NATIONAL COLLEGE OF BUSINESS AND ARTS

Cubao-Fairview-Taytay
FIRST SEMESTER SY 2015-2016

FINAL DEPARTMENTAL EXAMINATIONS 2 HRS

BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS

INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer
for each item by shading the corresponding letter of your choice on the answer sheet provided.
STRICTLY NO ERASURES ALLOWED. Use Pencil No. 2 only.

For Numbers 1 – 10, determine if:

A. TRUE B. FALSE

1. Commodatum and mutuum may be gratuitous or with a stipulation to pay interest. B

2. When there are two or more bailees to whom a thing is loaned in the same contract, they are liable
solidarily. A
3. A stipulation forbidding the owner from alienating the immovable property subject of the mortgaged
shall be valid. B
4. The creditor can automatically become the owner of the thing mortgage upon failure on the part of
the debtor to pay the principal debt on maturity and after demand. B
5. If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor or owner,
there is a conclusive presumption that the same has been returned by the pledgee. B
6. The sale of the thing pledged or mortgaged shall extinguish the principal obligation, whether or not
the proceeds of the sale are equal to the amount of the principal obligation, interest and expenses
in a proper case. B
7. The promise to constitute a pledge or a mortgage is enforceable against the whole world. B
8. During the auction sale of the thing pledged, the pledgee may also bid but his offer shall not be
valid if he is the only bidder. A
9. The pledgee is always entitled to claim from the pledgor any deficiency between the amount of the
debt or obligation and the proceeds after the sale of the thing pledged. B
10. Like pledge, a chattel mortgage is constituted only over movable properties. A

MULTIPLE CHOICE:
11. The following are the characteristics of a contract of sale, except:
A. Principal, which means that a contract of sale can stand by itself.
B. Real, which requires the delivery of the object of the contract of sale for its perfection.
C. Onerous, where rights are acquired in exchange of a valuable consideration.
D. Bilateral, which means that both parties are bound reciprocal to each other.

12. One of the following statements on the transfer of ownership of the thing “sale on trial” is incorrect.
Which is it?
A. Ownership of the thing is transferred to the vendee when he signifies his approval or
acceptance to the vendor.
B. Ownership of the thing is transferred to the vendee when he does an act adopting the
transaction.
C. Ownership of the thing is transferred to the vendee if the time for the return of the thing has
expired and the vendee retains the thing without giving notice of rejection or acceptance to
the vendor.
D. Ownership of the thing is transferred to the vendee upon delivery.

13. In a contract of sale of personal property the price of which is payable in installments, the vendor
may exercise any of the following remedies, except:
A. Exact fulfillment of the obligation, should the vendee fail to pay any number of installments.
B. Cancel the sale, should the vendee’s failure to pay cover two or more installments.
C. Foreclose the chattel mortgage on the property if the vendee’s failure to pay cover two or
more installments and recover any deficiency after the foreclosure sale if they have stipulated
it.
BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
D. Foreclose the chattel mortgage on the property if the vendee’s failure to pay cover two or
more installments but he may no longer recover any deficiency after the foreclosure sale.

14. This refers to an encumbrance imposed upon an immovable for the benefit of another immovable
belonging to a different owner.
A. Easement or servitude
B. Real estate mortgage
C. Pledge
D. Chattel mortgage

15. If a movable property is sold separately to two or more different vendees, ownership shall belong to
the person:
A. Who in good faith first paid the purchase price in full.
B. Who in good faith first recorded the sale in the Registry of Property.
C. Who in good faith presents the oldest title.
D. Who in good faith first took profession of the property.

16. The following may not be valid objects of a contract of sale, except:
A. Objects outside the commerce of men.
B. Illicit things.
C. Future goods.
D. Impossible service.

17. The Recto Law applies to which of the following examples of sale?
A. Sale of a car on straight term.
B. Sale of house and lot on installment.
C. Sale of car on installment where the buyer constituted a mortgage on his truck.
D. Sale of a piano on installments where the buyer constituted a chattel mortgage on the piano.

18. S sold to B a lot through a deed of absolute sale duly acknowledged before a notary public. Three
days later, S sold the sale lot to X, also through a deed of sale duly acknowledged before a notary
public. X had the sale registered with the Register of Deeds. Neither B nor X was aware of the sale
made by S to the other and neither took physical possession of the lot. Who is the present owner of
the lot?
A. B, because he was the first purchaser in good faith.
B. X, because he registered the sale in good faith.
C. Neither B nor X.
D. S, as long as he does not surrender physical possession of the lot.

19. In one of the following cases, the ownership of the thing object of the contract is transferred to the
other party upon delivery.
A. Contract to sell
B. Agency to sell
C. Sale or return
D. Sale on approval

20. One of the following statements pertaining to a sale by auction is incorrect. Which is it?
A. A sale by public auction is perfected when the auctioneer announces its perfection by the fall
of the hammer, or in any other manner.
B. Before perfection, any bidder may retract his bid.
C. Before perfection, the auctioneer may withdraw the goods unless the auction was
announced to be without reserve.
D. The seller may validly participate in the bidding without prior notice of the bidders.

21. As regards antichresis, which of the following is not correct?

A. The amount of the principal and of the interest shall be specified in writing, otherwise the
contract of antichresis shall be void
B. The debtor, unless there is stipulation to the contrary is obliged to pay the taxes and charges
upon the estate

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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
C. The debtor cannot reacquire the enjoyment of the immovable without first having totally paid
what he owes the creditor
D. The creditor is bound to bear the expenses necessary for the preservation and repair of the
immovable

22. Which of the following is not correct?

A. Any stipulation exempting the vendor from the obligation to answer for eviction shall be void
B. Every stipulation exempting the agent from the obligation to render an account shall be void
C. If the thing pledged is returned by the pledgee to the pledger or owner, the pledge is
extinguished and any stipulation to the contrary is void
D. A stipulation forbidding the owner from alienating the immovable mortgaged shall be void

23. A owns a parcel of land which he sells to B with a 3 year redemption period. After the second year,
A dies leaving his children C, D and E as his heirs. Which of the following is not correct?
A. A can repurchase the whole thing, so anyone among C, D and E may repurchase the whole
thing
B. C can redeem his 1/3 share, D his 1/3 share E his 1/3 share if B does not require all of them or
any one of them to redeem the whole property
C. B may demand all of the co-heirs that they come to an agreement upon repurchase of the
whole thing sold
D. B cannot be compelled to consent to partial redemption

24. S sold his car to B on instalment and a chattel mortgage was constituted on the car. B defaulted in
two instalment payments. S foreclosed the chattel mortgage and sold the car at a public auction. If
there is deficiency, can S recover the deficiency?
A. Yes, even without stipulation C. No, even if there is stipulation
B. Yes, if there is stipulation D. No, unless there is stipulation

25. B borrowed P100,000 from S secured by a chattel mortgage on B’s car. The debt is payable in
instalment. When B defaulted in 2 instalment payments, S foreclosed the chattel mortgage and sold
the car at a public auction. If there is excess, who is entitled to the excess?
A. S, even without stipulation C. S, unless there is stipulation
B. B, only if there is stipulation D. B, even without stipulation

26. B pledged his ring to S. B failed to pay his obligation. S sold the ring at a public auction. If there is
deficiency, can S recover the deficiency?
A. Yes, if there is stipulation C. Yes, even without stipulation
B. No, even if there is stipulation D. No, unless there is stipulation

27. The following are the essential elements of a contract of sale, except:
A. Consent of the contracting parties.
B. Subject matter which should be determinate.
C. Price which is certain in money or its equivalent.
D. Warranty against eviction and against hidden defects.

28. One of the following is not a requisite of the object of a contract of sale. Which is it?
A. It must be within the commerce of men.
B. It must be licit.
C. It must be determinate or determinable.
D. Vendor must have the right to transfer the ownership of the thing at the time of sale.

29. An unpaid seller has the following rights, except:

A. A lien on the goods or the right to retain them for the price while he is possession of them.
B. In case of insolvency of the buyer, a right of stopping the goods in transit after he has parted
with the possession of them.
C. A right to repurchase.
D. A right to rescind.

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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
30. The vendor shall be liable for the death of the animal sold when the following requisites are
present, except:
A. The disease existed at the time of sale.
B. The disease is the cause of the death of the animal.
C. The disease must be redhibitory.
D. The animal dies within 3 days from the time of purchase.

31. A, B and C are co-owners of an undivided parcel of land. A sold his 1/3 interest to C in a deed of
absolute sale. Which is correct?
A. B may exercise the right of redemption on the interest sold by A to C.
B. B cannot exercise the right or redemption.
C. The sale made by A to C is voidable.
D. B may redeem only ½ of the interest sold by A to C.

32. One of the distinctions between a contract of sale and a contract for a piece work is that a contract
for a piece of work:
A. Is not governed by the Statute of Frauds.
B. Refers to a contract for the delivery goods which are manufactured on the ordinary course of
business although the same are not available.
C. Has for its parties the vendor and the vendee.
D. Has for its consideration the price of the thing.

33. The sale of an expected thing

A. Dacion en pago
B. Emptio spei
C. Payment by cession
D. Emptio rei-speratae

34. The sale of the hope itself

A. Dacion en pago C. Emptio spei
B. Payment by cession D. Emptio rei-speratae

35. A needs a size 10 of model 101 of Delicious Shoes available to the public for her boyfriend B, but
the same is not available so she placed an order for one. On the other hand, B placed an order for
size No. 8, colored violet, (something not ordinarily made by the company) to be given to A. Which
is correct?
A. Both are contracts of sale
B. Both are contracts for a piece of work
C. First is a contract of sale, second is a contract for a piece of work
D. First is a contract for a piece of work, second is a contract of sale

36. A offered to sell for P12,000,000 her house and lot to B who was interested in buying the same. In
her letter to B, A stated that she is giving B a period of one month within which to raise the amount
and that as soon as B is ready, they will sign the deed of sale. Five days before the expiration of
the one month period. A went to B and told her that she is no longer willing to sell the property
unless the price is increased to P15,000,000. Which is correct?
A. B may compel A to accept the P12,000,000 first offered
B. A may compel B to pay P15,000,000
C. A and B should shoulder the P3,000,000 difference
D. B cannot compel A to accept the P12,000,000 first offered

37. If the object of the contract is specially made or manufactured at the specific order of another, it is
a contract for a piece of work. This is
A. English rule C. New York rule
B. Massachusetts rule D. Chicago rule

38. The rule observed in the Philippines is

A. English rule C. New York rule
B. Massachusetts rule D. Chicago rule

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39. Delivery by merely pointing to the object of sale if it cannot be delivered to the vendee at the time of
the sale is
A. Traditio longa manu C. Traditio constitutum possessorium
B. Traditio brevi manu D. Traditio symbolica

40. Effected when the object of sale is already in the possession of the vendee at the time of sale so
that delivery need no longer be made is
A. Traditio longa manu C. Traditio constitutum possessorium
B. Traditio brevi manu D. Traditio symbolica

41. A stole a fountain pen from P and sold it to a “store for pens”, which paid for it in good faith, not
knowing it was stolen. The “store” then sold it to B, a reviewee. Which is correct?
A. B cannot be considered as the owner because the original seller (A) is not the real owner
B. P may recover the fountain pen from B without reimbursement because he is the legal
owner
C. B became the owner because he purchased the pen from a merchant store.
D. B became the owner regardless whether the seller is a store for pens or not because B
bought it in good faith.

42. A mortgaged his residential land to B as a guarantee for the payment of P400,000 obligation to B.
They agreed that A shall not sell the land while the obligation exists. Before the maturity of the
mortgage, C offered to buy the land from A. Which is correct?
A. A cannot sell the land to C because of the agreement not to sell
B. A can sell the land to C only if B consents in writing
C. A can sell the land to C despite the agreement not to sell
D. A cannot sell the land to C unless A pays the obligation

43. One of the following is not a characteristic of pledge and mortgage:

A. Accessory C. Gratuitous
B. Consensual D. Onerous

44. The liability of the surety is:

A. Solidarily C. Jointly
B. Secondarily D. Subsidiarily

45. The distinction between a chattel mortgage and a pledge is that in chattel mortgage:
A. The delivery of the personal property is necessary.
B. The registration of the property in the Registry of property is not necessary.
C. The excess over the amount due after foreclosure goes to the debtor.
D. The entire amount of the proceeds goes to the creditor.

46. A void stipulation fixing the price at which the property will be sold at a foreclosure sale.
A. auction price C. upset price
B. option money D. contract price

47. A pledged his watch to Mr. Tambunting for P10,000. On due date, A failed to redeem his watch.
The pawnshop sold the watch at a public auction to the highest bidder at P9,000.
A. The pawnshop can recover the deficiency of P 1,000 from A
B. The pawnshop cannot recover the deficiency of P1,000 unless there is a stipulation
C. The pawnshop cannot recover the deficiency of P1,000 even if there is a stipulation
D. The pawnshop can recover the deficiency of P1,000 even without the stipulation

48. If the proceeds of the sale of the thing pledged sold at public auction is less than the principal
obligation, can the creditor recover the deficiency from the debtor?
1st ANSWER: Yes, the creditor is entitled to recover the deficiency form the debtor.
2nd ANSWER: No, unless there is a stipulation to that effect in the contract of pledge.
A. 1st answer correct, 2nd answer wrong C. Both answers are wrong
B. Both answers are correct D. 1st answer wrong, 2nd answer correct

49. A borrowed from B a sum of money and offered his house by way of mortgage. In case of non-
payment of the obligation on time -
A. A may stipulate in the contract that the house would then be B’s.
B. A instead of paying in cash, can alienate his house in favor of B.
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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
C. A may stipulate in the contract the B can sell the house to pay for the debts of A.
D. B may occupy the house of A until payment is made.

50. Possession of the thing pledged must be placed in the hands of

A. Pledgee C. Surety
B. Guarantor D. Pledgor

51. A creditor, through a contractual arrangement made within Mr. Benitez, is to receive the rentals of
the Benitez apartment buildings in Quezon City with the obligation to apply them to the payment of
the interest and thereafter to the principal of his credit. This contract is a valid.
A. Pledge. C. Antichresis.
B. Mortgage. D. Guaranty.

52. A owes B the sum of P10,000. A pledged his laptop as security. Later, A borrowed an additional
sum of P5,000. from B. A paid B the P10,000 and demands the return of the laptop which was the
property pledged. B refused.
A. B should return the laptop as the original loan was already paid.
B. B should retain the laptop until the P5,000 is paid.
C. B should deposit the laptop with the court.
D. B should sell the laptop at public auction to the highest bidder to insure the collection of P5,000.

53. Before acceptance is conveyed, an offer becomes ineffective upon the death, civil interdiction,
insanity or insolvency
A. Of the offeror
B. Of the offeree
C. Of either party
D. Of both offeror and offeree

54. On January 10, 2015, A sold for Php 8M her house and lot to B. It was agreed that delivery of the
house and lot and the payment therefore would be made on April 10, 2015. Unfortunately, C, a
stranger negligently set the house on fire on March 10, 2015 and the house was completely
destroyed. As a result
A. B is required to pay the Php 8M minus the fair market value of the house
B. A must still deliver the lot but is excused from delivering the house while B must still pay the
Php 8M
C. A must still deliver the lot and the salvage value of the house while B must still pay the Php
8M
D. A need not deliver the lot while B need not pay the Php 8M

55. On February 12, 2015, a sold his only dog to B for P20, 000. The parties agreed that B will pay one
day after the results of the May 2015 CPA Licensure Examination are released while A will deliver
the dog on the day B pays. If the results were released on May 25, 2015 but the dog gave birth to a
puppy on May 24, 2015, which of the following statements is correct?
A. A is entitled to the puppy because the puppy was born before the obligation to deliver arises
B. A is entitled to the puppy because of the principle that accessory follows the principal
C. B is entitled to the puppy because the contract was perfected on February 12, 2015
D. B is entitled to the puppy because the puppy cannot be separated from the mother dog yet

56. The following are obligations of the agents, except

A. In the execution of the agency, the agent shall act in accordance with the instructions of the
principal
B. Shall be bound to advance the necessary funds, except when the principal is insolvent
C. Shall finish the business already begun on the death of the principal, should delay entail any
danger
D. In case a person declines an agency he is bound to observe the diligence of a good father of
a family in the custody and preservation of the goods forwarded to him by the owner until the
latter should appoint an agent.

57. X borrowed money from Y. X constituted a real estate mortgage over his house to secure the loan.
It was stipulated that in case X could not pay the loan on time, the house would belong to Y. Which
is correct?
A. Y shall become owner of the house upon default by X by virtue of their written agreement
B. Y shall become the owner of the house by virtue of the default of X.
C. Y shall only enjoy the right of alienation over the land

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D. Y shall be entitled to the right of appropriation of the land

58. Spouses H and W are under the regime of absolute community of property. H, through violence
and intimidation obtained the signature of W to a contract of sale involving W’s exclusive property
in favor of H. The fair market value of the property is P1M but the selling price is only P700,000.
The sale is
A. Rescissible C. Unenforceable
B. Voidable D. Void

59. When the sale of a piece of land or any interest therein is through an agent, the authority of the
agent may be
A. In a public instrument
B. In a private instrument
C. Either in a public or private instrument
D. Duly notarized

60. In three of the following defective contracts, ratification cleanses the defects. Which is the
exception?
A. Both parties are incapable of giving consent
B. Sale of immovable property or interest orally entered into
C. Sale of piece of land through an agent and the authority is given orally
D. Contracts entered into by a person who has been given no authority

61. Angela appointed Angelo as her agent to sell her house in cash for P5,000,000 with promise to pay
5% commission. Angelo using persuasive skills was able to sell it for P6,000,000 on credit. After
ratifying the sale with the buyer:
A. Angelo must give P5,000,000 only.
B. Angelo must give P 6,000,000 minus the commission.
C. Angelo must give P 5,000,000 minus the commission.
D. Angelo must give P 6,000,000

62. Antonio sold to Bernardo a residential lot to be containing an area of 1,000 square meters at
P1,000 per square meter. In this connection, which of the following statements is correct?
A. If the lot should contain 950 sq. meters only, B can ask for a proportionate reduction of the
price and rescission.
B. If the lot should contain 1,200 sq. meters, B cannot reject the excess and must pay additional
price at P1,000 per square meter.
C. If the lot should contain 900 sq. meters, B can choose between proportionate reduction of the
price but not rescission of the sale
D. If the lot should contain 900 sq. meters, B can choose between proportionate reduction of the
price or rescission of the contract

63. A sale with a right to repurchase anytime from the date of sale was executed. In this case:
A. The stipulation is void
B. The buyer has 4 years within which to repurchase the property sold
C. The buyer has 12 years within which to repurchase the property sold
D. The buyer has 10 years within which to repurchase the property sold.

64. Jackie is the sole owner of one hectare of land. In need of money, she sold 1/3 of the land without
specifying which portion she is selling to Jack. In this case, the sale is
A. Void, because co-ownership is discouraged by law.
B. Void, because the 1/3 part is not determinate
C. Valid, only if Jack has paid the purchase price
D. Valid as the sole owner of a thing may sell an undivided interest therein

65. Tom pledged his car to Jerry for P100,000.00. Tom was unable to pay the obligation 60 days after
due date. Jerry sold the laptop at public auction for P75,000.00. Which of the following is correct?
A. The deficiency of P25,000.00 can be recovered
B. The deficiency of P25,000.00 can be recovered even if a contrary stipulation appears
C. The deficiency of P25,000.00 can be recovered if stipulated
D. The deficiency of P25,000.00 cannot be even if there is a stipulation that she can.

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66. In sale of a land with a non-apparent servitude, a hidden defect, the buyer can rescind the sale
within period of time?
A. 6 months from the date of delivery
B. 1 yrs from the date of delivery
C. 30 days from the discovery of the hidden defect
D. 1 year from the execution of the contract of sale

67. Narda transferred to Darna a parcel of land for the price of P200,000; P30,000 to be paid in cash
and for the difference, she will convey her car worth P170,000. What kind of contract is this?
A. Lease contract C. Obligation to sell
B. Contract of barter D. Sale

68. The redhibitory action based on the faults if defects of animals must be brought within
A. 30 days from delivery to the vendee
B. 40 days from delivery to the vendee
C. 40 days from perfection
D. 6 months from delivery to the vendee

69. Rosario sells to Mercedes 500 sacks of rice at P1,000.00 per sack from the stock then stored in the
warehouse of Rosario. Unknown to the parties, the warehouse contains only 480 sacks of rice.
What is the status of the contract between Rosario and Mercedes?
A. The sale is void since the quantity available is less than the quantity sold.
B. The sale is valid up to 480 sacks of rice but void as to the deficiency of 20 sacks of rice.
C. The entire sale is valid up to 500 sacks of rice. Mercedes becomes the owner of the whole
stock available and Rosario must deliver the deficiency of 20 sacks of rice.
D. The sale is valid up to 480 sacks of rice but rescissible as to the deficiency of 20 sacks of rice
by reason of damage suffered by Mercedes.

70. A borrowed from B P 50,000. A offered his house by way of mortgage. It was expressly stipulated
that upon non-payment of the debt on time, the house would belong to B. This forfeiture clause,
which has traditionally not been allowed is called a
A. Caveat emptor C. Pactum commissorium
B. Dacion en pago D. Pacto de retr

**** THE END ****

GOD BLESS!

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