NATIONAL COLLEGE OF BUSINESS AND ARTS

Cubao-Fairview-Taytay
SECOND SEMESTER SY 2016-2017

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.

1. 1st statement – If a movable property, instead of being recorded, is delivered to a third person or to the
creditor, the contract is pledge and not chattel mortgage.
2nd statement – 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.
A. True, True B. True, False C. False, False D. False, True

2. Pudring pledged his watch to Mr. Tambunting Pawnshop for P15,000. On due date, Pudring failed to
redeem his watch. The pawnshop sold the watch at a public auction to the highest bidder at P14,000.
A. The pawnshop can recover the deficiency of P 1,000 from Pudring
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

3. 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

4. If an agent contracts in the name of his principal, exceeding the scope of his authority, what would be
the status and effect of the contract?
A. Unenforceable B. Void C. Voidable D. Valid

5. Andy appointed Bobby to be his agent to administer his rice field while Andy was in Hong Kong for five
years, but Bobby died leaving his son of legal age to take care of the rice field until Andy arrived. This
is an example of agency created by:
A. Ratification C. Operation of law
B. Estoppel D. Consent of the principal

6. If the agent is authorized to sell, which of the following is not within the scope of his authority?
A. To execute the necessary transfer documents
B. To mortgage
C. To fix the place, time and manner of delivery
D. To receive the price, unless he was authorized to solicit orders only

7. 1st statement – The parties cannot stipulate that ownership in the thing shall not pass to the purchaser
until he has fully paid the price.
2nd statement – Whenever earnest money is given in a contract of sale, it shall be considered as part of
the price and as proof of perfection of the contract.
A. True, True B. True, False C. False, False D. False, True

8. The principle which states that the thing perishes with its owner.
A. caveat emptor C. res perit domino
B. pactum commissorium D. respondeat superior

9. Mark purchased from Anthony a parcel of land worth P600,000; P200,000 to be paid in cash and for
the difference, he will convey his car worth P400,000. What kind of contract is this?
A. Lease contract C. Contract to sell
B. Contract of sale D. Barter
BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
10. 1st Statement – Dacion en pago is governed by the law on sales.
2nd Statement – In the consummation of the contract of sale, the option money given by the buyer to
the seller will be deducted from the purchase price
A. Both statements are false.
B. First statement is false, second statement is true.
C. Both statements are true.
D. First statement is true, second statement is false.

11. Also known as barter

A. do ut des B. facio ut des C. facio ut facias D. do ut facias

12. A contract or receipt for the transport of goods and their delivery to the person named therein to order
or to bearer is a:
A. warehouse receipt B. dock warrant C. bill of lading D. quedan

13. When does a buyer has the right to the fruits of the things bought?
A. From the time the fruits are delivered.
B. From the time the obligation to deliver the thing bought arises.
C. From the time the sale is perfected.
D. From the time the thing bought is delivered.

14. A warranty of the seller that the buyer shall enjoy legal and peaceful possession of the thing sold:
A. warranty as to quality C. warranty against eviction
B. express warranty D. warranty against hidden defect

15. An oral contract of sale involving a wooden table sold for Php500 is:
A. voidable B. rescissible C. unenforceable D. void or inexistent

16. A sold her specific car to B for P200,000 payable in 5 equal installments. A delivered the car to B but a
mortgage was constituted on the car to answer for the unpaid installments B paid the first 2
installments but failed to pay the last 3 installments. A foreclosed the mortgaged property and sold it at
public auction for P100,000. Which is correct?
A. A can recover from B the balance of P20,000 even if there is no stipulation to that effect
B. A can recover from B the balance of P20,000 if there is stipulation to that effect
C. A cannot recover the deficiency only if there is stipulation to that effect
D. A cannot recover the deficiency even if there is stipulation to the contrary

17. A sold to B orally a parcel of land for P200,000.00. Delivery was made of the land. The payment of the
price was to be made three (3) months later. At the end of the 3 month period
A. B may refuse to pay claiming in his defense the statute of frauds
B. B may return the parcel of land to A
C. A can collect from B because the contract has already been executed
D. B may refuse to pay on the ground that there is no written contract to support the sale

18. The redhibitory action based on the faults if defects of animals must be brought within
A. 30 days from delivery to the vendee C. 40 days from delivery to the vendee
B. 45 days from delivery to the vendee D. 6 months from delivery to the vendee

19. A contract of sale whereby the seller acquires the right to redeem or repurchase the object of the sale
from the buyer after a certain period agreed upon
A. Equitable mortgage B. Absolute sale C. Sale on sale or return D. Pacto de retro sale

20. In distinguishing Earnest Money from Option Money, Earnest Money is:
A. Given when there is no contract of sale.
B. Given only when there is a perfected contract of sale.
C. Given to bind the offerer in a unilateral promise to sell or to buy.
D. Given as a separate consideration from the purchase price.

21. Which of the following cannot be an object of a contract of sale

A. Sale of credit
B. Young of animal not yet conceived at the time of perfection
C. Land which the seller expects to buy
D. Vain hope

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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
22. 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 deliverry to the vendee
C. 45 days from delivery to the vendee
D. 6 months from delivery to the vendee

23. 1st statement - The buyer is not obligated to accept partial delivery of the thing sold, unless there is a
stipulation to the contrary.
2nd statement - The seller having voidable title to the thing sold can validly transfer title to his buyer,
provided his title has not been avoided at the time of the sale.
A. True, True C. False, False
B. True, False D. False, True

24. When goods are delivered to the buyer on "sale or return" for a period of 15 days, ownership of the
good passes to the buyer upon:
A. delivery of the goods
B. expiration of seven days
C. acceptance by the buyer of the offer of the seller
D. perfection of the contract

25. What mode of extinguishing a contract of sale is effected when a person is subrogated upon the same
terms and condition stipulated in the contract in the place of one who acquires a thing by onerous title?
A. Compensation C. Novation
B. Conventional redemption D. Legal redemption

26. If the agent is authorized to sell, which of the following is not within the scope of his authority?
A. To execute the necessary transfer documents
B. To receive the price, unless he was authorized to solicit orders only
C. To fix the place, time and manner of delivery
D. To sell on credit

27. This serves as a proof of the perfection of the contract of sale

A. Decion en pago
B. Option money
C. Delivery
D. Arras

28. The sale of an expected thing

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

29. The sale of the hope itself

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

30. A contract of sale is not

A. A consensual contract
B. A real contract
C. A reciprocal contract
D. An onerous and commutative contract

31. Which of the following cannot be an object of a contract of sale?

A. Sale of credit
B. Young of animal not yet conceived at the time of perfection
C. Land which the seller expects to buy
D. Future inheritance

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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
32. 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
B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Traditio symbolica

33. 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
B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Traditio symbolica

34. When the owner of the thing sells it to vendee, but continues to have possession or occupation of the
thing not as owner but as tenant or lessee
A. Traditio longa manu
B. Traditio brevi manu
C. Traditio constitutum possessorium
D. Traditio symbolica

35. Quasi-traditio is equivalent to

A. Traditio longa-manu
B. Traditio brevi-manu
C. Traditio constitutum possessorium
D. Execution of a public instrument

For items 36-39

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

37. If the article already exists and subsequently acquired by another, it is a contract of sale, and if the
article is still to be manufactured at the instance of another, it is a contract for a piece of work. This is
A. English rule
B. Massachusetts rule
C. New York rule
D. Chicago rule

38. If the material used in the manufacturer of the article is more valuable, it is a contract of sale, and if the
labor or skill is more valuable than the material used in the manufacture of the article, it is a contract for
a piece of work. This is
A. English rule
B. Massachusetts rule
C. New York rule
D. Chicago rule

39. The Realty Installment Buyer Protection Act applies to all transactions involving the sale or financing of
real estate on installment but it excludes the following except:
A. Sale of financing of industrial lots
B. Sale or financing of commercial building
C. Sale to tenants under the Land Reform Code
D. Sale of residential condominiums

40. Dacion en pago as distinguished from a contract of sale

A. There is a greater freedom in fixing the price
B. Obligations are created
C. Ownership of the object is transferred to the other party
D. A pre-existing credit is extinguished
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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS

41. A needs a size 10 of model 101 of Delicious Shoes regularly available to the public for her boyfriend B,
but the same is out of stock 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

42. A sold to B a percel of land for P3.8M The sale is evidenced by a memorandum of agreement of sale
written in the Bicolano dialect. One week later, A sold the same parcel of land to C for P4M. This is
evidenced by a formal deed of sale. Upon buying the property, C, who was aware of the first sale,
immediately tool possession of the lot. When informed of the second sale, B subsequently registered
an adverse claim to the property. Later, C registered the deed of sale in her favor. The parcel of land
shall belong to
A. B because he has got an older title
B. C because he is the first register
C. C because he is the first to take possession
D. No one as both sales are void

43. If redemption is to be made by the seller, one of the following need not be given to the buyer
A. Expenses of the contract
B. Interest on the price of the sale
C. Necessary expenses on the thing sold
D. Price of the sale

44. Ownership of the thing sold is

A. Retained by the seller in “sale or return”
B. Transferred to the buyer upon constructive or actual delivery of the thing sold
C. Acquired by the buyer upon perfection of the contract
D. Transferred to the buyer upon acceptance of the price

45. A contract of sale is in the stage of conception when

A. There is meeting of the minds
B. Negotiations are in progress
C. The parties come to an agreement
D. The contract is perfected

For number 46 -55

a. Both are true c. only the first is true
b. Both are false d. only the second is true

46. The vendor need not be the owner at the time the sale is perfected. It is sufficient that he is the owner
at the time the thing sold is delivered.
The sale of a vain hope or expectancy is voidable. (C )

47. There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency
which may or may not happen.
If the consideration of the contract consists partly in money and partly in another thing, it shall be
considered a barter if the value of the thing given as a part of the consideration exceeds the amount of
the money or its equivalent (C )

48. If the price is grossly inadequate, the sale is void.

Whenever option money is given in a contract of sale, it shall be considered as part of the price and a
proof of the perfection of the contract. (B)

49. Earnest money and option money both apply to perfected sale.
In a contract of sale of personal property the price of which is payable in installment, the vendor may
cancel the sale should the vendee fail to pay. (B)

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50. Should the vendee’s failure to pay, cover two or more installments, the vendor may foreclose the
chattel mortgage on the thing sold but he shall have no further action against the purchaser to recover
any unpaid valance of the price, except if there is an agreement to the contrary.
Sale is a consensual contract, therefore delivery or payment is not essential for perfection. (D)

51. 1st statement - Commodatum and mutuum may be gratuitous or with a stipulation to pay interest.
2nd statement - When there are two or more bailees to whom a thing is loaned in the same contract,
they are liable solidarily. (D)

52. 1st statement – A stipulation forbidding the owner from alienating the immovable property subject of the
mortgaged shall be valid
2nd statement - 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)

53. 1st statement - 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.
2nd statement - 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. (D)

54. 1st statement - The promise to constitute a pledge or a mortgage is enforceable against the whole
world.
2nd statement - 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. (D)

55. 1st statement – In real estate mortgage, the mortgagor can sell the property mortgage even without
the consent of the mortgagee.
2nd statement - In chattel mortgage like pledge, the possession of the thing mortgaged is vested in the
creditor. (C)

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

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

57. The liability of the surety is:

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

58. A uses a savings account with a bank. The contract between A and the bank is one of
A. Agency. C. Deposit.
B. Commodatum. D. Mutuum.

59. A Guarantor is liable:

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

60. The following are characteristics of a contract of real mortgage except one:
A. it is a real right
B. it is indivisible
C. it can secure all kinds of obligation
D. it is principal contract

61. 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.

62. The following are essential requisites common to the contract of pledge and mortgage, except one:
A. That they are constituted to secure the fulfillment of a principal obligation.
B. That the pledgor and the mortgagor is the absolute owner of the thing pledged or mortgaged.
C. That the contract is registered with the Register of Deeds.

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BUSINESS LAW 4 SALES, AGENCY, LABOR & OTHER COMMERCIAL LAWS
D. That the person constituting the contract has the free disposal of his property or that he is legally
authorized for the purpose.

63. A contract of mortgage involving an immovable property extends to the following except one:
A. Future properties of the mortgagee
B. Natural accessions of the property mortgaged
C. Improvements on the property mortgaged
D. Rents or income of the property mortgaged not yet received when the obligation becomes due.

64. 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
B. Both answers are wrong
C. Both answers are correct
D. 1st answer wrong, 2nd answer correct

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

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

66. 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. B. Mortgage. C. Antichresis. D. Guaranty.

67. A mortgaged his residential land to B as a guarantee for the payment of P400,000.00 obligation to A.
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.
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.

68. A borrowed from B P50,000. 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 retro.

69. 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.

70. In a contract of sale of real property by lump sum, when there is a difference between the area and the
boundary:
A. boundary prevails C. there must be another survey
B. area prevails D. contract is void

END OF EXAMS

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