Republic of the Philippines

BATANGAS STATE UNIVERSITY LIPA CITY

COLLEGE OF ACCCOUNTANCY, BUSINESS AND ECONOMICS
Marawoy, Lipa City
Tel. No. (043) 774-2526
COMPREHENSIVE FINAL EXAMINATION
LAW 105-LAW ON SALES, AGENCY AND CREDIT TRANSACTIONS
Second Semester, AY 2019 – 2020

Name: __________________________________________SR CODE:_________ Score:___________

Section: _________________________________________ Date:___________
VISION
A premier national university that develops leaders in the global knowledge economy
MISSION
A university is committed to producing leaders by providing a 21 st century learning environment through innovation in education, multidisciplinary
research , and community and industry partnership in order to nurture the spirit of nationhood, propel the national economy and engage the world for sustainable
development.

General Directions:
This is a closed-book, closed notes examination. However, cell phones are not permitted for use in any way. Any
discussion or otherwise inappropriate communication between examinees, as well as the appearance of any
unnecessary material or cell-phone usage, will be dealt with severely Erasures should be avoided. Answers must
be complete and in correct spelling. Unanswered questions will be marked wrong.
TEST I. MULTPLE CHOICE: Read and analyze each item and select the correct option that answers each
question. Write only the letter of your choice in the ANSWER SHEET provided before the number . (1 POINT
EACH= 100 points)
Start here>>
1. It is a contract, whereby a person binds himself to render some service or to do something in
representation or in behalf of another, with the consent and authority of the latter.
a. Contract of agency
b. Contract of partnership
c. Contract of sales
d. Contract of pledge
2. The following are the characteristics of a contract of agency, except
a. Principal – it can stand by itself.
b. Preparatory – It is a means by which other contracts may be entered into.
c. Consensual – It is perfected by mere consent.
d. Gratuitous – It is presumed to be gratuitous.
e. Nominate – It has a name given to it by law.
f. Bilateral – The parties are bound reciprocally to it by law.
g. Commutative – The parties give and receive almost equivalent values.
3. What is the status of the contract of agency in case the principal is capacitated and the agent is
incapacitated?
a. Voidable
b. Valid and binding
c. Unenforceable
d. Null and void
4. What is the status of the contract entered into by an agent, who is incapacitated, in behalf of the principal
who is capacitated?
a. Voidable
b. Valid and binding
c. Unenforceable
d. Null and void
5. The following statements pertain to the principal in a contract of agency, except
a. He is the person whom the agent represents.
b. He must be capacitated.
c. He gives authority to the other party.
d. He acts and represents the other party.
6. What type of relationship exists between the principal and agent?
a. Fiduciary relationship based on trust and confidence.
b. Investor-investee relationship
c. Debtor-creditor relationship
d. Protector-beneficiary relationship

LAW 105- COMPREHENSIVE FINAL EXAM Page 1

 7. Contract of agency may be express or implied. An agency may be implied from the following, except
a. Acts of the principal
b. Silence of the principal
c. Lack of action of the principal
d. Failure of the principal to repudiate the agency knowing that another person is acting in his behalf
without authority.
e. Special power of attorney
8. What is the status of the sale of a piece of land of the principal by the agent if the authority of the agent is
not in writing?
a. Null and void
b. Unenforceable
c. Voidable
d. Rescissible
9. What is the status of the contract entered into by the agent in behalf of the principal if the act perform
requires special power of attorney and the authority of the agent is only general?
a. Voidable
b. Valid and binding
c. Unenforceable
d. Null and void
10. If the agency if couched in general terms, only general power of attorney is required even if the principal
should state that he withholds no power, that the agent may execute acts he may consider appropriate or
even though the agency should authorize a general or unlimited management. Which of the following acts
can be performed by the agent in this case?
a. Acts of administration.
b. To effect novation.
c. To compromise liability.
d. To submit questions to arbitration.
11. The following acts require special power of attorney from the principal, except
a. To lease any personal property to another person for more than a year.
b. To bind the principal to render some service without any compensation.
c. To bind the principal in a contract of partnership.
d. To create or convey real rights over immovable property.
12. The acceptance by the agent of the contract of agency may be express or implied. The following are
considered implied acceptance, except
a. Acts of the agent to carry out the agency.
b. Silence or inaction by the agent according to the circumstances.
c. Between persons who are present, if the principal delivers his power of attorney to the agent and
the latter accepts it without any objection.
d. Between persons who are absent, when the principal transmits his power to the agent, and the
latter returns it with objection.
e. Between persons who are absent, when the principal entrusts to him by letter or telegram a power
of attorney with respect to the business in which he is habitually engaged as an agent, and he did
not reply to the letter or telegram.
13. Which of the following statements is incorrect?
a. When a person is appointed as special agent through special information, the person appointed
will be considered a duly authorized agent with respect to the person who received the special
information.
b. When a person is appointed as special agent through a public advertisement, the person appointed
will be considered a duly authorized agent with respect to persons who had read the newspaper
only.
c. If the announcement of the appointment is by special information, revocation shall be made also
by special information.
d. If the announcement of the appointment is by public advertisement, revocation of the
appointment shall also be made by public advertisement.
14. The following are the basic principles of agency, except
a. The agent must act within the scope of his authority.
b. The agent may do such acts as may be conducive to the accomplishment of the purpose of the
agency.
c. The limits of the agent’s authority shall be considered exceeded even it has been performed in a
manner more advantageous to the principal than that specified by him.
d. The agent must act in behalf of his principal and should disclose the principal.

LAW 105- COMPREHENSIVE FINAL EXAM Page 2

 15. The following are the effects if the agent acts within the scope of his authority but in his (agent’s) behalf
or without disclosing the principal, except
a. The principal has no right of action against the person with whom the agent has contracted.
b. The person with whom the agent has contracted has no right of action against the principal.
c. The agent is directly bound in favor of the one with whom he has contracted.
d. The contract does not bind the third person and the principal even if the contract involves thing
belonging to the principal.
16. A, an agent of P, sold the car of P to X in his own name and without disclosing P as his principal. Which
of the following statements is correct?
a. The contract does not bind P because the agent acts in his own name.
b. The contract is unenforceable as regards to P.
c. The contract is null and void.
d. The contract binds P and X because it involves the property of the principal.
17. What is the status of the contract entered into by the agent in excess of the authority of his principal and
in the name of the principal or by a person without authority of another but in the latter’s behalf?
a. Rescissible unless ratified by the principal
b. Voidable unless ratified by the principal
c. Unenforceable unless ratified by the principal
d. Null and void unless ratified by the principal
18. What is the status of the contract entered into by the agent in excess of the authority of the principal and
in his own behalf?
a. The contract is enforceable in favor of the principal.
b. The contract is rescissible in favor of the principal.
c. The contract is valid and binding against the agent.
d. The contract is null and void.
19. What is the obligation of a person appointed as an agent but declines the appointment?
a. He shall deliver and return the goods.
b. He shall pay for the price of the goods.
c. He shall observe diligence of a good father of a family in the custody and preservation of the
goods.
d. He has no obligation over the goods.
20. The following are the general obligations of an agent, except
a. To carry out the agency.
b. To be liable for damages through the non-performance, the principal may suffer.
c. To finish the business already begun on the death of the principal, should delay entail any danger.
d. To continue the agency despite the fact that its execution would manifestly result in loss or
damage.
21. The following are the special obligations of an agent, except
a. To advance the necessary funds if there was stipulation to that effect except when the principal is
insolvent.
b. To act in accordance with the instructions of the principal in the execution of the agency and in
the absence of instructions of the principal, he shall exercise the diligene of a good father of a
family.
c. No to carry out an agency if the execution would manifestly result in loss or damage to the
principal.
d. To be liable for damages if there being a conflict between interest and that of the principal, he
should prefer his own.
e. To lend money to the principal at current interest rate if he has been authorized to borrow money.
f. To borrow money of the principal at current interest rate without the principal’s consent, if the
latter has authorized him to lend principal’s money at interest.
g. To render an accounting of his transactions and to deliver to the principal whatever he may have
received by virtue of the agency, even though it may not be owing to the principal. Any obligation
exempting the agent from the obligation to render an account shall be void.
h. To be liable for interest on the sums he has applied to his own use from the day on which he did
so and those which he still owes after the extinguishment of the agency.
i. To be responsible not only for fraud, but also for negligence which shall be judged with more or
less right by the court.

LAW 105- COMPREHENSIVE FINAL EXAM Page 3

 22. The following are the rules that shall be observed as regards to the liability of agent when he appoints a
substitute, except
a. If the agent is not prohibited to appoint a substitute, the agent may appoint a substitute but he
shall be responsible for the acts of the substitute.
b. If the agent is authorized to appoint a substitute and the principal designated the person to be
appointed as substitute, the agent is not responsible for the acts of the substitute.
c. If the agent is authorized to appoint a substitute and the principal does not designate the person to
be appointed as a substitute, the agent shall be liable if the person appointed as substitute is
notoriously incompetent or insolvent man.
d. If the agent is prohibited to appoint a substitute, the agent cannot appoint a substitute. If he
appoints one, all the acts of the substitute shall be voidable.
23. What is the degree of liability of two or more agents if thet have been appointed simultaneously?
a. Joint and severally unless agreed otherwise.
b. Joint or proportionate unless agreed otherwise.
c. Solidary unless agreed otherwise.
d. No liability unless agreed otherwise.
24. The general rule is that the agent who acts in the name of the principal shall not be liable to the party with
whom he contracts. The following are the exceptions to the general rule, except
a. If the agent expressly binds himself.
b. If the agent exceeds the limits of his authority without giving such party sufficient notice of his
powers.
c. If the agent acts without the authority of the principal.
d. If the principal ratifies the acts of the agent which exceed the limits of his authority.
25. What is the status of the contract entered into by the agent without or beyond the authority of the principal
if the other party was aware of the agent’s acting beyond the limits of his authority?
a. If the agent did not undertake to secure the principal’s ratification, the contract shall be
unenforceable.
b. If the agent did not undertake to secure the principal’s ratification, the contract shall be void.
c. If the agent did not undertake to secure the principal’s ratification, the contract shall be voidable.
d. If the agent did not undertake to secure the principal’s ratification, the contract shall be valid.
26. The following are the rights and obligations of third persons who have contracted with an agent who has
exceeded his authority, except
a. As to third persons, an act is deemed to have been performed within the scope of the agent’s
authority, if such act is within the power of attorney, as written, even if the agent has in fact
exceeded the limits of his authority according to an understanding between the principal and the
agent.
b. A third person cannot set up the fact that the agent has exceeded his powers, if the principal has
ratified or has signified his willingness to ratify the agent’s acts.
c. A third person may require the agent to present his power of attorney or the instructions as
regards the agency.
d. Private or secret orders and instructions of the principal prejudice third persons who have relied
upon the power of attorney or instructions shown them.
27. He is a person who buys and sells goods or chattels consigned or delivered to him by his principal, for a
compensation known as commission.
a. Ordinary agent
b. Partnership agent
c. Commission agent
d. Preferred agent
28. The following are the obligations of a commission agent, except
a. To be responsible for the goods received by him in the terms and conditions and as described in
the consignment unless upon receiving them he should make a written statement of the damage
and deterioration suffered by the same.
b. To distinguish by countermarks goods of the same kind and mark which belong to different
owners, and designate the merchandise respectively belonging to each principal.
c. To sell the goods on credit.
d. To bear the risk of collection and to pay the principal the proceeds of the same on the same terms
agreed upon with the purchaser if he receives on a sale, in addition to the ordinary commission,
another called a guarantee commission.
e. To be liable for damages if he does not collect the credits of the principal at the time they become
due and demandable, unless he proves that he exercised due diligence for that purpose.

LAW 105- COMPREHENSIVE FINAL EXAM Page 4

 29. P gives a general power of attorney to A to sell P’s goods for P10,000 cash for a commission. A sells the
goods on a 15-day credit term for P11,000 to B without authority from P. What is the right of P if he does
not ratify the sale on credit?
a. P may demand immediate payment of P11,000 from A.
b. P may demand immediate payment of P10,000 from A and A gets the excess of P1,000.
c. P may get the excess of P1,000.
d. A cannot be compelled to pay P10,000 immediately.
30. Using the same data in number 210, what is the right of P if he ratifies the sale on credit?
a. P may demand P11,000 from A immediately.
b. P may collect P11,000 upon payment of B.
c. P may only collect P10,000.
d. A shall only account P10,000 to P.
31. The following are the obligations of the principal in the contract of agency, except
a. To comply with all the obligations which the agent may have contracted within the scope of his
authority.
b. To be bound for any obligation wherein the agent exceeded his power if he ratifies such
obligation expressly or tacitly.
c. To be solidarily liable with the agent if he allowed the latter to act as though he had full powers
when the agent exceeded his authority.
d. To advance to the agent the sums necessary for the execution of the agency should the agent so
request.
e. To reimburse the agent the sums advanced by the seller even if the business or undertaking was
not successful provided that the agent is free from fault including the interest on the sum.
f. To indemnify the agent for all damages which the execution of the agency may have caused the
latter, without the fault or negligence on his part.
g. When two or more persons have appointed an agent for a common transaction or undertaking, the
principals
h. shall be jointly liable for all the consequences of the agency.
32. The following are the instances wherein the principal shall not be liable for the expenses incurred by the
agent, except
a. When the agent acted in contravention of the principal’s instructions and the principal avails
himself of the benefits derived from the contract.
b. When the expenses were due to the fault of the agent.
c. When the agent incurred them with knowledge that an unfavorable result would ensue if the
principal was not aware thereof.
d. When it was stipulated that the expenses would be borne by the agent, or that the latter would be
allowed only a certain amount.
33. What is the right of the agent over the object of the agency until the principal reimburses him for the sums
necessary for the execution of the agency which he had advanced and until the principal pays him the
indemnity for all damages in the execution of the agency?
a. Right to appropriate the property.
b. Right to sell the property.
c. Right to retain in pledge the property or legal pledge.
d. Right to destroy the property.
34. When two persons contract with regard to the same movable thing, one of them with the agent, and the
other with the principal, and the two contracts are incompatible with each other, who between the buyers
shall be preferred?
a. First possessor in good faith.
b. The buyer of the principal.
c. The buyer of the agent.
d. Person with older title.
35. When two persons contract with regard to the same immovable thing, one of them with the agent, and the
other with the principal, and the two contracts are incompatible with each other, who between the buyers
shall be preferred?
a. First registrant in good faith.
b. First possessor in good faith.
c. Buyer with older title.
d. Buyer of the principal.
e. Buyer of the agent.

LAW 105- COMPREHENSIVE FINAL EXAM Page 5

 36. The following are the modes of extinguishment of agency: (EDWARD)
a. E – Expiration of the period for which the agency was constituted.
b. D – Death, Civil interdiction, Insanity or Insolvency of the principal or agent.
c. W – Withdrawal of the agent.
d. A – Accomplishment of the object or purpose of the agency.
e. R – Revocation of the agency by the principal.
f. D – Dissolution of the firm or corporation which entrusted or accepted the agency.
37. Revocation refers to the act of the principal of terminating the agency at will. The principal may revoke
the agency at will and compel the agent to return the document evidencing the agency. The revocation
may be express or implied. The following acts are considered implied revocation, except
a. When a new agent is appointed for the same business or transaction.
b. If the principal directly manages the business entrusted to the agent, dealing directly with third
persons.
c. When a special power of attorney is granted to an agent with a general power of attorney.
d. When the principal assist the agent.
38. The following are the instances when agency may not be revoked at will, except
a. If a bilateral contract depends upon an agency.
b. If the agency is a means of fulfilling an obligation already contracted.
c. If a partner appointed a manager of a partnership in the contract of partnership and his removal
from the management is unjustifiable.
d. If the agency is for the benefit of the principal.
39. The following statements concerning revocation are true, except
a. If the agency has been entrusted for the purpose of contracting with specified persons, the
principal must give a timely notice of the revocation to such third persons.
b. If the agent had general powers, he was entrusted to contract with general public or any person,
revocation of the agency does not prejudice third persons who acted in good faith and without
knowledge of the revocation.
c. Notice of revocation of general powers in a newspaper of general circulation is sufficient warning
to third persons.
d. Revocation does not bind third persons who had knowledge thereof.
40. The following statements concerning withdrawal by the agent are true, except
a. The agent must give notice to the principal of the withdrawal.
b. The agent must indemnify the principal for any damage suffered by reason of the withdrawal.
c. The agent shall not be liable for withdrawal if it is based upon the impossibility of continuing the
performance of the agency without grave detriment to himself.
d. The agent who withdraws should not take care of the object of the agency if his reason is valid.
41. The following requisites are essential to the contracts of pledge and mortgage, except
a. That they be constituted to secure the fulfillment of a principal obligation.
b. That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged.
c. That the persons constituting the pledge or mortgage have the free disposal of their property, and
in the absence thereof, that they be legally authorized for the purpose.
d. That the thing pledged or mortgaged be placed in the possession of the creditor, or of a third
person by common agreement.
e. That when the principal obligation becomes due, the things in which the pledge or mortgage
consists may be alienated for the payment of the creditor.
42. The following are the kinds of principal obligations that may be secured by a pledge or mortgage, except
a. Pure or conditional obligations whether suspensive or resolutory
b. Natural obligations
c. Rescissible, voidable or unenforceable obligations
d. Null and void obligations
43. When is the pledgor or mortgagor required to be the owner of the thing pledged or mortgaged?
a. At the time the principal obligation is constituted.
b. At the time the pledge or mortgage is constituted.
c. At the time of the failure to pay the principal obligation.
d. At the time the thing to be pledged or mortgaged is to be delivered.
44. D borrowed P1,000,000 from C. G, a third person, mortgaged his land to secure the fulfillment of D’s
loan. Is the contract of mortgage valid?
a. No because D must be the owner of the mortgaged land.
b. Yes provided G will deliver the land to C.
c. Yes because third person may pledge or mortgage his property.
d. No because G is no privy to the contract of loan.

LAW 105- COMPREHENSIVE FINAL EXAM Page 6

 45. D borrowed P10,000 from C. To secure the fulfillment of the loan, D pledged his laptop. The contract of
pledge provides that the creditor-pledgee may appropriate the laptop upon failure of the debtor-pledgor to
pay the loan. On the date of maturity of the loan, D failed to pay the loan. Which of the following
statements is correct?
a. D becomes the owner of the laptop.
b. The laptop cannot be alienated for the payment of the loan.
c. D does not become the automatic owner of the laptop upon failure to pay the loan because that
provision is considered pactum commissorium which is contrary to law and public policy.
d. The contract of pledge is null and void because of pactum commissorium provision.
46. D borrowed P20,000 from C. To secure the fulfillment of the loan, D mortgaged a land owned by his
ailing father. Which of the following statements is correct?
a. The contract of mortgage is valid because future property may be pledged or mortgaged.
b. The contract of loan is null and void because the contract of mortgage is null and void.
c. The contract of mortgage will become valid upon the death of D’s father.
d. The contract of mortgage is null and void because the mortgagor must be the owner of the
property mortgaged at the time it is constituted.
47. ABC Inc. is the borrowed P2,000,000 from BPI. ABC Inc. is under receivership. To secure the fulfillment
of the loan, ABC mortgaged its administrative building. Which of the following statements is correct?
a. The contract of mortgage is null and void because the mortgagor has no free disposal of the thing.
b. The contract of mortgage is valid because the mortgagor is the absolute owner of the property
mortgaged at the time the mortgage is constituted.
c. The contract of mortgage is null and void because only natural person may enter in a contract of
mortgage.
d. The contract of mortgage is voidable.
48. It is a stipulation whereby the thing pledged or mortgaged shall automatically become the property of the
creditor in the event of non-payment of the debt within the term fixed.
a. Pactum creditarium
b. Pactum commissorium
c. Pactum debitarium
d. Pactum crematorium
49. The following are the instances where the thing pledged or mortgaged may be sold or alienated to pay the
principal obligation, except
a. If the pledgor or mortgagor fails to fulfill certain conditions and such violation would make the
debt due and demandable.
b. If the debtor has lost the right to make use of the period or where there is an acceleration clause in
the payment of installment.
c. Upon default to pay the obligation at maturity.
d. Before maturity of the principal obligation.
50. What is the nature of contract of pledge or mortgage?
a. A pledge or mortgage is divisible if the principal contract is joint.
b. A pledge or mortgage is indivisible if the principal contract is solidary.
c. A pledge or mortgage is divisible whether the principal contract is joint or solidary.
d. A pledge or mortgage is indivisible whether the principal contract is joint or solidary.
51. D borrowed P10,000 from C and pledged his ring and watch with P4,000 and P6,000 value respectively.
After several days, D pays P4,000 to C. Which of the following statements is correct?
a. The contract of pledge is extinguished.
b. The contract of loan is extinguished.
c. D cannot demand the release of his ring because a contract of pledge is indivisible.
d. D may compel C to return the ring because P4,000 of the loan is already paid.
52. D borrowed from C P100,000 secured by a mortgage on D’s two lots (lot 1 and lot 2). D dies leaving E
and F as heirs with E inheriting lot 1 and F lot 2. F pays P50,000 of the loan. Which of the following
statements is correct?
a. F may ask for the extinguishment of the mortgage on lot 2.
b. The contract of mortgage is extinguished.
c. The contract of loan is extinguished.
d. F cannot ask for the extinguishment of the mortgage on lot 2.
53. Using the same data in number 12, suppose it is C who dies leaving X and Y as heirs. If D pays X
P50,000, which of the following statements is correct?
a. X may cancel the mortgage to the prejudice of Y.
b. X cannot cancel the mortgage to the prejudice of Y.
c. The contract of mortgage is extinguished.
d. The contract of loan is extinguished.

LAW 105- COMPREHENSIVE FINAL EXAM Page 7

 54. D borrowed P10,000 from C and pledged his ring and watch with P4,000 and P6,000 value respectively.
They agreed that the ring will secure P4,000 of the loan and the watch will secure the balance of the loan.
After several days, D pays P4,000 to C. Which of the following statements is correct?
a. The contract of pledge on the watch is extinguished.
b. The contract of loan is fully extinguished.
c. D cannot demand the release of his ring because a contract of pledge is indivisible.
d. D may compel C to return the ring because contract of pledge on the ring is extinguished.
55. The following statements pertaining to a promise to constitute a pledge or mortgage are correct, except
a. It gives rise only to a personal action between the contracting parties.
b. The contract perfected is a real contract.
c. It creates no real right in the property but only a right to compel the fulfillment of the promise but
there is no pledge or mortgage yet.
d. The promissory will be criminally liable if he mortgages or pledges as unencumbered things
which he knew were subject to some burden
56. It is a contract by virtue of which the debtor delivers to the creditor or to a third person a movable, or
instrument evidencing incorporeal rights for the purpose of securing the fulfillment of a principal
obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions.
a. Pledge
b. Chattel mortgage
c. Real mortgage
d. Antichresis
57. The following are the characteristics of a contract of pledge, except
a. Consensual – It is perfected by mere consent.
b. Accessory – It has no independent existence of its own.
c. Unilaterial – It creates an obligation on the part of the creditor to return the thing upon the
fulfillment of the principal obligation.
d. Subsidiary – The obligation incurred does not arise until the fulfillment of the principal obligation
which is secured.
58. The following are the requisites of conventional pledge, except
a. That it be constituted to secure the fulfillment of a principal obligation.
b. That it be registered in the registry of deeds.
c. That the pledgor be the absolute owner of the thing pledged.
d. That person constituting the pledge has the free disposal of his property, and in the absence
thereof, that he be legally authorized for the purpose.
e. That the thing pledged be placed in the possession of the creditor, or a third person by common
agreement.
59. What is the nature of a contract to constitute a pledge?
a. Consensual contract
b. Real contract
c. Formal contract
60. What is the nature of a contract of pledge?
a. Consensual contract
b. Real contract
c. Formal contract
61. The following may become the object of a contract of pledge, except
a. All movable or personal property susceptible of possession.
b. Incorporeal rights which are evidenced by negotiable instruments, bill of lading, shares of stocks,
bonds, warehouse receipts and similar documents.
c. Real or immovable properties and rights thereon.
62. What is the form of contract of pledge to bind the contracting parties?
a. It must be in a private instrument.
b. It must be in a public instrument.
c. It must be registered in the registry of deeds.
d. It may be in any form because it is a real contract.
63. What is the form of contract of pledge to bind the contracting parties?
a. It must be registered in the chattel mortgage registry.
b. It must be registered in the registry of deeds.
c. It must be in a public instrument showing a description of the thing pledged and the date of the
pledge.
64. The contract of pledge shall cover the following, except
a. The thing pledge.
b. The fruits, income, dividends or interests earned or produced by the thing pledged, unless there is
stipulation excluding them.
c. The offspring, when the thing pledged is an animal, unless there is a stipulation excluding them.

LAW 105- COMPREHENSIVE FINAL EXAM Page 8

 d. The inheritance of the pledgor.
65. The following are the rights of the debtor-pledgor, except
a. To alienate, without the consent of the pledge, the thing pledged.
b. To ask that the thing pledged be judicially or extra-judicially deposited if it is used without
authority or for a purposes other than for its preservation.
c. To continue to be the owner of the thing pledged unless it is expropriated.
d. To ask for the return of the thing pledged after he has paid the debt and its interest, with expenses
in a proper case.
e. To require that the thing be deposited with a third person if it is in danger of being lost or
impaired through the negligence or willful act of the pledgee.
f. To demand the return of the thing pledged, upon offering another thing in pledge, provided the
latter is of the same kind and quality, if there are reasonable grounds to fear the construction or
impairment of the thing pledged without the fault of the pledgee. This right is without prejudice
to the right of the pledge to have the thing sold at a public sale
66. The following are the obligations of the debtor-pledgor, except
a. To pay the debt and its interest, with expenses, in a property case, when they are due.
b. To pay damages that the pledge may suffer by reason of the flaws of the thing pledged, if he was
aware of such flaws but did not advise the pledgee of the same.
c. To pay for the expenses which are not necessary for the preservation of the thing pledged.
67. The following are the rights of the creditor-pledgee, except
a. To retain in his possession the thing pledged until the debt is paid.
b. To demand reimbursement of the expenses made for the presentation of the thing pledged.
c. To bring actions which pertain to the owner of the thing pledged in order to recover it from, or
defend it against third person.
d. To use the thing pledged if he is authorized to do so, or when its use is necessary of the
preservation of the thing.
e. To cause the sale of the thing pledged at a public sale, if there is a danger of destruction,
impairment or diminution of value of the thing pledged without his fault.
f. To collect and receive the amount due if the thing pledged is a credit which becomes due before it
is redeemed, and to apply the same to the payment of his claim.
g. To sell the thing pledged upon default of the debtor.
h. To appropriate the thing pledged upon failure of debtor to pay the principal obligation.
68. Which of the following statements is correct when the pledgor sells the thing pledged with the consent of
the pledge?
a. The ownership is transmitted to the vendee or transferee upon delivery.
b. The contract of pledge is extinguished.
c. The ownership is transmitted to the vendee or transferee as soon as the pledge consents to the
alienation.
d. The thing pledged shall be delivered to the vendee.
69. The following are the obligations of creditor-pledgee, except
a. To take care of the thing pledged with the diligence of a good father of a family.
b. To be liable for the loss or deterioration of the thing pledged unless it is due to a fortuitous event.
c. To deposit the thing pledged with a third person.
d. To be responsible for the acts of his agents or employees with respect to the thing pledged.
e. Not to use the thing pledged except when he is authorized by the owner or when the use of the
thing is necessary for its preservation.
f. To deliver to the debtor the surplus after paying his claim from what he has collected on a credit
that was pledged and which has become due before it is redeemed.
70. The following are the rights of a third person who pledges his own movable property to secure debt of
another, except
a. To be indemnified by the debtor if he pays the creditor.
b. To be subrogated to all the rights of the creditor against the debtor if he pays the creditor.
c. To be released from liability in the cases provided by law.
d. To become principally liable.
71. A third person who pledges his own movable property to secure the debt of another shall be released from
liability in the following cases, except
a. If the creditor voluntarily accepts immovable or other property in payment of the debt even if the
creditor thereafter loses the same by eviction.
b. If an extension of time is granted to the debtor by the creditor without pledgor’s consent.
c. If through some act of the creditor, the pledgor cannot be subrogated to the rights, mortgages and
preferences of the creditor.
d. If the thing pledged is deteriorated on the fault of the pledgor.

LAW 105- COMPREHENSIVE FINAL EXAM Page 9

 72. If two or more things are pledged, who has the right to choose which thing will be sold in the absence of
stipulation?
a. Pledgor
b. Pledgee
c. Debtor
d. Government
73. Pledge may be extinguished directly or indirectly. The following are the modes of extinguishing the
contract of pledge directly, except
a. When the principal obligation secured by the pledged is extinguished.
b. Return by the pledge of the thing pledged to the pledgor or owner.
c. Renunciation or abandonment in writing by the pledgee of the pledge.
d. Sale of the thing pledged.
e. Appropriation of the thing pledged if the thing pledged is not sold in the first and second
auctions.
74. D owes C P5,000. The debt is secured by a pledge of G’s watch. If G pays C, which of the following
statements is correct?
a. The contract of loan cannot be extinguished by the payment of a third person.
b. The contract of pledge is not extinguished because the contract of loan is subsisting.
c. G is subrogated with the rights of the creditor.
d. G cannot recover from D.
75. Which of the following stipulation is null and void?
I. A stipulation which provides that the pledge is not extinguished by the return of the thing pledged.
II. A stipulation allowing the appropriation by the pledgee of the thing pledged in case the same is not
sold in the first and second auctions.
III. A stipulation for the recovery of deficiency in case the proceeds from the sale of the thing pledged is
less than the amount of the obligation.
a. I and III
b. II and III
c. I and II
d. I, II and III
76. If the thing is found in the possession of the pledgor or owner or if the thing is in the possession of a third
person who has received it from the pledgor or owner, which of the following is incorrect?
a. There is prima facie presumption that the contract of pledge is extinguished.
b. There is prima facie presumption that pledge returned the thing pledged.
c. There is prima facie presumption that the contact of loan is extinguished.
77. In case the cause or consideration of the contract of pledge is not stipulated, what is the cause or
consideration of a contract of pledge?
a. It has no cause or consideration.
b. The consideration of the principal obligation.
c. The cause or consideration is the liberality of the pledgor.
78. Which of the following statements is incorrect in case the pledgor renounces or abandons in writing the
pledge?
a. The contract of pledge is extinguished.
b. The acceptance by the pledgor is not necessary for extinguishing debt.
c. The pledgee becomes a depositary upon renunciation if in the meantime, the thing pledged is not
yet returned to the owner.
d. The return of the thing pledged is necessary for extinguishing the contract of pledge for this mode
of extinguishment.
79. The following are the formalities required for the sale of the thing pledged in case of failure of the debtor
to fail the principal obligation, except
a. It must be by public auction.
b. It must be through a notary public.
c. There must be a notice to the debtor and the owner of the thing pledged, stating the amount for
which the public sale is to be held.
d. It must be sold at the first auction.
80. The following persons may bid at the public auction, except
a. The pledgor or owner
b. The pledgee even if he is the only bidder
c. Third persons
81. In case the bids of the pledgor-owner, the pledgee and a third person are equal and considered the highest
bid, who shall be preferred?
a. Pledgee
b. Pledgor-owner
c. Third person
d. NONE OF THE ABOVE

LAW 105- COMPREHENSIVE FINAL EXAM Page 10

 82. What is the effect of sale at public auction of the thing pledged?
a. It does not extinguish the contract of pledge.
b. The principal obligation shall be extinguished if the proceeds of the sale are equal to the amount
of the principal obligation, interest and expenses in a proper case.
c. The principal obligation shall be extinguished if the proceeds of the sale exceed the amount of the
principal obligation, interest and expenses in a proper case.
d. The principal obligation shall be extinguished whether or not the proceeds of the sale are equal to
the amount of the principal obligation, interest and expenses in a proper case.
83. If the proceeds of the sale is more than the amount of the obligation, which of the following statements is
true?
a. The debtor-pledgor shall be entitled to the excess unless there is an agreement to the contrary.
b. The creditor-pledgee shall always be entitled to the excess.
c. The creditor-pledgee shall be entitled to the excess unless there is an agreement to the contrary.
d. The debtor-pledgor shall always be entitled to the excess.
84. If the proceeds of the sale is less than the amount of the obligation, which of the following statements is
true?
a. The debtor-pledgor shall always pay for the deficiency.
b. The creditor-pledgee cannot recover the deficiency even if stipulated.
c. The creditor-pledgee can recover deficiency only if stipulated.
d. The debtor-pledgor shall pay for the deficiency if stipulated.
85. If the thing pledged is not sold in the first and second public auctions, which of the following statements
is incorrect?
a. The creditor may appropriate the thing pledged validly.
b. The contract of pledge is extinguished.
c. The principal obligation is not extinguished.
86. Which of the following direct modes of extinguishing pledge impliedly extinguishes the principal
obligation?
I. Return by the pledgee of the thing pledged to the pledgor or owner.
II. Renunciation or abandonment in writing by the pledgee of the pledge.
III. Sale of the thing pledged.
IV. Appropriation of the thing pledged.
a. I and II
b. III and IV
c. I and III
d. II and IV
87. It is a type of pledge which refers to the right of a person to retain a thing until he receives payment of his
claim.
a. Conventional pledge
b. Voluntary pledge
c. Agreed pledge
d. Legal pledge or pledge by operation of law
88. The following are examples of legal pledge, except
a. A possessor in good faith may retain the movable upon which he has incurred necessary and
useful expenses until he has been reimbursed therefore.
b. He who has executed work upon movable has a right to retain it by way of pledge until he is paid.
c. The depositary may retain the thing deposited until the full payment of what may have been due
from him by reason of the deposit.
d. A contract by virtue of which the debtor delivers to the creditor or to a third person a movable, or
instrument evidencing incorporeal rights for the purpose of securing the fulfillment of a principal
obligation with the understanding that when the obligation is fulfilled, the thing delivered shall be
returned with all its fruits and accessions.
89. The provisions on conventional pledge on the possession, care and sale of the thing as well as on the
termination of the pledge shall be applicable to legal pledge except with respect to the sale of the thing as
follows. The following are the rules applicable to legal pledge on the sale of the thing pledged, except
a. The thing may be sold only after demand of the amount for which the thing is retained.
b. The public auction shall take place within one month after such demand.
c. If without just grounds, the creditor does not cause the public sale to be held within such period,
the debtor may require the return of the thing.
d. After payment of debt and expenses, the remainder of the price of sale shall be retained by the
pledgee-creditor.

LAW 105- COMPREHENSIVE FINAL EXAM Page 11

 90. The following are the essential requisites of a contract of real estate mortgage for its validity, except
a. That is be constituted to secure the fulfillment of a principal obligation.
b. That the mortgagor be the absolute owner of the thing pledged.
c. That the person constituting the mortgage must have the free disposal of his property, and in the
absence thereof, that he be legally authorized for the purpose.
d. That the document in which the mortgage appears be recorded in the Registry of Property.
91. The following are the important characteristics of real estate mortgage, except
a. Accessory – It cannot exist without a principal obligation.
b. Indivisible – It creates a lien on the whole or all of the properties mortgaged, which lien continues
until the obligation is secures has been fully paid.
c. Inseparable – It subjects the property upon which it is imposed, whoever the possessor may be, to
the fulfillment of the obligation for whose security it was constituted.
d. Real right – It creates a lien on the property mortgaged.
e. Real contract – It is perfected by the delivery of the thing mortgaged.
92. Which of the following statements pertain to equitable mortgage?
a. It is one which is created by the agreement of the parties.
b. It is one executed pursuant, to an express requirement of a provision of law.
c. It is one which although lacks certain formality, form or words or other requisites provided by
statute, shows the intention of the parties to charge the real property as a security for a debt and
contains nothing contrary to law.
93. The following may become object of contract of real estate mortgage, except
a. Immovable property
b. Rights on immovable property
c. Personal property
94. Which of the following statements concerning formalities of real estate mortgage is incorrect?
a. The real mortgage may be in any form to be valid since it is a consensual contract.
b. The real mortgage must be in a public instrument for the convenience of the parties but not for
validity.
c. The real mortgage must be registered in the Registry of Property to bind third persons.
d. The real mortgage must be in writing to be valid since it is a formal contract.
95. The real estate mortgage shall cover the following (R-I-N-G-I-R)
a. Real property mortgaged
b. Improvements
c. Natural accessions
d. Growing fruits
e. Indemnity granted or owing to the proprietor from the insurers of the property mortgaged or in
virtue of expropriations for public use.
f. Rents and income not yet received when the obligation becomes due
96. The following stipulations concerning real estate mortgage are null and void, except
a. A stipulation forbidding the owner from alienating the immovable mortgaged.
b. A stipulation providing that the mortgagee shall become the automatic owner of the property
mortgaged upon failure of the debtor to pay the principal obligation.
c. Tipo or upset price which refers to price set by the parties as the amount at which the property at
which the property will be sold at public auction.
d. A stipulation prohibiting a second mortgage with respect to property registered under the Torrens
System.
97. It refers to the remedy available to the mortgagee by which he subjects the property mortgaged to the
satisfaction of the obligation secured when the principal obligation is not paid when due or when there is
any violation of any condition, stipulation or warranty by the mortgagor.
a. Dation en pago
b. Foreclosure
c. Novation
d. Compensation
98. It is a type of foreclosure made through the filling of a petition in court.
a. Legal foreclosure
b. Conventional foreclosure
c. Judicial foreclosure
d. Extra-judicial foreclosure

LAW 105- COMPREHENSIVE FINAL EXAM Page 12

 99. It is foreclosure made in compliance with Act No. 3135 and available when there is a stipulation in the
mortgage contract that the mortgage may be foreclosed or when such foreclosure sale is made under a
special power of inserted in the contract.
a. Legal foreclosure
b. Conventional foreclosure
c. Judicial foreclosure
d. Extra-judicial foreclosure

100. Indicate the proper order on how the proceeds of sale from judicial or extrajudicial foreclosure
shall be distributed:
I. Cost of sale.
II. Claim of the person foreclosing the mortgage.
III. Claims of junior encumbrances in the order of their priority.
IV. Mortgagor or his agent.
a. I – II – III – IV
b. I – III – II – IV
c. II – I – IV – III
d. III – II – I – IV

***************************************************************************************
Goodluck and Godbless!!!
THE END JUSTIFIES THE MEANS.
----Good Luck and God Bless ! .---
----“Do not settle for less. Always aim for the best.”-
******************************************END ******************************************

Prepared by: Reviewed by:

Asst. Prof. ARNOLD Q. MALALUAN Asst. Prof. MONETTE M. SOQUIAT

Course Instructor Associate Dean, CABE

Approved by:

DR. NERRIE E. MALALUAN

Dean of Colleges

LAW 105- COMPREHENSIVE FINAL EXAM Page 13

 Republic of the Philippines
BATANGAS STATE UNIVERSITY LIPA CITY
COLLEGE OF ACCCOUNTANCY, BUSINESS AND ECONOMICS
Marawoy, Lipa City
Tel. No. (043) 774-2526
COMPREHENSIVE FINAL EXAMINATION
LAW 105-LAW ON SALES, AGENCY AND CREDIT TRANSACTIONS
Second Semester, AY 2019 – 2020

ANSWER SHEET
Student Name: S
RAW PERCENTAGE
SCORE
C
Course and Section Last Name First Middle Initial O
TOTAL
DateName
of Examination R ITEMS
E

Month Day
Year
TEST I. MULTIPLE CHOICE: Write only the letter of the correct answer.
PLEASE USE CAPITAL LETTER. (1 POINT EACH= 100 POINTS)

1. 11. 21. 31. 41.

2. 12. 22. 32. 42.
3. 13. 23. 33. 43.
4. 14. 24. 34. 44.
5. 15 25. 35. 45.
6. 16. 26. 36. 46.
7. 1. 27. 37. 47.
8. 18. 28. 38. 48.
9. 19. 29. 39. 49.
10. 20. 30. 40. 50.

CONTINUATION::::
51. 61. 71. 81. 91.
52. 62. 72. 82. 92.
53. 63. 73. 83. 93.
54. 64. 74. 84. 94.
55 65. 75. 85 95.
56. 66. 76. 86. 96.
57. 67. 77. 87. 97.
58. 68. 78. 88. 98.
59. 69. 79. 89. 99.
60. 70. 80. 90. 100.

_________________________________
Student Signature over Printed Name
____________________________
Asst. Prof. ARNOLD QUINTO MALALUAN,
MBA, MPA, MICB, REB, RCA.LPT, CMITAP, SPBE

LAW 105- COMPREHENSIVE FINAL EXAM Page 14

 Course Instructor

LAW 105- COMPREHENSIVE FINAL EXAM Page 15