CPA REVIEW SCH201 OF THE PHILIPPINES REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS: COVERAGE: A. Contract of Pledge, Real Mortgage, Chattel Mortgage, Other Credit Transactions and Agency pisses Read and select the best answer for the following questions. The following requisites are esential ode cont of pede real ele mortgage and chal morgage, except a. That they be constituted to secure the fulfillment ofa principal obligation such as contract of loan. b. That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged. ©. 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. 4. That when the principa: obligation becomes due, the things in which the pledge or mortgage consists may be alienated for the payment ofthe creditor. ©. That the thing pledged or mortgaged be placed in the possession of the creditor, or of a third person by common agreement. 2. The following are the kids of principal obligations that may be secured by a contracts of pledge, of real estate mortgage oof catel morgage, except Pure obligations. Conditional obligations whether suspensive condition or resclutory condition with a period whether susponsive period (ex die) or resolutory period (in diem) Natural obligations Res ible obligations Unenforceable obi Null and void obligations When is the pledgor or moitgagor required tc be the owner of the thing pledged or mortgaged for the validity of contracts of pledge, of rea! estate mortgage or of chattel mortgage? ‘8, Atthe time the principat obligation is constituted. b. Attthe time the cor.tract of piedge or mortgage is constituted. ¢. Atthe time of the failurs to pay the principal obligation. d. Atthe time the thing to be pisdged or mortgayed is to be delivered. Prop ange 4. 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 m: b. Yes prided G will deliv c. Yes because third perser:s or mortgaging their own property. 4. No because G is na privy 10 the contract of loan, D borrowed P20,000 fim, C. To secure the fulfillment of the loan, D mortgaged a land owned by his ailing father. Which of the following staternents is enrrect? 2. The contract of srortgage is valid because future property may be pledged or mortgaged. b. The contrast of Joan is aull and void because the contract of mortgage is null and void. ©. The contract of monyage will become valid upon the death of D's father. d. The contract of rorigege is null and void because the mortgagor must be the owner of the property mortgaged at the time it is constizuted bit the contract of loan remains to be valid. s ABC Inc. borrowed P2,000,000 trom BPI. ABC Inc. is under receivership. To secure the fulfillment of the loan, ‘ABC mortgaged its udminisiraiive building. Which of the following statements is correct? ‘a. The contract of racitgage is nul! and void becatse tie mortgagor has no free disposal of the thing. b. The contract of mortgage is valid Sess the mortgagor is the absolute owner of the property mortgaged at the time the mortgaze is ¢ c. The contract of morgage is nu mortgage d. The contract of mortgage is voidable. 7. Ibis stipulation whersby the thing pledged or mortgaged shall autcmatically become the property of the creditor in the event of non-payment of the debt within the term fixed. a. Pactum credit b. Pactum commissoriuct ¢. Pactum debitarivm d. Pactum crematorium a Tt Wb sly pera mayer; oooeast CRAR.— Begulatory Framework for Business Trancactions RFBT 8603 Page 1 of 208. 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 ofthe loan, D failed to pay the loan. Which ofthe following statements is correct? a. C becomes the owner of the laptop. \. The laptop cannot be alienated for the payment of the loan. ©. C does not become the automatic owner of the laptop upon D's failure to pay the loan because that provision is considered pactum commissorium which is contrary to law and public policy. 4. The contract of pledge is null and void because of pactum commissorium provision. 9. D borrowed P10,000 from C. To secure the fulfillment ofthe loan, D pledged his laptop. On the date of maturity of the loan, D failed to pay the loan. As a result, D and C agreed that the pledged laptop shall be owned by C in full satisfaction of the secured contract of loan. Which of the following statements js correct? 4. C becomes the owner ofthe laptop by reason of dacion en pego which is govemed by Law on Sales. b. The laptop cannot be alienated for the payment of the loan. . ©. C does not become the automatic owner of the laptop upon D's failure to pay the loan because their subsequent agreement is considered pactum commissorium which is contrary to law and public policy. 4. Their subsequent agreement for the payment of the loan shall be governed by Iaw on obligation because that is a novation. 10. The following are the instances where the thing pledged or mortgaged may be sold or alienated to pay the principal obligation, except 12. Ifthe pledgor or mortgagor fails to fulfil certain conditions and such violation would make the debt due ‘and demandable. b. Ifthe 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. 4. Before maturity of the principal obligation. ofa contract of pledge, of chattel mortgage, of real estate mortgage or of antichresis? ible ifthe principal contract is joint. le if the principal contract is solidary. le whether the principal contract is joint or solidary. indivisible whether the principal contract is joint or solidary. 11. What is the 12. D borrowed P10,000 from C and pledged his ring and watch with P4,000 and 6,000 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. 4. Dmay compel C to retum the ring because P4,000 of the loan is already paid. 13. D borrowed from C P100,000 secured by a mortgage on D's two Tots (lot | and lot 2). D dies leaving E and F as heirs with E inheriting lot | and F lot 2. F pays P50,000 of the loan. Which of the following statements is correct? 2. Fmay ask for the extinguishment of the mortgage on lot 2. b. The contract of mortgage is extinguished. ¢. The contract of loan is extinguished. 4. F cannot ask forthe extinguishment of the mortgage on lot 2. 14. Using the same data in preceding number, 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? 2. 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. \d watch with P4,000 and P6,000 value respectively. They 15. D borrowed P10,000 from C and pledged his ring anc ‘the balance of the loan. After several agreed thatthe ring will secure P4,000 of the loan and the watch will secure days, D peys P4,000 to C. Which of the following statements is correct? ‘2. The contract of pledge on the watch is extinguished. b. The contract of loan is fully extinguished. ¢. Deannot demand the release of his ring because a contract of pledge is indivisible. 4. Dimay compel C to retum the ring because contract of pledge on the ring is extingui (CRAR = Regulatory Framework for Business Transactions RFBT 8603 Page 2 of 2016. A and B jointly borrowed P10,000 from C. In order to secure their respective obligations, A pledged his cellphone whils B pledged his iaptop. At the maturity date of the loan, A paid PS,000 of the loan. Which of the following Statements is corres? 8. The contract of pledge on the cellphone is extinguished. b. The obligation of B is extinguished. €. Accannot demand the release of his cellphone because a contract of pledge is indivisible. 4. The contract of pledge on the laptop is extinguished. 11. A and B jointly borrowed P10,000 from C. In order to secure the obligation, A pledged his cellphone while B pledged his laptop, At the maturity date of the loan, A paid PS,000 of the loan. Which of the following statements is correct? a, The contract of pledge on the cellphone is extinguished. b. The obligation of B is extinguished, ©. A.cannot demand the release of his cellphione because a contract of pledge is indivisible. 4. The contract of pledge on the laptop is extinguished, 18 Itis a contract by virtue of which the debtor delivers tothe creditor or toa third person a movable, or instrument evidencing incorporeal rights for the purpose of securing the ‘ulfiliment of a principal obligation with the ‘understanding that when the obligation is fulfilled, the thing delivered shall be retumed with all its fruits and accessions. a. Contract of Pledge b. Contract of Chattel mortgage €. Contract of Real estate mortgage d. Contract of Antichresis 19. 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? 2, Ithas no cause or consideration. 'b, The cause o1 consideration of the principal obligation or contract of loan, ¢. The cause or consideration is the liberality of the pledgor. 4d. The cause is the service remenerated. 20. The following are the chavacteristics of a contract of pledge, except a. Consensual — It is perfecied hy mere consent. b. Accessory It has no independent existence of its own because there must be contract of loan. ©. Unilaterial - Ut creaves an obligation on the part of the creditor to return the thing upon the fulfillment of the principat cbligation. d. Subsidiary - The obiigation incurred does not arise unti! the fulfillment of the Principal obligation which is secured, 21. The following are the essential requisites of conventional pledge or con‘ract of pledge, except a. Thatit be constiiuted to secure the fulfillment of a principal cbligation or contract of loan, b. That the pledger be the absolute cwmmer of the thing pledged ©. That person constituting the pledge has the free disposal of his property, and in the absence thereof, that he be fegally authorized fer the purpose. 4. That the shing pledged be placed ‘n the possession of the ereditor, ora third person by common agreement or there must be delivery uf the thing pledged. ©. That the contrac: of pledge be constituted in public document. 22. What is the nature of a contract to constitute a pledge? a. Consensual contract b. Real centract ©. Formal consact 4. Solemn contrant 23. What is the legal effect of a promise or contract to constitute a pledge? a. Itis pertectea by delivery of she thing pledge. . B. Its perfected though the aotarization of the promise. © Itis perfected by mere conseat and gives rise only 12 a personsi action between the contracting parties, It gives rise to 2 real accion over the thing pledged, 24. The following statemenis pertaizing to 2 promise to constitute a pledge or mortgage are corect, except a. It gives rise only to a personal action between the contracting parts. b. The contract perfected is x real contract. €. It ereates no real right in the preperey but cnly & right to compet the fulfillment of the promise but there is no contract of pledge or contract of morgage yet. +d The promissor will be criminally tiable if he mortgages or pledges as unencumbered things which he Knew were subject to some burden, CRAR Segulatory Framework for Gusiness Transactions — RFBT B603 Page 3 of 2025. What is the nature of a contract of pledge? Consensual contract Real contract Formal contract Solemn contract aoe 26. The following may become the object ofa contact of pledge, except All movable B. Peronal property susceptible of possession. ©. Incorporeal rights which are evidenced by negotiable instruments, bill of lading, shares of stocks, bonds, warehouse receipts and similar documents. 4. Real or immovable properties and rights thereon. 27. What is the form of contract of pledge to bind the contracting parties? 8. It must be in a private instrument. b. Itmust be in a public instrument. ¢. Itmust be registered in the registry of deeds. 4. Itmay be in any form because it is areal contract. 28. What is the form of contract of pledge to bind or to affect third persons? a. It must be registered in the chattel mortgage registry. b. Itmmust be registered in the registry of deeds. ¢. It must be in a public instrument showing a description of the thing pledged and the date of the pledge. d. It must be recorded in the Intellectual Property Office. 29. The contract of pledge shall cover the following, except a. The thing pledged. 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. 4. The future inheritance of the pledgor. 30. The fallawing are the rights of the debtor-pledgor, except ‘a. Toalienate, with the consent of the pledgee, the thing pledged. b. Tocontinue to be the owner of the thing pledged unless itis expropriated. ¢, To become the owner of the offspring of the animal pledged if there is no stipulation to the contrary but such offspring shall be subject to the pledge. 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. ¢. 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. f. 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 pledge. 8 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 destruction or impairment of the thing pledged without the fault of the pledgee. This right is without prejudice to the right of the pledgee to have the thing sold at a public sale. h. To demand the retum of the thing pledged despite defaulting on the payment of the secured principal obligation. 31. In case the thing pledged is alienated by the debtor-pledgor to third person, what is the effect of the consent of the pledgee to the alienation made by the pledgor of the thing pledged to third person? 1. The thing pledged remains to be owned by the debtor-pledgor . The ownership of the thing pledged is transmitted to the buyer. ¢. The creditor-pledgee loses possession of the thing pledged. 4. The contract of pledge is already extinguished. 32. What is the remedy of the pledgor-debtor if the pledgee-creditor use the thing pledged, without the authority of the owner or should misuse the thing in any other way? a. Toask that it be judicially or extra-judicially deposited. b. Toask for the retum of the thing pledged. ¢. Toask for the extinguishment of the contract of pledge. 4. To ask for the extinguishment of the contract of loan. IR— Regulatory Framework for Business Transactions RFBT 8603 Page 4 0f 2033. What is the remedy of the pledgor-owner if the thing pledged is in danger of being lost or impaired through the egligent or willful act of the plulyec? 8. To require that it be deposited with a third person, b. Toask for the retum of the thing pledged. ¢. Toask for the extinguishment ofthe contract of pledge. 4. Toask forthe extinguishment ofthe contract of loan. 34. What is the remedy of the pledgor-ownet if there are reasonable grounds to fear the destruction or impairment of the thing pledged. without the ful of the pledgee? 8. To ask for the return of the thing, upon offering another thing in pledge, provided the latter is of the same kkind as the former and not of inferior quality but subject to the right of the pledgee to sell the said pledged item in public avetion, b. Torequire that it be deposited with a third person. ©. Toask for the extinguishment of the contract of pledge, 4. Toask for the extinguishment of the contract of loan, 35. If there are reasonable grounds to fear the destruction or impairment of the thing pledged, without the fault of the pledge, which is correct? a. The pledgor-owner may ask for the return cf the thing, upon offering another thing in pledged, provided the latter is of the same kind as the former and not of inferior quality even it is already sold in public auction by the pledgee-creditor. b. The pledgee-creditor may cause the sale of the thing pledged at a public sale and the proceeds of the auction shall be a security for the principal obligation in the same manner as the thing originally pledged. However, the pledgee is bound to advise the pledgor, without delay, of any danger to the thing pledged. ¢. The right of the pledgor-owner is superior to tne right of the pledgee-creditor. 4. The contract uf pledge is extinguished by the sale of the thing pledged in the public auction. 36. 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 pledgee may suffe: by reason of the flaws of the thing pledged, if he was aware of such flaws but he did not advise the pledgee of the same. ©. To pay for the expenses which are necessary for the preservation of the thing pledged, d. To warrant the thing pledged for its quality and merchantability. 37. The following are the rights of the creditor-pledges, except a. Terretain in his possession the thing pledged until the debt is paid. b. To demand reimoursement of the expenses made for the preservation of the thing pledged. €. To bring acticns which pertain to the owner of the thing pledged in order to recover it from, or defend it against third person. 4. To use the thing pledged if he is authorized to do s0, or when its use is necessary of the preservation of the thing. €. To cause the sule 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. The pledgee is bound to advise the pledgor, without delay, of an: danger wo the thing pledged. To collect and rective the arcouat due if the thing pledged is a credit which becomes due before it is redeemed, ari! to apply ihe same to the payment of his clait 8 Ifthe pledge zams or produces fiuits, income, dividends, or interests, the creditor shall compensate what he receives with thuse which are owing him; but if none are owing him, or insofar as the amount may exceed that which is due, he shati apply it to the principal. Unless there is a stipulation to the contrary, the pledge stall extend to the interest and earnings of the right pledged. h. Toseli the thing pledged upon cefach of the debtor i, Toapprepziate the thing piedged in case the thing pledged is aot sold in first and second public auctions, 4. To become the automatic owner the thing pledged upoa first default of debtor to pay the principal obligation at maturity date, By 38. The following are the obigaticns of ersditor-pledgee, except a. Te take care othe :hing pledgee with the diligence of a good futher of a family. b. To be liable fur the ‘oss or deterioration of the thing pledged unless it is due to a fortuitous event. ‘. a. ‘ale forthe acts of his agen's or employes with respect to the thing pledged. Not 10 use she thing pledged except when he is authorized by the owner or when the use of the thing is necessary tor ts preservation. ©. To deiiver to the debtor the surpit.s after paying his clsim from what he has collected on a credit that was pledged and which has become due Lefeve it is redeemed. f. To deposit ke thing piedged with a third person even not authorized by the court. CPAR- Regulatory Framework for‘Eusiness Tranzacioas REBT 8603 Page 5 of 2039. The following are the rights of a third person who pledges his own movable property to secure debt of another, except 8. Tobe indemnified by the debtor if he pays the creditor. b. Tobe subrogated to all the rights ofthe creditor against the debtor if he pays the creditor. © Tobe released from lisbility in the cases provided by law. d. To become principally liable. 40. Grace obtained « loan from Jojo in the amount of PIM with Mar serving as guarantor. Rody pledged his cellphone to secure the debt of Grace. If Rody pays the P1M loan of Grace, which is correct? ‘8. There will be no legal subrogation if Grace does not consent to the payment of Rody. 'b. Rody cannot collect the P1M from Grace if the latter does not consent to the payment of Rody. . Rody can collect the PIM from Mar if Grace will not be able to pay Rody. 4. Mar is not liable to Rody. 41. A third person who pledges his own movable property to secure the debt of another shall be released from liability in the following cases and may ask for the retum of the thing pledge from the pledgee, 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. Ifan extension of time is granted to the debtor by the creditor without pledgor’s consent. ©. If through some act of the creditor, the pledgor cannot be subrogated to the rights, mortgages and preferences of the creditor. J. Ifthe thing pledged is deteriorated on the fault of the pledge. . Ifthe debtor defaults in the payment of principal obligation on the maturity date, 42. 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. Pledge ©. Debtor 4. Government . Pledge may be extinguished directly or indirectly. The following are the modes of extinguishing the contract of pledge directly, except ‘When the principal obligation secured by the pledged is extinguished. . Retum by the pledgee of the thing pledged to the pledgor or owner. . Renunciation or abandonment in writing by the pledgee of the pledge. Sale of the thing pledged regardless of the net proceeds. ‘Appropriation of the thing pledged by the pledgee if the thing pledged is not sold in the first and second auctions. e 4 eaoerp 44, Which of the following direct modes of extinguishing contract of pledge impliedly extinguish the principal obligation or contract of loan? Retum by the pledgee of the thing pledged to the pledgor or owner. Renunciation or abandonment in writing by the pledgee of the contract of pledge. Sale of the thing pledged in public auction in case of default by debtor regardless of the amount of the net roceeds of sale. ‘Appropriation ofthe thing pledged by the pledgee in case the thing pledged isnot sold in the first and second public auctions. a. Tend b. MandIV ©. Tend Il d. Wand IV 45, Which of the following direct modes of extinguishing contract of pledge do not impliedly extinguish the principal obligation or contract of loan? 1. Retumby the pledge of the thing pledged to the pledgor or owner. IL. _ Renunciation or abandonment in writing by the pledgee of the contract of pledge. Il. Sale of the thing pledged in public auction in case of default by debtor regardless of the amount of the net Vv. 2 HBr proceeds of sale. . ‘Appropriation ofthe thing pledged by the pledgee in case the thing pledged is not sold in the first and second public auctions. . a, Tand ll b. DlandIV c. [and I 4. Wand IV CAR Regulatory Framework for Business Transactions RFBT 8603 Page 6 of 20“. Which ofthe following stipulations in a contact of plodge is mall and void? A slipulation 1¢ vontreci of pledge is uct extinguished by the retum of the thing pledged, i. 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. M1 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. Vand It b. Wand It c. Lard It 4. i, Mand IL 47. Ifthe thing is found in the possession of the pledgor or owner or if the thing is in the possession of a ‘who has received it from the pledgor or owner, which of tne following is Incorrect? ‘8. There is prima facie presumption that the contract of pledge is extinguished. b. There is prima facie presumption thet pledgee retumed the thing pledged. ©. There is prima facie presumption that the contact of Ican is extinguished. 48. Which of the following statements is incorrect in caso the pledge renounces or abandons in writing the contract oflede? 2. The contract of pledge ‘s extinguished bat the contract of loan remains. b. The acceptance by the pledgor is not necessary for extinguishing contract of pledge. ©. The pledgee becomes a depesitary upon renunciation if in the meantime, the thing pledged is not yet returned to the owner, 4. The return of the thing pledged is necessary for extinguishing the contract of pledge for this mode of contract of pledge extinguishment. 49. The following are the formalities required for the sale of the thing pledged in case of failure of the debtor to pay the principal obligation, except a It must be by public auction, b, It must be through a nctsry public. ¢. There mast be # notice (o the debtor and the ownor of the thing pledged, slating the amount for which the public sale is te be held. 4. The thing pledged must be sold by tho pledgee at the first auction only. 50. Sale of pledged personal property in contract of pledze shall be made in 8. Public austion or fate only b,. Private waction ot sele only public suction or sete urdess there is agreement for private auction or sale vate auction or sale unless there is aprevmuent for public auction or sale 51. The following persous may bid at the public avetion, except a. The plaigor cr owner 'b. The peogte if there are cther bidders Third persons 4. The pledgee even if he is the onty bidder ‘52. 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 among, thera? a, Pledgee b. Piedgor-owner ©, Third persea 53. What is the effect of sale at putlic auctic 4. Itdoes not extinguish the contcnct of pledge. b. The contact of pledge urd princi ecact of lan cBignion shall be enguised if ho pocaods of the sale ure cqual to the amount af prinsipal obligation, interest and expenses in a proper: ¢. The contiast of pledge and princi joneontract of loan shall be tinguished if th the proceeds of the sale exceed the amount of the bene obligation, interest and expenses in a proper case. 4, The coairact of pledge an¢ principal obligstion‘contract of loan shell be extinguished whether or not the proceeds of the sale ars equal to the emount of the principal cbligetion, interest and expenses in a proper case. of the thing pledged? 54, Ifthe proceeds of the sale of the thing pledzed in conventional pledge is more than the amount of the obligation, which of the following stute:nents is true? ‘a The debtor-pledgor shall be entitled to fhe excess unless there is an agreement to the contrary. b. The creditor-pledgee stall always be eniitied to the excess. + & Thecreditor-pledges shalt be entitled to tho excess unless there is an agroement to the contrary. €. The debtor-rledgor shail alweys be entitled iv the excess. Se CPAR- Reguletory Framework for Basiness Transactions RFBT 6603 Page 7 of 2055. If the proceeds of the sale of the thing pledged in conventional pledge is less than the amount of the obligation, which of the following statements is true? 4. Thedebtor-pledgor shall always pay for the deficiency. b. Thecreditor-pledgee cannot recover the deficiency even if stipulated. ©. The creditor-pledgee can recover deficiency only if stipulated. 4. The debtor-pledgor shall pay forthe deficiency if stipulated. $6. If the thing pledged is not sold in the first and second public auctions, which of the following statements is incorrect in case of appropriation by the pledge of the thing pledged? ‘The creditor may appropriate the thing pledged validly. b. The contract of pledge is extinguished if the creditor decided to appropriate the thing pledged. ¢, The principal obligation/contract of loan is not extinguished if the ereditor decided to appropriate the thing pledged. 57. DLSU pledged its notes receivable from a parent fo factor on January 1, 2016 with remaining term of 30 days or maturity date of January 31, 2016. The face value of the notes receivable is 1,000,000 with maturity value of 1,200,000. The notes receivable is pledged for a note payable of P1,100,000 inclusive of interest. If the factor- pledgee collects the P1,200,000 from the parent on January 31, 2016, who shall be entitled for the excess of 100,000? 4. DLSU, the pledgor-debtor b. Parent ¢. Factor, the pledgee-creditor 4, None of the above 58. Itis a type of pledge which refers to the right of a person to retain a thing until he receives payment of his claim. Conventional pledge b. Voluntary pledge c. Agreed pledge 4. Legal pledge or pledge by operation of law 59, The following are examples of legal pledge, except ‘a. A possessor in good faith may retain the movable upon which he has incured 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. ¢. The depositary may retain the thing deposited until the full payment of what may have been due from him by reason of the deposit. 4. A contract by virtue of which the deblor 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. 60. 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 1. 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. 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. 4. In case there is deficiency from the public sale, the pledgee-creditor may still recover the deficiency even if not stipulated, . After payment of debt and expenses, the remainder of the price of sale shall be retained by the pledgee- creditor. 61. In case of legal pledge or pledge by operation of law, if the thing held in pledged by operation of law is sold by the creditor in public auction resulting to excess, who shall be entitled to the excess? a. The debtor/owner of the thing sold even if not stipulated. b. The creditor or foreclosing party if stipulated. ©. The creditor or foreclosing party even if not stipulated. d. The debtor/owner of the thing sold only if stipulated. 62. In case of legal pledge or pledge by operation of law, if the thing held in pledged by operation of law is sold by the creditor in public auction resulting to deficiency, may there be recovery of deficiency by the creditor? a. Noeven if stipulated because any stipulation for recovery of deficiency in of pledge is void. b. Yes even if not stipulated. : . Yes but it must be stipulated by the contracting parties. 4, No because it is pledged by operation of law. COAR Regulatory Framework for Business Transactions RFBT 8603third person secures to the creditor the fulfillment of a principal obligation, curity immovable property or real rights over immovable property in case the lied with atthe time stipulated, a. Real estate mortgage b. Chattel mortgage ©. Pledge d. Antichresis 64, The following are the essential requisites of a contract of real estate mortgage for its validity, except ‘8. That it be constituced to secure the fulfillment of a principal obligation. b, That the mortgagor be the absolute owner of the thing mortgaged, ¢. 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. 4. That the document in which the mortgage appears be recorded in the Registry of P : 65. The following are the important characteristics of contract of real este mortgage, except a. Accessory — It cannot exist without a principal obligation, ible - It creates a tien on the whole or all of the properties rnortgaged, which lien continues until ation is secures has heen fully paid, c, Inseparable ~ It subjects the property upca which it is imposed, whoever the wig wa fulfillmens of the obligation for whose security it was constituted. , 4. Real right - It creates alien on the property mortgaged fe, Real contract —Itis perfected by the delivery of the thing mortgaged. 66. Which of the following staternents pertains (o equitable mortgage? a. Itis one which is created by the agreement of the parties. b. Itis one executed pursuant, to un express requirement of a provision of law. ¢, It is one which although lacks certain formality, form or words or other requisites provided by statute, shows the intention of the pasties to charge the real property as a security for a debt and contains nothing contrary to law. 67. The following may become object of contract of real estate mortgage, except 8, Immovable property b. Real property 4a. (68. What is the status of contract of real estate mortgage if the property covered as collateral is a personal property instead of real prnpesty? a. The contract of real estate mortgage is always void because the subject matter of real estate mortgage is immovat le property b. The conmact of real estate mortgage mey be valid as to the contracting parties on the basis of doctrine of estoppel tut the chird person dircely affected ny ssid veid contract may ask for its declaration of nullity. ¢. The contract of real estare mortgage wil be valid to both contracting perties and even third persons. 4. Third persons who are not dicestly affected by the real estate mortgage may ask for the declaration of nullity ofzhe realestate mortgage contract. 69, Which of the following statements concerning formalities of real estate mortgage is incorrect? 8, The real mortgage may be in any Yorm to be velid since it is a consensual contract, bb. The real mortgage must be in a public instrament for the convenience of tne parties but not for validity. ¢. The real mortgage must be registered in the Regisiry of Property to bind third persons. 4. The real mortgage must be in writing to be valid sizee it is a formal contact. 70, The contract of real estate mortgage shall cover the following (R-I-N-G-I-R), except Real property raorlgaged Improvements . Natural accessions . Growing iraits , Indenmity granted or owing to the proprietor {roma the insurers of the property mortgaged or in virtue of cexpropriations for public use. Reats and income nit yer eceived when the obligation becomes due g Future inheritance of the morsgage peer ee CRAR- Regulatory Framework for Gusmess Transactions RFT 8603 Page 9 of 2071. The following stipulations ‘conceming real estate mortgage are null and void, except ®. 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. ©. 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. 4. A stipulation prohibiting a second mortgage with respect to property registered under the Torrens System. 72. It refers to the right of mortgagor to redeem the mortgaged property after his default of the performance of his obligation by paying the obligation but before the property is sold in order to prevent the public sale. 8. Equity of redemption b. Right of redemption ©. Right of preemption 4. Equity of preemption 73. It refers to the right of the mortgagor to repurchase the property within a certain period after it was sold in public suction for the payment of the mortgage debt. 8. Equity of redemption b. Right of redemption ©. Rightof preemption 4. Equity of preemption 74, Tt 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 ©. Novation 4. Compensation 75. It is a type of foreclosure made through the filling of a petition in court under Rule 68 of Rules of Court and availed of when the deed of real estate mortgage does not provide for special power of attorney (SPA) authorizing the mortgagee-creditor to foreclosure it extrajudicially. a. Legal foreclosure b. Conventional foreclosure ¢. Judicial foreclosure 4. Extra-judicial foreclosure 76. In case of judicial foreclosure, if upon the trial in such action the court shall find the facts set forth in the complaint io be true, it shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interest and other charges as approved by the court, and costs, and shall render judgment for the sum $0 found due and order that the same be paid to the court or to the judgment obligee. This is known as equity of redemption of judgment debtor and the amount shall be paid by the judgment debtor. What is the period for exercise of equity of redemption in case of judicial foreclosure? a. Within a period of not less than 90 days nor more than 120 days from the entry of judgment. 'b, Within a period of not less than 1 year nor more than 2 years from the entry of judgment. ¢. Within a period of not less than 90 days nor more than 1 year from the entry of judgment. 4. Within a period of not less than 120 days nor more than 1 year days from the entry of judgment. 77. In case the judgment debtor in judicial foreclosure failed to exercise his equity of redemption, the property shall ‘be ordered by the trial court to be sold at public auction. In such a case, the foreclosure sale, generally, when ‘confirmed by an order of the court, shall operate to divest the rights of all the parties to the action and to vest their rights in the purchaser. May the judgment debtor still redeem the property already foreclosed and sold in public auction? 1. Yes because he has right of redemption which is 1 year from the confirmation ofthe sale. , Nohe can never redeem the property because the equity of redemption bas already expired. . Yes because he can exercise his equity of redemption even beyond the 90 days from entry of judgment or even after the foreclosure sale itself es long as itis prior to the court's order of confirmation of the sale. 4. Yes because his right of redemption is not subject to a period. 78, Is the right of redemption available to the judgment debtor in case of judicial foreclosure? a. Yes inall instances. b. No except in those cases provided by special laws, ©, No in all instances. ._ Yes except in those cases provided by special laws. en CRAR— Regulatory Framework for Business Transactions RFBT 8603 Page 10 of 2079. Uncer Section 47 of RA 8791 (General Banking Laws), in the event of foreclosure made by banks, whether Judicially or extrojudicially, af any mortgege on recl estate which is security for any loan or other credit accommodation granted, the mortgagor or debtor whose real property has been sold for the full or partial payment of his obligation shall have the right of redemption. What is the period for exercise of right of redemption in case i foreclosure made by banks? 2. within one year after the sale of the real estate, b. within 90 days after the sale of the roal estate, © within 6 months year after the sale of the real estate. 4. within 2 years after the sale of the real estate, 80. Itis a type of foreclosure made in compliance with Act No. 3135 and available when there is a stipulation in the ‘Mortgage contract thal the mortgage may be foreclosed extrajudicially or when such foreclosure sale is made under a special power of attomey inserted in the contract authorizing foreclosing extrajudicially. a. Legal foreclosure b. Conventional foreclosure 81. When a real property is foreclosed and sold under Act No. 3135 in case of extrajudicial forectosure of Real Estate Mortgage, the public auction sale shall be made at the 8, Province where the property is situated b. Domicile of the morigagor ¢. Domicile of the mortgagee 4. Atany place in the Philippine 82. In all cases of extrajudicial sale made under Act No. 3135 or extrajudicial foreclosure, the following persons may redeem the real property sold in the public auction, except a, Debtor-mongagor b. Successor in interest of debtor-mortgagor ¢. Judgment creditor of the debtor-mortgagor 4. Any person having e lien on the real property sold subsequent to the mortgagee or deed of trust ©. Any third person 83. Sale of foreclosed real property in contract of real estate mortgage shall be made in a. Public avetion or sale only .. Private auction or sale only ©. Generally public auction or sale unless there is agreement for private auction or sale 4. Generally private auction or sale uniess there is agreement for public auction or sale 84, In case of extrajudicin! foreclosure of real property under Act No. 3135, what is the period of the exercise of right of redemption by the debtor-nrortgagor ar any’ othe: persoas authorized by the said law? a Within. the term of one year and after the dete of sale or registration of the sheriffs certificate of foreclosure sale. Ww b. the tezm of 90 days and after the date of extrajudicial sale or registration of the sheriffs certificate closure sale. . the term of two years and after the date of extrajudicial sale or registration of the sheriffs of foreclosure sale. 4. ie term of six months and after the date of extrajudicial sale or registration of the sheriffs certificate of foreclosure sale. 85. Notwithstanding Act 3135, Section 47 cf RA 8791 (General Bauking Laws) provides that juridical persons whose Property is being sold pursuant tn ar extrajudicial foreclosure by banks, shall have the right of redemption to be exercised 2 Within 3 months after the foreclosure and sale but rot after the registration of the certificate of foreslosure sale with the applicable Register of Deeds. . Within 6 months after the foreclosure and sele but not after the registration of the certificate of foreclosure sale with tice epplicable Register of Deeds. ‘ ¢. Within ¢ year afic: the foreclesure und sale but not after the registration of the certificate of foreclosure ith the opplicable Register of Deeds. d. Within 2 years eer the foreclosure and salc but not after the registration of the certificate of foreclosure sale with the applicable Register of Deeds. the principal obtigation and costs, which is true? a, The inorrgagee may retain the excess in the absence of stipulation to the contrary. b, The mortgagor is entieled to the excess ia the absence of stipulation to the contrary. ¢. The mongagce shall always retain the excess. 4. The mortgagor shall alwey3 recuver the excess. 2 CRAR— Regulatory Framework fox Business Tancactions REBT 8603 Page 11 of 2087. In case the proceeds of the sale from judicial or extrajudicial foreclosure of Real Estate Mortgage is lower than the principal obligation and costs, which is true? ‘8. The mortgagee may recover the deficiency in the absence of stipulation to the contrary. 'b. The mortgagor shall not pay the deficiency in the absence of stipulation to the contrary. ©. The mortgagee shall always recover the deficiency. 4. The mortgagor shall always pay the deficiency 88. Indicate the proper order on how the proceeds of sale from judicial or extrajudicial foreclosure of Real Estate Mortgage shall be distributed: L Cost of sale. Tl. _ Claim of the person foreclosing the mortgage. UI. Claims of junior encumbrances in the order of their priority, TV. —_ Mortgagor or his agent. obligation specified therein, the condition being thatthe sale shall be void upon the seller paying to the purchaser a sum of money or doing some other act named. Ifthe condition is performed according to its terms the mortgage tad sue immeditly become vod, nd the mortgages is hereby diverted of hist Chattel Mortgage b Pledge c. Real Estate Mortgage 4. Antichresis 90. The following are the requisites of chattel mortgage for its validity, except ‘1. That it be constituted to secure the fulfillment ofa principal obligation. b. That the mortgagor be the absolute owner ofthe thing mortgaged. ¢. 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. . That the document in which the mortgage appears be recorded in the Chattel Mortgage Register. ¢. That an affidavit of good faith must be appended to the Deed of Chattel of Mortgage and recorded therewith in the Chattel Mortgage Register. 91. The following are the important characteristics of contract of chattel mortgage, except ‘8, Accessory — It cannot exist without a principal obligation or contract of loan. b. Indivisibie — 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, 4. Real contract - It is perfected by delivery of the personal property mortgaged. 92. The following may become object of chattel mortgage, except ‘Personal property b. Movable property c. Intangible assets 4. Real or immovable property 93. The following are the rules for the place of registration of Chattel Mortgage, except ‘Asa general rule, it must be recorded in the Chattel Mortgage Register of the province where the mortgagee resides. b. It must be recorded in both Chattel Mortgage Registers of the provinces where the mortgagor resides and ‘where the property is located, If the mortgagor is domiciled outside the Philippines, the mortgage must be registered in the Chattel Mortgage Register where the property is located. 4, With respect to motor vehicles, it must be registered with Chettel Mortgage Register where the mortgagor resides and with Land Transportation Office where the motor vehicles are recorded. €. With respect to shares of stock, it must be registered with Chattel Mortgage Register in the province where the corporation has its principal office and in the Chattel Mortgage Register of the province of domicile of the mortgagor. f. With respect to vessel, it must be registered in the office of the Philippine Coast Guard of the port of documentation of the vessels. eee COAR— Rygulatory Framework for Business Transactions RFBT 8603 Page 12 of 2094. Whuch of the following siatoments conceming contrct of chattel mortgage is correct? 3. The morigagec ts not obligated to file an indepetslan tation far the en‘ercement of his credit or loan secured by a chattel mortgage. To do otherwise would defeat the purpose of the chattel mortgage, which is to give him preference over the mortgaged chattels forthe sutisfaction of his credit. b. A mortgagee who sues and obtains m personal judgment against a morigegor upon his credit waives thereby his right to enforce the mortgage securing it and therefore nio longer allowed to foreclose the chattel mortange, ¢. Beth A and B d. Neither A nor B 95. What is the grace period granted to auortgagor or the minimum period required to lapse from the time of the breach of the condition in Chattel Mortgage before the mortgagee may extrajudicial sell or foreclose in the public ‘auction the mortgaged property? a. Atleast 30 days b. Atleast 60 days © Atleast 90 days d. At least 120 days 96, When a movable property ts foreclosed and sold under Act No. 1508 for Chattel Mortgage, the public auction sale by 9 public officer shall be made at the public place of municipality a. Domicile of morgugor b. Location of movable property ¢c. Domicile of mortgagee d._ Either A or B 97. Sale of foreclosed personal property in contract of chattel inortgage shall be made in 8. Public auction or sale only” b. Private auction or sale only ¢. Generally public auction or sale unless there is agreement for private nuction or sale 4. Generally private auction or sale unless there is agreement for public auction or sale 98. In case the proceeds of the sale from judicial or extrajudicial foreclosure of Chattel Mortgage is higher than the principal obligation and costs, which is true? a. The murrigagce may retain the excess in the ahsence of stipulation to the contrary. b. The morgoger ‘s entitied to the excess in the absence of stipulation to the contrary. ¢. The mongayce shall atways retain the excess. 4. The mortgagor shall always recover the excess. 99. In case the proceeds of the sale from judivial or extrajudicial foreclosure of Chattel Mortgage is lower than the principal obligation and costs, which is true? The mortgagee ray recover the deficiency ia the absence of stpulation to the contrary. a b. The mortzacor shel! not pay the deficieacy in the absence of stinutation to the contrary. c. The morty gee shall always recover the deficicnsy. d, The mortgagor shai! always pay the deficiency 100. _Indicate the prcper order on how the proceeds of sale from judicial or extrajudicial foreclosure of Chattel Mortgage shalt be distributed: 1. Costof sale. Tl, Claim of the person foreclosing the mortgage. Ill. Claims of junior encunabrances it the order of their priority. TV. Mortgagor or his ag a I-0-ul-V b. I-I-0-1V ¢. D-J-1V-Il 4. W-U-1-1V 101. _It is acontract whereby tie creditor aciuires the right to receive the fruits of en immovable of his debtor, ‘with the obligation to apply them to the payment of the intorest, if owing, and thereafter to the principal of his credit. a. Pledge b. Chattel mortgage c. Real mortgage d, Antichresis CORR — Regulatory Framework for business Tansuctions RFBT 8603 Page 13 of 20102. oP 103. ‘The following are the important characteristics of contract of antichresis, except Accessory - It cannot exist without a principal obligation or contract of loan. . Indivisible — It creates a lien on the whole or all ofthe properties mortgaged, which lien continues until the obligation is secures has been fully paid. . 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 Real right - It creates a lien on the property mortgaged. Real contract — It is perfected by the delivery of the thing mortgaged. In contract of antichresis, what shall be the basis of measurement of the fruits in its application to the interest and principal of the loan? a b. e a ose 105. a b ° a 106. ‘The actual market value of the fruits at the time of the application. ). The actual market value of the fruits at the time of harvest. The actual market value of the fruits at the time of sale of fruits. The actual market value of the fruits at the time of perfection of the contract of antichresis. ‘What is the nature of the contract of antichresis? It isa consensual contract perfected by mere consent. ). Tt is a real contract perfected by delivery of the real property. It is a formal contract perfected by the execution of the ‘written instrament containing the antichretic agreement together With the amount of the principal and interest of the loan. Who shall be liable to pay the real property taxes and expenses necessary for the repair and preservation ‘of the real property used as collateral in contract of antichresis? ‘Alwoys antichretic creditor Always debtor “Antichretic creditor in the absence of stipulation to the contrary Debtor in the absence of stipulation to the contrary Upon non-payment or default of the entichrtic debtor of the principal obligation, may the antichretic ‘creditor automatically appropriate the real property used as security? ‘a. No because it is paetum commissorium which is prohibited by law and public policy. b ce a ‘Yes because the prohibition against pactum commissorium is not applicable to contract of antichresis, ‘Yes because itis the right of the creditor. Yes if't is agreed upon by the parties. je werererl COAR— Regulatory Framework for Business Transactions RFBT 8603 Page 14 of 20‘Comparison of Pledge. Real jortgage, Chattel Morigage and Antichresis Basis of ‘Conventional Pledge | Real Estate Mortgage Chattel Mortgage ‘Antichresis Difference ‘Type of Contract | Real - By delivery of | Consensual - By mitre | Formal ~ By reginration of Formal — By execution of asto perfection —_| object. consent the contract of chattel | written morgage in the Chattel | sntichresis with statemest of Mortgage Registry the amount of principal and of terest of the contract of loan. pn nae To bind third | Mast be tna _pobhe | Mun be repinared tn the | Sfast te accompanied by ‘stipulation. Any stipuletion for recovery of deficiency is pull and void. (Exception =Lega Pledge) persons instrument showing | Registy of Property aifidavit of good faith description of the thing pledged and the date of the pl ‘Object oF contract | Movnble or personal | Immovable o eal property + asada — on parr | Towle ore OPER Probibition against | Applicable “Applicable “Applicable ‘Applicable ectum ‘comnmissorium Indivisibility of the | indivisible Tndivisible Tadhg indivisible conic | ‘Remedy ‘Of | Foreclose security and seil | Forecinsc srcariy and sell | Foreclosc sooarity and sell | Gather the fruits of the land Creditor in ease of | the collateral in public | the collateral in public action | the collateral in public action | and apply the, fais market Debtor's defoult | action withthe proceeds to | with the preeseds to be | with the proceeds to be | value of the tuis et the time ‘be applied to the unpaid | applied to the unpaid | applied to the unpaid | of pplication first to the obligation obligation obligation iowerest of the loan and the remainder to the principal of the loan. “As to deficiency | Deficiency can never be | Deficiency can be recovered | Deficiency ean be recovered | Deficiency can be recovered recovered even if there is a | less there Is stipulation to | unless there is stipulation to | through continuous gathering the contrary. the contrary. (Except in case of ptsonal property sold in installment under Recto Law) As to excess of proceeds Encess helongi tothe pledgee-crodtor unless there is stipultion to the contrary. (Exception ~ Legal Pledge) ‘Excess beloogs to Gr | Excess belongs 10 the mortgaror unless there is | mortgagor unless there is Sipulaton othe sutry. | spelatio tothe contray. “AS to appropriation of property As to selling of The pledge may opropriate the thing | pledged if tite same is nat ‘c1d in two public auctions The pledgor miey only seit ‘The mortgagee cannot spproprinte the ting mortgaged. "The mortgagor Gun sell he | The morgagor can sell the property after the | the property with the | properny. Any stipulation | propsity. Any stipulation pledge or morgage ‘proaiatng the mangagar to | prohitiiag th: mortgagor 10 the owner. felluve pronery is void. | se the repenty is void. ‘Conduct of sale of ‘GR Pune se ‘Ga: Public sue foreclosed propety Excention’ Private sais if | Zxcertion: Private sale by creditor [ Sgaised by conan |i spine by couacting pasties es Redemption Tone but pledgan ean | Equity of swempuon ony | Exirgiediea! forclonne ~ | Noteppliable prevent ine pudhie sale ty | within 3¢ oays fiom defaalt ) Exuity of cedemption and Pojing, ke scour’ | topxy de are obligato | sight ofedemption obligation jt prevent the forecinewe | Jali) foreclosure = sie Geamally equity of Nace of | Contract ofCommodatum ‘Contract of Loan of | Conrract of Deposit Contract of Lease | Contract | Matuur __. Definition Tis» coniras wherein one [Il isa contra wherein cha of] Tis a congact wbereln «| It & contract wherein one of the paruics delizers 0 | tte prties Jelivers to eonther | persoa receives a thing | party binds bimself to give nother, either someting not | mency or other consumable | belonging to another. ‘another the enjoyment or use consumable so that the ister | thins, upow the condi: that | the cbligain of safely | of a thing for a price certain, may use the same for a | the same mous? of the same | Keeping it end of tetumsing | and fora period which may be certin time and return it. | Kind end qzalitv shall be paid. | une sum: and the the | defining or indefinite, stickeeping of the thing delivered is the prncipsl Surposs ef te contrect. _ fo ‘ ‘Sabject matter | 1. Non-consameble thing | 1. Money TE Consumable dung | 1. Real property 2 Consumable thing but | 2. Consumstts thing ‘LNoacosumeble ting | 2. Personal property coy fo purpose of exhitut _ Characteristics | 1. Resi T Red T Re T-Consensaal 2 Essentially gratuitous | 2. Onerous it there is interest | 2. Onerous if thete | 2. Onerous incws if tes is co } depostary fee or gratuitous _| iffor See, CRAR— Regulatory Framework for Business Fesnsactions REBT 8603 Page 15 of 20107.It is a contract, whereby a person binds himself to render some service or to do something ia representation or in bebalf of ‘mother, with the consent and authority of the latter, Contract of agency b. Contract of partnership ©. Contract of sales 4. Contract of pledge 108.The following are the characteristics of a contract of agency, except & Principal — it can stand by itself. Preparatory ~ It is a means by which other contracts may be entered into. ‘Consensual - It is perfected by mere conseat. Onerous = Its presumed to be onerous unless declared to be gratuitous. ‘Nominate —It has a name given to it by law. Bilateral - The partes are bound reciprocally to it by law. Commutative ~ The partes give and receive almost equivaleot values, Formal contract ~ It s perfected by written special power of attorney. 109, What is the status ofthe contract of agency in case the principal is capacitated and the agent is incapacitated? a Voidable b. Valid and binding ¢ Unenforceable 4. Null and void FPemeass 1110. 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 © Unenforceable Null and void 111. The following statements pertain to the principal in a contract of agency, except He isthe person whom the agent represents. b. He must be capacitated. ‘c. He gives authority tothe other party, 4, He acts and represents the other party, 112. What type of relationship exists between the principal and agent? Fiduciary relationship based on trust and confidence, b. Investor-investee relationship ‘€. Debtor-creditor relationship @._Protector-beneficiary relationship 113.Contrect of agency may be express or implied. An agency may be implied from the following, except ‘Acts of the princip Silence of the principal Lack of action of the principal Failure ofthe principal to repudiate the agency knowing that another person is acting in his behalf without authority. Special power of attomey ‘ 114,What is the stamus of the written sale of a piece of land of the principal by the agent in the principal's name if the authority of the ageat is not in writing? a Null and void b, Unenforceable c. Voidable a Rescissible pppoe 115.What isthe status ofthe contract entered into by the agent in bebalf of the principal if the act performed by the agent requires special power of atiomey and the authority of the agent is only general? ‘2. Voidable b. Volid and binding ©. Unenforceable 4, Null and void 116.Lf the agency is couched in general terms, only general power of attomey is required even ifthe principal should state that he withholds no power, that the agent may execute acts be may consider appropriate or even though the agency should authorize ‘general or unlimited management. Which ofthe folldwing acts can be performed by the agent in this case? & Toadminister the property. b. Toeffect novation, © Tocompromise liability. & To submit questions to arbitration. onli rseieicaeeeSenieeieasetemeneeeseseece CRAR— Regulatory Framework for Business Transactions RFBT 8603 Page 16 of 20