LAW 43: SALES, AGENCY, BAILMENT CONTRACS & SECURED TRANSACTIONS

FINALS

University of Luzon (UL), College of Accountancy Prof. Bryan Jasper D. Solis

DIRECTION: Choose the best answer from among the choices. Write answer on separate answer sheet. Good
Luck!

1. By mere meeting of minds, this contract is deemed perfected.

a. Agency
b. Commodatum
c. Mutuum
d. Deposit
2. Fidel executed power of attorney which reads as follows: “I hereby grant full and absolute
powers to my agent, Castro, without any reservation, in the administration and management
of 808 Bakeshop and Restaurant in Tayug, Pangasinan.” By virtue of this uninhibited grant of
authority to Castro as agent, he is capacitated to—
a. Perform acts of administration only.
b. Perform strict acts of dominion.
c. Perform both acts of strict dominion and administration.
d. Exceed the authority given to him by the principal provided it results into unusual
profits.
3. Refer to the preceding number. Under the present grant of authority to the agent, which act
below cannot be performed by Castro without specific authority?
a. To give donation to victims of typhoon.
b. To purchase flour, lard, and other baking ingredients in bulk.
c. To lease any real property to another person for one year.
d. To sell industrial ovens in surplus and other baking tools and wares.
4. If Castro received the power of attorney from Fidel without expressly giving his consent or
manifesting acceptance, but nevertheless, subsequently performed the duties specified
therein—
a. The contract is perfected by implied acceptance and the subsequent transactions by
Castro bind Fidel
b. The contract is valid but the parties need to reduce it in writing to be enforceable.
c. Agency is not perfected for lack of acceptance and the transactions entered into by
Castro are void as far as Fidel is concerned.
d. Agency is not perfected for lack of acceptance and transactions entered into by
Castro are unenforceable as far as Fidel is concerned.
5. Jeff and Christian are brothers. Jeff delegated Christian as seller of his house and lot in
Mangaldan, Pangasinan for the price of Php500,000.00 cash only. To bind Jeff with the
contract of sale, the authority to sell by Christian must be—
a. Specific
b. Written
c. Either (a) or (b)
d. Both (a) & (b)
6. If the required kind and form of authority is not complied with between the brothers in the
preceding number, the resulting contract of sale is—
a. Still valid when ratified
b. Unenforceable
c. Voidable
d. Void
7. If the property is sold by Christian for Php700,000 cash without prior approval of Jeff
regarding the shift in the price—
a. Christian is guilty of ultra vires act
 b. The contract of sale is valid as to Jeff, but Christian is liable for damages for
exceeding the authority given to him
c. The contract is deemed void because Christian acted in excess of authority.
d. Christian is not considered to have exceeded his authority because he acted in a
manner more advantageous to the Jeff; and the contract of sale is valid and
enforceable as to Jeff.
8. If the brothers did not talk about payment of commission fee or compensation between them,
is Jeff obligated to pay Christian for his services?
a. Yes, because the contract is presumed onerous or compensatory.
b. Yes, because to not do so is likened to enriching oneself at the expense of another.
c. No, because as brothers, the act or service is to be considered labor of love.
d. No, because in the absence of stipulation to the contrary, agency is deemed
gratutitous.
9. On June 8, a verbal agreement was reached by sisters Kai and Ioanna where the latter will
borrow the condominium unit of the former in Baguio City for a year to coincide with the
employment of Kai in Chicago. On June 18, Kai turned over the key of the condominium unit
to Ioanna, who thereafter had the place cleaned up and prepared for take-over. On June 28,
Ioanna moved in and settled at her sister’s condo. By mere consent, this contract is perfected
by the sisters--
a. Bailment
b. Commodatum
c. Future Commodatum
d. Agency.
10. _________________________________________, a contract of Commodatum was deemed
perfected between the sisters—
a. Upon verbal agreement was reached by sisters Kai and Ioanna where the latter will
borrow the condominium unit of the former in Baguio City for a year to coincide with
the employment of Kai in Chicago
b. When Kai turned over the key of the condominium unit to Ioanna
c. When Ioanna moved in and settled at her sister’s condo
d. When a written contract is signed by the parties simultaneous with the delivery of the
condo unit
11. Refer to the preceding number. How much, if any, will Ioanna pay to her sister Kai for the use
of the latter’s condo?
a. None, as the contract is strictly gratuitous.
b. Discounted rate or half the prevailing rent of other units in the building.
c. Lump sum of the reasonable rent for the whole year payable upon the return of
the condo.
d. In exchange for letting her live in the condo for free, Ioanna must give something
of value to Kai to bring abroad.
12. In the absence of express stipulation, specify the consideration in mutuum or simple loan.
a. Consumption of the object.
b. Transfer of ownership of the thing upon delivery.
c. Liberality of the lender.
d. Payment of interest rates.
13. In a real contract of Commodatum, delivery of the object by the bailor—
a. Transfers its ownership to the bailee.
b. Vests in the bailee the right to use the thing, including its fruits.
c. Obligates the bailee to keep the thing principally for safekeeping.
d. Perfects the contract.
14. In a real contract of mutuum, delivery of the thing by the lender—
a. Transfers its ownership to the borrower.
b. Obligates the borrower to give another non-consummable thing in exchange.

2
 c. Obligates the borrower to pay interest apart from principal, with or without written
agreement to that effect.
d. Obligates the borrower to return the very same thing to the lender.
15. A thing borrrowed in commodatum is not—
a. Only for personal use by the borrower but also for other persons permitted by
him.
b. Non-consumable.
c. Immovable property.
d. Subject to retention by the bailee on the ground that the bailor owes him
something.
16. Loss of the thing in mutuum due to fortuitous event—
a. Extinguishes the obligation of the borrower to pay.
b. Is borne by the borrower before delivery.
c. Is borne by the borrower after delivery.
d. Renders the contract void for absence of an essential element (object).
17. Loss of the thing in commodatum due to fortuitous event—
a. Extinguishes the obligation of the bailee to return it.
b. Is borne by the bailor before delivery.
c. Is borne by the bailor after delivery.
d. All of the above.
18. Bailee’s right to the thing consists of the following, except one. Which is it?
a. Lend the object of the contract to members of his household.
b. Reimbursement for ordinary expense for the use of the thing.
c. Appropriate the fruits of the object if agreed upon.
d. Indemnity for damages arising from the defect in the thing borrowed.
19. Kevin borrowed the car of Joshua to fetch his partner Jacob from the airport. On the return
trip to the province, weighed down by the balikbayan boxes on board, the car stalled on the
highway near San Clemente, Tarlac. The couple found a local mechanic within the area to
check on the car, who quoted a price of Php3,500 for parts and Php750 for labor. The
incident resulted into heavy traffic in the area. Not wasting time and to avoid further
inconvenience to other motorists, Kevin decided at once to let the local mechanic fix the car
without prior approval of Joshua. For the repair of the car, who will shoulder the cost?
a. Joshua only
b. Kevin only
c. Joshua and Kevin, pro-rata.
d. Joshua and Jacob, pro-rata.
20. Refer to the preceding number. Assuming Kevin will answer for the cost of the repair, can he
exempt himself from the payment of expenses or damages by abandoning the car to Joshua?
a. Yes, as this right is granted to the bailor by law.
b. Yes, if such option is stipulated upon in the contract.
c. No, the bailee can only retain the thing until such time payment is made.
d. No, the bailee can insist on returning the thing borrowed and demanding
reimbursement.
21. ACME Co. wrote a circular letter to its customers introducing Olivia as its duly authorized
agent. Baron, a customer, dealt or transacted business with Olivia. Later, Olivia’s authority
was revoked and was published in a newspaper of general circulation. Without knowledge of
the revocation as he does not read newspapers, Baron continued to transact business with
ACME Co. thru Olivia. Is ACME Co. still liable for the agent’s act even after revocation?
a. Yes, because the notice of revocation was not by special notice to Baron
b. No more, because third persons like Baron are deemed notified by the
publication.
c. No more, because transactions entered after revocation are deemed void.
d. Yes, because ACME Co. is estopped from denying the authority of Olivia.

3
22. In three of the following, a special power of attorney is required. Which one is considered the
exception?
a. To obligate the principal as guarantor.
b. To effect novations which put an end to obligation already contracted before the
agency.
c. To borrow money not necessary for the preservation of the property under
administration.
d. To lease property to another person for one year.
23. Spot the only fiduciary contract in the mix.
a. Commodatum
b. Mutuum
c. Deposit
d. Agency
24. Harry borrowed the book Harry Potter and the Sorcerer’s Stone from UL library, due for return
today. In the Student Handbook as well as in the library borrower’s card, both signed by
Harry, it is specified therein that borrower must return the book on due date without need of
demand. A week after due date, Harry brought the book to campus and intended to return it
after Professor Solis’ class. The book was placed on the table top of Harry’s armchair when a
rogue wind dashed into the open window and blasted the book into a clutter of pages, many
were irretrievably flown away. What becomes of Harry’s obligation to return the book?
a. Harry is liable for the loss of the thing even if should be thru a fortuitous event
because he delays its return.
b. Harry is liable to return what is left of the book.
c. Harry’s obligation to return the book is extinguished as the loss is due to
fortuitous event.
d. Harry is liable only if demand has expressly been made on him by the school
librarian to return the book.
25. Which statement is true about the bailor’s right to demand the return of the thing at will?
a. Bailor is entitled the right to demand the return of the thing at will in all contracts
of commodatum.
b. Bailor is entitled to demand the return of the thing at will only in precarium.
c. Bailor is entitled to demand the return of the thing at will if bailee refuses to
accomodate his sexual advances as this amounts to an act of ingratitude.
d. Bailor is entitled to demand the return at will in case he has urgent need for the
thing.
e. All of the above.
26. In case of temporary use by the bailor of the thing, the contract of Commodatum is ____ while
in the possession of the bailor.
a. Suspended.
b. Interrupted.
c. Terminated.
d. Rescinded.