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1. It is the delivery of property by one person to another in trust for a specific purpose upon a
contract to perform the trust and carry out such object, and thereupon either to return or account
for the property when the special purpose is accomplished or to keep it until the giver reclaims it:
a. assignment of credit;
b. compromise;
c. bailment;
d. usufruct.
2. The ability of an individual to borrow money by virtue of the confidence and trust reposed by
the lender that he will pay what he may promise:
a. surety;
b. credit;
c. collateral;
d. loan.
3. A movable which cannot be used in a manner appropriate to its nature without its being
consumed:
a. consumable;
b. non-consumable;
c. fungible;
d. non-fungible.
4. A contract where one of the parties delivers to another, either something not consumable so
that the latter may use the same for a certain time and return it:
a. mutuum or simple loan;
b. commodatum or loan for temporary possession;
c. pledge;
d. guaranty.
5. In commodatum, the bailee acquires:
a. jus utendi or right to use;
b. jus fruendi or right to the fruits;
c. ownership;
d. right to use and right to the fruits.
6. It is a form of commodatum where the bailor may demand the thing at will:
a. precarium;
b. bailment;
c. special commodatum;
d. unilateral.
7. It is one where a person who receives a loan of money or any fungible thing acquires the
ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and
quality:
a. mutuum;
b. commodatum;
c. pledge;
d. usufruct.
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8. A contract whereby one person transfers the ownership of non-fungible things to another with
the obligation on the part of the latter to give things of the same kind, quantity, and quality:
a. gratuitous simple loan;
b. commodatum;
c. barter;
d. onerous simple loan.
9. In mutuum, as distinguished from commodatum:
a. the subject matter is non-fungible and the same thing must be returned;
b. the cause may be gratuitous or onerous;
c. the ownership is retained by the bailor;
d. the contract is purely personal, i.e. death of either party terminates the contract, unless
stipulated.
10. Which of the following is a characteristic of commodatum?
a. it may be for compensation;
b. the bailee can lend or lease the object to a third person;
c. the members of the bailee’s household may make use of the thing loaned;
d. the bailee may make use of the fruits of the object.
11. As a rule in commodatum, the borrower is not liable for loss or damage due to a fortuitous
event, unless:
a. he devotes the thing to any purpose different from that for which it has been loaned;
b. if he keeps it longer than the period stipulated;
c. if the thing has been appraised of its value;
d. all of the above;
e. none of the above.
12. In loan for temporary use or possession, the borrower has no right of retention over the thing
loaned on the ground that the lender owes him something, except:
a. for useful expenses incurred by the bailee which expenses increased the value of the
thing loaned;
b. for necessary expenses incurred by the bailee for the preservation of the thing;
c. for the value of the fruits of the thing loaned delivered to the bailor pursuant to a
stipulation;
d. for damages suffered by bailee due to hidden flaw of the thing loaned which flaw is
known to bailor but not disclosed to the bailee.
13. A contract where the collateral must be placed in the possession of the creditor or third
person:
a. mortgage;
b. pledge;
c. antichresis;
d. all of the above;
e. none of the above.
14. Bart obtained a loan from Corry and as security thereof, delivered his farm lot to the latter so
she may use the fruits. However, no interest was mentioned. Neither did they stipulate that the
fruits would be applied to the interest first and then to the principal. This contract is:
a. mortgage;
b. pledge;
c. antichresis;
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d. guaranty;
15. A common requisite to the contracts of pledge and mortgage:
a. that they be constituted to secure the property subject of the contract;
b. that the obligor be the absolute owner at the time the property is to be delivered to
the obligee;
c. that the persons constituting the contract have the free disposal of their
property or legally authorized for the purpose;
d. that only parties to the principal obligation may secure the latter by
pledging or mortgaging their own property;
e. that the obligee may alienate the thing even before the principal obligation becomes
due.
16. If the principal obligation is voidable, unenforceable or merely natural, the pledge or
mortgage is:
a. valid;
b. void;
c. it may be voidable, unenforceable or natural depending on the principal obligation;
d. valid if the parties are in good faith and without notice of the defect.
d. she cannot demand the cancellation of the pledge until the loan is fully paid;
e. none of the above.
21. Which of the following cannot be secured by a pledge or mortgage?
a. pure obligation;
b. conditional obligation;
c. alternative obligation;
d. joint and solidary obligations;
e. none of the above.
22. Mr. Gor borrowed P2 Million from Mr. Gee. The parties agreed that Mr. Gor would execute
a mortgage on his land to secure the obligation. However, Mr. Gor failed to execute a mortgage.
Which of the following is the remedy of Mr. Gee?
a. foreclose the mortgage;
b. demand the constitution of the mortgage;
c. ask the court for reformation of the contract;
d. demand novation of the contract.
23. A pledge created by operation of law;
a. voluntary;
b. conventional;
c. legal;
d. real.
24. All movables which are within commerce may be pledged, provided they are susceptible of
possession, which of the following cannot be pledged?
a. negotiable instruments and documents;
b. bonds and shares of stock;
c. warehouse receipts and bills of lading;
d. all of the above;
e. none of the above.
25. A pledge may take effect only against third persons if the following formalities are followed:
a. the pledge must be in a public instrument and recorded in the registry;
b. it must be in a public instrument containing the description of the thing pledged and
the date of the pledge;
c. it must be in writing duly signed by the parties;
d. it must be in a public instrument.
26. An obligation of the pledgee:
a. to sell the thing pledged at public auction;
b. to answer for the loss of the thing pledged in case of negligence;
c. to deposit the thing pledged with a third person;
d. to use the thing pledged.
27. The creditor is not entitled to recover any deficiency in case the price of sale of the thing
pledged is less than the amount due, what is the reason?
a. equity;
b. it is iniquitous;
c. to compel creditor to hold an honest public sale;
d. to discourage creditors from abusing the financial needs of the borrower.
28. What is the right of the pledgee when the pledge earns or produces fruits, income, dividends,
or interests?
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35. Nora mortgaged his farmland to Vilma. The farmland has a fair market value of P50,000
while the loan is only P10,000. Thereafter, Nora sold the farmland to Boyet. What is the legal
effect of the sale to Boyet.
a. the sale is void and Vilma may foreclose the mortgage in case of default by
Nora;
b. the sale is valid but it does not affect the mortgage;
c. the sale is unenforceable as Nora was not authorized to sell the property;
d. Vilma may foreclose the property to protect her interest.
36. It is a remedy available to mortgagee where he subjects the mortgaged property to the
satisfaction of the obligation through the sale of the property at public auction and the
application of the proceeds thereof to the payment of his claims:
a. foreclosure;
b. assignment;
c. alienation;
d. encumbrance.
37. The following are the kinds of real estate mortgage, except;
a. voluntary mortgages;
b. legal mortgages;
c. contracts of sale with right of repurchase;
d. equitable mortgages;
e. all of the above.
38. The contract of mortgage extends to and includes the following except:
a. growing fruits;
b. improvements, even those made by third persons subsequent to mortgage;
c. natural accessions;
d. proceeds of insurance received from insurance of the property;
e. none of the above.
39. Which of the following is not a principal obligation of the mortgagor?
a. to comply with his obligations at the time stipulated;
b. to pay any deficiency in case there is a balance due to the mortgagee after
applying the proceeds of the foreclosure sale;
c. to respect the right of the mortgagee;
d. to continue in the ownership and possession of the mortgaged property;
e. all of the above.
40. Which of the following is not a principal right of the mortgagee?
a. to compel the mortgagor to execute a contract of mortgage in a public
instrument;
b. to free the property from the encumbrance once the obligation is fulfilled;
c. to claim from the transferee of the mortgaged property the payment of the
part of credit secured by the property which the transferee possesses;
d. to recover any deficiency in case there be a balance due after applying the
proceeds of the foreclosure sale;
e. all of the above.
41. A similarity between pledge and chattel mortgage:
a. delivery is necessary;
b. constitute a lien on the property;
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least 2/3 of the debtor’s total liabilities, including secured creditors holding more than 50% of the
secured claims, and unsecured creditors holding more than 50% of the unsecured claims:
a. pre-negotiated rehabilitation;
b. voluntary proceedings;
c. involuntary proceedings;
d. out-of-court or informal restructuring agreements or rehabilitation plans.
48. Proceedings that may be initiated by creditors if (a) there is no genuine issue of fact or law on
the claims of the petitioners, and the due and demandable payments have not been made for at
least 60 days or that the debtor has generally failed to meet its liabilities as they fall due, or (b) a
creditor, other than petitioners, has initiated foreclosure proceedings against the debtor that will
prevent the debtor from paying its debts as they become due or will render it insolvent.
a. pre-negotiated rehabilitation;
b. voluntary proceedings;
c. involuntary proceedings;
d. out-of-court or informal restructuring agreements or rehabilitation plans.
49. It is agreed upon by the debtor, and approved by creditors holding at least 85% of the
debtor’s total liabilities, including secured creditors holding at least 67% of the secured
obligations and unsecured creditors holding at least 75% of the unsecured obligations:
a. pre-negotiated rehabilitation;
b. voluntary proceedings;
c. involuntary proceedings;
d. out-of-court or informal restructuring agreements or rehabilitation plans.
50. The FRIA allows for rehabilitation proceedings for a group of debtors when one or more of
its members foresee the impossibility of meeting debts when they respectively fall due, and the
financial distress will likely adversely affect the financial condition and/or operations of the
other members of the group, and/or the participation of the other members is essential under the
terms and conditions of the proposed Rehabilitation Plan:
a. corporations that are financially related to one another as parent corporation,
subsidiaries or affiliates;
b. partnerships that are owned more than 50% by the same person;
c. single proprietorships that are owned by the same person;
d. all of the above;
e. FRIA does not allow rehabilitation proceedings for a group of debtors.
51. A remedy available to an individual debtor in case of insolvency:
a. suspension of payments;
b. voluntary liquidation;
c. involuntary liquidation;
d. all of the above;
e. a and b only.
52. An order issued by the court declaring the debtor insolvent and in case of a juridical debtor,
likewise declaring it as dissolved:
a. commencement order;
b. liquidation order;
c. dissolution order;
d. cancellation order.
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True or false: