DE LA SALLE LIPA

College of Business, Economics, Accountancy and Management

Accountancy Department
Business Law - Review
COVERAGE:
A. Contract of Pledge
a. Nature and binding effect on third persons
b. Obligations/rights of pledgor or pledge
c. Pactum commissorium
d. Modes of extinguishment
B. Contract of Mortgage (Real and Chattel)
a. Nature
b. Requisites
c. Rights and obligations of mortgagor and mortgagee
d. Requisites to have binding effect on third persons
e. Modes of extinguishment
C. Contract of Partnership
a. Nature and as distinguished from corporation
b. Elements and kinds
c. Formalities required
d. Rules of management
e. Distribution of profits and losses
f. Sharing of losses and liabilities
g. Modes of dissolution
h. Limited partnership

Direction: Read and select the best answer for the following questions.
1.

2.

3.

4.

5.

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.
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
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.
D borrowed P1,000,000 from C. G, a third person, mortgaged his land to secure the fulfillment of Ds 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.
D borrowed P10,000 from C. To secure the fulfillment of the loan, D pledged his laptop. The contract of pledge provides that the creditorpledgee 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.

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6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

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 Ds 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.
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.
It is a stipulation whereby the thing pledged or mortgaged shall automatically become the property of the creditor in the event of nonpayment of the debt within the term fixed.
a. Pactum creditarium
b. Pactum commissorium
c. Pactum debitarium
d. Pactum crematorium
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.
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.
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.
D borrowed from C P100,000 secured by a mortgage on Ds 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.
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.
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.
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.

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d.

The promissory will be criminally liable if he mortgages or pledges as unencumbered things which he knew were subject to some
burden

16. 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
17. 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.
18. 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.
19. What is the nature of a contract to constitute a pledge?
a. Consensual contract
b. Real contract
c. Formal contract
20. What is the nature of a contract of pledge?
a. Consensual contract
b. Real contract
c. Formal contract
21. 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.
22. 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.
23. 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.
24. 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.
d. The inheritance of the pledgor.
25. 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

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26. 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.
27. 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.
28. 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.
29. 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.
30. 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.
31. 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 pledgors 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.
32. 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
33. 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.
34. D owes C P5,000. The debt is secured by a pledge of Gs 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.

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35. 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
36. 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.
37. 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.
38. 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.
39. 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.
40. 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
41. 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
42. 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.
43. 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.
44. 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.

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45. 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.
46. 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
47. 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
48. 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.
49. 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.
50. 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.
51. 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.
52. 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.
53. The following may become object of contract of real estate mortgage, except
a. Immovable property
b. Rights on immovable property
c. Personal property
54. 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.

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b.
c.
d.

The real mortgage must be in a public instrument for the convenience of the parties but not for validity.
The real mortgage must be registered in the Registry of Property to bind third persons.
The real mortgage must be in writing to be valid since it is a formal contract.

55. 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
56. 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.
57. 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
58. 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
59. 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
60. 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
61. In case the proceeds of the sale from judicial or extrajudicial foreclosure is higher than the principal obligation and costs, which is true?
a. The mortgagee may retain the excess in the absence of stipulation to the contrary.
b. The mortgagor is entitled to the excess in the absence of stipulation to the contrary.
c. The mortgagee shall always retain the excess.
d. The mortgagor shall always recover the excess.
62. In case the proceeds of the sale from judicial or extrajudicial foreclosure is lower than the principal obligation and costs, which is true?
a. 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.
c. The mortgagee shall always recover the deficiency.
d. The mortgagor shall always pay the deficiency
63. It refers to the right of mortgagor to redeem the mortgaged property after his default of the performance of his obligation but before the
property is sold.
a. Equity of redemption
b. Right of redemption

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c.
d.

Right of preemption
Equity of preemption

64. It refers to the right of the mortgagor to repurchase the property within a certain period after it was sold for the payment of the mortgage
debt.
a. Equity of redemption
b. Right of redemption
c. Right of preemption
d. Equity of preemption
65. Which of the following statements is incorrect concerning the prescriptive period of equity of redemption and right of redemption?
a. In judicial foreclosure, the mortgagor is given not less than 90 days to exercise his equity of redemption by paying the mortgage
debt before the property is sold.
b. In extra-judicial foreclosure, the mortgagor may exercise his equity of redemption by paying the mortgage debt after his default
but before the sale of property.
c. In judicial foreclosure, the mortgagor may exercise his right of redemption after the sale but before the confirmation by the court
of the sale.
d. In extra-judicial foreclosure, the mortgagor has one month from the date of sale to exercise his right of redemption.
66. The following are the requisites of chattel mortgage for its validity, except
a. That it be constituted to secure the fulfillment of a principal obligation.
b. That the mortgagor be the absolute owner of the thing mortgaged.
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 Chattel Mortgage Register.
e. That an affidavit of good faith must be appended to the Deed of Chattel of Mortgage and recorded therewith in the Chattel
Mortgage Register.
67. The following may become object of chattel mortgage, except
a. Personal property
b. Movable property
c. Real or immovable property
68. The following are the rules for the place of registration of Chattel Mortgage, except
a. As a general rule, it must be recorded in the Chattel Mortgage Register of the province where the mortgagee resides.
b. If must be recorded in the both Chattel Mortgage Registers of the provinces where the mortgagor resides and where the property
is located.
c. If the mortgagor is domiciled outside the Philippines, the mortgage must be registered in the Chattel Mortgage Register where
the property is located.
d. With respect to motor vehicles, Chattel Mortgage Register and LTO.
e. With respect to shares of stock, Chattel Mortgage Register in the province where the corporation has its principal office and in
the domicile of the mortgagor.
f. With respect to vessel, Bureau of Customs at port of entry.
69. It is a contract whereby the debtor secures to the creditor the fulfillment of a principal obligation, especially subjecting to such security,
immovable property or real rights over immovable property in case the principal obligation is not complied with at the time stipulated.
a. Pledge
b. Chattel mortgage
c. Real mortgage
d. Antichresis
70. The following are the instances where the pledgor-owner may ask that the thing pledged be deposited judicially or extrajudicially, except
a. If the creditor uses the thing without authority.
b. If the creditor uses the thing in any other way.
c. If the thing is in danger of being lost or impaired because of the negligence or willful act of the pledgee.
d. If there are reasonable grounds to fear the destruction or impairment of the thing pledged without the fault of the pledgee.

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Basis of Difference
Type of Contract as to perfection
To bind third persons
Object of contract
As to deficiency

As to excess of proceeds
As to appropriation of property
As to selling of property after the
pledge or mortgage by the owner.

Comparison of Pledge, Real Mortgage and Chattel Mortgage

Pledge
Real Estate Mortgage
Real By delivery of object
Consensual By mere consent

Chattel Mortgage
Formal By registration in the
Chattel Registry
Must be accompanied by affidavit
of good faith

Must be in a public instrument

showing a description of the thing
pledged and the date of the pledge
Movable or personal property
Deficiency can never be recovered
even if there is a stipulation.

Must be registered in the Registry

of Property

Excess is retained by pledeecreditor unless there is stipulation

to the contrary.
The pledgee may appropriate the
thing pledged if the same is not
sold in two public auctions.
The pledgor may only sell the
property with the consent of the
pledgee.

Excess belongs to the mortgagor

unless there is stipulation to the
contrary.
The mortgagee cannot appropriate
the thing mortgaged.

Movable or personal property

Deficiency can be recovered
except in case of personal
property sold in installment (Recto
Law)
Excess belongs to the mortgagor
unless there is stipulation to the
contrary.
The mortgagee cannot appropriate
the thing mortgaged.

The mortgagor can sell the

property. Any stipulation
prohibiting the mortgagor to sell
the property is void.

The mortgagor can sell the

property. Any stipulation prohibiting
the mortgagor to sell the property
is void.

Immovable or real property

Deficiency can be recovered
unless there is stipulation to the
contrary.

71. It is a contract of two or more persons who bind themselves to contribute money, property, or industry to a common fund, with the intention
of dividing the profits among themselves. It may also be formed by two of more persons for the excersise of a profession.
a. Contract of Agency
b. Contract of Partnership
c. Contract of Co-ownership
d. Contract of Sale
72. The following are the characteristics of a contract of partnership, except
a. Formal It is perfected by the registration of articles of partnership in the SEC.
b. Principal It does not depend upon any other contract for its validity or existence.
c. Bilateral or Multilateral It is entered into by two or more persons whose rights and obligations are reciprocal.
d. Nominate It has a special name given to it by law.
e. Preparatory It is a means by which other contracts will be entered into as the partnership pursues its business.
f. Onerous The partners contribute money, property or industry to a common fund.
73. The following are the essential requisites of partnership, except
a. There must be a valid partnership contract.
b. There must be a mutual contribution of money, property or industry to a common fund.
c. It must have a lawful object or purpose.
d. The partnership must be established for the common benefit or interest of the partners which is to obtain profits and to divide the
profits among the partners.
e. The partnership must be registered in the SEC.
74. The following statements concerning partnership are correct, except
a. Partnership is a juridical entity which has a personality separate and distinct from that of each of the partners.
b. There must be intent to form a partnership because o the element of delectus pesonae which means the right of a person to
choose those whom he wants to be associated with in partnership.
c. There is fiduciary relation among partners.
d. All partnership contracts are consensual.
75. The following statements pertain to the forms of a partnership contract, except
a. As a general rule, a partnership contract may be constituted in any form, whether written or oral, to be valid.

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b. Where immovable property or real rights are contributed to the partnership, regardless of the amount thereof, the partnership contract
must be in a public instrument and an inventory of the said property must be made, signed by the parties and attached to the public
instrument, in order to be valid.
c. Where the capital of the partnership is P3,000 or more, in money or property, the partnership contract must be in a public instrument and
registered with the SEC, in order to be valid.
d. If the partnership is a limited partnership, a certificate signed under oath by the partners and recorded with the SEC, otherwise the
partnership will be considered as a general partnership.
76. The following persons may become a partner, except
a. Any natural person who is capacitated.
b. Another partnership.
c. Corporation
77. The following cases do not establish a partnership, except
a. Persons who are not partners to each other.
b. Co-ownership or co-possession, whether such co-owners or co-possessors do or do not share any profits made by the use of the
property.
c. Sharing of gross returns, whether or not the persons sharing them have a joint or common right or interest in any property from which
the returns are derived.
d. Receipt by a person of a share of the profits of a business.
78. The receipt by a person of a share of the profits of a business shall not be considered a prima facie evidence that he is a partner in a business in
the following instances, except
a. As a debt by installment or otherwise
b. As a return of the contribution or investment in the business.
c. As wages of an employee or rent to a landlord.
d. As an annuity to a widow or representative of a deceased partner.
e. As interest on a loan, though the amounts of payment vary with the profits of the business.
f. As the consideration for the sale of a goodwill of a business or other property by installment or otherwise.
79. This is a partnership which all the partners contribute all the property which actually belonged to them to the common fund, with the intention of
dividing the same among themselves, as well as the profits which they acquire therewith.
a. Universal partnership of all present property.
b. Universal partnership of profits.
c. Particular partnership
80. The following properties shall belong to the common fund in a universal partnership of all present property, except
a. Property belonging to the partners at the time of the constitution of the partnership.
b. Profits that may be acquired from the present property.
c. Property acquired by each partner after the formation of the partnership if stipulated.
d. Profits and fruits from property acquired by each partner, even those from property acquired by inheritance, legacy or donation after the
formation of the partnership if stipulated.
e. Property acquired by inheritance, legacy or donation after the formation by the partnership if stipulated.
81. This is a partnership whereby the common fund comprises all that the partners may acquire by their work or industry during the existence of the
partnership.
a. Universal partnership of all present property.
b. Universal partnership of profits.
c. Particular partnership
82. The following properties shall belong to the common fund in a universal partnership of profits, except
a. Profits obtained by the partners by their work or industry during the existence of the partnership.
b. Profits acquired by the partners without the exertion of physical or intellectual efforts, such as those acquired by chance or lucrative title
if stipulated.
c. The usufruct or use of the property belonging to each partner at the time of the constitution of the partnership.
d. The profits and fruits from the properties mentioned in letter a and c.
e. The profits and fruits, if stipulated, of the property acquired by each partner after the constitution of the partnership.
83. The articles of universal partnership is entered into without specification of its nature. What shall be its construction?
a. It is a particular partnership.
b. It is a universal partnership of all present property.
c. It is a universal partnership of profits.
84. The following persons cannot enter into a universal partnership but can enter into a particular partnership, except
a. Husband and wife
b. Persons who were guilty of adultery or concubinage at the time of formation
c. Persons who were guilty of the same criminal offense
d. Public officer or his wife, descendants or ascendants and another person by reason of the public officers position
e. Partnership and another partnership

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85. It is a partnership which has for its object determinate things, their use or fruits, or a specified undertaking, or the exercise of a profession.
a. Universal partnership of all present property.
b. Universal partnership of profits.
c. Particular partnership

86. Which of the following statements pertain to partnership by estoppel?

a. It is a partnership where all the partners are liable to the extent of their separate property after the partnership assets have been
exhausted.
b. It is a partnership where is at least one general partner and at least one limited partner who is liable to the extent of his investment in the
partnership.
c. It is a partnership which actually exists among the partners as well as to third persons.
d. It is a partnership which in reality is not partnership but is considered as one with respect to those who, by reason of their conduct or
admission, are precluded from denying its existence.
87. Which of the following statements pertain to partnership at will?
a. It is one for which a period for its duration is fixed by the partners.
b. It is one which is organized for a certain undertaking which, when attained, will cause the termination of the partnership.
c. It is one where no period is fixed by the parties for its duration.
88.Which of the following statements pertain to a general-limited partner?
a. He is one who is liable for partnership debts to the extent of his separate property after all the assets of the partnership have been
exhausted.
b. He his one who is liable for partnership debts to the extent of his capital contribution only.
c. He is one who has all the rights and powers and is subject to all the restrictions of a general partner, except that, in respect to his
contribution, he shall have the rights against the other members which he would have had if he were not also a general partner.
89. Which of the following statements pertain to a capitalist-industrial partner?
a. He is one who contributes money or property to the common fund.
b. He is one who contributes his services or industry to the partnership.
c. He is one ho contributes not only money or property but also his services to the partnership.
90. Which of the following statements pertain to an ostensible partner?
a. He manages the business or affairs of the partnership.
b. He takes charge of the winding up of the affairs of the partnership after it is dissolved.
c. He is not actually a partner but who may become liable as such to third persons.
d. He is one who is active and known to the public as a partner, such as by allowing his name to be included in the firm name.
e. He is one whose connection with the partnership is kept from the public.
f. He is one who has no voice in the management of the business.
g. He is who does not participate in the management of the business and not known to the public as a partner.
91. Profits and losses of the partnership shall be divided according to the agreement. In the absence of agreement as to the sharing of the profits,
how shall it be distributed?
a. It should be divided equally.
b. It should be divided according to profit sharing agreement.
c. It should be divided proportionately in accordance to the capital contribution.
92. In the absence of agreement as to the sharing of the profits, how shall it be distributed?
a. It should be divided equally.
b. It should be divided according to loss sharing agreement.
c. It should be divided proportionately in accordance to the capital contribution.
93. Profits and losses of the partnership shall be divided according to the agreement. In the absence of agreement as to the sharing of the profits,
how shall industrial partner share with it?
a. The industrial partner shall not share in the profit.
b. The profit shall be divided equally.
c. The industrial partner shall receive the lowest share received by a capitalist partner.
d. The industrial partner shall first receive a just and equitable share in the profits.
94. . Profits and losses of the partnership shall be divided according to the agreement. In the absence of agreement as to the sharing of the losses,
how shall industrial partner share with it?
a. The industrial partner shall not share in the losses, notwithstanding any stipulation to the contrary.
b. The losses shall be divided equally.
c. The industrial partner shall receive the lowest share received by a capitalist partner.
d. The industrial partner shall first receive a just and equitable share in the losses.
95. Which of the following stipulations in the sharing of profit or losses is valid?

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a. A stipulation excluding a capital partner in the share of profits.

b. A stipulation excluding a capital partner in the share of losses.
c. A stipulation excluding an industrial partner in the share of profits.
d. A stipulation excluding an industrial partner in the share of losses.
96. C, a capitalist partner and I, an industrial partner agreed with the following profit or loss sharing terms. I will share equally in the profit and there is
no agreement as to losses. On 2010, the partnership had P10,000 net loss. On 2011, the partnership had P20,000 net income. How much shall be
received by I as his share for the two years?
a. P10,000 because industrial partner do not share in the losses.
b. P5,000 because P10,000 loss shall be netted from the P20,000 net income.
c. zero because industrial partner has no investment.

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