DE LA SALLE LIPA

College of Business, Economics, Accountancy and Management

Accountancy Department
Second Semester A.Y. 2012-2013
Accounting Review 2
Quiz V Contracts of Pledge and Mortgage
Name:____________________________________________________________________Date:___________________________
_
Section:__________________________________________________________________Score:___________________________
Direction: Read and solve the following problems. Write the letter of your best answer on the space provided before
each number. Erasures are not allowed and considered wrong.
___1. The right of a mortgagor in a judicial foreclosure to redeem the mortgaged property after his default in the
performance of the conditions of the mortgage but before the sale of the mortgaged property or confirmation of the sale by
the court is known as
a. Accion pauliana
b. Equity of redemption
c. Pacto de retro
d. Right of redemption
___2. X constituted a chattel mortgage on a car (valued at Php 1M) to secure a Php 500,000 loan. For the mortgage to be
valid, X should have
a. The right to mortgage the car to the extent of half of its value.
b. Ownership of the car.
c. Unqualified free disposal of his car.
d. Registered the car in his name.
___3. X, at Ys request, executed a Real Estate Mortgage on his (Xs) land to secure Ys loan from Z. Z successfully
foreclosed the mortgage when Y defaulted on the loan but half of Ys obligation remained unpaid. May Z sue X to enforce
his right to the deficiency?
a. Yes but solidarily with Y
b. Yes since Xs is deemed tow arrant that his land would cover the whole obligation
c. No since it is the buyer at the auction sale who should answer for the deficiency.
d. No because X is not Zs debtor.
___4. The following may be the objects of contract of pledge, except
a. Shares of stocks
b. Pieces of jewelry
c. An agricultural land d. A negotiable bill of exchange
___5. Which of the following statements is not correct?
a. If the thing pledged will be returned by the pledge, the contract of pledge is extinguished.
b. Unlawful partnership is void ab initio.
c. Any stipulation allowing pledge or mortgagee to appropriate the thing pledged or mortgaged is void.
d. In case the creditor foreclosed the chattel mortgage, he cannot recover any deficiency in case the proceeds of
the foreclosure sale are less than the unpaid obligation.
___6. For failure of the debtor to pay two installment payments, the creditor foreclosed the chattel mortgage constituted to
secure the obligation amounting to P200,000. The proceeds amounted to P220,000. In this case
a. The debtor gets the P20,000 only if stipulated.
b. The debtor gets the P20,000 even if not stipulated.
c. The creditor gets the excess even if not stipulated.
d. The creditor gets the excess whether or not it is stipulated.
___7. A pledged his watch to B for P20,000. A failed to pay his obligation. B sold it at public auction for P18,000. Can B
recover the deficiency?
a. Yes even without stipulation
c. No even if there is stipulation
b. Yes if there is stipulation
d. No unless there is stipulation
___8. Using the preceding number, if the sale is for P22,000, can A recover the excess?
a. Yes even without stipulation
c. No even if there is stipulation
b. Yes if there is stipulation
d. No unless there is stipulation
___9. A mortgaged his car to B for P200,000. A failed to pay his obligation. B sold it at public auction for P180,000. Can B
recover the deficiency?
a. Yes even without stipulation
c. No even if there is stipulation
b. Yes only if there is stipulation
d. No unless there is stipulation
___10. Using the preceding number, if the sale is for P220,000, can A recover the excess?
a. Yes even without the stipulation
c. No even if there is stipulation
b. Yes only if there is stipulation
d. No unless there is stipulation

DLSL CPA Board Operation Business Law

Page 1 of 4

___11. An oath in a contract of chattel mortgage wherein the parties severally swears that the mortgage is made for the
purpose of securing the obligations specified in the conditions thereof and for no other purposes and that the same is just
and valid obligation and one not entered into for the purpose of fraud is
a. Oath of allegiance
c. Affidavit of good faith
b. Antichresis
d. Equity of redemption
___12. A owes B P500 and as security, A pledged his diamond ring. Later A borrowed again P200. As a result
a. B has a right to retain the thing until the P700 is paid
b. B has a right to retain the thing until the P500 is paid
c. A has a right to demand that the thing be deposited with a third person
d. B has the right to use the thing pledged until the pledge effects payment of the obligation
___13. Real estate mortgage as distinguished from pledge
a. The debtor is entitled to the excess of the proceeds if stipulated
b. The debtor shall not be entitled to the excess of the proceeds
c. The creditor is not entitled to the excess of the proceeds
d. The creditor cannot recover the deficiency
___14. Should there be a reasonable ground to fear the destruction or impairment of the thing pledged, without the fault of
the pledge, what is the obligation of the pledge and what then is the right of the pledgor?
I. The pledgee is bound to advice the pledgor, without delay of any danger to the thing pledged.
II. The pledgor can demand the return of the thing pledged upon offering another thing in pledge which is of the
same kind as the former and not of inferior quality.
a. True, True
b. True, False
c. False, True
d. False, False
___15. J mortgaged his residential land to R as guarantee for the payment of P500,000 loan of J. They agreed that J will
not sell the land while the obligation exists. Before the maturity of the mortgage, C offered to but the land from J. Which of
the following statements is correct?
a. J cannot sell the land to C because of the agreement not to sell.
b. J can sell the land to C only if R consents in writing.
c. J can sell the land to C despite the agreement not to sell.
d. J cannot sell the land to C unless J pays R the obligation.
___16. A contract of pledge is
A. A real contract because it is perfected by the delivery of the thing pledged.
B. An accessory contract because it has no independent existence of its own.
a. Only A
b. Only B
c. Both A and B
d. Neither A nor B
___17. Which of the following statements is not correct?
a. The sale of the thing pledged shall extinguish the principal obligation, whether or not the proceeds of the sale
are equal to the amount of the principal obligation, interest and expenses in a proper case.
b. If the price of the sale of the thing pledged is more than the obligation, the debtor shall not be entitled to the
excess unless it is otherwise agreed.
c. If the price of the thing pledged is less than the obligation, the creditor shall not be entitled to recover the
deficiency, unless it is otherwise agreed.
d. At the public auction, the pledgor or owner may bid and he shall have a better right if he should offer the same
terms as the higher bidder.
___18. The following are the essential characteristics common to the contracts of pledge and mortgage, except
a. That they are constituted to secure the fulfillment of the principal obligation.
b. That the pledgor or mortgagor is the absolute owner of the thing pledged or mortgaged.
c. That the contract is registered with the Register of Deeds.
d. That the person constituting the contract has free disposal of his property or that he is authorized legally for the
purpose.
___19. I. In all cases of extrajudicial sale, the mortgagor may redeem the property at any time within one year from and
after the date of registration of the sale.
II. In judicial foreclosure of real estate mortgage, the general rule is that the mortgagor cannot exercise his right of
redemption after the confirmation of the sale by the court.
a. True, True
b. False, False
c. False, True
d. True, False
___20. A pledged her ring to F to secure a P10,000 obligation payable in two years. One year thereafter, F gives a note in
writing to A stating that the debt need not be secured and that A may get the ring back at her most convenient time. As a
result
a. The principal obligation and the contract of pledge are both extinguished.
b. Only the principal obligation is extinguished but not the contract of pledge because A did not get the ring.
c. Both the principal obligations and the contract of pledge are not extinguished because A did not get back the
ring.
d. The pledge is extinguished and F is constituted as a depositary.

DLSL CPA Board Operation Business Law

Page 2 of 4

___21. This is an accessory contract

a. Sales
b. Mutuum
c. Commodatum
d. Mortgage
___22. These are real contracts, except
a. COmmodatum
b. Deposit
c. Pledge
d. Chattel mortgage
___23. L pledged his shares of stock to M to secure his obligations. Later, S sold his shares to J. As a result
a. L can compel M to surrender the shares certificate to J.
b. J can compel M to deliver the shares of certificate to him.
c. The refusal of M to surrender the shares certificate will invalidate the sale.
d. M can refuse to surrender the shares certificate.
___24.I. The creditor cannot appropriate the thing pledged or mortgaged, or disposed of them. Any stipulation to the
contrary is void.
II. The contract of pledge or mortgage may secure all kinds of obligations be they pure or subject to a suspensive
condition.
a. True, True
b. False, False
c. False, True
d. True, False
___25. D mortgaged his parcel of land to C as security for a loan. Fearing foreclosure of the mortgage due to his inability
to pay the loan, D sold the land to X without the consent of C. Is the sale valid?
a. No unless there was prior consent of the mortgagee.
b. Yes stipulation prohibiting the sale without the consent of the mortgagee shall be void.
c. Yes provided the mortgage was notified before the sale.
d. No, if there was stipulation requiring prior consent.
___26. D owes C a sum of money with M as mortgagor of his land to secure the loan. Is the mortgage valid even if the
mortgagor is not the debtor?
a. Yes provided the mortgagor or pledgor in case of pledge is the absolute owner of the property mortgaged or
pledged.
b. Yes provided it is in writing and registered.
c. No the mortgagor/pledgor must be the debtor himself.
d. No unless the mortgagor is a co-debtor.
___27. The price stipulated by the parties to a mortgage contract below which the property shall not be sold at public
auction.
a. Market price
b. Current price
c. Upset price
d. Selling price
___28. One the following is not a characteristic of real mortgage
a. Accessory contract b. Real contract
c. Inseparable contract d. Indivisible contract
___29. A written instrument indicates that D received P20,000 from C. Later, the parties executed a written instrument
indicating the delivery by D of his laptop computer to C. In case of doubt, what contract was entered into between D and C
as regards the laptop computer?
a. Pledge
b. Dacion en pago
c. Sale
d. Agency
___30. Pledge is extinguished by any of the following means, except
a. Return by the pledgor of the thing pledged.
b. Written abandonment of the pledge by the pledge who remains in possession of the thing pledged.
c. Sale of the thing pledged for less than the amount of the debt.
d. Appropriation of the thing pledged if not sold at one public auction.
___31. D obtained a loan from C. To secure the debt, D pledged his right to C. Before due date, C executed a private
document stating that he was abandoning the pledge. In the meantime, C remained in possession of the ring and D has
yet to express his acceptance of the abandonment of the pledge.
a. The pledge of the ring is extinguished.
b. The pledge is not extinguished until C returns the ring.
c. The pledge is not extinguished unless D accepts the abandonment since it is an act of generosity.
d. The pledge is not extinguished because the abandonment should be in public instrument.
___32. D pledged his diamond ring and gold watch to C to secure a debt of P10,000.
a. If D defaults and the ring and watch are sold at public auction, C may recover any deficiency if the proceeds of
sale amounts to less than P10,000.
b. If D defaults, C may automatically appropriate for himself the ring and the watch.
c. If D pays C P5,000, D may demand either the return of the ring or the watch.
d. If C renounces the pledge in writing, the pledge is extinguished although C continues to possess the ring and
the watch.
___33. In a contract of pledge, the pledgee/creditor may do the following, except to:
a. Use the thing pledged for purposes of preservation.
b. Retain the thing pledged until the principal obligation is satisfied.
c. Ask for a substitute if he was deceived on the substance or quality of the thing pledged.
d. Sell the thing pledged without notice to the pledgor/debtor.

DLSL CPA Board Operation Business Law

Page 3 of 4

___34. A kind of mortgage which lacks the formalities required by law but nevertheless shows the intention of the parties
to secure a debt with real property is known as
a. Conventional mortgage
b. Voluntary mortgage
c, Equitable mortgage d, Legal mortgage
___35. The creditor/pledge has the following rights, except to:
a. Retain the thing in his possession until the debt is paid,
b. Use the thing pledged even without authority if such use is necessary for its preservation.
c. Demand reimbursement of the expenses made for the preservation of the thing.
d. Automatically appropriate the thing pledged upon default of the debtor in the payment of his debt.
___36. This is a stipulation in pledge or mortgage providing that the ownership of the thing given as security will pass to
the pledge or mortgagee upon default of the debtor.
a. Constitutum possessorium
b. Pactum commissorium
c. Legal subrogation
d. Redemption
___37. In order to bind third persons, a pledge:
a. Must be recorded with the Register of Deeds
b. Must be in a public instrument showing a description of the thing pledged and the date of the pledge.
c. Is sufficient that it be in a private instrument showing a description of the thing pledged and the date of the
pledge.
d. Must be accompanied by an affidavit of good faith.
___38. D borrowed P5,000 from C. To secure the debt, D pledged 50 grams of shabu. On due date, demanded payment
but D refused to pay by raising the defense that his debt is void. May C collect from D?
a. No because the loan obligation and the pledge are contrary to law.
b. Yes, but if D cannot pay, C may go after the pledge to satisfy his claim.
c. No because the nullity of the pledge carried with it the nullity of the loan obligation.
d. Yes but if D cannot pay, C may have to resort to other remedies to satisfy his claim.
___39. D obtained a 12-month loan of P100,000 from C. D constituted a mortgage on a certain lot which he knew
belonged to X. On due date:
a. C cannot collect from D because the obligation is rendered void, D, the mortgagor, not being the owner of the
mortgaged lot.
b. C can collect from D because the mortgagor need not be the owner of the property.
c. C can collect from D because although the mortgage is void, the loan obligation can stand independently from
it.
d. C cannot collect from D because the latter was not authorized by any power of attorney to mortgage the lot.
___40. It refers to the procedure adopted by the mortgagee to terminate the rights of the mortgagor on the property
mortgaged and includes the sale of the property.
a. Redemption
b. Repossession
c. Foreclosure
d. Repurchase
___41. A borrowed P100,000 from B and as a security, A pledged his ring to B. After the obligation falls due, A goes to B
relinquishing ownership of the ring in favor of B. This is
a. Caveat emptor
b. Dacion en pago
c. Pactum commisorio d. Pacto de retro
___42. A borrowed P30,000 from B and as a security, he pledged his ring, part of earnings and necklace. On due date, A
paid P20,000. As a result,
a. A can demand the return of one of the things pledged.
b. A can demand the return of any two of the things pledged.
c. A can demand the return of the ring.
d. A cannot demand the return of the ring.
___43. Which of the following is not correct as regards pledge and mortgage?
a. The creditors can foreclose the things pledged or mortgaged in case of non-payment of the obligation.
b. The things pledged or mortgaged are delivered to the creditors to secure the fulfillment of the obligation.
c. In case of default, the creditors cannot appropriate the things pledged or mortgaged even if stipulated.
d. A pledge or mortgage cannot exist without a valid obligation.
___44. The creation of a lien on the property upon which it is imposed whoever may be the possessor of the property, to
the fulfillment of the obligation for whose security it was constituted refers to the characteristics of real mortgage being
a. Accessory contract
b. Indivisible contract c. Inseparable contract
d. A real property in itself
___45. The following are the characteristics of a chattel mortgage, except
a. The mortgagor must be the absolute owner of the property mortgaged.
b. It is an accessory contract.
c. It involves immovable property.
d. The deed of chattel mortgage must be accompanied by an affidavit of good faith to be binding against third
person.

DLSL CPA Board Operation Business Law

Page 4 of 4