Polytechnic University of the Philippines

COLLEGE OF ACCOUNTANCY & FINANCE

Sta. Mesa Manila

ACCO 3023 -- SALES AND OTHER SPECIAL CONTRACTS

Mid-term Examination
January 8, 2017

1. A contract of sale:
a. must be absolute in nature;
b. may be conditional when subject to a suspensive condition only;
c. may be absolute or conditional;
d. is a solemn contract.

2. Angie and Cyrine executed a contract of sale wherein Angie would render professional service in favor of
Cyrine for one week based on the rate imposed by the minimum wage law, is the contract valid?
a. no, it is tantamount to involuntary servitude;
b. no, there is no price certain in money;
c. yes, there is a valid cause because the price is fixed by law;
d. yes, there is a valid object as rendering professional service is not prohibited by law.

3. Miss Karen is the representative of the Philippines for the Miss Universe 2020 contest to be held in
Norway. To finance her quest for the title, she sold to J. Ivan for P1 Million the Audi car she would receive
if she wins the title, is the sale void?
a. no, there may be sale of a thing whose acquisition depends upon a contingency;
b. yes, the object is uncertain;
c. yes, ownership of the thing sold is an element of a contract of sale;
d. no, all things and rights capable of existence may be objects of sale.

4. Sydney owns a specific piece of land and being the sole owner thereof, he can sell the same; but which of
the following may not be sold by Sydney?
a. his right to enjoy the fruits of the land;
b. a distinct and specific portion of the land;
c. his undivided one-half interest in the land;
d. none of the above.

5. Determination of a price may be left to the judgment of an arbitrator, what is the effect should such person
be unable to fix it?
a. the price is inefficacious;
b. the contract is inefficacious;
c. the contract may be valid with reference to a certain thing;
d. the contract is void because the price must be agreed upon only by the parties.

6. Which transaction is considered a contract of sale in the Philippines?

a. Philippine peso exchanged for local coins;
b. Philippine peso exchanged for euro;
c. Euro exchanged for US dollar;
d. all of the above.

7. The following persons are relatively incapacitated to enter into a contract of sale by reason of their relation
to the objects of sale, choose the exception:
a. guardians;
b. aliens;
c. agents;
d. court employees.

8. In a contract to sell, full payment of the price is a positive suspensive condition, what is the effect when
there is failure to pay the price?
a. breach of contract;
b. the contract is inefficacious;
c. such failure prevents the obligation of the vendor to convey title to vendee;
d. the vendor may deprive vendee of possession by rescission of the contract.

9. It is a contractual reservation of title:

a. pactum reservati dominii;
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b. option contract;
c. contract with right of first refusal;
d. barter.

10. A contract of sale is perfected:

a. when the contract is signed by the parties;
b. at the moment there is a meeting of minds;
c. at the moment there is a meeting of minds upon the object and the price;
d. at the moment there is a meeting of minds upon the object and the price, and delivery
of the object to the vendee.

11. Kristine agreed to sell her car to Patrick who gave her the amount of P10,000.00 as initial payment.
Subsequently, the car was delivered to Patrick. Due to her busy schedule, however, Kristine forgot the
transaction with Patrick. Two years after, Kristine saw Patrick with the car at the mall and demanded
payment of the price of the car. Is the demand of Kristine valid?
a. yes, Patrick must pay the reasonable price of the car;
b. no, there was no price agreed upon and the parties have to enter into new or further
agreement to determine the price;
c. no, Kristine has no cause of action against Patrick because there was no contract of
sale;
d. yes, delivery of the car to Patrick perfected the contract of sale.

12. A characteristic of some contracts of sale wherein what one receives may in time be greater or smaller than
what he has given:
a. aleatory;
b. commutative;
c. onerous;
d. alternative.

13. Warranty against deprivation of the property purchased is:

a. an essential element of a contract of sale;
b. an inherent element of a contract of sale;
c. an accidental element of a contract of sale;
d. a special characteristic of a contract of sale.

14. In dation in payment, as distinguished from a contract of sale:

a. there is no pre-existing credit;
b. the contract gives rise to obligations;
c. the delivery of the object may extinguish completely or partially the credit;
d. there is greater freedom in the determination of the price.

15. Angeline’s rich uncle died and left her and her siblings a property in London. After being informed of the
death of her uncle, Angeline sold to her brother Jordan her share of the London property. Angeline’s sister,
Ericka, questions the transaction for being void, is the contention of Ericka correct?
a. yes, no contract may be entered into upon future inheritance;
b. yes, Angeline’s right to the London property is not yet capable of determination;
c. no, sale of a future thing may be subject of a contract of sale;
d. no, Angeline’s right to the London property is already realized and may be sold.

16. What is the minimum requirement for a valid object of a contract of sale?
a. the thing must be particularly designated;
b. the thing must be physically segregated from all others of the same class;
c. the thing is capable of being made determinate without the necessity of a new or
further agreement between the parties;
d. all of the above.

17. Emptio spei deals with:

a. future things;
b. things subject of a contingency;
c. hereafter-acquired properties;
d. present things;

18. Lester sold his laptop with a value of P15,000.00 to Daniella in consideration of Daniella’s bag worth
P10,000.00 and P5,000.00 cash, what kind of transaction did the parties enter into?
a. contract of sale;
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b. barter;
c. mutuum;
d. commodatum.

19. As a rule, gross inadequacy of price does not affect a contract of sale. However, if the price is so inadequate
as to be unconscionable, what is the effect?
a. the contract of sale may be annulled;
` b. the contract may be considered a donation;
c. the contract may be considered an equitable mortgage;
d. all of the above.

20. In sale by auction, may the auctioneer withdraw the goods from the sale?
a. yes, in all instances before the fall of the hammer;
b. yes in general but before perfection as the bid is merely an offer;
c. no, if the auction is announced to be with reserve;
d. no in all instances as the participation in the auction constitutes meeting of minds.

21. A promise to buy and sell a determinate thing for a price certain is:
a. reciprocally demandable;
b. a perfected promise;
c. an option contract;
d. considered a policitacion.

22. Which of the following is not a requisite of the Recto law, the proviso on non-recovery of the deficiency:
a. there must be a contract of sale;
b. the object of sale is personal or real property;
c. the sale must be on installment;
d. all of the above are requisites.

23. Ownership of the thing sold is acquired by the vendee from the moment of:
a. perfection of the contract;
b. delivery to him;
c. payment of the price;
d. signing of the contract.

24. The effects of “on sale or return”, except:

a. ownership passes to the buyer on delivery;
b. buyer can return the object even if he finds nothing wrong with its quality;
c. it is a sale with suspensive condition;
d. the buyer bears the loss of the object.

25 to 27.
Russle sold to Beatriz a container of beauty products which was shipped on board a common carrier. Russle
transmitted to Beatriz a bill of lading wherein the goods are deliverable to the order of buyer and a bill of
exchange to be drawn by the Beatriz in favor of Russle. Consequently, Beatriz obtained possession of the
container. Instead of honoring the bill of exchange however, Beatriz sold the bill of lading to Mark who
took it in good faith and for value.

25. What is the remedy of Russle?

a. possessory lien;
b. right of stoppage in transitu;
c. right of action for rescission of the contract;
d. none of the above.

26. Who is the owner of the goods?

a. Beatriz;
b. Russle;
c. Mark.

27. Supposing before Beatriz could sell the bill of lading, the goods were lost due to fortuitous event, who
bears the loss?
a. Beatriz;
b. Russle;
c. Mark.
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28. Which is not applicable to the sale of real estate made for a lump sum?
a. there shall be no increase of the price although there be greater area or number than
that stated in the contract;
b. there shall be no decrease of the price if the area or number is less than that stated in
the contract;
c. there shall be delivery of everything within the boundaries;
d. the above-cited rules are applicable to the lump sum sale.

29. If a possessor of a movable, which was lost or unlawfully deprived from the owner, has acquired the thing
in good faith at a public sale, can the owner obtain its return from the possessor?
a. no, possession of a movable property acquired in good faith is equivalent to a title;
b. yes, but the possessor is entitled to reimbursement;
c. no, there was a valid sale and delivery of the thing to the possessor;
n. none of the above.

30. In order for the affirmation of fact or any promise of the seller relating to the object to be considered as an
express warranty, what is the test?
a. the buyer who is ignorant of the asserted fact is induced to purchase the thing and
actually purchases it relying on such affirmation or promise;
b. the buyer relies on the opinion of the seller and buys the thing based on said opinion;
c. the seller knows the truth or falsity of his affirmation or promise which induces the
buyer to purchase;
d. all are considered express warranties.

31. What is the liability of the vendor if the vendee waives the warranty against eviction with knowledge of the
risk of eviction and assumes its consequences?
a. the vendor is not liable;
b. the vendor shall pay the value which the thing sold had at the time of the eviction;
c. the vendor shall pay the value which the thing sold had at the time of the sale;
d. the vendor must return the value of the thing sold plus the income or fruits, cost of suit
and the expenses of the contract.

32. Warranty of merchantability means:

a. fit for the general purpose of the thing;
b. fit for the particular purpose for which it has been acquired;
c. fit for the use intended as stated in the contract;
d. opportunity given to the buyer to examine the object of sale.

33. One of the remedies of a vendee in case of violation of the warranty is accion quanti minores, it is defined
as:
a. proportionate reduction of the price;
b. rescission of the contract of sale;
c. specific performance;
d. action for damages.

34. What is the nature of conventional redemption?

a. a right granted by law to the vendee;
b. a right granted to the vendee by virtue of an express agreement of the parties in a
contract of sale;
c. a preparatory contract;
d. a privilege granted to the buyer in case of foreclosure of mortgage.

35. One which although lacking in some formality, form or words, or other requisites demanded by a statute,
nevertheless reveals the intention of the parties to charge a real property as security for the fulfillment of an
obligation:
a. real estate mortgage;
b. equitable mortgage;
c. chattel mortgage;
d. foreclosure of mortgage.

For items 36 to 43, write:

a. Only first statement is true; c. Both statements are true;
b. Only second statement is true; d. Both statements are false.
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36. First statement: Where necessaries are sold and delivered to a person without capacity to act, he must pay a
reasonable price therefor.
Second statement: A lawyer may purchase the property of his client subject of litigation during the pendency
of the case.

37. First statement: Things having potential existence may be objects of a contract of sale.
Second statement: The thing is licit when the object of a contract is something within the commerce of
man.

38. First statement: Automatic rescission of the sale of immovable property upon failure of the buyer to pay
the purchase price at the time agreed upon is authorized by law.
Second statement: With respect to movable property not yet delivered, automatic rescission of the sale shall
of right take place in the interest of the vendor, if the vendee, upon the expiration of the period fixed for
delivery of the thing, failed to appear to receive the goods, or having appeared, failed to tender the price.

39. First statement: If a thing sold should be lost in consequence of the hidden faults, and the vendor was not
aware of them, the vendor shall return the price and interest thereon, and reimburse the expenses of the
contract which the vendee might have paid.
Second statement: If two or more animals are sold together, whether for a lump sum or for a separate price
for each of them, and one animal is found to be suffering under a redhibitory defect, its redhibition gives rise
to the redhibition of the other animals.

40. First statement: In co-ownership, if the sale is made to another co-owner, the other co-owners cannot
legally redeem the share sold.
Second statement: In co-ownership, if a third person acquires the property by gratuitous title, the right
of legal redemption cannot be exercised.

41. First statement: In impersonation, no agency is created because the element of

representation is absent.
Second statement: The relation of an agent to his principal is fiduciary in character because it
is based on trust and confidence.

42. First statement: The power to mortgage includes the power to execute a second mortgage.
Second statement: A special power to compromise does not authorize submission to
arbitration.

43. First statement: Where the agent is authorized to appoint a sub-agent, generally, the
relation of principal and agent exists between the principal and the sub-agent.
Second statement: All acts of the substitute appointed by the agent against the prohibition of
the principal shall be void.

44. In sale of realty by installments under the Realty Installment Buyer Protection Act, where the buyer has
paid at least two years of installments and the contract is cancelled, what must be refunded to the buyer?
a. down payment;
b. cash surrender value;
c. fifty percent of the total instalments;
d. none, since the seller is not mandated to give refund.

45. It is the act or right of purchasing before others, and exercised before the sale or resale against would-be
vendor:
a. right to repurchase;
b. right of legal redemption;
c. right of preference;
d. right of pre-emption.

46. Basis of the contract of agency:

a. representation;
b. fiduciary;
c. extension of principal’s personality;
d. performance.

47. An agency which comprises one or more specific transactions:

a. general;
b. special;
c. couched in specific terms;
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d. simple.

48. Ralph appointed Rosalyn as his agent for a specific transaction. When the transaction was completed,
Rosalyn demanded payment for her services. Ralph refused to pay Rosalyn because there was no agreement
as to her compensation. Is Ralph’s contention correct?
a. yes, an agency is presumed to be gratuitous unless compensation is expressly
stipulated;
b. yes, if there is no agreement, there would be no basis for compensation;
c. no, an agency is presumed to be for compensation unless there is proof to the contrary;
d. no, the minimum wage law provides for the compensation.

49. A characteristic of an agency couched in general terms:

a. it is applicable only to general agency;
b. it includes only acts of administration;
c. it includes only acts of strict dominion;
d. it includes acts of administration and strict ownership.

50. In this case, a special power of attorney is not necessary:

a. to make customary gifts for charity;
b. to accept an inheritance;
c. to borrow money;
d. to waive any obligation gratuitously.

51. A commission agent is also known as:

a. del credere agent;
b. general agent;
c. attorney-in-fact;
d. factor.

52. An example of express agency:

a. agent’s acceptance of power of attorney without objection;
b. principal’s lack of action with the knowledge that someone is representing him without
his consent;
c. ratification by the owner of the management of the business in a quasi-contract;
d. failure of the principal to repudiate the agency knowing that another person is acting
on his behalf without authority.

53. Pamela authorized Andrew to sell her brand new motorcycle. Andrew sold it to Gillana but acted in his own
name. In case of a hidden defect, can Gillana sue Pamela for violation of warranty?
a. no, since Andrew acted in his own name, Gillana has no right of action against Pamela;
b. no, the contract of sale is unenforceable;
c. yes, the contract involves a thing belonging to the principal;
d. yes, the agent need not disclose the principal in order to bind the latter.

54. The agent must act in accordance with the instructions of the principal. What is the rule when there are no
specific instructions from the principal?
a. the agent must do all that a good father of a family would do as required by the nature
of the business;
b. the agent must wait for the instruction of the principal;
c. the agent is allowed to do whatever is necessary to attain the purpose of the agency;
d. failure to give instruction is a ground for the agent to terminate the contract of agency.

55. An instance where the stipulation is void for being against public policy:
a. where the agent acting in the name of the principal exceeded his authority and the party
with whom the agent has contracted is aware of the limits of the agent’s powers;
b. when an authority to sell a piece of land is verbally given to an agent;
c. where the agent is exempted from the obligation to render an accounting;
d. all of the above.

56. What is the liability of the agent and the principal when agent exceeded his authority and the principal
allowed the agent to act as though the latter had full powers?
a. they are jointly and severally liable;
b. they are jointly liable;
c. the principal is principally liable while agent is secondarily liable;
d. the agent is the only one liable.
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57. In loan for use or temporary possession, as distinguished from loan for consumption:
a. the borrower suffers the loss;
b. the cause may gratuitous or onerous;
c. what is involve is only personal property;
d. it is purely personal in character.

58. A case where the contract of commodatum is precarium:

a. if the use of the thing is merely tolerated by the bailor;
b. if duration of the contract has been stipulated;
c. if the use to which the thing loaned should be devoted has been agreed upon;
d. when there is waiver of right.

59. No interest shall be due unless it has been expressly stipulated in writing. If the borrower pays interest
where there has been no stipulation therefor, what is the effect?
a. the debtor may recover the interest if paid by mistake;
b. debtor is estopped from recovering the interest;
c. if the interest paid exceeds the legal interest of 6%, the debtor may recover the excess;
d. the interest received must be returned by the creditor plus damages.

60. Contracts of security are either personal or real. Choose the contract of personal security:
a. pledge;
b. mortgage;
c. antichresis;
d. guaranty.

61. A common requisite of pledge and mortgage:

a. the security must be placed in the possession of the creditor;
b. the debtor must have free disposal of the property to be encumbered;
c. the person constituting the contract of security be the absolute owner of thing to be
encumbered;
d. all of the above.

62. Which contract may not secure after-incurred obligations or future debts?
a. chattel mortgage;
b. pledge;
c. real estate mortgage;
d. antichresis.

63. An example of a real contract:

a. pledge;
b. chattel mortgage;
c. antichresis;
d. all of the above.

64. What is the effect when the thing pledged is sold?

a. if the price of the sale is less than the principal obligation, the creditor can recover the
deficiency;
b. the principal obligation is extinguished;
c. if the price of the sale is more than the obligation, the debtor is entitled to the excess;
d. the pledge continues over the proceeds of the sale.

65. A procedure to be adopted by the mortgagee to terminate the rights of the mortgagor over the property:
a. assignment;
b. automatic appropriation;
c. foreclosure;
d. public auction.

66. A characteristic of a mortgage credit:

a. real right;
b. it may be alienated or assigned to third person;
c. it follows the property;
d. all of the above.
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67. Extent of a mortgage:

a. it is limited to the property encumbered;
b. it extends to the property and its fruits and income;
c. it extends to the property and all its accessions, improvements, growing fruits, income
and proceeds of insurance, if any;
d. none of the above.

68. First statement: Consumable goods may be the subject of commodatum.

Second statement: In commodatum, since ownership is retained by the bailor, he is obliged to pay for
the ordinary expenses for the use and preservation of thing loaned.
a. Only first statement is true;
b. Only second statement is true;
c. Both statements are true;
d. Both statements are false.

69. First statement: In mutuum, it what was loaned is a fungible thing other than money, the debtor owes
another thing of the same kind, quantity and quality, even if it should change in value.
Second statement: In mutuum, the contracting parties may stipulate to capitalize the interest due and
unpaid, which as added principal, shall earn new interest.
a. Only first statement is true;
b. Only second statement is true;
c. Both statements are true;
d. Both statements are false.

70. First statement: Indivisibility of pledge or mortgage applies only if the debtors are
solidary.
Second statement: A thing pledged must be placed in the possession of the creditor, or of a
third party by common agreement, however, constructive or symbolical delivery
is sufficient.
a. Only first statement is true;
b. Only second statement is true;
c. Both statements are true;
d. Both statements are false.