Chapter 1: Agency

20. I. The power to collect and receive payments on behalf of the principal an ordinary act of administration covered by the general
powers of an agent.

II. A duly appointed agent has no power to exercise any act of strict domination on behalf of the principal unless authorized by a
special power of attorney.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

The power to collect and receive payments on behalf of the principal is an ordinary act of administration covered by the
general powers of an agent. On the other hand, the filing of suits is an act of strict dominion.

Under Article 1878 (15) of the Civil Code a duly appointed has no power to exercise any act of strict dominion on behalf of the
of the principal unless authorized by the special power of attorney. An agent’s authority to file suit cannot be inferred from his authority
to collect or receives payments: the grant of special powers cannot be presumed from the grant of general powers. Moreover, the
authority to exercise the special powers must be duly established by evidence, even though it need to be in writing.

21. I. An agent’s authority to file suit cannot be inferred from his authority to collect or receive payments.

II. The authority to exercise special powers must be duly established by evidence, even though it need not to be in writing.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

22. Special of attorney are necessary in the following cases, except.

a. To make such payments as are not usually considered as an acts of administration

b. To effect novations which put an end to obligations already in existence at the time the agency was constituted

c. To compromise, to submit questions to arbitration, to renounce the right to appeal from a judgement, to waive objections to the
venue of an action or to abandon a prescription already acquired

d. To manage an apartment for the principal

23. Special powers of attorney are necessary in the following cases, except:

a. To enter into any contract by which the ownership of an immovable is transmitted r acquired either gratuitously or for a valuable
consideration

b. To make gifts,except customary ones for charity or those made to employees in the business managed by the agent

c. To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are under
administration
d. To lease any real property to another person for one year

24. Special powers of attorney are necessary in the following cases, except.

a. To bind the principal to render some service without compensation

b. to bind the principal in a contract of partnership

c. To obliagate the principal in a contract of partnership

d. To obligate the principal as a guarantor or surety

d. To create or convey real rights over personal property

25. Special powers of attorney are necessary in the following cases except.

a. To create or convey real rights over immovable property

b. To accept or repudiate an inheritance an inheritance

c. To retify or recognize obligation contracted before the agency

d. Any other act of administration

26. I. Even if a document is titled as a general power of attorney, the requirement of a special power of attorney is met if there is a clear
mandate from the principal specifically authorizing the performance of the act.

II. The special power of attorney can be included in the general power when it is specifies therein the act of transaction for which the
special power is required.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

True, Article 1878 requires a special power of attorney for an agent to execute a contract that transfers the ownership of an
immovable. However, the Court has clarified that Article 1878 refers to the nature of the authorization, not to its form. Even if a
document is titled as a general power of attorney, the requirement of special power of attorney is met if there is a clear mandate from
the principal specifically authorizing the performance of the act.

In Veloso v. Court of Appeals, the Supreme Court explained that a general power of attorney could a special power to sell that
satisfies the requirement of a special power of attorney to sell that satisfies the requirement of 1878, thus.

An examination of the records showed that the assailed power of attorney was valid and regular on its face. It was notarized
and as such, it carries the evidentiary weight conferred upon it with respect to its due execution. While it is true that it was denominated
as a general power of attorney a perusal thereof revealed that it stated an authority to sell, to wit:

To buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and hereditaments or other forms of real
property, more specifally TCT No. 49138, upon such terms fit and conditions and under such covenants as my said attorney shall deem
fit and proper. Thus, there was no need to execute a separate special power of attorney had expressly authorized the agent or attorney
in fact the power to sell the subject property. The special power of attorney can be included in the general power when it is specified
therein the act or transaction for which the special power is required.
27. I. The power to borrow money is one of those cases where corporate officers as agents of the corporation need a special power of
attorney.

II. As a general rule, a contract of agency may be oral.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

The power to borrow the money is one of those cases where corporate officers as agents of the corporation need a special power of
attorney. As a general rule, a contract of agency may be oral. However, it must be written when the law requires a specific, for
example, in a sale of a piece of land or any interest therein through an agent.

28. I. If the special authority is not written, then it must be duly established by evidence.

II. A special power of attorney is necessary to lease any real property to another person for more than one year.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

Article 1878 does not state that the authority be in writing. As long as the mandate is express, such authority may be either
oral or written. The Supreme Court unequivocably declared in Lim Pin v. Liao Tian, et al., that the requirement under Article 1878 of the
Civil Code refers to the nature of the authorization and not to its form. Be that as it may, the authority must be duly established by
competent and convincing evidence other than the self serving assertion of the party claiming that such authority was verbally given
thus:

The requirements of a special power of attorney in Article 1878 of the Civil Code and of a special authority in Rule 138 of the
Rules of Court refer to the nature of the authorization and not its form. The requirements are met if there is a clear mandate from the
principal specifically authorizing the performance of the act. As early as 1906, this Court in Strong c. Gutierrez-Repide(6 Phil.680)
stated that such a mandate may be either oral or written, the one vital thing being that is shall be express. And more recently, we stated
that, if the special authority is not written, then it must be duly established by evidence.

Rules require, for attorneys to compromise the litigation of their clients, a special authority be in writing the Court has every
reason to expect that the self-serving assertion of counsel himself that such authority was verbally given him. (Home insurance
Company vs. United States lines Company, et al., 21 SCRA 863; Vicente vs. Geraldez, 52 SCRA 210; 225)

29. I. The authority to bind a principal as a guarantor or surety is none of those powers which requires a general power authority

II. A duly appointed agent has no power to exercise any act of strict dominion on behalf of the principal unless authorized by a general
power of attorney.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Note:

Our law mandates an agent to act within the scope of his authority. The scope of an agent’s authority is what appears in the
written terms of the power of attorney granted upon him. Under Article 1878 (11) of the Civil Code, a special power of attorney is
necessary to obligate the principal as a guarantor of surety.

The authority to bind a principal as a guarantor or surety is one of those powers which requires a Special Power of Attorney
pursuant to Article 1878 if the Civil Code. Such power could not be simply assumed or inferred from the mere existence of an agency.
A person who enters into a contract if suretyship with an agent without confirming the extent of the latter’s authority does so at his peril.

Note:

Under Article 1878 (15) of the Civil Code, a duly appointed agent has no power to exercise any act of strict dominion on behalf
of the principal unless authorized by a special power of attorney. An agent’s authority to file suit cannot be inferred from his authority to
collect r receive payments; the grant of special powers cannot be presumed from the grant of general powers. Moreover, the authority
to exercise special powers must be duly established by evidence even though it need not be in writing.

30. I. A special power to sell includes the power to mortgage.

II. A special power to mortgage includes the to sell.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and independent contract and not an
auction sale resulting from extrajudicial foreclosure, which is precipitated by the default of a mortgagor. Absent that default, no
foreclosure results. The stipulation granting an authority to extrajudicially foreclose a mortgage is an ancillary stipulation supported by
the same cause or consideration for the mortgage and forms an essential or inseparable part of that bilateral agreement. The power to
foreclose is not an ordinary agency that contemplates exclusively the representation of the principal by the agent but is primarily an
authority conferred upon the mortgage for the latter’s own protection.

31. I. The power to foreclose is not an ordinary agency that contemplates exclusively the representation of the principal by the agent
but is primarily an authority conferred upon the mortgagee for the latter’s own protection.

II. A special power to compromise authorizes submission to arbitration.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

32. I. The authority of the agent to act emanates from the powers granted to him by his principal, the actions of the former shall bind the
latter.

II. As long as the agent acts beyond the scope of the authority given by his principal, the actions of the former shall bind the latter.

a. Only I is true
b. Only II is true
 c. Both are true
d. Both are false

Note:

Agency is basically personal, representative, and derivative in nature. The authority of the agent to act emanates from the
powers granted to him by his principal; his act is the act of the principal if done within the scope of the authority. Qui facit per alium facit
se. ‘’ He who acts through another acts himself ”.

Article 1881 of the New Civil Code provides that the agent must act within the scope of his authority. He may do such acts as
may be conductive to the accomplishment of the purpose of the agency. Thus, as long as the agent acts within the scope of the
authority given by his principal, the actions of the former shall bind the latter.

33. I. The limit of the agent’s authority shall be considered exceeded should it have been performed in a manner more advantageous to
the principal than that specified by him.

II. If an agent acts in his own name, the principal has ni right of action against the person with whom the agent has a contracted;
neither have such persons against the principal.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

34. I. If an agent acts in his own name, the agent is the one directly bound in favour of the person with whom he has ontracted, as if the
transaction where is own, except when the contract involves things belonging to the principal.

II. When things belong to the principal are dealt with, the agent is bound to the principal although he does not assume the character
of such agent and appearing acting in his own name.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

Art, 1883. If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has
contracted; neither have such persons against the principal.

In such case the agent is the one directly bound in favour of the person with whom he has contracted, as if the transaction
were his own, except when the contract involves things belonging to the principal.

The provision of this article shall be understood to be without prejudice to the actions between the principal and agent.

Consequently, when things belonging to the principal are dealt with the agent is bound to the principal although he does not
assume the character of such agent and appears acting in his own name. In the other words, the agent’s apparent representation
yields to the principal’s true representation and that in reality and in effect , the contract must be considered as entered into between
the principal and the third person. Corollarily, if the principal can be obliged to perform his duties under the contract, then he can also
demand the enforcement of his rights arising from the contract.
Chapter 2: Agency

Obligation of the agent

1. I. The agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his non-
performance, the principal may suffer.
II. The relationship existing between principal and agent is fiduciary one, demanding conditions of trust and confidence.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

An agent is bound to carry out the agency. The relationship existing between principal and agent is fiduciary one, demanding
conditions of trust and confidence. It is the duty of the agent to act in good faith for the advancement of the interests of the principal.

An agent who carries out the orders and instructions of the principal without the authority of negligence, deceit or fraud,
cannot be held responsible for the failure of the principal to accomplish the object of the agency. This can be gleaned from the following
provisions of the New Civil Code on the obligations of the agent:

Article 1884. The agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his
non-performance, the principal may suffer.

Article 1889. The agent shall be liable for the damages if, there being a conflict between his interests and those of the
principal, he should prefer his own.

Article 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be
responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

(2) When he was given such power but without designating the person and the person appointed was notoriously incompetent or
insolvent.

Article 1909. The agency is responsible not only for fraud but also for negligence which shall be judged with more or les rigor by the
court according to whether the agency was or was not for a compensation.

2. I. An agent who carries out the orders and instructions of the principal without being guilty of negligence, deceit or fraud,
cannot be held responsible for the failure of the principal to accomplish the object of the agency.
II. In case a person declines an agency, he is bound to observe extra-ordinary diligence in the custody and preservation of the
goods forwarded to him by the owner.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
3. P who is based in Baguio City, sent a letter with a special power of attorney to A, an agent dealing with buy and sell of cars in
Davao, to sell its cars. The letter which was sent through the postal office, was duly received by A, who signed in the registry
return receipt. A, however did not respond to the letter. Based on the foregoing data:
a. No agency was created between P and A because A did not respond to the letter.
b. An agency was created by the ratification of A when he duly received the letter with a special power of attorney.
c. An agency was created between P and A by the implied acceptance of A of the agency.
d. No agency was created because of the inaction of A.
 4. I. Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to do so even if the
principal insolvent.
II. In the execution of the agency, the agent shall act in accordance with the instructions of the principal.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Example:

P (principal) and A (agent) agreed to enter into a contract of agency. One of their stipulation, among others, is for A to
advance the necessary funds for the payment if office supplies, inventories, electricity, water, and telephone expenses. In this case, A
must advance the necessary funds. It is understandable, however, that P will reimburse it.

( Putol ba to? Number 12 agad kasunod buddy e) Check mo na lang

12. This is based on the rule that all persons dealing with property covered by a Torrens Certificate of Title, as buyers or mortgaged,
are not requires to go beyond what appears on the face of the title.

a. Doctrine of the mortgagee in good faith

b. Doctrine of mortgagor in good faith
c. Doctrine of highest bidder in good faith
d. Doctrine of lowest bidder in good faith

13. There are at least two contractual modes under the Civil Code by which personal property can be used to secure a principal
obligation:

I. he first is through a contract of pledge.

II. The second is through a real mortgage.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

There are at least two contractual modes under the Civil Code by which personal property can be used to secure a principal
obligation. The first is through a contract of pledge, while the second is through a chattel mortgage. A pledge would require the pledgor
to surrender possession of the thing pledged, ie., the membership share, to the pledge in order that the contract if the pledge may be
constituted.

14. I. The law recognizes instances when persons not directly parties to a loan agreement may give as security their own properties for
the principal trasaction.

II. When the property of a third person which has been expressly mortgaged to guarantee an obligation to which the said person is a
stranger, said property is directly and solidarily liable for the fulfilment thereof.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Note:

Art. 2085 (3) of the Civil Code reads:

The following requisites are essential to the contracts of pledge and mortgage:

(3) 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.

Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own
property.

In this jurisdiction, when the property of a third person which has been expressly mortgaged to guarantee an obligation to
which the said person is a stranger, said property is directly and jointly liable for the fulfilment thereof, in the same manner as
the mortgaged property if the debtor himself.

15. I. In a contract of mortgage, the debtor retains beneficial interest over the property notwithstanding the encumbrance, since the
mortgage only serves to secure the fulfilment of the principal obligation.

II. Even if the debtor defaults, this fact does not operate to vest in the creditor the ownership of the real property, subject of
mortgage. The creditor must still resort to foreclosure proceedings.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

In a contract of mortgage, the debtor retains beneficial interest over the property notwithstanding the encumbrance, sine the
mortgage only serves to secure the fulfilment of the principal obligation. Indeed, even if the debtor defaults, this fact does not operate to
vest in the creditor the ownership of the property; the creditor must still resort to foreclosure proceedings. Thus, a mortgaged property
may still be levied upon by the sheriff to satisfy the judgement debtor’s obligations.

16. I. The subsequent declaration of a title as null and void is not a ground for nullifying the mortgage right of a mortgagee in good faith.

II. Where innocent third persons relying on the correctness of the certificate thus issued, acquire rights over the property, the court
cannot disregard such rights.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

The rule applicable to thus controversy, with the exception thereto, is well settled. Where the certificate of title is in the name
of the mortgagor when the land is mortgaged, the innocent mortgagee for value has the right to rely on what appears on the certificate
of title. In the absence of anything to excite or arouse suspicion, said mortgagee is under no obligation to look beyond the certificate
and investigate the title of the mortgagor appearing on the face of said certificate. Although Article 2085 of the Civil Code provides that
absolute ownership of the mortgaged property by the mortgagor is essential, the subsequent declaration of a title as null and void is not
a ground for nullifying the mortgage right of a mortgagee in good faith.
The rationale for this rule is stayed thus:

The main purpose of the Torrens System is to avoid possible conflicts to title to real estate and to facilitate transactions
relative thereto by giving the public the right to rely upon the face of a Torrens certificate of title and to dispense with the need of
inquiring further, except when the party concerned had actual knowledge of facts and circumstances that should impel a reasonably
cautious man to make such further inquiry. Thus, where innocent third persons relying on the correctness of the certificate thus issued,
acquire rights over the property, the court cannot disregard such rights. The lien of the petitioner, an innocent mortgage for value, must
be respected and protected.

17. I. A mortgage who files a suit for collection abandons the remedy of foreclosure of the chattel mortgage constituted over the
personal property as security for the debt or value of the promissory note which he seeks to recover in the said collection suit.

II. In the necessary contract of real mortgage, the consideration of the debtor in furnishing the mortgage is the existence of a valid,
voidable, unenforceable debt.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

The filing of collection suit barred the foreclosure of the mortgage thus:

A mortgage who files a suit for collection abandons the remedy of foreclosure of the chattel mortgage constituted over the
personal property as a security for the debt or value of the promissory note which he seeks to recover in the said collection suit.

The reason for this rule is that:

“...when however, the mortgage elects to file a suit for collection, not foreclosure, thereby abandoning the chattel as basis for relief, he
clearly manifest his lack of desire and interest to go after the mortgaged property as security for the promissory note.

The consideration of the necessary contract of real estate mortgage is the same as that of the principal contract. For the
debtor, the consideration of his obligation to pay is the existence of a debt. Thus, in the accessory contract of real estate mortgage, the
consideration of the debtor in furnishing the mortgage is the existence of a valid voidable or unenforceable debt. (Art. 2086, in relation
to Art. 2052 if the Civil Code)

18. I. When the principal obligation becomes due and the debtor fails to perform his obligation, the creditor may foreclose on the pledge
or mortgage for the purpose of alienating the property to satisfy his credit.

II. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary
is unenforceable.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

19. Appropriation of the mortgaged properties by the mortgagee even if stipulated by the parties would be null and void for being what
is known as:

a. Pactum commissorium
b. Pacta sunt servanda
c. Pactum commissioner
 d. Pacto de retro

Note:

Pactum commissorium is among the contractual stipulations that are deemed contrary to law. It is defines as “a stipulation empowering
the creditor to appropriate the thing given as guaranty for the fulfilment of the obligation in the event the obligor fails to live up tp his
undertakings, without further formality, such as foreclosure proceedings, and a public sale.

The prohibition against a pacto commissorium is intended to protect the obligor, pledgor, or mortgagor against being
overreached by his creditor who holds a pledge or mortgage over property whose value is much more than the debt.

20. I. Prohibition against pacto commissorium is intended to The prohibition against a pacto commissorium is intended to protect the
obligor, pledgor, or mortgagor against being overreached by his creditor who holds a pledge or mortgage over property whose value is
much more than the debt.

II. The essence of pactum commisorrium is that ownership of the security will pass to the creditor by the mere default of the debtor.
Such arrangements as contrary to morals and public policy.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

The essence of pactum commissorium is that ownership of the security will pass to the creditor by the mere default of the
debtor. The Supreme Court has repeatedly declared such agreements as contrary to morals and public policy.

21. There are two elements for pactum commissorium to exist:

I. That there should be a pledge or mortgage wherein a property is pledged or mortgage by way of security for the payment of the
principal obligation.

II. That there should be a stipulation for an automatic appropriation by the creditor of the thing pledged or mortgaged in the event of
non-payment of the principal obligation within the stipulated period.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

1. That there should be a pledge or mortgage wherein a property is pledged or mortgaged by way of security for the payment of
the principal obligation; and
2. That there should be a stipulation for an automatic appropriation by the creditor of the thing pledged or mortgaged in the event
of non-payment of the principal obligation within the stipulated period.

22. I. A stipulation allowing the mortgage to take actual or constructive possession of a mortgaged property upon foreclosure is not
valid.

II. A pledge or mortgage is divisible, even though the debt may be divided among the successors in interest of the debtor or of the
creditor.

a. Only I is true
 b. Only II is true
c. Both are true
d. Both are false

Note:

When the principal obligation becomes due and debtor fails to perform his obligation, the creditor may foreclose on the
mortgage for the purpose of alienating the mortgaged property to satisfy his credit.

A stipulation allowing the mortgagee to take actual or constructive possession of a mortgaged property upon foreclosure is
valid. In agricultural and Industrial Bank v. Tambunting the Supreme Court explained:

A stipulation,,, authorizing the mortgagee, for the purpose stated therein specified, to take possessioun of the mortgaged
premises upon the foreclosure of a mortgage is not repugnant. To either Article 2088 or Article 2137. On the Contrary, such stipulation
is in consonance or analogous to the provisions of Article 2132, et seq. Of the Civil Code regarding antichresis and the provision of the
Rules of Court regarding the appointment of a receiver as a convenient and feasible means of preserving and administering the
property in litigation.

23. I. In Pledge or mortgage, the debtor’s heir who has paid a part of the debt cannot ask for the proportionate extinguishment of the
pledge or mortgage as long as the debt is not completely satisfied.

II. In pledge or mortgage, neither can the creditor’s heir who received his share of the debt return the pledge or cancel the mortgage, to
the prejudice of the other heirs who have not been paid.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

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32. I. The contract of pledge gives a right to the creditor to retain the thing in his possession or in that of a third person to whom it has
been delivered, until the debts is paid.

II. The creditor shall take care of the thing pledged with the axtra-ordinary diligence; he has a right to the reimbursement of the
expenses made for its preservation, and is liable for its loss or deterioration.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

33. I. The pledgee can deposit the thing pledged with a third peron, unless there is a stipulation authorizing him to do so.

II. The pledgee is not responsible for the act of his agents or employees with respect to the thing pledge.

a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false

34. I. in case of a pledge of animals, their offspring shall pertain to the pledgee.
II. The creditor cannot use the thing pledge, without the authority of the owner, and if he should do so, or should misue the thing in any
other way, the owner may ask that it be judicially or extrajudicially deposited. When the preservation of the thing pledge requires its
use, it must be used by the creditor but for that purpose.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

35. I. The debtor cannot ask for the return of the thing pledge against the will of the creditor, unless and until he paid the debt and its
interest, with expenses in a proper case.

II. In pledge the prescriptive period within which to demand the return of the thing pledge should begin to run only after payment of the
loan and a demand for the thing has been made.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Note:

The right to recover the shares based on the written contract of pledge between petitioner and respondents would arise only
upon payment of their respective loans. Therefore, the prescriptive period within which to demand the return of the thing pledge should
begin to run only after the payment of the loan and a demand for the thing has been made, because it is only then that respondents
acquire a cause of action for the return of the thing pledge.

Prescription should not begin to run on the action to demand the return of the thing pledge while the loan still exist. This is
because the right to ask for the return of the thing pledge will not arise so as long the loan subsists.In the present case, the
prescriptive period did not begin to run when he became due. On the other hand, the petitioners right to demand payment that may be
in danger of prescription.

36.I. If trough the negligence or wilful act of the pledgee, the thing pledged is in danger of being lost or impaired, the pledgor may
require that it be deposited with a third person.

II. The pledgee is bound to advise the pledgor, without delay, of any danger to the thing pledege.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false59

37. I. If there are reasonable grounds to fear the destruction or impairment of the thing pledged, without the fault of the pledge, the
pledgor may demand the return of the thing, upon offering another thing in pledge.

II. If, without the fault of the pledgee, there is danger of destruction, impairment, or diminution in value of the thing pledge, he may
cause the same to be sold at a public sale.

a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false60
38. I. If creditor is deceived on the substance or quality of the thing pledge, he may either claim another thing in its stead, or demand
immediate payment of the principal obligation.

II. If the thing pledge is returned by the pledge to the pledgor or owner the pledge is extinguished. Any stipulation to the contrary shall
be valid.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

39. I. If subsequent to the perfection of the pledge, the thing is in the possession of the pledgor or owner, there is a conclusive
presumption that the same has been returned by the pledge.

II. A verbal statement by the pledge that he renounces or abandons thepledge is sufficient to extinguish thepledge.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

40.i. The creditor to whom the credit has not ben satisfied in due time. may proceed before a judge to the sale thing of the thing pledge.

II. If at the first auction the thing is not sold, a second one with the same either, the creditor may appropriate the thing pledge.

a. Only I is true
b. Only II is true
c. Only are true
d. Both are false

41.I. The creditor. In a contract of real security, like pledge cannot appropriate without foreclosure the things givenby way of pledge.

II. The law requires foreclosure in order to allow a transfer of title of the goods given by way of security from its pledgor, and before any
such foreclosure, the pledgor, not the pledgee. Is the owner of the goals.

a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false

(Putol yung note na nasend sa number 41)

42. I. At the public auction, the pledgor or owner cannot bid.it The pledge may also bid, and his offer shall valid if the he is the only
bidder.

II. The pledge may also bid and his offer shall be valid if he is the only bidder.

a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false

Note:
 The pledgor and the pledgee may bid at the public auction. The pledgor has a better right if the should offer the same terms
as the highest bidder The pledgee offer shall not be valid if he is the only bidder.

43.I. The sale of the thing pledge shall extinguish the principal obligation,only if the proceeds of the sale are equal to the amount of the
principal obligation , interest and expenses in aproper case.

II. All bids at the public auction shall offer to pay the purchase price at once, aif any other bid is accepted the pledgee is deemed to
have received the purchase price, as far as the pledgor or owner is concerned.

a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false

44. in a sale of the thing pledge:

I. if the price of the sale is more than said amount, the debtor shall be entitled to the excess, unless it is otherwise agreed.

II. If the price of the sale is less, neither shall the creditor be entitled to recover the deficiency, unless otherwise stipulated.

a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false

Note:

Under the civil code, it is the pledgee, and not the pledgor, who is gives the right to choose which of the items should be sold if
two or more things are pledged, no similar option is given to pledgor under the civil code. Moreover there is nothing in the Civil code
provision governing the extrajudicial sae of pledge properties that prohibits the pledge of several different pledge contract from the
buyer of the auction all of the pledged properties on a single occasion or from the buyer at the auction sale in purchasing all the pledge
properties with a single purchase price. The relative insignificance of ascertaining the definite apportionments of the sale price to the
individual shares lies in the fact once apledged item sold at auction, neither the pledge nor the pledgor can recover whatever deficiency
or excess there may be between the purchase price and the amount of the principal obligation

45.I.Under the Civil code, it is the pledgee, and not the pledgor, who is gives the right to choose which of the items should be sold if two
or more things are pledged.

II. There is nothing in the Civil Code provisions governing the extrajudicial sale of pledged properties that prohibits the pledgee of
several different pledge contacts from auctioning all of the auction sale in purchasing all the pledged properties with a single purchase
price.

a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false

46. I. It is settled that if the proceed of the sale are insufficient to cover the able in an extrajudicial foreclosure of the mortgage, the
mortgagee is not entitled to claim the deficiency from the debtor.\

II. when the legislature intends to deny the right of a creditor to sure for any deficiency resulting for foreclosure of security given to
guarantee an obligation it expressly provides as in the case of pledges and in real martages of a thing sold on instalment basic,
a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false