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Law on Obligations Summary Quiz

Obligations and Contracts (University of the Visayas)

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1. Whenever in an obligation a period is designated, it is presumed to have been established for
the benefit of:
A. Both the creditor and the debtor
B. The creditor
C. The debtor
D. The third party
Ans: A

2.An act of liberality whereby a creditor condones the obligation of the debtor
A. Confusion
B. Compensation
C. Remission
D. Novation
Ans: C

3.The thing deteriorates pending the fulfilment of the suspensive condition without the fault of
the debtor, the impairment is:
A. To be borne by the party who cause the deterioration
B. To be borne partly by the debtor and partly by the creditor
C. To be borne by the debtor
D. To be borne by the creditor
Ans: D

4. A owes B P10, 000. With the consent of both, C pays B P5, 000. Now B and C are the creditors of
A to the amount of P5, 000 each. Suppose A has only P5, 000. Which is correct?
A. B and C should divide the P5, 000 equally
B. C should be preferred
C. A may chose who to pay
D. B should be preferred
Ans: D

5. An obligation where only the presentation has been agreed upon but the debtor may
render another in substitution is:
A. Conjoint obligation
B. Facultative obligation
C. Simple obligation
D. Alternative obligation
Ans: B

6.X, Y and Z are solidarily liable to A for P30, 000 which matures on July 1, 2018. On May 1, 2018,
X paid A fro the whole amount of the debt. If on December 1, 2018, X will be reimbursed by Y, the
latter will be liable for:
A. P10, 000 with interest from July 1, 2018 to December 1,
2018 B.P10, 000 without interest
C. P10, 000 with interest from May 1, 2018 to July 1, 2018
D. P10, 000 with interest from may 1, 2018 to December 1, 2018
Ans: A

7.A thing is not deemed lost when it:

A. Perishes
B. Disappears in such a way its existence is unknown or it cannot be recovered
C. Goes out of commerce
D. Deteriorates
Ans: D

8.A mango tree in the land of O is reclining towards the road. All of a sudden, without a storm or an
earthquake or even a strong wind, the tree falls hitting a car belonging to Y causing P20, 000
damages. The liability of O to X arises from:
A. Law
B. Quasi-contracts
C. Contracts
D. Quasi-delict
Ans: D

9.A, B and C solidary debtors owe soidary creditors X and Y P30, 000. X remitted the entire obligation
in favour of A. The effect is:
A. The obligation is not extinguished until A collects from B and C
B. The obligation is not yet extinguished until Y is paid by X his share of credit
C. A cannot recover from B and C because remission in his favour extend to the benefit of B and C
D. A can recover from B and C their respective share of the debt
Ans: C

10.A signs a promissory note and binds himself to pay X P100, 000 plus 15% per annum interest on
June 30, 2018.
A. Before June 30, 2018, X can demand payment
B. If on June 30, 2018 A is paying X, the latter can refuse the payment
C. A can compel creditor X to accept payment before June 30, 2018
D. Because the period is for the benefit of the debtor and creditor, X can refuse any
tendered payment before June 30, 2018
Ans: D

11.The following are the requisites of an obligation, except:

A. passive subject, debtor, or obligor
B. Active subject, creditor, or oblige
C. Efficient cause
D. Presentation
Ans: D

12.The debtor shall lose the right to make use of the period in the following cases except:
A. When he becomes insolvent
B. When he violates any undertaking in consideration of which the creditor agreed to the period
C. When the debtor attempts to abscond
D. When he does not furnish any guarantee or security to the creditor
Ans: D

13.An obligation ceases to be alternative and becomes a simple obligation in the following
cases, except:
A. When the debtor has communicated his choice to the creditor.
B. When the right of choice has been expressly granted to the creditor and his choice has
been communicated to the debtor.
C. When among the several prestations that are due only one is practicable.
D. When several prestations are due but the performance of one is enough to extinguish
the obligation
Ans: D

14.D is obliged to give C a specific watch, a specific ring, or a specific bracelet. The parties
agreed that C will have the right to choose the thing which will be given to him. Before C could
make his choice, the watch and the ring are lost through D’s fault, successively. What is the right
of C?
A. C may choose the delivery to him of the bracelet, or the price of the watch or the price of the
ring plus damages.
B. C cannot choose the price of the watch or the price of the ring because the said objects
have already been lost.
C. C can only choose to have the bracelet because anyway, D can still perform his obligation.
D. C can only choose to have the delivery of the bracelet or the price of the ring which was the
last item that was lost plus damages.
Ans: A

15.D obliged to give C a specific ring. The parties agreed that D may give a specific bracelet as a
substitute. Which of the following is true?
A. If the ring is lost through a fortuitous event before substitution, the obligation is extinguished.
B. If the bracelet is lost through a fortuitous event before the substitution, the obligation
is extinguished.
C. If the ring is lost through a fortuitous event after the substitution, the obligation is extinguished.
D. If the ring is lost through the debtor’s fault after substitution, the debtor shall pay damages.
Ans: A

16.It refers to a joint obligation:

A. One in which each debtor is liable for the entire obligation and each creditor is entitled to
demand the whole obligation.
B. One in which either one of the parties is indispensable and the other is not necessary.
C. One in which the obligation of one is a resolutory condition of the other, the non-fulfilment
of which entitles the other party to rescind the contract.
D. One in which each of the debtors is liable only for a proportionate part of the debt and
each credit.
Ans:D

17.D borrowed P50,000 from C. C dies before he has collected the debt leaving S, his son as heir.
Which from the following statements is correct?
A. S can collect from D although D and C did not agree that the right to the debt will pass on to
the heirs of C.
B. S cannot collect because the credit right is personal to C.
C. S can collect only if D and C agreed that the right to the debt will pass on the heirs of C.
D. S cannot collect because the law prohibits the transmission of the credit
right. Ans. A

18.A, B, C, and D, solidary debtors, are obliged to give V,W,X,Y and Z, solidary creditors, P20,000.
A. V may collect from D P20,000.
B. V may collect from D P4,000.
C. V may collect from D P5,000.
D. V may collect from
D1,000. Ans. A
19.When the period is ‘on or before a date’, the debtor has the benefit of the period. This benefit
is lost and the obligation becomes demandable when:
A. The debtor attempts to abscond.
B. After contracting the obligation, the creditor suspects the debtor of becoming insolvent.
C. The guarantee given by the debtor is not acceptable to the creditor.
D. Demand by creditor could be
useless. Ans: A

20.Unless the law or the stipulation of the parties requires another standard of care, the
obligation to give a thing carries with it the obligation to take care of it with:
A. Extra-ordinary diligence
B. Degree of care agreed upon the parties
C. Diligence of a good father of a family
D. Diligence of a good family of a
father. Ans. C

21.One of the following shall produce the effect of payment of debts:

A. Delivery of check.
B. Tender of Central Bank notes
C. Delivery of promissory note
D. Dacion en pago
Ans. D

22.If the creditor to whom tender of payment has been made refuses without just cause to accept
it, the debtor shall be released from responsibility by
A. Assignment of property
B. Consignation of the thing or sum due
C. Adjudication or pacion en
pago Ans. B

23.A excutes a promissory note in favour B who subsequently indorsed in favour of A. The obligation
to pay the promissory note is thereby extinguished because there is?
A. Confusion or merger
B. Novation
C. Remission
D. Compensation
Ans. A

24.This is a promissory note:

“I promise to pay A,B, and C the sum of P18,000 “(sgd) D,E and F.
A. F is obliged to pay P6,000
B. F is obliged to pay P2,000
C. F is obliged to pay 12,000
D. F is obliged to pay 18,000
Ans. A

25. If the obligor binds himself to perform his obligations as soon as “he shall have obtained a
loan” from a certain bank, this obligation is:
A. Wtih a term
B. Conditional
C. Suspensive
D, Resolutory
Ans. B

26. It presupposes not only that the obligor is able , ready and willing but more so, in the act
of performing his obligations.
A. Promissory note
B. Tender of payment
C. Bill of exchange
D. Obligation to sell
Ans. B

27. Which of the following is not considered as quasi-contract?

A. Solution indebti
B. When the third person without the knowledge of the debtor, pays the debt
C. Negotiorum gestio
D. Reimbursement due to the person who saved the property during fire or storm without
the knowledge of the owner

28. In tender and consignation, if after consignation is made, the creditor allows the debtor
to withdraw the thing deposited in court, which of the following is incorrect?
A. Co-debtors, guarantors and securities are released from the obligation unless they consented.
B. The obligation remains to subset
C. The obligation is extinguished
D. None of the above
Ans. C

29. D owes C P10,000 payable on December 25, 2018. Later D forced C to sign a promissory note for
P10,000 payable on December 25, 2018. If all other requisites of compensation are present, are
both debts extinguished?
A. Yes, under legal compensation
B. No, B’s consent was obtained by force
C. Yes, with the approval of the court
D. Answer not
given Ans. A

30. X has been missing for sometime leaving no one to manage his properties. A and B jointly
took charge of the management thereof. However, due to the fault of A, the properties of X were
damaged. The liability therefore to X damage shall be:
A. Only A shall be liable
B. Both shall be jointly liable
C. Both shall be solidarily liable
D. They are not liable since X is at fault for having abandoned his
properties Ans. C

31. X by mistake delivered to A and B a sum of money which should have been delivered to C and
D. X now demand the return of the same from A and B. Liability of the latter for the sum of money
to which they are not entitled shall be:
A. A and B shall be liable solidarily
B. A and B shall be liable jointly
C. They are not liable for having received the money is good faith.
D. X has no right to recover as he was negligent in the delivery of the money.
Ans. A

32. The obligation of mutual support for each other of husband and wife arises from:
A. Law
B. Contract
C. Quasi-delicit
D. Quasi-contract
Ans. A

33. In three of the following instances, the officious manager may still be held liable for
fortuitous events. Which is the exception?
A. If he assumed the management in bad faith.
B. If he undertakes risky operation like the owner was accustomed to do
C. If he is manifestly unfit to carry on the management
D. If he has preffered his own interest to that of the
owners Ans. B

34. Marilou who was entrusted by her principal with a diamond pendant for sale, was robbed
one evening and lost the pendant. Is Marilou excuse from civil liability attendant to the loss of
the pendant even if the robber is not yet apprehended?
A. No, because the agent acted as agent and had possession of the pendant
B. No, because the agent failed to exercise due diligence in the safekeeping of the diamond pendant
C. Yes, due to fortuitous event
D. Answer not
given Ans. C

35. One is not a requisite needed in order that obligation shall be extinguished by loss or
destruction of the thing due:
A. When the thing is lost without the fault of the debtor
B. When the thing lost is generic
C. When the thing is lost before the debtor has incurred delay
D. When the thing lost in
specific Ans. B

36. Every obligation whose performance does not depend upon future or uncertain event, or upon
a past unknown to the parties is demandable at once. This refers to:
A. Divisible and Indivisible Obligations
B. Joint and Solidary Obligations
C. Obligation with a Period
D. Pure and Conditional
Obligations Ans.D

37. To have the effect of payment debts in payment in money should be paid:
A. In currency which is legal tender in the Philippines.
B. By the delivery of promissory notes payable to order
C. By the delivery of checks or bills of exchange
D. By all of the above
Ans.A

38. Which of the following is not an element of legal compensation?

A. Debts to be compensated are due and demandable.
B. There is a controversy or adverse claim over any debts to be compensated
C. There are 2 or more debts of the same kind
D. There are 2 persons who are creditors and debtors of each
other Ans. B

39. Rescission of contract can take place in this case:

A. When the things which are the object of the contract are legally in the possession of third
person who acted in bad faith
B. When he who demands rescissions can return whatever he may obliged to restore.
C. When the party seeking rescission can perform only as to part and rescind the reminder
D. When seller cannot return the instalments paid to him by the
buyer Ans.B

40. One is not a requisite in order that obligation shall be extinguished by loss or destruction of
the thing due:
A. When the thing is lost without the fault of the debtor
B. When thing loss is generic
C. When the thing before the debtor has incurred in delay
D. When the thins lost is
specific Ans. B

41. Change of persons or objects:

A. Confusion
B. Novation
C. Solution indebiti
D. Negotiorum
gestio Ans.B

42. A solidary obligation is one in which each of the debtors is liable for the entire obligation or
debt, and each of the creditor is entitled to the entire credit. Obligations shall also be considered
solidary under the following three exceptions. Which does not belong to the exception?
a. When solidary is expressly stipulated in the obligation
b. When the prestation is indivisible and there are two or more debtors and creditors
c. When the law expressly provides solidary
d. When the nature of the obligation requires
solidarity. Ans. B

43. Payment of the obligation by a solidary debtor shall not entitle him to reimbursement from
his co-debtors.
a. If such payment was made after the obligation is due.
b. If such payment was made after the obligation has prescribed or become illegal.
c. If such payment was made in compliance with the demand to him by all creditors.
d. If such payment was made after the obligation has become due and demandable and notice
of payment was made to him.
Ans.B

44. A, B and C secured a loan from X. The promissory note which evidences the obligation states:
“I promise to pay” and signed by A, B and C. The obligation is:
a. Joint
b.Solidary
c. Divisible
d. Indivisible
Ans.B

45. Consignation is a mode of payment which extinguishes an obligation. Which of the following
is not a requisite for consignation?
a. Actual consignation with the proper judicial authorities
b. Existence of a valid debt
c. There must be prior notice of consignation to persons interested in the fulfilment of the obligation
d. The notice must be publish in a newspaper of general circulation for consecutive
weeks. Ans. D

46. The creditor shall have a right to indemnity for damages when through the fault of the debtor,
all things which are alternatively the object of the obligation have been lost or compliance of the
obligation has become impossible. The indemnity shall be fixed on the basis of:
a. The value of the least expensive things
b. The value of the most expensive things
c. The value of the last thing which disappeared
d. The value of the first thing which
disappeared Ans. C

47. A is indebted to B for P20,000. X is the guarantor of A. B is also indebted to A for P8,000.
How much will X be liable as a guarantor if B sues A and A cannot pay?
a. P12,000
b. P20,000
c. P8,000
d. X has no liability
Ans. A

48. On October 4, 2018, A is indebted to B for P50,000 for a 20-day period. A proposed to B that X
will pay A’s debt and that A will be free from all liabilities. B and X agreed to the proposal. On
October 25, 2018, X became insolvent. At the time of delegation, X was already insolvent but this
was not known to A. The insolvency is not of public knowledge. So B sues A on the ground that it
was A who made the proposal that A guaranteed X’s solvency. Decide.
a. A is liable because he is presumed to have guaranteed X’s solvency.
b. A is not liable because A does not know the insolvency of X at the time of delegation and neither
was the insolvency of public knowledge.
c. A is liable because he did not exercise due diligence in determining the insolvency of X.
d. A is liable because X agree to the proposal to make himself solidarily liable for the
obligation. Ans.B

49. X and Y are solidary debtors of A, B, C and D, joint creditors to the amount of P8,000. How
much can A collect from X?
a. A could recover P4,000 from X. A, in turn, has to give B, C, and D P1,000 each
b. A could recover P2,000 only from X
c. A could recover P1,000 only from X
d. A could recover P8,000 from X, in turn,has to give to B, C and
D Ans.B

50. Mr. AB owes Mr. CD P150,000 due on August 31, 2018 Mr. AB executed a mortgage in favour of
Mr. CD on Mr. AB’s building to guaranty the obligation. On August 10, 2018, the mortgaged
building
was totally lost due to a strong typhoon. On august 12, 2018 Mr. CD demanded payment from Mr.
AB. Is Mr. CD’s demand valid?
a. No, the obligation is with a definite period, thus the creditor cannot demand fulfilment of
the obligation as such would be prejudicial to the rights of the debtor.
b. No, the obligation is distinguished because the obligation is lost due to a fortuitous event.
c. Yes, the debt becomes due at once because the guaranty was lost even though a fortuitous
event unless the debtor can mortgage another property that is actually satisfactory.
d. Yes, the debt becomes due at once because the tenor benefit is given solely to the
creditor thereby giving the creditor the right to demand performance even before the due
date.
Ans. C

51. Mr. ABC is obliged to give Mr. XYZ his only car on July 15, 2018 Mr. ABC did not deliver on July
15, 2018. On July 20, 2018, an earthquake destroyed the building where the car was garaged and
the car was destroyed. Is Mr. ABC still liable?
a. No, considering that no demand to deliver was made by Mr. XYZ and the specific thing was
lost due to fortuitous event, the obligation is extinguished.
b. No, the obligation is extinguished even if the debtor is already in default, because the debtor
can plead impossibility of performance.
c. Yes, Mr. ABC is already in legal delay, thus the obligation to deliver the lost specific thing
is converted into monetary claim for damages.
d. Yes, the creditor can instead demand for a substitute equivalent in value from the debtor

52. A and B are solidary debtors of X, Y and Z, joint creditors to the amount of P15,000. How
mkuch can Z collect from B?
a. Z could recover P 7,500 from B.
b. Z could recover P 5,000 from B
c. Z could recover P 5,000 from B. Z turn has to give X and Y P 5,000 each
d. Z could recover P 5,000 from B. B in turn can collect from A the amount of P 7,
500 Ans. B

53. Mr. S executed a first mortgage of his house in favour of Mr. D on May 15, 2017 to guaranty a
mortgage loan of P200, 000 due for payment on May 15, 2018. On September 16, 2017 the house
was completely destroyed by a typhoon. On September 18, 2017, Mr. D demanded payment of
the loan from Mr. S. Is Mr. D’s demand for payment valid?
a. No, the obligation is one with a definite period, so the creditor cannot demand payment until
the definite due date arrives.
b. No, the obligation is extinguished because the object of the obligation is lost due to fortuitous
event.
c. Yes, the obligation becomes due at once because the tenor benefit is given solely to the creditor
thereby giving the creditor the right to demand performance even before the due date is
stipulated.
d. Yes the obligation becomes due at once because the guaranty was lost even through a
fortuitous event unless the debtor can mortgage another property that is equally satisfactory.
Ans. D

54. A, B and C borrowed P 24, 000 from Y and Z and signed promissory note dated January 15,
2018 and due date within 6 months. How much can Y collect from A?
a. P12, 000
b. P4, 000
c. P8, 000
d. P24, 000
Ans. B
55. A, B, and C borrowed P36, 000 from X and Y. The three debtors signed a promissory note dated
January 10, 2018 promising to pay the creditors on or before July 10, 2018. How much can X
collect from C?
a. P18, 000
b. P6, 000
c. P12, 000
d. P36, 000
Ans. B

56. When two persons are reciprocally debtors and creditors, there is:
a. Consignation
b. Merger
c. compensation
d. Confusion
Ans. C

57. This is the promissory note: ‘’We promise to pay A,B and C the sum of one hundred
eighty thousand (P180, 000) pesos within 60 days. Signed by X, Y and Z.’’
a. X is obliged to pay A P20, 000
b. X is obliged to pay A P60, 000
c. X is obliged to pay A P180, 000
d. X is obliged to pay A, B and C P180,
000 Ans. A

58. E is obliged to give R a 2009 specific car with plate number BA123 on September 30, 2018. On
October 10, 2018, E did not yet deliver the car which was totally destroyed by an earthquake on
such date. Is E still liable?
a. No, the obligation is extinguished. The specific thing was lost due to fortuitous event and
no demand to deliver was made by Mr. R
b. Yes. E is in legal delay. R can claim damages
c. No. Even if E is already in default, he can plead impossibility of performance.
d. Yes. R can instead demand for another car equivalent value from
E Ans. A

59. C is the creditor of D in the amount of P50, 000. G is the guarantor of D. D paid C partially with
P20, 000. A, not knowing the partial payment and against the will of D paid C the amount of P50,
000 What is the effect of this payment in the obligation?
a. The obligation is extinguished. A cannot recover any amount from D but A can
demand reimbursement from C in the amount of P50, 000
b. The obligation is extinguished. A can demand P30, 000 from D because this amount benefited
D, or A, having subrogated into the rights of C can proceed against guarantor G.
c. The obligation is not extinguished. A’s payment against the will of D does not
extinguish obligation.
d. the obligation is extinguished. A can demand P30, 000 from D but if D cannot pay, a
cannot ordinarily proceed against guarantor G because A is not entitled to subrogation
Ans. D

60. In this case, advance payment by the debtor is recoverable

a. If the advance payment is only for interest due.
b. If the creditor demanded for the advance payment and the debtor knew it was not yet due.
c. If the advance payment is in reciprocity to the advance payment of the other party
d. If the debtor was unaware of the
period. Ans. D

61. When the debtor abandons and assigns all his properties in favor of his creditor for the latter
to sell to satisfy his credits, this is:
a. Remission
b. Payment by cession
c. Dation on payment
d. Expromission
Ans. B

62. Mr. AB offered in writing to sell his home and for P750, 000.00 to Mr. CD on July 1, 2018 Mr.
CD Requested Mr. AB to give him 60 days within which to raise the P750, 000.00. On August 15,
2018 Mr. AB informed Mr. CD that the price is raised and now at P1, 000, 000.00 can Mr. CD
compel
Mr. AB to sell the house and lot at P750, 000 which was offered in writing by Mr. AB?
a. Yes, because Mr. AB is already in estoppels by his written offer.
b. Yes, because the 60 days offer has not yet expired.
c. No, because Mr. CD has not accepted the offer of Mr. AB.
d. Yes, because there was already meeting of the
minds. Ans. C

63. A, B, C and D are joint creditors of E and F, solidary debtors in the amount of P40, 000.00
how much can A, B and C collect from E?
a. A, B, C and D could collect P20, 000.00 from E.
b. A, B, C and D could collect P30, 000.00 from E
c. A, B, C and D could collect P40, 000.00 from E
d. A, B, C and D could collect P20, 000.00 and P10, 000.00 from
F Ans. B

64. This mode of extinguishment of obligation is when two persons, in their own rights are
creditors and debtors of each other.
a. Merger of confusion
b. Condonation or Remission
c. Compensation
d. Novation
Ans. C

65. A obliges himself to pay X P100, 000 in 30 days plus a penalty of P20, 000. If A fails to pay
the Obligation in due time. A failed to pay the obligation in 30 days. X can demand from A.
a. The principal of P100, 000 plus P20, 000 penalty
b. The principal of P100, 000 plus P20,000 penalty plus legal interest
c. The principal of P100, 000 plus legal interest.
d. The principal of P100, 000 plus P20, 000 penalty plus legal interest plus
damages Ans. A

66. A owes X P50, 000 payable on or before June 30, 2018. S whop is not a party to the contract
and Without the consent and against the will of A paid X the P50, 000 on April 2018 when the
prevailing Rate of interest was 12% per annum.
a. S can ask reimbursement from A in the amount of P50, 000 plus 12% interest from April to June
30, 2005
b. S can ask reimbursement from A in the amount of P50, 000
c. S cannot ask reimbursement from A because the payment by S is without the consent and
against the will of A.
d. S can ask refund from X because the payment by S was against the will of
A. Ans. A

67. When an obligation is extinguished because of the passage of time, this is:
a. Fulfillment of resolutory condition
b. Arrival of a resolutory period
c. Prescription
d. Rescission
Ans. C

68. When the debtor abandons or transfers all his properties to the creditors so that the creditors
may sell the properties and out of the net proceeds the creditors recover their claims, this is called:
a. Dacion en pago
b. Tender of payment and consignation
c. Payment by cession
d. Remission
Ans. C

69. When the period is ‘’ on or before a date’’, the debtor has the benefit of the period. This benefit
is lost and the obligation becomes demandable when:
a. The debtor attempts to abscond.
b. After contracting the obligation, the creditor suspects the debtor to becoming insolvent.
c. The guarantee given by the debtor is not acceptable to the creditor
d. Demand by the creditor could be
useless. Ans. A

70. It takes place when two persons in their own right, are creditor and debtor of each other.
a. remission
b. Confusion
c. Novation
d. compensation
Ans. D

71. X borrowed P5, 000 from Y on February 1, 2018. On march 1, 2018, X tendered to Y a cashier’s
check in the amount of P5, 100. Y accepted the check, but forgot to deposit it until September 30,
2018. His bank refused to accept the check as it had become stale. Y now wants X to pay him in cash
the amount of P5,100 claiming that the previous payment was not in legal tender. X refused to pay
him claiming that Y is stopped from raising the issue of legal tender as it was his negligence is not
depositing the check immediately. Decide.
a. Y is correct, payment in check is not legal tender.
b. X is correct, Y is now stopped from raising the issue that the check is not legal tender.
c. Y is correct, payment in cashier’s check like manager’s check is not legal tender.
d. y is correct because the check was not
encashed. Ans. B

72. The following are obligations without an agreement except:

a. Delicts
b. Quasi-Delicts
c. Contracts
d. All other obligations arising from
law Ans. C

73. X had a savings deposit with Y Bank in the amount of P5,000,000. Subsequently, X obtained a car
loan from the same bank in the amount of P1,200,000, payable in 12 equal monthly installments. X
issued in favour of Y bank post-dated checks, each in the amount of P100,000, to cover the 12
monthly installment payments. On the third, fourth, and fifth months, the corresponding checks
bounced. Is compensation applicable?
a. No, Compensation is not applicable as X and Y Bank are not mutually debtor and creditor of each
other.
b. Yes, Compensation is applicable because a bank deposit is a contract of loan, where the depositor
is the creditor and the bank is the debtor.
c. No, compensation is not applicable because what is applicable is confusion.
d. Yes, compensation is applicable because a bank deposit is a contract of
deposit Ans. B

74.X had a savings deposit with Y bank in the amount of P5,000,000. Subsequently, X obtained a car
loan from the same bank in the amount of P1,200,000, payable in 12 equal monthly intallments. X
issued in favor of Y bank post-dated checks, each in the amount of P100,000, to cover the 12
monthly intallment payments. On the third, fourth, and fifth months, the corresponding checks
bounced. Y Bank then declared the whole obligation due, and proceeded to deduct the amount of
P1,000,000 from X’s deposit. Is the bank correct?
a. Yes, the bank is correct because the P1,000,000 balance is subject to compensation
b. No, the bank is not correct because what is due, demandable, and liquidated is only up to the
amount of P300,000. This is the amount that is subject to compensation
c. Yes, the bank is correct because it is presumed that there is acceleration clause in the contract.
d. Yes, the bank is correct. However, it can deduct the amount of
P1,200,000 Ans. B

75. X obtained a loan of P1,000 from Y payable within one year. Ten days after maturity date, X
tendered a manager’s check to Y. The latter refused to accept payment on the ground that he
wanted payment in cash. Is Y’s refusal justified?
a. No, because a manager’s check is legal tender.
b. No, because an offer of a manager’s check in payment of a debt is a valid tender of payment and
may not be refused receipt by the creditor
c. No, because the delivery of a check discharges an obligation
d. Yes, because a check, whether a manager’s check or an ordinary check is not legal tender, and an
offer of a check in payment of a debt is not a valid tender of payment.
Ans. D
LAW ON CONTRACTS

1. In order that a stipulation in favour of a third person would be valid and binding upon the
parties thereto, the following are requisites; except:
a. There must be a stipulation in favour of a third person
b. The contracting parties must have clearly and deliberately conferred a favour upon that third
person.
c. The third person communicated his acceptance to the obligor before its revocation
d. That there must be an existing agency between either of the contracting parties and the
third person.
Ans. D

2. G was appointed guardian of S, the latter being 16 years old. S sold his parcel of land in writing
to B valued at P100,000 for P75,000 suffering lesion by ¼ of the value. What is the status of the
contract?
a. Rescissible
b. Unenforceable
c. Void
d. Voidable
Ans. D

3. Must be in writing to be enforceable:

a. Lease of land for 12 months
b. Lease of car for 18 months
c. Both a and b
d. None of a and
b Ans. D

4. Three of the following contracts are void. Which is the exception?

a. Those whose cause, object or purpose is contrary to law, morals, good custom, public order
or public policy.
b. Those which are absolutely simulated or fictitious.
c. Those whose cause or object did not exist at the time of the transaction.
d. Those where both parties are incapable of giving consent to a
contract Ans. D

5. Essential requisites of a contract:

a. Consent
b. Cause
c. Subject
d. All of them
Ans. D

6. A and B agreed on February 3, 2000 that B will construct the house of A on January 2002. The
contract was orally entered into. B received a down payment from A with the balance payable
after completion of the house
The contract is:
a. Voidable because it is not public instrument.
b. Enforceable even if not in writing, having been ratified.
c. Unenforceable because it is not in writing and yet performance there is after one year
from perfection.
d. Void because it is not in writing as required by
law. Ans. B

7. D borrowed a sum of money from C with G as a guarantor. The loan is in writing but the
guaranty is oral. D failed to pay C, who now is demanding payment from G. Can G be compelled to
pay?
a. Yes, because he is the guarantor obliged to pay in case the debtor defaults
b. No, because the guaranty is void having been orally made.
c. No, because the guaranty is unenforceable against G, it being oral.
d. Yes, because the guaranty is enforceable, writing not
needed. Ans. C

8. A gave B one billion pesos for the latter to kill C. Before could accomplish his criminal intent to
kill C, A changed his mind and demanded the return of the money from B. Decide:
a. A cannot recover the payment he made to B because it was a void contract which does not
allow recovery by the guilty party.
b. A cannot recover the money because the contract is unenforceable.
c. A can recover the money although the contract is void since the crime was not committed.
d. No recovery and both A and B will be prosecuted from the
crime. Ans. C

9. In three of the following, the contract is cleansed of its defect by ratification. Which is not
so ratified?
a. Contract where the creditor was damaged by the act of the debtor who intended to defraud him.
b. Contract entered into by a person incapable of giving consents.
c. Sale of chattels orally entered into for a price not less than five hundred pesos.
d. Lease of real property for more than one year orally entered
into Ans. A

10. A without authority from B sold the latter’s car in the name of the latter. The contract
is therefore:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
Ans. C

11.Which of the following instruments is not subject to reformation?

a. Simple donations inter vivos wherein no condition is imposed.
b. Wills
c. When agreement is void
d. All of the above
Ans. D

12. In three of the following defective contracts, ratification cleanses the defect. Which is
the exception?
a. Both parties are incapable of giving consent.
b. Sale of immovable property or interest therein orally entered into.
c. Sale of a piece of land thru an agent and the authority is in writing.
d. Contracts is void as the offer being
ineffective. Ans. D
 13. Which of the following contract is voidable?
a. Those whose object is outside the commerce of men.
b. Those which are absolutely fictitious.
c. Those where one of the parties is incapacitated.
d. Those which contemplate an impossible
service. Ans. C

14. X alleged that Y promised to give him one hectare of land. This is in consideration of X’s
meritorious services to Y. Y pleads in defense that since the promise was not in writing, it is
unenforceable under the Statute of Frauds. Decide.
a. The promise is unenforceable because it is not in writing.
b. The Statute of Frauds is applicable because A has rendered services.
c. The Statute of Frauds is inapplicable here, because the promise to give the land is not a sale of
real property.
d. The Statute of Frauds can apply to partially executed
contract. Ans. C

15. Three of the following are void contracts. Which is the exception?
a. Contracts where the cause is immoral.
b. Contracts to prevent a known supporter of a political rival from voting for his candidate for
a valuable consideration.
c. Contracts with valid consideration but with unlawful motives.
d. Absolutely simulated
contracts. Ans. C

16. Statute of Frauds is applicable to

a. Executed contract
b. Oral contract loan
c. Contract not to be performed within a year from the making thereof
d. Mutual promise to
marry Ans. C

17. Which of the following contracts must be in writing to be enforceable?

a. Acts and contracts for the creation, transmission, modification, extinguishments of real rights
b. The cession, repudiation, renunciation of heredity rights
c. Contract of guaranty
d. Contract of
partnership Ans. C

18. G was appointed as the guardian of M who owns a parcel of land valued at P1,000,000. M
sold the land only for P700, 000 to B. The contract was defective because it is:
a. Uneforceable
b. Rescissible
c. Voidable
d. Void
Ans. C

19. A sold to B a genuine X brand of beer. However, upon delivery, the former substituted afake.
B wants to annul the sale. Decide.
a. The contract is void ab initio therefore, it can be annulled.
b. The contract can be annulled since it is voidable due to fraud.
c. The contract cannot be annulled because it is only incidental fraud.
d. There is dolo incidente therefore, it can be
annulled. Ans. C

20. Contract which cannot be sued upon unless ratified, thus as if they have no effect yet:
a. Voidable
b. Rescissible
c. Void
d. Unenforceable
Ans. D

21. Which of the following contracts is not void ab intio?

a. Those whose subject is outside the commerce of men.
b. Those whose object did not exist at the time of transaction.
c. Those which contemplate an impossible service.
D. Those undertaken in fraud of creditors.
Ans. D

22. Which of the following is correct?

a. An action to enforce judicially a natural obligation prescribes on 4 years.
b. An action for annulment is imprescriptible.
c. An action to declare a contract void is not subject to prescription.
d. An action for rescission of contract prescribes in five years counted from the execution of
the contract.
Ans. C

23. Which of the following contracts is voidable?

a. Those which are entered into by guardians whenever the wards whom they represent suffer
a lesion of more than ¼ of the value of the object of the contract.
b. Those executed in representation of absentee, if the latter suffer a lesion more than ¼ of the
value of the object of the contract.
c. Those where one of the parties is incapable of giving consent to a contract.
d. Those undertaken in fraud of creditors when the latter cannot in any other manner collects
the claims due them.
Ans. C

24. Which of the following contracts is voidable?

a. Those where both parties are incapable of giving consent to a contract.
b. Those undertaken in Fraud of creditors when the latter cannot in any manner collect the
claims due them.
c. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
d. Those whose object is outside the commerce of
men. Ans. C

25. Which of the following contracts is rescissible?

a. Those where one of the parties is incapable of giving consent to a contract.
b. Those where both parties are incapable of giving consent to a contract.
c. Those which are entered into by guardians whenever the wards whom they represent suffer
a lesion of more than ¼ of the value of the object of the contract.
d. Those which are absolutely simulated or
fictitious. Ans. C
26. S orally sold to B a parcel of land for which the latter paid P 1M. B now wants to register the
sale so that he can have a Transfer Certificate of Title in his name. Decide:
a. S cannot be compelled to execute the public document of sale because the sale is unenforceable.
b. S can be compelled to execute the public document of sale because the sale is enforceable.
c. The sale is void and therefore cannot be registered
d. S cannot be compelled to execute the public document of sale because the sale is
voidable. Ans. B

27. S orally leased to R his parcel of land for a term of two years. The contract is:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
Ans. C

28. To defraud his creditors, A sold his real property to B. B now seeks to register the sale. X, a
creditor seeks to prevent the registration on the ground that it is a rescissible contract. Despite
X’s objection, may the land be registered in B’s name?
a. No, because the contract is rescissible and therefore without effect.
b. No, because the sale is void and after annulment is not binding.
c. Yes because the contract although voidable is valid and binding .
d. Yes, because the contract although rescissible is valid, binding and enforceable before
rescission. Ans. D

29. Element without which cannot be a contract is:

a. Essential element
b. Natural element
c. Accidental element
d. All of the above

30. Contracts take effect only to the parties, their assigns and heirs except where the rights
and obligations arising therefrom:
a. Is not transmissible by their nature
b. Is not transmissible by stipulation by stipulation of the parties.
c. Is not transmissible by provision of law
d. All of the above
Ans. D

31. Where damages is caused to either of the contracting parties or to a third person, the
contract may be:
a. Annuled
b. Rescinded
c. All of the above
d. None of the above
Ans. B

32. When the contract lacks one of the essential elements, the contract is:
a. Void
b. Voidable
c. Rescissible
d. All of the obove
Ans. A

33. Is a remedy in equity by means of which a written instrument is made or constructed do as to

express or conform to the real intention of the parties when some error or mistake has been
committed?
a. Ratification
b. Reformation
c. Resolution
d. All of the above
Ans. B

34. A qualified acceptance constitutes:

a. An absolute acceptance
b. A meeting of the minds between parties
c. Counter offer
d. All of the above
Ans: C

35. The span of time wherein a person is in possession, temporarily, of all his mental faculties:
a. Lucid interval
b. Option period
c. Prescriptive period
d. Reglementary period
Ans. A

36. The stage of ‘’conceptio’’ of a contract is

a. When the parties come to an agreement
b. When the contract is fully executed
c. When there is meeting of minds of the parties
d. When negotiation is in
progress Ans. D

37. The essential of impelling reason why the parties enter into a contract:
a. Motive
b. Cause
c. Profit
d. All of the above
Ans. B

38. Contracts entered into a state of drunkenness or during hypnotic spell is:
a. Voidable
b. Void
c. Unenforceable
d. Rescissible
Ans. A

39. Business advertisements of the things for sale are:

a. Definite offer
b. Invitation to make an offer
c. Counter offer
d. Acceptance of the offer
Ans.B

40. A and B entered into an oral sale of the former’s car for P 1M which amount has been credited
to his bank account although the car has not yet been delivered to the latter. Can B compel A to
execute the deed of the sale of the car?
a. No, because the sale is unenforceable .
b. Yes, because it is enforceable.
c. Yes, if A used the money to paid him.
d. No, because the sale is
void Ans. B

41. When there is concurrence of the offer and acceptance, there is ;

a. Payment
b. Consent
c. Acceptance
d. Revocation
Ans. B

42. When the object of the contract is outside the commerce of man, the contract is:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
Ans. D

43. Which of the following is not a rule in the interpretation of contract?

a. If some stipulation of any contract should admit of several meanings, it shall be understood
as bearing that import which is most adequate to render the contract effectual.
b. Word which may have different significations shall be understood in that which is most in
keeping with the nature and object to the contract.
c.In order to judge the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered
d. Although the cause is not stated in the contract, it is presumed that it exist and is lawful unless
the debtor proves the contrary.
Ans. D

44. Contracts are effective and binding only between the parties, their assigns and their heirs.
Three of the following enumerations are exceptions as provided by law. Which does not belong to
the exception?
a. When there is a stipulation in favor of a third party
b. When one of the parties to the contract dies thereafter a suit is filed on the basis of the contract
c. Where the obligation arising from contract are not transmissible by its nature.
d. Where the obligation arising from contract are not transmissible by stipulation or by provision
of law.

45. In order that fraud may make a contract voidable.

a. It may be incident but should have been employed by both parties.
b. It should be serious and the parties must be in pari delicto.
c. It should be serious and should not have been employed by both contacting parties.
d. It may be incidental but both parties should not be in pari
delicto. Ans. C
46. A and B who are both unemancipated minors entered into a contact. The contract entered
into by and between them is:
a. Rescissible
b. Unenforceable
c. Voidable
d. Void
Ans. B

47. Which of the following contracts cannot be ratified?

a. Those whose cause or object did not exist at the time of the transaction.
b. Unauthorized transactions
c. Those where both parties are incapable of giving consent
d. Those that fail to comply with the Statute of
Fraud Ans. A

48. A guardian of B, sold B’s house and lot worth P 4,800,000 for P2,400,000.
a. The contract can be rescinded because of inadequacy of price.
b. The contract cannot be rescinded because there is no fraud, mistake or undue influence.
c. The contract cannot be rescinded because all elements of the contract are present.
d. The contract cannot be rescinded it is expressly provided by law as one of the contracts
which cannot be rescinded.
Ans. A

49. X enters into a contract with Y where by X sold his land orally to Y. The land has been
delivered and the money has been paid. Is the oral sale of the land valid?
a. The contract is not valid because it is not in writing as required by the Statute of Fraud.
b. The contract is not valid because the contract is not made in a public instrument.
c. The contract is unenforceable.
d. The contract is valid because the contract is already perfected and
executed. Ans. D

50. To defraud his creditors A, contracted with B by selling a land to B. B now seeks to register
the land with the Register of Deeds. X, a creditor of A seeks to prevent the registration on the
ground that the contract is rescissible. Despite X’s objection, may the land be registered based on
the contract in B’s name?
a. The land cannot be registered based on the contract which is rescindable.
b. The land cannot be registered because the contract is in fraud of the creditor.
c. The land can be registered based on the contract because the contract is not yet rescinded.
d. The land can be registered because the contract is valid and can be attached collaterally in a
land registration proceeding.
Ans. C