01 Civ2 2020 Compilations

SAMPLEX COMPILATION
Obligations
Midterms 2020…………………………………………………………………………………………………………… 2
Midterms samplex 1……………………………………………………………..……………………………………... 5
Midterms samplex 2 ……………………………………………………………………………………………….….. 22
Midterms samplex 3 ………………………………………………………………………………………………….…32
First actual quiz ……………………………………………………………………..………………………………..…34
Second actual quiz …………………………………………………………………………………………………...…37
Third actual quiz …………………………………………………………………………………………………...……42
Fourth actual quiz ……………………………………………………………………………...…………………….…46
Extinguishment
E - Samplex #1 ……………………………………………………………………………………………………48
E - Samplex #2 ……………………………………………………………………………………………………53
E - Samplex #3 ……………………………………………………………………………………………………55
E - Samplex #4 ……………………………………………………………………………………………………57
E - Samplex #5 ……………………………………………………………………………………………………62
Unanswered quiz - O ………………………………………………………………………..……………………………65
Contracts
First actual quiz ………………………………………………………….……………………………………………...…69
Contracts quiz samplex ………………………………………………………………………………………………..…76
Status of Contracts (contracts second quiz) ……………………………………………………………………………96
Unanswered quiz - C
UQuiz #1 …………………………………………………………………………………………..………………103
UQuiz #2 …………………………………………………………………………………………..………………103
Sales
Sales Quiz samplex #1 …………………………………………………….…………………………………………………….105
Sales Quiz samplex #2 …………………………………………………………………………………………………………..106
warranties (P106),
Maceda Law (P108),
status of contracts of sale (P110),
remedies (P111),
extinguishment (P113)
Sales Quiz samplex #3 …………………………………………………………………………………………………………. 115
Sales Quiz samplex #4 (google quiz) ………………………………………………………………………………………….134
ATP
Agency quiz samplex ………………………………………………………………..………………………………………..…157
Agency and partnership quiz samplex ………………………………………………………………………………………...160
CREDTRANS
Credit Transactions quiz samplex ……………………………………………………………………………………………...162
CTQuiz Samplex #1 ……………………………………………………...……………………………………………………...164
CTQuiz Samplex #2 ……………………………………………………...……………………………………………………...175
LEASE ……………………………………………………...……………………………………………………........................179
TORTS ……………………………………………………...…………………………………………………….......................182
COMBINED SUBJECTS ……………………………………………………...…………………………………………………187
FINALS SAMPLEX ……………………………………………………...…………………………………………………….....193
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OBLIGATIONS
OBLIGATIONS MIDTERMS, 2020
I. TRUE OR FALSE
1. In novation, if the original obligation was subject to a suspensive condition, the new obligation shall
be under the same condition, unless it is otherwise stipulated.
a. TRUE. Art. 1299. If the original obligation was subject to a suspensive or resolutory condition, the
new obligation shall be under the same condition, unless it is otherwise stipulated.
2. Novation which consists in substituting a new debtor in the place of the original one, may be made
even without the knowledge or against the will of the creditor, but not without the consent of the
debtor.
a. FALSE. Art. 1293. Novation which consists in substituting a new debtor in the place of the original
one, may be made even without the knowledge or against the will of the debtor, but not without the
consent of the creditor.
3. Compensation may be set up against a creditor who has a claim for support.
a. TRUE. There are exceptions:
i. support in arrears;
ii. contractual support – there is a qualification under Art. 208, FC.
b. Only gratuitous support can’t be compensated. Art. 1287. Neither can compensation be set up
against a creditor who has a claim for support due by gratuitous title.
c. “Support comprises everything that is indispensable for sustenance, dwelling, clothing, medical
attendance, education, and transportation, in keeping with the financial capacity of the family…”
(Art. 194, FC)
4. When the service has become so difficult as to be manifestly beyond the contemplation of the
parties, the obligation shall be extinguished.
a. FALSE. “WILL NOT”, the obligor may also be released therefrom, in whole or in part. (Art. 1267)
b. The law grants the court the power to release the debtor in whole or in part but it did not vest the
court the power to change the terms and conditions agreed upon by the parties.
5. It is presumed that the accessory obligation of pledge has been remitted where the thing pledged,
after it’s delivery to the creditor, is found in the possession of the principal debtor.
a. FALSE. Because the presumption will only arise if found in the possession of the OWNER of the
thing.
b. Expressly stated under Art. 1274, it is presumed that the accessory obligation of pledge has been
remitted when the thing pledged, after its delivery to the creditor, is found in the possession of the
principal debtor or of a third person who owns the thing. The thing may not belong to the principal
debtor hence important to mention ownership of the thing.
6. Merger which takes place in the person of the principal debtor or creditor benefits the guarantors.
a. TRUE. Under Art. 1276.
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b. Why? Because a guaranty is only an accessory contract.
7. When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall
not be exempt from the payment of its price, whatever may be the cause for the loss.
a. FALSE. There is an exemption. Art. 1268. When the debt of a thing certain and determinate
proceeds from a criminal offense, the debtor shall not be exempted from the payment of its price,
whatever maybe the cause for the loss, unless the thing having been offered by him to the person
who should receive it, the latter refused without justification to accept it.
8. There shall be no legal compensation if one of the debts consists in civil liability arising from a
felony.
a. TRUE. Art. 1288. Neither shall there be compensation if one of the debts consists in civil liability
arising from the penal clause.
9. There being no express stipulation and if the undertaking is to deliver a generic thing, the payment
shall be made wherever the thing might be at the moment the obligation was constituted.
a. FALSE. Art. 1251. Payment shall be made in the place designated in the obligation.
There being no express stipulation and the undertaking is to deliver a determinate thing, the
payment shall be made wherever the thing might be at the moment the obligation was
constituted.
If generic, it be wherever that thing will be.
10. Payment to a person who is incapacitated to administer his property may be valid.
a. TRUE. Art. 1241. Payment to a person who is incapacitated to administer his property shall be
valid if he has kept the thing delivered, or insofar as the payment has been beneficial to him.
11. Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be
demanded.
a. TRUE. Express provision under Art. 1228.
12. The creditor is not bound to accept payment or performance by a third person.
a. FALSE. This is not absolute.
b. Under Art. 1236, the creditor is not bound to accept payment of performance by a third person,
who has no interest in the fulfilment of the obligation, unless there is a stipulation to the contrary.
c. Creditor may be bound to accept when third person has an interest in the fulfilment. Example:
surety, guarantor, mortgagor
13. Even if there has been no performance, the penalty may be reduced by the courts.
a. TRUE. Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has
been partly or irregularly complied with by the debtor. Even if there has been no performance, the
penalty may also be reduced by the courts if it is iniquitous or unconscionable.
14. When the creditor accepts the performance, knowing its completeness or irregularity, the obligation
is deemed complied with.
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a. FALSE. Art. 1235. The acceptance of such performance must be done without expressing any
protest.
15. The debtor cannot exempt himself from the performance of the obligation by paying the penalty
a. FALSE. The right must be reserved.
b. Art. 1227. The debtor cannot exempt himself from the performance of the obligation by paying the
penalty, save in the case where this right has been expressly reserved for him.
16. The creditor cannot validly demand the fulfilment of the obligation and the satisfaction of the penalty
at the same time.
a. FALSE. There are instances when penalty is in addition to fulfilment.
b. Art. 1227. 2nd paragraph: Neither can the creditor demand the fulfilment of the obligation and the
satisfaction of the penalty at the same time, unless this right has been clearly granted to him.
However, if after the creditor has decided to require the fulfilment of the obligation, the
performance thereof should become impossible without his fault, the penalty may be enforced.
17. When the choice has been expressly given to the creditor, the obligation shall cease to be alternative
from the day when the selection has been consented to by the debtor.
a. FALSE. Consent of the debtor not necessary. It must be communicated to the party (in this case,
the debtor)
b. Art. 1201. The choice shall produce no effect except from the time it has been communicated.
18. Consignation may result in the partial extinguishment of the obligation.

a. TRUE. Creditor may make a reservation as to the lacking amount (Dalton v. FGR) and when
creditor accepts, even when it is not the full amount.
b. Atty. Uribe: In the same manner, when it comes to consignation, can there be a partial
extinguishment? In the first place, if the money delivered to the court is P70,000 and the debt is
P10,000, may the court conclude or declare that the consignation is valid? NO. Because that is
partial payment. But the SC has ruled in one case, if the creditor accepted the incomplete payment,
but he made a reservation as to the balance, there can be partial extinguishment even by
consignation.
19. It is presumed that there is legal subrogation when a creditor pays another creditor who is preferred,
even without the debtor’s consent.
a. TRUE.
b. Art. 1302. It is presumed that there is legal subrogation:
i. When a creditor pays another creditor who is preferred, even without the debtor’s
knowledge;
ii. When a third person, not interested in the obligation, pays with the express or tacit
approval of the debtor;
iii. When, even without the knowledge of the debtor, a person interested in the fulfilment of the
obligation pays, without prejudice to the effects of confusion as to the latter’s share.
20. Conventional subrogation of a third person does not require the consent of one of the original
parties.
a. FALSE.
b. Art. 1301. Conventional subrogation of a third person requires the consent of the original parties
and the third person.
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II. MULTIPLE CHOICE
1. When one voluntarily takes charge of the business of another with the latter’s authority, there is:
a. Quasi-delict – not this because Art. 2176.
b. Natural obligation – not this because Art. 1423. Not natural because there is an obligation.
c. Quasi-contract – not this because there is authority in question. Art. 2142. Certain lawful, voluntary,
and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be
unjustly enriched or benefited at the expense of another.
d. Solutio Indebiti – not this because Art. 2154
e. None of the above
EXPLANATION: Art. 2144. Whoever voluntarily takes charge of the agency or management of the
business or property of another, without any power from the latter, is obliged to continue the same until
the termination of the affair and its incidents, or to require the person concerned to substitute him, if
the owner is in a position to do so. This juridical relation does not arise in either of these instances:
(1) When the property or business is not neglected or abandoned;
(2) If in fact, the manager has been tacitly authorized by the owner.
In the first case, the provisions of Art. 1317, 1403 (1), and 1404 regarding unauthorized contracts shall
govern.
In the second case, the rules on agency in Title X of this Book shall be applicable.
2. An obligation of an heir to pay a debt of the decedent exceeding the value of the property which he
received by will or by the law of intestacy from the estate of the deceased is an obligation known as:
a. Civil
b. Quasi-contract
c. Pure
d. Conditional
EXPLANATION: It is a natural obligation. Art. 1429. When a testate or intestate heir voluntarily pays a debt
of the decedent exceeding the value of the property which he received by will or by the law of intestacy
from the estate of the deceased, the payment is valid and cannot be rescinded by the payer.
3. A borrower who delays the return of the thing borrowed shall be liable for its loss even in case of
fortuitous event, because:
a. He is required to exercise extra-ordinary diligence
b. The nature of the obligation requires the assumption of risk
c. The parties have expressly stipulated such liability
d. The law expressly so provides
e. The thing is generic
EXPLANATION: Art. 1165.
The debtor here is borrower – this is a commodatum. So, provisions on commodatum should apply.
Art. 1942 lists down the instances where bailee is liable for the loss of the thing, even if it should be
through a fortuitous event.
4. On October 6, 2010, Aurora obliged herself to deliver to Corita 100 cavans of corn in her warehouse
on the last day of the month. On November 1, 2010, Corita orally demanded for the delivery of the
100 cavans of corn but Aurora failed to comply. The next day, a flood damaged 100 cavans of corn
stored in the warehouse of Aurora.
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a. Aurora’s obligation to deliver 100 cavans of corn to Corita was not extinguished because of the
nature of the goods to be delivered.
b. Aurora is liable for damages because she was in default at the time of the loss.
c. Aurora’s obligation to deliver 100 cavans of corn to Corita was not extinguished because an oral
demand is not a valid demand.
d. Aurora’s obligation to deliver the 100 cavans of corn to Corita was extinguished, the cause of the
loss being a fortuitous event, exempting her from liability for damages
EXPLANATION: There was an oral demand – law does not distinguish as to the kind of demand for
delay.
● Not letter A because the nature of the goods is determinate (was segregated so obligation was
extinguished.) The things here are limited generic.
● Atty. Uribe: “In her warehouse” – NOT generic, kaya Aurora is now liable kasi she is now in
default.
5. Demand is not necessary to constitute the debtor in default in the following cases, except:
a. Demand would be useless
b. The law so provides
c. The period is the controlling motive for the creation of the obligation
d. The period for performance has been fixed in the obligation
EXPLANATION: Case of Rivera v. Sps. Chua. Art. 1169.
6. A promissory note signed by Martiniano and dated March 15, 2011 is worded as follows: “I promise
to give Juanita the sum of P50,000 provided that if she should fail in the October, 2011 CPA
Examination, she shall return to me said amount.” The obligation of Juanita is one with a:
a. Suspensive condition – obligation of Juanita to return will arise if she fails
b. Casual condition
c. Resolutory condition
d. Potestative condition
e. Positive condition
EXPLANATION:
Kind of condition as to the acquisition or extinguishment of rights:
1. Suspensive – happening of which gives rise to the obligations
2. Resolutory – happening of which extinguishes the rights already existing
Whether the fulfilment of the condition is dependent upon the parties or others:
1. Potestative - depends on the sole will of the party to the juridical relation
2. Casual – depends on change or third party
Whether it is an act or omission:

1. Positive – something is to be done or an act shall be performed
7. The following are obligations with a term, except:

a. I promise to pay B P100,000 on December 25, 2002
b. I promise to pay B P100,000 on Easter Sunday next year
c. I promise to pay B P100,000 once my means would permit
d. I promise to pay b P100,000 if his dog dies within 2-years
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EXPLANATION: A term is a future and certain event upon which the demandability (or extinguishment)
of an obligation depends. In letter D, it is not certain that the dog will die within 2-years. It is a condition
that may or may not happen.
8. Which of the following conditional obligations is void?

a. When the fulfilment of the suspensive condition is dependent upon the sole will of the creditor.
b. When the happening of the resolutory condition is dependent upon the sole will of the creditor.
c. When the fulfilment of the suspensive obligation is dependent upon the sole will of the debtor.
d. When the happening of the resolutory condition is dependent upon the sole will of the debtor.
e. None of the above.
EXPLANATON: Under Art. 1182, if the fulfilment of the condition is dependent solely upon the will of
the debtor, the obligation is void.
9. Mr. AB (debtor) owes Mr. CD (creditor) P150,000 due on August 31, 2011. Mr. EF executed a
mortgage in favour of Mr. CD on Mr. EF’s building to guaranty the obligation. On August 10, 2011, the
mortgaged building was totally lost due to the fault of AB (fault of debtor). On August 12, 2000, Mr.
CD demanded payment from Mr. AB. Is Mr. CD’s demand valid?
a. No. The obligation is one 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 extinguished because the object of the obligation is lost.
c. Yes. The debt becomes due at once because the guaranty was lost, unless the debtor can
mortgage another property that is equally satisfactory.
d. Yes. The obligation becomes due at once because from the tenor, benefit is solely to the creditor
thereby giving the creditor the right to demand performance even before the date.
EXPLANATION: Art. 1198 (3). Only the guaranty was lost not the principal amount of the obligation
which is P150,000. The guaranty was lost due to the debtor’s fault hence the debtor lost the benefit of
the period.
● Atty. Uribe: The CR can validly make a demand if the DR lost his right to make use of the
period. He lost his right to make use of the same because he lost the thing.
10. Mr. ABC is obliged to give Mr. XYZ his only car on July 15, 2012. Mr. XYZ demanded orally for the
delivery of the car on July 10, 2012. On July 20, 2012, an earthquake destroyed the car which was still
in the garage of Mr. ABC. Is Mr. ABC liable for the loss of the car?
a. No. Considering that no valid demand to deliver was made by Mr. XYZ, and the specific thing
was lost due to fortuitous event.
b. No. The obligation is extinguished, even if the debtor is already in default, because the debtor can
plead impossibility of performance.
c. No. Because the oral demand is not sufficient to cause delay.
d. Yes. Mr. ABC is already in legal delay, thus the obligation to deliver the thing is converted into
monetary claim for damages.
EXPLANATION: There is no valid demand because the demand was made on July 10, and the
obligation was due on July 15.
● Not letter B – When the thing is lost while the debtor is in possession, it is presumed that the
loss is due to his fault. If the thing is lost due to the fault of the debtor, the obligation is not
extinguished.
● Not letter C – No valid demand. Demand was not valid because it was made before the
obligation became due and demandable.
● Not letter D – Speaks about Art. 1189. Mr. ABC is not in delay because there was no demand.
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11. On January 1, 2012, A signed a promissory note binding himself to pay X P100,000 on or before
August 30, 2012.
a. Before August 30, 2012, A can be compelled to pay.
b. Before August 30, 2012, X can validly refuse an offer to pay.
c. Before August 30, 2012, while A cannot be compelled to pay, X also cannot be compelled to
accept payment.
d. Before August 30, 2012, while a can be compelled to pay, X cannot be compelled to accept
payment.
e. Before August 30, 2012, while A cannot be compelled to pay, X can be compelled to accept
payment.
EXPLANATION: The period designated is for the benefit of the debtor only. Thus, he can oppose a
premature demand for payment, but may validly pay at any time before the period expired.
● The phrase “on or before” is an indicator that the period has been established for the benefit of
the debtor.
12. On June 1, 2015, Demetrio (debtor) obtained a loan of P100,000 from Cornelio (creditor). The loan,
which is payable on or before June 1, 2017, is secured by a chattel mortgage on Demetrio’s brand-
new Toyota car with plate number XYZ 123. On July 1, 2016, while Demetrio was opening the trunk of
his car at the parking lot of a grocery store, three unidentified men approached him and took his car
at gunpoint. He reported the carnapping to the authorities but his car has not been recovered to
date.
a. Cornelio may now demand immediate payment of the loan unless Demetrio gives another
security therefore.
b. Cornelio may demand payment only on June 1, 2017 because Demetrio has the sole benefit of the
period and the loss of the car was due to force majeure. – not force majeure
c. Cornelio may no longer demand payment since the loan was extinguished by reason of the loss of
the car due to a fortuitous event – not FE
d. Cornelio may now demand immediate payment even if Demetrio offers another security because
the car is determinate and could not be replaced. – Demetrio can offer another security
e. Cornelio can no longer demand payment because the loss happened when the obligation was not
yet due.
EXPLANATION: Art. 1198
13. The following are the effects of a joint obligation, except:

a. Total remission of the debt by one of the creditors in favour of a debtor releases all the
debtors
b. Demand by one creditor upon one debtor produces the effect of default only with respect to the
creditor who demanded and the debtor on whom demand was made
c. Insolvency of one of the debtors does not increase the responsibility of his co-debtors
d. Interruption of a prescriptive period by judicial demand by one creditor upon a debtor does not
benefit the other creditors nor prejudice the other debtors
EXPLANATION: Each debtor is liable only for a proportionate part of the entire debt. Liability of joint
debtors are separate and distinct from the other debtors hence other joint debtors will not benefit from
remission.
14. A, B and C borrowed P36,000.00 from X and Y. The three (3) debtors signed a promissory note on
January 10, 2017 promising to pay the creditors on or before December 10, 2017. How much can X
validly demand from C today in case of passive solidarity?
a. P18,000
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b. P6,000
c. P12,000
d. P36,000
e. None
EXPLANATION:
A, B, C solidary debtors P36,000
P36,000 / 2 = P18,000 each for X and Y
Solidary debtors meaning X can demand the whole amount of his share to C.
Passive solidarity means solidary only on the part of the debtors. Creditors are joint.
15. A B and C borrowed P150,000 from X. The debtors signed a promissory note on January 10, 2017
promising to pay X individually and jointly on or before March 10, 2017. How much can X collect from
A and B today?
a. P100,000
b. P25,000
c. P50,000
d. P150,000
e. None
EXPLANATION: Ronquillo v. CA
16. A B and C borrowed P360,000 from X and Y. The three debtors signed a PN on January 10, 2016
promising to pay the creditors on or before July 10, 2016. How much can X validly demand from C on
June 30, 2016 in case of active solidarity and A is insolvent?
a. P180,000
b. P60,000
c. P120,000
d. P360,000
e. None
EXPLANATION: Because active solidarity – joint debtors, solidary creditors. Since they are joint
debtors, it does not matter if A is insolvent.
● The answer is letter E because at the time of demand, the obligation was not due and
demandable. If it was due, the answer would be that C is liable to pay P120,000.
17. X filed an action against A, one of the debtors who bound themselves to pay jointly and severally to
pay the amount of P100,000. The action was dismissed because A was a minor when the contract
was entered into. If Y, a solidary creditor, files an action against B, one of the 4 debtors:
a. The action will not prosper
b. Y can recover the amount of P100,000
c. Y can recover only P12,500
d. Y can recover the amount of P75,000
EXPLANATION: Minority is a defence to the extent of the share of the solidary debtor. So, the share of
A who is a minor will be subtracted to the P100,000 leaving a debt of P75,000. Since the debtors are
bound themselves to pay jointly and severally, Y can recover P75,000 from B.
18. In passive solidarity with A, B, C, D, and E as debtors and X and Y as creditors in the amount of
P20,000, how much can X demand from A, if B is insolvent and X remitted the share of C?
a. P20,000
b. P10,000
c. P8,000
d. P6,000
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e. None
EXPLANATION: In passive solidarity, debtors are solidary and creditors are joint. One creditor can
collect his share of the debt from all creditors. Here, since X remitted the share of C, the total amount
of the debt is lessened to P16,000 to be divided equally among the four remaining solidary debtors.
Since B is insolvent, his share amounting to P4,000 will be shared proportionally by A, B, D, and E.
Thus, X can collect P8,000 from A which corresponds to his share from the P16,000 debt.
19. X filed an action against A, one of the 4 debtors who bound themselves to pay jointly, the amount of
P100,000. The action was dismissed because the obligation was void as to A as he was prohibited
from entering into such a kind of contract. If Y, the solidary creditor files an action against B, one of
the 4 debtors:
a. Y cannot recover from B
b. Y can recover the amount of P100,000
c. Y can recover only P12,500
d. Y can recover the amount of P25,000
e. Y can recover the amount of P6,250
EXPLANATION: Creditors are solidary, debtors are joint.
● Because debtors are joint, so each entire share of debtor can be claimed.
● Void as to A doesn’t matter because joint debtors and each debt is separate and distract from
each other.
● Not letter C because solidary creditor.
20. D obliged himself to give C, object no. 1 valued P15,000; or object no. 2 valued at P10,000; or object
no. 3 valued at P5,000. Before D could communicate his choice, object no. 1 was lost due to C’s fault
(fault of the creditor).
a. D’s obligation is extinguished.
b. C’s obligation is to pay D the value of object no. 1 plus damages
c. C’s right is to demand the value of any of the objects plus damages
d. D’s obligation is to pay the value of object no. 1 plus damages
e. D may rescind the obligation with damages
EXPLANATION: Art. 1203. If through the creditor’s acts, the debtor cannot make a choice according
to the terms of the obligation, the latter (debtor) may rescind the contract with damages.
● Under Art. 1200, the right of choice belongs to the debtor (GR), unless it has been expressly
granted to the creditor (XPN).
● In this case, D the debtor has the right to choose, thus, when the thing was lost due to the fault
of C the creditor, Art. 1203 applies not Art. 1205 which shall apply when the right of choice is
expressly given to the creditor and the loss is due to the fault of the debtor before the choice of
the creditor has been communicated.
21. D obliged himself to give C, object no. 1 valued at P15,000; or object no. 2 valued P10,000; or object
no. 3 valued P5,000. Before C could communicate his choice, object no. 1 was lost due to D’s fault
(debtor’s fault).
a. D’s obligation is extinguished
b. D’s obligation is to pay C the value of object no. 1 plus damages
c. C’s only right is to demand the value of any of the remaining objects plus damages
d. C’s right is to demand for the delivery of object no. 2 or 3 plus the value of object no. 1
e. C’s right is to demand for the value of object no. 1 plus damages
EXPLANATION: Art. 1205 (2): if the loss of one of the things occurs through the fault of the debtor, the
creditor may claim any of those subsisting, or the price of that which, through the fault of the former,
has disappeared, with a right to damages
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● Not A because no choice made, there are still other remaining prestations
● Not C because not “only” right
● Not D because there are remaining objects, and it says there is no right to damages
22. On May 1, 2012, D obtained a 60-day loan from ABC Loan Company amounting to P50,000 with G as
a guarantor. D also issued two checks—one amounting to P30,000 dated June 30, 2012, and the
other for P20,000 dated July 1, 2012. On the due dates of the checks, ABC Loan presented the
checks for payment but only the check for P30,000 was honoured. The other check was dishonoured
for lack of funds. T, wanting to save the credit standing of D, paid ABC Loan P50,000 with the
consent of D.
a. T may recover from D P50,000 and if D cannot pay, T can go against G
b. T may recover from D P20,000 and if D cannot pay, T can go against G
c. T may recover from D P50,000 and if D cannot pay, T cannot go after G
d. T may recover from D P30,000 and if D cannot pay, T cannot go after G
e. T may recover from D P20,000 and if D cannot pay, T cannot go after G
EXPLANATION: Art. 1236. The creditor is not bound to accept payment or performance by a third
person who has no interest in the fulfilment of the obligation, unless there is a stipulation to the
contrary.
Whoever pays for another may demand from the debtor what he has paid, except that if he paid
without the knowledge or against the will of the debtor, he can recover only insofar as the payment has
been beneficial to the debtor.
● If the substitution of the debtor is by way of delegacion (with consent or knowledge of the
original debtor but without any objection.) X can seek reimbursement at the amount actually
repaid and if A fails to reimburse, X can run after the guarantors because upon payment, he
was subrogated in the rights of the creditor.
● Because T may recover from D P50,000, the amount T paid because D consented
● But T can go after G, because there is legal subrogation, because D consented
23. It presupposes not only that the obligor is able, ready, and willing, but more so, in the act of
performing his obligation
a. Promissory note
b. Bill of exchange
c. Tender of payment
d. Obligation to sell
e. Consignation
24. A owes solidary creditors X, Y, and Z P10,000. There is remission of the debt when:
a. X borrows P10,000 from A
b. Z makes a will giving the P10,000 credit to B
c. Y tells A that instead of paying P10,000, a shall just deliver a ring to Y
d. X waives gratuitously the obligation of P10,000 in favour of A
EXPLANATION: Art. 1270. Condonation or remission is essentially gratuitous, and requires the
acceptance by the obligor. It may be made expressly or impliedly.
● Not A because in that case there would be compensation.
● Not C because there is novation. Not dation because there is no delivery. Y only told A to
deliver, no delivery yet.
● Remission is in the nature of a donation.
25. Which of the following will not extinguish an obligation?
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a. Condonation
b. Novation
c. Fortuitous event
d. Mutual dissent
e. Compromise
EXPLANATION: FE is not a mode of extinguishment if at all it will result in the extinguishment, mode is
the loss of the thing due. Just because there’s a fortuitous event doesn’t mean obligation will be
extinguished.
● Because FE by itself will not extinguish the obligation. FE is as to liability, not as to
extinguishment. FE can extinguish only IF according to stipulation.
26. Which of the following is not an element of legal compensation?

a. Debts to be compensated are due and demandable
b. The obligations are reciprocal in character
c. There are two or more debts of the same kind
d. The two persons are principally bound as debtors of each other
e. The two persons are creditors of each other in their own right
EXPLANATION: Elements of legal compensation are enumerated under Art. 1279. Letter B is not
enumerated therein. Also, there can be no legal compensation in a reciprocal obligation because Art.
1279 (2) provides that both debts must consist in a sum of money or if the things due are consumable,
they may be of the same kind, and also of the same quality if the latter has been stated. Reciprocal
obligations arise from the same cause and as such, they can never involve both sums of money or the
same consumables of the same kind and quality. Otherwise, no one can be compelled to perform an
obligation.
27. Joey, husband, and Alma, wife, are legally separated. By order of the court which decreed the legal
separation, Joey is obliged to give a monthly support of P20,000.00 to Alma which is payable on or
before the fifth day of the month. For the month of March 2017, Joey has not yet given Alma’s
support of P20,000.00. Last February, however, Alma borrowed P20,000.00 from Joey and has not yet
paid it although it is already due. Alma now demands from Joey the amount of P20,000.00 for her
support for March 2017 but Joey refuses to give it on the ground that Alma’s debt to him and Alma’s
monthly support had extinguished each other by compensation. Alma maintains that she is still
entitled to receive her support for March 2017 and that it is she alone who can claim compensation.
Decide.
a. Joey has the right to claim compensation but not Alma
b. Alma has the right to claim compensation but not Joey
c. Both debts are extinguished by legal compensation even without Joey or Alma
d. Neither may claim compensation because the debts are not of the same kind
EXPLANATION: Art. 1287. Compensation shall not be proper when one of the debts arises from a
depositum or from the obligations of a depositary or of a bailee in commodatum.
Neither can compensation be set up against a creditor who has a claim for support due by gratuitous
title, without prejudice to the provisions of paragraph 2, of Art. 301. Support cannot be subject of
compensation.
Example: B is the father of A, a minor who under the law is entitled to be supported by B. Now A owes
B P10,000. B cannot compensate his obligation to support A by what A owes him because the right to
receive support cannot be compensated with what the recipient A owes the obligor B. The right to
receive support cannot be compensated because it is essential to the life of the recipient.
28. On October 6, 2009, A is indebted to B for P50,000 for a 30-day period. On October 20, 2009, without
knowledge of A, B proposed to X for X to pay A’s debt on November 15, 2009 releasing A from his
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obligation. X agreed to the proposal. On November 25, 2009, when B tried to collect from X, he found
out that X was insolvent. The insolvency was of public knowledge as early as October 20, 2009. Can
B still validly demand payment from A?
a. A Is liable because he is presumed to have guaranteed X’s solvency.
b. A is liable because the insolvency of X was already in existence and of public knowledge on
October 20, 2009.
c. A is not liable because the agreement between B and X happened before the obligation of A
became due.
d. A is not liable because his obligation was extinguished with the agreement of B and X.
● EXPLANATION: Extinguished by passive subjective novation, specifically expromission (when
the substitution is without the knowledge or against the will of the debtor, but with the consent
of the creditor.) In other words, there was no consent of the original debtor.
● In this case, it was B who initiated the substitution.
● Art. 1294. If the substitution is without the knowledge or against the will of the debtor, the new
debtor’s insolvency or non-fulfilment of the obligation shall not give rise to any liability on the
part of the original debtor.
29. In which of the following will there be no legal subrogation?

a. When a debtor pays a creditor, who is preferred
b. When a third person who has an interest in the fulfilment of the obligation pays without the
approval of the debtor
c. When a person who has no interest in the fulfilment of the obligation pays with the consent of the
debtor
d. None of the above
EXPLANATION: Art. 1303. Subrogation transfers to the persons subrogated the credit with all the
rights thereto appertaining, either against the debtor or against third persons, be they guarantors or
possessors of mortgages, subject to stipulation in a conventional subrogation.
Legal subrogation, in simpler terms, means that one party steps into the shoes of the creditor. In letter
A, the debtor only paid his debt to the preferred creditor. That doesn’t mean he’s going to be the new
creditor of anyone else. Hence, there is no legal subrogation when a debtor pays a creditor who is
preferred.
● It’s the creditor who pays another creditor who is preferred
● Art. 1302 – presumption of legal subrogation, grounds
30. X owes Y P40,000. With the consent of both parties, Z pays Y P20,000 which makes Y and Z creditors
of X to the amount of P20,000 each. X becomes bankrupt and has only P20,000 assets left.
a. Y and Z should divide the P20,000 equally.
b. X may choose whom to pay.
c. Y should get the P20,000.
d. Z is entitled to the P20,000.
EXPLANATION: The original debtor will be preferred. Art. 1302.
III. ESSAY
1. If the debtor delivers a thing to his creditor with a Special Power of Attorney (SPA) authorizing the latter to
sell the thing, is the debtor’s obligation extinguished by way of dation in payment upon acceptance of the
things by the creditor?
No, the obligation of the debtor is not extinguished because there is no valid dation in payment made
which shall extinguish the obligation. The SPA merely authorized the creditor to sell the thing without any
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indication as to the application of the proceeds of such sale to the fulfilment of the debtor’s obligation to
the creditor. Article 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of
a debt in money, shall be governed by the law of sales.
● No, was not extinguished by dation,
● In dacion, there should be transfer of ownership.
● There was only assignment of right to sell.
● Filinvest v. Phil. Acetylene.
2. A entered into a contract with B which was notarized. Thereafter, A filed an action for rescission. B filed a
motion to dismiss on two grounds: First, that the action was filed more than four years from the date of the
contract and second, that A did not exhaust available legal remedies. If you were the judge, how would you
rule on the motion?
COVERTOPS (pg 39)
The defence that the plaintiff did not exhaust other available remedies is correct if the rescission is under
Art. 1383 (the true rescission), because in that kind of rescission the remedy would only be available if the
injured does not have any available remedy.
In other words, the rescission under Art. 1383 is a subsidiary remedy whereas the one in Art. 1191(this kind
of rescission is a misnomer; a product of wrong translation from Spanish; it should have been “resolution”) i
s a principal remedy even if he has other remedies.
● Art. 1191
○ Remedy for substantial breach
● Art. 1383
○ For lesion / economic injury
● Grounds raised in MD are under Art. 1383
● To find out cause of action = allegations in complaint
● ANSWER: If I were the judge, I would have granted the motion to dismiss if the rescission is
based under Art. 1383.
■ Because prescription of 4 years is prescription for an action under 1383
■ Because "not exhaust available legal remedies applies" as a defence for
1383 because is a subsidiary action
3. ABC Corporation, a VAT Zero-Rate taxpayer, filed a claim for the issuance for the issuance of tax credit
certificates for its alleged unutilized input taxes. BIR refused to issue tax credit certificates. ABC
Corporation claimed that the government will be unjustly enriched under the principle of solutio indebiti if
BIR will not issue the said tax certificates. Is the claim tenable?
Case: CBK Power Co. v. CIR (G.R. Nos. 198729-30)

This is a tax case. CBK Power is a zero-rated VAT taxpayer. It claims that it ﬁled for an application for the
issuance of a tax credit certiﬁcate (TCC), saying that it has unutilized input taxes. The CIR rejected CBK
Power’s application. In the SC, ang isang naging argument ay: If the government or the BIR will not issue
the TCC, the government will be unjustly enriched at the expense of the taxpayer under the principle of
solutio indebiti.
ISSUE: Is the principle of solutio indebiti applicable in this case?
Uribe: Nung nagbayad sila, is it correct to say that the government or BIR does not have the right to
demand for such money (taxes)? Of course the BIR has all the right, kasi VAT yan. Dapat magbayad ka
talaga. Pangalawa, was it delivered by mistake? Hindi din. Kailangan naman talaga na magbayad ka eh.
Kaya lang, may merong lumabas ng unutilized input taxes, saka mae-entitle sa issuance ng TCC.
So, on both grounds, walang solutio indebiti dito.
First, CBK Power paid, and the BIR has the right to demand for it. Second, the payment was not made by
mistake.
Again, under the law, something is delivered by mistake if there is no right to demand for it.
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RULING: NO. There is solutio indebiti when:
1. Payment is made when there exists no binding relation between the payor, who has no duty to pay,
and the person who received the payment; and
2. Payment is made through mistake, and not through liberality or some other cause.
My answer sa exam: no. for solutio indebiti to arise, the following requisites must be present: 1. Payment
was made by mistake, and 2. The person who received payment had no right to demand or receive such
payment. In this case, the BIR had the right to demand the payment of tax and ABC corp had the
obligation to pay such tax. Therefore, there was no mistake in the payment thereof.
● The requisites of solutio indebiti is NOT present.

● REQUIREMENT: payee has no right to demand
● Here, there was a right to demand on the part of BIR. --> there is a binding relationship
(taxpayer has an obligation to pay).
REQUIREMENT: payee has no right to demand
Here, there was a right to demand on the part of BIR. --> there is a binding relationship
(taxpayer has an obligation to pay).
● UFC case
4. A. Iya and Betty owed Jun P500,000.00 for advancing their equity in a corporation they joined as
incorporators. Iya and Betty bound themselves solidarily liable for the debt. Later, Iya and Jun became
sweethearts so Jun condoned the debt of P500,000. May IYa demand from Betty P250,000.00 as her share
in the debt. Explain with legal basis. (3%)
NO, Iya cannot demand from Betty the P250,000 because under Art. 1220, the remission of the whole
obligation obtained by one of the solidary debtors does not entitle him to reimbursement from his
co-debtors.
When the obligation was extinguished in favor of one of the debtors, that does not entitle her from
reimbursement from one of the debtors because condonation is a gratuitous act.
In this case, Iya did not pay anything. Under the Civil Code, if there is a condonation even if it is in
favor of the solidary debtor, he or she is not entitled to reimbursement from his or her other co-
debtors.
● No, Iya cannot demand from Betty P250,000.00 as her share in the debt due to the condonation done
by Jun of the whole debt.
● In Art. 1220 of the Civil Code, the remission of the whole obligation, obtained by one of the solidary
debtors, does NOT entitle him to reimbursement from his co-debtors.
In this case, since Jun condoned the Iya of the whole 500,000.00 debt, Iya CANNOT claim
reimbursement from Betty because the law does not allow reimbursement from co-debtors of
obligations remitted by the creditor, Jun.
● Question here is NOT whether obligation was extinguished. So, if you answer this, wrong.
B. Juancho, Don and Pedro borrowed P150,000.00 from their friend Cita to put up an internet cafe orally
promising to pay her the full amount after one year. Because of their lack of business know-how, their
business collapsed. Juancho and Don ended up penniless but Pedro was able to borrow money and put up
a restaurant which didd well. Can Cita demand that Pedro pay the entire obligation since he, together with
the two others, promised to pay the amount in full after one year? Defend your answer. (2%)
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Cita cannot demand that Pedro pay the entire obligation. Based on the facts, there being no stipulation that
it is solidary, there is no law requiring it to be solidary or the nature of obligation requires solidarity, the
obligation to pay Cita is joint. Cita may only claim P50k from Pedro.
● No, Cita cannot demand Pedro to demand the entire obligation.

● Presumed that the obligation is joint
● REMEMBER this is Oral agreement --> we don't know what they talked about
○ So remember to qualify "UNLESS the parties stipulated for solidarity"
● Law on simple loan is applied here
OBLIGATIONS MIDTERMS SAMPLEX #1
I. TRUE OR FALSE
1. Proof of actual damages suffered by a creditor is not necessary in order that penalty may be demanded.
a. TRUE. Art. 1228 actual wording.
2. An obligation whose performance does not depend upon a future and uncertain event, or upon a past
event unknown to the parties, is demandable at once.
a. FALSE. Should be “or” not “and”. Art. 1179.
3. Every person obliged to give is also obliged to take care of it with the diligence of a good father of a family.
a. FALSE. Incomplete statement. Art. 1163 states “unless the law or the stipulation of the parties
requires another standard of care.
4. When the debtor obliges himself to pay when his means permit him to do so is a conditional obligation.
a. FALSE. Art. 1180 states that it shall be deemed to be one with a period.
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5. When the fulfilment of a condition depends upon the sole will of one of the parties, the conditional
obligation shall be void.
a. FALSE. Art. 1182 provides that it is void only if upon sole will of the debtor.
6. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfilment.
a. TRUE. Art. 1186 actual wording: when the obligor prevents fulfilment of the condition, the condition
shall be deemed fulfilled.
7. The condition not to do an impossible thing shall annul the obligation.

a. FALSE. Art. 1183, “considered not having agreed upon.”
8. The effects of a conditional obligation to give, once condition is fulfilled, shall retroact to the day of the
constitution of the obligation.
a. TRUE. Art. 1187, retroactivity.
9. The creditor may, before fulfilment of a condition, bring appropriate actions for the preservation of his right.
a. TRUE. Art. 1188, actual wording.
10. Whenever in an obligation a period is designated, it is for the benefit of both creditor and debtor.
a. FALSE. Art. 1196 provides that “whenever in an obligation a period is designated, it is “presumed”
to have been established for the benefit of both the creditor and debtor.
11. Obligations with a resolutory period take effect at once but terminate upon arrival of a day certain.
a. TRUE. Art. 1193 exact wording.
12. The debtor shall lose every right to make use of the period when after the obligation is contracted he
becomes insolvent.
a. FALSE. Art. 1198 (1) provides that the debtor shall lose every right to make use of the period: (1)
when after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or
security for the debt.
13. In obligations with a penal clause, the penalty shall substitute indemnity for damages and payment of
interest in case of non-compliance.
a. FALSE. Art. 1226, “if there is no stipulation to the contrary.”
14. The debtor cannot exempt himself from the performance of an obligation by paying the penalty, save in
cases where the right is clearly granted to him.
a. FALSE. Art. 1227, “save in the case where this right has been expressly reserved for him.”
15. A person alternatively bound by different prestations shall completely perform all of them.
a. FALSE. Art. 1199, “one of them.”
16. In alternative obligations, the right of choice belongs to the debtor.
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a. FALSE. Art. 1200, this is the general rule only. “Unless it has been expressly granted to the
creditor.”
17. Obligations for whose fulfilment a day certain has been fixed shall be demandable at once.
a. FALSE. Art. 1193, “shall be demandable only when that day comes.”
18. In alternative obligations, the choice shall produce no effect except from the time it has been made.
a. FALSE. Art. 1201 should be “communicated” not “made.”
19. In alternative obligations, if through the creditor’s acts the debtor cannot make a choice according to the
terms of the obligation, the obligation is extinguished.
a. FALSE. Art. 1203, “the debtor may rescind the contract, with damages.”
20. When only one prestation has been agreed upon, but obligor may tender another in substitution, the
obligation is called disjunctive.
a. FALSE. Art. 1206, “facultative” not “disjunctive.”
b. Disjunctive obligation – there are 2 or more creditors and 2 or more debtors but they are named
disjunctively as debtors and creditors in the alternative. Rules of solidary obligations apply because
if they are considered joint, then the debtor will generally be given the choice to whom he shall give
payment. Example: A binds himself to pay either to X or Y. A or B will pay to X.
21. An obligation becomes due upon demand.

a. FALSE. Demand may only be made if obligation becomes due.
22. In obligations with a penal clause, penalty shall substitute indemnity for damages and payment of interests
in case of non-compliance.
a. FALSE. Not only in case of non-compliance. There are other instances. Art. 1226: (1) obligor
refuses to pay penalty; (2) guilty of fraud in fulfilment of the obligation; (3) stipulation to the contrary
23. The power to rescind obligations is implied if the parties are mutual debtors and creditors.
a. FALSE. Mutual debtors and creditors not necessarily reciprocal under Art. 1191. “The power to
rescind obligations is implied in reciprocal ones, in case the obligor should not comply with what is
incumbent upon him.”
24. No person shall be responsible for those events which could not be foreseen, or which though foreseen,
were inevitable, unless there is an express stipulation to the contrary.
a. FALSE. Art. 1174. May be liable if (1) specified by law, or otherwise (2) declared by stipulation or (3)
when the nature of the obligation requires the assumption of risk.
II. MULTIPLE CHOICE
1. In an obligation with a penal clause, which is absolutely true?

a) Debtor cannot exempt himself from the performance of an obligation by paying the penalty.
b) The creditor cannot demand the fulfilment of an obligation and satisfaction of penalty at the same time.
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c) Nullity of a penal clause carries with it that of the principal obligation.
d) If after the creditor has decided to require fulfilment of an obligation and the performance thereof
should become impossible without his fault, penalty shall be enforced.
e) None of the above.
EXPLANATION:
Not letter A: It is false, if the right has been reserved for the debtor then the latter can exempt himself from
the performance of an obligation by paying the penalty.
Not letter B: It is false, there are instances when penalty is in addition to fulfilment as when the creditor has
been granted a right to demand fulfilment and the satisfaction of the penalty.
Not letter C: It is false, penal clause is only an accessory to the principal obligation.
Not letter D: It is false, fulfilment has become impossible, rescission + damages
2. X filed an action against A, one of 4 debtors who bound themselves to pay jointly the amount of
P100,000. The action was dismissed because the obligation had an unlawful object. If Y, a solidary
creditor, files an action against B, one of the 4 debtors:
a) The action will not prosper.
b) Y can recover P25,000.
c) Y can recover P100,000.
d) Y can recover P12,500.
e) Y can recover P75,000.
EXPLANATION: The action was dismissed because of an unlawful object. Therefore, action against any
debtor shall not prosper because they pertain to the same obligation.
3. In an active solidarity with A, B, C, D and E as debtors and X and Y as creditors in the amount of
P10,000, how much can X demand from A?
a) 10,000
b) 5,000
c) 2,000
d) 1,000
e) None
EXPLANATION: Solidary creditors, joint debtors. Debtor only pays his share in the debt.
4. I promise to pay X or Y the amount of P100 on December 25, 2002 is:

a) alternative obligation
b) conjunctive obligation
c) obligation with a period
d) facultative obligation
e) joint obligation
5. D is obliged to return to C the latter’s car upon the death (event that is certain to happen) of X. This
is an example of:
a) obligation with a suspensive condition
b) an obligation with a resolutory condition
c) obligation with a suspensive period
d) obligation with a resolutory period
e) pure obligation
EXPLANATION: Death is a future or uncertain event. Art. 1179.
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6. Effects of the loss of the thing in a facultative obligation. Which is incorrect?
a) Before substitution, if principal thing is lost due to a fortuitous event, there is no more obligation.
b) Before substitution, if substitute thing is lost due to debtor’s fault, he cannot be liable.
c) After substitution, if principal thing is lost, debtor no longer liable even if it was lost due to his fault.
d) None of the above.
7. A and B are solidary debtors of solidary creditors X and Y in the amount of P4,000. On due date, X
condoned in favour of A the entire obligation. Which is correct?
a) B shall give A P2,000.
b) Y can collect from A P2,000.
c) Y can collect from B P2,000.
d) None.
EXPLANATION:
Not letter A: No reimbursement to debtor condoned
Not letter B and C: Because the whole debt has been condoned
8. The creditor is entitled to recover only the penalty stipulated

a) when the debtor has performed the obligation.
b) when the debtor refuses to pay the penalty.
c) when the debtor is guilty of fraud in the fulfilment of the obligation.
d) when the debtor fails to perform his obligation.
EXPLANATION: Art. 1226 states that in case of non-compliance, the penalty shall substitute the indemnity
for damages and the payment of interest.
Not letter A: No penalty because the obligation has been performed
Not letter B: Art. 1226 states that when the debtor refuses to pay the penalty, damages shall be paid along
with penalty
Not letter C: Art. 1226 states that when the debtor is guilty of fraud in the fulfilment of the obligation,
damages shall be paid along with penalty.
9. Which of the following obligations may the creditor exercise the right to choose which prestation
should be performed by the debtor?
a) Conjunctive – all must be performed
b) Alternative
c) Facultative – only debtor has the right to choose
d) Obligation with a penal clause
EXPLANATION: In alternative obligations, creditor can be given the right to choose the prestation
according to Art. 1200.
10. In a passive solidarity with A, B, C, D and E as debtors and X and Y as creditors in the amount of
P10,000, how much can X validly demand from A?
a) 10,000
b) 5,000
c) 2,000
d) 1,000
e) None
EXPLANATION: In passive solidarity, the debtors are solidary and the creditors are joint. The debtors shall
pay the whole share of one creditor.
11. Which of the following is a subsidiary remedy?
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a) action for damages
b) action for resolution – this is also known as rescission
c) accion subrogatoria
d) action for specific performance
12. Rescission as a subsidiary remedy would be available if:

a) one of the parties or a third person suffers lesion
b) there is a breach of faith
c) there is casual breach of contract
d) there is fundamental breach
Not letter B: Cause of rescission
Not letter C: Cannot rescind contract for casual breach of the obligation
Not letter D: Ground for rescission under Art. 1191
13. Mr. AB owes Mr. CD P150,000 due on August 31, 2000. AB (debtor) executed a mortgage in favour of
CD (creditor) on AB’s building to guaranty obligation. On August 12, 2000, CD (creditor) demanded
payment from AB but building was destroyed when CD (fault of creditor) left it alone. Is CD’s demand
valid?
a) NO. Obligation is with a definite period thus creditor cannot demand.
b) NO. Obligation is extinguished because object was lost due to CD’s fault.
c) YES. Debt becomes due at once because guaranty was lost.
d) YES. Debt becomes due at once because, from the tenor of the obligation, benefit is given to the
creditor.
EXPLANATION: The obligation was not yet due.
Not letter B: Because the object of the obligation is not the building.
Not letter C: Art. 1198 (3) is not applicable because it states that the debtor must be at fault for the
impairment of the guaranty or security.
Not letter D: No indication that it was for the benefit of the creditor.
14. On February 1, 2011, Zardi obliged himself to deliver to Rey his Ford Expedition on March 1, 2011. No
delivery was made until March 15, 2011 when the garage of Zardi was totally destroyed because of
an earthquake. Is Zardi still liable for the loss?
a) YES. The obligation was changed upon the destruction of the garage.
b) YES. The contract was already perfected.
c) NO. Even if Zardi in default, he could plead impossibility of fulfillment.
d) NO. No demand from Rey to deliver the car.
EXPLANATION: No demand so Zardi cannot be in delay.
15. On October 6, 2010, Aurora obliged herself to deliver to Corita 100 cavans of corn on the last day of
the month. On November 1, 2010, Corita orally demanded delivery but the cavans of corn perished
due to the elements. What is the proper action?
a) specific performance
b) pay for damages
c) restitution
d) reparation
EXPLANATION: Thing was already due; plus, thing to be delivered is generic. Art. 1165. If generic, he may
ask that the obligaton be complied with at the expense of the debtor.
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16. Demand is not necessary to constitute the debtor in default in the following cases, except when:
a) demand is useless
b) law provides
c) period for performance is fixed in the obligation
d) period is the controlling motive
e) None of the above
EXPLANATION: Case of Rivera v. Sps. Chua. Art. 1169.
17. D obliged to paint the house of C within 1-month from the agreement with the understanding that D
will pay the penalty of P1,000 in case of non-compliance. Suppose before D could start painting he
tells C that he would just pay the penalty, may D validly do so?
a) YES, if the right was clearly granted to D
b) YES, if the right was expressly reserved to D.
c) NO, D can still be compelled to fulfil the obligation.
d) NO, there was a perfected contract.
EXPLANATION: Art. 1227. Can pay penalty instead of complying with the obligation if right is expressly
reserved to the debtor.
18. In a passive solidarity with A, B, C, D and E as debtors and X and Y as creditors in the amount of
P10,000, how much can X validly demand from A if B is insolvent and Y remitted the share of C?
a) 10,000
b) 8,000
c) 5,000
d) 2,000
e) None
EXPLANATION: Passive solidarity, the debtors are solidary while the creditors are joint. You pay the whole
share of one creditor only. Thus, X can demand P4,000 from A which corresponds to X’s share in the debt.
Since Y remitted the debt of C, the debt now amounts to P8,000. Divided equally among X and Y, each of
them shall get P4,000.
19. In a solidary obligation with V, W, X, Y and Z as debtors and A as creditor in the amount of P20,000,
how much can X validly demand from Z as reimbursement if?
a) 10,000
b) 5,000
c) 2,000
d) 1,000
e) None
20. D obliged himself to give C either object #1 valued at P15,000; or object #2 valued at P10,000. What
happens when through C’s acts D cannot make a choice according to the terms of the obligation?
a) D’s obligation is extinguished.
b) C’s obligation is pay D value of object #1 plus damages.
c) C’s right is to demand value of object #1.
d) D’s obligation is to pay with damages.
e) D may rescind with damages.
EXPLANATION: Art. 1203. If through the creditor’s acts the debtor cannot make a choice according to the
terms of the obligation, the latter may rescind the contract with damages.
22
III. ESSAY
1. Aaron obliged himself to deliver to Benjamin his car, his watch or his notebook on or before December 31,
2004. On December 25, 2004 Aaron decided to deliver his watch to Benjamin. On December 26 his
notebook was destroyed due to the fault of Benjamin. May rescission be a remedy? NO. Rescission is
not a remedy. The obligation is alternative and the choice is with the debtor. Under Art. 1203,
rescission is only available if through the creditor’s acts, the debtor cannot make a choice according
to the terms of the obligation. Since there are other choices available, the remedy of rescission is
not proper.
2. A, B, C, D and E borrowed P500,000 from Y, binding themselves jointly and individually. Y condoned A’s
entire share in the debt. B was insane at the time obligation was constituted. C was insolvent when the
obligation became due and demandable. Y makes a demand on D to pay the debt. Having paid Y the
amount he can be compelled to pay, how much can D validly demand from A? Discuss effects, if any, of
the condonation of A’s share, B’s insanity and C’s insolvency. D can validly demand P33,000 from A
because A is still liable to reimburse his co-debtor’s due to C’s insolvency. The condonation and
insolvency of A and B respectively lessened the total debt to P300,000. Since C is insolvent, his debt of
P100,000 shall be shared proportionately by A, D, and E.
A 100 (CONDONED) 0 33
B 100 (INSANE) 0
C 100 100 (INSOLVENT) 0
D 100 100 133
E 100 100 133
Total: 500 Total: 300 Total: 300
3. On January 1, 2004, A obliged himself to deliver and transfer ownership over a mango plantation to B upon
B’s passing the CPA Board Exam. Two years later B passed the said exam. A claimed that the obligation is
void because the condition is potestative in character. Is A’s claim tenable? NO. The condition is not
potestative and so valid. To be potestative and void, the condition must be suspensive and depends
only upon the sole will of the debtor.
4. On January 1, 2004, A obliged himself to deliver and transfer ownership over a mango plantation to B upon
B’s passing the CPA Board Exam. Two years later B passed the said exam. Who is entitled to the fruits
harvested after January 1, 2004 but before B passed the board exam? A is entitled to the fruits under
Art. 1187 on unilateral obligations.
23
OBLIGATIONS MIDTERM SAMPLEX #2
I. TRUE OR FALSE
A = Both True
B = Both False
C = 1st Statement is True, 2nd Statement is False
D = 1st Statement is False, 2nd Statement is True
A 1. In natural obligation, the debtor may pay the creditor of his debt.
TRUE
In natural obligation, the debtor may not pay the creditor of his debt.
TRUE
B 2. In case of non-compliance of obligations with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interest.
FALSE. There are other instances under Art. 1226 (1) obligor’s refusal to pay the penalty; (2) guilty of
fraud in the fulfilment of the obligation; (3) stipulation to the contrary
The insolvency of one debtor will increase the liability of his co-debtors.
FALSE. This is not true in case of joint liability among debtors.
D 3. Those obliged to deliver or to do something incur in delay only from the time the obligee judicially or
extrajudicially demands from them the fulfilment of the obligation.
FALSE. Art. 1169 states that the demand by the creditor shall not be necessary in order that delay may
exist in the following instances: (1) when the obligation declares; or (2) the law expressly so declares; or
(3) when time is of the essence (De Leon); or (4) when demand would be useless as when the obligor
has rendered it beyond his power to perform.
Proof of actual damages suffered by the creditor is not necessary in order that the penalty may be
demanded.
TRUE. Art. 1228.
24
A 4. An obligation which is payable upon the death of Mr. X within five-years from its execution is a
conditional obligation.
TRUE.
Solidarity may exist although the creditors and the debtors may not be bound in the same manner and
by the same periods and conditions.
TRUE. Art. 1211.
B 5. When the fulfilment of the condition depends upon the sole will of the debtor, the obligation shall be
void.
FALSE. Not when it comes to resolutory conditions.
In conjunctive obligations, the right of choice belongs to the debtor, unless it has been expressly
granted to the creditor.
FALSE. This pertains to alternative obligations under Art. 1199. Conjunctive obligations is when there
are several prestations and all of them can be performed separately.
C 6. Where an application for a loan of money is approved, there arises a perfected contract even before
the delivery of the object of the contract.
TRUE.
It is a concept that derives from the principle that since mutual agreement can create a contract,
mutual disagreement by the parties can cause its extinguishment.
?
B 7. If the obligation has been substantially performed, the obligor shall recover as though there had been
a strict and complete fulfilment.
FALSE. Art. 1234 states it must be performed in good faith. It provides that if the obligation has been
substantially performed in good faith, then the obligor may recover as though there had been a strict
and complete fulfilment, less damages suffered by the oblige.
When the obligee accepts the performance, knowing its incompleteness or irregularity, the obligation is
deemed fully complied with.
FALSE. Art. 1235.
A 8. Consignation of the amount required is not necessary to preserve the right to redeem.
TRUE. Case of Immaculata v. Navarro.
Where an application for a loan of money was approved, there arises a perfected contract even before
TRUE
A 9. An agreement to pay a promissory note in dollars, while null and void under RA No. 529, does not
defeat a creditor’s claim.
TRUE
A Certification implies that the check is drawn upon sufficient funds in the hands of the drawee, that
they have been set apart for its satisfaction and that they shall be so applied whenever the check is
presented for payment.
TRUE
25
A 10. Prestation is an essential requisite of obligations
TRUE
Resolutory condition is demandable at once

TRUE
B 11. A certified personal check is not legal tender nor the currency stipulated and therefore cannot
constitute valid tender of payment.
FALSE. Art. 1249, personal check is not a valid tender and creditor cannot be compelled to accept it /
can refuse to accept. (So if there is acceptance on the part of the creditor, okay na siguro)
The rule that in case an extraordinary inflation or deflation of the currency stipulated should supervene,
the value of the currency at the time of the establishment of the obligation shall be the basis of
payment is an applicable to obligations arising from tort.
FALSE. Not tort. Art. 1250.
D 12. Under the principle of dation in payment, the mere delivery of the mortgaged motor vehicle by the
mortgagor results in the transfer of ownership to the mortgagee even without the consent of the latter.
FALSE. There must be consent of the mortgagee. Mere delivery does not result in the transfer of
ownership.
There can be no consignation when there is no obligation to be extinguished.

TRUE
C 13. Consignation of the amount required is not necessary to preserve the right to redeem.
TRUE
Tender of payment may be extrajudicial.

FALSE. It is by its nature EXTRAJUDICIAL.
B 14. Consent is an essential requisite of obligation.

FALSE. For contracts.
Written Contract is necessary to make it enforceable.

FALSE. Oral contracts are still enforceable. There are certain contracts that must be written but not all
must be written to be enforceable.
B 15. A thing is indeterminate if it is not physically segregated from all others of the same class.
FALSE. Art. 1460. A thing is determinate when it is particularly designated or physically segregated
from all others of the same class. There are things that are determinate but not physically segregated.
In obligations with a term, the obligation arises upon the arrival of the period.
FALSE. The obligation does not “arise” upon the arrival of the period. The obligation does not come
into existence upon the arrival of the period rather, the obligation becomes demandable at such arrival
of the period.
A 16. In obligations with a penal clause, the debtor may exempt himself from the performance of the
obligation by paying the penalty.
TRUE
The indivisibility of an obligation necessarily gives rise to solidarity.
26
FALSE. Art. 1210. The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.
B 17. The insolvency of one debtor will increase the liability of his co-debtors.
FALSE. Not true in case of joint liability of debtors.
Whenever a period is designated in an obligation, it is for the benefit of both the creditor and debtor.
FALSE. It is “presumed” to be for the benefit of both the creditor and the debtor.
C 18. There is an obligation in every contract.

TRUE
When the fulfilment of the obligation is dependent upon the sole will of the debtor, the conditional
obligation shall be void.
FALSE. Not in the case of resolutory conditions.
D 19. In facultative obligations, the right of choice belongs to the debtor unless it has been expressly
granted to the creditor.
FALSE. Should be alternative obligations and not facultative obligations. In facultative obligations,
ONLY the debtor can choose the prestation.
Consignation, to be valid, generally requires a prior tender of payment.

TRUE
A 20. Consignation of the amount required is not necessary to preserve the right to redeem.
TRUE. Case of Immaculata v. Navarro.
The debtor loses every right to use the period when he attempts to absconds
TRUE. Art. 1198.
A 21. Difficulty of service authorizes release of obligor but does not authorize courts to modify or revise
he contract between the parties.
TRUE
Tender of payment is required only when the creditor refuses, without just causes, to accept payment.
TRUE
B 22. The insolvency of one debtor will increase the liability of his co-debtors.
FALSE. Not if joint debtors.
In facultative obligation, the right of choice belongs to the debtor unless it has been expressly granted
to the creditor.
FALSE. This is true in alternative obligations.
A 23. It is a concept that derives from the principle that since mutual agreement can create a contract,
mutual disagreement can cause its extinguishment.
TRUE
Where an application for a loan of money was approved, there arises a perfected contract before the
delivery of the object of the contract.
TRUE
27
B 24. If the obligation has been substantially performed, the obligor shall recover as though there had
been a strict and complete fulfilment.
FALSE. Must be performed in good faith.
B 25. Obligation is always a juridical necessity to give, to do, or not to do

FALSE
Contract is meeting of meeting of the minds between two persons only

FALSE
A 26. An agreement to pay a promissory note in dollars, while null and void under RA 529 does not defeat
a creditor’s claim.
TRUE
Consignation presupposes not only that the obligor is able, ready, and willing to pay, but mores so in
the act of performing his obligation.
TRUE
D 27. Nullity of contract is a mode of extinguishment not enumerated under Article 1231
FALSE. It’s a status of a contract, not a mode of extinguishment.
Arrival of the period may be a mode of extinguishment not enumerated under Article 1231
TRUE
B 28. When the obligee accepts the performance knowing its incompleteness or irregularity, the obligation
is deemed fully complied with.
FALSE.
“A proof that an act could have been done is no proof that it was actually done” supports the concept
known as tender of payment.
FALSE.
B 29. A certified personal check is not the legal tender nor the currency contemplated, therefore cannot
FALSE
The rule that in case of extraordinary inflation or deflation of the currency stipulated should supervene,
the value of the currency at the time of the establishment of the obligation shall be the basis of payment
of obligations arising from law.
FALSE
B 30. A thing is indeterminate if it is not physically segregated from all others of the same class.
FALSE.
In obligations with a term, the obligation arises upon the arrival of the period.
FALSE.
A 31. In a joint obligation with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P100,000.00. There are 10 obligations.
TRUE
28
In a joint obligation with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P900,000 where V is insolvent. A validly demand 90,000 from X.
TRUE
C 32. In a solidary obligation with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P150,000.00. A can demand the entire obligation from W.
TRUE.
A and B are solidary debtors of X and Y, and solidary creditors in the amount of P240,000.00. If X
remits the whole obligation in favour of A without the consent of Y. X can demand the P240,000.00
from Y.
FALSE. X can only demand P120,000 because that is his share in the P240,000 debt of A and B.
A 33. In an active solidarity with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P150,000.00. A validly demand 30,000 from V
TRUE. Active solidarity: solidary creditor, joint debtor. Debtor pay his share only.
In a passive solidarity with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P900,000. A validly demand P450,000 from V.
TRUE. Passive solidarity: solidary debtor, joint creditor. Pay whole share of one creditor.
C 34. The indivisibility of an obligation does not necessarily give rise to solidarity.
TRUE
Under the principle of dation in payment, what is transferred is merely possession of

the property. (ownership)
FALSE
C 33. There can be no dation in payment when there is no obligation extinguished.

TRUE.
Tender of payment may be extrajudicial.

FALSE.
B 35. The arrival of a period or the happening of a condition gives rise to an obligation.
FALSE.
No person shall be responsible for those events which could not be foreseen, or which though
foreseen, were inevitable.
FALSE. Art. 1174 (law, stipulation, nature of obligation)
B 36. If the debtor obliged to do something fails to do it, an action for specific performance will prosper.
FALSE. Involuntary servitude. Remedy is substitute performance / damages.
In conditional obligations, the obligation arises upon the happening of the condition.
FALSE.
A 37. In novation, if the new obligation is void, the original one shall subsist, unless the parties intended
that the former relation should be extinguished in any event.
TRUE. Art. 1297
If a person should have against him several debts which are susceptible of compensation, the rules on
the application of payments shall apply to the order of the compensation.
29
TRUE. Art. 1289
D 38. In partial compensation, no obligation is extinguished.

FALSE. Obligation where partial compensation applied is extinguished. Art. 1281 says
compensation may be total or partial.
If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration thereof.
TRUE. Art. 1197.
A 39. Obligations for whose fulfilment a day certain has been fixed, shall be demandable only when that
day comes.
TRUE. Art. 1193.
When one or both debts are rescissible or voidable, they may be compensated against each other
before they are judicially rescinded or avoided.
TRUE. Art. 1284
B 40. Dation in payment is governed by the law of sales.

FALSE. Art. 1245. “whereby property is alienated to the creditor in satisfaction of a debt in
money”
In an obligation with a penal clause, the penalty shall substitute the indemnity for damages and the
payment of interest in case of noncompliance.
FALSE. There are other instances in Art. 1226.
D 41. The enumerations under Article 1231 are conclusive modes of extinguishment of obligation.
FALSE.
Articles 1157 are conclusive enumeration of sources of obligation

TRUE.
II. MULTIPLE CHOICE
41. A, B and C borrowed P36,000 from X. the debtors signed a promissory note on January 10, 2000,
promising to pay the creditor jointly and severally on or before July 10, 2000. How much can X collect
from C?
a) P18,000
b) P6,000
c) P12,000
d) P36,000 - solidary
42. On January 1, 1999, A signs a promissory note and binds himself to pay X P100,000 plus 15% per
annum interest on June 30, 1999.
a) Before June 30, 1999, X can demand payment
b) IF on June 30, 1999, A is paying X, X can refuse the payment
c) Because the period is for the benefit of the debtor, A can compel the creditor X to accept payment any
date before June 30, 1999.
d) Because the period is for the benefit of the debtor and the creditor, X can refuse any rendered
payment before June 30, 1999. – presumed for the benefit of both
30
43. Bertulfo and Claudio promised to deliver a particular car valued at P100,000 to Manuela on or before
September 15, 1999. September 15, 1999 came and upon demand by Manuela for delivery from Bertulfo
and Claudio, Bertulfo was willing to deliver but Claudio refused to deliver. Thereafter, the car was
destroyed. In this case:
a) An action for specific performance will lie against both Bertuflo and Claudio.
b) Both Bertulfo and Claudio shall be liable for P50,000 each with damages.
c) Bertulfo shall be liable for P50,000 without damages and Claudio shall be liable for P50,000 and
damages.
d) An action for specific performance will lie against Claudio only because of his refusal.
44. In an obligation where only one prestation has been agreed upon, but to extinguish the obligation, the
debtor is allowed to render another prestation, the obligation is:
a) Disjunctive obligation
b) Facultative obligation
c) Obligation with penal clause
d) Alternative obligation
e) Joint obligation
45. An obligation ceases to be alternative and becomes a simple obligation:

a) When the debtor has already made a choice
b) When the creditor has already made a choice
c) When the choice of the debtor is consented to by the creditor
d) When the choice of the creditor is consented to by the debtor
46. The following obligations are immediately demandable, EXCEPT:

a) a pure obligation
b) obligation with a resolutory condition
c) obligation with a resolutory period
d) all of the above (all are demandable at once)
e) none of the above
47. In an obligation where only one prestation has been agreed upon, but to extinguish the obligation the
debtor is allowed to render another prestation, the obligation is a:
a) disjunctive obligation
b) obligation with a penal clause
c) alternative obligation
d) joint obligation
e) none of the above (It is facultative)

a) when the debtor has already made a choice
b) when the creditor has already made a choice
c) when choice of the debtor is consented to by the creditor
d) when choice of the creditor is consented to by the debtor
e) none of the above (when only one is left among all the choices)
49. 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 obligation of the other, the non0fulfillment
of which entitles the other party to rescind the contract.
31
d) One in which each of the debtors is liable only for a proportionate part of the debt and each creditor
is entitled only for a proportionate part of the credit.
50. A and B are solidary debtor of X and Y, solidary creditors to the amount of P4,000. On the due date, X
renounced gratuitously in favor of A the entire obligation. Which of the following is correct?
a. B shall give A P2,000
b. Y can still collect from B P2,000
c. Any of the two
51. The creditor has the right to the fruits of the thing from:
a) The time the thing is delivered
b) The time the obligation to deliver the thing arises
c) The time the contract is perfected
d) The time the fruits are delivered
52. The issue of who has the right to choose may not occur in:
a) Conjunctive obligations
b) Facultative obligations
c) Alternative obligations
d) Both A and B
53. D obliged himself to give C, object No. 1 valued P15,000; or object No. 2 valued P10,000; or object 3
valued P5,000. All the objects were lost due to D’s fault in the order as stated.
a) D’s obligation is extinguished.
b) D’s obligation is to pay the value of object No.1 plus damages
c) C’s right to demand the value of any of the objects plus damages.
d) D’s obligation is to pay the value of object No. 3 plus damages.
54. D obliged himself to allow C the use of his car until C passes the CPA Examination. This is an example of:
b) an obligation with a suspensive condition
c) an obligation with a resolutory condition
d) an obligation with a suspensive period
e) an obligation with a resolutory period
55. When the debtor binds himself to pay when his means permit him to do so, the obligation is:
b) an obligation with a suspensive condition
c) an obligation with a resolutory condition
d) an obligation with a suspensive period
e) an obligation with a resolutory period
56. When two persons in their own right are debtors and creditors of each other, there is:
a) confusion
b) compensation
c) consignation
d) novation
57. Which of the following will NOT necessarily extinguish an obligation?

a) condonation
b) novation
c) death of the obligor
32
d) mutual dissent
58. X owes Y P40,000. With the consent of both parties, Z pays Y P20,000 which makes Y and Z creditors of X
to the amount of P20,000 each. X becomes bankrupt and has only P20,000 assets left.
a) Z should get the P20,000.
b) Y and Z should divide the P20,000 equally.
c) X may choose whom to pay.
d) Y should get the P20,000.
59. One of the following is TRUE:

a) Contract to Loan is not an obligation
b) Contract of Loan is not an obligation
c) Contract to sell is not an obligation
d) None of the above
60. In a solidary obligation with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P900,000 and V is insolvent. How much can X recover from Y if he paid the amount that A can compel him to
pay?
a) 900,000
b) P225,000
c) 450,000
d) 90,000
33
OBLIGATIONS MIDTERMS SAMPLEX #3
I. TRUE OR FALSE
F 1. Acts and contracts which have for their objects the creation, transmission, modification or
extinguishment of real rights over immovable property must be in a public instrument to be valid and
binding. (not for validity but for greater efficacy)
F 2. In consignation, before acceptance by the creditor, the withdrawal of the sum or thing consigned by
the debtor will be a matter of right. (if made after judicial consignation)
F 3. Contract of lease for 2 years is unenforceable if not in writing. (only if lease of real property)
T 4. Tender of payment is required only when the creditor refuses, without just causes, to accept payment.
F 5. An action for rescission of a contract entered into to defraud a creditor will prosper 4 years from actual
discovery of fraud. (from time of registration)
T 6. Undue influence shall annul the obligation, although it may have been employed by a third person who
did not take part in the contract.
F 7. In obligation to deliver a determinate thing, the loss of the thing while in the possession of the debtor
shall be presumed to be due to his fault. (loss on occasion of calamity…)
T 8. Rescission shall be only to the extent necessary to cover the damage caused by a contract in fraud of a
creditor.
F 9. A conveyance is presumed to be in fraud of creditor if made by a debtor after a suit is file against him
while it is pending. (conveyance must be onerous title)
F 10. A contract which is void on its face cannot be the subject of reformation. (the only the subject of
reformation is the real intention of the parties)
F 11. Once a contract is perfected, though the same is not in the form required by law, the contracting
parties may compel each other to observe that form.
F 12. Lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or
undue influence.
T 13. The cause in a lucrative contract is the liberality of the benefactor.

T 14. An offer may become ineffective upon insolvency of either party before acceptance is conveyed even if
the insolvency is not judicially declared.
F 15. A contract of sale entered into between spouses is void.
T 16. A creditor to whom partial payment has been made may exercise his right for the remainder and he
shall be preferred to the person who has been subrogated in his place in virtue of partial payment of credit.
F 17. If novation of the new obligation is void, the original one shall subsist.
34
F 18. In obligation which is subject to suspensive condition or term, the happening of the condition or event
will give rise to the obligation
F 19. Conditional obligation where the condition is both suspensive and potestative is void.
F 20. Those obliged to deliver or to do something incur in delay only from the time the obligee judicially or
extrajudicially demands from them the fulfilment of the obligation.
F 21. No person shall be responsible for those events which could not be foreseen or which though foreseen
were inevitable unless there is an express stipulation to the contrary.
T 22. The indivisibility of an obligation does not necessarily give rise to solidarity.
F 23. A creditor cannot be compelled partially to receive the prestations in which the obligation consists.
T 24. Proof of actual damages suffered by the creditor is not necessary in order that penalty may be
demanded.
F 25. A person alternatively bound by different prestations shall completely perform all of them.
F 26. Any waiver of an action for fraud is void.
F 27. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation
shall be void.
F 28. In facultative obligation, the right of choice belongs to the debtor unless it has been expressly granted
to the creditor.
F 29. Impossible conditions, those which are contrary to good customs or public policy and those prohibited
by law are deemed not agreed upon.
35
FIRST ACTUAL QUIZ
I. TRUE OR FALSE
1. Consent is an essential requisite of obligations. - FALSE. Not all obligations require consent; only contracts
require consent.
2. A thing is indeterminate if it is not physically segregated from all others of the same class. - FALSE. This
statement is not absolute. A thing may still be determinate even if not physically segregated, as when the
object is particularly designated.
3. In obligations with a term, the obligation arises upon the arrival of the period. - FALSE. The term or period
has no effect upon the existence of the obligation, but only their demandability or performance. The effect
of arrival of a period only goes into the demandability.
4. In obligations with a penal clause, the debtor cannot exempt himself from the performance of the obligation
by paying the penalty. - FALSE. This must be expressly granted.
5. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment
of interest. - FALSE. The statement is not absolute; an exception is if there was an agreement.
6. The insolvency of one debtor will increase the liability of his co-debtors. - FALSE. This does not apply in
obligations where the debtors are joint.
7. The indivisibility of an obligation does not necessarily give rise to solidarity. - TRUE. Express provision.
8. Whenever a period is designated in an obligation, it is for the benefit of both the creditor and the debtor. -
FALSE. This is a disputable presumption. The rule under Art. 1196 is that the period is presumed to have
been established for the benefit of both creditor and debtor, unless from the same or other circumstances it
should appear that the period has been established in favor of one or the other.
9. When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation
shall be void. - FALSE. The obligation shall be void only if suspensive condition; if the condition is
resolutory, the obligation shall be valid.
10. In facultative obligations, the right of choice belongs to the debtor, unless it has been expressly granted to
the creditor. - FALSE. The choice only belongs to the debtor. The power of the debtor to make substitution
is absolute.
PART TWO
1. A, B and C borrowed P36,000 from X. the debtors signed a promissory note on January 10, 2000, promising
to pay the creditor jointly and severally on or before July 10, 2000. How much can X collect from C?
a. P18,000
b. P6,000
c. P12,000
d. P36,000
The debtors are bound solidarily, hence, any one of them may be made to pay the whole amount of the
obligation.
2. On January 1, 1999, A signs a promissory note and binds himself to pay X P100,000 plus 15% per annum
interest on June 30, 1999.
a. Before June 30, 1999, X can demand payment
b. IF on June 30, 1999, A is paying X, X can refuse the payment
36
c.Because the period is for the benefit of the debtor, A can compel the creditor X to accept
payment any date before June 30, 1999.
d. Because the period is for the benefit of the debtor and the creditor, X can refuse any
rendered payment before June 30, 1999.
The law presumes that the period is for the benefit of both debtor and creditor. In this case, the period
allows the debtor to raise money to pay the obligation, while the creditor has interest.
3. Bertulfo and Claudio promised to deliver a particular car valued at P100,000 to Manuela on or before
September 15, 1999. September 15, 1999 came and upon demand by Manuela for delivery from Bertulfo and
Claudio, Bertulfo was willing to deliver but Claudio refused to deliver. Thereafter, the car was destroyed. In this
case:
a. An action for specific performance will lia against both Bertuflo and Claudio.
b. Both Bertulfo and Claudio shall be liable for P50,000 each with damages.
c. Bertulfo shall be liable for P50,000 without damages and Claudio shall be liable for
P50,000 and damages.
The obligation is joint and indivisible but it has become impossible to perform due to the fault of one of
the debtors. Thus, the obligation is converted to a monetary obligation with damages for the debtor at
fault.
d. An action for specific performance will lie against Claudio only because of his refusal.
4. In an obligation where only one prestation has been agreed upon, but to extinguish the obligation, the debtor
is allowed to render another prestation, the obligation is:
a. Disjunctive obligation
b. Facultative obligation
c. Obligation with penal clause
d. Alternative obligation
e. Joint obligation

a. When the debtor has already made a choice
b. When the creditor has already made a choice
c. When the choice of the debtor is consented to by the creditor
d. When the choice of the creditor is consented to by the debtor
6. 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 obligation of the other,
the nonfulfillment 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 creditor is entitled only for a proportionate part of the credit.
7. A and B are solidary debtor of X and Y, solidary creditors to the amount of P4,000. On the due date, X
renounced gratuitously in favor of A the entire obligation. Which of the following is correct?
a. B shall give A P2,000
b. Y can still collect from B P2,000
c. Any of the two
8. The creditor has the right to the fruits of the thing from:
a. The time the thing is delivered
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b. The time the obligation to deliver the thing arises
c. The time the contract is perfected
d. The time the fruits are delivered
a. Conjunctive obligations
b. Facultative obligations
c. Alternative obligations
d. Both A and B
e. A, B and C
f. None of the above
10. D obliged himself to give C, object No. 1 valued P15,000; or object No. 2 valued P10,000; or object 3
valued P5,000. All the objects were lost due to D’s fault in the order as stated.
b. D’s obligation is to pay the value of object No.1 plus damages
c. C’s right to demand the value of any of the objects plus damages.
d. D’s obligation is to pay the value of object No. 3 plus damages.
In alternative obligations, the right of choice is presumed to belong to the debtor.
SECOND ACTUAL QUIZ
I. TRUE OR FALSE
1. If the obligation is payable upon demand, then the prescription period starts to run form demand - F
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REASON: “Upon demand” - obligation is already due and demandable. Demand is unnecessary, and
when there is delay, it effectively interrupts/tolls/suspends the running of the prescriptive period.
2. Obligations with a resolutory period shall be demandable immediately- T

REASON:
3. Whenever in an obligation a period is designated, it is disputably presumed to have been established for
the benefit of both the creditor and debtor -T
REASON: The rule under Art. 1196 is that the period is presumed to have been established for the benefit
of both creditor and debtor, unless from the same or other circumstances it should appear that the
period has been established in favor of one or the other.
4. If the obligation does not fix a period, the courts shall fix the duration thereof - F
REASON: The word “shall” makes the statement wrong - Art 1197 provides that the court MAY fix the duration
of the obligation if it was inferred from the nature and the circumstances that the period was intended by the
parties
Art. 1197 expressly states “If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.”
The statement is saying that in all instances where the obligation does not fix a period, the court must fix
the duration. The provision states that the parties must have inferred that a period was intended.
5. The debtor shall lose every right to make use of the period when after the obligation has been contracted,
he becomes insolvent - F
REASON: The statement in #5 only mentions only the general rule. Art. 1198 provides the exception to such
rule.
Art. 1198: The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or
security for the debt
Creditor must agree to the guaranty
6. In alternative obligations, the debtor can no longer perform another prestation after having communicated
to the creditor the prestation to be performed - T
REASON:
The issue in this question is the effect of the communication given by the debtor. The effect of the notice
is to limit the obligation to the object or prestation selected. The obligation is converted into a simple
obligation to perform the prestation chosen. Once a selection has been communicated, it is irrevocable.
[Arco Pulp case]
7. In facultative obligations, the prestation may be due at the same time - F

The time the it was communicated to the creditor.
REASON: In facultative obligations, only ONE thing is due while the other prestations may be performed in
substitution of the one due (Dr has right to substitute it with other prestations)
8. The loss or deterioration of the thing intended as a substitute, through the negligence of the obligor, does
not render him liable- T
REASON: TRUE. Art. 1206 par. 2 – The loss or deterioration of the thing intended as a substitute, through
the negligence of the obligor, does not render him liable. But once the substitution has been made, the
obligor is liable for the loss of the substitute on account of his delay, negligence, or fraud. The
statement is true because the first part of the provision used the word “intended” which presupposes
that the substitution HAS NOT YET BEEN MADE. The second statement is not an exception to the first
one because both contemplate different scenarios.
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9. When the fulfilment of the condition depends upon the sole will of the debtor the condition shall be void- F
REASON: Condition should be a suspensive condition. The obligation shall be void only if suspensive
condition; if the condition is resolutory, the obligation shall be valid.
10. Impossible conditions shall be considered as not having been agreed upon.- F
REASON: Art. 1183 – Impossible conditions, those contrary to good customs or public policy, and those
prohibited by law shall annul the obligation which depends upon them.
II. MULTIPLE CHOICE

11. D is obliged to give C a specific car if C passes the CPA examination. The condition is:
a. Suspensive (if) - resolutory (until)
b. Mixed
c. Positive
d. All of the above
REASON:
● Suspensive - Obligation shall only be effective upon the fulfillment of the condition [Art. 1181]; “IF C
passes”
● Mixed - Fulfillment depends partly on chance or the will of a 3rd person; C passing the CPA
Examination
● Positive -consists of an obligation “to do”; taking and passing CPA Exams
12. D is obliged to give C P10,000 if X dies. This is an example of:

a. A pure obligation
b. An obligation with a suspensive condition
c. An obligation with a resolutory condition
d. An obligation with a suspensive period
e. An obligation with a resolutory period
REASON: An obligation is one with a suspensive period (ex die) when such obligation becomes demandable
after the lapse of the period.
In the present case, the obligation of D only becomes due and demandable upon the arrival of the period (death
of X).
Art. 1193. Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when that
day comes.
Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.
A day certain is understood to be that which must necessarily come, although it may not be known when.
If the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall be
regulated by the rules of the preceding Section.
WHY NOT:
● CONDITION -future and uncertain event; there is a certainty of DEATH
● PURE - immediately demandable; in this case it is not: “if X dies”
● RESOLUTORY - Art. 1193 (par 2)
13. The following obligations are immediately demandable except:

a. Pure obligation
b. Obligation with a resolutory condition
c. Obligation with a resolutory period
d. All of the above
e. None of the above- what is not immediately demandable are suspensive conditions/period
(I think lang lol pls search answer huhu)
REASON:
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Pure obligations are demandable at once. (Art. 1179)
Art. 1179. Every obligation whose performance does not depend upon a future or uncertain event, or
upon a past event unknown to the parties, is demandable at once.
Obligations with a resolutory condition or period are also demandable at once. (Art. 1179 and Art. 1193)
Art. 1193. Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when
that day comes.
Obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain.
A day certain is understood to be that which must necessarily come, although it may not be known
when.
If the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall
be regulated by the rules of the preceding Section.
[Answer: A] - sir’s quiz
14. “I promise to give A a car upon A’s passing the bar examinations” the obligation is :
a. Resolutory - the happening of the condition extinguishes the obligation or rights.
b. Casual- the happening is dependent on chance.
c. Positive (sa samplex this is possible not positive so im not sure what the answer is- upon
the happening of the event which is the passing of the bar exam by A) OR, something is
to be done or an shall be performed - something is to be done or an act shall be
performed
d. All of the above
e. None of the above - Possible obligation- whether it can be fulfilled
REASON:
● A possible is one which is capable of fulfilment according to nature, law, public policy, or good
customs
● It is not resolutory because it is not a certain event
● The worst answer is CASUAL, because a casual condition is that which depends
● EXCLUSIVELY upon chance or other factors, and NOT UPON THE WILL OF THE CONTRACTING
PARTIES.

a. When the debtor has already made a choice
b. When the creditor has already made a choice
c. When the choice of the debtor is consented by the creditor
d. When the choice of the creditor is consented by the debtor
e. None of the above-
REASON:
● Correct answer is when the choice has been communicated to the other party.
ARTICLE 1205. When the choice has been expressly given to the creditor, the obligation shall cease to
be alternative from the day when the selection has been communicated to the debtor.
16. Which of the following conditional obligations is void?

a. When the happening of the suspensive condition is dependent upon the sole will of the creditor
b. When the happening of the resolutory condition is dependent upon the sole will of the creditor
c. When the happening of the resolutory condition is dependent upon the sole will of the debtor
d. When the happening of the suspensive condition is dependent upon chance
REASON: ARTICLE 1182. When the fulfillment of the condition depends upon the sole will of the debtor,
the conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the
obligation shall take effect in conformity with the provisions of this Code
Talks about suspensive conditions.
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17. On January 1, 2017, A signed a promissory note binding himself to pay X P100,000 within 6 months
a. Before the expiration of the 6-month period, A can be compelled to pay
b. Before the expiration of the 6-month period, X cannot validly refuse an offer to pay
c. Before the expiration of the 6-month period, while A cannot be compelled to pay, X also cannot
be compelled to accept payment
d. Before the expiration of the 6-month period, While A can be compelled to pay, X cannot be
compelled to accept payment
REASON:
● The period designated is for the benefit of the debtor only. Thus, he can oppose a premature
demand for payment, but may validly pay at any time before the period expires.
● The phrase “on or before” is an indicator that the period has been established for the benefit of the
debtor.
18. As to plurality of prestations, obligations are classified into, except:

a. Alternative
b. Disjunctive
c. Conjunctive
d. Facultative
REASON:
● This is a classification of the obligation as to the rights and obligations of multiple parties.
● [If asked what is a disjunctive obligation] An obligation is disjunctive when there are 2 or more
creditors and 2 or more debtors but they are named disjunctively as debtors and creditors in the
alternative. The rules on solidary obligations are applied to disjunctive obligations because if rules
on alternative obligations will be applied, then the debtor will generally be given the choice to whom
shall he give payment. *no transfer of ownership- deposit
a. conjunctive obligations- There are several prestations and all of them can be performed
separately.
b. facultative obligations- ARTICLE 1206. When only one prestation has been agreed upon, but
the obligor may render another in substitution, the obligation is called facultative.
c. alternative obligations- ARTICLE 1199. A person alternatively bound by different prestations
shall completely perform one of them.
d. both a and b
e. a, b, and c
20. D obliged himself to give C, object no. 1 valued at P15,000; or object no. 2 valued at P10,000; or
object no. 3 valued at P5,000. All the objects were lost due to D’s fault in the order as stated. If C has
the right to choose
b. D’s obligation is to pay the value of object no. 1 plus damages.
c. C’s right to demand the value of object no. 3 plus damages ARTICLE 1204. The creditor
shall have a right to indemnity for damages when, through the fault of the debtor, all the
things which are alternatively the object of the obligation have been lost, or the
compliance of the obligation has become impossible.
The indemnity shall be fixed taking as a basis the value of the last thing which
disappeared, or that of the service which last became impossible.
Damages other than the value of the last thing or service may also be awarded.
d. D’s obligation is to pay the value of object no. 3 plus damages.
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Basis Article 1205: if all things are lost through the fault of the debtor, the price fo any of the object
THIRD ACTUAL QUIZ
1. In a joint obligation with V, W, X, Y and Z as debtors and A and B as creditors in the amount of P150,000,
how much can A validly demand from V?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
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how much can V recover from W if he paid the amount that A can compel him to pay?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
how much should A give to B if V paid him the amount that he can compel V to pay?
a. none
b. 75,000
c. 30,000
d. 15,000
P150,000, how much can A validly demand from X?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
P150,000, how much can X recover from W if he paid the amount that A can compel him to pay?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
P150,000, how much should A give to B if X paid him the amount that he can compel X to pay?
a. none
b. 75,000
c. 30,000
d. 15,000
7. In an active solidarity with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P150,000.00, how much can A validly demand from V?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
P150,000.00, how much can V recover from Z if he paid the amount that A can compel him to pay?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
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P150,000.00, how much should A give to B if V paid him the amount that he can compel V to pay?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
10. In solidary obligations with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P150,000.00 and V is insolvent, how much can A validly demand from X?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
P150,000.00 and V is insolvent, how much can X recover from Y if he paid the amount that A can compel
him to pay?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
P150,000.00 and V is insolvent, how much should A give to B if X paid him the amount that he can compel
X to pay?
a. 150,000
b. 75,000
c. 30,000
d. 15,000
13. In a joint obligation with V, W, X, Y and Z as debtors and A and B as creditors in the amount of
P150,000.00, where V is insolvent, how much can A validly demand from X?
a. zero
b. 75,000
c. 30,000
d. 15,000
P150,000.00, where V is insolvent, how much can X recover from Y if he paid the amount that A can
compel him to pay?
a. zero
b. 75,000
c. 30,000
d. 15,000
P150,000.00, where V is insolvent, how much should A give to B if X paid him the amount that he can
compel X to pay?
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a. zero
b. 75,000
c. 30,000
d. 15,000
P150,000.00, where V is insolvent and A remitted the share of Z without the knowledge of B, how much
can A validly demand from X?
a. 120,000
b. 90,000
c. 75,000
d. 15,000
can X recover from Z if he paid the amount that A can compel him to pay?
a. 120,000
b. 90,000
c. 75,000
d. 15,000
can A give to B if X paid him the amount that he can compel X to pay?
a. 120,000
b. 90,000
c. 75,000
d. 15,000
19. A, B and C, joint debtors, are obliged to give X, Y and Z, solidary creditors P240,000.00. How much may A
be held liable by X?
a. 240,000
b. 120,000
c. 80,000
d. 26,667
20. A, B and C, solidary debtors of X and Y, solidary creditors in the amount of P240,000. If X remits the whole
obligation in favour of A without the consent of Y, how much can Y recover from X?
a. 120,000
b. 60,000
c. 30,000
d. Zero
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FOURTH ACTUAL QUIZ
I. TRUE OF FALSE
1. Consignation does not always extinguish the whole obligation

2. If the creditor refused to accept without just cause, the obligation is extinguished
3. Novation may take place even without the knowledge of the debtor
4. Payment to any person in possession of credit shall release the debtor
5. Legal compensation may be set up against a person who has a claim for support
6. In partial compensation, some obligations may be totally extinguished
7. Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his
fault
8. When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be
exempted from the payment of its prive, whatever may be the cause for the loss
9. Whenever the public document in which the debt appears is found in the possession of the debtor, it shall
be disputable presumed that the creditor delivered it voluntarily
10. Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a
donation, which requires the debtor’s consent. Even if the debtor’s consent is not given the obligation is
extinguished.
II. MULTIPLE CHOICE
11. Which of the following is not a mode of extinguishment of obligations?

a. Remission
b. Novation
c. Fortuitous Event
d. Mutual dissent
12. If a person who has no interest in the fulfillment of the obligation pays the creditor without the knowledge of
the debtor, the following are true, except?
a. He can recover only insofar as the payment has been beneficial to the debtor
b. He can recover from the debtor only if the latter consents
c. His remedy is only a simple personal action for reimbursement
d. He cannot be subrogated to the rights of the creditor
13. Payment made to a “third person” will not necessarily extinguish the obligation even if:
a. The payment was made to a person in possession of credit
b. The payment was given to the original creditor after an assignment of the credit without notice to
the debtor
c. The payment was made to an agent of the creditor who was authorized to receive payment
d. The payment redounded to the benefit of the creditor
14. Which of the following will always extinguish an obligation?

a. Insolvency of the debtor
b. Mutual dissent
c. Tender of payment
d. Consignation
15. When an obligation is extinguished because of the passage of time, this is:
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a. Fulfillment of resolutory condition
b. Arrival of a resolutory period
c. Novation
d. Rescission
16. The following shall produce the effect of payment of debts:

a. Delivery of check
b. Tender of Bangko Sentral ng Pilipinas notes
c. Delivery of promissory notes
d. Consignation
17. This is a requisite in order for an obligation to 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 in delay
d. When the thing is lost is specific

a. Debts to be compensated are due and demandable
b. There is no controversy or adverse claim over any of the 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
19. In which of the scenarios given below may legal compensation take place?
a. A owes B P1,000 due on June 30, 2016. B owes A P1,000 due on June 30, 2016 but C has filed an
adverse claim against A.
b. A owed B P1,000 payable on October 31, 2016. B owes A P3,000 due on October 31, 2017
c. A owes B P1,000 with C as his guarantor. B owes C P1,000
d. A owes B P1,000 payable May 31, 2016. B to deliver to A 2 piculs of sugar worth P1,000 on May
31, 2016
20. X owes Y P40,000. With the consent of both parties, Z pays Y P20,000 which maes Y and Z creditors of X
a. Z should get the P20,000.00
b. Y and Z should divide the P20,000 equally
c. X may choose whom to pay
d. X has the right to the P20,000.00
e. Y should get the P20,000.00
EXTINGUISHMENT SAMPLEX
SAMPLEX #1
I. TRUE OR FALSE
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1. Payment made by the debtor to a third person who is not the creditor shall never extinguish the
obligation. FALSE.
● Art. 1241 – Payment to a third person shall also be valid insofar as it has redounded to the benefit of
the creditor.
● Art. 1242 – Payment made in good faith to any person in possession of the credit shall release the
debtor.
● When the payment was made to the creditor after the assignment of credit but without knowledge of
the assignment.
● When creditor is incapacitated to receive payment or performance.
2. The delivery to and acceptance by the creditor of a cashier’s check produces the effect of payment of
the debtor’s obligation.
● FALSE.
● Art. 1249 – The payment of debts in money shall be made in the currency stipulated, and if it is not
possible to deliver such currency, then in the currency which is legal tender in the Philippines.
● The delivery of promissory notes payable to order, or bills of exchange, or other mercantile documents
shall produce the effect of payment ONLY when they have been cashed, or when through the fault of
the creditor, they have been impaired.
3. Payment by cession does not always extinguish the whole obligation.

● TRUE. Art. 1255 – This cession, unless there is a stipulation to the contrary, shall only release the
debtor from responsibility for the net proceeds of the thing assigned.
4. Legal subrogation requires the consent of the original parties and of the third person.
● FALSE. Art. 1301 – Conventional subrogation of a third person requires the consent of the original
parties and of the third person.
● Legal subrogation is subrogation by law. Unless there is a specific law providing for it, its existence
cannot be presumed. The consent of the parties has absolutely nothing to do with it.
5. In novation, if the new obligation is void, the original one shall subsist, unless the parties intended that
the former relation should be extinguished in any event.
● TRUE. Art. 1297 If the new obligation is void, the original one shall subsist, unless the parties intended
that the former relation should be extinguished in any event.
6. When the principal obligation is extinguished in consequence of a novation, accessory obligations

subsist.
● FALSE. Art. 1296 – When the principal obligation is extinguished in consequence of a novation,
accessory obligations MAY subsist only insofar as they may benefit third persons who did not give their
consent.
7. Novation may be made even without the knowledge of the creditor.

● FALSE. Art. 1293 – Novation may be made even without the knowledge or against the will of the latter
(debtor), but not without the consent of the creditor.
● Consent of the creditor is ALWAYS necessary in novation.
8. Payment shall be made to one of the parties to the constitution of the obligation to extinguish the
obligation.
● FALSE. Art. 1240 – Payment shall be made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized to receive it.
9. Payment made in good faith to any person in possession of the evidence of credit shall release the
debtor.
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● FALSE. Art. 1242 – Payment made in good faith to any person in POSSESSION OF THE CREDIT shall
release the debtor.
● Possession of credit IS DIFFERENT with possession of evidence of credit
10. Dation in payment is governed by the law of sales.

● FALSE. Art. 1245 – Dation in payment, whereby the property is alienated to the creditor in satisfaction
of a DEBT IN MONEY, shall be governed by the law of sales.
● If debt in money – law on sales; if debt is non-monetary – law on novation shall apply.
11. Legal compensation shall not be proper when one of the debts arises from a depositum.
● TRUE. Art. 1287 – Compensation shall not be proper when one of the debts arises from a depositum or
from the obligations of a depositary or of a bailey in commodatum.
● “Legal compensation is the true kind of compensation.” (URIBE) Thus, this provision applies to all kinds
of compensation, including legal compensation.
12. If a person should have against him several debts which are susceptible of compensation, the rules on
the application of payments shall apply to the order of the compensation.
● TRUE. Art. 1289.
13. In partial compensation, no obligation is extinguished.

● FALSE. Art. 1290 – When all the requisites mentioned in Art 1279 are present, compensation takes
place by operation of law, and extinguishes BOTH DEBTS TO THE CONCURRENT AMOUNT, even
though the creditors and debtors are not aware of the compensation.
14. When one or both debts are rescissible or voidable, they may be compensated against each other
before they are judicially rescinded or avoided.
● TRUE. Art. 1284.
15. In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of
the currency at the time of payment shall be the basis of payment.
● FALSE. Art. 1250 – In case an extraordinary inflation or deflation of the currency stipulated should
supervene, the value of the currency at the time of the ESTABLISHMENT OF THE OBLIGATION shall
be the basis of payment, unless there is an agreement to the contrary.
16. If the debt produces interest, payment of the principal shall not be deemed to have been made until
the interests have been covered.
● TRUE. Art. 1253.
17. An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be
lost or destroyed due to a fortuitous event.
● TRUE. Art. 1262 – An obligation which consists in the delivery of a determinate thing shall be
extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred
in delay.
● The delay is not a factor to consider in determining whether the obligation has been extinguished or
not. It is only relevant insofar as the remedies of the creditor against the debtor are concerned.
18. Compensation shall take place in reciprocal obligations.

● FALSE. Art. 1279 – In order that compensation may be proper, it is necessary: (2) That both debts
consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of
the same quality if the latter has been stated; …
● In reciprocal obligations, there are different prestations, one is delivery of a thing and the other is
monetary.
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19. The guarantor may not set up compensation as regards what the creditor may owe the principal debtor
● FALSE. Art. 1280 – Notwithstanding the provisions of the preceding article, the guarantor MAY set up
compensation as regards what the creditor may owe the principal debtor.
20. The obligation is extinguished from the time the characters of the creditor and debtor are compensated
in the same person.
● FALSE. Art. 1275 – The obligation is extinguished from the time the characters of the creditor and
debtor are MERGED in the same person.
MULTIPLE CHOICE QUESTIONS

1. In three of the following cases, compensation shall NOT be proper. Which is the exception?
a) commodatum
b) gratuitous support
c) civil liability arising out of criminal offenses
d) bank deposit
● Article 1287. Compensation shall not be proper when one of the debts arises from a depositum or from
the obligations of a depositary or of a bailee in commodatum.
● Neither can compensation be set up against a creditor who has a claim for support due by gratuitous
title, without prejudice to the provisions of paragraph 2 of article 301. (1200a)
● Article 1288. Neither shall there be compensation if one the debt consists in civil liability arising from a
penal offense. (n)
2. When two persons in their own right are debtors and creditors of each other, there is:
a) confusion
b) compensation
c) consignation
d) novation
● Art. 1278 – Compensation shall take place when two persons, in their own right, are creditors and
debtors of each other.
● Uribe: As principal debtors - Una, because both of them are debtors and creditors of each other-as
debtors, both must be principally bound. In other words kung sa isang utang guarantor lang siya, eh di
hindi siya principally bound.
● As creditors in their own right - Also as promised to be discussed with you ay: As creditors, di ba
nakalagay dito “at the same time principal creditor of the other,” the law actually would tell us that they
must be creditors in their own right.
3. A owes X P50,000 payable on or before June 30, 1999. S, who is not a party to the contract and without the
consent and against the will of A, paid X the P50,000 on April 1, 1999 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 1 to June 30,
1999.
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.
● Art. 1236 – Whoever pays for another may demand from the debtor what he has paid, except that if he
paid without the knowledge or against the will of the debtor, he can recover only insofar as the
payment has been beneficial to the debtor.
● Since the payment was made before June 30, there is no interest due to X.
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● Also, because the payment was made without the consent and against the will of A, S can only ask for
reimbursement to the extent that A was benefited.

a) fulfillment of a resolutory condition
b) arrival of a resolutory period
c) novation
d) rescission
● A condition refers to an event, while a term or period refers to an interval of time. Since the statement
referred to the “passage of time,” the better answer is the arrival of a resolutory period.

a) delivery of check (not legal tender)
b) tender of central bank notes (not payment if not accepted)
c) delivery of promissory note (not legal tender)
d) dacion en pago
● The delivery of a check or of a promissory note will not produce the effect of payment UNLESS they
have been cashed or through the fault of the creditor, they have been impaired. (Art. 1249)
● The tender of central bank notes (money ) will also not produce the effect of payment if the tender was
not accepted.
6. Which of the following will NOT necessarily extinguish an obligation?

a) condonation
b) novation
d) mutual dissent - Saura v. DBP - If an obligation may arise from the mutual agreement of the parties; the
obligation likewise may be extinguished by the mutual disagreement of the parties.
● The death of the obligor will only extinguish an obligation if it is PURELY PERSONAL.
7. If a person pays the creditor without the knowledge or against the will of the debtor, the following are true,
EXCEPT:
a) He can recover only insofar as the payment has been beneficial to the debtor.
b) He cannot recover the amount from the creditor as payment of what is not due.
c) His remedy is only a simple personal action for reimbursement.
d) He can be subrogated to the rights of the creditor if the latter agrees.
● When payment by a third person is made without the knowledge of the debtor or against his will,
there will be no right of subrogation.
8. Payment made to a third person will NOT be valid if:

a) The payment redounded to the benefit of the creditor.
b) The payment was made to a person in possession of evidence of credit.
c) The payment was given to the original creditor after an assignment of the credit without notice to the
debtor.
d) The payment was made to an agent of the creditor who was authorized to receive payment.
● Art. 1242 - has to be the credit and not just possession.
● Art. 1241. Payment to a person who is incapacitated to administer his property shall be valid if he has
kept the thing delivered, or insofar as the payment has been beneficial to him.
● Payment made to a third person shall also be valid insofar as it has redounded to the benefit of the
creditor. Such benefit to the creditor need not be proved in the following cases:
1. If after the payment, the third persons acquires the creditor's rights;
2. If the creditor ratifies the payment to the third person;
3. If by the creditor's conduct, the debtor has been led to believe that the third person had
authority to receive the payment.
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9. Which of the following will always extinguish an obligation?
a) tender of payment
b) insolvency of the debtor
d) none of the above
● Tender of payment without acceptance from the creditor will not extinguish the obligation.
● The fact of insolvency of the debtor will also not extinguish the obligation. It is only upon the
declaration of the courts that the insolvency of the debtor may extinguish the obligation.
● The death of the obligor only extinguishes obligations which are purely personal.
10. X owes Y P40,000. With the consent of both parties, Z pays Y P20,000 which makes Y and Z creditors of X
a) Z should get the P20,000.
b) Y and Z should divide the P20,000 equally.
c) X may choose whom to pay.
d) Y should get the P20,000.
● The original creditor is preferred over the new creditor in case the assets of the debtor are insufficient
to pay the debt.
SAMPLEX #2
TRUE OR FALSE
1. Consignation, to be valid, generally requires a prior tender of payment
a. FALSE.
b. Must have all the requisites: (1) Debt is due; (2) Tender of payment was refused without just cause;
(3) Previous notice consignation; (4) Among due was placed in the disposal of the court; (5) After
consignation, notify
2. Consignation of the amount required is not necessary to preserve the right to redeem
a. FALSE.
3. Difficulty of service authorizes release of obligor but does authorize courts to modify the contracts,
especially a contract to do
53
a. TRUE.
4. It is a concept that derives from the principle that since mutual agreement can create a contract, mutual
disagreement can cause its extinguishment.
a. TRUE.
b. If an obligation may arise from the mutual agreement of the parties, the obligation likewise may be
extinguished by the mutual disagreement of the parties.
5. Where an application for a loan of money was approved, there arises a perfected contract even before the
delivery of the object of the contract.
a. TRUE.
6. If the obligation has been substantially performed, the obligor shall recover as though there had been a
strict and complete fulfilment.
a. FALSE.
b. Art. 1234, - If the obligation has been substantially performed in good faith, the obligor may recover
as though there had been a strict and complete fulfillment, less damages suffered by the
obligee."
7. When the obligee accepts the performance knowing its incompleteness or irregularity, the obligation is
deemed fully complied with.
a. FALSE.
b. 1235 has to be without expressing any protest or objection
8. Payment by a judgment debtor to the wrong party does not extinguish judgment debt
a. FALSE.
b. COVERTOPS: Sa payment to a wrong party, the Supreme Court would sometimes say that it is a
void payment therefore it would not extinguish the obligation; however, this is only the general rule.
There are instances when the payment may have been made to a wrong party but it may actually
extinguish the obligation, which are as follows:
i. When the payment redounded to the benefit of the creditor.
ii. When the payment was made in good faith to a person in possession of the credit, not just
in possession of the evidence in credit
iii. When the payment was made to the creditor after the assignment of credit but without
knowledge of the assignment.
9. Obligations requiring payment in foreign currency must be discharged in Philippine currency as provided in
RA 8183.
a. FALSE.
b. The parties can agree to pay in any currency. RA 8183 provides that obligations contracted in the
PH can be denominated and valued at any currency.
10. An agreement to pay a promissory note in dollars, while null and void under RA 529 does not defeat a
creditor’s claim.
a. TRUE.
b. NELIA PONCE AND VICENTE PONCE VS. CA AND JESUSA AFABLE - It is to be noted that while
an agreement to pay in dollars is declared as null and void and of no effect, what the law
specifically prohibits is payment in currency other than legal tender. It does not defeat a creditor's
claim for payment, as it specifically provides that "every other domestic obligation xxx whether or
not any such provision as to payment is contained therein or made with respect thereto, shall be
discharged upon payment in any coin or currency which at the time of payment is legal tender for
public and private use." A contrary rule would allow a person to profit or enrich himself inequitably
at another's expense.
11. A CERTIFICATION implies that the check is drawn upon sufficient funds
12. Consignation presupposes not only that the obligor is able, ready, and willing to pay, but more so in the act
of performing his obligation.
a. FALSE.
b. “Tender of payment”
13. A proof that an act could gave been done is no proof that is was actually done supports the concept known
as tender of payment
a. TRUE.
54
14. A certified personal check is not the legal tender nor the currency contemplated, therefore cannot
a. TRUE. Art. 1249.
15. The rule that in case of extraordinary inflation or deflation of the currency stipulated should supervene, the
value of the currency at the time of the establishment of the obligation shall be the basis of payment of
obligations arising from law.
a. TRUE. Art. 1250.
16. Under the principle of dation in payment, what is transferred is merely the possession of property.
a. FALSE.
b. Dacion en pago or Dation in payment is the delivery and transmission of ownership of a thing by
the debtor to the creditor as an accepted equivalent of the performance of the obligation.
17. There can be no dation in payment when there is no obligation extinguished.
a. TRUE.
b. Requisites: (1) instead of the original prestation, another prestation is performed; (2) the original
prestation is due and the one performed are different; (3) the parties agreed that the performance of
the different prestation extinguishes the obligation.
18. Tender of payment may be extrajudicial.
a. TRUE.
b. Jurado: tender of payment by its very nature is extrajudicial. In Soco v. Militante, tender of
payment, if made during the pendency of the action makes the consignation void. Tender of
payment should be made prior to consignation not during the pendency of the action.
19. Consignation is necessarily judicial.
a. TRUE.
SAMPLEX #3
TRUE OF FALSE (C)
1. Consignation presupposes not only that the obligor is able, ready and willing but more so in the act of
performing his obligation. False
2. “A proof that an act could have been done is no proof that it was actually done” supports the concept
known as ____Tender of payment__________.
3. A certified personal check is not a legal tender nor the currency stipulated and therefore cannot constitute
valid tender of payment. True
4. It is concept that derives from the principle that since mutual agreement can create a contract, Mutual
disagreement by the parties can cause its extinguishment.
5. Where an application for a loan of money was approved, there arises a perfected contract even before the
delivery of the object of the contract. True
6. If the obligation has been substantially performed the obligor shall recover as though there had been a
strict and complete fulfillment. False
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7. When the obligee accepts the performance, knowing its incompleteness or irregularity, the obligation is
deemed fully complied with. False:
8. Payment by the judgment debtor to the wrong party does not extinguish judgment debt. False
9. Obligations requiring payment in foreign currency must be discharge in Philippines currency as provided by
R.A No. 8183 False
10. An agreement to pay a promissory note in dollars while null and avoid under R.A No.529 does not defeat a
creditor’s claim. True
11. A certification implies that the check is drawn upon sufficient funds in the hands of the drawee, that they
have been set apart for its satisfaction and that they shall be so applied whenever the check is presented
for payment.
a. BASIS: NEW PACIFIC TIMBER AND SUPPLY COMPANY VS. HON. SENERIS AND EX-OFFICIO
SHERIFF HAKIM ABDULWAHID
12. The delivery of promissory notes payable to order or bills of exchange or other mercantile documents
produces the effects of payment. False
13. The creditor cannot be compelled partially to receive the prestations in which the obligation consists.
Neither may the debtor be required to make partial payments. False.
Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled partially to
receive the prestations in which the obligation consists. Neither may the debtor be required to make partial
payments.
14. However, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the
debtor may effect the payment of the former without waiting for the liquidation of the latter.
15. The rule that in case an extraordinary inflation or deflation of the currency stipulated should supervene, the
value of the currency at the time of the establishment of the obligation shall be the basis of payment is
inapplicable to obligation arising from tort. True
16. Art. 1250: In case an extraordinary inflation or deflation of the currency stipulated should supervene, the
value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless
there is an agreement to the contrary.
17. Under the principle of dation in payment, the mere delivery of the mortgaged motor vehicle by the
mortgagor results in the transfer of ownership to the mortgage even without the consent of the latter. False
a. Req: of Valid Dation in Payment:
i. instead of the original prestation, another prestation is performed
ii. the original prestation is due and the one performed are different
iii. The parties agreed that the performance of the diff prestation extinguishes the obligation.
18. There can be no dation in payment when there is no obligation to be extinguished. True
19. Tender of payment may be extrajudicial. TRUE

a. SPOUSES OSCAR AND THELMA CACAYORIN VS. ARMED FORCES AND POLICE MUTUAL
BENEFIT ASSOCIATION, INC., G.R. No. 171298, April 15, 2013: Tender of payment may be
extrajudicial, while consignation is necessarily judicial, and the priority of the first is the attempt
to make a private settlement before proceeding to the solemnities of consignation
20. Consignation is necessary judicial. TRUE
21. Consignation of the amount required is not necessary to preserve the right to redeem. True
a. LAURO IMMACULATA VS. HON. NAVARRO AND HEIRS OF JUANITO VICTORIA: The right to
redeem is a RIGHT NOT AN OBLIGATION, thus no consignation is required.
b. To preserve the right to redeem, consignation is not required. But to actually redeem, there
must of course be payment or consignation (deposit) itself.
22. Difficulty of service authorizes release of obligor but does not authorize court to modify or revise the
contract between the parties. True
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SAMPLEX #4
TRUE OR FALSE (D)
A-BOTH TRUE
B-BOTH FALSE
C-TRUE, FALSE
D-FALSE TRUE
1. C
It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its
delivery to the creditor, is found in the possession of the debtor, or of a third person who owns the thing.
True. Accessory obligation of pledge has been remitted when the thing after its delivery is found in the
possession of the debtor or third person. [Art. 1274, CC]
The delivery to and acceptance by the creditor of a cashier's check produces the effect of payment of the
debtor's obligation.
57
false. Art. 1249, CC. The payment of debts in money shall be made in the currency stipulated, and if it is not
The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents
shall produce the effect of payment only when they have been cashed, or when through the fault of the
creditor they have been impaired.
In the meantime, the action derived from the original obligation shall be held in the abeyance.
2. B
Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his
fault.
- false. When Presumption Applies [Art. 1265, CC]:
a. Thing is lost while in the possession of the debtor
b. No proof of fortuitous event Effect: It is presumed that loss was due to his fault.
c. Exceptions [Art. 1265, CC]
i.There is proof to the contrary
ii.In case of earthquake, flood, storm or other natural calamity.
Legal subrogation requires the consent of the original parties and of the third person.
- False. Legal Subrogation- Takes place by operation of law.
3. B
When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be
exempted from the payment of its price, whatever may be the cause for the loss.
- False. Article 1268. When the debt of a thing certain and determinate proceeds from a criminal offense,
the debtor shall not be exempted from the payment of its price, whatever may be the cause for the loss, unless
the thing having been offered by him to the person who should receive it, the latter refused without justification
to accept it.
When the principal obligation is extinguished in consequence of a novation, accessory obligations subsist.
- False. Article 1296. When the principal obligation is extinguished in consequence of a novation,
accessory obligations may subsist only insofar as they may benefit third persons who did not give their
consent.
- [Balane] - Effect of novation as to accessory obligations-Accessory obligations may subsist only
insofar as they may benefit third persons who did not give their consent, e.g., stipulation pour atrui
4. B
Whenever the private document in which the debt appears is found in the possession of the debtor, it shall be
conclusively presumed that the creditor delivered it voluntarily.
- false. Article 1272. Whenever the private document in which the debt appears is found in the
possession of the debtor, it shall be presumed that the creditor delivered it voluntarily, unless the contrary is
proved.
Payment shall be made to one of the parties to the constitution of the obligation to extinguish the obligation.
- False. Payment may also be made to the successors in interest or to those authorized to receive
payment.
5. B
Payment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a
donation, which requires the debtor's consent. If the debtor's consent is not given the obligation is not
extinguished.
- False
Dation in payment is governed by the law of sales.
58
- False. Article 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a
debt in money, shall be governed by the law of sales. (n)
6. A
Legal compensation shall not be proper when one of the debts arises from a depositum.
- True. Obligations which cannot be compensated [Arts. 1287-1288, CC]
1. Contracts of depositum
2. Contracts of commodatum
3. Future support due by gratuitous title
4. Civil liability arising from a penal offense
5. Obligations due to the government
6. Damage caused to the partnership by a
partner
If a person should have against him several debts which are susceptible of compensation, the rules on the
application of payments shall apply to the order of the compensation.
- True. Order of Compensation - If a person should have against him several debts which are
susceptible of compensation, the rules on application of payments shall apply to the order of the
compensation. [Art. 1289 CC]
7. D
In partial compensation, no obligation is extinguished.
- False. partial obligation is extinguished
When one or both debts are rescissible or voidable, they may be compensated against each other before they
are judicially rescinded or avoided.
- True. 1284- When one or both debts are recissible or voidable, they may be compensated against each
other before they are judicially rescinded or avoided
8. D
In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the
currency at the time of payment shall be the basis of payment.
- False. Art. 1250, CC. In case an extraordinary inflation or deflation of the currency stipulated should
supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of
payment, unless there is an agreement to the contrary.
If the debt produces interest, payment of the principal shall not be deemed to have been made until the
interests have been covered.
- True. If debt produces interest, the payment is not to be applied to the principal unless the interests are
covered. [Art. 1253, CC]
9. C
An obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or
destroyed due to a fortuitous event.
- True. General Rule: Loss of determinate things extinguishes the obligation when: [Par. 1, Art. 1262
CC].
● An obligation which consists in the delivery of a determinate thing
● Art. 1262 – An obligation which consists in the delivery of a determinate thing shall be extinguished if it
should be lost or destroyed without the fault of the debtor, and before he has incurred in delay.
● The delay is not a factor to consider in determining whether the obligation has been extinguished or
not. It is only relevant insofar as the remedies of the creditor against the debtor are concerned.
59
Compensation shall take place in reciprocal obligations.
- False
- Art. 1278. Compensation shall take place when two persons, in their own right, are creditors and
debtors of each other.
- Soriano: a mode of extinguishment to the concurrent amount, the obligations of those persons who in
their own right, are reciprocally creditors and debtors of each other.
10. B
The guarantor may not set up compensation as regards what the creditor may owe the principal debtor.
- False. Right of a Guarantor - A guarantor may set up compensation as regards what the creditor may
owe the principal debtor. [Art. 1280, CC]
The obligation is extinguished from the time the characters of creditor and debtor are compensated in the same
person.
- False. confusion
- ARTICLE 1275. The obligation is extinguished from the time the characters of creditor and debtor are
merged in the same person.
MULTIPLE CHOICE
1. In three of the following cases, compensation shall not be proper. Which is the exception?
a. commodatum
b. gratuitous support
c. civil liability arising out of criminal offenses
d. bank deposit
2. When two (2) persons in their own right are debtors and creditors of each other, there is:
a. confusion
b. compensation - Article 1278. Compensation shall take place when two persons, in their own right,
are creditors and debtors of each other.
c. consignation
d. novation
3. A owes X P50,000.00 payable on or before June 30, 1999, S who is not a party to the contract and without
the consent and against the will of A paid X the P50,000.00 on April 1, 1999 when the prevailing rate of interest
was 12% per annum.
a. S can ask reimbursement from A in the amount of P50,000.00 plus 12% interest from April 1 to June 30,
1999.
b. S can ask reimbursement from A in the amount of P50,000.00
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.

a. fulfillment of resolutory conditions
b. arrival of a resolutory period- ARTICLE 1193 par. 2. Obligations with a resolutory period take effect at
once, but terminate upon arrival of the day certain.
c. novation
d. rescission
60
a. delivery of check
b. tender of central bank notes
c. delivery of promissory note
d. dacion en pago-ARTICLE 1245. Dation in payment, whereby property is alienated to the creditor in
satisfaction of a debt in money, shall be governed by the law of sales.
6. 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- ARTICLE 1263. In an obligation to deliver a generic thing, the loss or
destruction of anything of the same kind does not extinguish the obligation
c. when the thing lost before the debtor has incurred in delay
d. when the thing lost is specific

a. debts to be compensated are due and demandable
b. there is controversy or adverse claim over any debts to be compensated - (Article 1279. In order that
compensation may be proper, it is necessary: (5) That over neither of them there be any retention or
controversy, commenced by third persons and communicated in due time to the debtor.)
c. there are two or more debts of the same kind
d. there are two persons who are creditors and debtors of each other
8. Which of the examples given below can legal compensation take place?
a. A owes B P1,000 due on June 30, 1993. B owes A P1,000 due on June 30, 1993 but C has filed an adverse
claim against A.
b. A owes B P1,000 payable October 31, 1993. B owes A P1,000 due on October 31, 1993.
c. A owes B P1,000 with C as his guarantor. B owes C P1,000.
d. A owes B P1,000 payable May 31, 1993. B to deliver to A 2 piculs of sugar worth P1,000 on May 31, 1993.
9. A owes solidary creditors XYZ P10,000. There is remission of the debts when:
a. X borrows P10,000 from A.
b. X waives partially the obligation of P10,000 to A.
c. Z maked a will giving the P10,000 debt to A as legacy
d. Y tell A that instead of paying P10,000, A shall just deliver a ring to Y.
10. Which of the following is not a special mode of payment?

a. Dacion en pago
b. Payment by cession
c. Tender of payment and consignation
d. Prescription- Art. 1231 par. 2: Other causes of extinguishment of obligations, such as annulment,
rescission, fulfillment of a resolutory condition, and prescription, are governed elsewhere in this Code.
Four Special Kinds of Payments:

1. Dacion en pago (Article 1245.)
2. Application of payments (Subsection 1.)
3. Payment by cession (Subsection 2.)
4. Consignation (Subsection 3.)
61
SAMPLEX #5
TRUE OR FALSE (E)
1. If the obligation has been substantially performed in good faith, the obligor will recover as though there
had been a strict and complete fulfillment. – False, A. 1234 less damages suffered by the obligee.
a. Substantial performance. If the obligor can recover the total price as agreed upon.
b. Article 1234. If the obligation has been substantially performed in good faith, the obligor may
recover as though there had been a strict and complete fulfillment, less damages suffered by
the obligee.
2. When the obligor accepts the performance, knowing its incompleteness or irregularity, and without
expressing any protest or objection, the obligation is deemed fully complied with. – False, A. 1235
when the obligee
a. Article 1235. When the obligee accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or objection, the obligation is deemed fully
complied with.
b. Creditor is the one who accepts
3. The creditor is not bound to accept payment or performance by a third person, unless there is a
stipulation to the contrary. – False, A. 1236 by a third person who has no interest in the fulfillment of
the obligation, unless there is a stipulation Creditor will be bound to accept, Ex. Guarantor, mortgagor,
62
surety
4. If the debt produces interest, payment of the principal shall not be deemed to have been made until the
interests have been covered. – True, A. 1253
a. In relation to Application of Payment (Special form of payment), as to which debt the payment
should be applied – to the debt designated by the debtor; one of the limitations of the right of
the debtor to designate.
b. Ex. A. 1248 Creditor cannot be compelled to accept partial performance, obligation not yet
due; A. if the period was fixed solely for the benefit of the debtor
5. Payment to a person who is incapacitated to administer his property shall be void. – False, A. 1241
payment to a person who is incapacitated to administer his property shall be valid if he has kept the
thing delivered, or insofar as the payment has been beneficial to him
a. If the question goes into the payee – who shall be the payee. Even if the payee is incapacitated
can the obligation be extinguished - yes
6. If the debts due are of the same nature and burden, the payment shall be applied to all of them
proportionately. – True. A. 1254 p. 2
a. If debtor did not designate the debt to which the payment shall be applied, to which debt shall
the payment be applied – application should be proportionate
7. The payment of debts in money shall be made in the currency stipulated. – True, A. 1249 and if it is not
a. Art. 1249 as amended by RA 529, further amended by RA 8183 as the basis of the
8. Payment by cession shall only release the debtor from responsibility for the net proceeds of the thing
assigned. – True, A. 1255 The debtor may cede or assign his property to his creditors in payment of
his debts. This cession, unless there is stipulation to the contrary, shall only release the debtor from
responsibility for the net proceeds of the thing assigned. The agreements which, on the effect of the
cession, are made between the debtor and his creditors shall be governed by special laws.
a. False. Regardless of the net proceeds, if the parties agreed that the cession shall extinguish the
obligation, then the whole obligation shall be extinguished, not just the net proceeds.
9. In case an extraordinary inflation or deflation of the currency agreed upon by the parties should
supervene, the value of the currency at the time of the establishment of the obligation arising from a
contract shall be the basis of payment, unless there is an agreement to the contrary. – True, A. 1250
a. A. 1250 did not state the basis of the obligation.
b. In Commissioner v. Burgos, A. 1250 would only apply if the obligation arises from a contract
“currency stipulated” stipulated means in a contract. In this case A. 1250 was not applied.
10. Payment made by a third person who does not intend to be reimbursed by the debtor is valid as to the
creditor who has accepted it, with or without the consent of the debtor. – True, A. 1238, with or without
consent of debtor Donor is the third person, indirect donation
a. (Article 1238. Payment made by a third person who does not intend to be reimbursed by the
debtor is deemed to be a donation, which requires the debtor's consent. But the payment is
in any case valid as to the creditor who has accepted it.)
MULTIPLE CHOICE
1. Which of the following will extinguish an obligation?
a. Tender of payment acceptance will determine w/n the oblig is extinguished
b. arrival of resolutory period mode not covered under A. 1231
c. Fortuitous event not a mode of extinguishment
d. Insolvency of the debtor it is just a condition, it will not extinguish – debtor can filed petition
to be declared insolvent e. None of the above
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2. If a person who has no interest in the fulfillment of the obligation pays the creditor with the consent of the
debtor, the following are true, EXCEPT:
a. he can recover only insofar as the payment has been beneficial to the debtor
b. he can recover from the debtor the amount paid
c. he can run after guarantors consistent with letter D, that payor is subrogated to the rights of
d. he will be subrogated to the rights of the creditor
e. none of the above
3. Payment made to a “third person” will not necessarily extinguish the obligation even if:
a. the payment was made to a person in possession of credit A. 1242 the payor must be in good faith and
to a person in possession of the credit. NAPOCOR v. Ibrahim
b. the payment was given to the original creditor after an assignment of the credit
without notice to the debtor c. the payment was made to an agent of the creditor who
was authorized to receive payment
d. the payment redounded to the benefit of the creditor
e. none the above

a. Fulfillment of resolutory condition
b. Arrival of a resolutory period x
c. Death
d. Rescission
5. The following shall extinguish the obligation upon delivery: when payment would produce effect
a. Delivery of check will produce payment only upon encashment
b. Payment by cession upon delivery of the object, it would not necessarily extinguish – net proceeds
c. Delivery of promissory note
d. Dation in payment
e. None of the above x
6. The following has legal tender power in this jurisdiction:

a. Manager’s check
b. Negotiable promissory note
c. US Dollars
d. all of the above
7. Payment made to a third person shall also be valid insofar as it has redounded to the benefit of the
creditor. Such benefit to the creditor need not be proved in the following cases, EXCEPT:
a. If before the payment, the third person acquires the creditor's rights it should be after payment that the
third person acquires the creditor’s rights
b. If the creditor ratifies the payment to the third person
c. If by the creditor's conduct, the debtor has been led to believe that the third person had
authority to receive the payment.
8. There will always be total extinguishment in:

a. dation in payment
b. payment by cession
c. consignation
d. all of the above
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9. Payment made to a “third person” will extinguish the obligation even if:
a. the payment was made to a person in possession of credit
b. the payment was given to the original creditor after an assignment of the credit with
knowledge of the assignment
c. the payment was made in good faith to a person in possession of the evidence of credit
d. all of the above
e. none the above
10. A owes X P50,000.00 payable on or before June 30, 2015. S who is not a party to the contract and
without the consent of A paid X P50,000.00 on April 1, 2015 when the prevailing legal rate of interest was
6% per annum.
a. S can ask reimbursement from A in the amount of P50,000.00 on June 30, 2015.
b. S cannot ask reimbursement from A because the payment by S is without the consent of A
c. S can ask refund from X because the payment by S was without the consent of A.
d. S. can ask reimbursement from A in the amount of P50,000.00 plus 12% interest from April 1 to June 30,
2015.
Art. 1236 – Whoever pays for another may demand from the debtor what he has paid, except that if he paid
without the knowledge or against the will of the debtor, he can recover only insofar as the payment has
been beneficial to the debtor. Since the payment was made before June 30, there is no interest due to X.
Also, because the payment was made without the consent and against the will of A, X can only
ask for reimbursement to the extent that A was benefited
UNANSWERED QUIZ - O
Multiple Choice: Choose the best answer. Write the letter only.
1. One of the following is a determinate thing. Which is it?
a. a cow.
b. a horse in Y’s stable
c. a Toyota car with engine no. 12345
d. a ring with diamond stone
e. a brand new black Mitsubishi Lancer GLX
2. D is obliged to give C a specific car if C passes the CPA Examination. This is an

example of:
a. a pure obligation
b. an obligation with a suspensive condition
c. an obligation with a resolutory condition
d. an obligation with a suspensive period
e. an obligation with a resolutory condition
3. One of the following obligations is not immediately demandable.

a. pure obligation
b. obligation with a resolutory condition
c. obligation with a resolutory period
d. obligation with a suspensive period
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4. D is obliged to give C P10,000.00 if X dies. This is an example of:
a. an obligation with a suspensive condition
b. an obligation with resolutory condition
c. an obligation with a period
d. a pure obligation
e. an obligation with potestative condition
5. When the debtor binds himself to pay when his means permit him to do so the
obligation is:
a. an obligation with a resolutory condition
b. a pure obligation
c. an obligation with a suspensive condition
d. an obligation with a suspensive period
e. an obligation with impossible condition
6. Whenever a period is designated in an obligation, the said period shall be deemed

to have been established for the benefit of:
a. the debtor
b. the creditor
c. both the debtor and creditor
d. neither of the parties
7. The debtor shall lose the right to make use of the period in the following cases,
except:
a. when the securities have disappeared
b. when the 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 the guaranties or securities that he has promised
e. When he becomes insolvent, unless he give a guaranty
8. The obligation of the employers to pay death benefits and funeral expenses for the employee’s death
while in the course of employment as sanctioned by the Workmen’s Compensation Act is one which
arises from:
a. Law
b. Culpa-contractual
c. Contracts
d. Quasi-delict
e. Delict
9. Which of the following is not a source of obligation

a. law
b. culpa contractual
c. quasi contract
d. culpa aquiliana
e. delict
10. When the debtor binds himself to pay when his means persist
Obligation is considered case.
a. With a conditions dependent upon the debtor’s sole will
b. With a period dependent upon the debtor’s sole will
c. That is void potestative condition, being suspensive and debtor’s
d. With a period dependent upon the court’s decision.
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11. When A voluntarily takes charge of the neglected business
Latter’s authority where reimbursement must be made for necessary and useful expenses, there is a
a. Quasi-delict
b. Negotiorum gestio
c. Quasi-contract
d. Solutio indebiti
e. Contract
12. When A received a sum of money when there is no right to demand and it was unduly delivered by
mistake, there is
a. Quasidelict
b. Negotiorum gestio
c. Quasi contract
d. Solutio inebiti
e. Contract
13. When a right to due upon an obligation has lapsed by prescription, the obligation is known as:
a. Conditional
b. With a period
c. Civil
d. Natural
e. Pure
14. For a juridical relation known as quasi-contract to arise, the act must be:
a. Unilateral
b. Voluntary
c. Lawful
d. All of the Above
e. None of the Above
15. “I promise to give A a car upon A’s passing of the bar examinations. The condition in this obligation is:
a. resolutory
b. casual
c. positive
d. all of the above
16. The following are requisites of an obligation, except:

a. passive subject
b. creditor
c. efficient cause
d. vinculum juris
e. consent
17. Obligations may arise from any of the following, except:

a. contracts
b. quasi-contracts
c. law
d. prestation
e. culpa aquiliana
18. Unless the law or stipulation of the parties require another standard of care, every person obliged to
give something is also obliged to take care of it with:
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a. extraordinary diligence
b. diligence of a father of a good family
c. diligence of a good father of a family
d. good diligence of a father of a family
e. utmost diligence
19. The rent in a contract of lease is:

a. natural fruit
b. artificial fruit
c. industrial fruit
d. mechanical fruit
e. civil
20. It is a thing that is particularly designated or physically segregated from all others of the same class.
a. Generic Thing
b. Indeterminate thing
c. Determine thing
d. Real thing
e. Personal
True or False. Write True, only if the
If not, write false,
1. If the contract does not state the diligence which is to be observed in the performance, that which is
expected of a good father of a facility shall be required.
2. The condition not to do an impossible thing shall the obligation.
3. Obligations ex lege are presumed.
4. An obligation whose performance depends upon a future
5. Upon a past event unknown to the parties, is demandable at once.
6. The effects of a conditional obligation to gove, once the condition has been fulfilled, shall retroact to the
day of the constitution of the obligation.
7. An obligation which is payable upon the death of Mr. X within five years from its execution is a conditional
obligation.
8. In an obligation to grive a determinate thing which is subject to a suspensive the obligation.
9. Obligations arising form contracts have the force of law between the contracting parties.
10. An obligation subject to a resolutory condition is demandable at once.
11. An obligation which is subject to a suspensive condition that is potestative on the part of the debtor at the
same time, is valid
12. An obligation where the debtor binds himself to pay when his means permit him to do so is a conditional
obligation.
13. An obligation which is demandable upon the death of a person is an obligation with a period.
14. The condition not to do an impossible thing shall be considered as not having been agreed upon. In such a
case, the obligation as immediately demandable.
15. The condition that some event happen at a determinate time shall extinguish the obligation as soon as the
time expires or it has become indubitable that the event will not take place.
16. The condition shall be deemed fulfilled if the debtor voluntarily prevents its fulfillment.
17. In an obligation to give a determinate thing which is subject to a suspensive condition, the deterioration of
the thing without the debtor’s fault shall render the debtor liable for damages.
18. If the thing is improved at the expense of the debtor before the fulfillment of a suspensive condition, the
debtor may demand reimbursement from the creditor.
19. Whenever a period is designated in an obligation, it shall be presumed to have been established for the
benefit of the debtor.
20. The debtor does not lose the right to make use of the period if the guaranty that be has given is lost due to
a fortuitous event.
21. The period in an obligation always refers to the future.
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22. When the happening of the condition is dependent upon the sole will of a party to the jurical relation, the
obligation is void.
23. Contracts are obligations.
24. The sources of obligations enumerated in Art. 1157 of the NCC is exclusive.
25. The obligation to go to church every Sunday is a civil obligation.
26. Every person criminally liable for a felony is also civilly liable.
27. Consent is one of the essential elements of an obligation.
28. The object of an obligation is the performance of the prestation, which may consist in giving, doing and not
doing something.
29. Culpa aquiliana is the same as culpa extra-contractual.
30. In an obligation to deliver a generic thing, the object due becomes determinate upon the constitution of the
obligation.
31. The creditor has the right to the fruits of the thing from the time of the constitution of the obligation.
CONTRACTS
FIRST ACTUAL QUIZ
I. TRUE OR FALSE
1. The contracts must bind both contracting parties; its validity or termination cannot be left to the will of one of
them.
2. An offer becomes ineffective upon the insolvency of either party before acceptance is conveyed.
3. In contracts creating real rights, third persons who acquire ownership over the object of the contract are
bound thereby.
4. Undue influence shall annul the obligation, although it may have been employed by a third person who did
not take part in the contract.
5. In a contract of agency, the cause is the liberality of the benefactor.
6. Consent is manifested by the meeting of the offer and the acceptance upon the thing.
7. An offer made through the agent is accepted from the time acceptance is communicated to the agent.
8. Real contracts, such as deposit, pledge and antichresis, are not perfected until the delivery of the object of
the obligation.
9. In onerous contracts the object is understood to be, for each contracting party, the prestation or promise of
a thing or service by the other.
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10. A contract may be rescissible even though there may have been no damage to the contracting parties.
a. TRUE
Pending Questions: When can it be rescinded without damage

A: Article 1381. The following contracts are rescissible:
xxx
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims
due them;
● BECAUSE here, the damage is NOT on the contracting parties but on 3rd party (creditor)
II. MULTIPLE CHOICE

Choose the best answer.
11. With the intention of raising money to buy a gun which he would use in killing X, his mortal enemy, S sold
his only car for P100,000.00 cash to B who knew nothing of the intention of S in selling the car. After the sale, S
was able to buy a gun complete with all the papers required by law. B, on the other hand, was able to register
the car in his name at the Land Transportation Office.
a. The sale of the car by S to B is valid provided S does not kill X.
b. The sale of the car by S to B is void if S kills X.
c. The sale of the car by S to B is voidable whether S kills X or not.
d. The sale of the car by S to B is void whether S kills X or not.
CORRECT ANSWER: The sale of the car by S to B is valid whether S kills X or not.
● EFFECT of unlawful motive:
○ RULE: illegality of motive does not affect validity of contract
■ BECAUSE Article 1351. The particular motives of the parties in entering into a contract
are different from the cause thereof.
MOTIVE CAUSE
Personal Provided by LAW

Ex. Commodatum = gratuity
particular reason of a contracting party which does essential reason for the contract
not affect the other party.
○ EXCEPTION: motive predominates the purpose of the party in entering the contract
■ EX. Sale to defraud the creditors --> rescissible
11.)
Q: The problem is about what?
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Lawrence: A, because the problem is motive.
Renzo: E, the problem is about privity.
Von: Motive is not necessary for the validity of the contract.
Q: What is the rule?
Von: Even if the motive is illegal, it will not affect the contracts.
Q: This has nothing to do with privity of contracts but an unlawful motive. What will be the effect? The GR is
the legality of the motive will not affect the contract. What is the basis?
Lawrence: Article 1351. The particular motives of the parties in entering into a contract are different from the
cause thereof.
Article 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The cause is
unlawful if it is contrary to law, morals, good customs, public order or public policy.
Q: What is the difference between motive and cause? Distinction?

Renzo: xxx
Q: When would the illegality of the contract affect the validity of the contract?
Yu: When the motive predetermines the purpose of the party into entering the contract.
Q: Example.
Lawrence: Sale to defraud creditors
12. On February 1, 2020, Perfecto offered to sell his house and lot to Reynaldo for P1,500,000.00.
Perfecto told Reynaldo that he was giving Reynaldo up to February 28, 2020 to decide whether to buy or
not the house and lot. Reynaldo accepted the option but did not give anything to Perfecto to support the
option given to him. On February 20, 2020, Perfecto found another buyer who was ready to buy the
house and lot for P2,000,000.00. Perfecto asked you whether he can still withdraw the offer he made to
Reynaldo.
Decide.
a. Yes, Perfecto may withdraw the offer because he stands to gain an added profit of P500,000.00 and
this will be more than enough to pay any damages to Reynaldo.
b. Yes, Perfecto may withdraw the offer by just informing Reynaldo of such fact even after being informed
of the acceptance by the latter.
c. No, Perfecto may not withdraw the offer because the option was accepted by Reynaldo although
Reynaldo did not give anything in support thereof.
d. No, Perfecto may not withdraw his offer until the lapse of the period given to Reynaldo to exercise his
option.
CORRECT ANSWER: Perfecto may withdraw the offer by just informing Reynaldo of such fact.
· When the offeror has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except
when the option is founded upon a consideration.
· In this case, the option was not founded upon any consideration.
Article 1324. When the offeror has allowed the offeree a certain period to accept, the offer may be withdrawn
at any time before acceptance by communicating such withdrawal, except when the option is founded upon a
consideration, as something paid or promised.
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Q: The problem pertains to what?
A: Mere option agreement. Can withdraw validly without violating the contract.
13. As to cause, a contract of agency:

a. is a preparatory contract (degree of dependence)
b. may be a gratuitous contract. (As to cause)
c. is a principal contract.(degree of dependence)
d. is an onerous contract. (As to cause)
e. is a consensual contract (as to perfection)
May be gratuitous but presumed onerous
● Article 1868. By the contract of agency a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the latter.
● Because contract of agency is a CONSENSUAL contract
○ Most are consensual except real contracts/formal contracts
● Does NOT involve whether it should be in writing or not --> because the effect of that is as the
contract/document's enforceability itself
Q: What are the kinds of Contract as to cause
1. Onerous
2. Gratuitous
3. Renumenatory
14. The elements of a contract without which a contract would not exist are known as:
a. Accidental elements
These are those which are agreed upon by the parties and which cannot exist without being stipulated.
b. Natural elements
These exist as part of the contract even if the parties do not provide for them
because the law creates them.
c. Civil element
d. Essential elements
These are those that without such, there can be no contract. These are consent,
object and cause.
Article 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Q: Warranties; what kind of element are they?

A: Express - Accidental. Implied - Essential.
15. The contracting parties may establish such stipulations, clauses, terms and conditions as they may
deem convenient provided they are not contrary to law, morals, good customs, public order or public
policy. This is known as:
a. Freedom of contract - aka autonomy (Art. 1306)
i. Examples of those contrary to law:
1. Article 1799. A stipulation which excludes one or more partners from any share in the
profits or losses is void.
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2. Article 2088. The creditor cannot appropriate the things given by way of pledge or
mortgage, or dispose of them. Any stipulation to the contrary is null and void.
3. Article 2130. A stipulation forbidding the owner from alienating the immovable
mortgaged shall be void.
ii. Contrary to Morals or Good Customs - Morals may be considered as meaning good customs;
or those generally accepted principles of morality which have received some kind of social and
practical confirmation. (Tolentino) → excessive stipulation of interest
iii. Contrary to Public Order or Public Policy - The Constitution is controlling in determining what
public order and policy dictates. (Uribe)
b. Mutuality of contract
i. i. The contract must bind both contracting parties; its validity or compliance cannot be left to
the will of one of them. (Art. 1308)
c. Relativity of contract
i. Contracts take effect only between the contracting parties, their assigns and heirs except in
cases where obligations and rights arising from the contracts are not transmissible by their
nature, or by stipulation or by provision of law
d. Obligatory force of contract
i. Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith. (Art. 1159)
16. One of the following is not a real contract:

a. Pledge
b. Commodatum
c. Mutuum
d. Deposit
i. Article 1962. A deposit is constituted from the moment a person receives a thing belonging to
another, with the obligation of safely keeping it and of returning the same. If the
safekeeping of the thing delivered is not the principal purpose of the contract, there is no
deposit but some other contract.
ii. Article 1963. An agreement to constitute a deposit is binding, but the deposit itself is not
perfected until the delivery of the thing.
● NOT (C) Mutuum (simple loan)
○ Mutuum is a real contract --> because perfected upon delivery
○ Art. 1934: An accepted promise to deliver something by way of commodatum or mutuum is
binding upon the parties BUT the commodatum or simple loan itself shall not be perfected until
17. It is the manifestation of the meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract.
a. Consideration
b. Contract
c. Privity
d. Consent
e. Cause
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Answer: Article 1319. Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer
was made
18. On May |, 2020, S offered to sell a specific car to B for P500,000.00. B sent his letter of acceptance to
S on May 8, 2020, On May 10, 2020, however, S died in a vehicular accident and his secretary received
the letter of acceptance on May 12, 2020 unaware that S had already died.
a. The contract was perfected on May 8, 2020 when B sent his letter of acceptance.
b. The contract was perfected on May 12, 2020 when the secretary of S received the letter of acceptance.
c. The contract was perfected on May 1, 2020 because the acceptance made by B on May 8, 2020
retroacts to the date of the offer.
d. The contract was not perfected because the secretary was unaware of the death of S.
NOTES: Correct answer: The contract was not perfected because the offer of S became ineffective when
he died.
EXPLANATION: Under the theory of manifestation (or theory of cognition according to De Leon), offer
and acceptance takes effect only from the time knowledge is acquired by the person to whom it is
directed. If during the intervening time, the offer or acceptance is extinguished by death/insanity, such
offer or acceptance has no more effect
19, Which will make a contract voidable?

a. Mistake as to the substance of the thing which is the object of the contract - Art. 1331 (par. 1) - In order
that mistake may invalidate consent, it should refer to the substance of the thing which is the object of
the contract, or to those conditions which have principally moved one or both parties to enter into the
contract.
b. Mistake as to one of the conditions which moved one or both parties to enter into the contract - Art.
1331 (par. 1) - In order that mistake may invalidate consent, it should refer to the substance of the thing
which is the object of the contract, or to those conditions which have principally moved one or both
parties to enter into the contract.
c. Mistake as to the identity or qualifications of one of the parties, which identity or qualifications have
been the principal cause of the contract. - Art. 1331(par. 2) - Mistake as to the identity or qualifications
of one of the parties will vitiate consent only when such identity or qualifications have been the
principal cause of the contract.
d. All of the above
Answer: Article 1390. The following contracts are voidable or annullable, even though there may have been no
damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
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These contracts are binding, unless they are annulled by a proper authority action in court. They are
susceptible of ratification.
20, It is present when one of the contracting parties is compelled by a reasonable and well-grounded
fear of an imminent and grave evil upon his person or property, or upon the person or property of his
spouse, descendants, and ascendants to give his consent:
a. Violence
b. Physical Coercion
c. Duress - covers both intimidation and duress.
d. Mistake
NOTES: Correct answer: INTIMIDATION
Article 1335. There is VIOLENCE when in order to wrest consent, serious or irresistible force is
employed.
There is INTIMIDATION when one of the contracting parties is compelled by a reasonable and well-
grounded fear of an imminent and grave evil upon his person or property, or upon the person or property
of his spouse, descendants or ascendants, to give his consent.
To determine the degree of intimidation, the age, sex and condition of the person shall be borne in mind.
A threat to enforce one's claim through competent authority, if the claim is just or legal, DOES NOT
VITIATE CONSENT.
Vitiation, necessarily VOIDABLE lang. Common yan, “Because there was vitiation of consent, the
contract is VOID.” HINDI. Vitiation is not the same as “lack of consent.” Lack of consent, VOID. But
vitiation means nagbigay siya ng consent, pero napilitan lang. Baka may violence, intimidation. Hindi
void, but only VOIDABLE.
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CONTRACTS QUIZ SAMPLEX
I. TRUE OR FALSE
1. Contracts must bind both parties, its validity or termination cannot be left to the will of one of them.
a. FALSE
b. Its validity or compliance, not termination, cannot be left to the will of one of them.
(Art. 1308)
2. Unenforceable contracts are susceptible of ratification.
a. TRUE.
b. Unenforceable, unless they are ratified. (Art. 1403)
3. Contracts are perfected by mere consent.
a. FALSE.
b. This statement is only the general rule. An exception – real contracts such as deposit, pledge and
commodatum, are not perfected until the delivery of the object of the obligation. (Art. 1316)
4. Ratification requires conformity of the contracting parties.
a. FALSE.
b. Ratification does not require the conformity of the contracting party who has no right
to bring the action for annulment. (Art. 1395)
5. Mistake as to the qualifications of one of the parties vitiates consent.
a. FALSE.
b. It will only vitiate consent when such qualification or identity have been the principal
cause of the contract. (Art. 1331)
6. Contracts take effect between their parties, assigns and heirs.
a. FALSE.
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b. The statement is not absolute as when the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation, or by provision of law. (Art. 1311)
7. A mere expression of an opinion does not signify fraud.
a. FALSE.
b. This is not absolute. It will only signify fraud when it is made by an expert and the
other party has relied on the expert’s special knowledge.
Art. 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the
other party has relied on the former's special knowledge.
8. Incidental fraud invalidates a contract.
a. FALSE.
b. In order that fraud may make a contract voidable, it should be serious and should not have been
employed by both contracting parties. Incidental fraud only obligates the person employing it to pay
damages.
Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have
been employed by both contracting parties.
Incidental fraud only obliges the person employing it to pay damages.

c. Dolo incident is fraud that does not have such a decisive influence and by itself cannot cause the
giving of consent; it refers only to some particular or accident of the obligation.
9. In contracts of pure beneficence, the cause is the liberality of the benefactor.
a. TRUE.
Article 1350. In onerous contracts the cause is understood to be, for each contracting party, the
prestation or promise of a thing or service by the other; in remuneratory ones, the service or benefit
which is remunerated; and in contracts of pure beneficence, the mere liberality of the benefactor.
10. The contract is void if the cause is not stated in the contract.
a. FALSE.
b. Although the cause is not stated, it is presumed that it exists and is lawful, unless the debtor proves
the contrary.
11. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient.
a. TRUE.
Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order,
or public policy.
12. Acceptance by letter or telegram binds the offeror from the time the letter or telegram is sent.
a. FALSE.
b. It binds the offerer from the time it came to his knowledge. (Art. 1319(2): Acceptance made by letter
or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in such a
case, is presumed to have been entered into in the place where the offer was made.)
13. An offer made through the agent is accepted from the time acceptance is communicated to the agent.
a. TRUE.
Article 1322. An offer made through an agent is accepted from the time acceptance is communicated
to him.
14. There is violence when in order to wrest consent, serious or irresistible force is employed.
a. TRUE.
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Article 1335. There is violence when in order to wrest consent, serious or irresistible force is employed.
15. Failure to disclose facts constitutes fraud.
a. FALSE.
b. Failure to disclose facts will constitute fraud only when there is a duty to reveal them,
as when parties are bound by confidential relations. (Art. 1339)
16. Real contracts, such as mutuum, pledge and guaranty are not perfected until the delivery of the object of
the obligation.
a. FALSE.
b. Real contracts such as deposit, pledge and commodatum, not mutuum and guaranty,
are not perfected until the delivery of the object of the obligation. (Art. 1316)
17. Contracts of pure beneficence are contracts without cause.
a. FALSE.
b. In contracts of pure beneficence, the cause is the mere liberality of the benefactor.
(Art. 1350)
18. If the cause is not stated in the contract, it exists and is lawful.
a. FALSE.
b. It is presumed to be valid and existing, unless otherwise proven by the debtor.
19. A contract may be voidable even though there may have been no damage to the contracting parties.
a. TRUE.
20. The action or defense for the declaration of the inexistence of a contract prescribes in 10 years.
a. FALSE.
b. The action or defense for the declaration of the inexistence of a contract does not
prescribe. (Art. 1410)
21. Acts and contracts which have for their objects the creation transmission, modification or extinguishment of
real rights over immovable property must be in a public instrument to be valid and binding.
a. FALSE.
B. Not for validity but for greater efficacy. Art. 1358 does not require such form in order to
validate the act or contract, but only to insure its efficacy. (Doliendo v. Depino)
22. Contract of lease for 2 years is unenforceable if not in writing.

a. FALSE. An agreement for the leasing for a longer period than one year of real property or of
an interest therein, should be in writing, otherwise it will be unenforceable. (Art. 1403(2e)
b. Only if lease of real property.
23. An action for rescission of a contract entered into to defraud a creditor will prosper 4 years from actual
discovery of fraud.
a. FALSE. “From time of registration”.
24. Undue influence shall annul the obligation, although it may have been employed by a third person who did
not take part in the contract.
a. TRUE. by analogy
B. Intimidation, Violence and Undue influence→ volunariness
Article 1336. Violence or intimidation shall annul the obligation, although it may have been employed by a third
person who did not take part in the contract. (1268)
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25. Rescission shall be only to the extent necessary to cover the damage caused by a contract in fraud of a
creditor.
a. TRUE.
Article 1384. Rescission shall be only to the extent necessary to cover the damages caused
26. A conveyance is presumed to be in fraud of creditor if made by a debtor after a suit is filed against him
while it is pending.
a. FALSE. Alienations by onerous title are also presumed fraudulent when made by persons against
whom some judgment has been issued. (Art. 1387)
b. conveyance must be onerous title
27. A contract which is void on its face cannot be the subject of reformation.
a. FALSE. The action for reformation of instruments presupposes that there is a valid existing
contract between the parties, and only the document does not correctly express the terms of their true
agreement.
b. When the real agreement is void, there can be no reformation.
c. only the subject of reformation is the real intention of the partie
8. Once a contract is perfected, though the same is not in the form required by law, the contracting parties may
compel each other to observe that form.
a. FALSE.
b. If the law requires a document or other special form, the contracting parties may
compel each other to observe that form, once the contract has been perfected. (Art. 1357)
29. Lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or
undue influence.
a. FALSE.
b. Except in cases specified by law, lesion or inadequacy of shall not invalidate a contract,
unless there has been fraud, mistake or undue influence. (Art. 1355)
30. The cause in a lucrative contract is the liberality of the benefactor.

a. TRUE.
31. An offer may become ineffective upon insolvency of either party before acceptance is conveyed even if the
insolvency is not judicially declared.
a. TRUE.
32. A contract of sale entered into between spouses is void.

a) FALSE.
b) Cause its donation during the marriage that is void (?) Article 133. Every donation between the
spouses during the marriage shall be void. This prohibition does not apply when the donation takes
effect after the death of the donor. Neither does this prohibition apply to moderate gifts which the
spouses may give each other on the occasion of any family rejoicing.
33. Acts and contracts which have for their objects the creation, transmission, modification, or extinguishment
of real rights over immovable property must be in a public instrument to be valid and binding (not for validity
but for greater efficacy)
a. FALSE. Art. 1358.
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34. Contract of lease for 2-years is unenforceable if not in writing. (only if lease of real property)
35. A contract which is void on its face cannot be the subject of reformation. (only the subject of reformation is
the real intention of the parties.
a. FALSE.
36. Once a contract is perfected, though the same is not in the form required by law, the contracting parties
may compel each other to observe that form.
37. The cause in a lucrative contract is the liberality of the benefactor.

a. TRUE. Art. 1350.
38. Contracts agreed to in a state of drunkenness are voidable.
a. TRUE
b. Art. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of
drunkenness or during a hypnotic spell are voidable.
39. A contract where consent is given through mistake, violence. Intimidation, undue influence, or fraud is
voidable.
a. TRUE
b. Art. 1330. A contract where consent is given through mistake, violence, intimidation, undue influence,
or fraud is voidable.
40. Mistake as to the identity or qualification of one of the parties will violate consent.
a. FALSE
b. Art. 1331 (2)- will vitiate consent only when such identity or qualification have been the principal cause
of the contract
c. Art. 1331. In order that mistake may invalidate consent, it should refer to the substance of the thing
which is the object of the contract, or to those conditions which have principally moved one or both
parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such
identity or qualifications have been the principal cause of the contract.
A simple mistake of account shall give rise to its correction
41. There is intimidation when in order to wrest consent serious or irresistible force is employed.
a. FALSE
b. This is VIOLENCE
c. Article 1335. There is violence when in order to wrest consent, serious or irresistible force is employed.
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There is intimidation when one of the contracting parties is compelled by a reasonable and well-
grounded fear of an imminent and grave evil upon his person or property, or upon the person or
property of his spouse, descendants or ascendants, to give his consent.
To determine the degree of intimidation, the age, sex and condition of the person shall be borne in
mind.
A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate
consent.
42. Simulation of a contract is absolute when the parties conceal their true agreements.
a. FALSE
b. ART. 1345. Simulation of a contract may be absolute or relative. The former takes place when the
parties do not intend to be bound at all; the latter, when the parties conceal their true agreement.
c. ABSOLUTE SIMULATION- NO INTENTION TO BE BOUND AT ALL → VOID
d. RELATIVE- CONCEALMENT OF TRUE AGREEMENT
43.All things which are not outside the commerce of men including future things may be the object of a
contract.
a. TRUE
b. Art. 1347. All things which are not outside the commerce of men, including future things, may be the
object of a contract. All rights which are not intransmissible may also be the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized by law.
All services which are not contrary to law, morals, good customs, public order or public policy may
likewise be the object of a contract.
44. Contracts are obligatory, in whatever form they may have been entered into provided all the essential
requisites for their validity are present.
a. FALSE
b. Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all
the essential requisites for their validity are present. However, when the law requires that a contract be
in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way,
that requirement is absolute and indispensable. In such cases, the right of the parties stated in the
following article cannot be exercised.
45. The action for rescission is a principal remedy, it cannot be instituted except when the party suffering
damage has no other legal means to obtain reparation for the same.
a. FALSE
b. Art. 1383. The action for rescission is subsidiary;
46.All contracts by virtue of which the debtor alienates property by onerous title are presumed to have been
entered into in fraud of creditors when the donor did not reserve sufficient property to pay all debts contracted
before the donation.
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a. FALSE. Should be gratuitous title not onerous title
b. Art. 1387. All contracts by virtue of which the debtor aliens property by gratuitous title are presumed to
have been entered into into fraud of creditors, when the donor did not reserve sufficient property to pay
all debts contracted before the donation.
Alienations by onerous title are also presumed fraudulent when made by persons against whom some
judgment has been rendered in any instance or some writ of attachment has been issued. The decision
or attachment need not refer to the property alienated, and need not have been obtained by the party
seeking the rescission.
47. Voidable contracts are susceptible of ratification
a. TRUE
b. Art. 1390. The following contracts are voidable or annullable, even though there may have been no
damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible
of ratification.
48. Unenforceable contracts cannot be assailed by third persons.
a. TRUE
b. Art. 1408. Unenforceable contracts cannot be assailed by third person

1. On February 11, 2003, Perfecto offered to sell his house and lot to Reynaldo for P1,500,000.00. Perfecto told
Reynaldo that he was giving Reynaldo up to February 28, 2003 to decide whether or not to buy the house and
lot. Reynaldo accepted the option but did not give anything to Perfecto to support the option given to him. On
May 20, 2003, Perfecto found another buyer who was ready to buy the house and lot for P2,000,000.00.
Perfecto wants to ask you whether he can still withdraw the offer he made to Reynaldo. Decide.
this will be more than enough to pay damages to Reynaldo.
b. Yes, Perfecto may withdraw the offer by just informing Reynaldo of such fact.
i. When the offeror has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such
withdrawal, except when the option is founded upon a consideration.
ii. In this case, the option was not founded upon any consideration.
d. No, Perfecto may not withdraw his offer until the lapse of the period given to Reynaldo to exercise
his option.
2. Elements that accompany certain contracts unless set aside or suppressed by the parties, are known as:
a. Natural elements
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i. These exist as part of the contract even if the parties do not provide for them because the law
creates them.
b. Essential elements
i. These are those that without such, there can be no contract. These are consent,
object and cause.
c. Accidental elements
i. These are those which are agreed upon by the parties and which cannot exist without being
stipulated.
d. Original elements
3. A contract where both parties are required to render reciprocal prestations, are known as:
a. Bilateral contract
b. Unilateral contract
c. Gratuitous contract
d. Commutative contract
4. Contracts take effect only between the contracting parties, their assigns and heirs except in cases where
obligations and rights arising from the contracts are not transmissible by their nature, or by stipulation or by
provision of law. This principle is known as:
a. Relativity of contracts
b. Mutuality of contracts
i. The contract must bind both contracting parties; its validity or compliance cannot be
left to the will of one of them. (Art. 1308)
c. Obligatory force of contracts
i. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. (Art. 1159)
d. Liberty of contracts

a. Pledge
b. Commodatum
c. Lease
i. The contract of lease may be of things or of work and service. (Art. 1642)
d. Mutuum
7. On May 1, 2002, S offered to sell a specific car to B for P500,000.00. B sent his letter of acceptance to S on
May 8, 2002. On May 10, 2002, however, S died in a vehicular accident and his secretary received the letter or
acceptance on May 12, 2002 unaware that S had already died.
a. The contract was perfected on May 8, 2002 when B sent his letter of acceptance.
i. Definitely wrong. Acceptance made by letter or telegram does not bind the
offeror until from the time it came to his knowledge.
b. The contract was perfected on May 12, 2002 when the secretary of S received the letter
i. Defnitely wrong. Secretary was not the offeror.
c. The contract was not perfected because the offer of S became ineffective when he died.
i. Under the theory of manifestation, offer and acceptance takes effect only from the time
knowledge is acquired by the person to whom it is directed. If during the intervening time, the
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offer or acceptance is extinguished by death/insanity, such offer or acceptance has no more
effect.
d. The contract was perfected on May 1, 2002 because the acceptance made by B on May 8, 2002
retroacts to the date of the offer.
8. Mistake in three of the following will make a contract voidable. Which one will not?
a. Mistake as to the substance of the thing which is the object of the contract
b. Mistake as to the principal conditions which principally moved one or both parties to
enter into the contract.
c. Mistake as to the identity or qualifications of one of the parties, where identity or
qualifications have been the principal cause of the contract.
d. Simple mistake of account.
Article 1331. In order that mistake may invalidate consent, it should refer to the substance of the thing which is
the object of the contract, or to those conditions which have principally moved one or both parties to enter into
the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or
qualifications have been the principal cause of the contract.
A simple mistake of account shall give rise to its correction.
In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of
the contract, or those conditions which have principally moved one or both parties to enter into the contract.
A simple mistake of account shall give rise to its correction. (Art. 1331)
9. It is the employment of serious or irresistible force to obtain consent.

a. Intimidation
i. There is intimidation when one of the contracting parties is compelled by a reasonable and
well-grounded fear of an imminent and grave evil upon his person or property, or upon the
person or property of his spouses, descendants or ascendants, to give his consent.
b. Threat
c. Violence
Article 1335. There is violence when in order to wrest consent, serious or irresistible force is
employed.
d. Moral coercion
10. It is present when one of the contracting parties is compelled by a reasonable and well- grounded fear of an
imminent and grave evil upon his person or property or upon the person or property of his spouse,
descendants, and ascendants to obtain consent:
a. Violence
b. Physical coercion
c. Intimidation
Art. 1335. There is intimidation when one of the contracting parties is compelled by a
reasonable and well-grounded fear of an imminent and grave evil upon his person or property,
or upon the person or property of his spouse, descendants or ascendants, to give his consent.
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d. Mistake
TRUE OR FALSE
1. Statements:
FALSE - All Contracts by virtue of which the debtor alienates property by onerous title are presumed to have
been entered into in fraud of creditors, when the donor did not reserve sufficient property to pay all debts
contracted before the donation.
TRUE - Voidable contracts are susceptible of ratification.
2. Statements:
FALSE - Ratification requires the conformity of the contracting parties.
TRUE - Unenforceable contracts cannot be assailed by third persons.
3. Statements:
FALSE - Contracts are obligatory, in whatever form they may have been entered into, provided all the essential
FALSE - Contracts take effect between the parties, their assigns and heirs.
4. Statements:
FALSE - A mere expression of an opinion does not signify fraud.
FALSE - Incidental fraud invalidates a contract.
5. Statements:
FALSE - Contracts are perfected by mere consent.
TRUE - An offer becomes ineffective upon the insolvency of either party before acceptance is conveyed.
6. Statements:
TRUE - Contracts agreed to in a state of drunkenness are voidable.
TRUE - A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is
voidable.
7. Statements:
FALSE - Mistake as to the identity or qualifications of one of the parties will vitiate consent.
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FALSE - There is intimidation when in order to wrest consent, serious or irresistible force is employed.
8. Statements:
FALSE - Failure to disclose facts constitutes fraud.
FALSE - Real contracts, such as deposit, pledge and guaranty, are not perfected until the delivery of the object
of the obligation.
9. Statements:
FALSE - Contracts of pure beneficence are contracts without cause.
FALSE - If the cause is not stated in the contract, it exists and is lawful.
10. Statements:
TRUE - A contract may be voidable even though there may have been no damage to the contracting parties.
FALSE - The action or defense for the declaration of the inexistence of a contract prescribes in 10 years.
II.
1. With the intention of raising money to buy a gun which he would use in killing X, his mortal enemy, S
sold his only car for P100,000.00 cash to B who knew nothing of the intention of S in selling the car. After the
sale, S was able to buy a gun complete with all the papers required by law. B, on the other hand, was able to
register the car in his name at the Land Transportation Office.
a. The sale of the car by S to B is valid provided S does not kill X.
b. The sale of the car by S to B is void if S kills X.
c. The sale of the car by S to B is valid whether S kills X or not.
d. The sale of the car by S to B is void whether S kills X or not.
2. The warranty against hidden defects in a contract of sale is an example of:

a. Natural element
b. Accidental element
c. Original element
d. Stipulated element
3. A contract where both parties are required to render reciprocal prestations is known as:
a. Bilateral contract
b. Unilateral contract
c. Gratuitous contract
d. Commutative contract
4. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of
one of them. This is known as:
a. Mutuality of contract
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b. Relativity of contract
c. Consensuality of contract
d. Freedom to contract

a. Pledge
b. Commodatum
c. Deposit
d. Antichresis
6. S offered to sell his car to B for P125,000.00 cash. B accepts the offer but is willing to pay only
P120,000.00.
a. The contract was perfected at the price of P125,000.00.
b. The contract was perfected at the price of P120,000.00.
c. The contract was perfected at the price of P122,500.00, the average price of the offer and the
acceptance.
d. The contract was not perfected because the acceptance by B was qualified and it
constituted a counter-offer.
7. On July 1, 2002, Serrano offered to sell his only Mercedes Benz car for P1,000,000.00 to Benitez who
was interested in buying the same. In his letter to Benitez, Serrano stated that he was giving Benitez up to July
31, 2002 to make up his mind whether to buy the car or not. On July 25, 2002, Serrano personally went to
Benitez to inform him that he was no longer willing to sell the car unless the price was increased to
P1,400,000.00 because another buyer was interested in buying the car for the said amount of P1,400,000.00.
a. Benitez may compel Serrano to sell to him the car for P1,000,000.00.
b. Serrano may validly withdraw his offer to Benitez because the option was not founded
upon a consideration.
c. Serrano may not withdraw his offer until after the lapse of the option period he have to Benitez.
d. The increase in price made by Serrano was not valid because it was made within the option
period.
8. Mistake in three of the following will make a contract voidable. Which one will not?
b. Mistake as to the principal conditions which primarily moved one or both of the parties to enter
into the contract
c. Mistake as to the identity or qualifications of one of the parties, which identity or qualifications
have been the principal cause of the contract.
d. Simple mistake of account.
9. It involves the employment of serious or irresistible force to obtain consent.

a. Intimidation
b. Threat
c. Violence
d. Moral coercion
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10. It is present when one of the contracting parties is compelled by a reasonable and well-grounded fear of an
imminent and grave evil upon his person or property, or upon the person or property of his spouse,
descendants, and ascendants to give his consent:
a. Violence
c. Intimidation
d. Mistake
TRUE OR FALSE
#5 - Cause is the essential reason why party entered into a contract. Why false because not necessarily a
gratuitous contract. It is presumed to be onerous.
#6 FALSE - Article 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer
was made. (1262a)
#8 FALSE - mutuum is also a real contract. Not in codal
MULTIPLE CHOICE
his only car for P100,000.00 cash to B who knew nothing of the intention of S in selling the car. AFter the sale,
S was able to buy a gun complete with all the papers required by law. B, on the other hand, was able to register
the car in his name at the Land Transportation OFfice
a. The sale of the car by S to B is valid provided S does not kill X
b. The sale of the car by S to B is void if S kills X
c. The sale of the car by S to B is voidable whether S kills X or not
d. The sale of the car by S to B is void whether S kills X or not
12. On February 1, 2020, Perfecto offered to sell his house and lot to Reynaldo for P1,500,000.00. Perfecto told
Reynaldo that he was giving Reynaldo up to February 28, 2020 to decide whether to buy or not the house and
lot. Reynaldo accepted the option but did not give anything to Perfecto to support the option given to him. On
February 20, 2020, Perfecto found another buyer who was ready to buy the house and lot for P2,000,000.00.
Perfecto asked you whether he can still withdraw the offer he made to Reynaldo. Decide.
this will be more than enough to pay any damages to Reynaldo
b. Yes, Perfecto may withdraw the offer by just informing Reynaldo of such face even after being informed
of the acceptance by the latter.
d. No, Perfecto may not withdraw his offer until the laps of the period given to Reynaldo to exercise his
option
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13. As to cause, a contract of agency is:

a. A preparatory contract
b. May be a gratuitous contract
c. Is a principal contract
d. Is an onerous contract
e. Is a consensual contract
14. The elements of a contract without which a contract would not exist are known as:
a. Accidental elements
b. Natural elements
c. Civil Elements
d. Essential Elements
15. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient provided, they are not contrary to law, morals, good customs, public order or policy. This is known
as:
a. Freedom of contract
b. Mutuality of contract
c. Relativity of contract
d. Obligatory force of contract

a. Pledge
b. Commodatum
c. Mutuum
d. Deposit
17. It is the manifestation of the meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract
a. Consideration
b. Contract
c. Privity
d. Consent
e. Cause
18. On may 1, 2020, S offered to sell a specific car to B for P500,000.00. B sent his letter of acceptance to S on
May 8,2020. On May 10, 2020, S died in a vehicular accident and his secretary received the letter of
acceptance on May 12, 2020, unaware that S has already died.
a. The contract was perfected on May 8, 2020 when B sent his letter of acceptance
b. The contract was perfected on May 12, 2020 when the secretary of S received the letter of acceptance
c. The contract was perfected on May 1, 2020 because the acceptance made by B on May 8 2020
retracts to the date of the offer
d. The contract was not perfected because the secretary was unaware of the death of S
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19. Which will make a contract voidable?
b. Mistake as to one of the conditions which moved one or both parties to enter into the contract
c. Mistake as to the identity or qualification of one of the parties, which identify or qualifications have
been the principal cause of the contract
d. All of the above
20. It is present when one of the contracting parties is compelled by reasonable and well-grounded fear of an
imminent grave evil upon his person or property, or upon the person or property of his spouse, descendants,
and ascendants to give his consent:
a. Violence
c. Duress
d. Mistake
ADDITIONAL QUESTIONS:
1. One of the following is not an accidental element of contract
a. Terms of Payment
b. Rate of Interest
c. Place of delivery
d. Warranty against eviction
2. One of the following is not incapacitated to give his consent

a. Insane persons
b. Deaf-mutes who do not know how to write
c. Deaf-mutes who know how to read
d. Unemancipated minors
Art. 1327. The following cannot give consent to a contract:

(1) Unemancipated minors
(2) Insane of demented persons, and deaf-mutes who do not know how to write
3. A contract entered into by an incapacitated person is:

a. Void
b. Voidable
c. Rescissible
d. Unenforceable
4. The following are the vices of consent, except:

a. Violence
b. Intimidation
c. Mistake
d. Due Influence
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5. The following are rescissible contracts, except:
a. Entered into by guardian whenever ward suffers damage more than ¼ of value of property
b. Agreed upon in representation of absentees, if absentee suffers lesion by more than ¼ of value
of property
c. Contracts where fraud is committed on creditor (accion pauliana)
d. Contracts entered into by minors
Art. 1381 enumerates rescissible contracts. Status of the contract in this question: Unenforceable, not
voidable. When both parties are incapacitated or their consent are vitiated, the status of the contract is
unenforceable.
6. The following are the requisites before a contract entered into in fraud of creditors may be rescinded,
except:
a. There must be credit existing prior to the celebration of the contract
b. There must be fraud, or at least, the intent to commit fraud to the prejudice of the creditor
seeking rescission.
c. The creditor cannot in any legal manner collect his credit (subsidiary character of rescission)
d. The object of the contract must be legally in the possession of a 3rd person in good faith.
D is not a requisite before a contract entered into in fraud of creditors may be rescinded.
How to determine whether a contract is entered into in fraud of creditors? (Requisites)
(1) There must be an intention to defraud creditors.

(2) There must be a pre-existing obligation at the time it was entered into.
Note: Even if the contract was entered into before the obligation arose, it is still in fraud of creditors
when the purpose is really to defraud creditors.
(3) The existence of fraud or bad faith on the part of the debtor which can either be presumed or proven;
and
(4) The creditors cannot recover their credits in any other manner.
7. Which of the following expresses a correct principle of law? Choose the best answer.
a. Failure to disclose facts when there is a duty to reveal them, does not constitute fraud.
b. Violence or intimidation does not render a contract annullable if employed not by a contracting
party but by a third person.
c. A threat to enforce one’s claim through competent authority, if the claim is legal or just, does
not vitiate consent.
d. Absolute simulation of a contract always results in a void contract.
Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice
a third person and is not intended for any purpose contrary to law, morals, good customs, public order or
public policy binds the parties to their real agreement.
8. Aligada orally offered to sell his two-hectare rice land to Balane for Php 10M. The offer was orally
accepted. By agreement, the land was to be delivered (through execution of a notarized Deed of Sale)
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and the price was to be paid exactly one-month from their oral agreement. Which statement is most
accurate?
a. If Aligada refuses to deliver the land on the agreed date despite payment by Balane, the latter
may not
successfully sue Aligada because the contract is oral.
b. If Aligada refused to deliver the land, Balane may successfully sue for fulfillment of the
obligation even if he has not tendered payment of the purchase price.
c. The contract between the parties is rescissible.
d. The contract between the parties is subject to ratification by the parties.
● Issue: Whether the property is movable or immovable

● Why D? The premise is that the contract is unenforceable which is subject to ratification.
● Why not A? There is part performance, but statute of frauds will not apply.
○ Doctrine of Performance = Statute of Frauds apply only to wholly executory contracts; it does
not apply to those partial executory contracts.
● Why not B? No part performance. Unenforceable contract.
● Why not C? The contract is unenforceable and not rescissible
9. Which of the following contracts is void?

a. An oral sale of a parcel of land.
b. A sale of land by an agent in a public instrument where his authority from the principal is
oral.
c. A donation of a wrist watch worth P 4,500.00.
d. A relatively simulated contract.
Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter
shall be in writing; otherwise, the sale shall be void.
● B is the answer. Absolutely void; ART. 1874.
● Statute of Fraud does not make a contract void; it merely makes the contract voidable
● Why not C? Because a donation is not a contract but may be governed by the rules on contract when it
is an onerous donation. Assuming that this is an onerous donation, it will not be a void contract. There
is no contract that is void simply because of the value.
● Why not D?
Part Four
his only car for P100,000.00 cash to B who knew nothing of the intention of S in selling the car. After the
sale, S was able to buy a gun complete with all the papers required by law. B, on the other hand, was able
to register the car in his name at the Land Transportation Office. What is the status of the sale?
The sale is valid. As a rule, motive does not affect the validity of a contract since motive is different from
cause and the illegality of motive does not affect the validity of the contract. (Art. 1351) EXCEPTION: If
motive predominates the purpose of the party to enter into a contract such as do defraud his creditors,
then the sale will not be valid.
● Particular motives are different from the cause = even if the motives are illegal or unlawful, since
they are not essential elements of contract, it does not affect its validity.
● When would a contract like a Deed of Sale be improperly notarized? = nagpapanotarize pero di
nagaappear sa notary public
● Spouses Aguinaldo vs. Torres
● Contract improperly notarized = the contract is VALID.
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2. On March 13, 2008, Ariel entered into a Deed of Absolute Sale (DAS) with Noel where the former sold his
titled lot in Quezon City with an area of three hundred (300) square meters to the latter for the price of
P300,000.00. The prevailing market value of the lot was P3,000.00 per square meter. On March 20, 2008,
they executed another “Agreement to Buy Back/Redeem Property” where Ariel was given an option to
repurchase the property on or before March 20, 210 for the same price. Ariel, however, remained in actual
possession of the lot. Since Noel did not pay the taxes, Ariel paid the real property taxes to avoid a
delinquency sale.
On March 21, 2010, Ariel sent a letter to Noel, attaching thereto a manager’s check for P300,000.00
manifesting that he is redeeming the property. Noel rejected the redemption claiming that the DAS was a
true and valid sale representing the true intent of the parties. Ariel filed a suit for the nullification of the DAS
or the reformation of said agreement to that of a Loan with Real Estate Mortgage. He claims the DAS and
the redemption agreement constitute an equitable mortgage. Noel however claims it is a valid sale with
pacto de retro and Ariel clearly failed to redeem the property.
As the RTC judge, decide the case with reasons.
● In favor of Ariel – If noel cannot prove to court that this is not good faith sale with right of
repurchase because of the presumption that inadequate and remains in possession.
● If the price is grossly inadequate, the presumption arose that there is an equitable mortgage
(disputable presumption)
● Reformation is a remedy
3. Lino entered into a contract to sell with Ramon, undertaking to convey to the latter one of the five lots he
owns, without specifying which lot it was, for the price of P1 million. Later, the parties could not agree
which of five lots he owned Lino undertook to sell to Ramon. What is the standing of the contract?
● Void. Under Art. 1409(6): The following contracts are inexistent or void from the beginning: those
where the intention of the parties relative to the principal object of the contract cannot be
ascertained.
● No meeting of the minds as to the object of the contract (ART. 1378: If doubts are cast upon the
principal object of the contract in such a way that it cannot be known what may have been the
intention or willf of the parties, the contract shall be null and void)
4. X was the owner of a 10,000 square meter property. X married Y and out of their union, A, B and C were
born. After the death of Y, X married Z and they begot as children, D, E and F. After the death of X, the
children of the first and second marriages executed an extrajudicial partition of the aforestated property on
May 1, 1970. D, E and F were given a one thousand square meter portion of the property. They were
minors at the time of the execution of the document. D was 17 year old, E was 14 and F was 12; and they
were made to believe by A, B and C that unless they sign the document they will not get any share. Z was
not present then. In January 1974, D, E and F filed an action in court to nullify the suit alleging they
discovered the fraud only in 1973.
a. Can the minority of D, E and F be a basis to nullify the partition? Explain your answer.
Yes, the minority can be a basis to nullify the partition because D, E, and F were not properly
represented by their parents or guardians at the time they contracted the extra-judicial
partition. (Art. 1327, Art. 1391)
b. How about fraud? Explain your answer.
93
In the case of fraud, when through insidious words or machinations of one party, the
other is induced to enter into the contract without which he would not have agreed to, the
action still prosper because under Art. 1391, the action of annulment may be brought
within four years from the discovery of the fraud.
5. Eduardo borrowed P50,000.00 from Diego payable within 30 days. Eduardo failed to pay the debt on the
due date despite repeated demands from Diego. When the debt remained unpaid for 6 months, Diego
asked his counsel, Atty. Santos, to write a letter to Eduardo informing him that unless Eduardo assigns his
lot to Diego, Diego would be compelled to file a civil complaint against Eduardo for the collection of Diego’s
claim. Eduardo, afraid of the threat of a court action against him, was forced to sign a deed of assignment
of his lot in favor of Diego. What is the status of the assignment?
The assignment is valid. Article 1335 provides that a threat to enforce one’s claim through competent
authority, if the claim is just or legal, does not vitiate consent.
6. Michael Fermin, without the authority of Pascual Lacas, owner of a car, sold the same car in the name of
Mr. Lacas to Atty. Buko. What is the status of the contract between Atty. Buko and Mr. Lacas ?
Unenforceable. Article 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given no authority or legal
representation, or who has acted beyond his powers.
7. “X” came across an advertisement in the “Manila Daily Bulletin” about the rush sale of three slightly used
TOYOTA cars, Model 1989 for only P200,000 each. Finding the price to be very cheap and in order to be
sure that he gets one unit ahead of the others, “X” immediately phoned the advertiser “Y” and placed an
order for one car. “Y” accepted the order and promised to deliver the ordered unit on July 15, 1989. On the
said date, however, “Y” did not deliver the unit. “X” brings an action to compel “Y” to deliver the unit. Will
such action prosper? Give your reasons.
The action will not prosper. Although the contract has been perfected, the contract is unenforceable under
the statute of frauds. The contract is a sale of a movable property valued more than P500, hence it must be
in writing. In the case at bar, there is only a verbal contract.
The action will prosper if there is no objection to the oral evidence which amounts to the waiver of the statute
of frauds.
8. Sergio is the registered owner of a 500-square meter land. His friend, Marcelo, who has long been
interested in the property, succeeded in persuading Sergio to sell it to him. On June 2, 2012, they agreed
on the purchase price of P600,000 and that Sergio would give Marcelo up to June 30, 2012 within which to
raise the amount. Marcelo, in a light tone usual between them, said that they should seal their agreement
through a case of Jack Daniels Black and P5,000 "pulutan" money which he immediately handed to Sergio
and which the latter accepted. The friends then sat down and drank the first bottle from the case of
bourbon.
On June 15, 2013, Sergio learned of another buyer, Roberto, who was offering P800,000 in ready cash for
the land. When Roberto confirmed that he could pay in cash as soon as Sergio could get the
documentation ready, Sergio decided to withdraw his offer to Marcelo, hoping to just explain matters to his
friend. Marcelo, however, objected when the withdrawal was communicated to him, taking the position that
they have a firm and binding agreement that Sergio cannot simply walk away from because he has an
option to buy that is duly supported by a duly ·accepted valuable consideration.
94
Can Sergio claim that whatever they might have agreed upon cannot be enforced because any agreement
relating to the sale of real property must be supported by evidence in writing and they never reduced their
agreement to writing?
Yes. There is already a perfected contract of sale. From the facts, “succeeded in persuading Sergio to sell it to
him” and given the period “until June 30, 2012” is only for the performance.
The case of bourbon and P5,000 pulutan - can be considered only as to statute of frauds that this should be in
writing, but the party had already performed. “Decided to withdraw his offer” is not accurate, because he
did not withdraw from the offer, but from the contract of sale.
9. In 1950, the Bureau of Lands issued a Homestead patent to A. Three years later, A sold the homestead to
B. A died in 1990, and his heirs filed an action to recover the homestead from B on the ground that its sale
by their father to the latter is void under Section 118 of the Public Land Law. B contends, however, that the
heirs of A cannot recover the homestead from him anymore because their action has prescribed and that
furthermore, A was in pari delicto. Decide.
As to prescription, it is not a good defence because an action to declare the nullity or inexistence of the
contract does not prescribe.
As to the defence of in pari delicto, the same is untenable because as provided in Art. 1416, that when a law
declares a contract null and void but there is no inherent illegality (not illegal per se) in the contract and the
declaration of nullity by law is intended or designed to protect one of the parties to that contract, that person
in whose favour the law would so provide its nullity may recover what he sold to the other party. The
prohibition under the Public Land Law is intended to protect the grantee and his family because if he sells or
alienates the property within that period, he would have nothing more to cultivate himself and his family. That
is why he would still have the right to recover the property as the contract is a void contract and the in pari
delicto rule is not applicable under the facts.
10. Simon owned a townhouse that he rented out to Shannon, a flight attendant with Soleil Philippine Airlines
(SPA). They had no written contract but merely agreed on a three (3)-year lease. Shannon had been using
the townhouse as her base in Manila and had been paying rentals for more than a year when she accepted
a better job offer from Sing Airlines. This meant that Singapore was going to be her new base and so she
decided, without informing Simon, to sublease the townhouse to Sylvia, an office clerk in SPA.
a. Can Simon compel Shannon to reduce the lease agreement into writing?
● Yes, Simon can compel Shannon to reduce the agreement into writing as it is a right provided
to the parties under Art. 1357. An agreement for the leasing of real property for a longer period
than one-year is covered by the Statute of Frauds, thus, requiring a written memorandum of its
essential provisions under Art. 1403. Under Art. 1406, the parties may avail themselves of the
right under Art. 1357 if the contract is enforceable under the State of Frauds. In the case at bar,
the contract was taken out of the operation of the Statute of Frauds under the Doctrine of Part
Performance thus, Art. 1357 may be availed of by Simon.
95
STATUS OF CONTRACTS
CONTRACTS SECOND QUIZ
QUESTION ANSWER
1. Contacts undertaken in fraud of creditors Rescissible

when the latter cannot in any other manner
collect the claims due them. Art. 1381. The following contracts are rescissible:
(3) Those undertaken in fraud of creditors when

the latter cannot in any other manner collect the
claims due them;
2. Sale of private agricultural land to a Void (not sure about basis)

former Filipino citizen.
ARTICLE 1409. The following contracts are
inexistent and void from the beginning:
(1) Those whose cause, object or purpose is

contrary to law, morals, good customs, public
order or public policy;
(7) Those expressly prohibited or declared void by

law.
3. The contract has a false cause. Void
ARTICLE 1353. The statement of a false cause in

contracts shall render them void, if it should not
be proved that they were founded upon another
cause which is true and lawful.
4. Contract of sale where the consideration Valid

is in Chinese Yuan.
96
ARTICLE 1347. All things which are not outside
the commerce of men, including future things,
may be the object of a contract. All rights which
are not intransmissible may also be the object of
contracts.
5. Oral sale of immovable for P450. Unenforceable

Art. 1403. (2) Those that do not comply with the
Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made
shall be unenforceable by action, unless the
same, or some note or memorandum, thereof, be
in writing, and subscribed by the party charged,
or by his agent; evidence, therefore, of the
agreement cannot be received without the
writing, or a secondary evidence of its contents:
6. Sale of large cattle contained in a private Void

instrument.
Sec. 22, Act. No. 1147. Unless the record of such
transaction is so registered and the certificate
obtained, the ownership of the cattle does not
pass and they may still be attached as the
property of the vendor.
Art. 1403. (2) Those that do not comply with the

writing, or a secondary evidence of its contents
7. Sale of a guardian of the property of the Rescissible

ward valued at P100,000 for P70,000. Art. 1381(1) - Those which are entered into by
guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of
the value of the things which are the object
thereof;
8. Oral lease of a car for 3 years. Valid

If the subject of the lease is a personal property,
then it cannot be subject to the provision of the
97
statute of fraud pertaining to lease contracts.
Can also be unenforceable?

1403. (e) An agreement for the leasing for a longer
period than one year, or for the sale of real
property or of an interest therein;
9. Oral contract for the sale of a bag where Unenforceable

the bag will be delivered after 18 months and Art. 1403. The following contracts are
the payment shall be made upon delivery. unenforceable, unless they are ratified:
(a) An agreement that by its terms is not to be

performed within a year from the making thereof;
10. Absolute deed of sale where the price is Valid

not indicated.
Do not confuse “immovable property” with
“parcel/piece of land. Magkaiba yan. One
example is found in Art. 1874.The price is
irrelevant
11. Contract where the signature of one of Void

the contracting parties is forged.
ARTICLE 1318. There is no contract unless the
following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of

the contract;
(3) Cause of the obligation which is established
12. One of the contracting parties is Void

relatively incapacitated.
1327. The following cannot give consent to a
contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes

who do not know how to write. (1263a)
ARTICLE 1329. The incapacity declared in article

1327 is subject to the modifications determined
by law, and is understood to be without prejudice
to special disqualifications established in the
98
laws.
13. One of the contracting parties lacks Void

juridical capacity.
14. One of the contracting parties is 20 Valid

years of age.
15. A contract entered into by a person Valid

while insane during a lucid interval.
ARTICLE 1328. Contracts entered into during a
lucid interval are valid. Contracts agreed to in a
state of drunkenness or during a hypnotic spell
are voidable.
16. Contract where one party is a minor and Unenforceable

the other party is insane.
Art. 1403. The following contracts are
unenforceable, unless they are ratified: (3) Those
where both parties are incapable of giving
consent to a contract.
17. Contacts which refer to things under Rescissible

litigation if they have been entered into by the
defendant without the knowledge and Art. 1381. The following are rescissible contracts:
approval of the litigants or of competent
judicial authority. (4) Those which refer to things under litigation if
they have been entered into by the defendant
without the knowledge and approval of the
litigants or of competent judicial authority;
18. One party incapable of giving consent Voidable
ARTICLE 1390. The following contracts are

voidable or annullable, even though there may
have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of

giving consent to a contract;
19. Contacts where the consent is vitiated Voidable

by mistake, violence, intimidation, undue ARTICLE 1390. The following contracts are
influence or fraud. voidable or annullable, even though there may
have been no damage to the contracting parties:
(2) Those where the consent is vitiated by

mistake, violence, intimidation, undue influence or
99
fraud.
20. A contract entered into in representation Unenforceable

of another without authority. ARTICLE 1403. The following contracts are
unenforceable, unless they are ratified:
(1) Those entered into in the name of another

person by one who has been given no authority or
legal representation, or who has acted beyond his
powers
22. The guardian purchases the property of VOID

his ward.
ARTICLE 1491. The following persons cannot
acquire by purchase, even at a public or judicial
auction, either in person or through the mediation
of another:
(1) The guardian, the property of the person or

persons who may be under his guardianship;
23. The purchaser of a private agricultural VALID

land is a former Filipino citizen. Not sure if this should be the basis: under the
consti, art. XII: national patrimony and economy
SECTION 8. Notwithstanding the provisions of

Section 7 of this Article, a natural-born citizen of
the Philippines who has lost his Philippine
citizenship may be a transferee of private lands,
subject to limitations provided by law.
VOID daw cos alien na yung former filipino citizen

as per lawrence pajo from the other class po.
24. Sale of a car where the price is in Chinese VALID

Yuan.
RA 8183 -SECTION 1. All monetary obligations
shall be settled in the Philippine currency which is
legal tender in the Philippines. However, the
parties may agree that the obligation or
transaction shall be settled in any other currency
at the time of payment.
25. Sale of hereditary rights of an heir to the VOID

executor of the will of the decedent.
Article 1491. The following persons cannot
100
of another:
(3) Executors and administrators, the property of

the estate under administration;
26. Sale of a property in litigation to the court VOID

stenographer of the court where the case is
pending. Article 1491. The following persons cannot
of another:
(5) Justices, judges, prosecuting attorneys, clerks

of superior and inferior courts, and other officers
and employees connected with the
administration of justice, the property and rights
in litigation or levied upon an execution before the
court within whose jurisdiction or territory they
exercise their respective functions; this
prohibition includes the act of acquiring by
assignment and shall apply to lawyers, with
respect to the property and rights which may be
the object of any litigation in which they may take
part by virtue of their profession;
27. A contract of lease where the rental is VALID

P1.00 annually
Gross inadequacy of the price will not affect the
validity of the contract - general rule
28. Those undertaken in fraud of creditors RESCISSIBLE

when the latter cannot in any other manner 1381: (3) Those undertaken in fraud of creditors
collect the claims due to them when the latter cannot in any other manner collect
the claims due them;
29. One of the parties is 19 years old VALID
30. Parties are both minors UNENFORCEABLE
Art. 1403. The following contracts are

unenforceable, unless they are ratified:
(3) Those where both parties are incapable of
giving consent to a contract.
101
31. Those which refer to things under VALID
litigation if they have been entered into by the Art. 1381 provides that what is rescissible are:
defendants with the approval of the
competent juridical authority (4) Those which refer to things under litigation if
they have been entered into by the defendant
without the knowledge and approval of the
litigants or of competent judicial authority;
32. Undertaken in fraud of creditors when the RESCISSIBLE

latter cannot in any manner collect claims due 1381: (3) Those undertaken in fraud of creditors
to them when the latter cannot in any other manner collect
the claims due them;
33. Oral guaranty UNENFORCEABLE
Art. 1403(2): Those that do not comply with the

writing, or a secondary evidence of its contents:
(b) A special promise to answer for the debt,

default, or miscarriage of another;
34. Oral sale of a parcel of land for P350.00 UNENFORCEABLE
Article 1358. The following must appear in a

public document:
(1) Acts and contracts which have for their object
the creation, transmission, modification or
extinguishment of real rights over immovable
property; sales of real property or of an interest
therein are governed by articles 1403, No. 2, and
1405;
35. Consent was given because of VOIDABLE

intimidation
ARTICLE 1330. A contract where consent is given
through mistake, violence, intimidation, undue
influence, or fraud is voidable. (1265a)
102
36. Contract where the motive of one of the VALID. If motive predominates the purpose of the
parties was unlawful party to enter into a contract, such as to defraud
his creditors, it is RESCISSIBLE.
37. A contract where there is a threat to VALID.

enforce a legal claim through competent
authority
38. A contract where there was a mistake in VALID.

the identity of the other party
39. WITHOUT JUDICIAL CAPACITY - VOID
UNANSWERED QUIZ
QUIZ #1
True or False Write True only if the statement is absolutely true, otherwise write false no explanation required.
1. Contracts take effect between the parties, their assigns and heirs.
2. Contract are perfected by the mere consent.
3. An offer become ineffective upon the insolvency of either party before acceptance is conveyed.
4. Contract agreed to in a state of drunkenness are voidable.
5. A contract where consent is given through mistake, violence. Intimidation, undue influence, or fraud is
voidable.
6. Mistake as to the identity or qualification of one of the parties will violate consent.
7. There is intimidation when in order to wrest consent serious or irresistible force is employed.
8. A mere expression of an opinion does not signify fraud.
9. Simulation of a contract is absolute when the parties conceal their true agreements.
10. All things which are not outside the commerce of men including future things may be object of a
contract.
11. Contracts of pure beneficence are contract without cause.
12. If the cause is not stated in the contract, it exists and is lawful.
13. Lesion or inadequacy of cause does not invalidate a contract.
14. Contract are obligator, in whatever from they may have been entered into provided all the essential
15. The action for rescission is a principal remedy, it cannot be instituted excepts when the party suffering
damage has no other legal means to obtain reparation for the same.
16. All contracts by virtue of which the debtor alienates property by onerous title are presumed to have
been entered into in fraud of creditors when the donor did not reserve sufficient property to pay all
debts contracted before the donation.
17. Voidable contracts are susceptible of ratification
18. Ratification requires the conformity of the contracting parties.
19. Unenforceable contracts cannot be assailed by third persons.
20. The action or defense for the declaration of the inexistence of a contract prescribes in four years.
QUIZ #2
103
1. Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due
them.
2. The purchaser of a private agriculture land for residential purposes is a former natural-born Filipino Citizen.
3. Contracts with a false cause.
4. Contract where the price is to be paid in the Japanese Yen.
5. Oral sale of a parcel of land for P450.00
6. Oral sale of the large cattle’s.
7. The guardian bought the property of his ward valued at P100t for the price of P70t
8. A deed of absolute sale which does not contain a provision as to the price.
9. Oral sale of a car where it was agreed that the car will be delivered after two years and payment will be
upon.
10. Oral lease involving a car for two years.
11. The signature of one of the parties’ was forged.
12. One of the parties to the contract is without judicial capacity.
13. One of the parties to the contract is relatively incapacitated.
14. One of the parties is 19 years of age.
15. One of the parties of the contract while insane entered into the contract during hid lucid interval.
16. A contract between a minor and an insane person.
17. Those which refer to things under litigation it they have been entered into by the defendant without the
knowledge and approval of the litigants or of competent just authority.
18. When the consent of one of the parties is vitiated
19. Consent was given because of the undue influence exerted by a third person upon one of the parties
20. Consent was given by one in representation of another but without authority.
104
SALES
SALES QUIZ SAMPLEX #1
TRUE OR FALSE
1. A thing is determinate when it is particularly designated.

a. TRUE.
2. For a sale to be valid, the object must be determinate.

a. FALSE. It is sufficient that it can be made determinate at the time the contract is entered into
without the necessity of a new and further agreement between the parties.
3. A sale is valid even if the consideration to be paid is in Chinese Yuan.

a. TRUE. A price certain may be in MONEY or its equivalent. Money does not have to be legal tender.
4. Goods are no longer in transit if the carrier or other bailee refuses to deliver the goods to the buyer
or his agent in that behalf.
a. FALSE. It has to be WRONGFUL refusal. (Art 1531)
5. If two or more animals are sold together, whether for a lump sum or for a separate price for each of
them, the redhibitory defect of one shall only give rise to its redhibition, and not that of the others.
a. FALSE. There may be a redhibition of all animals when it should appear that the vendee would not
have purchased the sound animal or animals without the defective one. (Art 1572)
6. When adverse possession had been commenced before the sale but the prescriptive period is
completed after the transfer, the vendor shall not be liable for eviction.
a. TRUE. Codal.
7. Sellers are liable for breach of warranty.
105
a. FALSE. Sellers are not always liable for breach of warranty, as when they have complied with their
obligation, and in accordance with their warranties. Further, warranties may be waived.
8. The vendee shall owe interest for the period between the delivery of the thing and payment of the
price.
a. FALSE. This is only true in the following three cases:
i. should it be stipulated;
ii. should the thing sold and delivered produce fruits and income;
iii. should he be in default, from the time of judicial or extrajudicial demand for the payment of
the price. (Art 1589)
9. Seller may exercise possessory lien and right of stoppage in transitu at the ANY time.
a. FALSE.
10. Di ko maalala yung isa pa. Something to do with ownership vesting with the buyer at perfection?
a. FALSE.
WARRANTIES
Part One. Modified True or False.
A. Both are true
B. Both are false
C. No. 1 is true, No. 2 is false
D. No. 1 is false, No. 2 is true
1. Statements:
● No affirmation of the value of the thing, nor any statement purporting to be a statement of the seller’s
opinion only, shall be construed as a warranty.
o FALSE, it will be considered a warranty when the seller made such affirmation or statement as
an expert and it was relied upon by the buyer. Art. 1546.
● The sale of animals suffering from contagious diseases shall be void.

o TRUE, Art. 1575.
2. Statements:
● For the vendor to be held liable for breach of warranty against eviction, the judgment must be based on
a right prior to the sale.
o FALSE, judgment may also be based on an act imputable to the vendor.
● The vendee need not appeal from the decision in order that the vendor may become liable for eviction
o TRUE, Art. 1549.
3. Statements:
● When adverse possession had been commenced before the sale but the prescriptive period is
completed after the transfer, the vendor shall not be liable for eviction.
o TRUE, Art. 1550.
106
● There are no implied warranties in sale of animals at fairs or at public auctions, or of live stock sold as
condemned.
o FALSE, only warranties against hidden defects are not provided for such sales.
4. Statements:
● If the property is sold for nonpayment of taxes due, the vendor is liable for eviction.
o FALSE, such nonpayment of taxes due shall not be made known to the vendee before the sale.
● If two or more animals are sold together, whether for a lump sump or for a separate price for each of
them, the redhibitory defect of one shall only give rise to its redhibition and not that of the others.
o FALSE, the statement will only be true if it should NOT appear that the vendee would not have
purchased the sound animal or animals without the defective one. This will be presumed when
a team, yoke, pair, or set is bought, even if a separate price has been fixed for each one of the
animals composing the same. Art. 1572.
5. Statements:
● Any stipulation exempting the vendor from the obligation to answer for eviction shall be void.
o FALSE, vendor must act in bad faith to render such stipulation void. Art. 1553.
● Should the vendee have made the waiver with knowledge of the risks of eviction and assumed its
consequences, the vendor shall not be liable.
o TRUE, Art. 1554.
MULTIPLE CHOICE
6. The following cannot be held liable for breach of warranty except:

a. sheriff
b. auctioneer
c. mortgagor ??
d. pledgee
The law would specifically exempt certain persons from liability for breach of warranty like
sheriff, auctioneer, mortgagee, pledgee and other persons who sell by virtues of an authority of
law like notary public because they are not really selling for themselves, they are selling on
behalf of another person.
7. The redhibitory action, based on the faults or defects of animals must brought within:
a. forty days from the date of their delivery to the vendee. (Art. 1577)
b. forty days from the date of the contract
c. six months from the date of their delivery to the vendee.
d. six months from the date of the contract
e. one year from the date of the contract
8. If there is a stipulation exempting the vendor from the obligation to answer for eviction and the vendor acted
in bad faith the vendor shall be liable for the following:
a. Value of the thing at the same time of eviction
b. Income or fruits, if he has been ordered to deliver them to the party who won the suit against him
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c. Expenses of the contract, if the vendee has paid them, and
d. Damages and interest, and ornamental expenses, if the sale was made in bad faith
e. All of the above. (Art. 1555)
9. There is no implied warranty as to hidden defects/quality in the following, except:

a. “as is, where is” sales
b. sale of second hand articles
c. sale by virtue of authority in fact or law (Art. 1570)
d. animals sold at fairs or at public auctions (Art. 1574)
e. when validly suppressed by parties
10. The buyer is deemed to have accepted the goods

a. when he intimates to the seller that he is accepting them.
b. when he does any act in relation to the goods which is inconsistent with the ownership of the seller
c. when he retains the goods after the lapse of a reasonable time without intimating to the seller that he
has rejected them.
d. all of the above. (Art. 1585)
e. none of the above.
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MACEDA LAW
TRUE OF FALSE
1. If the place of payment should not have been stipulated, the payment must be made at the place of the
delivery of the thing sold.
2. The buyer of goods is not bound to accept delivery by installments.
3. Where the goods are delivered to the buyer, he is not deemed to have accepted them unless and until he
has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in
conformity with the contract.
4. Where there is a breach of warranty by the seller, the buyer may, refuse to accept the goods, and maintain
an action against the seller for damages for the breach of warranty.
5. Acceptance of the goods by the buyer shall not discharge the seller from liability in damages or other legal
remedy for breach of any promise or warranty in the contract of sale.
6. If, after acceptance of the goods, the buyer fails to give notice to the seller of the breach in any promise of
warranty within a reasonable time after the buyer knows, or ought to know of such breach, the seller shall
not be liable therefor.
7. The Maceda Law can only be invoked if the buyer had paid at least two years of installments before default.
8. The right to a grace period shall be exercised by the buyer, under the Maceda Law, only once in every five
years of the life of the contract, and its extensions, if any.
9. Down payments, deposits or options in a sale covered by the Maceda Law, shall be included in the
computation of the total number of installment payments made.
10. A sale of realty on credit will be covered by the Maceda Law.
MULTIPLE CHOICE
11. The buyer is deemed to have accepted the goods when:
a. he intimates to the seller that he has accepted them

b. when the goods have been delivered to him, and he does any act in relation to them which is
inconsistent with the ownership of the seller.
c. when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he
has rejected them.
d. all of the above
12. The vendee shall owe interest for the period between the delivery of the thing and the payment of the price,
in the following cases, except:
a. Should it have been so stipulated

b. Should the thing sold and delivered produce fruits or income
c. From the time the obligation to pay the price becomes due and demandable
13. The Realty Installment Buyer Act may apply to:
a. a sale of industrial lots

b. a sale of commercial buildings
c. sales to tenants
d. all of the above
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14. Under the Maceda Law, the buyer is entitled to a grace period of not less than:
a. 30 days
b. 60 days
c. 90 days.
d. one year
e. two years
15. The cash surrender value is a minimum of:
a. 20% of the total payments made

b. 30% of the total payments made
c. 40% of the total payments made
d. 50% of the total payments made
e. 90.% of the total payments made
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STATUS OF CONTRACTS OF SALE
1. There may be a contract of sale of goods, whose acquisition by the seller depends upon a contingency
which may or may not happen.
a. TRUE. Express provision 1462(2).
2. The sale of expectancy is voidable.
a. FALSE. The sale of vain hope or expectancy is void. (1461(2))
3. Things having a potential existence may be the object of the contract of sale.
a. TRUE. Express provision 1461(1).
4. A contract of sale is void when the object is neither particularly designated nor physically segregated from
all others of the same class.
a. FALSE. The requisite that a thing be determinate is satisfied if at the time the contract is entered
into, the thing is capable of being made determinate without the necessity of a new or further
agreement between the parties. (1460(2))
5. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or
some other act or contract.
a. TRUE. Express provision 1471.
i. Alternative answer: FALSE. Parties may be held bound by the false price indicated in the
instrument, especially when the interest of the Government or third persons would be
adversely affected by the reformation of the contract. (Spouses Doromal v. CA)
6. The husband and the wife cannot sell property to each other.
a. FALSE. The following are exceptions to the rule – a
i. Separation of property in the marriage settlement; and
ii. Judicial separation of property (Art. 1490)
7. A contract of sale entered into by a guardian over the property of his ward is rescissible if the price is only
70% of the value of the property.
a. TRUE.
8. A contract of sale is void when the executor is the vendee and the object of the sale is a property of the
estate under his administration.
a. TRUE. Relative Incapacity. (Art. 1491, par. 3)
9. A contract of sale if void when the vendee is not a Filipino citizen and the object of the sale is a private
land.
a. FALSE. An exception is when a formerly natural-born Filipino citizen who lost his Filipino
citizenship. (Estate of Serra v. Heirs of Hernaez)
i. Alternative answer: TRUE. The question depends on how you appreciate “not a Filipino
citizen”.
10. If the fixing of the price is left to the discretion of one of the parties, the contract will not be perfected.
a. FALSE. The fixing of the price can never be left to the discretion of one of the contracting parties.
However, if the price fixed by one of the parties is accepted by the other, the sale is perfected.
(1473)
See status of the contract of sale (as a rule) quiz from previous set.
111
REMEDIES
I. TRUE OR FALSE
1. It is not essential to the validity of a resale that notice of the time and place of such resale should be given
by the seller to the original buyer.
a. TRUE.
2. It is not essential to the validity of resale that notice of an intention to resell the goods be given by the seller
to the original buyer.
a. TRUE.
3. The unpaid seller (art. 1525) cannot directly or indirectly buy the goods in the exercise of the right to resell.
a. TRUE.
4. The seller of goods is deemed to be an unpaid seller when a bill of exchange or other negotiable instrument
has been received as conditional payment.( and the condition on which it was received has been broken by
reason of the dishonor of the instrument, the insolvency of the buyer, or otherwise.)
a. FALSE.
5. The unpaid seller may exercise his right of stoppage in transitu by obtaining actual possession of the
goods.
a. TRUE.
6. The unpaid seller shall not be liable to the original buyer for any profit made by the resale of the goods.
a. TRUE.
7. A lien on the goods of the unpaid seller of goods can be exercised even if he is in possession of them
merely as a depository.
a. TRUE.
8. The remedies of the unpaid seller of goods can no longer be invoked if ownership in the goods have
passed already to the buyer. (Art. 1526)
a. FALSE.
9. The seller of goods is deemed to be an unpaid seller when the whole of the price has not been paid.
a. TRUE.
10. The remedies of an unpaid seller are alternative in character. (not alternative but cumulative?)
a. FALSE.
II. MULTIPLE CHOICE

11. That the buyer is insolvent is a requirement for the exercise of the:
a. A right to retain the goods
b. A right of stopping the goods in transitu
c. A right of resale
d. A right to rescind the sale
e. A right to demand for the payment of the unpaid price
12. The unpaid seller of goods loses his lien , except:
a. When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer
without reserving the ownership in the goods or the right to the possession thereof
b. When the buyer or his agent lawfully obtains possession of the goods.
c. When he has obtained judgment or decree for the price of the goods.
d. By waiver thereof
13. Goods are no longer in transit:

a. If the buyer, or his agent in that behalf, obtains delivery of the goods before their arrival at the
appointed destination
112
b. If, after the arrival of the goods at the appointed destination the carrier or other bailee
acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in
possession of them as bailee for the buyer or his agent
c. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that
behalf
d. All of the above
14. An unpaid seller cannot exercise the right to resell if:
a. The seller has parted possession of the goods
b. The goods are of perishable nature
c. The seller expressly reserves the right of resale in case the buyer should make default
d. The buyer has been in default in the payment of the price for an unreasonable time
e. All of the above
f. None of the above
15. The unpaid seller’s right of lien or stoppage in transitu is not affected by any sale, or other disposition of the
goods which the buyer may have made, unless:
a. The seller has parted possession of the goods
b. A negotiable document of title has been issued for goods, which were sold to a purchaser for
value in good faith to whom such document has been negotiated
c. The goods are of perishable nature
d. The seller expressly reserves the right of resale in case the buyer should make default
e. The buyer has been in default in the payment of the price for an unreasonable fare
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EXTINGUISHMENT
Part One. True or False.

1. Legal redemption shall take place when the vendor reserves the right to repurchase the thing sold.
a. FALSE.
2. The vendor who repurchases the thing shall respect the leases constituted by the vendee.
a. FALSE.
3. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the
contract, in the place of one who acquires a thing by purchase only.
a. FALSE.
4. Should there have been no fruits at the time of the sale and some exist at the time of redemption, they shall
be prorated between the redemptioner and the vendee.
a. TRUE.
5. The contract shall be presumed to be a sale with a right to repurchase when the price in a mortgage is
unusually inadequate.
a. FALSE.
6. The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the
sale and the necessary and useful expenses made on the thing sold.
a. TRUE.
7. In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an
equitable mortgage.
a. TRUE.
8. The vendee is subrogated to the vendor’s rights and actions.
a. TRUE.
9. The creditors of the vendor cannot make use of the right of redemption against the vendee, until after they
have exhausted the property of the vendor.
a. TRUE.
10. The right of redemption of co-owners excludes that of adjoining owners.
a. TRUE.
Part Two. MCQ.

11. If the transaction is an equitable mortgage, the remedy is:
a. declaration of nullity
b. annulment
c. rescission
d. any of the above
12. In conventional redemption, the period for redemption, in the absence of an express agreement shall last:
a. one year from the date of the contract
b. four years from the date of the contract
c. one year from the registration of the contract
d. four years from the registration of the contract
13. Should there be an agreement as to the period of redemption, the period cannot exceed:
a. one year
b. four years
c. ten years
d. thirty years
14. In a sale of a parcel of land with a right to repurchase, there being no stipulation to the contrary, ownership
passes to the vendee upon:
a. the perfection of the sale
b. upon delivery
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c. upon payment of the price
d. upon the lapse of the period to repurchase
e. upon the order of the court
15. The remedy of the creditors of the vendor as to the right of redemption against the vendee is:
a. a cumulative remedy
b. a principal remedy
c. a subsidiary remedy
d. all of the above
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TRUE OR FALSE
1. A thing is determinate when it is particularly designated separating it from all others of the same class.
a. TRUE.
b. A thing is determinate when it is particularly designated or physically segregated from all others of
the same class. (Art. 1460)
i. Alternative answer: FALSE, because the statement implies that a thing will only be
determinate if it is particularly designated, excluding things which are physically
segregated.
2. In an absolute sale, ownership of the thing sold shall be transferred to the vendee upon the delivery thereof.
a. FALSE.
b. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive
delivery thereof (Art. 1477), OR in any manner signifying an agreement that possession is
transferred from the vendor to the vendee (Art. 1496). (Baviera, p.63)
c. In sale on approval, ownership passes to the buyer only when he signifies his approval to the seller
or when he does any other act adopting the transaction or when he retains the goods without
giving notice of rejection, or on the expiration of a reasonable time, if no period has been fixed. (Art.
1502)
d. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has
fully paid the price. (Art. 1478)
e. Where there is a contract of sale of specific goods, the seller may, by the terms of the contract,
reserve the right of possession or ownership in the goods until certain conditions have been
fulfilled. (Art. 1503)
3. When adverse possession had been commenced before the sale but the prescriptive period is completed
after the transfer, the vendor shall not be liable for eviction.
a. TRUE.
b. Art. 1550.
4. If two or more animals are sold together, whether for a lump sum or for a separate price for each of them,
the redhibitory effect of one shall only give rise to its redhibition, and not that of the others.
a. FALSE.
b. The statement will only be true if it should NOT appear that the vendee would not have purchased
the sound animal or animals without the defective one. This will be presumed when a team, yoke,
pair, or set is bought, even if a separate price has been fixed for each one of the animals
composing the same. (Art. 1572)
5. For a sale of a thing to be valid, the thing must be determinate.
a. FALSE.
b. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the
thing is capable of being made determinate without the necessity of a new or further agreement
between the parties. (Art. 1460, par. 2)
6. The price may be in a currency not legal tender here in the Philippines.
a. TRUE.
b. The only requirement in the law is for the price to be certain in money or its equivalent. (Art. 1458)
7. A vendor may be liable for eviction even if it is based on a right after the sale.
a. FALSE.
b. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act
imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.
(Art. 1548)
i. Alternative answer: TRUE. It is not only based on a right prior to the sale, but also an act
imputable to the vendor.
8. The vendee shall owe interest for the period between the delivery of the thing and the payment of the price.
a. FALSE.
b. The vendee shall only owe interest in the following instances:
i. Should it have been stipulated;
ii. Should the thing sold and delivered produce fruits or income; or
116
iii. Should he be in default, from the time of judicial or extrajudicial demand for the payment of
the price. (Art. 1589)
9. Possessory lien and the right of stoppage in transit cannot be exercised by the unpaid seller
simultaneously.
a. FALSE.
b. In cases where there is partial delivery, the seller may exercise his right of stoppage in transit for
those goods which he has already parted with, and his right to possessory lien on the remainder.
(Art. 1528)
10. Goods are considered no longer in transit if the carrier refuses to deliver the goods to the buyer.
a. FALSE.
b. It will only be considered no longer in transit if there was wrongful refusal to deliver the goods to
the buyer or his agent. (Art. 1531[3])
11. The contract is one of barter if the value of the thing to be delivered by one party exceeds the value of the
thing to be delivered by the other party.
a. FALSE.
b. There is barter when it is manifested in the intention of the parties or when the consideration is
partly in money and partly in another thing when the value of the thing given exceeds the amount of
the money or its equivalent. (Art. 1468)
12. A contract of sale is essentially commutative.
a. TRUE.
b. A commutative contract is when there is equivalency in the value of the prestation to be performed
by both parties. Normally, the thing sold would be equal to the price paid by the other party. (Art.
2010)
i. Alternative answer: FALSE. A contract of sale may be aleatory, as in the case of the sale of
a hope (e.g. sweepstakes ticket). (De Leon, p.5)
13. A sale of a right binds third persons if it is in a public instrument.
a. FALSE.
b. The public instrument must also be registered before it can bind third persons.
c. An assignment of a credit, right, or action shall produce no effect as against third persons, unless it
appears in a public instrument, or the instrument is recorded in the Registry of Property, in case the
assignment involves real property. (Art. 1625)
14. In a contract to sell, the ownership of the thing automatically passes to the buyer upon the full payment of
the price.
a. FALSE.
b. In a contract to sell, ownership is reserved by the seller despite the delivery to the buyer. While a
contract to sell is considered a special kind of conditional sale, it is a peculiar kind of sale because
despite the happening of the condition and actual delivery, the buyer does not automatically
acquire ownership.
c. If condition happens, the right of the buyer is to compel the seller to execute a final deed of sale.
So ownership does not automatically pass.
d. In a contract to sell, the prospective buyer explicitly reserves the transfer of title and, therefore,
does not as yet unequivocally agree or consent to a transfer of ownership of the property subject of
the contract to sell. Upon the fulfillment of the suspensive condition which is the full payment of the
purchase price, ownership will not automatically transfer to the buyer although the property may
have been previously delivered to him. The prospective buyer still has to convey title to the
prospective buyer by executing a contract of absolute sale to consummate the transaction and
transfer ownership. (De Leon, p.25)
15. The option money may be considered as part of the price.
a. TRUE.
b. Though it is option money, it can be considered as part of the price as long as it is stipulated.
Without stipulation, the option money cannot be considered as partial payment because it is a
consideration for the option and therefore not part of the price.
16. A contract of sale is perfected upon the payment of the price.
a. FALSE.
117
b. A contract of sale is perfected upon the meeting of the minds of the persons as to the object and
the price. (Art. 1475)
17. In a conditional sale, ownership passes to the buyer upon delivery.
a. FALSE.
b. The delivery of the thing sold does not transfer title until the condition is fulfilled. (De Leon, p.18)
c. In conditional sales, conditions are imposed by the seller before ownership will pass. Ownership
automatically passes to the buyer from the moment the condition happens. There is no need for
another contract to be entered into.
18. A contract of sale where price is not money is void.
a. FALSE.
b. By a contract of sale, one of the contracting parties obligates himself to transfer the ownership of
and to deliver a determinate thing and the other to pay a price certain in money OR its equivalent.
(Art. 1458)
c. The cause in a contract of sale may be money or its equivalent.
19. An assignment of credit is a consensual contract.
a. TRUE.
b. An assignment of credit is perfected in accordance with the provisions of Art. 1475, where the law
provides that a contract of sale is perfected at the moment there is meeting of the minds. (Art.
1624)
20. Oral sale of a personal property with a market value of P700 is unenforceable.
a. FALSE.
b. An agreement for the sale of goods, chattels or things in action, at a price not less than five
hundred pesos not in writing is unenforceable unless it is ratified. (Art. 1403[2](d)]
c. “Market value” is not the same as “price”.
21. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery
of the thing which is the object of the contract.
a. FALSE.
b. This will only apply if from the deed, the contract does not appear or cannot clearly be inferred.
(Art. 1498)
22. Where goods are shipped and by the bill of lading the goods are delivered to order of the buyer or of his
agent, ownership passes upon the delivery of the goods to the carrier.
a. FALSE.
b. The seller may reserve his right to the ownership of the goods notwithstanding the delivery of the
goods to the buyer or to a carrier or other bailee for the purpose of transmission to the buyer. (Art.
1503 par.1)
23. The goods remain at the seller’s risk until the ownership therein is transferred to the buyer.
a. FALSE.
b. The parties may stipulate to the contrary. (Art. 1504)
24. Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the
contract and the ownership in the goods has been retained by the seller merely to secure performance by
the buyer of his obligations under the contract, the goods are at the buyer’s risk from the time of such
delivery.
a. TRUE.
b. Art. 1504(1).
25. Where goods are sold by a person who is not the owner thereof, and who does not sell them under
authority or with the consent of the owner, the buyer acquires no title to the goods.
a. FALSE.
b. The buyer acquires no better title to the goods than the seller had, unless the owner of the goods is
by his conduct precluded from denying the seller’s authority to sell. (Art. 1505)
c. The statement is absolutely false because the buyer still acquires a title to the goods even if the
seller is not the owner and he does not sell them under authority or with the latter’s consent. (Uribe)
26. Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, and the buyer
accepts or retains the goods as delivered, knowing that the seller is not going to perform the contract in
full, he must pay for them at their fair value.
118
a. FALSE.
b. He must pay for them at the contract rate. It is only when the buyer has used or disposed of the
goods delivered before he acquires knowledge that the seller is not going to perform his contract in
full will he be liable for not more than the fair value to him of the goods he received. (Art. 1522)
27. Where in pursuance of a contract of sale, the seller is authorized or required to send the goods to the
buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of
transmission to the buyer is deemed to be a delivery of the goods to the buyer.
a. FALSE.
b. The exceptions to this rule are found in the cases provided under Article 1503, first, second, and
third paragraphs, or unless a contrary intent appears. (Art. 1523 par. 1)
28. In a lump sum sale of real estate, the vendor shall be obliged to deliver to the vendee, all that may have
been stated in the contract; but should this be not possible, the vendee may choose between a
proportional reduction of the price and the rescission of the contract.
a. FALSE.
b. In the sale of real estate, made for a lump sum, there shall be no increase or decrease of the price,
although there be a greater or lesser areas or number than that stated in the contract. (Art. 1542)
c. If the sale of real estate should be made with a statement of its area, at the rate of a certain price,
for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter
should demand it, all that may have been stated in the contract; but, should this not be possible,
the vendee may choose between a proportional reduction of the price and the rescission of the
contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that
stated. (Art. 1539)
29. If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith.
a. FALSE.
b. Determine first if the thing sold was movable or immovable. (Art. 1544)
i. If movable, first who took possession in good faith has the better right.
ii. If immovable:
1. First to register the sale, in good faith; or
2. First to take possession, in good faith; or
3. Party who has oldest title, in good faith.
30. If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in good
faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.
a. TRUE.
b. Art. 559
31. The owners of adjoining lands have the right of redemption when a piece of rural land, the area of which
does not exceed one hectare, is alienated.
a. FALSE.
b. The statement will not apply if the grantee does not own any rural land or if the adjacent lands are
separated by brooks, drains, ravines, roads, and other apparent servitudes for the benefit of other
estates. (Art. 1621)
32. The fruits at the time of redemption will be prorated between the redemptioner and the vendee, giving the
vendee the part corresponding to the time he possessed the land in the last year, counted from the
anniversary of the date of sale.
a. FALSE.
b. The statement will not apply if there were fruits at the time of sale and some exist at the time of
redemption. (Art. 1617)
c. For conventional redemption. Can only exist in a sale with a right to repurchase.
33. In the warranty against eviction, the deprivation must be based on a right prior to the sale.
a. FALSE.
b. Eviction shall take place whenever by a final judgment based on a right prior to the sale OR an act
imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.
(Art. 1548)
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34. The contracting parties may increase, diminish, or suppress the obligation of the vendor to warrant the
object of the sale.
a. TRUE.
b. Warranty is not an essential element of a contract of sale and may therefore be increased,
diminished, or suppressed by the agreement of the parties. (Art. 1548, par. 3)
35. The vendee need not appeal from the decision in order that the vendor may become liable for eviction.
a. TRUE.
b. Art. 1549.
a. TRUE.
b. Art. 1550.
37. If the property is sold for non-payment of taxes due as a consequence of which the vendee was evicted,
the vendor is liable for eviction.
a. FALSE
b. It is only when the property is sold for non-payment of taxes due and not made known to the
vendee before the sale will the vendee be liable for eviction. (Art. 1551)
c. The fact of non-payment of taxes should not be known to the vendee. Also, the non-payment of
taxes cannot be a basis for the vendor’s liability for eviction because the taxes may become due
after the sale.
38. Any stipulation exempting the vendor from the obligation to answer for eviction is void, if he acted in bad
faith.
a. TRUE.
b. Art. 1553.
39. The right of pre-emption may be exercised by a co-owner.
a. FALSE.
b. The right of pre-emption may only be exercised by an adjoining owner of an urban land. (Art. 1622)
c. One of the conditions or requisites for the exercise of the right of pre-emption or redemption of an
urban land is that the one exercising the right must be an adjacent owner. (De Leon, p.475)
40. The right of redemption of co-owners exclude that of adjoining owners.
a. TRUE.
b. Art. 1623.
41. The “contract of sale with a right to repurchase” shall be presumed to be an equitable mortgage when the
vendee remains in possession as lessee or otherwise.
a. FALSE.
b. It should be the vendor, not the vendee, that remains in possession as lessee or otherwise. (Art.
1602, par. 2)
42. A co-owner of an undivided immovable who sells his share with a right to repurchase to a third person who
subsequently acquires the whole thereof, may be compelled by the latter to redeem the whole property, if
the former wishes to make use of the right of redemption.
a. TRUE.
b. In a sale with a right to repurchase, the vendee of a part of an immovable who acquires the whole
thereof in the case of Article 498, may compel the vendor to redeem the whole property, if the latter
wishes to make use of the right of redemption. (Art. 1611)
43. If the vendee made the waiver with knowledge of the risks of eviction and assumed the consequences, the
vendor shall not be liable.
a. TRUE.
b. Art. 1554.
44. The “contract of sale with a right to repurchase” shall be presumed to be an equitable mortgage when it
may be fairly inferred that the real intention of the parties is that transaction shall secure the payment of a
debt or the performance of any other obligation.
a. TRUE.
b. Art. 1602(6).
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45. The “contract of sale with a right to repurchase” shall be presumed to be an equitable mortgage when the
vendor binds himself to pay the capital gains tax.
a. FALSE.
b. The contract shall be presumed to be an equitable mortgage when the vendor binds himself to pay
the taxes on the thing sold. (Art. 1602[5])
c. Paying capital gains tax, which is not a tax on the thing itself, does not give rise to the presumption
that whoever is paying is the owner.
d. The presumption will only arise if the seller bound himself to pay the tax on the thing not the capital
gains tax. That would be the real property tax.
46. By the contract of sale one of the contracting parties transfer ownership over a determinate thing and the
other pays therefore a price certain in money or its equivalent.
a. FALSE
b. A seller is not only obligated to transfer ownership but also to deliver the determinate thing to the
other. (Art. 1458)
47. The vendor must be the owner at the time of delivery for the sale to be valid.
a. FALSE.
b. It is not required that the vendor be the owner of the thing for the sale to be valid. Ownership is not
an essential requisite of a valid sale.
c. The vendor must have a right to transfer the ownership of the thing at the time it is delivered. (Art.
1459)
d. Unless a contrary intention appears, the seller impliedly warrants that he has a right to sell the thing
at the time when the ownership is to pass. (Art. 1547[1])
48. The ownership of the thing sold shall be transferred to the vendee upon the delivery thereof.
a. FALSE.
b. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him
OR in any other manner signifying an agreement that the possession is transferred from the vendor
to the vendee. (Art. 1496)
c. The statement only applies to absolute sales.
49. The goods will be at the buyer’s risk after the delivery of the goods to the buyer.
a. FALSE.
b. As a general rule, if the thing is lost by fortuitous event, the risk is borne by the owner of the thing
at the time of the loss under the principle of res perit domino.
c. However, there are exceptions to this rule: (Art. 1504)
i. If there was a stipulation to the contrary (Lawyer’s Cooperative v. Tabora);
ii. Title was reserved by the seller to secure the payment of the price by the buyer;
iii. There was delay in the delivery.
50. The ownership of the thing shall not pass to the purchaser until he has fully paid the price.
a. FALSE.
b. The statement will not apply:
i. In an absolute sale, where the sale in not subject to any condition whatsoever and the title
to the property passes to the buyer upon delivery of the thing sold. (De Leon, p.16)
ii. In a sale or return, where the ownership of the goods passes to the buyer on delivery; (Art.
1504 par.1)
51. The sale may be valid even if the seller is not the owner of the thing sold.
a. TRUE.
b. It is not required that the vendor be the owner of the thing for the sale to be valid. Ownership is not
an essential requisite of a valid sale.
c. The vendor must have a right to transfer the ownership of the thing at the time it is delivered. (Art.
1459)
d. Unless a contrary intention appears, the seller impliedly warrants that he has a right to sell the thing
at the time when the ownership is to pass. (Art. 1547[1])
e. Examples: When the sale is approved by the court or by persons with a statutory power to sell. (Art.
1505, par. 2)
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52. A contract of sale may be valid even if the object is neither particularly designated nor physically
segregated from all others of the same class.
a. TRUE.
b. The requisite that the thing be determinate is satisfied if at the time the contract is entered into, the
53. The price may be in a currency not legal tender here in the Philippines.
a. TRUE.
54. Service may be the subject matter of a valid sale.
a. FALSE.
b. Only things and rights may be the subject matter of a valid sale.
55. The sale of an immovable for a price less than P500 shall be enforceable even if not in writing.
a. FALSE.
b. The sale of an immovable must be in writing regardless of the price. (Art. 1403[2](e))
56. In a contract of sale, the seller will have the obligation to take care of the thing sold with the diligence of a
good father of a family.
a. FALSE.
b. Every person obliged to give something is also obliged to take care of it with the proper diligence of
a good father of a family, UNLESS the law or the stipulation of the parties requires another
standard of care. (Art. 1163)
c. The statement will not apply if:
i. There was a stipulation on the contrary;
ii. Traditio brevi manu
iii. Sale of a generic thing.
57. When goods are delivered to the buyer on satisfaction, the ownership therein may pass to the buyer even if
the buyer does not signify his approval or acceptance to the seller.
a. TRUE.
b. This may occur when the buyer:
i. Does any other act adopting the transaction;
ii. Retains the goods without giving notice of rejection, then if a time has been fixed for the
return of the goods, on the expiration of time, and if no time has been fixed, on the
expiration of a reasonable time. (Art. 1502[2])
58. The risk of loss shall be borne by the owner.
a. FALSE.
b. As a general rule, if the thing is lost by fortuitous event, the risk is borne by the owner of the thing
at the time of the loss under the principle of res perit domino.
c. However, there are exceptions to this rule: (Art. 1504)
i. If there was a stipulation to the contrary (Lawyer’s Cooperative v. Tabora);
iii. There was delay in the delivery.
59. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt, shall be governed
by the law of sales.
a. FALSE.
b. Dation in payment will only be governed by the law on sales if the debt was in money. (Art. 1245)
60. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of
business manufactures or procures for the general market, if the same is on hand, is a contract for a piece
of work.
a. FALSE.
b. The statement pertains to a contract of sale, not a contract for a piece of work, regardless of
whether the article is on hand or not. (Art. 1467)
c. It will be a contract for a piece of work if the seller does not normally produce or manufacture the
thing for the general market. (Ibid.)
61. A contract of sale with things having a potential existence as object may be a valid sale.
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a. TRUE.
b. Art 1461.
62. The goods remain at the seller’s risk until the ownership therein is transferred to the buyer, but when the
ownership therein is transferred to the buyer the goods are at the buyer’s risk whether actual delivery has
been made or not.
a. FALSE.
b. The statement will not apply when:
i. Unless otherwise agreed upon; (Uribe doesn’t agree to this.)
iii. If there was delay in the delivery, person who was in delay will bear the loss. (Art. 1504)
63. In a contract to sell, ownership passes to the buyer upon full payment of the price.
a. FALSE.
b. In a contract to sell, ownership is reserved by the seller despite the delivery to the buyer. While a
contract to sell is considered a special kind of conditional sale, it is a peculiar kind of sale because
despite the happening of the condition and actual delivery, the buyer does not automatically
acquire ownership.
c. If condition happens, the right of the buyer is to compel the seller to execute a final deed of sale.
So ownership does not automatically pass.
64. If the possessor of a movable lost or which the owner has been unlawfully deprived has acquired it in a
public sale, the owner cannot obtain its return without reimbursing the price paid therefor.
a. FALSE.
b. The owner can recover the thing lost without reimbursement if the buyer was in bad faith. (Art. 559)
65. Where goods are sold by a person who is not the owner thereof, and who does not sell them under
authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller
had.
a. FALSE.
b. The statement will not be true if the owner of the goods is by his conduct, precluded from denying
the seller’s authority to sell. (Art. 1505)
66. When goods are delivered to the buyer on “sale or return”, ownership is transferred when he signifies his
approval or accepts to the seller or does any other act adopting the transaction.
a. FALSE.
b. The statement applies to a “sale on approval or satisfaction”.
c. In a “sale or return”, ownership is transferred to the buyer upon delivery but he may revest the
ownership in the seller by returning or tendering the goods within the time fixed in the contract or
within a reasonable time. (Art. 1502)
67. If a movable property is sold to two or more persons, ownership shall belong to the person who may have
first taken possession thereof.
a. FALSE.
b. It must be a possession in good faith. (Art. 1544)
68. Contracts of sale shall be obligatory, in whatever form they may have been entered into, provided all the
essential requisites for their validity are present.
a. FALSE.
b. The parties may reciprocally demand performance, subject to the provisions of the law governing
the form of contracts. (Art. 1475)
69. The authority of the agent to sell a piece of land must be in writing; otherwise, the agency is void.
a. FALSE.
b. The sale, not the agency, is void. (Art. 1874)
70. The expenses for registration and execution of the sale are borne by the vendee unless otherwise
stipulated.
a. FALSE.
b. The expenses are borne by the vendor, not the vendee, unless otherwise stipulated. (Art. 1487)
71. If the consideration of the contract consists partly in money and partly in another thing, it shall be
considered a barter if the value of the thing given a part of the consideration exceeds the amount of the
money or its equivalent.
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a. FALSE.
b. Consider the intent of parties first. (Art. 1468)
72. There may be a contract of sale of goods whose acquisition by the seller depends upon contingency which
may or may not happen.
a. TRUE.
b. Art. 1462.
73. The sale of a vain hope or expectancy is void.
a. TRUE.
b. Art. 1461.
74. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation or
some other act or contract.
a. TRUE.
b. Art. 1471.
75. A contract of sale entered into between a husband and wife is void.
a. FALSE.
b. The statement is only the general rule. There are exceptions:
i. If the spouses have a marriage settlement of complete separation of property;
ii. If there is a judicial separation of property. (Art. 1490)
76. A thing is determinate when it is particularly designated.
a. TRUE.
b. A thing is determinate when it is particularly designated or physically segregated from all others of
the same class. (Art. 1460)
77. For a sale to be valid, the object must be determinate.
a. FALSE.
b. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the
78. A sale is valid even if the consideration to be paid is in Chinese Yuan.
a. TRUE.
c. Money does not necessarily have to be in legal tender.
79. Goods are no longer in transit if the carrier or other bailee refuses to deliver the goods to the buyer or his
agent in that behalf.
a. FALSE.
b. It has to be WRONGFUL refusal. (Art 1531)
80. If two or more animals are sold together, whether for a lump sum or for a separate price for each of them,
the redhibitory defect of one shall only give rise to its redhibition, and not that of the others.
a. FALSE.
b. There may be a redhibition of all animals when it should appear that the vendee would not have
purchased the sound animal or animals without the defective one. (Art 1572)
a. TRUE.
b. Art. 1550.
82. Sellers are liable for breach of warranty.
a. FALSE.
b. Sellers are not always liable for breach of warranty, as when they have complied with their
obligation, and in accordance with their warranties. Further, warranties may be waived.
83. The vendee shall owe interest for the period between the delivery of the thing and payment of the price.
a. FALSE.
b. This is only true in the following three cases:
i. should it be stipulated;
ii. should the thing sold and delivered produce fruits and income;
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iii. should he be in default, from the time of judicial or extrajudicial demand for the payment of
the price. (Art 1589)
84. Seller may exercise possessory lien and right of stoppage in transitu at the ANY time.
a. FALSE.
b. The right to retain possessory lien presupposes that the seller must still have possession of the
goods. In the right of stoppage in transitu, it is necessary that the seller has parted with the thing
sold and the buyer must be insolvent. (Art. 1526[1] and [2])
85. The unpaid seller loses his lien on the goods when he delivers the goods to a carrier or other bailee for the
purpose of transmission to the buyer.
a. FALSE.
b. The seller may reserve his right to the ownership or possession of the goods. (Art. 1529)
86. The seller’s possessory lien or right of stoppage in transitu is not affected by any sale or disposition of the
goods made by the buyer.
a. FALSE.
b. The seller may lose his lien when he assented to the sale or disposition or when the goods are
covered by a negotiable instrument. (Art. 1535)
87. Notice need not to be given to the original buyer of the intention to resell the goods for the validity of the
resale.
a. TRUE.
b. Art. 1533
88. The right of redemption of co-owners exclude that of adjoining owners.
a. TRUE.
b. Art. 1623
89. If a small piece of rural land which was bought for speculation has been resold, the owner of the adjoining
has a right of redemption at a reasonable price.
a. FALSE.
b. Whenever a piece of urban land, which is so small and so situated that a major portion thereof
cannot be used for any practical purpose within a reasonable time, having been bought merely for
speculation, is about to be resold, the owner of any adjoining land has a right of pre-emption at a
reasonable price. (Art. 1622 par.1)
90. The apparent vendor may ask for the reformation of the instrument in the contracts presumed to be a sale
with a right to repurchase.
a. FALSE.
b. What should be presumed is an equitable mortgage or a contract purporting to be an absolute sale.
(Art. 1602 and 1604)
c. In the cases referred to in Articles 1602 and 1604, the apparent vendor may ask for the reformation
of the instrument. (Art. 1605)
91. If refusal to accept delivery is justified, title to the goods does not pass on to him.
a. TRUE.
b. If there is no stipulation as specified in the first paragraph of Article 1523, when the buyer’s refusal
to accept the goods is without just cause, the title thereto passes to him from the moment they are
placed at his disposal. (Art. 1588)
c. Thus if the refusal was justified, it is Article 1587 and not 1588 that will apply, viz.: Unless otherwise
agreed, where goods are delivered to the buyer and he refuses to accept them, having the right to
do so, he is not bound to return them to the seller, but it is sufficient if he notifies the seller that he
refuses to accept them. If he voluntarily constitutes himself a depositary thereof, he shall be liable
as such.
92. The remedies under the Maceda Law are alternative.
a. FALSE.
b. The remedies under the Maceda Law are cumulative, not alternative.
c. The remedies under the Recto Law are alternative and are not to be exercised cumulatively or
successively and the election of one is a waiver of the right to resort to the others. (De Leon, p.133,
citing jurisprudence)
93. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing.
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a. FALSE, because the word “shall” implies that conventional redemption shall only take place when
the vendor reserves the right to repurchase.
b. Pacto de retro sales or sales with right to repurchase may be the subject matter of conventional
redemption.
94. In sale with right to repurchase, the vendee is subrogated to the vendor’s rights and actions.
a. TRUE.
b. Art. 1609.
MCQ
1. When the goods are delivered to the buyer, the ownership passes to the buyer in:
a. Sale on approval
i. Ownership passes to the buyer when (1) he signifies his acceptance or does any other
act adopting the transaction; (2) retains the goods without giving notice of rejection,
then if a time has been fixed for the return of the goods, on the expiration of such time,
and if no time has been fixed, on the expiration of a reasonable time. (Art. 1502)
b. Sale on satisfaction
i. Same with sale on approval.
c. Sale on trial
i. Same with sale on approval.
d. Sale or return
i. In a sale or return, the buyer acquires ownership upon delivery of the thing sold and
may revest the ownership to the seller within the time fixed in the contract or within a
reasonable time. (Art. 1502)
e. Contract to sell
i. It is considered a special kind of conditional sale, it is a peculiar kind of sale because
despite the happening of the condition and actual delivery, the buyer does not
automatically acquire ownership. If condition happens, the right of the buyer is to
compel the seller to execute a final deed of sale. So ownership does not automatically
pass.
2. It is an affirmation of fact or any promise by the seller relating to the thing which has a natural tendency
to induce the buyer to purchase the same, relying on such promise or affirmation.
a. Condition
b. False representation
c. Warranty
i. Art. 1546
d. Seller’s talk
3. S makes an offer to B on January 1, 1996. B makes known his acceptance in a letter sent on January 2,
and received by the secretary of S on January 10. Meantime, on January 5, S died.
a. There is no contract.
i. An offer becomes ineffective upon the death of either party before acceptance is
conveyed. (Art. 1323)
ii. The offer is deemed accepted once the seller has knowledge of the buyer’s
acceptance.
b. The contract is voidable because a party is insane.
c. There is already a meeting of minds, the contract is perfected.
d. The contract is unenforceable.
4. 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 P65,000. What is the status of the contract?
a. Rescissible
b. Void
c. Unenforceable
d. Enforceable
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e. Voidable
i. One of the parties who entered into the contract was incapable of giving consent.
5. Which of the following obligations of the vendor cannot be waived?
a. To allow the buyer to examine the goods sold
b. To pay the expenses of the deed of sale
c. To warrant the thing sold
d. To transfer ownership to the buyer
6. When delivery takes place by the mere consent of agreement of contracting parties as when the vendor
merely points to the thing sold which shall thereafter be a the control and disposal of the vendee if the
thing sold cannot be transferred to the possession of the vendee at the time of the sale, delivery is
effected:
a. By actual delivery
i. Delivery or transfer of a thing from hand to hand if it is movable, or by certain material
and possessory acts of the grantee performed in the presence and with the consent of
the grantor if it is movable.
ii. “real tradition”
b. By traditio longa manu
i. The grantor pointing out to the grantee the thing which is delivered which at the time
must be within sight.
c. By traditio brevi manu
i. Delivery of movable property takes place when the vendee had the thing already in his
possession before the sale took place, not as owner but as lessee, borrower or as
depositary.
d. Constitutum possesorium
i. Vendor remains in possession of the property sold by virtue of a lease contract
agreement with the vendee.
7. Lucy is a lessee of a store in a shopping mall. She only sells/assigns her rights to Salome. She then
allows Salome to occupy the stall. The delivery here is called:
a. Quasi-tradition
i. This is used to indicate the exercise of a right by the grantee with the acquiescence of
the grantor.
b. Actual delivery
i. Delivery or transfer of a thing from hand to hand if it is movable, or by certain material
and possessory acts of the grantee performed in the presence and with the consent of
the grantor if it is movable.
ii. “real tradition”
c. Traditio longa manu
i. The grantor pointing out to the grantee the thing which is delivered which at the time
must be within sight.
d. Traditio brevi manu
i. Grantee is already in possession of the thing under a title which is not of ownership,
such as when the lessee purchases from the lessor the object of the lease.
8. Ownership of the thing sold is transferred/acquired/retained:
a. Retained by the seller in “sale or return”
i. Wrong. In a sale or return, ownership passes to the buyer upon delivery, but the buyer
can revest the title to the seller.
b. Transferred to the buyer upon constructive or actual delivery of the thing sold
c. Acquired by the buyer upon perfection of the contract
i. Wrong. It is fundamentally wrong. There was no delivery, but only mere perfection of
the contract. As a general rule, ownership is transferred upon delivery.
d. Transferred to the buyer upon acceptance of the price
i. Wrong. It is fundamentally wrong. There was no delivery, but only mere perfection of
the contract. As a general rule, ownership is transferred upon delivery.
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9. Which of the following statements is correct:
a. In a contract of sale, full payment of the price is in the nature of suspensive condition in that the
seller is obligated to transfer ownership of the thing sold upon payment.
i. Wrong. This only applies in an absolute sale. In a conditional sale, full payment of the
price may not be the only condition to be fulfilled.
b. The seller need not be the owner of the thing sold at the perfection of the sale.
i. This is not absolutely correct. There are different types of perfection which requires
immediate delivery.
ii. What the law requires of the seller is the right to transfer ownership, not necessarily
ownership of the thing sold.
c. There may be a transfer of ownership over the thing even if the seller has not delivered
the thing sold to the buyer.
d. In a contract of sale, the buyer becomes the owner of the thing sold upon full payment of the
purchase price.
i. Wrong because this does not cover conditional sales.
10. Which of the following statements is not correct:
a. Actual delivery of the thing or payment of the price is not required for the perfection of the sale.
i. The contract of sale is perfected at the moment there is a meeting of the minds upon
the thing which is the object of the contract and upon the price. (Art. 1475)
b. A stipulation that even when the object is delivered to the buyer, ownership will not pass until
the price is fully paid is not valid.
c. A sale is consummated upon delivery of the thing and the payment of the purchase price.
i. In a conditional sale, payment of the price and/or delivery of the thing sold may not be
the only conditions to be fulfilled for the consummation of the sale.
d. Sales through letters or telegrams are deemed perfected only when acceptance by the buyer is
known to the seller.
11. The delivery of movable property may be made by the mere consent or agreement of the contracting
parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the sale.
This mode of delivery is known as:
a. Actual delivery
b. Traditio constitutum possesorium
i. Vendor remains in possession of the property sold by virtue of a lease contract
agreement with the vendee.
i. Grantee is already in possession of the thing under a title which is not of ownership,
such as when the lessee purchases from the lessor the object of the lease.
e. Formal delivery
12. In a sale of an incorporeal property, the following are the modes of delivery, except:
a. Execution of public instrument
b. Placing of the titles of ownership in the possession of the vendee
c. Use by the vendee of his rights, with the vendor’s consent
d. Actual delivery
13. In this kind of sale, the ownership passes to the buyer on delivery, but he may revest the ownership in
the seller by returning or tendering the goods within the time fixed in the contract, or, if no time has
been fixed, within a reasonable time.
a. Conditional sale
i. Conditions are imposed by the seller before ownership will pass. Normally, the
condition is the full payment of the price.
ii. Ownership automatically passes to the buyer from the moment the condition happens.
There is no need for another contract to be entered into.
b. Sale or return
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c. Sale on trial
d. Contract to sell
i. It is considered a special kind of conditional sale, it is a peculiar kind of sale because
despite the happening of the condition and actual delivery, the buyer does not
automatically acquire ownership. If condition happens, the right of the buyer is to
compel the seller to execute a final deed of sale. So ownership does not automatically
pass.
e. Absolute sale
i. Seller does not reserve his title over the thing sold and thus, upon delivery of the thing,
ownership passes regardless of whether or not the buyer has paid.
14. For ownership to pass, the seller must have the right to sell:
a. Before the perfection of the sale
b. At the time of perfection
c. Upon payment
d. At the time ownership is to pass
e. Upon registration of the sale
15. When a person who is not the owner of a thing sells or alienates and delivers it, and later the seller or
grantor acquires title thereto, such title passes by operation of law to the buyer or grantee. This is:
a. Estoppel in pais
i. By the principle of estoppel, a person is precluded from denying that another person
has authority to sell because of his acts. Also known as “Estoppel in Pais” which is a
kind of equitable estoppel because of the acts / representation of the owner, he may
not later on deny the authority of the 3rd person.
b. Estoppel by deed
i. When the seller who was not the owner at the time of the sale, acquires ownership,
automatically, ownership passes to the buyer by operation of law. However, Article
1434 requires delivery to the buyer.
c. Estoppel by record
i. Case where the seller was estopped from denying the authority to sell due to his prior
testimony made in court.
d. Equitable estoppel
16. In a CIF arrangement, delivery is considered to take place at:
a. Place of perfection of the sale
b. Place of payment
c. Port of origin
d. Port of destination
i. This applies in an FOB arrangement.
17. In this mode of delivery, the seller would remain in possession of the thing after the sale:
a. Actual delivery
b. Traditio constitutum possesorium
e. Formal delivery
18. This seller has a statutory power to sell:
a. Sheriff
i. This seller has the authority given by the court.
b. Agent
i. This seller was given the authority to sell by the owner.
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c. Auctioneer
d. Notary public
i. He may be the owner but he may have the authority of the law to sell, known as
“Statutory Power to Sell” (Article 1505). Examples: Notary public in pledge, liquidators,
guardians and receivers.
19. Ownership passes upon delivery in:
a. Conditional sale
i. Conditions are imposed by the seller before ownership will pass.
b. Sale on trial
c. Absolute sale
i. Seller does not reserve his title over the thing sold and thus, upon delivery of the thing,
ownership passes regardless of whether or not the buyer has paid.
20. Who can transfer ownership by virtue of a sale?
a. Seller
b. Buyer
i. Consider “sale or return”
c. One with a right to sell
d. All of the above
21. The following are requisites for a valid exercise of the right of stoppage in transitu, except:
a. seller is unpaid
b. goods are in transit
c. seller has not parted with the possession of the goods
d. buyer is insolvent
22. One of the following is not a remedy granted to an unpaid seller:
a. right of stoppage of goods in transit
b. right of lien over the goods
c. right of resale
d. right to demand a security for the payment of the price
Under the Civil Code, the following are the remedies of an unpaid seller: (1) retain the thing in his
possession; (2) stoppage in transitu; (3) resale; and (4) rescission. There is no mention of a right to demand
security for the payment of the price.
23. One of the following is not an alternative remedy available to a seller of personal property sold on
instalment if the buyer defaults.
a. to go to court and ask the court to order delivery of the property
b. to foreclose the chattel mortgage
c. to sue for specific performance
d. to take possession of the property and forfeit the amount paid by buyer
24. The following are the alternative remedies, except one, available to the buyer in breach of warranty by
the seller.
a. keep the goods and ask for damages
b. refuse to accept the goods and ask for damages
c. rescind the sale and retain the goods
a. The remedy provided by law is to rescind the sale and refuse to receive the goods, or if
the goods have already been received, return them or offer to return them to the seller
and recover the price or any part thereof which has been paid. (Art. 1599)
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d. keep the goods and set up against the seller by way of recoupment in price
25. If redemption is made, which of the following will not be paid by the seller to the buyer?
a. price paid by the buyer
b. expenses in the execution of the sales contract paid by the buyer
c. all necessary expenses on the thing sold and to be redeemed
d. interest of the price paid by the buyer
a. The law does not require the redemptioner to pay for any interest.
26. M, N and O are co-owners of a parcel of land proindiviso. M sold his 1/3 share in the land to N in an
absolute sale. Which is correct?
a. The deed of sale between M and N is void because it was not made in favor of a third party.
b. O may exercise his right of redemption on the interest sold by M to N.
c. O may redeem only ½ of the interest sold by M to N.
d. O cannot exercise the right of redemption because the sale was made in favor of a co-
owner.
27. An unpaid seller has the following rights, except:
a. a lien on the goods after he has parted with the possession of them
a. Unpaid seller cannot have a lien on the goods if he does not have possession over
them.
b. in case of insolvency of the buyer, a right of stopping the goods in transitu
c. a right to rescind, under the circumstances provided by law
d. a right of resale, under the circumstances provided by law
28. The unpaid seller is not entitled to retain the possession of the goods where:
a. the goods have been sold without stipulation as to credit
b. the goods have been sold on credit, but the term of credit has expired
c. the buyer is insolvent
d. the possession of the seller on the goods is only as agent or bailee for the buyer
a. Art. 1527.
29. What mode of extinguishing a contract of sale is effected when a person is subrogated upon the same
terms and conditions stipulated in the contract in the place of one who acquires a thing by onerous
title?
a. compensation
b. conventional redemption
c. novation
d. legal redemption
30. A sold to B a specific car for P 250,000 in 10 equal monthly installments. B failed to pay the 3rd
installment. The right of A is:
a. cancel the sale
b. demand payment from B
c. (missing)
d. (missing)
31. In a contract of sale, a warranty against eviction is:
a. an essential element
b. a natural element
c. an accidental element
d. a formal requisite
32. It is an affirmation of fact or promise by the seller relating to the thing which has a natural tendency to
induce the buyer to purchase the same, relying on such promise or affirmation.
a. condition
b. false representation
c. express warranty
d. seller’s talk
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33. In a contract of sale of a specific carabao, the seller was obliged to deliver the animal on December 31,
2003. In November 2003, the carabao had an offspring. The offspring belongs to:
a. Seller, because the sale is already perfected prior to its truth.
b. Seller, because the fruit arose before the obligation to deliver arises.
c. Buyer, because the fruit arose after the perfection of the contract.
d. Buyer, if he pays the purchase price.
Under Art. 1164, the creditor has a right to the fruits of the thing from the time the obligation to deliver it
arises. However, he shall acquire no real right over it until the same has been delivered to him.
34. There is no warrant in:

a. “as is, where is sale”
a. Sale which means as it is found, where it is found
c. animals sold at fairs
d. sale by virtue of authority in fact or law
35. Persons not liable for breach of warranty, except:
a. Sheriff
b. Auctioneer
c. Mortgagee
d. Pledgor
36. When does the buyer of a thing has the right to the fruits of the thing bought?
From the time the obligation to deliver the thing arises.
37. If an immovable property is sold to two persons, ownership shall belong to the person ____.
Who first recorded the sale and bought the property in god faith.
38. A contract of sale is perfected ____.
As a general rule, when there is meeting of the minds between the vendor and the vendee
on the object of the sale and the price certain.
39. It is a contract by virtue of the terms which the parties thereto promise and obligate themselves to enter
into another contract at a future time, upon the happening of certain events, or the fulfillment of certain
conditions.
Contract of option or option-contract.
40. A contract of sale is not necessarily:
a. Consensual
b. Bilateral
c. Commutative
d. Onerous
e. None
41. When the goods are delivered to the buyer, the ownership passes to the buyer in ___.
Sale or return.
42. The following may not be valid objects of a contract of sale, except:
a. objects outside the commerce of men
b. illicit things
c. Future goods.
d. impossible service
43. (missing)
44. S makes an offer to B on January 1, 1996. B makes known his known his acceptance in a letter sent on
January and received by S on January 10. Meantime on January 5, S became insane.
There was no perfected contract of sale since there was no meeting of the minds
between the party, applying the cognition theory where there is a perfected contract of
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sale if the acceptance of the buyer is made known to the seller. Unlike manifestation
theory where acceptance by the buyer perfects the contract already.
45. Which of the following obligations of the vendor cannot be waived.
to deliver the thing to the buyer
Transfer of ownership of the object of the sale is necessary in the performance of the obligation
of the vendor and transfer of ownership is effected only through delivery. There is always
delivery in a contract of sale it is either actual or constructive.
46. Ownership of the thing sold is transferred/acquired/retained:
a. retained by seller in sale or return
b. transferred to buyer upon constructive or actual delivery
c. acquired by the buyer upon perfection of contract
d. transferred to buyer upon acceptance of price
47. Which of the following statements is correct?
a. in COS, the full payment of the price is in the nature of suspensive
b. seller need not be the owner of the thing sold at the perfection of the sale
c. there may be a transfer of ownership over the thing even if the seller has not delivered the thing
sold to the buyer
d. in COS, the buyer becomes the owner of the thing sold upon full payment of the purchase price
48. In a contract of sale of a specific carabao, the seller was obliged to deliver the animal on Dec 31 2003.
In November 2003, the carabao had an offspring. The offspring belongs to ___.
Seller, because the fruit arouse before the obligation to deliver arises.
49. Sale is distinguished from dation in payment in that in dation in payment ___.
There is a pre-existing obligation or credit.
50. There is a contract of sale ___.
a. When goods are delivered to distributor on consignment
b. When the manufacturer delivers the foods to an agent where the former retains the ownership
and dictates the term of the sale
c. When foods are delivered to a person on charge account
d. When goods are delivered to an agent to be sold by him and the agent is not liable to the
manufacturer of the goods
51. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person
or through the mediation of another, except ___
Agents, the property whose administration or sale may have been entrusted to them.
52. Araneta wrote a letter to Bascon wherein he offered to sell a piece of land. In Araneta’s letter he gives
Bascon a period of 2 months within which to pay the price of 500k. After 50 days, Araneta told Bascon
that he is increasing the price of the land to 700k. Can Bascon compel Araneta to accept the 500k first
offered by Araneta and execute the deed of sale?
No, Bascon did not signify his acceptance of offer.
53. A characteristic of COS which involves exchange of value, it is ___.
Commutative
54. A case where COS may not necessarily be in writing to be enforceable.
a. Sale of 100 piculs of sugar at 400 per picul when there is partial delivery; even if there is
no partial delivery, the amount is already more than 500 and covered by the statue of
frauds.
b. Sale whereby its term cannot be performed within one year from the making thereof
c. Sale of land
d. All of the Above
55. In a contract of sale, the nature of the object of the sale will not be relevant in
a. Maceda Law
b. Recto Law
c. Double Sales
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d. Statute of Frauds
STATUS OF THE CONTRACT OF SALE (as a rule).
1. The guardian purchases the property of his ward.

a. VOID.
2. The purchaser of a private agricultural land is a former Filipino citizen.
a. VALID.
3. Contracts of sale with a false cause.
a. VOID.
4. Sale of a car where the price is in Chinese Yuan.
a. VALID.
5. Oral sale of an immovable for P450.
a. UNENFORCEABLE.
6. Sale of large cattle in a private instrument.
a. VOID.
7. The guardian sold the property of his ward valued at P100,000 to another person for the price of
P70,000.
a. UNENFORCEABLE.
8. A deed of absolute sale which does not contain a provision as to the price.
a. VALID.
9. Sale of hereditary rights of an heir to the executor of the will of the decedent.
a. VOID.
10. Sale of a property in litigation to the court stenographer of the court where the case is pending.
a. VOID.
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SALES QUIZ SAMPLEX #4 (google quiz)
Part ONE
Modified True or False. Consider the statement true only when it is absolutely true.
Explain ALL your answers.
1. The contract is one of barter if the value of the thing to be delivered by one party exceeds
the value of the thing to be delivered by the other party.
FALSE. There is barter when it is manifested in the intention of the parties or when the
consideration is partly in money and partly in another thing when the value of the thing given
exceeds the amount of the money or its equivalent.
Art. 1468
If the consideration of the contract consists partly in money, and partly in another thing, the transaction
shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it
shall be considered a barter if the value of the thing given as a part of the consideration exceeds the
amount of the money or its equivalent; otherwise, it is a sale.
2. A sale of a right binds third persons if it is in a public instrument.

FALSE. The public instrument must also be registered before it can bind third persons.
3. The option money may be considered as part of the price.

TRUE. Though it is option money, it can be considered as part of the price as long as it is
stipulated. Without stipulation, the option money cannot be considered as partial payment
because it is a consideration for the option and therefore not part of the price
4. In a conditional sale, ownership passes to the buyer upon delivery.

FALSE. In conditional sales, conditions are imposed by the seller before ownership will pass.
Ownership automatically passes to the buyer from the moment the condition happens. There is
no need for another contract to be entered into.
5. An assignment of credit is a consensual contract.

TRUE. An assignment of credit is perfected in accordance with the provisions of Art. 1475, where
the law provides that a contract of sale is perfected at the moment there is meeting of the
minds.
Article 1624. An assignment of creditors and other incorporeal rights shall be perfected in accordance
with the
provisions of article 1475.
Article 1475. The contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the contract and upon
the price.
6. There may be a contract of sale of goods, whose acquisition by the seller depends upon a
contingency which may or may not happen. TRUE. Art. 1462.
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Article 1462. The goods which form the subject of a contract of sale may be either existing goods,
owned or possessed by the seller, or goods to be manufactured, raised, or acquired by the seller after
the perfection of the contract of sale, in this Title called "future goods."
7. In order to transfer ownership, the vendor need not be the owner at the time of delivery.
True. Ownership is not an essential requisite. Yes. Ownership over the thing sold is not an
essential requisite for the sale to be valid. But if theseller does not own the thing, he may have a
problem on his obligation to transfer ownership. The problem would be whether or not the buyer
would acquire ownership over the thing sold if the person who sold the thing is not the owner.
8. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of
the thing which is the object of the contract.
True. Kinds of delivery of things as a consequence of sale known as “tradition” – under the law:
Constructive – by the execution of a public instrument if the contrary intention does not appear
on the document. By the mere execution of thepublic instrument that is equivalent to delivery.
Hence, ownership passes to the buyer.
Note: The execution of a public instrument may be equivalent to actual delivery if the contrary
intention does not appear on the DOS. Kasipwedeng notarized but it is clear in the contract
that ownership will not pass until full payment ofthe price then that is not equivalent to delivery.
Theintention is clear. 9. The law of sales, whereby property is alienated to the creditor as an accepted
mode of extinguishment of an obligation, shall govern dation in payment.
False. It depends if the pre-existing obligation is in money whereby property is alienated to thecreditor. It
is provided that the law on sales shallgovern such transaction. It is specifically providedthat the pre-
existing obligation must be in money. Ifnot in money and there is DIP, it will not be governed by the law
on sales but by the law onnovation because practically there is a change in the object of the contract.
Article 1245. Dation in payment, whereby property is alienated to the creditor in satisfaction of a debt in
money, shall be governed by the law of sales 10. A contract of sale is void when the object is neither
particularly designated nor physical segregated from all others of the same class. FALSE. The
requisite that a thing be determinate is satisfied if at the time the contract is entered into, the
between the parties. (1460(2))
Article 1460. A thing is determinate when it is particularly designated or physical segregated from all others of
the same class.
The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is
capable of being made determinate without the necessity of a new or further agreement between the
parties.
11. When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract.
Same lang to sa number 8 hays. True. Kinds of delivery of things as a consequence of
sale known as “tradition” – under the law: Constructive – by the execution of a public
instrument if the contrary intention does not appear
on the document. By the mere execution of thepublic instrument that is equivalent to delivery.
Hence, ownership passes to the buyer.
Note: The execution of a public instrument may be equivalent to actual delivery if the contrary
intention does not appear on the DOS. Kasipwedeng notarized but it is clear in the contract
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that ownership will not pass until full payment ofthe price then that is not
equivalent to delivery. Theintention is clear. 12. The goods remain at the
seller's risk until the ownership therein is transferred to the buyer.
FALSE. There are instances when ownership has already transferred to the buyer but the seller will
still bear the risk; as when the seller is in delay.
13. Where goods are sold by a person who is not the owner thereof, and who does not sell them under authority
or with the consent of the owner, the buyer acquires no title to the goods.
FALSE. The buyer may acquire title provided that he bought it in good faith and for value.
14. Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the
buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of
transmission to the buyer is deemed to be a delivery of the goods to the buyer.
FALSE. It is only a general rule. Unless otherwise provided in Art. 1523, par. 2.
Article 1523. Where, in pursuance of a contract of sale, the seller is authorized or required to send the
goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the
purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, except in the
cases provided for in article 1503, first, second and third paragraphs, or unless a contrary intent appears.
Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf
of the buyer as may be reasonable, having regard to the nature of the goods and the other
circumstances of the case. If the seller omit so to do, and the goods are lost or damaged in course
of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold
the seller responsible in damages.
Unless otherwise agreed, where goods are sent by the seller to the buyer under circumstances in which
the seller knows or ought to know that it is usual to insure, the seller must give such notice to the buyer as
may enable him to insure them during their transit, and, if the seller fails to do so, the goods shall be
deemed to be at his risk during such transit. (n)
15. If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith.
FALSE. Determine first if the thing sold was movable or immovable.
i. If movable, first who took possession in good faith has the better right.
ii. If immovable:
1. First to register the sale, in good faith; or
2. First to take possession, in good faith; or
3. Party who has oldest title, in good faith.
Part TWO
Multiple Choice. Choose the best answer.
1. When does the buyer of a thing has the right to the fruits of the thing bought?
a. From the time the fruits are delivered
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b. From the time the obligation to deliver the thing bought arises.
c. From the time the sale is consummated.
d. From the time the thing bought is delivered
e. From the perfection of the contract.
1537 should be considered in relation to 1164. Under 1164, the fruits shall
pertain to the creditor only from the time the obligation to deliver the thing arises.
Article 1537. The vendor is bound to deliver the thing sold and its accessions and accessories in the
condition in which they were upon the perfection of the contract.
Article 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it
arises. However, he shall acquire no real right over it until the same has been delivered to him
2. If a movable property is sold to two persons, ownership shall belong to the person:
a. who paid in good faith the purchase price in full
b. who in good faith first recorded it in the Registry of Property
c. who presents the oldest title
d. who have first taken possession in good faith
Article 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is
good faith.
3. It is a contract by virtue of the terms of which the parties thereto promise and obligate themselves to enter
into another contract at a future time, upon the happening of certain events, or the fulfillment of certain
conditions.
a. contract of adhesion c. contract of sale
b. contract of option d. auto-contract
not sure
4. In a contract of sale, a warranty against eviction is:

a. an essential element c. an accidental element
b. a natural element d. a formal requirement
5. This is a kind of symbolic delivery where the vendor remains in possession of the property sold, by virtue of
the lease agreement with the vendee.
a. tradition longa manu c. tradition constitutum possessorium
b. tradition brevi manu d. delivery to a common carrier
6. The delivery of movable property may be made by the mere consent or agreement of the contracting parties, if the
thing sold cannot be transferred to the possession of the vendee at the time of the sale. This mode of delivery
is known as:
a. actual delivery
b. traditio constitutum possessorium
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c. traditio longa manu
d. tradition brevi manu
e. formal delivery
Example 1: The thing was the subject matter of alease with a 3rd person until the expiration of the
lease, the thing cannot be delivered
7. In this kind of sale, the ownership passes to the buyer on delivery, but he may revest the ownership in the seller
by returning or tendering the goods within the time fixed in the contract, or, if no time has been fixed,
within a reasonable time.
a. Conditional sale
Conditions are imposed by the seller before ownership will pass. Normally, the condition is the full
payment of the price.
b. Sale or return.
c. Sale on trial.
Ownership passes to the buyer when (1) he signifies his acceptance or does any other act
adopting the transaction; (2) retains the goods without giving notice of rejection, then if a time has
been fixed for the return of the goods, on the expiration of such time, and if no time has been
fixed, on the expiration of a reasonable time.
d. Contract to sell
It is considered a special kind of conditional sale, it is a peculiar kind of sale because despite the
happening of the condition and actual delivery, the buyer does not automatically acquire
ownership. If condition happens, the right of the buyer is to compel the seller to execute a final
deed of sale. So ownership does not automatically pass.
e. Absolute sale
Seller does not reserve his title over the thing sold and thus, upon delivery of the thing, ownership
passes regardless of whether or not the buyer has paid.
8. When a person who is not the owner of a thing sells or alienates and delivers it, and later the seller or
grantor acquires title thereto, such title passes by operation of law to the buyer or grantee. This is:
a. Estoppel in pais.
b. Estoppel by deed
c. Estoppel by record.
d. Equitable estoppel
9. In this mode of delivery, the seller would remain in possession of the thing after the sale:
a. actual delivery
b. traditio constitutum possessorium
c. traditio longa manu
d. tradition brevi manu
e. formal delivery
10. Ownership passes upon delivery in :
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a. Conditional sale
Conditions are imposed by the seller before ownership will pass.
b. Sale on trial
Ownership passes to the buyer when (1) he signifies his acceptance or does any other act
adopting the transaction; (2) retains the goods without giving notice of rejection, then if a time has
been fixed for the return of the goods, on the expiration of such time, and if no time has been
fixed, on the expiration of a reasonable time. (
c. Contract to sell
d. Absolute sale
Seller does not reserve his title over the thing sold and thus, upon delivery of the thing, ownership
passes regardless of whether or not the buyer has paid.
Part THREE
Give direct and concise but complete answers.
Cite authorities, if any.
1. Merle offered to sell her automobile to Violy for P60,000.00. After inspecting the automobile, Violy offered to buy
it for P50,000.00. This offer was accepted by Merle. The next day, Merle offered to deliver the automobile,
but Violy being short of funds, secured postponement of the delivery, promising to pay the price “upon
arrival of the steamer, Helena”. The steamer however never arrived because it was wrecked by a typhoon
and sank somewhere off the Coast of Samar.
1. Is there a perfected contract in this case? Why?

Yes. In this case, the contract involved is one of sale. Sale is not a real or a formal contract
which would require delivery or compliance with a certain form for its perfection; it is a
consensual contract which is perfected at the moment there is meeting of the minds.
In this case, there was meeting of the minds the moment the counter-offer or offer to buy
was accepted. As such, there is a perfected contract.
2. Is the promise to pay made by Violy conditional or with a term? Why?
The promise to pay is with a term, and the term hererefers to the date of payment, which
Violy fixes on thedate of the arrival of the steamer, Helena.
3. Can Merle compel Violy to pay the purchase price and to accept the automobile? Why?
Yes, since contract is perfected already. Merle cancompel Violy to pay the purchase price
and accept theautomobile on the date, which is to be fixed again afterthe original date of
payment set on the arrival of
steamer Helena didn’t materialize because it waswrecked and sank due to the typhoon
2. Mr. and Mrs. X migrated to the US with all their children. As they had no intention of coming back, they offered their
house and lot for sale to their neighbors, Mr. and Mrs. A (the buyers) who agreed to buy the property for 8
Million. Because Mr. and Mrs. A needed to obtain a loan from a bank first, and since the sellers were in a hurry
to migrate, the latter told the buyers that they could already occupy the house, renovate it as it was already in
a state of disrepair, and pay only when their loan is approved and released. While waiting for the loan approval,
the buyers spent 1 Million in repairing the house. A month later, a person carrying an authenticated special
power of attorney from the sellers demanding that the buyers either immediately pay for the property in full
now or vacate it and pay damages for having made improvements on the property without a sale having been
perfected.
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a.) What are the buyers’ options or legal rights with respect to the expenses they incurred
in improving the property under the circumstances? (3%)
The buyers here may be deemed possessors or builders in good faith because they were
made to believe that they were allowed to make repairs or renovation by the sellers
themselves. As builders in good faith, they have the right to seek reimbursement for the
value of the improvements in case the owner decides to appropriate them. They cannot be
asked to remove the improvements because that is not one of the options given by law to the
landowner in case the builder is in good faith.
b.) Can the buyers be made to immediately vacate on the ground that the sale was not perfected?
Explain briefly. (3%) No, the buyers cannot be made to vacate on the ground that the sale was not
perfected for the fact of the matter is that a contract of sale is consensual and is perfected by mere
consent. (Article 1315, Civil Code) In this case, there was an agreement to deliver a determinate thing for
a price certain in money. When the owners made an offer to sell their property to Mr. and Mrs. A and the
latter accepted the offer, there was already a meeting of the minds between the parties resulting in the
perfection of the contract of sale. 3. State the basic difference (only in their legal effects) –
(a) Between a contract to sell, on the one hand, and a contract of sale, on the other;
(b) Between a conditional sale, on the one hand, and an absolute sale, on the other hand.
contract to sell vs. contract of sale (both absolute and conditional): contract to sell is a special kind of
conditional sale where ownership does not automatically pass upon fulfillment of the condition which is
usually the full payment of the purchase price. It will only give the buyer the right to demand the execution
of a deed of sale or to compel the seller to sell and the seller is now bound to sell. Ownership transfers
upon execution of the deed of sale. The premise is that the buyer is already in possession of the property
even before execution of the deed of sale.
Whereas a conditional sale, ownership automatically transfers to the buyer upon fulfillment of the
condition, without need of a new agreement or to execute a new contract
In absolute sale, ownership transfers upon delivery, actual or constructive, even if no total payment yet. If
no payment happened, the buyer becomes a debtor as far as the price is concerned. The remedy for the
seller is rescission and not reconveyance of the property since the property already belongs to the buyer.
4. Arthur gave Richard a receipt which states:
“Receipt
Received from Richard as down payment

for my 1995 Toyota Corolla with
plate no. XYZ-123……………………… P50,000.00.
Balance payable: 12/30/01……… P50,000.00
September 15, 2001

(Sgd.) Arturo”
Does this receipt evidence a contract to sell? Why?
No. there is nothing in the receipt that would indicate that the seller reserved ownership. In a contract
where the seller did not reserve ownership, it is an absolute sale. In a contract to sell, you have to impose
as a condition for the transfer of ownership, the full payment of the price. Would action for recovery
possession prosper? No. Because Richard is the owner. The action should be rescission.
5. Nante, a registered owner of a parcel of land in Quezon City, sold the property to Monica under a deed of
sale which reads as follows:
“That for and in consideration of the sum of P500,000.00, value to be paid and delivered
to me, and
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receipt of which shall be acknowledged by me to the full satisfaction of Monica, referred to as
Vendee, I hereby
sell, transfer, cede, convey, and assign, as by these presents, I do have sold, transferred,
ceded, conveyed and
assigned a parcel of land covered by TCT No. 2468 in favor of the Vendee.”
After delivery of the initial payment of P100,000.00, Monica immediately took possession of the
property. Five (5) months after, Monica failed to pay the remaining balance of the purchase price.
Nante filed an action for the recovery of possession of the property. Nante alleged that
the agreement was one to sell, which was not consummated as the full contract price was not
paid. Is the contention of Nante tenable? Why?
No. No. It does not pertain to a CTS because in aCTS ownership is reserved by the seller despite
delivery to the buyer. The buyer does not acquire ownership. This is an Absolute Sale. In this case, Monica
immediately took possession of the property.
6. A granted B the exclusive right to sell his brand of Maong pants in Isabela, the price for his
merchandise payable 60 days from delivery, and promising B a commission of 20% on all sales. After
the delivery of the merchandise to B but before he could sell any of them, B’s store in Isabela was
completely burned without his fault, together with all of A’s pants. Must B pay A for his lost pants?
Why? From the wordings of the problem you may have an idea that this is an agency to sell. If this is an
ATS, the fact that the agent has not yet sold the maong pants when they were burned will not result
in a liability on his part, there being no negligence on his part because with the delivery of the thing
from the principal to the agent, ownership does not pass. Under the principle in the Civil Code – res
perit domino – it will be the seller (owner) who will bear the loss. But if this transaction is sale then
with the delivery of the maong pants to B, ownership passed to B because he did not reserve ownership
over the pants despite the fact that the other party has not paid the price. So when thepants were burned,
it would now be B as the owner who will bear the loss. SA: This is exactly the case of Quiroga vs. Parsons.
Article 1466 – in construing a contract containing provisions characteristics of both a COS and ATS, you
have to go into the essential clauses
of the whole instrument. In this problem, one of the clauses “B has to pay the price within 30 days”.
That would make the contract COS and not ATS because in 30 days from delivery, whether or not B
has already sold those pants to other persons, he is already obliged to pay a price. That is not an
ATS. Being a COS, therefore, after having been delivered, ownership passed to the buyer and hence under res
perit domino rule, the buyer bear the loss.
7. In 1972, Luciano de la Cruz sold to Chua Chung Chun, a Chinese citizen, a parcel of land in Binondo. Chua
died in 1990, leaving behind his wife and three children, one of whom, Julian, is a naturalized Filipino
citizen. Six years after Chua’s death, the heirs executed an extrajudicial settlement of estate, and
the parcel of land was allocated to Julian. In 2007, Luciano filed suit to recover the land he sold to Chua,
alleging that the sale was void because it contravened the Constitution which prohibits the sale of private
lands to aliens. Julian moved to dismiss the suit on grounds of pari delicto, laches and acquisitive
prescription. Decide the case with reasons.
An alien is prohibited under the Constitution from acquiring private lands. EXCEPT: when acquired through
(1) succession; or (2) sale of residential land to a former natural born Filipino citizen.
A sale in violation of the prohibition is void. As such, the seller may recover the land. However, if at the time
the action to recover was filed, the land was already transferred to a Filipino, the action will no longer
prosper.
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8. Rica petitioned for the annulment of her ten-year old marriage to Richard. Richard hired Atty. Cruz to represent
him in the proceedings. In payment for Atty. Cruz's acceptance and legal fees, Richard conveyed to Atty.
Cruz a parcel of land in Taguig that he recently purchased with his lotto winnings. The transfer documents
were duly signed and Atty. Cruz immediately took possession by fencing off the property's
entire perimeter.
Desperately needing money to pay for his mounting legal fees and his other needs and despite the
transfer to Atty. Cruz, Richard offered the same parcel of land for sale to the spouses Garcia. After
inspection of the land, the spouses considered it a good investment and purchased it from
Richard. Immediately after the sale, the spouses Garcia commenced the construction of a three-
story building over the land, but they were prevented from doing this by Atty. Cruz who claimed
he has a better right in light of the prior conveyance in his favor.
Is Atty. Cruz’s claim correct?

Atty. Cruz is not correct. First contract with Atty. Cruz is a dation in payment. Second contract is a sale.
Double sale applicable despite dation since it is governed by law on sales. However, 1544 requires that
both sales are valid.
Dation in payment – valid transaction? No. Void. 1491: a lawyer cannot in anyway acquire by purchase
(law on sales is applicable on dation in payment) a thing which is the subject matter of an action. There
was annulment of marriage, the parcel of land is one of the properties which would be considered in
settlement of conjugal properties.
Property acquired through his lotto winnings, if the marriage is solemnized under the Family
Code, and no marriage settlement was entered into, absolute community of property. As such, lotto
winnings are considered community property, consequently, the land is community property. As such,
sale of such without the consent of the wife is void.
9. “X” came across an advertisement in the “Manila Daily Bulletin” about the rush sale of three slightly used
TOYOTA cars, Model 1989 for only P200.000 each. Finding the price to be very cheap and in order to be
sure that he gets one unit ahead of the others, “X” immediately phoned the advertises “Y” and place an
order for one car. “Y” accepted the order and promised to deliver the order unit on July 15, 1989. On the
said date, however, “Y” did not deliver the unit. “X” brings an action to compel “Y” to deliver the unit. Will
such action prosper? Give your reasons.
WON the action will prosper goes into perfection, which may also be subject to formalities required by law.
Since the subject matter is a movable, and price is more than P500, it is unenforceable since it is not
written. The action will not prosper, if there is proper objection. 10. May a person sell something that does
not belong to him? Explain.
Yes. There are two aspects: validity of the contract of sale and ability to transfer ownership.
VALIDITY OF THE CONTRACT: the seller need not be the owner, he may be a liquidator, executor,
administrator, sheriff, or a notary (in case of pledge).
This is different from a pledge or mortgage which requires the pledger or mortgagor to be the absolute
owner of the thing. Yes. Ownership over the thing sold is not an essential requisite for the sale to be valid.
But if the seller does not own the thing, he may have a problem on his obligation to transfer ownership.
The problem would be whether or not the buyer would acquire ownership over the thing sold if the
person who sold the thing is not the owner.
11. Rod, the owner of an FX taxi, found in his vehicle an envelope containing TCT No. 65432 over a lot
registered in Cesar’s name. Posing as Cesar, Rod forged Cesar’s signature on a Deed of Sale in Rod’s
favor. Rod registered the said document with the Register of Deeds, and obtained a new title in his
name. After a year, he sold the lot to Don, a buyer in good faith and for value, who also registered lot in
his name.
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a. Did Rod acquire title to the land? Explain.
No, Rod did not acquire title to the land. The inscription in the registry, to be effective,
must be made in good faith. The defense of indefeasibility of a Torrens Title does not extend to a
transferee who takes the certificate of title with notice of a flaw. A holder in bad faith of a
certificate of title is not entitled to the protection of the law, for the law cannot be used as a shield
for frauds b. Discuss the rights of Don, if any, over the property.
It is a well-known rule in this jurisdiction that persons dealing with registered land have the legal
right to rely on the face of the Torrens Certificate of Title and to dispense with the need to inquire
further, except when the party concerned has actual knowledge of facts and circumstances that
would impel a reasonably cautious man to make such inquiry (Naawan Community Rural Bank v.
Court of Appeals, G.R. No. 128573, January 13, 2003).
In the given problem, the property was already registered in the name of Rod when he bought the same
from the latter. Thus, Don could be considered as a buyer in good faith and for value. However, since Rod
did not actually sell any property to him, Don has no right to retain ownership over the property. He has
only the right to recover the purchase price plus damages.
12. Donna pledged a set of diamond ring and earrings to Jane for 200,000.00. She was made to sign an agreement
that if she cannot pay her debt within six months, Jane could immediately appropriate the jewelry for herself.
After six months, Donna failed to pay. Jane then displayed the earrings and ring set in her jewelry shop
located in a mall. A buyer, Juana, bought the jewelry set for 300,000.00.
b.) Can Donna redeem the jewelry set form Juana by paying the amount she owed Jane to Juana?
Explain with legal basis.
No. Donna should pay 300, 000.00 which Juana paid in jewelry shop. Article 559. The possession of
movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any
movable or has been unlawfully deprived thereof, may recover it from the person in possession of the
same.
If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in
good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid
therefor.
In this case, there is already a public sale and Juana bought it in good faith, hence Donna should reimburse
Juana to recover the movable.
13. Mahinhin lost her diamond ring when the bus she was riding on was held up by a band of brigands who
divested the passengers of all their money and valuables. The ring found its way to the Pasanglaan
pawnshop, where one of the robbers had pawned it. The pawnshop, in due time, foreclosed the pledge
and sold the ring at public auction to Mayaman, the highest bidder.
Three years after the loss, Mahinhin was able to trace the ring to Mayaman and demanded that the
latter give the ring back to her. Mayaman refused, saying that he had acquired the ring in good
faith.
Who was the better right to the ring? Explain.

Mahinhin lost her diamond ring when the bus she was riding was held up by a band of brigands who
divested the passengers of all their money and valuables. The ring found its way to the Pasanglaan
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pawnshop, where one of the robbers had pawned it. The pawnshop, in due time, foreclosed
the pledge and sold the ring at public auction to Mayaman, the highest bidder.
Three years after the loss, Mahinhin was able to trace the ring to Mayaman and demanded that the latter
give the ring back to her. Mayaman refused, saying that he had acquired the ring in good faith.
14. D sold a second-hand car to E for P150,000.00. The agreement between D and E was that half of the purchase
price, or P75,000.00, shall be paid upon delivery of the car to E and the balance of P75,000.00 shall be
paid in five equal monthly installments of P15,000.00 each. The car was delivered to E, and E paid the
amount of P75,000.00 to D. Less than one month thereafter, the car was stolen from E’s garage with
no fault on E’s part and was never recovered. Is E legally bound to pay the said unpaid balance of
P75,000.00? Explain your answer.
Yes. This case involves an absolute sale and there was already delivery. As such, ownership already
passed to the buyer. Applying the res perit domino doctrine, the buyer bears the loss since he is already
the owner at the time of loss. He can be compelled to pay the unpaid balance.
15. If the same thing should have been sold to different vendees, to whom shall the ownership be transferred?
Article 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is
good faith
16. JV, owner of a parcel of land, sold it to PP. But the deed of sale was not registered. One year later, JV sold the
parcel again to RR, who succeeded to register the deed and to obtain a transfer certificate of title over the
property in his own name.
Who has better right over the parcel of land, RR or PP? Why? Explain the legal basis for your answer?
It depends on whether or not RR is an innocent purchaser for value. Under the Torrens System, a deed or
instrument operated only as a contract between the parties and as evidence of authority to the Register of
Deeds to make the registration. It is the registration of the deed or the instrument that is the operative act
that conveys or affects the land. (Sec. 51, P.D. No. 1529).
In cases of double sale of titled land, it is a well-settled rule that the buyer who first registers the sale in
good faith acquires a better right to the land. (Art. 1544, Civil Code).
Persons dealing with property covered by Torrens title are not required to go beyond what appears on
its face. (Orquiola v. CA 386 SCRA 301, [2002]; Domingo v. Races, 401 SCRA 197, [2003]). Thus,
absent any showing that RR knew about, or ought to
have known the prior sale of the land to PP or that he acted in bad faith, and being first to register the sale,
RR acquired a good and a clean title to the property as against PP.
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17. Knowing that the car had a hidden crack in the engine, X sold it to Y without informing the latter about it. In
any event, the deed of sale expressly stipulated that X was not liable for hidden defects. Does Y have
the right to demand from X a reimbursement of what he spent to repair the engine plus damages?
No. should determine whether the vendor was aware ofthe defects or he was not aware. Again, if he was
aware, damages may be recovered. If he was notaware, he may not be held liable for damages
unless he can only be held liable for interest.
Article 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing
sold, even though he was not aware thereof. This provision shall not apply if the contrary has been
stipulated, and the vendor was not aware of the hidden faults or defects in the thing sold. In this
case the waiver is void because the vendor was aware of hidden defects.
Sales
Rights & Obligations of the Vendee – Redemption1
Part ONE. Modified True or False.
1. If the place of payment should not have been stipulated, the payment must be made at the place of the delivery
of the thing sold.
FALSE. Art. 1582: The vendee is bound to accept delivery and to pay the price of the thing sold at the time
and place stipulated in the contract. If the time and place should not have been stipulated, the payment
must be made at the time and place of the delivery of the thing sold.
Incomplete statement; it should be “AT THE TIME AND PLACE”
2. Where goods are delivered to the buyer, he is not deemed to have accepted them unless and until he has had
a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity
with the contract.
FALSE.
Art. 1584. Where goods are delivered to the buyer, which he has not previously examined, he is
not deemed to have accepted them unless and until he has had a reasonable opportunity of examining
them for the purpose of ascertaining whether they are in conformity with the contract if there is no
stipulation to the contrary. Unless otherwise agreed, when the seller tenders delivery of goods to the
buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for
the purpose of ascertaining whether they are in conformity with the contract.
Where goods are delivered to a carrier by the seller, in accordance with an order from or
agreement with the buyer, upon the terms that the goods shall not be delivered by the
carrier to the buyer until he has paid the price, whether such terms are indicated by
marking the goods with the words "collect on delivery," or otherwise, the buyer is not
entitled to examine the goods before the payment of the price, in the absence of
agreement or usage of trade permitting such examination.
3. Acceptance of the goods by the buyer shall not discharge the seller from liability in damages or other
legal remedy for breach of any promise or warranty in the contract of sale.
FALSE.
Art. 1586. In the absence of express or implied agreement of the parties, acceptance of the goods by
the buyer shall not discharge the seller from liability in damages or other legal remedy for breach of
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any promise or warranty in the contract of sale. But, if, after acceptance of the goods, the buyer fails to
give
notice to the seller of the breach in any promise of warranty within a reasonable time after
the buyer knows, or ought to know of such breach, the seller shall not be liable therefor.
4. The Maceda Law can only be invoked if the buyer had paid at least two years of installments before
default. FALSE. Even if he has only paid for a month, there will be rights already for such buyer under the Maceda
Law. If he has paid at least 2 years, he will have better rights.
5. Down payments, deposits or options in a sale covered by the Maceda Law, shall be included in the computation
of the total number of installment payments made.
TRUE.
6. No affirmation of the value of the thing, nor any statement purporting to be a statement of the seller's
opinion only, shall be construed as a warranty.
FALSE, it will be considered a warranty when the seller made such affirmation or statement as an
expert and it was relied upon by the buyer.
Art. 1546: Any affirmation of fact or any promise by the seller relating to the thing is an express
warranty if the natural tendency of such affirmation or promise is to induce the buyer to purchase the
same, and if the buyer purchase the thing relying thereon. No affirmation of the value of the thing, nor
any statement purporting to be a statement of the seller's opinion only, shall be construed as a warranty,
unless the seller made such affirmation or statement as an expert and it was relied upon by the buyer.
7. For the vendor to be held liable for breach of warranty against eviction, the final judgment must be based on
a right prior to the sale.
FALSE, judgment may also be based on an act imputable to the vendor.
Art. 1548. Eviction shall take place whenever by a final judgment based on a right prior to the sale or
an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.
The vendor shall answer for the eviction even though nothing has been said in the contract on the subject.
The contracting parties, however, may increase, diminish, or suppress this legal obligation of the vendor.
8. When adverse possession had been commenced before the sale but the prescriptive period is completed after
the transfer, the vendor shall not be liable for eviction.
TRUE. Art.1550: When adverse possession had been commenced before the sale but the
prescriptive period is completed after the transfer, the vendor shall not be liable for eviction.
9. If the property is sold for nonpayment of taxes due, the vendor is liable for eviction.
FALSE. Art. 1551. If the property is sold for nonpayment of taxes due and not made known to the
vendee before the sale, the vendor is liable for eviction
10. Any stipulation exempting the vendor from the obligation to answer for eviction shall be void. FALSE. Art. 1553.
Any stipulation exempting the vendor from the obligation to answer for eviction shall be void, if he acted in bad faith.
11. The seller of goods is deemed to be an unpaid seller when the whole of the price has not been paid. TRUE.
Art. 1525. The seller of goods is deemed to be an unpaid seller within the meaning of this Title: (1) When the
whole of the price has not been paid or tendered;
12. The seller of goods is deemed to be an unpaid seller when a bill of exchange or other negotiable instrument
has been received as conditional payment.
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FALSE. ART. 1525: The seller of goods is deemed to be an unpaid seller within the meaning of this
Title: (2) When a bill of exchange or other negotiable instrument has been received as conditional
payment, and the condition on which it was received has been broken by reason of the dishonor of the
instrument, the insolvency of the buyer, or otherwise.
13. The unpaid seller may exercise his right of stoppage in transitu by obtaining actual possession of the
goods. TRUE.
Art. 1530. Subject to the provisions of this Title, when the buyer of goods is or becomes insolvent,
the unpaid seller who has parted with the possession of the goods has the right of stopping them in
transitu, that is to say, he may resume possession of the goods at any time while they are in transit, and
he will then become entitled to the same rights in regard to the goods as he would have had if he had
never parted with the possession.
Art. 1531. Goods are in transit within the meaning of the preceding article: (1) From the time when
they are delivered to a carrier by land, water, or air, or other bailee for the purpose of transmission to
the buyer, until the buyer, or his agent in that behalf, takes delivery of them from such carrier or other
bailee; (2) If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of
them, even if the seller has refused to receive them back.
Goods are no longer in transit within the meaning of the preceding article: (1) If the buyer,
or his agent in that behalf, obtains delivery of the goods before their arrival at the
appointed destination; (2) If, after the arrival of the goods at the appointed destination, the
carrier or other bailee acknowledges to the buyer or his agent that he holds the goods on
his behalf and continues in possession of them as bailee for the buyer or his agent; and it
is immaterial that further destination for the goods may have been indicated by the buyer;
(3) If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his
agent in that behalf.
If the goods are delivered to a ship, freight train, truck, or airplane chartered by the buyer, it
is a question depending on the circumstances of the particular case, whether they are in
the possession of the carrier as such or as agent of the buyer. If part delivery of the goods
has been made to the buyer, or his agent in that behalf, the remainder of the goods may
be stopped in transitu, unless such part delivery has been under such circumstances as to
show an agreement with the buyer to give up possession of the whole of the goods
Art. 1532. The unpaid seller may exercise his right of stoppage in transitu either by obtaining
actual possession of the goods or by giving notice of his claim to the carrier or other bailee in whose
possession the goods are. Such notice may be given either to the person in actual possession of the goods
or to his principal. In the latter case the notice, to be effectual, must be given at such time and under
such circumstances that the principal, by the exercise of reasonable diligence, may prevent a delivery to
the buyer.
When notice of stoppage in transitu is given by the seller to the carrier, or other bailee in
possession of the goods, he must redeliver the goods to, or according to the directions of,
the seller. The expenses of such delivery must be borne by the seller. If, however, a
negotiable document of title representing the goods has been issued by the carrier or
other bailee, he shall not obliged to deliver or justified in delivering the goods to the seller
unless such document is first surrendered for cancellation
14. The remedies of the unpaid seller of goods can no longer be invoked if ownership in the goods have
passed already to the buyer.
FALSE, there are exceptions.
Art. 1526. Subject to the provisions of this Title, notwithstanding that the ownership in the goods
may have passed to the buyer, the unpaid seller of goods, as such, has:
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(1) A lien on the goods or right to retain them for the price while he is in possession of
them; (2) In case of the insolvency of the buyer, a right of stopping the goods in transitu
after he has parted with the possession of them;
(3) A right of resale as limited by this Title;
(4) A right to rescind the sale as likewise limited by this Title.
Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in
addition to his other remedies a right of withholding delivery similar to and coextensive
with his rights of lien and stoppage in transitu where the ownership has passed to the
buyer
15. It is not essential to the validity of a resale that notice of the time and place of such resale should be given by
the seller to the original buyer.
TRUE. Art. 1533 (4), express provision.
16. Legal redemption shall take place when the vendor reserves the right to repurchase the thing
sold. FALSE.
Art. 1601. Conventional redemption shall take place when the vendor reserves the right to repurchase
the thing sold, with the obligation to comply with the provisions of Article 1616 and other stipulations
which may have been agreed upon.
Art. 1619. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in
the contract, in the place of one who acquires a thing by purchase or dation in payment, or by any
other transaction whereby ownership is transmitted by onerous title.
17. Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the contract,
in the place of one who acquires a thing by purchase only.
FALSE. Art. 1619. Legal redemption is the right to be subrogated, upon the same terms and
conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation in
payment, or by any other transaction whereby ownership is transmitted by onerous title.
18. The contract shall be presumed to be a sale with a right to repurchase when the price in a mortgage is
unusually inadequate.
FALSE.
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the
vendee as rent or otherwise shall be considered as interest which shall be subject to the
usury laws.
19. In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an
equitable mortgage.
TRUE. Art. 1603, express provision.
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20. The creditors of the vendor cannot make use of the right of redemption against the vendee, until after they
have exhausted the property of the vendor.
TRUE. ART. 1610, express provision.
Part TWO. Multiple Choice. Choose the best answer.
1. The buyer is deemed to have accepted the goods when:

a. he intimates to the seller that he has accepted them
b. when the goods have been delivered to him, and he does any act in relation to them which is inconsistent
with the ownership of the seller
c. when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he
has rejected them
d. all of the above Art. 1585, express provision (a,b,c)
2. The Realty Installment Buyer Act may apply to:

a. a sale of industrial lots
b. a sale of commercial buildings
c. sales to tenants
d. all of the above
Maceda Law/Realty Installment Buyer Act applies to:
a. object - residential realty on installments
b. realty - house and lots, condominiums (not immovables)
c. installment - not "on credit"
3. The cash surrender value is a minimum of:

a. 20% of the total payments made
b. 30% of the total payments made
c. 40% of the total payments made
d. 50% of the total payments made
e. 92% of the total payments made
CASH SURRENDER VALUE: minimum of 50% of all payments (including downpayment) plus 5% after
five years (55% after 7 years of payment), and 5% for every additional year thereafter upto a maximum
of 90% (or 14 years of instalment).
4. The redhibitory action, based on the faults or defects of animals, must be

brought within: a. forty days from the date of their delivery to the vendee.
b. forty days from the date of the contract
c. six months from the date of their delivery to the vendee.
d. six months from the date of the contract
e. one year from the date of the contract
Art. 1577. The redhibitory action, based on the faults or defects of animals, must be brought within
forty days from the date of their delivery to the vendee.This action can only be exercised with respect to
faults and defects which are determined by law or by local custom.
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5. There is no implied warranty as to hidden defects/quality in the following, except:
a. “as is, where is” sales
c. sale by virtue of authority in fact or law
d. animals sold at fairs or at public auctions
e. when validly suppressed by parties
Art. 1570. The preceding articles of this Subsection shall be applicable to judicial sales, except that
the judgment debtor shall not be liable for damages.
Art. 1574. There is no warranty against hidden defects of animals sold at fairs or at public auctions, or
of live stock sold as condemned.
6. The term "seller" [unpaid] includes the following, except:

a. an agent of the seller to whom the bill of lading has been indorsed
b. a consignor or agent who has himself paid or is directly responsible for the price
c. creditor of the buyer
d. any other person who is in the position of a seller
In Articles 1525 to 1535 the term "seller" includes an agent of the seller to whom the bill of lading has
been indorsed, or a consignor or agent who has himself paid, or is directly responsible for the price, or any
other person who is in the position of a seller.
7. The unpaid seller of goods who is in possession of them is entitled to retain possession of them until payment
or tender of the price in the following cases, except:
a. Where it was so stipulated
b. Where the goods have been sold without any stipulation as to credit
c. Where the goods have been sold on credit, but the term of credit has expired
d. Where the buyer becomes insolvent
e. all of the above
f. none of the above
Art. 1527. Subject to the provisions of this Title, the unpaid seller of goods who is in possession of them is
entitled to retain possession of them until payment or tender of the price in the following cases, namely:
(1) Where the goods have been sold without any stipulation as to credit;
(2) Where the goods have been sold on credit, but the term of credit has expired;
(3) Where the buyer becomes insolvent.
The seller may exercise his right of lien notwithstanding that he is in possession of the
goods as agent or bailee for the buyer.
8. That the buyer is insolvent is a requirement for the exercise of the:

a. A right to retain the goods
b. A right of stopping the goods in transitu
c. A right of resale
d. A right to rescind the sale
e. A right to demand for the payment of the unpaid price
Art. 1530. In possessory lien/right to retain goods: insolvency not required, although a ground
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9. In conventional redemption, the period for redemption, in the absence of an express agreement, shall
last: a. one year from the date of the contract
b. four years from the date of the contract
c. one year from the registration of the contract
d. four years from the registration of the contract
Art. 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last four
years from the date of the contract. Should there be an agreement, the period cannot exceed ten years.
However, the vendor may still exercise the right to repurchase within thirty days from the time final judgment
was rendered in a civil action on the basis that the contract was a true sale with right to repurchase.
10. In a sale of a parcel of land with a right to repurchase, there being no stipulation to the contrary, ownership passes
to the vendee upon:
a. the perfection of the sale
b. upon delivery
c. upon payment of the price
d. upon the lapse of the period to repurchase
e. upon the order of the court
Part THREE. Give direct and concise but complete answers. Cite authorities, if any.
1. By means of a public instrument, Mr. Nagbibili sold his mango plantation to Abenturero effective
immediately. They agreed that the delivery shall be effected six months from the execution of the deed of
sale. When the said period arrived, Abenturero demanded delivery in writing but Nagbibili dilly-dallied. It
was not until a month afterwards that Nagbibili finally gave the land to Abenturero. In the three weeks
before delivery, Nagbibili sold and delivered the entire produce of the mango plantation to Mr.
Commerciante for P200,000.00. Commerciante knew nothing of the contract between Nagbibili and
Abenturero. Abenturero now seeks to recover from Commerciante either the full value of the mangoes or a
similar amount and quality of the mangoes sold.
Does Abenturero have this right against Commerciante? Explain.
No, Abentuero does not have right to recover from Commerciante.Under the law particularly Art.
1567, the buyer shall have the right to the fruits of the thing from the time of the perfection of the sale.
In relation to Art. 1164, the creditor shall be entitled to the fruits of the thing from the time the obligation
to deliver it arises. In their agreement the obligation to deliver will arise only after 6 months, therefore
the buyer will not be entitled to the fruits during the 6 months period. Though under the facts,
Abenturero already had the right to the fruits, Abenturero does not have the right to recover against
Commerciante because under Art. 1164, he will not have any real right over the thing until the actual
delivery of the thing to him. The only remedy of Abenturero is only against Nagbibili since,
Commerciante had no knowledge of such sale between Nagbibili and Abenturero.
What if during the 6 month period, Nagbibili harvested the fruits and sold it to Commerciante,
can Abentuero recover these fruits or the value thereof?
ANSWER: Abenturero does not have the right to the fruits because Abenturero shall only
have the right to the fruits of the thing from the time the obligation to deliver it arises.
Under the facts, it was harvested before the 6 month period and during such time Nagbibili
is under no obligation to deliver the fruits.
2. Spouses Macario and Bonifacia Dakila entered into a contract to sell with Honorio Cruz over a parcel
of industrial land in Valenzuela, Bulacan for a price of Three Million Five Hundred Thousand
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Pesos (P3,500,000.00). The spouses would give a downpayment of Five Hundred Thousand Pesos
(P500,000.00) upon the signing of the contract, while the balance would be paid for the next three (3)
consecutive months in the amount of One Million Pesos (P1,000,000.00) per month. The spouses paid the
first two (2) installments but not the last installment. After one (1) year, the spouses offered to pay the
unpaid balance which Honorio refused to accept.
The spouses filed a complaint for specific performance against Honorio invoking the application of
the Maceda Law. If you are the judge, how will you decide the case?
• I will rule in favor of Honorio. The invocation of the Maceda Law is misplaced. The law applies
only to sale or financing of realty on installment payments including residential units or
residential condominium apartments and does not apply to sales of industrial units or
industrial lands like in the case presented. Another reason why the Maceda law will not apply
is that, the sale in the case at bar is not the sale on installment as contemplated by the law.
The sale on installment covered by the Maceda Law is one where the price is paid or
amortized over a certain period in equal installments. The sale to the Spouses Dakila is not a
sale on installment but more of a straight sale where a down payment is to be made and
the balance to be paid in a relatively short period of three months.
3. Priscilla purchased a condominium unit in Makati City from the Citiland Corporation for a price of P10
Million, payable P3 Million down and the balance with interest thereon at 14% per annum payable in sixty
(60) equal monthly installments of P198,333.33. They executed a Deed of Conditional Sale in which it is
stipulated that should the vendee fail to pay three (3) successive installments, the sale shall be deemed
automatically rescinded without the necessity of judicial action and all payments made by the vendee shall
be forfeited in favor of the vendor by way of rental for the use and occupancy of the unit and as liquidated
damages. For 46 months, Priscilla paid the monthly installments religiously, but on the 47th and 48th
months, she failed to pay. On the 49th month, she tried to pay the installments due but the vendor refused
to receive the payments tendered by her. The following month, the vendor sent her a notice that it was
rescinding the Deed of Conditional Sale pursuant to the stipulation for automatic rescission, and
demanded that she vacate the premises. She replied that the contract cannot be rescinded without judicial
demand or notarial act pursuant to Article 1592 of the Civil Code.
a. Is Article 1592 applicable? (3%)

Article 1592 of the Civil Code does not apply to a conditional sale.In Valarao v. CA, 304 SCRA 155,
the Supreme Court held that Article 1592 applies only to a contract of sale and not to a Deed
of Conditional Sale where the seller has reserved title to the property until full payment of the
purchase price. The law applicable is the Maceda Law.
Art. 1592. In the sale of immovable property, even though it may have been stipulated that upon failure
to pay the price at the time agreed upon the rescission of the contract shall of right take place, the
vendee may pay, even after the expiration of the period, as long as no demand for rescission of the
contract has been made upon him either judicially or by a notarial act. After the demand, the court may
not grant him a new term
b. Can the vendor rescind the contract? (2%)

No, because the object of sale is a residential unit and under the Maceda Law, there are two
stipulations that are declared void by this law. One of the stipulation is the stipulation providing for the
automatic rescission of the contract. Another void stipulation under the Maceda Law is known as the
forfeiture clause. In other words, the buyer is entitled to the Cash Surrender Value even if there is a
forfeiture clause. Such clause is a void clause under the Maceda Law.
The vendor cannot rescind because under this Maceda Law, the buyer had already paid for
at least two years. The buyer is entitled to a grace period which is 1 month for every year.
Under the facts Priscilla had already paid for 46 months, and thus having completed
paying 3 years she is entitled to a 3 months grace period equivalent to 90 days. On the
49th installment offered to pay, she dafaulted on the 47th and 48th month hence, there is
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60 days within which she did not pay which was well within the 90 day grace period. Had
she not offered to pay on the 49th month, rescission may be a remedy on the part of the
seller.
Hence, rescission cannot be a remedy on the part of the seller. If rescission is a remedy,
the seller is obliged to return the cash surrender value to the buyer. There can be no valid
rescission without the return of this cash surrender value. If rescission is a remedy, the
seller is obliged to return the cash surrender value to the buyer. There can be no valid
rescission without the return of this cash surrender value.
If the price is to be paid in 15 years and buyer failed to pay on the 5th month of the first year, how long
is the grace period? He has a grace period of 60 days. Thereafter he was able to pay the 5th, 6th, 7th, and
in fact he was able to pay installments up to the 5th year. On the 5th month of the 5th year, he
defaulted again. How long is the grace period?
Answer: None. Under this law, the buyer can only avail of the grace period once in every 5
years of installments.
4. X sold Y 100 sacks of rice that Y was to pick up from X’s rice mill on a particular date. Y did not,
however, appear on the agreed date to take delivery of the rice. After one week, X automatically rescinded
the sale without notarial notice to Y. Is the rescission valid?
Yes, automatic rescission is allowed since, having the character of movables and consumables, rice
can easily deteriorate.
5. What are the so-called “Maceda” and “Recto” Laws in connection with sales on installments? Give the
most important features of each law. (5%)
Maceda Law or Realty Installment Buyer Act (RA No. 6552)
- Essential Features:
1. Oject: is sale of residential realty on installments.
2. Realty: covers house and lot and condominium units, NOT immovales.
3. Installment: not “on credit”.
- Rights of the Buyer: if installments have not yet reached 2 years equivalent:
1. Pay without interest within 60 days;
2. The buyer may sell his interest;
3. He may assign his interest (by way of donation or dacion en pago);
4. Pay the entire balance
- After 2 years’ worth of installment, the buyer will have:
5. Grace period of minimum of 60 days, if the instalments already covers AT LEAST
two years, plus 1 month for every year after two years;
6. Seller has a right to rescind, but the seller should first give the CASH
SURRENDER VALUE: minimum of 50% of all payments (including downpayment)
plus 5% after five years (55% after 7 years of payment), and 5% for every
additional year thereafter upto a maximum of 90% (or 14 years of instalment).
- Stipulations which are VOID:
1. Automatic cancellation or rescission upon default of the buyer;
2. Stipulation as to interest or damages or penalty during the grace period.
Recto Law
- Essential Features:
1.promulgated to protect the buyer
2. pertains to the right of the buyer
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3. if you analyze the law, it only provided 3 remedies
4. pertains to movable on installments
- Art. 1484. In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies: (1) Exact fulfillment of
the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's
failure to pay cover two or more installments; (3) Foreclose the chattel mortgage on the
thing sold, if one has been constituted, should the vendee's failure to pay cover two or
more installments. In this case, he shall have no further action against the purchaser to
recover any unpaid balance of the price. Any agreement to the contrary shall be void.
-R e m e d i e s a r e a l t e r n a t i v e : if the seller invoked one, he is no longer allowed to
invoke any of the two remaining remedies.
-If only one installment was not paid: the seller can only choose the first remedy, since the
2nd and 3rd requires that there must be non-payment of two or more consecutive
installments. Consecutive since the law does not state that “the buyer failed to pay
TWICE”
- Restitution of payments under the 2 nd option, cancellation of the sale :
1. The cancellation would entail mutual restitution by the parties;
2. The seller may retain a reasonable amount of the purchase price already paid as
compensation for the use of the thing;
3. The seller cannot retain ALL of the purchase price, EXCEPT: if there is a
forfeiture clause, which entitles him to the purchase price already paid at the time
of cancellation. However, this clause will not apply if the retention of ALL the
purchase price would be unconscionable.
Note that under the MACEDA law, a forfeiture clause would not be valid.
6. A bought a truck from B payable in installment secured by a chattel mortgage executed by A on the truck.
As additional security, A’s brother, C, executed a real estate mortgage in favor of B. defaulted in the
payment of several installments. Consequently, B filed an action for replevin, repossessed the truck, and
foreclosed the chattel mortgage. an B proceed against the other properties of A and the real estate
mortgage executed by C to recover the deficiency, if any, after the chattel mortgage foreclosure sale?
Explain.
No. The sale in this case is that of a personal property in installment. As such, the Recto Law applies.
As such, the remedies being alternative under such law, since B already foreclosed the chattel mortgage,
he can no longer exact fulfillment of the obligation by foreclosing the real estate mortgage or by
proceeding against the other properties of A. If A would’ve foreclosed the real estate mortgage, the Recto
Law would not have applied since the mortgage foreclose is not on the thing sold. Accordingly, such
foreclosure would be in line with exacting fulfillment and he would’ve been entitled to a deficiency in
the proceeds of the foreclosure sale and the unpaid amount.
7. On January 2, 1980, A and B entered into a contract whereby A sold to B a parcel of land for and in
consideration of P10,000.00. A reserving to himself the right to repurchase the same. Because they were
friends, no period was agreed upon for the repurchase of the property.
1) Until when must A exercise his right of repurchase?

The period is 4 years. Under the law, if there is a right of redemption but the parties failed to provide
for such a period, the law itself says that the right may be exercised only within 4 years. However, if
the parties stipulated as to the period within which the right may be exercised, the law provides that
such cannot exceed 10 years, and if it exceeds 10 years, the same will be reduce.
Art. 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last
four years from the date of the contract. Should there be an agreement, the period cannot exceed ten
years. However, the vendor may still exercise the right to repurchase within thirty days from the time
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final judgment was rendered in a civil action on the basis that the contract was a true sale with right
to repurchase
2) If A fails to redeem the property within the allowable period, what would you advise B to do for his
better protection?
To file an action for the consolidation of title
8. On July 14, 2004, Pedro executed in favor of Juan a Deed of Absolute Sale over a parcel of land covered by
TCT No. 6245. It appears in the Deed of Sale that Pedro received from Juan P120,000.00 as purchase
price. However, Pedro retained the owner’s duplicate of said title. Thereafter, Juan, as lessor, and Pedro,
as lessee, executed a contract of lease over the property for a period of one (1) year with a monthly rental
of P1,000.00. Pedro, as lessee, was also obligated to pay the realty taxes on the property during the
period lease. Subsequently, Pedro filed a complaint against Juan for the reformation of the Deed of
Absolute Sale, alleging that the transaction covered by the deed was an equitable mortgage. In his verified
answer to the complaint, Juan alleged that the property was sold to him under the Deed of Absolute Sale,
and interposed counterclaims to recover possession of the property and to compel Pedro to turn over to
him the owner’s duplicate of title.
Resolve the case with reasons.

The complaint of Pedro against Juan should be dismissed. The instances when a contract — regardless
of its nomenclature — may be presumed to be an equitable mortgage are enumerated in Article 1602 of
the Civil Code: “Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of
the following cases:
1. When the price of a sale with right to repurchase is unusually inadequate:

2. When the vendor remains in possession as lessee or otherwise;
3. When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;
4. When the purchaser retains for himself a part of the purchase price;
5. When the vendor binds himself to pay the taxes on the thing sold;
6. In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.
“In any of the foregoing cases, any money, fruits, or other benefit to be received by the
vendee as rent or otherwise shall be considered as interest which shall be subject to the
usury laws.”Article 1604 states that “the provisions of article 1602 shall also apply to a
contract purporting to be an absolute sale.”
For Articles 1602 and 1604 to apply, two requisites must concur: 1) the parties entered into a
contract denominated as a contract of sale; and 2) their intention was to secure an existing debt by way
of mortgage (Heirs of Balite v. Lim, G.R. No. 152168, December 10, 2004).In the given case,
although Pedro retained possession of the property as lessee after the execution of the Deed of Sale, there
is no showing that the intention of the parties was to secure an existing debt by way of mortgage. Hence,
the complaint of Pedro should be dismissed.
9. Antonio, Bart, and Carlos are brothers. They purchased from their parents specific portions of a parcel of land
as evidenced by three separate deeds of sale, each deed referring to a particular lot in metes and bounds.
When the deeds were presented for registration, the Register of Deeds could not issue separate
certificates of title due to the absence of a subdivision plan. The new title had to be issued, therefore, in
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the names of the brothers as co-owners of the entire property. The situation has not changed up to now,
but each of the brothers has been receiving rentals exclusively from the lot actually purchased by him.
Antonio sells his lot to a third person, with notice to his brothers. To enable the buyer to secure a
new title in his name, the deed of sale was made to refer to an undivided interest in the property of
the seller (Antonio), with the metes and bounds of the lot sold being stated. Bart and Carlos
reacted by signifying their exercise of their right of redemption as co-owners. Antonio, in his behalf
and in behalf of his buyer, contends that they are no longer co-owners, although the title covering
the property has remained in their names as such.
May Bart and Carlos still redeem the lot sold by Antonio? Explain.
No, because under the facts, they are no longer co-owners. A TCT is not conclusive as to the rights of
the parties to a certain property. Pwedeng apparently co - owners sila but in reality there has already been
a participation of the property, yun lang hindi pa naka-reflect sa TCT. In fact, a property may be
registered in a person who is not the owner kasi na - forge lang yung signature ng real owner. Thus, the
requirement of the law that the co-owner would have the right to redeem is not present therefore, there
would be no right of redemption.
10. Betty and Lydia were co-owners of a parcel of land. Last January 31, 2001, when she paid her real estate
tax. Betty discovered that Lydia had sold her share to Emma on November 10, 2000. The following day,
Betty offered to redeem her share, but the latter replied that Betty’s right to redeem has already
prescribed. Is Emma correct or not? Why? (5%)
EMMA is not correct. Because the law provides 30 days from the time notice was given to the co-owner. In this
problem, the 30 days had not even started to run because no notice was given
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AGENCY, TRUST, AND PARTNERSHIP
AGENCY QUIZ SAMPLEX

PART I
1. Statements:
TRUE Agency may be oral.
FALSE Notice of the revocation in a newspaper of general circulation is a sufficient warning to third
persons. - Article 1922. If the agent had general powers, revocation of the agency does not
prejudice third persons who acted in good faith and without knowledge of the revocation.
Notice of the revocation in a newspaper of general circulation is a sufficient warning to
third persons. (n)
2. Statements:
TRUE The principal may revoke the agency at will and compel the agent to return the document
evidencing the agency. Article 1920. The principal may revoke the agency at will, and compel
the agent to return the document evidencing the agency. Such revocation may be express or
implied. (1733a)
TRUE If two or more persons have appointed an agent for a common transaction or undertaking, they
shall be solidarity liable to the agent for all the consequences of the agency.
3. Statements:
TRUE The limits of the agent’s authority shall not be considered exceeded should it have been
performed in a manner more advantageous to the principal than that specified by him.
FALSE If the 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.
4. Statements:
FALSE The principal is liable for the expenses incurred by the agent.
TRUE The agent may retain in pledge the things which are the object of the agency until the principal
effects the reimbursement and pays the agent for all the damages which the execution of the
agency may have caused the latter, without fault or negligence on his part.
5. Statements:
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FALSE The agent shall be liable for damages if there is a conflict between his interest and those of the
principal.
TRUE If the agent has been empowered to lend money at interest, he may himself be the borrower at
the current rate of interest.
6. Statements:
FALSE A person who is not a partner may not be liable as though he were a partner.
FALSE The receipt by a person of a share in the profits of a business is prima facie evidence that he is
a partner in the business.
7. Statements:
TRUE A partnership may be constituted in any form.
FALSE Persons who are prohibited from giving each other any donation or advantage cannot enter
into a particular partnership.
8. Statements:
TRUE A partnership begins from the moment of the execution of the contract.
TRUE Every partner is a debtor of the partnership for whatever he may have promised to contribute
thereto.
9. Statements:
TRUE A partner is co-owner with his partners of specific partnership property.
TRUE Every partnership shall operate under a firm name, which may or may not include the name of
one or more of the partners.
10. Statements:
TRUE The contributions of a limited partner may be cash or other property, but not services.
TRUE A person may be a general partner and a limited partner in the same partnership at the same
time.
PART II
1. Which of the following statements is correct?
a. A partnership contract is not covered by the Statute of Frauds.
b. A limited partnership is one having at least one general partner or one limited partner and the
limited partner shall not be liable for the obligations of the partnership.
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c. A limited partner who takes active part in the management of the from becomes liable as
a general partner.
d. The contract of partnership is void if it contains a stipulation which excludes a partner from
sharing in the profits or the losses.
2. Partnership as distinguished from co-ownership:

a. It has juridical personality
b. Created not only by agreement of the parties but also by law
c. Purpose is to make profits
d. Profits are divided in proportion to one’s interest
3. The following, except one, are not the characteristics of a limited partnership. Which one is the exception?
a. There is mutual agency among partners
b. The general partners are liable solidarily for the contractual obligations of the partnership
c. All the partners are liable after exhaustion of partnership assets to the extent of their personal
property
d. It has a juridical personality separate and distinct from the partners.
4. May contribute money, property or industry to the common fund:

a. General partner
b. Industrial partner
c. Limited partner
d. Capitalist partner
5. A limited partner who takes active part in the management of the firm becomes:
a. a managing partner
b. liable as a general partner
c. a general partner
d. a general partner and a limited partner at the same time
6. Which of the following statements is not correct?

a. A limited partner in a limited partnership manages the business of the partnership but
cannot perform acts of ownership without the consent of all the limited partners.
b. Valid contributions of a limited partner are money and property but not services.
c. Additional limited partners maybe admitted into the limited partnership with the consent of all
the partners.
d. A person who is both a general partner and a limited partner is deemed a limited partner only
with respect to the return of his contribution.
7. A is the managing partner in A & B Company. X is indebted to A for P20,000.00 and to the partnership for
P60,000.00. When both debts mature, X pays A P20,000.00 and the latter issues a receipt of the
partnership. The payment for P20,000.00 shall be applied:
a. ¼ in favor of A and ¾ in favor of the partnership
b. To the whole debt owing to A
c. ½ in favor of A and ½ in favor of the partnership
d. To the debt owing to the partnership
8. Which of the following liabilities of a partner shall rank first in the order of payment?
a. Those owing to partnership creditors other than partners
b. Those owing to partners in respect to profits
c. Those owing to partners by way of contribution
d. Those owing to separate creditors
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9. Which of the following incidents may be a cause for involuntary dissolution of a partnership?
a. Expulsion of any partner
b. Termination of the term of the partnership
c. Insolvency of any partner
d. Express will of any partner
AGENCY AND PARTNERSHIP QUIZ SAMPLEX
TRUE 1. Agency may be oral.
FALSE 2. Notice of revocation in a newspaper of general circulation is sufficient warning

to third persons of the revocation of agency.
TRUE 3. The principal may revoke agency at will and compel the agent to return the
documents of agency.
TRUE 4. Two or more persons appointed for a common transaction shall be solidarily
liable to the agent for all consequences of the agency.
TRUE 5. The limits of the agent’s authority are deemed exceeded even if the act is more
advantageous to the principal.
FALSE 6. If the agent acted in his own name, the principal has no right of action against
the person with whom the agent has contracted.
FALSE 7. The principal is liable for expenses incurred by the agent.
TRUE 8. The agent may retain in pledge object of the agency until the principal effects
reimbursement and pays the agent.
FALSE 9. The agent is liable if there is a conflict of interest between his interests and
those of the principal.
FALSE 10. If the agent is empowered to lend money, he may be the borrower.
TRUE 11. Persons not partner may be liable as a partner.
FALSE 12. Receipt of profits is prima facie evidence of partnership.
TRUE 13. Partnership may be constituted in any form.
FALSE 14. Persons prohibited from giving donation or advantage cannot enter into
particular partnership.
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FALSE 15. Partnership begins from the execution of the contract.
TRUE 16. Every partner I a debtor of the partnership
FALSE 17. A partner is a co-owner of the partnership property.
TRUE 18. Every partnership shall operate under a firm name.
TRUE 19. Contributions of a limited partner may be cash or property not services.
TRUE 20. A person may be a general partner and a limited partner at the same time.
FALSE 21. Sale of a piece of land thru agent—agency is void.
TRUE 22. SPA is necessary to waive any obligation gratuitously.
TRUE 23. SPA to sell includes power to mortgage.
FALSE 24. SPA to mortgage does not include power to sell.
FALSE 25. Agency shall remain in full force even after the death of the principal
FALSE 26. All acts of the agent even after the death of the principal, without his
knowledge, is valid.
TRUE OR FALSE
1. Notice of the revocation in a newspaper of a general circulation is a sufficient warning to third persons.
a. TRUE, Art. 1922.
2. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be
solidarily liable to the agent for all the consequences of the agency.
a. TRUE, Art. 1915.
3. 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.
a. FALSE, as a general rule, the agent is the one directly bound in favor 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. (Art. 1883, par. 2)
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4. The agent may retain in pledge the things which are the object of the agency until the principal effects the
reimbursement and pays the agency for all the damages which the execution of the agency may have caused
the latter, without fault or negligence on his part.
a. FALSE, because the agent may also retain in pledge the things which are the object of the agency not only for
all the damages, but also for the sums advanced by the agent for the execution of the same. (Art. 1912 and
1913)
5. The agent shall be liable for damages if there is a conflict between his interests and those of the principal.
a. FALSE, because the agent will only be liable for damages, if, there being a conflict between his interests and
those of the principal, he should prefer his own. (Art. 1889)
6. Special power of attorney is necessary to loan or borrow money.
a. FALSE, the special power of attorney is not necessary to loan or borrow money IF there is urgency or it is for
the preservation of the things which are under the agent’s administration. (Art. 1878, par. 7)
7. When a sale of a piece of an immovable property is through an agent, the authority of the latter shall be in
writing; otherwise the sale shall be void.
a. FALSE, because the law provides “sale of a piece of land”, not immovable. (Art. 1874)
8. The agency may remain in full force and effect even after the death of the agent.
a. TRUE, as a general rule, the death of the agent extinguishes the agency. However, if the agency was
constituted (a) for the benefit of both parties or (b) for the benefit of a third person who accepted the benefit,
then that agency shall continue even after the death of the agent. (Art. 1930)
9. The principal is not liable for the expenses incurred by the agent if the agent acted in contra ention of the
principal s instructions.
a. FALSE, the principal may still be liable for the expenses incurred by the agent even if the latter acted in
contravention of the former’s instructions when the principal wants to avail of the benefits derived by the
agent. (Art. 1918)
10. By the contract of agency, a person renders some service or does something in representation or on behalf
of another, with the consent or authority of the latter.
a. TRUE, Art. 1868.
i. Alternative answer: FALSE, not all acts in representation or on behalf of
another result to agency. Art. 1868 does not contemplate social and political representation. In order to have a
contract of agency, the purpose of the agency must be the execution of a juridical act; the act that will be
163
executed by the agent on behalf of the principal should create, modify, or extinguish a legal relationship
between the principal and a third person. (Uribe lecture)
1. A feature which is common to agency, negoriorum gestio and guardianship is:

● The relationship created by law
● Based on trust and confidence
● There is representation
● One has control over the other
2. The following acts may not require a SPA to be enforceable except: - malabo ung tanong at choices.
isipin mong mabuti ha.
● to make payment
● to waive an obligation
● to accept an inheritance
● to make gifts
● to loan or borrow money if there is urgency or if for the preservation of things which
are nder the agent s administration the SPA ill not be necessar
3. The performance of the following acts may be delegated by a person to his agent, except:
● to ote in a stockholders meeting
● to enter into a contract of lease over his real property for more than 1 year
● acts of strict dominion
● to represent the principal in a meeting of board of directors’ of a company.
4. If the 3rd person with whom the agent contracted was aware that the agent was acting outside the
scope of his authority:
A. The contract is void and the principal will be liable to 3rd persons
B. the contract is void and this contract cannot be ratified
C. the contract is void and the agent will be liable to 3rd persons
D. The contract is void and the agent will be liable to the 3rd person if he undertook to secure the
principal’s ratification – Art. 1898
E. None of the above
5. An SPA may be valid even if:
a. not signed by the principal

b. not in writing
c. not acknowledge before a person authorized to administer oaths
d. no aurhotity given
6. The following are characteristics of agency as a contract:
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● consensual
● essentially onerous
● preparatory
● principal
7. The agent shall not be personally liable if:
● he acted in his own name
● he expressly binds himself
● he acted fraudulently
● the exceeded his authority but the 3rd person was are of the limits of his authority
8. If the agency is couched in general terms; it comprises
● all the business of the principal
● only one or more transactions but not all the business of the principal
● only acts of administration – Art. 1877
● all acts of strict dominion
9. If the agent has been empowered to borrow money:
● he cannot be the lender without the consent of the principal
● he may himself be the lender at the current rate of interest
● he may himself be the lender at the legal rate of interest
● he may himself be the lender but the loan may comply with the Usury Law
10. Even if the agents bound themselves solidarily, they will not be held solidarily if:
● the agent who caused damages acted in bad faith
● the agent who caused damages acted negligently
● the agent who caused damages acted in bad faith
● the agent who caused damage caused beyond the scope of their authority
RUE OR FALSE
1. The authority of the agent must be in writing in order for the contract that will be entered into by the agent
with a 3rd person to bind the principal.
a. FALSE, agency must be in writing only in the instances provided under Art. 1878.
2. The acceptance of the agency may be implied if the principal delivers his power of attorney to the
agent and the latter receives it without any objection.
a. FALSE, a distinction must be made if the acceptance is between persons who are present and
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between persons who are absent:
i. In an acceptance between persons who are present, the statement is true. (Art. 1871)
ii. In an acceptance between persons who are absent, acceptance cannot be implied from the silence
of the agent except –
1. Principal transmits his power of attorney to the agent who receives it without any objection;
2. Principal entrusts to the agent by letter or telegram a power of attorney with respect to the
business in which the latter is habitually engaged as an agent and he did not reply to the
letter or telegram. (Art. 1872)
3. When a sale of an immovable is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void.
a. FALSE, because the law provides “sale of a piece of land”, not immovable. (Art. 1 )
4. Agency is onerous, unless there is proof to the contrary.
a. FALSE, it is only presumed to be onerous (for compensation), unless there is proof to the contrary. (Art.
1875)
5. A SPA is necessary to abandon a prescription already acquired.
a. TRUE, Art. 1878, par. 3.
6. A SPA is necessary to loan or borrow money.
a. FALSE, an SPA will not be required to loan or borrow money when there is urgency and is indispensable for
the preservation of the thing under administration. (Art. 1878, par. 7)
7. The object of a contract of agency is a thing.
a. FALSE, it is the execution of a juridical act.
8. Any act which one may lawfully do personally can be delegated to an agent.
a. FALSE, there are acts that are purely personal and cannot be delegated to an agent such as voting in
national elections.
9. A person capable of acting for himself can be an agent of another.
a. FALSE, in a contract of agency, as far as third persons are concerned, what is important and material is the
legal capacity OF THE PRINCIPAL to enter into a contract. The capacity of the agent is of no moment. The
agent’s personality is merely an extension of the principal. If the principal has the necessary capacity, that is
enough.
10. The object of a contract of agency is the execution of an act in relation to a third person.
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a. FALSE, must be a juridical act; not all acts in relation to ta third person are juridical acts.
1. This is an essential requisite of a contract of agency: a. that the agent is of age

b. that the agent shall act in representation of the principal
c. execution of a juridical act
d. the promise of the principal to pay his agent his commission
2. This act may be delegated to an agent:
● execution of a will
● making of an affidavit
● to vote – take note “MAY”; a principal may ask his agent to vote in stockholder meetings;
this is a better answer than NONE OF THE ABOVE.
● purely personal acts
● none of the above
3. Who has the burden of proving that a contract of agency is gratuitous?
a. b. c. d. e.
4. A SPA a. b. c. d. e.
the principal
the agent
whoever alleges that the contract is gratuitous
the third person with whom the agent entered into a contract on behalf of the principal no one
is not necessary to:
to accept an inheritance (Art. 1878, par. 13)
to sell the car of the principal (Art. 1878, par. 15)
to bind the principal in a contract of partnership (Art. 1878, par. 10) to lease the land of a 3rd person for 3
years (Art. 1878, par. 8)
none of the above
5. If the agent sold an immovable property of the principal without a SPA, as a rule, the contract of agency is:
● void
● voidable
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● valid – TAKE NOTE, the question is about the contract of agency, NOT THE CONTRACT
OF SALE. A contract of agency is a preparatory contract which means that there is
another contract that will be entered into.
● unenforceable
● rescissible
TRUE OR FALSE
1. The commission agent who does not collect the credits of his principal at the time when they become due
and demandable is liable for damages.
a. FALSE, commission agent will not be liable if he proves that he exercised due diligence in the collection of
credits.
2. Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to do so.
a. FALSE, when the principal is insolvent, the agent will not be required to advance the necessary funds. (Art.
1886)
3. Should the commission agent receive on a sale his commission, he shall bear the risk of collection.
a. FALSE, this pertains to a guarantee commission. (Art. 1907)
4. If the agent has been empowered to borrow money, he may himself be the lender.
a. TRUE, Art. 1890. Take note that the agent must lend a the current rate of interest.
5. If the commission agent sold the goods on credit, without the consent of the principal, the sale is void
a. FALSE, the sale is valid. The implication of such sale is that the principal may demand from the agent
payment in cash, but the commission agent shall be entitled to any interest or benefit which may result from
such sale. (Art. 1905)
6. The acts of the substitute appointed against the prohibition of the principal shall be void.
a. TRUE, Art. 1892.
7. Private or secret orders and instructions of the principal do not prejudice 3rd persons who have relied upon
the power of attorney or instructions shown them.
a. TRUE, Art. 1902.
8. The agent who acts as such is not personally liable to the party with whom he contracts.
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a. FALSE, the agent may be personally liable when he binds himself to the third person or he exceeds limits
his authority without giving such party sufficient notice of his powers. (Art. 1897)
9. If the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal
does not ratify the contract, it shall be void.
a. FALSE, the contract may be valid. It will only be void if the third party with whom the agent contract with
is aware of the limits of the powers granted by the principal. (Art. 1898)
10. A 3rd person cannot set up the fact that the agent has exceeded his powers if the principal ratified the
agent s acts
a. TRUE, Art. 1901.
1. If the 3rd person with whom the agent contracted was aware that the agent was acting outside the
scope of his authority:
● Contract is void and the principal will be liable to 3rd person
● Contract is void and this contract cannot be ratified
● Contract is void and the agent will be liable to 3rd person
● Contract is void and the agent will be liable to 3rd person if he undertook to secure
the principal’s ratification and he failed to do so
2. By the fact that the agent acted in excess of his authority, the contract that he entered into can never
be:
● enforced against the principal
● unenforceable
● voidable
● void
3. If a commission agent sold the goods in installment basis with interest without the authority of the
principal to sell on credit:
● the principal will be entitled to the interest
● the agent will not be entitled to his commission
● the principal can demand payment from the agent in cash – Art. 1905
● the principal can recover the things sold from the buyer
4. Even if the agents bound themselves solidarily, they will not be held solidarily if:
● the agent who caused damage acted in good faith
● the agent who caused damage acted negligently
● the agent who caused damage was at fault
● the agent who caused damage acted beyond the scope of his authority
5. If the agent has been empowered to borrow money:
● he cannot be the lender without the consent of the principal
● he may himself be the lender at the current rate of interest
● he may himself be the lender at the legal rate of interest
● he may himself be the lender but the loan must comply with the Usury Law.
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TRUE OR FALSE
1. If the agent dies, his heirs must notify the principal thereof, and in the meantime adopt such measures as
the circumstances may demand in the interest of the latter.
a. TRUE, Art. 1932.
2. If the agent has exceeded his authority, the principal is jointly liable with the agent if the former allowed the
latter to act as though he had full powers.
a. FALSE, the principal is solidarily liable, not jointly, with the agent. (Art. 1911)
3. If two or more persons have appointed an agent for a common transaction or undertaking, they shall be
jointly liable to the agent for all the consequences of the agency.
a. FALSE, solidarily liable. (Art. 1915)
4. The principal is not liable for the expenses incurred by the agent when the agent incurred them with
knowledge that an unfavorable result would ensue.
a. FALSE, this will only apply if the principal was not aware that an unfavorable result would ensue. (Art.
1918, par. 3)
5. Agency is extinguished by the death of the principal.
a. FALSE, when the agency is one coupled with interest. (Art. 1930)
6. Notice of the revocation in a newspaper of general circulation is a sufficient warning to 3rd persons.
a. TRUE, Art. 1922.
7. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly
with 3rd persons.
a. TRUE, Art. 1924.
8. A general power of attorney is revoked by a special one granted to another agent, as regards the special
matter involved in the latter.
a. TRUE, Art. 1926.
9. When two or more principals have granted a power of attorney for a common transaction, one of them
cannot revoke the same without the consent of the others.
a. FALSE, any one of the principals may revoke the agency without the consent of the others. (Art. 1925)
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10. An agency cannot be validly revoked if a bilateral contract depends upon it.
a. TRUE, Art. 1927. MULTIPLE CHOICE QUESTIONS
1. The principal must reimburse agent for the sums advanced by him which shall include interest on the
sum advanced
● from the time the agency was perfected
● from the time the agency was made
● from the time demand was made by the agent
● within 30 days from demand
● from the day on which the advance was made
2. When two persons leased the same thing, one of them with the agent and the other with the principal,
and the two contracts are incompatible with each other:
● the contract earlier entered into shall be preferred
● the contract entered into by the agent shall be preferred if the agent acted in good faith
● the contract entered into by the principal shall be preferred if the principal acted in
good faith
● the contract which was first registered in good faith
3. The principal is NOT liable for the expenses incurred by the agent in the following cases:
a. if the agent acted in contra ention of the principal's instructions
b. when the expenses were due to the fault of the principal – the law provides that the expenses were
incurred due to the fault of the AGENT, not the principal. (Art. 1918)
c. when the agent incurred them with knowledge that an unfavorable result would ensue
d. When it was stipulated that the expenses would be borne by the agent
e. All the above
4. If two or more persons have appointed an agent for a common transaction or undertaking, they
● solidarily liable to the agent for all the consequences of the agency
● jointly liable to the agent for all the consequences of the agency
● solidarily liable to the agent for all the consequences of the agency only if stipulated
● solidarily liable to third persons
PARTNERSHIP IN GENERAL
TRUE OR FALSE
1. A partner (person) who is not a partner may not be liable as though he were a partner.
● TRUE. This happens in a partnership by estoppel under Art. 1825 which provides that a
person who represents himself or consents to another representing him to anyone as a
partner in an existing partnership or with one or more persons not actual partner is liable to
anyone who has, on the faith of such representation, given credit to the actual or apparent
partnership.
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● Note, however, that Art. 1825 does not create a partnership as between the alleged
partners. The law only considers them as partners and the association as a partnership
insofar as it is favorable to third persons. However, the liability is created only in favor of
persons who on the faith of such representation gave credit to the partnership.
2. Every partner is a debtor of the partnership for whatever he may have promised to contribute thereto.
● TRUE, Art. 1786.
● The cause of a contract of partnership is the promise of each partner to contribute
money, property or industry.
3. A partnership may be constituted in any form.
● FALSE. This will not be true if immovable or real properties are contributed to the
partnership, in which case, the contract must be in a public instrument, recorded in the SEC.
(Art. 1771)
● Also, if the partnership involves contributions of immovable properties, there must be an
inventory of such attached to the public instrument. Otherwise, the contract of partnership
shall be void. (Art. 1773)
4. A partner is a co-owner with his partners of specific partnership property.
a. FALSE, because this is not an ordinary co-ownership under property law. Instead, co- ownership has
specific incidence as provided under Art. 1811.
i. Alternative answer: TRUE. Express provision of Art. 1811.
5. The receipt by a person of a share of profits of a business is prima facie evidence that he is a partner in the
business.
● FALSE. No such inference shall be drawn if such profits were received in payment:
i. As a debt by installments or otherwise;
ii. As wages of an employee or rent to a landlord;
iii. As an annuity to a widow or representative of a deceased partner;
iv. As interest on a loan; or
v. As consideration for the sale of a goodwill of a business or other property by installments or
otherwise.
● Sharing in the profits does not necessarily result in a partnership contract because the sharing of the
profits may only be a way of compensating the other person. Such profits may be received in
payment as a debt, among others, as provided under Art. 1769, par. 4.
6. Every partnership shall operate under a firm name, which may or may not include the name of one or more
of the partners.
a. TRUE, Art. 1815.
7. Persons who are prohibited from giving each other any donation or advantage cannot enter into a particular
partnership.
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a. FALSE, because the persons who are prohibited from giving each other any donation or advantage cannot
enter into a universal, not particular, partnership. (Art. 1782)
8. The contributions of a limited partner may be cash or other property, but not services.
a. TRUE, Art. 1845.
9. A partnership begins from the moment of the execution of the contract.

a. FALSE, because a partnership begins from the moment of the execution of the contract, unless it is
otherwise stipulated. (Art. 1784).
10. A person may be a general partner and a limited partner in the same partnership at the same time.
● TRUE, if it is stated in the certificate of limited partnership. His rights are those of a general
partner. However, with regard to his contribution, he would be considered a limited partner,
with the rights of a limited partner insofar as the other partners are concerned.
● Such person would have all the rights and obligations of a general partner; however, he
would have a right as to his contribution as against the other partners, which he would not
have, had he not been a limited partner. When it comes to division of assets upon dissolution
he has the priority as a limited partner.
1. This is a a partner s share of profits and s urpl s
A. a partner s rights in specific partnership propert y

B. a partner’s interest in the partnership (Art. 1 12)
C. a partner s right to participate in the management
D. all of the above
E. none of the above
2. The receipt by a person of a share of the profits of a business is prima facie evidence that he is a
partner in the business, but no such inference shall be drawn if such profits were received in payment:
● as an annuity to a widow
● as interest on a loan
● as the consideration for the sale of a goodwill of a business
● all of the above (Art. 1769(4))
3. This partnership comprises all that the partners may acquire by their industry or work during the
existence of the partnership:
a. universal partnership of present property
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● universal partnership of profits (Art. 1780)
● particular partnership
● limited partnership
4. Articles of universal partnership, entered into without specification of its nature, shall be deemed:
● a universal partnership of present property
● a universal partnership of profits (Art. 1781)
● either a universal partnership of present property or a universal partnership of profits
● neither a universal partnership of present property or a universal partnership of profits
5. Persons who are prohibited from giving each other any donation or advantage (cannot?) enter into a:
● universal partnership of present property
● universal partnership of profits
● any kind of universal partnership (Art. 1782)
● particular partnership
6. This partnership has for its object determinate things, their use or fruits or a specific undertaking, or
the exercise of a profession or vocation:
● universal partnership of present property
● universal partnership of profits
● particular partnership (Art. 1783)
7. This partner cannot engage in business for himself, unless the partnership expressly permits him to do
so:
● capitalist
● industrial (Art. 1789)
● limited
● general partner
● incoming
8. The risk of specific and determinate things contributed to the partnership so that only their use and
fruits may be for the common benefit shall, in the absence of a contrary stipulation, be borne by the
partnership except if the things:
● are not fungible (Art. 1795) – If not fungible, the risk shall be borne by the partner who owns
them.
● cannot be kept without deteriorating
● were contributed to be sold
● were appraised in the inventory
● all of the above
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9. This partner cannot engage for his own account in any operation which is of the kind of business in which the
partnership is engaged, unless there is a stipulation to the contrary:
● capitalist (Art. 1808)

● industrial
● limited
● general partner
● managing
10. Except when authorized by the other partners or unless they have abandoned the business, one or more
but less than all the partners have no authority to:
● confess a judgment
● submit a partnership claim or liability to arbitration
● renounce a claim of the partnership
● all of the above (Art. 1818)
PARTNERSHIP
TRUE OR FALSE
1. A partner is co-owner with the partnership of specific partnership property.
a. FALSE, because a partner is a co-owner with the other partners, not with the
2. A partner cannot assign his right in specific partnership property.

a. FALSE, because in specific partnership property, while there can be no valid
assignment of rights by one partner, such assignment will be valid if all the partners assigns their
rights in the same property. (Art. 1811(2))
3. A partner s interest in the partnership is his share of the profits and surplus.
a. TRUE, Art. 1812.
4. A stipulation which excludes one or more partners from any share in the profits is void.
a. TRUE, Art. 1799.
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5. Any partner shall have the right to a formal account as to the partnership affairs if he is wrongfully excluded
from the partnership business or possession of its property by his co- partners.
a. TRUE, Art. 1809(1).
6. Any partner shall have the right to a formal account as to partnership affairs every fiscal year.
a. FALSE. The law only enumerated the specific circumstances when a partner would have the right to a
formal account, the last of which states “whenever other circumstances render it just and reasonable.” A
partner exercising the right to a formal account every fiscal year is not just and reasonable, considering the
fact that he already has access to the books of the partnership. (Art. 1809)
7. A partner s right in specific partnership propert is not s bject to attachment or e ec tion except on a
claim against the partnership.
a. TRUE, Art. 1811(3).
8. A partner who has undertaken to contribute a sum of money and fails to do so becomes a debtor for the
interest and damages from the time demand is made.
a. FALSE, from the time he should have complied with his obligation. (Art. 1788)
9. The risk of specific and determinate things, which are contributed to the partnership so that only their use
and fruits may be for the common benefit, shall be borne by the partnership.
a. FALSE, because a distinction must be made as to the nature of the thing contributed:
i. If the thing contributed is non-fungible, the risk shall be borne by the partner
who owns it;
ii. If the thing contributed is fungible or it thing cannot be kept without
deteriorating or contributed by the partner to be sold, or (4) when it has an appraised value in the
inventory, the risk shall be borne by the partnership. (Art. 1795)
10. The designation of losses and profits cannot be entrusted to one of the partners.
a. TRUE, Art. 1798, par. 2. MULTIPLE CHOICE QUESTIONS
1. As for the profits, the industrial partner shall receive: a. 1/3 of profits
b. equal to the share of the capitalist partners
c. in proportion to the shares of the capitalist partners
d. such share as may be just and equitable under the circumstances
2. A stipulation which excludes one or more partners from any share in the profits is known as:
● pactum commissorium
● pactum de non aliendo
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● pactum leonine
● constitutum possessorium
3. The revocation of the power of a partner who has been appointed manager after the constitution of
the partnership requires:
● just cause and the vote of the majority of the partners
● just cause and the vote of the majority of the managing partners
● the vote of the partners representing the controlling interest, with or without just
cause
● the vote of the partners representing the controlling interest with just cause
● the vote of the majority of the industrial partners, with or without just cause
4. In case it should have been stipulated that none of the managing partners shall act without the consent
of the others, the validity of the acts of each partner would require:
● concurrence of the majority of the partners
● concurrence of the majority of the capitalist partners
● concurrence of the managing partners – (Art. 1802)
● concurrence of the majority of the managing partners
● concurrence of the partners having controlling interest
5. C, P and IP are partners, IP is an industrial partner. There is no stipulation as to the sharing of profits
and losses. The partnership realized profits of P21,000. The share of IP in the profits:
● C and P will determine IP s share in the profits
● IP s share is
● Pro-rata to his contributed capital
● Value of Service
● Nothing, because he is an industrial partner
CREDIT TRANSACTIONS
CREDIT TRANSACTIONS QUIZ SAMPLEX
TRUE 1. Deposit is a real contract.
FALSE 2. Deposit is not covered by the Statute of Frauds.
FALSE 3. Deposit by a capacitated person with another who is not, the depositor shall
have action to recover while thing is in possession of the depositary.
FALSE 4. The depositary is obliged to keep the thing safely and to return it to the
177
depositor.
FALSE 5. If deposit with a third person is allowed, the depositary shall not be liable for
the loss.
TRUE 6. The surety undertakes to pay if the principal does not pay; the guarantor only
binds himself to pay if the principal cannot pay. The first is the insurer of the
debt, while the other is the insurer of the solvency.
FALSE 7. A guaranty is essentially gratuitous.
TRUE 8. Guaranty may be constituted to guarantee a voidable contract.
TRUE 9. Guaranty may be constituted to guarantee future debts...
FALSE 10. A guarantor cannot be compelled to pay the creditor unless the latter has
exhausted all the properties of the principal debtor, and…
FALSE 11. The thing deposited may not be used without the permission of the depositor.
TRUE 12. The depositary cannot demand that the depositor prove his ownership of the
thing deposited.
FALSE 13. The thing deposited must be returned upon demand.

Reason: Art. 1988. The thing deposited must be returned to the depositor upon
demand, even though a specified period or time for such return may have been fixed.
This provision shall not apply when the thing is judicially attached while in the
depositary's possession, or should he have been notified of the opposition of a third
person to the return or the removal of the thing deposited. In these cases, the
depositary must immediately inform the depositor of the attachment or opposition.
TRUE 14. Deposit of effects by travellers in hotels or inns is a necessary deposit.
FALSE 15. Loan and deposit are essentially gratuitous.
FALSE 16. Bailor in commodatum acquires use of the thing loaned without compensation
but not its fruits.
FALSE 17. The bailee is not liable for the loss of the thing if due to a fortuitous event.
FALSE 18. A contract of deposit is a consensual contract.
FALSE 19. An escalation clause is void if there is no de-escalation clause.
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CTQUIZ SAMPLEX #1
PART ONE. TRUE OR FALSE
1. The indivisibility of a pledge or mortgage is not affected by the fact that the debtors are not jointly liable.
a. FALSE, debtors are not SOLIDARILY liable. (Art. 2090)
b. If the debtors are jointly liable,
2. Incorporeal rights may also be pledged.

a. TRUE, Art. 2095.
ARTICLE 2095. Incorporeal rights, evidenced by negotiable instruments, bills of lading, shares
of stock, bonds, warehouse receipts and similar documents may also be pledged. The
instrument proving the right pledged shall be delivered to the creditor, and if negotiable, must
be indorsed. (n)
3. A pledge shall not take effect between the parties if a description of the thing pledged and the
date of the pledge do not appear in a public instrument.
a. FALSE, this requirement goes into the effectivity of the pledge as to third persons. The
pledge will remain valid and binding between the parties regardless of whether the
instrument is registered or not. (Art. 2096)
4. The guarantor who pays is subrogated by virtue thereof to all the rights which the creditor had
against the debtor.
a. FALSE, this statement is not absolute. An exception is when the payment by the guarantor
was made without the debtor’s consent or when the debtor already paid when the
guarantor paid. (Art. 2068-2070)
5. A guarantor may bind himself for more, but not for less than the principal debtor.
a. FALSE, a guarantor may not bind himself for more than the principal debtor; and may bind
himself for less than the principal debtor. (Art. 2054)
6. A mortgage may also be given as security for future debts, the amount of which is not yet known.
a. FALSE, you must distinguish first –
i. A real estate mortgage, pledge, or antichresis may
secure after incurred obligations so long as these future debts
are accurately described.
ii. A chattel mortgage can only cover obligations existing
at the time the mortgage is constituted.
7. The bailor in commodatum acquires the use of the thing but not its fruits; if any compensation is to
be paid by him who acquires the use, the contract ceases to be a commodatum.
a. FALSE, because it is the bailee who acquires the use of the thing, not the bailor. (Art.
1935)
8. Consumable goods may be the subject of commodatum.
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a. TRUE, when the thing was borrowed not for its consumption but for a mere exhibition.
(Art. 1936)
9. Fixed, savings and current deposits of money in banks and similar institutions shall be governed
by the provisions concerning commodatum.
a. FALSE, such are governed by the provisions on simple loan, not commodatum. (Art. 1980)
10. A deposit is constituted from the moment there is a meeting of the minds upon the thing which is
the object of the contract.
a. FALSE, this is only an accepted promise to constitute a deposit.
b. A deposit is only perfected until the delivery of the thing. (Art. 1963)
11. Third persons who are not parties to the principal obligation may secure the latter by mortgaging
their own property.
a. TRUE, Art. 2085, last par.
a. TRUE, this applies in real estate mortgage called a “dragnet clause”. This pertains to
where a mortgage is given to secure future advancements which enable the parties to
provide continuous dealings.
b. A stipulation which states that the real estate mortgage is not limited to just the fixed
amount but also covers other credit accommodations in excess thereof is a valid and
binding stipulation between the parties. (Ajax Marketing v. CA)
13. The indivisibility of a pledge or mortgage is not affected by the fact that the debtors are not
solidarily liable.
a. TRUE, Art. 2090.
14. A guaranty may be entered into without the knowledge or consent, or against the will of the
principal debtor.
a. TRUE, Art. 2050.
15. A compromise between the creditor and the principal debtor benefits the guarantor.
a. TRUE, Art. 2063.
16. The bailee in commodatum is liable for the loss of the thing, even if it should be through a
fortuitous event.
a. FALSE, there are only (5) instances when the bailee will be liable for the loss of the thing if
it should be lost through a fortuitous event –
i. Devotes the thing to any purpose different from that
which it has been loaned;
ii. Keeps it longer than the period stipulated or after
accomplishment of the use;
iii. Thing was delivered with an appraisal of its value,
unless there is a stipulation to the contrary;
iv. Bailee lends or leases the thing to a third person who
is not a member of his household;
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v. Ingratitude. (Art. 1942)
17. The bailor cannot demand the return of the thing loaned until after the expiration of the period
stipulated.
a. FALSE, the bailor may demand the return of the thing when there is an urgent use of the
thing or when the bailee committed any act of ingratitude. (Art. 1946 and 1948)
18. The bailor shall be liable to the bailee for the damages which the bailee may suffer by reason of the
flaws of the thing loaned.
a. FALSE, the bailor will only be liable if he knew of the flaws and did not advise the bailee of
the same and the latter suffered damages because of it. (Art. 1951)
19. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed
by the provisions concerning depositum.
a. FALSE, such are governed by the provisions on simple loan, not depositum. (Art. 1980)
20. A deposit is constituted from the moment there is a meeting of the minds upon the thing which is
the object of the contract.
a. FALSE, this is only an accepted promise to constitute a deposit.
b. A deposit is only perfected until the delivery of the thing. (Art. 1963)
21. A guaranty may be constituted to guarantee the performance of an unenforceable contract.

a. TRUE, Art. 2052. A guaranty cannot exist without a valid obligation.
Nevertheless, a guaranty may be constituted to guarantee the performance of a voidable or an
unenforceable contract. It may also guarantee a natural obligation.
22. The guarantors are released from their obligation whenever by some act of the creditor they cannot
be subrogated to the rights of the latter
a. TRUE, Art. 2080. The guarantors, even though they be solidary, are released from their
obligation whenever by some act of the creditor they cannot be subrogated to the rights,
mortgages, and preferences of the latter.
23. A compromise between the creditor and the principal debtor benefits the guarantor
a. TRUE, Art. 2063. A compromise between the creditor and the principal debtor benefits the
guarantor but does not prejudice him. That which is entered into between the guarantor
and the creditor benefits but does not prejudice the principal debtor.
24. A guarantor may bind himself for more, but not for less than the principal debtor
a. FALSE, a guarantor may not bind himself for more than the principal debtor; and may bind
himself for less than the principal debtor. (Art. 2054)
25. If a person binds himself with the principal debtor, the contract is called a surety.
a. FALSE, a distinction must be made first –
i. If a person binds himself solidarily with the debtor,
the contract is a surety.
ii. If a person binds himself jointly with the debtor, the
contract is a guaranty.
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26. A guaranty is for compensation, unless there is a stipulation to the contrary.
a. FALSE, a guaranty is gratuitous, not for compensation, unless there is a stipulation to the
contrary. (Art. 2048)
27. If the guarantor has paid without notifying the debtor, and the latter not being aware of the
payment, repeats the payment, the former has no remedy whatever against the debtor.
a. FALSE, an exception would be when the guaranty is gratuitous. In which case, if the
guarantor was prevented by a fortuitous event from advising the debtor of the payment and
the creditor becomes insolvent, the debtor shall reimburse the guarantor for the amount
paid. (Art. 2070)
28. The guarantor, even before having paid, may proceed against the principal debtor when he is sued
for payment.
ARTICLE 2071. The guarantor, even before having paid, may proceed against the principal
debtor:
(1) When he is sued for the payment;
29. If one, at the request of another, becomes a guarantor for the debt of a third person who is not
present, the guarantor who satisfies the debt may sue either the person so requesting or the debtor
for reimbursement.
a. TRUE, Art. 2072. If one, at the request of another, becomes a guarantor for the debt of a
third person who is not present, the guarantor who satisfies the debt may sue either the
person so requesting or the debtor for reimbursement.
30. An obligation with a term may also be secured.

a. TRUE, “all kinds of obligations” Art. 2091.
i. Alternative answer: FALSE, the provision also says
“be they pure or subject to a suspensive or resolutory
CONDITION,” not term.
31. The pledgor must be the absolute owner of the thing pledged when the principal obligation
becomes due and demandable.
a. FALSE, pledgor may also be a person authorized by the owner. (Ana)
32. Third persons who are not parties to the principal obligation may secure the latter by mortgaging
their own property.
a. TRUE, Art. 2085, last par.
ARTICLE 2085. The following requisites are essential to the contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;
(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.
182
Third persons who are not parties to the principal obligation may secure the latter by
pledging or mortgaging their own property.
Other answer byt he other class is true
a. FALSE, you must distinguish first –
i. A real estate mortgage, pledge, or antichresis may
secure after incurred obligations so long as these future debts
are accurately described.
ii. A chattel mortgage can only cover obligations existing
at the time the mortgage is constituted.
34. A pledge is indivisible.
a. FALSE, exception there being several things given in mortgage or pledge, each one of
them guarantees only a determinate portion of the credit (Art 2089, par. 4)
35. Pledge is a real contract.

a. TRUE, it is perfected by the delivery of the thing pledged. (Art. 2093)
36. Incorporeal rights may be pledged.

a. TRUE, Art. 2095. Incorporeal rights, evidenced by negotiable instruments, bills of lading,
shares of stock, bonds, warehouse receipts and similar documents may also be pledged.
The instrument proving the right pledged shall be delivered to the creditor, and if
negotiable, must be indorsed.
37. A pledge shall not take effect between the parties if a description of the thing pledged and the date
of the pledge do not appear in a public instrument.
a. FALSE, pledge will remain valid as to the parties even if not in a public instrument.
However, it will not take effect against THIRD PERSONS if it does not appear in a public
instrument.
38. The ownership of the thing pledged is transmitted to the vendee or transferee as soon as the
pledgee consents to the alienation.
a. TRUE, but take note that the pledgee shall continue in possession. (Art. 2097)
39. The contract of pledge may secure all kinds of obligations, be they pure or subject to a suspensive
term.
a. FALSE, “subject to a suspensive or resolutory CONDITION” not a term.
40. The pledgee cannot deposit the thing pledged with a third person.
a. FALSE, pledgee may deposit the thing with a third person provided there is a stipulation
authorizing him to do so. (Art. 2100)
41. Deposit is a real contract.

a. TRUE, “but the deposit itself is not perfected until the delivery of the thing” (Art 1963)
42. Deposit is not covered by the Statute of Frauds.
183
a. FALSE, except for the delivery of the thing, there are no formalities required for the
existence of the contract.
43. Deposit by a capacitated person with another who is not, the depositor shall have action to recover
while thing is in possession of the depositary.
a. FALSE, this is not the only remedy; another is “ to compel the depositary to pay him the
amount by which he may have enriched or benefitted himself with the thing or its price”
(Art. 1971)
44. The depositary is obliged to keep the thing safely and to return it to the depositor.
a. FALSE, “or to his heirs and successors, or to the person who may have been designated
in the contract” (Art. 1972)
45. If deposit with a third person is allowed, the depositary shall not be liable for the loss.
a. FALSE, the depositary is liable for the loss if he deposited the thing with a person who is
manifestly careless or unfit. (Art. 1973).
46. The surety undertakes to pay if the principal does not pay; the guarantor only binds himself to pay
if the principal cannot pay. The first is the insurer of the debt, while the other is the insurer of the
solvency.
a. TRUE, Machetti v. Hospicio de San Jose.
47. A guaranty is essentially gratuitous.

a. FALSE, unless there is a stipulation to the contrary. (Art. 2048)
48. Guaranty may be constituted to guarantee a voidable contract.

49. Guaranty may be constituted to guarantee future debts...

a. TRUE. A guaranty may also be given as security for future debts, the amount of which is
not yet known; there can be no claim against the guarantor until the debt is liquidated. A
conditional obligation may also be secured. (Art. 2053)
50. A guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the
properties of the principal debtor, and…
a. FALSE, the guarantor does not have the benefit of excussion in the following instances –
i. Waiver of the benefit;
ii. Liability assumed that of a surety;
iii. Insolvency of the debtor;
iv. Debtor absconds or cannot be locally sued; or
v. Resort to legal remedies is a useless formality
51. The thing deposited may not be used without the permission of the depositor.
a. FALSE, thing may be used if the use is necessary for the preservation. (Art. 1977)
52. The depositary cannot demand that the depositor prove his ownership of the thing deposited.
a. TRUE, Art. 1984.
184
53. The thing deposited must be returned upon demand.
a. FALSE.
b. Art. 1988. The thing deposited must be returned to the depositor upon demand, even
though a specified period or time for such return may have been fixed.
c. This provision shall not apply when the thing is judicially attached while in the depositary's
possession, or should he have been notified of the opposition of a third person to the
return or the removal of the thing deposited. In these cases, the depositary must
immediately inform the depositor of the attachment or opposition.
54. Deposit of effects by travellers in hotels or inns is a necessary deposit.

a. TRUE, Art. 1998. The deposit of effects made by travellers in hotels or inns shall also be
regarded as necessary. The keepers of hotels or inns shall be responsible for them as
depositaries, provided that notice was given to them, or to their employees, of the effects
brought by the guests and that, on the part of the latter, they take the precautions which
said hotel-keepers or their substitutes advised relative to the care and vigilance of their
effects.
55. Loan and deposit are essentially gratuitous.

a. FALSE, only commodatum is essentially gratuitous.
56. Bailor in commodatum acquires use of the thing loaned without compensation but not its fruits.
a. FALSE, bailee NOT bailor.
57. The bailee is not liable for the loss of the thing if due to a fortuitous event.
a. FALSE, there are exceptions. Supra.
58. A contract of deposit is a consensual contract.

a. FALSE, it is a real contract.
59. An escalation clause is void if there is no de-escalation clause.

a. FALSE, Banco Filipino v. Navarro (Lloyd)
PART TWO. MCQ

1. A contract which is both real and an accessory contract is:
a. Commodatum
b. Deposit
c. Mortgage
d. Pledge
e. Antichresis
2. A contract which is both a principal and a real contract is
a. Mutuum
b. Pledge
c. Mortgage
d. Antichresis
e. Lease
3. If a personal property is delivered to a creditor to secure the performance of an obligation, the contract is a:
185
a. Pledge
b. Chattel mortgage
c. Real mortgage
d. Antichresis
e. Sale
4. With this contract, the principal obligation may be extinguished
a. Pledge
b. Chattel mortgage
c. Real mortgage
d. Antichresis
5. The subject matter of a contract of deposit may not be
a. Movable
b. Immovable
c. Consumable
d. Non-consummable
e. Non-fungible
6. This bailment is solely for the benefit of the bailee
a. Mutuum
b. Commodatum
c. Gratuitous deposit
d. Onerous deposit
e. Gratuitous guaranty
7. In the following contract/s, ownership passes to the other party:
a. Mutuum
b. Commodatum
c. Deposit
d. A & b
e. A & c
f. A, b & c
8. The following are real contract/s:
a. Mutuum
b. Commodatum
c. Deposit
d. A & B
e. A & C
f. A, B & C
9. A deposit made in compliance with a legal obligation is a:
a. Judicial deposit
b. Extra-judicial deposit
c. Voluntary deposit
d. Necessary deposit
10. The pledge is void if the
a. Pledgor’s consent was vitiated
b. Pledgor is suffering civil interdiction
c. Pledge is not in writing
186
d. Pledge is not in a public instrument
11. A contract of commodatum
a. may be gratuitous
b. essentially gratuitous
c. may be onerous
d. essentially onerous
12. The contractual relation is known as precarium if:
a. the borrower has no obligation to pay interest.
b. the lender may demand the return of the thing borrowed at will.
c. the depositary can demand for the return at will.
d. the depositary has the right to retain the thing.
e. the depositary can use the thing.
13. The following are contractual bailments, except:
a. mutuum
b. commodatum
c. deposit
d. guaranty
14. This bailment is solely for the benefit of the bailor
a. mutuum
b. commodatum
c. gratutitous deposit
d. onerous deposit
e. gratuitous guaranty
17. The depositor is obliged to reimburse the depositary for the expenses he may have incurred for the
preservation of the thing deposited if:
a. the deposit is onerous
b. the deposit is gratuitous
c. the depositary has the right to use the thing
d. the thing deposited is fungible
21. If a person binds himself solidarily with the principal debtor, he is called a:
a. guarantor
b. surety
c. solidary debtor
d. co-guarantor
e. sub-guarantor
22. The excussion may take place:
a. If the guarantor has expressly renounced it
b. If he has bound himself solidarily with the debtor
c. In case of insolvency of the debtor
d. When he cannot be sued within the Philippines
23. The guarantor, even before having paid, may proceed against the principal debtor, except:
a. When he is sued for the payment
b. In case of insolvency of the creditor
· Art. 2071; it is the insolvency of the debtor
c. If there are reasonable grounds to fear that the principal debtor intends to abscond
187
d. If the principal debtor is in imminent danger of becoming insolvent
24. A guaranty may be constituted to guarantee the performance of the following obligations, except:
a. natural obligation
b. conditional obligation
c. obligation with a term
d. all of the above
25. A contract of guaranty is:
a. a principal contract
b. an essentially gratuitous contract
c. a formal contract
d. all of the above
27. If a person binds himself solidarily with the principal debtor, he is called a:
a. guarantor
b. surety
c. solidary debtor.
d. co-guarantor.
e. sub-guarantor.
PART THREE. MODIFIED T/F (guaranty and suretyship)

1. C
· The guaranty may be entered into without the knowledge of the principal debtor.
o TRUE. (2050, NCC)
· The guarantor may set up against the creditor all the defenses which pertain to the principal
debtor.
o FALSE. (2081, NCC)
2. C
· A guaranty may be given as security for future debts, the amount of which is not yet known.
o TRUE. (2053, NCC; continuing guaranty)
· An extension granted to the debtor by the creditor extinguishes the guaranty.
3. B
· The guarantor who pays is subrogated by virtue thereof to all the rights which the creditor had
against the debtor.
o FALSE. – cannot be subrogated when the guaranty was entered into without the knowledge
of the debtor (2076, 1237, NCC)
· If the debt was for a period and the guarantor paid it before it became due, he cannot demand
reimbursement of the debtor until the expiration of the period.
4. B
· If the guarantor should be convicted of a crime, the creditor may demand another who has all the
qualifications by law.
188
· The guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the
property of the debtor.
5. A
· If the creditor voluntarily accepts immovable or other property in payment of the debt, even if he
should afterwards lose the same through eviction, the guarantor is released.
o TRUE. (2077, NCC; dacion en pago)
· The obligation of the guarantor is extinguished at the same time as that of the debtor.
o TRUE. (2076, NCC; because it is an accessory contract)
6. D
· The pledgor must be the absolute owner of the thing pledged when the principal obligation
becomes due and demandable.
· Third persons who are not parties to the principal obligation may secure the latter by mortgaging
their own property.
o TRUE. (jurisprudence)
7. A
· A mortgage may also be given as security for future debts, the amount of which is not yet known.
o TRUE. (has to be stipulated)
· A pledge is indivisible.
o TRUE. (2089, NCC)
8. A
· Pledge is a real contract.
o TRUE. (1313, NCC)
· Incorporeal rights may also be pledged.
o TRUE. (2095, NCC)
9. D
· A pledge shall not take effect between the parties if a description of the thing pledged and the
date of the pledge do not appear in a public instrument.
o FALSE. (2096, NCC; pledge is not a formal contract)
· The ownership of the thing pledged is transmitted to the vendee or transferee as soon as the
pledge consents to the alienation.
o TRUE. (2097, NCC)
10. C
· The contract of pledge may secure all kinds of obligations, be they pure or subject to a suspensive
term.
o TRUE. (2091, NCC)
· The pledgee cannot deposit the thing pledged with a third person.
CTQUIZ SAMPLEX #2
189
Part One
True or False 
Consider the statement true only when it is absolutely true.
1. Third persons who are not parties to the principal obligation may secure the latter by mortgaging their
own property. TRUE, this is expressly allowed under Art. 2085, ¶ 2.
TRUE, see China Banking Corp. v. CA (1997).
3. The indivisibility of a pledge or mortgage is not affected by the fact that the debtors are not solidarily
liable. TRUE, as provided in Art. 2090.
 
4. A guaranty may be entered into without the knowledge or consent, or against the will of the principal
debtor.TRUE, a guaranty exists for the benefit of the principal creditor, not for the principal
debtor who is not a party to the guaranty. See Art. 2050.
5. A compromise between the creditor and the principal debtor benefits the guarantor. TRUE, as
provided under Art. 2063.  
6. The bailee in commodatum is liable for the loss of the thing, even if it should be through a fortuitous
event. FALSE, only in specific situations outlined in Art. 1942 (1)-(5). 
7. The bailor cannot demand the return of the thing loaned till after the expiration of the period stipulated.
FALSE, orafter the accomplishment of the use for which the commodatum has been constituted. 
8. The bailor shall be liable to the bailee for the damages which the bailee may suffer by reason of the
flaws of the thing loaned. FALSE, the bailor has to know the flaws and not advise the bailee of the
same to be liable. 
9. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the
provisions concerning depositum. FALSE, provisions concerning simple loan. 
10. A deposit is constituted from the moment there is a meeting of the minds upon the thing which is the
object of the contract. FALSE, Art. 1962.
11. The bailor in commodatum acquires the use of the thing loaned but not its fruits; if any compensation is
to be paid by him who acquires the use, the contract ceases to be a commodatum. FALSE, it is the
bailee who acquires the use of the thing etc.
12. Consumable goods may be the subject of commodatum. TRUE, provided that the purpose of the
contract is not the consumption of the object, as when it is merely for exhibition.
Part Two
190
Multiply Choice
Choose the best answer. Write the letter only.
1. A contract of commodatum
a. May be gratuitous
b. May be onerous
c. Essentially gratuitous
d. Essentially onerous
C
2. The contractual relation is known as a precarium if:

a. The borrower has no obligation to pay interest
b. The lender may demand the return of the thing borrowed at will
c. The depositary can demand for the return at will
d. The depositary has the right to retain the thing
e. The depositary can use the thing
B
3. The following are contractual bailments, except:

a. Mutuum
b. Commodatum
c. Deposit
d. Guaranty
D
4. This bailment is solely for the benefit of the bailor:

a. Mutuum
b. Commodatum
d. Onerous deposit
C
5. The following are real contract/s:

a. Mutuum
b. Commodatum
c. Deposit
d. a & b
e. a & c
f. a, b & c
F
6. A deposit made in compliance with a legal obligation is a:

a. Judicial deposit
b. Extra-judicial deposit
c. Voluntary deposit
d. Necessary deposit
191
D
7. The depositor is obliged to reimburse the depositary for the expenses he may have incurred for
the preservation of the thing deposited if:
a. The deposit is onerous
b. The deposit is gratuitous
c. The depositary has the right to use the thing
d. The thing deposited is fungible
B
8. The pledge is void if the

a. Pledgor’s consent was vitiated
b. Pledgor is suffering civil interdiction
c. Pledge is not in writing
d. Pledge is not in a public instrument
B
9. A contract which is both a principal and a real contract is:

a. Mutuum
b. Pledge
c. Mortgage
d. Antichresis
e. Lease
A
10. A contract which is both a real and an accessory contract is:

a. Commodatum
b. Deposit
c. Mortgage
d. Pledge
e. Antichresis
D
11. In the following contract/s, ownership passes to the other party:

a. Mutuum
b. Commodatum
c. Deposit
d. A&B
e. A&C
f. A,B,&C
A
12. If a personal property is delivered to a creditor to secure the performance of an obligation, the
contract is a:
a. Pledge
b. Chattel mortgage
c. Real mortgage
192
d. Antichresis
e. Sale
A
13. This bailment is solely for the benefit of the bailee:

a. Mutuum
b. Commodatum
d. Onerous deposit
B
CANNOT SEEM TO COPY PASTE MODFIED T AND F FOUND IN THE COMPILATION
193
LEASE
PART ONE. TRUE OR FALSE

1. A contract where one of the parties binds himself to render to the other some service is a contract for a
piece of work.
● FALSE, the statement pertains to a contract of lease of service.
i. In a contract for a piece of work, the contractor binds himself to execute a piece of
work for the employer, in consideration of a certain price or compensation. The
contractor may either employ only his labor or skill, or also furnish the material. (Art.
1713)
ii. In the lease of work or service, one of the parties binds himself to execute a piece of
work or to render to the other some service for a price certain. (Art. 1644)
2. No lease for more than ninety-nine years shall be valid.
● TRUE, Art. 1643.
3. Fungible goods cannot be the subject matter of a contract of lease.
● TRUE, Art. 1665. --- according to source.
i. Alternative answer: FALSE, Art. 1645. When the lease of the thing, although fungible, is
only for exhibit or it is an accessory to an industrial establishment, it can be the subject
matter of a lease.
4. The guardian cannot lease the property of his ward for himself.
● FALSE, although Art. 1646, in relation to Art. 1491, provides that a guardian is disqualified to
become a lessee of a property of his ward, Art. 1647 will allow the guardian to lease such
property if with proper court authority.
5. If a lease is to be recorded in the Registry of Property, the father or guardian, as to the property of the
minor or ward, cannot constitute the same without proper authority.
● TRUE, Art. 1647.
6. When in the contract of lease of things there is no express prohibition, the lessee may assign the lease,
in whole or in part, without prejudice to his responsibility for the performance of the contract toward the
lessor.
● FALSE, Art. 1649 and 1650.
● The lessee cannot assign the lease without the consent of the lessor, unless there is a
stipulation to the contrary. (Art. 1649)
● When in the contract of lease of things there is no prohibition, the lessee may sublet the thing
leased. (Art. 1650)
● As a general rule:
i. Lessee CANNOT assign the lease.
ii. Lessee CAN sublease.
7. The sublessee shall not be responsible beyond the amount of rent due from him, in accordance with
the terms of the sublease, at the time of the extra-judicial demand by the lessor.
● TRUE, Art. 1652. --- according to source.
i. Alternative answer: FALSE, Art. 1652, par. 2.
8. The provisions governing warranty, contained in the title on Sales, shall be applicable to the contract of
lease.
● TRUE, Art. 1653.
194
9. The lessor is obliged to make all the necessary repairs in order to keep the thing suitable for the use to
which it has been devoted.
● FALSE, parties’ stipulation. (Art. 1654, par. 2)
● cockpit case? --- according to source.
10. If the thing leased is destroyed partially by fortuitous event, the lessee may choose between a
proportional reduction of the rent and specific performance.
● FALSE, the remedies of the lessee are only proportional reduction of the rent OR rescission,
not specific performance. (Art. 1655)
11. There is a mere act of trespass when the third person claims no right whatever.
● TRUE, Art. 1664, par. 2.
12. The lessee has the burden of proving that the deterioration or loss of the thing leased was without his
fault.
● FALSE, the presumption does not apply when happens during calamity.
i. This burden of proof on the lessee does not apply when the destruction is due to
earthquake, flood, storm or other natural calamity. (Art. 1667)
13. If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with
the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been
given, it is understood that there is an implied new lease, for the period of the original contract.
● FALSE, the implied new lease is not for the period of the original contract. It will depend if the
land is rural or urban –
i. If rural land, see Art. 1682.
ii. If urban land, see Art. 1687.
14. The purchaser of a piece of land which is under a lease that is not recorded in the Registry of Property
may terminate the lease, save when there is a stipulation to the contrary in the contract of sale.
● FALSE, lease may be terminated in such case when there is a stipulation to the contrary in the
contract of sale OR when the purchaser knows of the existence of the lease. (Art. 1676)
15. With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may
remove the ornamental object, provided no damage is caused to the principal thing, and the lessor
does not choose to retain them by paying their value at the time the lease is extinguished.
● TRUE, Art. 1678.
16. The lessee shall have the right to reduction of the rent by reason of the loss of more than one-half of
the fruits through extraordinary and unforeseen fortuitous event, save always when there is a specific
stipulation to the contrary.
● TRUE, Art. 1680.
17. If the period for the lease of a rural land has been fixed, it is understood to be from year to year, if the
rent agreed upon is annual, from month to month, if it is monthly from week to week, if the rent is
weekly, and from day to day, if the rent is to paid daily.
● FALSE, statement pertains to urban land, not rural land. (Art. 1687)
i. Also, the provision will only apply if the period has NOT been fixed.
18. An agreement waiving or limiting the contractor’s liability for any defect in the work is void.
● FALSE, statement will apply when the contractor acted fraudulently. Art. 1716.
19. The contractor is responsible for the damages if the edifice falls, within fifteen years from the
completion of the structure, on account of defects in the construction or the use of materials of inferior
quality furnished by him, or due to any violation of the terms of the contract. If the engineer or architect
supervises the construction, he shall be jointly liable with the contractor.
● FALSE, the supervising engineer or architect shall be held solidarily liable with the contractor.
(Art. 1723)
195
20. He who has executed work upon a movable has a right to retain it by way of pledge until he is paid.
● TRUE, Art. 1731.
TORTS
196
TORTS AND DAMAGES QUIZ
I. TRUE OR FALSE
1. The defense of a good father of a family is a complete and proper defense in delict.
a. FALSE. It is a defense in quasi-delict.
b. The liability of an employer when the source of the liability is culpa criminal is subsidiary (Art.
103, RPC) and he cannot relieve himself of liability by proving due diligence of a good father of
a family. This is so because of the very nature of his obligations. (Jurado)
c. Elcano v Hill (Rae Rep)
2. A willful act may be the basis of a liability under quasi-delict.

a. TRUE. The concept (of a quasi-delict) covers not only acts not punishable by law but also
those punishable “whether intentional and voluntary or negligent (Elcano v. Hill)
b. Quasi Delict- Fault or Negligence
c.
3. The liability of the employer for the acts of its employees is a subsidiary liability.
a. FALSE. It depends on the source of the obligation.
i. If culpa acquiliana and culpa contractual, it is direct and primary
ii. If culpa criminal, it is subsidiary (Jurado)
4. Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, only if they are engaged in any business or industry.
a. FALSE. Art. 2180 provides that employers shall be liable even though they are not engaged in
any business of industry.
b. Depends on the source of obligation - this rule does not apply in quasi-delict. Applies in delict.
5. It is conclusively presumed that a driver was negligent, if he had been found guilty of reckless driving or
violating traffic regulations at least twice within the next preceding two months.
a. FALSE. The presumption is disputable. (Art. 2184)
6. Respondeat superior applies to the vicarious liability of employers.

a. FALSE.
b. The doctrine of imputed negligence or vicarious liability is not the same with respondeat
superior.
i. The doctrine of respondeat superior (“let the superior make answer”) holds an
employer or principal, principally liable for the employee’s or agent’s wrongful acts
committed within the scope of employment or agency. Respondeat superior is
applicable in the liability of employers and the liability of a partner for a tort committed
by another partner. On the other hand, liability that arises from vicarious liability is
subsidiary.
ii. Vicarious - responsibility over the person. Ex. parents - children, teachers - students.
iii. Just because employee is negligent does not automatically result in the liability (basis:
last paragraph 2180)
iv. Relationship of Patear Pamilias
197
7. In motor vehicle mishaps, the owner is solidarily liable with his driver, if he was inside the vehicle at the
time of the mishap.
a. FALSE. The owner will only be solidarily liable, if while he was in the vehicle during the motor
vehicle mishap, he could have, by the use of his due diligence, prevented the misfortune. (Art.
2184**)
b. Even when ER was not in vehicle, may still he liable under 2180
8. In quasi-delicts, the defendant shall be liable for all damages which are the natural and probable
consequences of the act or omission complained of.
a. TRUE. Art. 2202.
9. The father and, in the case of his death or incapacity, the mother, are responsible for the damages
caused by their children who live in their company.
a. FALSE. Art. 2180 provides that the father or the mother is responsible for the damages caused
by their minor children who live in their company.
b. Art. 221 of the Family Code provides that the parents and other persons exercising parental
authority shall be civilly liable for the injuries and damages caused by the acts or omissions of
their unemancipated children living in their company and under their parental authority,
subject to appropriate defenses provided by law.
10. Moderate damages, which are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be provided with certainty.
a. FALSE. Art. 2224 provides that moderate damages may be recovered when the court finds that
some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be
proved with certainty.
II. MULTIPLE CHOICE:
1. As a source of obligation, quasi-delict may be distinguished from delict in that, in delict:

a. Proof required is only preponderance of evidence - not delict
b. Right violated is a private one
c. There must be no pre-existing contractual relation between the parties
d. The defense of “good father of a family” is not a proper defense
2. The following are required to exercise utmost diligence or the highest degree of diligence, EXCEPT:
a. Stevedoring companies - The public policy considerations in legally imposing upon a
common carrier or a warehouseman a higher degree of diligence is not present in a
stevedoring outfit which mainly provides labor in loading and stowing of cargoes for its
clients. - basis? jurisprudence
b. Doctors
c. Banks
d. Public utilities
3. A conclusive presumption of negligence arises when:
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a. An animal causes damage
b. A thing thrown from a building causes damage to another (Art. 2193)
i. Article 2193. The head of a family that lives in a building or a part thereof, is
responsible for damages caused by things thrown or falling from the same. (1910)
ii. But according also to Aquino, Art. 2193 does not indicate a presumption or admit proof
of care. Does not exempt cases involving force majeure.
c. The driver involved in a vehicular mishap had been found guilty of violating traffic regulations at
least twice within the next preceding two months
d. The driver, at the time of the mishap, was violating any traffic regulation
i. Not letter A: because there are exceptions: (1) force majeure; and (2) fault of the person
who suffered damages
ii. Not letter C and D: presumptions under Art. 2184 and 2185 respectively
4. The degree of diligence that should ordinarily be observed in the absence of a law or stipulation to the
contrary is:
a. Extraordinary diligence
b. Diligence of bonus pater pamilias (diligence of a good father of a family)
c. Utmost diligence
d. Highest degree of diligence
5. The following may be held liable under quasi-delict, EXCEPT:

a. Minors (2182)
i. Article 2182. If the minor or insane person causing damage has no parents or guardian,
the minor or insane person shall be answerable with his own property in an action
against him where a guardian ad litem shall be appointed. (n)
b. Appointive officials of the government
c. Private corporations
d. All of the above
6. The liability of this person is a vicarious liability

a. Minors
b. Incapacitated persons
c. State (2180)
i. 2180: The State is responsible in like manner when it acts through a special agent; but
not when the damage has been caused by the official to whom the task done properly
pertains, in which case what is provided in article 2176 shall be applicable.
d. Human resource manager of a corporation
7. Where both parties are negligent, but the negligent act of one is appreciably later in time than that of
the other, or when it is impossible to determine whose fault or negligence should be attributed to the
incident, the one who had the last clear opportunity to avoid the impending harm and failed to do so is
chargeable with the consequences thereof. This doctrine is NOT the:
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a. Doctrine of supervening negligence - The negligence of the plaintiff does not preclude a
recovery for the negligence of the defendant where it appears that the defendant, by exercising
reasonable care and prudence, might have avoided injurious consequences to the plaintiff.
Even though a person’s own acts may have placed him in a position of peril, and an injury
results, the injured person is entitled to recovery
b. Doctrine of last clear chance
c. Doctrine of last fair chance
d. Doctrine of discovered peril
e. Doctrine of concurrent causes
i. Under the doctrine of “last clear chance” (also referred to as “supervening
negligence” or as “discovered peril”), petitioner bank was indeed the culpable party.
ii. Stated differently, the rule would also mean that an antecedent negligence of a person
does not preclude the recovery of damages for the supervening negligence of, or bar a
defense against liability sought by another, if the later, who had the last fair chance,
could have avoided the impending harm by the exercise of due diligence (Philippine
Bank of Commerce v. CA)
8. This is only a partial defense

a. No causal relationship between the act and the damage
b. Damnum absque injuria - no damage without injury
c. Double recovery
i. Why not? Something something may
d. Contributory negligence
9. Proof of pecuniary loss is required for the award of:

a. Lucro cessante - actual damages
i. Lucro cessante means lost profits
● Indemnification for actual or compensatory damages shall comprehend not
only the value of the loss suffered (daño emergente) but also that of the profits
which the obligee failed to obtain (lucro cessante). (Art. 2200)
● Pecuniary loss suffered by one entitled to actual or compensatory damages
must be duly proved. (Art. 2199)
b. Temperate damages
c. Exemplary damages
d. Nominal
10. In case of death caused by a quasi-delict, the following may be awarded moral damages, EXCEPT:
f. Spouse
g. Father
h. Grandmother
i. Illegitimate child
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j. None of the above
i. Art. 2219
COMBINED SUBJECTS
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ESSAY TIPS #3
1. A bought goods from B, to be delivered in Cebu and payment will be made in Cebu. Shipping is
evidenced by a bill of lading. A, on the other hand, sold the same thing to C without receiving yet the
goods. If A failed to pay B, may C compel B to deliver to him the goods?
Answer: It depends on the circumstances - Article 1503 par. 4
2. A, on behalf of P, entered into a contract of lease for 3 years with C. What are the instances that P may
claim that the contract is unenforceable?
Answer: 1403 (1), 1403 (2)(e), 1403 (3), 1878 (8) [Note: Not sure kung meron pang iba]
3. What are the presumptions when the alienation of the property of the debtor is considered as alienation
in fraud of its creditors?
Answer: It depends – gratuitous or onerous – Article 1387; badges of fraud (Beda Reviewer)
4. D1, D2 and D3 have a debt to C of 300,000. The debt is secured by a mortgage on a parcel of land
owned by D1. D1 paid 100,000 and claimed that because they are only joint debtors, the mortgage
must be extinguished. Is the claim of D1 proper?
Answer: Article 2089 and 2090 – It depends if the mortgage on the parcel of land secures the entire
amount of the debt or just a part of it.
5. A entered into an agreement with B for the lease of property on Feb 14, 1967 until Dec 1, 1976. On the
other hand, B entered in an agreement with C for the lease of the same property on (date) until
November 30, 1976, stipulating that B will pay for the taxes, etc. A died. The heirs of A are claiming that
the agreement of B and C is prohibited because it is an assignment of lease. Is the contention of the
heirs correct?
Answer: No, assignment of right vs. Sublease [Note: Case provided by Uribe; forgot the title – the
property will revert to B for one day so it will be considered as sublease and not assignment of right –
Dec 1]
6. X sold the TV of Y to MS Marketing. Z bought the TV from the store of MS Marketing. May Y recover
the TV from Z?
Answer: It depends if Y was unlawfully deprived of the TV [Take into consideration 1505, 559, Sun
Brothers vs. Velasco case, concepts of merchant store and buyer in good faith and for value]
7. The bus of A collided with the bus of B. C, the passenger of the bus of A was injured. C instituted a
criminal action against the bus of B and a civil action against the employer of bus A. What is the basis
of the civil liability? May the defense of diligence of a good father of a family be claimed?
Answer: It depends on the action. Distinguish if civil liability arising from the criminal action and civil
liability from the civil action. If QD, defense of GFOAF is available, if breach of contract, defense not
available
8. A bought land from B. A asked B to register the land in the name of C, his recognized natural child. A
died. The heirs of A now claim the land from C, arguing that C is only a trustee of A. Are the heirs
correct?
Answer: No, Article 1448 – trust, implied trust
9. B offered A to sell his parcel of land for 100,000. A was given 30 days to decide on whether to buy the
parcel of land of B. However, on the 5th day, B withdrew his offer before A could convey his
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acceptance. On the 10th day, A conveyed his acceptance, giving to B the amount of 100,000 but B
refused to accept. If A would institute an action, may it prosper?
Answer: It depends on what action will be instituted – if specific performance – will not prosper – option
not founded by consideration and no meeting of the minds – no contract (1374, 1479); if damages –
may prosper because of the withdrawal of offer before the given period to decide. (consider Sanchez
vs Rigos)
ESSAY TIPS #2
1. A, before leaving for abroad, asked B to manage A’s business. After a year, B appointed C as a
manager. The business incurred losses. Is B liable? To what extent?
● AGENCY; substitute agent and sub-agent; liability of agent for losses; under Art. 1892, an 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 (a) when the agent was not given the power to appoint
one or (b) when the agent was given such power, but without designating the person, and
the person appointed was notoriously incompetent or insolvent.
i. The first thing you have to consider is if the agent was prohibited from appointing a
substitute or not.
1. If agent was prohibited, agent will be liable for the loss incurred because of the
substitute’s fault because he appointed one despite the prohibition;
2. If agent was not prohibited, there are still two scenarios:
a. Agent was not prohibited but was neither given the power to appoint –
i. As long as the substitute acted within the scope of his
authority, in representation of the principal and he acted with
good faith, the agent cannot be held responsible or liable;
ii. However, if in the management of the business of the principal
losses were incurred because the substitute misappropriated
the income, the agent will be responsible for the acts of the
substitute and he may be held liable for the losses incurred by
the principal because the substitute acted negligently, outside
the scope of the authority and in bad faith.
b. Agent was not prohibited precisely because he was given the power to
appoint, still there may be two scenarios –
i. Principal designated the person to be substituted -
ii. If the substitute to be appointed was not designated, the agent
will only be liable if the substitute turns out to be notoriously
incompetent or insolvent. (Art. 1892)
2. PARTNERSHIP; designation of employees by general, implied, limited, industrial partner

● Partners may be classified as follows:
i. As to liability
1. General partners, those who can be held liable for partnership obligations even
to the extent of their private property;
2. Limited partners, those who cannot be held liable for partnership
obligations;
a. BUT, a limited partner may be held liable up to his personal property
when:
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i. He participates in the management of the business of the
partnership;
ii. His surname appears on the firm name;
1. Unless he has a same surname with a general partner;
or
2. Such name was already in the firm name prior to his
entry;
iii. When he is a general and limited partner at the same time;
ii. As to contribution
1. Capitalist partners, those who contribute money or property to the common
fund;
2. Industrial partners, those who contribute only their skill or industry to the
common fund;
● An industrial partner may NOT be a limited partner as a limited partner can only contribute
money or property. He cannot contribute service.
3. Fishpond leased from government. Armed men intruded, resulting to reduce harvest. Can lessee ask
for reduction?
● The law provides that reduction of rental may only be demanded by the lessee if he harvested
less than half of what normally would be harvested in that property due to extraordinary and
unforeseen fortuitous events, save always when there is a specific stipulation.
● Extraordinary fortuitous events are understood to be fire, war, pestilence, unusual flood,
locusts, earthquake, or others which are uncommon, and which the contracting parties could
not have reasonably foreseen.
4. Assignment of lease and subleasing

● As a general rule, lessee of a real property MAY NOT assign the lease to a third person without
the lessor’s consent, UNLESS there is a stipulation to the contrary.
● The rule on sublease is the lessee MAY sublease the premises to a third person without the
consent of the lessor, UNLESS there is an express prohibition.
● Whether the contract is assignment of lease or sublease would depend on whether there was
absolute transfer of rights from the lessee to the third person, such that the lessee desisted
himself from the lease contract and his personality, resulting now in two persons, the lessor
and the assignee, the latter is not converted into the new lessee. If the lessee retains interest no
matter how small in the contract of lease, then it will be treated only as a sublease. (Malacat v.
Salazar)
● In an assignment of lease, there has to be an absolute transfer of interest by the lessee of his
rights and the original lessee disassociates himself from the contract. If, however, there is
reversionary interest retained by the original lessee, then it will be considered a sublease. (id.)
5. Guarantor, without knowledge of principal, paid the latter’s debt. May the guarantor be subrogated to
creditor’s right?
● The guarantor who pays is not subrogated to the rights of the creditor if the guaranty is
constituted or the payment is made without the knowledge or against the will of the principal
debtor.
i. Art. 2050, when a person pays without the knowledge or against the will of the debtor,
such person can only recover only insofar as the payment has been beneficial to the
debtor and said person cannot compel the creditor to subrogate him in his (creditor)
rights, such as those arising from a mortgage, guaranty or penalty.
ii. Art. 2068 provides that if the guarantor should pay without notifying the debtor, the
latter may enforce against him all the defenses which he could have set up against the
creditor at the time the payment was made.
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iii. Thus, if the debtor has already paid the creditor, when the guarantor pays, the debtor
can set up against the debtor the defense of previous extinguishment of the obligation
by payment.
iv. The guarantor cannot be allowed, through his fault or negligence, to prejudice the
rights or interests of the debtor.
6. QUIROGA v. PARSONS; Contract of agency to sell v. contract of sale

● Sale may be distinguished from agency to sell as follows:
SALE AGENCY TO SELL
Buyer receives the goods as owner. The agent receives the goods as the goods of the
principal who retains his ownership over them.
Buyer has to pay the price. The agent has simply to account for the proceeds of
the sale he may make on the principal’s behalf.
Buyer, as a general rule, cannot return the object sold. The agent can return the object in case he is unable to
sell the same to a third person.
Buyer can deal with the thing sold as he pleases, being The agent in dealing with the thing received, must act
the owner. and is bound according to the instructions of his
principal.
7. Equitorial case
8. Right of first refusal – adjoining lot owner
● Make a distinction between a sale of an urban land and a sale of rural land.
URBAN LAND RURAL LAND
Under Art. 1622, whenever a piece of urban land is so Art. 1621 provides that the owners of adjoining lands
small and situated that a major portion thereof shall also have the right of redemption when a piece of
cannot be used for any practical purpose within a rural land, the area of which does not exceed one
reasonable time, having been bought merely for hectare, is alienated, unless the grantee does not own
speculation, is about to be resold, the owner of any any rural land.
adjoining land has a right of pre-emption at a
reasonable price. This right is not applicable to adjacent lands which are
separated by brooks, drains, ravines, roads and other
If the resale has been perfected, the owner of the apparent servitudes for the benefit of other estates.
adjoining land shall have a right of redemption, also at
a reasonable price. If two or more adjoining owners desire to exercise the
right of redemption at the same time, the owner of the
When two or more owners of adjoining lands wish to adjoining land of smaller area shall be preferred; and
exercise the rights of pre-emption or redemption, the should both lands have the same area, the one who
owner whose intended use appears best justified first requested the redemption.
shall be preferred.
ESSAY TIPS #1
1. GUARANTY; Art. 2070 provides that if the guarantor has paid without notifying, and the latter not being
aware of the payment, repeats the payment, the former has no remedy whatsoever against the debtor,
but only against the creditor. Nevertheless, in case of a gratuitous guaranty, if the guarantor was
prevented by a fortuitous event from advising the debtor of the payment, and the creditor becomes
insolvent, the debtor shall reimburse the guarantor for the amount paid.
● There was double payment – (a) by guarantor who did not notify debtor and (b) by debtor who
was unaware that guarantor made payment;
● As a rule, guarantor has no remedy against the debtor;
● BUT, the debtor shall reimburse the guarantor for the amount paid if:
i. Guaranty is gratuitous;
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ii. Guarantor was prevented by a fortuitous event from notifying the debtor; and
iii. The creditor becomes insolvent.
2. AGENCY; substitute agent and sub-agent; liability of agent for losses; under Art. 1892, an 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 (a) when the agent was not given the power to appoint one or (b) when the
agent was given such power, but without designating the person, and the person appointed was
notoriously incompetent or insolvent.
● The first thing you have to consider is if the agent was prohibited from appointing a substitute
or not.
i. If agent was prohibited, agent will be liable for the loss incurred because of the
substitute’s fault because he appointed one despite the prohibition;
ii. If agent was not prohibited, there are still two scenarios:
1. Agent was not prohibited but was neither given the power to appoint –
a. As long as the substitute acted within the scope of his authority, in
representation of the principal and he acted with good faith, the agent
cannot be held responsible or liable;
b. However, if in the management of the business of the principal losses
were incurred because the substitute misappropriated the income, the
agent will be responsible for the acts of the substitute and he may be
held liable for the losses incurred by the principal because the
substitute acted negligently, outside the scope of the authority and in
bad faith.
2. Agent was not prohibited precisely because he was given the power to
appoint, still there may be two scenarios –
a. Principal designated the person to be substituted -
b. If the substitute to be appointed was not designated, the agent will
only be liable if the substitute turns out to be notoriously incompetent
or insolvent. (Art. 1892)
3. AGENCY; Double sale in agency;

● Consider first the contract of agency between principal and agent. Remember, in a sale of a
parcel, the contract agency must be in writing; otherwise, the sale of the parcel of land will be
void. (Art. 1874)
i. BUT in a sale of real property other than a parcel of land, a special power of attorney is
required, otherwise the sale will be unenforceable.
● If it turns out that the sale made by the agent was void, then the other buyer will have a better
right.
● Rules on double sale will apply.
4. PLEDGE; thing pledged is sold

● With the consent of the pledgee, the thing pledged may be alienated by the pledgor or owner,
subject to the pledge. The ownership of the thing pledged is transmitted to the vendee or
transferee as soon as the pledgee consents to the alienation, but the latter shall continue in
possession. (Art. 2097)
5. PARTNERSHIP; debt due to partnership and a partner

● Art. 1792 provides that if a partner authorized to manage collects a demandable sum, which
was owed to him in his own name, from a person who also owed the partnership another sum
also demandable, the sum thus collected shall be applied to the two credits in proportion to
their amounts, even though the partner may have given a receipt for his own credit only;
i. This will only apply if the partner to whom the amount was delivered was a managing
partner;
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ii. If he is a limited partner, normally, he would not have any participation in the
management of the partnership business. Thus, if the payment was delivered to a
limited partner, he can have the right to receive everything he received;
● The partnership may have a right to the entire sum if the managing partner gave a receipt in the
partnership’s name;
● If the managing partner gives a receipt for the entire amount in his own name, he may be
entitled to retain everything if the debt owed to him was more onerous and the debtor chose to
have the amount paid to such debt.
6. SALES; delivery; who bears the loss

● Consider what the cause of the loss was, who caused the loss and when the loss happened.
i. Whoever is at fault will bear the loss, duh.
● As a general rule, res perit domino (Art. 1504). BUT, determine when ownership passes –
i. If at the time of the loss, the buyer is not yet the owner, the buyer will not bear the loss.
For example, in a sale on approval and the thing was lost through a fortuitous event
and without the buyer’s fault, the seller will bear the loss.
● Exception to the rule –
i. Lawyer’s Cooperative v. Tabora
ii. Title was reserved by the seller only to secure the payment of the price by the buyer
1. When the title was reserved by the seller only to secure the payment of the
price by the buyer, then by law, risk of loss will already be with the buyer.
iii. Delay in the delivery – when there is delay in the delivery due to the fault of one of the
parties, whoever was at fault will bear the loss.
7. Lease; contract for piece of work; unpaid supplier

● Owner entered into an agreement with contractor to build a building. Contractor bought
supplies from supplier but did not pay for everything If contractor failed to pay supplier, can
supplier run after owner?
i. NO. But, under 1729, supplier may have a cause of action against the owner to the
extent that the owner owes the contractor, this follows the principle of unjust
enrichment.
ii. If principal has no debt to contractor, supplier may still hold him liable, if owner paid
contractor before obligation became due; or owner renounced claim against
contractor; owner did not require contractor to post a bond.
8. SALES; warranty against eviction

● If there is a waiver of warranty against eviction and assuming the third person acted in good
faith, the vendor’s liability for breach of warranty will depend on the kind of waiver –
i. If waiver consiente – buyer executed a waiver without knowledge of the defect in the
title of the seller. Also, the vendor does not know of the defect. The only liability of the
vendor for breach of warranty against eviction is the value of the thing at the time of
eviction.
ii. If the waiver is intentionada – when the vendee executed the waiver with knowledge
of the defect in the title of the seller; he knew of the possibility of being evicted and
nonetheless bought the thing, the vendee cannot hold the vendor liable.
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FINALS SAMPLEX
1. D1, D2 an D3 obliged themselves to give C jointly and individually a specific car valued P525,000.00.
On the due date, C demanded delivery but the debtors failed to deliver. The next day, while D1 was still
in possession of the car, it got lost due to his fault. The right of C is
a) None, obligation is totally extinguished
b) Proceed against any of the debtors for the value of the car with damages
c) Proceed against D1 only, because he is the one in possession at the time it was lost
d) Proceed against all debtors for their respective liabilities, including damages.
e) Proceed against all debtors for their respective liabilities, but only D1 can be held liable for
damages.
2. A, B and C borrowed P36,000.00 from X and Y. The three (3) debtors signed a promissory note on
January 10, 2018 promising to pay the creditors on or before July 10, 2018. How much can X collect
from C in case of passive solidarity?
a) P18,000.00
b) P6,000.00
c) P12,000.00
d) P36,000.00
e) P9,000.00
EXPLANATION: Passive solidarity, debtors are solidary, creditors are joint. You pay the whole share of
one creditor.
3. [Samplex] A, B and C borrowed P150,000.00 from X. The debtors signed a promissory note on
January 10, 2018 promising to pay the creditor jointly and individually on or before July 10, 2018.
How much can X collect from B?
a) P15, 000.00
b) 25,000.00
c) 50,000.00
d) 150,000.00
e) 30,000.00
4. [Samplex] A and B are solidary debtors of X and Y, solidary creditors to the amount of
P40,000.00. On the due date X condoned the entire obligation in favor of A. Which of the
following is correct?
a) B shall give A P20,000.00
b) X can still collect from B P20,000.00
c) Y can still collect from B P20,000.00
d) Y can still collect from A or B P20,000.00
e) Y cannot collect from A or B
5. [Samplex] X filed an action against A, one of 4 debtors who bound themselves to pay individually
and jointly to pay the amount of P100,000.00. The action was dismissed because the obligation
had an unlawful object. If Y, a solidary creditor files an action against B, one of the 4 debtors:
a) the action will not prosper
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b) Y can recover the amount of P100,000.00
c) Y can recover only P12,500.00
d) Y can recover the amount of P75,000.00
6. A promissory note signed by Martiniano and dated March 15, 2018 is worded as follows: “I
promise to pay Juanita the sum of Fifty Thousand Pesos (P50,000.00) provided that if she should
fail in the October, 2018 CPA Examination, she shall return to me said amount.” The above note
involves an obligation with:
a) suspensive condition
b) casual condition
c) resolutory condition
d) potestative condition
7. On January 1, 2019, A signed a promissory note binding himself to pay X P100,000.00 on or

before June 30, 2019.
a) Before June 30, 2019, A cannot be compelled to pay.
b) Before June 30, 2019 X cannot validly refuse an offer to pay
c) Before June 30, 2019 while A cannot be compelled to pay, X also cannot be compelled to accept
payment.
d) Before June 30, 2019 while A can be compelled to pay, X cannot be compelled to accept payment.
e) Only a and b are correct
8. O gets a loan of P100,000 from P which becomes due on November 23, 2018 and mortgaged his
house as security for the debt. On September 22, 2018 the mortgaged house was completely
destroyed by an accidental fire. A week after, P demanded payment from O. Is P’s demand valid?
a) No, because the obligation is one with a definite period and the demand would be prejudicial
to the rights of the debtor
b) No, the obligation is extinguished because the object of the obligation is lost through a fortuitous
event - the house is not the object of the obligation
c) Yes, the debts become demandable because the period established is for the benefit of the
creditor
d) Yes, the debt becomes demandable because the collateral was lost through a fortuitous event -
Art. 1198 does not apply
9. [Samplex] On February 1, 2019, Zardi obliged himself to deliver to Rey his Ford Expedition on
March 1, 2019. There was no delivery until March 15, 2019 when the garage of Zardi was totally
destroyed because of an earthquake. Is Zardi liable for the loss of the car?
a) Yes. The obligation to deliver the crew cab is changed to an obligation to pay the equivalent value
because Zardi is in delay
b) Yes, because the contract was perfected.
c) No. Even if Zardi was already in default, he could plead impossibility of performance
d) No, because there was no demand by Rey to deliver the car and the specific object was lost
due to a fortuitous event.
10. On October 6, 2018, Aurora obliged herself to deliver to Corita 100 cavans of corn on the last day of
the month. On November 1, 2018, Corita orally demanded for the delivery of 100 cavans of corn but
Aurora failed to comply. The next day, a flood damaged the 500 cavans of corn stored in the
warehouse of Aurora and from which she intended to get 100 cavans of corn for delivery to Corita.
a) Aurora’s obligation to deliver 100 cavans of corn to Corita was extinguished, the cause of the loss
being a fortuitous event.
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b) Aurora’s obligation to deliver 100 cavans of corn to Corita was not extinguished because of the
nature of the goods to be delivered.
c) Aurora’s obligation to deliver 100 cavans of corn to Corita was not extinguished because Aurora is
in default.
d) Aurora’s obligation to deliver 100 cavans of corn to Corita was extinguished because an oral
demand is not a valid demand.
11. Which of the examples given below can legal compensation take place?
a) A owes B P100,000 due on June 30, 2018. B owes A P100,000 due on June 30, 2018 but C
has filed an adverse claim against A. - No legal compensation, Art. 1279 (5)
b) A owes B P10,000 payable October 1, 2018. B owes A P15,000 due on October 31, 2018. - Art.
1281.
c) A owes B P1,000 with C as his guarantor. B owes C P1,000
d) A owes B P1,000 payable May 31, 2018. B to deliver to A 2 piculs of sugar worth P1,000 on May
31, 2018.
12. X, Y, and Z are co-owners of an undivided parcel of land. Y sold his 1/3 interest to Z absolutely.
Which is correct?
a) X may exercise the right of redemption on the interest sold by Y to Z
b) X does not have the right of redemption
c) The sale made by Y to Z is voidable.
d) X may redeem only % of the interest sold by Y to Z.
13. [Midterms] On May 1, 2018, D obtained a 60-day loan from ABC Loan Company amounting to
P50,000.00 with G as guarantor. D also issued two checks — one amounting to P30,000.00 dated
June 30, 2018, and the other for P20,000.00 dated July 1, 2018. On the due dates of the checks,
ABC Loan presented the checks for payment but only the check for P30,000.00 was honored. The
other check was dishonored for lack of funds. T, wanting to save the credit standing of D, paid
ABC Loan P50,000.00 without the knowledge of D and believing that D still owed the same
amount.
a) T may recover from D P50,000.00 and if D cannot pay, T can go against G.
b) T may recover from D P20,000.00 and if D cannot pay, T can go against G.
c) T may recover from D P20,000.00 and if D cannot pay, T cannot go after G.
a. Art. 1236. Whoever pays for another may demand from the debtor what he has paid
EXCEPT that if he paid without the knowledge or against the will of the debtor, he
can recover only insofar as the payment has been beneficial to the debtor.
b. Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the
will of the latter, cannot compel the creditor to subrogate him in his rights, such as
arising from mortgage, guaranty, or penalty.
d) T may recover from D nothing because he paid without the knowledge of D.
14. P, the owner of a piece of residential land orally authorized A to sell the land for P500.00 with 5%
commission. Today A sold the land to C. One day later P sold the same land to D. Assuming that
both buyers are in good faith, who among them is the lawful owner?
a) C, being the first buyer
b) C, because A was giver authority by P
c) D, because the sale made by A to C is void
d) D, because he has a better title, his vendor being the owner himself
210
15. In four of the following defective contracts, ratification cleanses the defects. Which is the
exception?
a) Both parties are incapable of giving consent - unenforceable
b) Sale of immovable property or interest orally entered into
c) Sale of a piece of land thru an agent the authority is oral - Void: Art 1874
d) Contracts entered into by a person who has been given no authority
e) Those entered into by an agent in the name of the principal, exceeding the scope of his authority
and the third party was aware of the limits of the powers of the agent
16. Which of the following contracts is voidable?

a) Those were both parties are incapable of giving consent to a contract
a. Unenforceable
b) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the
claims due them
a. Rescissible
c) Those entered into by an agent in the name of the principal, exceeding the scope of his authority
and the third party was aware of the limits of the powers of the agent
a. Unenforceable
d) Those whose object is outside the commerce of men
a. Void
17. S and B orally agreed that S would sell and B would buy S’s radio for P400, two years from the
date of the agreement. At the end of the two-year period, S refused to deliver the radio although
B was willing to pay.
a) B can compel S to deliver because he is willing to pay the price
b) The contract is unenforceable
c) The contract is enforceable because the price is less than P500
d) The object being movable, the oral contract is enforceable.
18. 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 of the partial payment of D and against the will of D, paid C the amount
of P50,000. What is the effect of this payment to the obligation?
a) The obligation is extinguished. A cannot recover any amount from D, but A can demand
reimbursement from G 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 been subrogated into the rights of C, can proceed against guarantor G.
c) The obligation is not extinguished. A’s payment being against the will of D did not extinguish the
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.
a. Art. 1236 and 1237.
19. On October 4, 1999, 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, 1999, when B tried to collect from X, he found out that X was insolvent. At the time of
delegation, X was already insolvent but A did not know this. The insolvency is not of public
211
knowledge. So B sued A on the ground that it was A who made the proposal and that A really
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 his obligation had already been extinguished by novation
a. Art. 1295. Insolvency of the new debtor, who has been proposed by the original
debtor and accepted by the creditor, shall not revive the action of the latter against
the original debtor, EXCEPT (1) insolvency already existing and of public knowledge;
(2) known to debtor when he delegated the debt
c) A is liable because he did not exercise due diligence in determining the insolvency of X
d) A is liable because X agreed to the proposal to make himself solidarily liable for the obligation
20. In which of the following instances does legal subrogation not apply?
a) When a creditor pays another creditor who is preferred without the debtor’s knowledge
b) When a third person, not interested in the obligation, pays with the express or tacit approval of the
debtor
c) When a third person who has no interest in the fulfillment of the obligation pays the creditor
without the knowledge of the debtor
a. Not enumerated under Art. 1302.
d) When, even without the knowledge of the debtor, a person interested in the fulfillment of the
obligation pays, without prejudice to the effect of confusion as to the latter’s share
21. A, B and C are equal partners in ABC Partnership. On April 29, 2018, partner C died. On May 1,
2018, not knowing that C died, A contracted a liability to D who also does not know the death of
C. The liability is P90,000.00. After D exhausted the net assets of ABC Partnership in the amount
of P60,000.00, he can collect:
a) P30,000.00 from A
b) P15,000.00 from A and P15,000.00 from B.
c) P10,000.00 from estate of C; P10,000.00 from A; P10,000.00 from B.
d) P20,000.00 from A and P10,000.00 from B
22. A, B and C are partners engaged in a retail business. Their contribution is P10,000.00 each. D is
admitted as a new partner with a contribution of P10,000.00. At the time of his admission, the
partnership has an outstanding obligation to E in the amount of P80,000. In this case:
a) D is not liable to E for this obligation.
b) D is liable to E for this obligation so that after the assets of the partnership amounting to
P40,000.00 is exhausted leaving a balance of P40,000.00,only A, B and C shall be liable jointly, out
of their separate property.
c) D is liable to E for this obligation so that after the assets of the partnership will be exhausted,
leaving a balance of P40,000.00, all the partners, including D, shall be liable jointly, out of their
separate property.
d) D shall assume the balance, being a new partner.
23. M and O are partners of M & O Partnership, Ltd.. O is a the managing partner. N owes M
P10,000.00 and M & O Partnership, Ltd. P30,000.00. The obligations of N are both due. M
collected from N the debt of N to M in the amount of P10,000.00 and issued a receipt in the name
of M. To which obligation will the P10,000.00 be applied?
a) The whole of the P10,000.00 will be applied to debt of N to M.
212
b) The P10,000.00 will be applied to debt of N to the partnership
c) P5,000.00 each to debt of N to M and to the partnership
d) P2,500.00 to debt N to M and P7,500.00 to debt of N to the partnership
24. C, P and IP are partners. They contributed P50,000 each. They agreed that C & P will share the
profits and losses equally. The partnership realized profits of P21,000.00. The share of IP in the
profits.
a) C and P will determine IP’s share in the profits

b) IP’s share is P7,000.00
c) Pro-rata to his contributed capital
d) Value of service
e) Nothing, because he is an industrial partner
25. F, G, H, and I are partners. They contributed capital as follows: F, P15,000; G, P30,000.00; H,
P5,000.00 and I, as the industrial partner, his services. There is no stipulation as to the sharing of
profits and losses. The partnership’s obligation to outsiders exceeds the total net assets by
P25,000.00. Who and by how much will the partners be liable for the payment of the P25,000.00?
a) F, P8,333.33; G, P8,333.33; H. P8,333.33; I, nothing.
b) F, P7,500.00; G, P 15,000.00; H, P2,500.00; I, Nothing
c) F, P6,250.00; G, P6,250.00; H. P6,250.00; I, Value of Service
d) F, P6,250.00; G. P6,250.00; H. P6,250.00; I P6,250.00
26. X, Y and Z are partners. X contributed his services only; Y, P40,000; and Z, P20,000. The
partnership was liquidated. After payment of the partnership obligations, only P30,000 worth of
assets remained. How much will be the share of Y?
a) equal to the share of Z
b) P20,000
c) Zero
d) P10,000
e) Value of service to be determined
27. Which of the following is not correct? In a limited partnership composed of A, B and C, the
contribution may be as follows:
a) A-cash (limited partner); B-cash (general partner); C-services (general partner)
b) A-property (limited partner); B-services (general partner) C-services (general partner)
c) A-services (limited partner); B-cash (general partner); C-services (general partner)
d) A-cash (limited partner); B-property (general partner); C-services (general partner)
28. A sold his land to B. Later, A sold the same land to C. B in turn sold the same land to D, who took
possession of the land in good faith. C, a purchaser in good faith, registered the sale in his favor.
Decide:
a) B is the owner of the land because he was the first buyer
b) C is the owner of the land having registered the sale in good faith
c) D is the owner of the land being the transferee of the rights of B and who is in possession in good
faith
d) D is the owner because after A sold the land to B. A had no more right to transfer ownership to C,
the second buyer
213
29. A husband and his wife were living together under a conjugal partnership of gains. Later,
because of a quarrel, the wife left the husband without judicial approval. They have thus been
living apart for more than ten years. The wife later sold her land to the said husband. Is the sale
valid?
a) The sale is valid because the spouses have been separated in fact for more than ten years
b) The sale is valid if they executed a marriage settlement
c) The sale is void if the sale took place after a decree of legal separation
d) The sale is void because the spouses are living apart
30. A sold to B in a private instrument a parcel of land for Php 5,000.00 B now wants A to place the
contract in a public instrument so that B could register the sale with the Registry of Deeds and
secure the Transfer Certificate of Title in his name. Decide.
a) A may not be forced or compelled to execute the public instrument since the sale is unenforceable
being in private instrument only
b) A cannot be required to place the contract in a notarized deed of sale because the contract is void
not being in public instrument
c) A can be required to execute the public instrument only if B has paid the purchase price
d) A has the obligation to execute the public instrument because the contract of sale is enforceable
31. A leased a condominium unit to B for a period of 5 years. After one year, B transferred his rights
to C without the knowledge of A. The agreement between B and C was for three years. The
contract between B and C is:
a) Void because it was without the consent of A
b) Valid as long as B was not prohibited from transferring his rights
c) Void because this is an assignment of lease
d) Unenforceable against A because it was entered into without the consent of A.
32. On November 15, 2008, A leased an urban land to B for a period of ten years with the rental
payable annually. On December 5, 2018, B, while still in possession of the land, paid the rental to
A. After the expiration of the lease, there being no notice given by either party for the termination
of the lease, B will continue to have the right to use the thing
a) For a period of another 10 years
b) For a period of one month from November 15, 2018
c) For a period of one year from November 15, 2018
d) Only with the tolerance of A
e) For all the time necessary for the gathering of the fruits which the whole estate leased may yield in
one year.
33. X bought a parcel of land from Y which was being leased by Z. X cannot terminate the lease if:
a) The lease is recorded in the Registry of the Property
b) In the contract of sale, it was mentioned that there was an existing lease contract with Z.
c) X was aware of the existence of the lease
d) All of the above
34. If the lessee constructed a fence surrounding the leased land with knowledge of the lessor, upon
the termination of the lease:
214
a) The lessee will have the right of retention until he is reimbursed by the lessor the amount spent in
the construction of the fence.
b) The lessee can compel the lessor to reimburse him the amount spent in the construction of the
fence.
c) The lessor can appropriate the improvement but he shall pay the lessee the value of the
improvement at the time of the expiration of the lease.
d) The lessor can appropriate the improvement but he shall pay the lessee 2 of the value of the
improvement at the time of the expiration of the lease.
e) The lessee can compel the lessor to reimburse him '4 of the amount spent in the construction of
the fence.
35. In a lease of rural land, the lessee will have the right to a reduction of the rent in case of loss of
more than % of the fruits thru a:
a) Typhoon
b) Flood
c) Earthquake
d) Sterility of the land
e) Presence of lawless elements in the leased premises
36. In an agreement between X and Y, Y obliged himself to supply both labor and materials for the
construction of a building on the land of X. After the completion of the building, Z the supplier of
materials to Y, demanded payment from X. Can Z hold X liable for the unpaid materials used in
the construction of the building of X?
a) No, because there is no privity of contract between X and Y.
b) No, because Y is not the agent of X.
c) Yes, even if X already paid in full if the payment was made before the obligation became due.
d) Yes, but only if X had not yet paid Y in full.
37. The pledge is void if it was constituted

a) Before the obligation became due
b) After the obligation became due
c) Before the pledgor acquired ownership
d) After the pledgor acquired ownership
38. A contract of pledge will bind third persons

a) Once the pledge is perfected
b) Only if there had been delivery already even if the contract is oral
c) Only if there had been delivery already and the contract is in writing
d) Only if there had been delivery already and the contract is in a public instrument
39. A, B and C borrowed P300,000 from X secured with the delivery of a ring, watch and necklace
owned by A, B and C, respectively. The value of the ring is P150,000, the watch P100,000 and the
necklace P50,000. Thereafter, C paid P50,000. Can C validly demand for the return of the
necklace?
a) Yes, because their obligation is joint.
b) Yes, because the value of the necklace is only P50,000
c) No, because the obligation is solidary
d) No, because the obligation had not yet been fully paid.
40. For a foreclosure of a real estate mortgage to be valid, the following are required, EXCEPT:
215
Article 2085
a) the mortgagor is the absolute owner
b) the mortgagor has free disposal of the thing
c) the mortgage is in a public instrument
a. Real estate mortgage is not a solemn or formal contract. Under 2125, although registration
is indispensable, the lack thereof would not affect the binding effect of the mortgage
between the parties. In fact, the Supreme Court also ruled in a few cases that the failure to
register a real estate mortgage shall not bar the foreclosure of the mortgage, provided that
the mortgage is contained in a public instrument. While there can be no valid foreclosure of
a mortgage contained in a private instrument, the mortgagee is not without remedy. Under
1357, the mortgagee may require the mortgagor to execute the contract in the form
required by law. Therefore, form is really not a requirement for the validity of a real estate
mortgage. At best, form is only required for the enforceability of this contract.
d) the mortgagee has physical possession of the thing

e) none of the above
41. If the guaranty was constituted without the consent of the principal debtor, the guarantor, upon
payment,
a) Cannot seek reimbursement from the principal debtor - 1246
b) Can recover from the principal debtor only to the extent that the debtor was benefited - 1236
c) Will be subrogated in the rights of the creditor
d) (1237)
e) None of the abovE
The following are the similarities between a pledge and a chattel mortgage, except:
a. both are real contracts

b. both are accessory contracts
c. both are indivisible
d. both are constituted on personal property
Pledge CM
Real Contract Solemn or Formal
Possession is transfered No transfer is required
Public Instrument Registered to bind
None Affidavit of GF
None Deficiency of Sale can be recovered
Excess belongs to pledgee-creditor Excess belongs to mortgagor
216
There can be no valid foreclosure of a real estate mortgage unless it is:
a. in a private instrument
b. in a public instrument
c. registered
d. in writing
the Supreme Court also ruled in a few cases that the failure to register a real estate mortgage shall not bar the
foreclosure of the mortgage, provided that the mortgage is contained in a public instrument. While there can be
no valid foreclosure of a mortgage contained in a private instrument, the mortgagee is not without remedy.
Under 1357, the mortgagee may require the mortgagor to execute the contract in the form required by law.
Therefore, form is really not a requirement for the validity of a real estate mortgage. At best, form is only
required for the enforceability of this contract.
A mortgaged a parcel of land to B. It was stipulated that A cannot sell the land without the consent of B.
Thereafter, A sold the land without the knowledge of B. The sale is:
a. void because the land is subject to the rights of B

b. unenforceable because the sale was without the consent of B
c. void because there was no delivery yet
d. valid because the mortgagor is still the owner
e. valid as long as the essential elements of a contract of sale are present.
The antichretic creditor will always have the obligation to:
a. apply the fruits to the interest, if owing

b. pay the tax on the thing - Not always, because of the word “unless stipulation to the contrary”
c. bear the expenses necessary for the preservation of the thing
d. all of the above
When an obligor reimburses a third person who, without the knowledge of the obligor, paid the debt
which the obligor is not legally bound to pay because the action thereon had already prescribed, the
obligor cannot recover what he has paid because the obligation is known as:
a. pure
b. conditional
c. with a period
d. civil
e. natural
Edmund was a student of Excellent University when he was shot by a security guard during an
altercation. The guard was an employee of Piston Security Agency. An action for damages was filed by
Edmund. The school may be held liable under:
a. law
b. contract
c. quasi-contract
d. delict
217
e. quasi-delict
One of the following is a limited generic thing. Which is it?

a. a cow.
b. a horse in Y’s stable
c. a Toyota car with engine no. 12345
d. a ring with diamond stone
e. a brand new black Mitsubishi Lancer GLX
D obliged himself to give C, object No. 1 valued P15,000.00; or object No. 2 valued P10,000.00; or object
No. 3 valued P5,000.00. Before the communication of the choice, all the objects were lost due to D’s fault
in the order as stated. If C has the right to choose:
a. D’s obligation is extinguished

b. D’s obligation is to pay the value of object No. 1 plus damages
c. C’s right is to demand the value of any of the objects plus damages
d. D’s obligation is to pay the value of object No. 3 plus damages.
Effect of the loss of the thing in a facultative obligation. Which is correct?
a. Before substitution: if the principal things is lost due to fortuitous event, there is no more obligation
b. After substitution, if the principal thing is lost, the debtor is no longer liable for the loss even if it was
lost due to his fault
c. A and B
d. None of the above.
218

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SAMPLEX COMPILATION

COMBINED SUBJECTS ……………………………………………………...…………………………………………………187

FINALS SAMPLEX ……………………………………………………...…………………………………………………….....193

OBLIGATIONS MIDTERMS, 2020

18. Consignation may result in the partial extinguishment of the obligation.

Whether it is an act or omission:

7. The following are obligations with a term, except:

8. Which of the following conditional obligations is void?

13. The following are the effects of a joint obligation, except:

25. Which of the following will not extinguish an obligation?

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

29. In which of the following will there be no legal subrogation?

Case: CBK Power Co. v. CIR (G.R. Nos. 198729-30)

● The requisites of solutio indebiti is NOT present.

● No, Cita cannot demand Pedro to demand the entire obligation.

OBLIGATIONS MIDTERMS SAMPLEX #1

7. The condition not to do an impossible thing shall annul the obligation.

16. In alternative obligations, the right of choice belongs to the debtor.

21. An obligation becomes due upon demand.

II. MULTIPLE CHOICE

1. In an obligation with a penal clause, which is absolutely true?

4. I promise to pay X or Y the amount of P100 on December 25, 2002 is:

8. The creditor is entitled to recover only the penalty stipulated

11. Which of the following is a subsidiary remedy?

12. Rescission as a subsidiary remedy would be available if:

Resolutory condition is demandable at once

There can be no consignation when there is no obligation to be extinguished.

Tender of payment may be extrajudicial.

B 14. Consent is an essential requisite of obligation.

Written Contract is necessary to make it enforceable.

The indivisibility of an obligation necessarily gives rise to solidarity.

C 18. There is an obligation in every contract.

Consignation, to be valid, generally requires a prior tender of payment.

B 25. Obligation is always a juridical necessity to give, to do, or not to do

Contract is meeting of meeting of the minds between two persons only

Under the principle of dation in payment, what is transferred is merely possession of

C 33. There can be no dation in payment when there is no obligation extinguished.

Tender of payment may be extrajudicial.

D 38. In partial compensation, no obligation is extinguished.

B 40. Dation in payment is governed by the law of sales.

Articles 1157 are conclusive enumeration of sources of obligation

II. MULTIPLE CHOICE

45. An obligation ceases to be alternative and becomes a simple obligation:

46. The following obligations are immediately demandable, EXCEPT:

48. An obligation ceases to be alternative and becomes a simple obligation:

49. It refers to a joint obligation:

57. Which of the following will NOT necessarily extinguish an obligation?

59. One of the following is TRUE:

T 13. The cause in a lucrative contract is the liberality of the benefactor.

F 15. A contract of sale entered into between spouses is void.

F 26. Any waiver of an action for fraud is void.

5. An obligation ceases to be alternative and becomes a simple obligation:

6. It refers to a joint obligation:

SECOND ACTUAL QUIZ

2. Obligations with a resolutory period shall be demandable immediately- T

Creditor must agree to the guaranty

7. In facultative obligations, the prestation may be due at the same time - F

II. MULTIPLE CHOICE

12. D is obliged to give C P10,000 if X dies. This is an example of:

13. The following obligations are immediately demandable except:

[Answer: A] - sir’s quiz

15. An obligation ceases to be alternative and becomes a simple obligation:

16. Which of the following conditional obligations is void?