Test i.

TRUE OR FALSE

1. The contract parties may establish such stipulations, clauses, terms and condition as they
may deem convenient, provided they are not contrary to law, morals, good customs,
public order, or public policy.
2. The contract must bind both contracting parties; its validity or compliance can be left to
the will of one of them.
3. The determination of the performance may be left to a third person, whose decision shall
be binding until it has been made known to both contracting parties. The determination
shall not be obligatory if it is evidently inequitable. In such case, the courts shall decide
what is equitable under the circumstances.
4. The heir is liable beyond the value of the property he received from the decedent.
5. Creditors are protected in cases of contracts intended to defraud them.
6. A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, shall be unenforceable, unless it is
ratified, expressly or impliedly, by the person on whose behalf it has been executed, after
it is revoked by the other contracting party.
7. An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of
either party become acceptance is conveyed.
8. Contracts entered into during a lucid interval are valid. Contracts agreed to in a state of
drunkenness or during a hypnotic spell are voidable.
9. Impossible things or services can be the object of the contracts.
10. When one of the parties has brought an action to enforce the instrument, he cannot
subsequently ask for its reformation.
11. The interpretation of obscure words or stipulations in a contract shall not favor the party
who caused the obscurity.
12. Payments made in a state of insolvency for obligations to whose fulfillment the debtor
could not be compelled at the time they were effected, are also rescissible.
13. Voidable contracts are binding, unless they are annulled by a proper action in court. They
are not susceptible of ratification.
14. If there are two or more alienations, the first acquirer shall be liable first, so on
successively.
15. Ratification may be effected by the guardian of the incapacitated person.
16. In obligations to render service, the value thereof shall be the basis for damages.
17. A special promise to answer for the debts, default, or miscarriage of another is an
enforceable contract
18. Unenforceable contracts cannot be assailed by third persons.
19. Interest paid in excess of the interest allowed by the usury laws may not be recovered by
the debtor, with interest thereon from the date of the payment.
20. When the law sets, or authorizes the setting of a minimum wage for laborers, and a
contract is agreed upon by which a laborer accepts a lower wage, he shall be entitled to
recover the deficiency.
 21. When a right to sue upon a civil obligation has lapsed by extinctive prescription, the
obligor who voluntarily performs the contract can recover what he has delivered or the
value of the service he has rendered.
22. When a minor between eighteen and twenty-one years of age who has entered into a
contract without the consent of the parent or guardian, after the annulment of the contract
voluntarily returns the whole thing or price received, notwithstanding the fact that he has
not been benefited thereby, there is no right to demand the thing or price thus returned.
23. The action or defense for the declaration of the inexistence of a contract prescribes in
four years.
24. A contract which is the direct result of a previous illegal contract, is also void and
inexistent.
25. A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.

TEST II. MULTIPLE CHOICE: (Choose the best answer)

1. Mr. Seller and Mr. Buyer orally agreed on the following: (i) the land to be sold has an area
of 10,000 sq. meters; (ii) price is P5 million; and (iii) Mr. Seller shall prepare the deed of
sale. With fraudulent intent, Mr. Seller knowing the inadequacies of Mr. Buyer with respect
to numbers wrote 1,000 sq. meters instead of 10,000 sq. meters. The sale is

a. void
b. voidable but the contract may be reformed
c. valid but the instrument may be reformed
d. valid but the contract may be reformed

2. Mr. X promised to deliver a specified dog named “Auger” to Mr. Y on April 29, 2005.On
the due date, no dog was delivered. Which is not correct?

a. If the dog died on April 30 without anyone’s fault, Mr. X shall be liable to Mr. Y by
reason of delay.
b. Mr. Y shall bear the loss because of res perit domino.
c. Mr. Y shall bear the loss because of genus nunquan perit.
d. Mr. X shall bear the loss because of genus nunquan perit.
e. No one shall bear the loss.

3. Mr. X, without the authority of Mr. Y, owner of a car, sold the same car in the name
of Mr. Y to Mr. Z. The contract between Mr. X and Mr. Z is

a. void because of the absence of consent from the owner, Mr. Y.

b. valid because all of the essential requisites of a contract are present.
 c. unenforceable because Mr. X had no authority but he sold the car in the name of Mr. Y,
the owner.
d. rescissible because the contract caused lesion to Mr. Z.

4. Which of the following contracts are 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 P4,500.
d. A relatively simulated contract.

5. Which of the following expresses a correct principle of law?

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. Simulation of a contract always results in a void contract.

6. Mr. X orally offered to sell his two-hectare rice land to Mr. Y for P10 million. The
offer was orally accepted. By agreement, the land was to be delivered (through
execution of a notarized deed of sale) and the price was to be paid exactly one-month from
their oral agreement.

a. If Mr. X refuses to deliver the land on the agreed date despite payment by Mr. Y, the
latter may not successfully sue Mr. X because the contract is oral.
b. If Mr. X refuses to deliver the land, Mr. Y 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.

7. Which of the contracts below are rescissible?

a. Those entered into by guardians whenever the wards whom they represent suffer lesion
by more than one third of the value of the object subject matter thereof.
b. Those entered into by guardians in the above when the lesion suffered is one fourth of the
value of the property.
c. Those undertaken in fraud of creditors even if the latter has other means to collect the
debt.
d. Those where the contract is absolutely simulated.

8. Consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. Which of the following constitutes
an offer?
 a. an definite offer made through an agent
b. business advertisement of things for sale
c. advertisements for bidders
d. a declaration of an intent to sell.

9. Which of the following is most likely incorrect?

a. Mr. D promised to deliver to Mr. C 100 bottles of Japanese red wine of a specified brand.
Without the knowledge of Mr. D, production of the wine had been stopped. Despite earnest
efforts, Mr. D could only deliver ninety (90) bottles. Mr. O’s obligation is deemed fulfilled.
b. In the immediately preceding letter (a), Mr. D could recover as though there had been a
delivery of 100 bottles.
c. Mr. D promised to deliver 100 sacks of a certain type of rice. He delivered only 90 sacks
but the obligee did not object to the incomplete delivery. The obligation may be deemed
fully performed.
d. The creditor cannot be compelled to accept payment or performance by a third person
who has no interest in the fulfillment of the obligation or unless there is a stipulation to the
contrary.

10. Debtor owes Creditor P500,000. The debt is secured by a chattel mortgage on Debtor’s
car. On the due date of the obligation, Creditor is paid by Third
Person who has no interest in the obligation either as guarantor or surety. Thereis likewise
no stipulation as to Third Person’s right to pay.

a. If Third Person pays without the knowledge or against the will of Debtor, Third Person
may recover P500, 000 from Debtor even if the debt had been condoned to the extent of ½.
b. If Third Person pays with the Debtor’s knowledge and consent, Third Person may recover
P500, 000 from Debtor even if the debt had been condoned to the extent of ½. If Debtor
fails to pay, Third Person may foreclose the mortgage on Debtor’s car.
c. Same as letter “b” except that Third Person may not foreclose the mortgage on Debtor’s
car, unless Creditor consents.
d. Same as letter “b” except that Third Person may not foreclose the mortgage on Debtor’s
car because the mortgage was exclusively constituted in Creditor’s favor.

11. Which among the situations below states a correct principle of law?
 a. Third Person pays Debtor’s debt without intending to be reimbursed by Debtor. The
payment will not extinguish the obligation even if accepted by Creditor if Debtor does not
consent to the payment.
b. Third person pays Debtor’s debt without intending to be reimbursed by (c) Debtor. The
payment will extinguish the obligation if Debtor does not consent to the payment.
c. Debtor is obliged to give Creditor a Rado watch. Since no Rado watch was available on
the due date, Debtor decided to deliver a watch of a different brand more valuable than the
one that is due. Creditor must accept the watch.
d. D owes C P20, 000. D pays B, brother of C. The payment is not valid even if it redounded
to the benefit of C.

12. Debtor owes Creditor P20,000. On the due date of the obligation, Debtor could not
pay. Debtor instead offered his TV set worth P20,000 in payment of the obligation.
Creditor agrees.

a. There is no payment because the debt may only be discharged by the delivery of legal
tender.
b. There is payment pursuant to a facultative obligation because of a substitution.
c. There is dation in payment or dacion en pago.
d. There is payment by cession.

13. Mr. D owes Mr. Y P10, 000. On the due date, Mr. X offers a check in payment of the
obligation.

a. The receipt of the check by Mr. Y extinguishes the obligation if the check is a certified
one because it is as good as cash.
b. The receipt is not equivalent to automatic payment if the check is not a certified check.
c. Mr. Y has no reason to refuse the check if it’s fully funded as certified to by the bank.
d. Mr. Y cannot be compelled to accept the check.

14. Where the debtor has various debts of the same kind in favor of the same creditor and
on the due date the debtor does not have sufficient funds to cover all the debts, the debtor
may avail of

a. tender of payment and consignation.

b. application of payment.
c. dation in payment.
d. cession in payment.

15. It is that currency which the debtor can compel the creditor to accept in payment of all
debts, public or private.
 a. certified checks.
b. domestic money in any denomination.
c. legal treasury notes.
d. legal tender.

16. The extinguishment of an obligation by the passage of time is

a. fulfillment of a resolutory condition.

b. prescription.
c. expiration.
d. annulment.

17. Mr. Debtor is domiciled in Quezon City while Mr. Creditor is domiciled in Manila.
Payment is to be made in

a. Quezon City, domicile of Mr. Debtor.

b. Manila, domicile of Mr. Creditor.
c. Makati City if so stipulated.
d. The place designated by Mr. Debtor.

18. Mr. Debtor owes Mr. Creditor as follows: P10, 000 due February 5; P10, 000 due
March 5 and P10, 000 due April 5, all during the current year. Mr. Debtor has only P10,
000 and cannot pay all his obligations. If Mr. Debtor decides to pay P10, 000, the
amount shall apply:

a. To the debt chosen by Mr. Creditor.

b. To the debt chosen by Mr. Debtor.
c. To the debt due on February 5 being the oldest debt.
d. To the debt due on April 5 if it is an interesting obligation.

19. Mr. Debtor owes fifteen (15) persons substantial amounts of money. His financial
situation indicates that his liabilities for exceed his assets. If Mr. Debtor cedes or
assigns his properties to his creditors.

a. The creditors acquire ownership of the properties assigned or ceded.

b. The creditors shall sell the properties assigned and when sold, the debt of Mr. Debtor is
deemed paid regardless of whether or not the net proceeds are equal to or less than the
amount of the indebtedness.
c. The creditors shall sell the properties assigned and when sold, the debt of Mr. Debtor
shall only be released to the extent of the net proceeds of the sale.
d. The cession or assignment shall extinguish the obligation whether or not the creditors sell
the properties assigned.

20. Mr. Debtor owes Mr. Creditor P100, 000. On the due date, Mr. Debtor delivers a
cashier’s check for the full amount. Mr. Creditor refuses to accept the check.
 a. Debtor may make a consignation by depositing the amount due with any bank and in the
name of Mr. Creditor.
b. Mr. Debtor may make a consignation by depositing the amount due at the disposal of
judicial authorities before whom the tender of payment shall be proved in a proper case.
c. Mr. Debtor has no legal basis for making a consignation.
d. The creditor may be considered in mora accipiendi.

21. As a general rule, consignation must be preceded by a valid tender of payment. Enumerated
below however, are situations which allows a consignation without a prior tender of
payment. Which is the exception?

a. When for any cause, the creditor refuses to give a receipt.

b. When the creditor is absent or unknown, or does not appear at the place of payment.
c. When two or more persons claim the same right to collect.
d. When the title to the obligation has been lost.

22. Which among the following fails to state a correct legal principle?

a. The debtor in obligations to do shall be released when the prestation becomes legally or
physically impossible without the fault of the obligor.
b. Whenever the thing is lost in the possession of the debtor, it shall be presumed that the
loss was due to his fault, unless there is proof to the contrary.
c. An obligation which consists in the delivery of a determinate thing shall be extinguished
in any event it should be lost or destroyed without the fault of the debtor.
d. Condonation or remission is essentially gratuitous, and requires the acceptance by the
obligor. It may be made expressly or impliedly.

23. Mr. Debtor executed a promissory note in favor of Mr. Creditor in the amount of
P100, 000. The debt is secured by a pledge on a ring owned by Mr. Debtor. Which
among the following is most likely correct?

a. If on the due date, Mr. Creditor delivers the note to Mr. Debtor without collecting the
debt, there is an implied condonation if the note is a private instrument.
b. If the debt is condoned by Mr. Creditor, the pledge is not condoned.
c. If Mr. Creditor returns the thing pledged to Mr. Debtor, the pledge and the loan are
deemed extinguished.
d. If on the due date, Mr. Creditor delivers the note to Mr. Debtor without collecting the
debt, there is an implied condonation if the note is a public document.

24. Mr. Oliveros, by virtue of a written agreement agreed to deliver to Mr. Santos a car
on a specified date provided the latter pays the former P1 million.
 a. The prestation is the car; Mr. Santos is the active subject; Mr. Oliveros is the passive
subject and the juridical tie is the contract.
b. The active subject is Mr. Oliveros; the passive subject is Mr. Santos; the juridical tie is
the law and the prestation is the giving of the car.
c. The active subject is Mr. Santos; the passive subject is Mr. Oliveros; the prestation is the
delivery of the car and the juridical tie is law.
d. The passive subject is Mr. Oliveros; the active subject is Mr. Santos; the prestation is the
delivery of the car and the juridical tie is the contract.

25. When a party causes damage to another due to his negligent act and such damage is caused
in the course of the performance of a contractual obligation, the latter is liable to the
former on the basis of

a. culpa criminal
b. culpa extra contractual
c. culpa contractual
d. culpa aquiliana