UNIVERSITY OF THE CORDILLERAS

College of Law
CIVIL LAW REVIEW 2
OBLIGATIONS AND CONTRACTS EXAMINATION

Name: ___________________________________ Section:_____________________

INSTRUCTIONS: This is a HANDWRITTEN examination. Read each question carefully then

choose the correct answer for each number. For each number, write down the question then
below it write in CAPITAL LETTERS the letter of your choice together with its accompanying
statement. Good Luck!

1._______The City of Baguio was held liable for damages for the injury suffered by King by
reason of a defective condition of the road. What is the source of the City of Baguio’s
obligation?

a. Law
b. Contract
c. Quasi-contract
d. Quasi-Delict

2._______If a stranger pays the obligation without the debtor’s consent, how much can said
payor collect from the debtor?

a. up to the extent that the debtor was benefited

b. the whole obligation
c. none
d. the entire amount he paid plus interest

3._______Dan, a lessee of an apartelle, gave his rentals to Ney believing him to be the owner
thereof. Ney is obliged to give said rentals to Philipp the owner and lessor of the leased
premises. What is the source of Ney’s obligation to give the rentals to the true owner?

a. Law
b. Contract
c. Quasi-contract
d. Quasi-delict

4._______The substitution or change of an obligation by another, resulting in its

extinguishment or modification, either by changing its object or principal conditions, or by
substituting another in place of the debtor, or by subrogating a 3rd person in the rights of the
creditor. It is the total or partial extinction of an obligation through the creation of a new one
which substitutes it.

a. Novation
b. Subrogation
c. Compensation
d. Condonation

5._______Which of the following payors need not secure the consent of the creditor for
purpose of payment?

a. the debtor’s heirs

1
 b. the debtor’s agent
c. the debtor himself
d. Anyone of the above

6._______Ray agreed to pay the debt of Mon to Annie. What is the source of Ray’s obligation to
pay Annie?

a. Law
b. Contract
c. Quasi-contract
d. Quasi-delict

7._______Which of the following does not give a right to the creditor to file an action in court
for the fixing of the period?

a. When the period depends upon the sole will of the debtor
b. When a period is intended but it is not fixed by the parties.
c. When the period is more than ten years
d. When the debtor binds himself to pay when his means permit him to do so.

8._______ Statement 1 - When an employee enters into a contract with his employer
whereby he (employee) shall receive a wage lower than the minimum allowed by law, he is
deemed to have waived the right to question such contract.

Statement 2 - An employee may still recover the deficiency in his wage if the same be less
than that allowed by law, notwithstanding any contract between him (employee) and his
employer.

a. statement (1) is true and statement (2) is incorrect;

b. both statements are true;
c. statement (1) is false and statement (2) is true;
d. both statements are false.

The following facts are for numbers 9 to 10

It was agreed upon by D and C that if D will fail to deliver the goods to C on February 28,
2011, he shall be liable to pay a penalty of P2,000.00. D failed to perform his obligation
on the agreed date and as a result thereof, C suffered damages amounting to
P50,000.00.

9._______Did D incur delay when he failed to deliver the goods on February 28, 2011?

a. Yes, because that is the stipulation of the parties;

b. No, because there was no demand yet from C.
c. Yes, because there is a period agreed upon for the performance of D’s obligation
d. No, because D may be allowed to have a reasonable delay

10._______Can C demand P50,000.00 from D?

a. Yes, provided he can show proof of his pecuniary loss

b. No, because the amount is inequitable
c. Yes, because that is the loss suffered by him
d. No, because penalty is the substitute indemnity for damages or interest.

2
11._______Due to a super typhoon, the carabao of X was able to escape from its pen and it
grazed on the corn plantation of Y. Can Y validly demand payment of indemnity from X?

a. No, because no person shall be liable for a fortuitous event

b. Yes, because X was negligent
c. No, because X did not cause the damage but the carabao
d. Yes, because even if X was not negligent and the escape of the carabao was
because of the typhoon, he was benefited.

12._______In illegal contracts, the conditions in order that repudiation may be allowed are:

i) there has been fulfillment of the purpose and one of the parties discovered that
the other is in bad faith;
ii) if the purpose has not yet been accomplished;
iii) there was delay on the part on one of the parties;
iv) if damage has not yet been caused to any third person.

Which of the above statements are correct:

a. only i and ii;
b. ii and iii;
c. iii and iv;
d. ii and iv.

13._______The law says that contracts shall have the force of law between the contracting
parties. This connotes that:

a. Contracts are the law between the parties and must be complied with. It
prevails in all instances for all other laws bow to the will of the parties in a
contract.
b. Contracts are superior to the law, hence must be complied with even if
contrary to law as long as agreed upon by the parties.
c. Contracts are presumed to be entered into for the benefit of each contracting
party. Therefore, it prevails against any odd. Before a contract can be enforced, it
must first be valid, and it cannot be valid if it is against the law.
d. The parties may stipulate as to any terms and conditions and shall be binding
provided they are not contrary to law, morals and public policy.

The following facts are for numbers 14 to 15.

Orlando entered into a contract with Conrado for the construction of his house. Their
contract provides, among other things, that Conrado will furnish labor and materials for the
project and Orlando will pay him P750,000.00.

14._______If the cost of the construction materials increased by 15% one month after the start
of the project, what right, if any is available to Conrado?

a. He can withdraw from the contract

b. He can demand an increase of the contract price.
c. He can demand amendment of the plan
d. None of the above.

15._______Can Orlando validly withdraw from the construction of the work after it had been
commenced?

3
 a. Yes, by express provision of laws.
b. No, because the contract has been perfected.
c. Yes, because he is the owner of the project.
d. No, because it would be unfair to Conrado.

The following facts are for number 16 to 17:

D obtained a loan of one cavan of Jasmine rice from C worth P4,000 to be paid on March
10, 2011. On the maturity date, the cost of one cavan of Jasmine rice is already
P8,000.00

16._______What should be paid by D to C on March 10, 2011?

a. One cavan of Jasmine rice

b. one-half cavan of Jasmine rice
c. one cavan of another kind of rice worth P4,000
d. one cavan of another kind of rice worth P4,000.00 plus P4,000 in cash

17._______Assuming that no Jasmine rice is available in the market on the maturity date, what
should D pay C?

a. another kind of rice worth P4,000

b. another kind of rice worth P8,000
c. P4,000 in cash
d. P8,000 in cash

18._______In case of illegal contracts, the courts may allow recovery of the money paid or
property delivered when:

a. there has been bad faith on the part of any of the parties;
b. there was no fulfillment of the purpose by one of the parties;
c. the public interest would be subserved;
d. the damage has already been caused to third persons.

19._______Manuel is obliged to pay 120 monthly installments (10 years) and interests in case
of default for the price of 2 parcels of land, Lot 5 and Lot 6 owned by XYZ Hermanos. Manuel
has paid 90 monthly installments then he defaulted payment. After ten years, he informed XYZ
that he will build his house in Lot 5. XYZ contends that he cannot build the house as he does
not yet own the lot. The lower court ordered that Manuel may acquire either Lot 5 or Lot 6
because the totality of how much he paid for the 90 monthly installments is even higher than
the value of either lot. Is the court correct?

a. YES, as there had been substantial compliance by Manuel

b. YES, as the action to reacquire the lot has already prescribed
c. NO, as there is no complete payment of the price
d. NO, as the contract does not transfer ownership pending arrears

20._______Statement 1 - Moral obligations may be converted into civil obligations;

Statement 2 - Voluntary fulfillment means that the debtor complied with the same
even if he knew that he could not have been legally forced to do so.

a. statement (1) is false and statement (2) is true

b. statement (1) is true and statement (2) is false
c. both statements are false
4
 d. both statements are true

21._______A donated to B everything that he (A) possessed and owned leaving nothing for
himself. What is the status of the contract?

a. illegal per se;

b. unconstitutional;
c. prohibited;
d. prohibited but not illegal per se.

22._______Statement 1 - Payment means not only the delivery of money, but also the
performance, in any other manner, of a condition.

Statement 2 - Performance of an obligation is considered a form of payment in law.

a. Only statement 1 is false

b. Only statement 2 is false
c. Both are false
d. Both are true

23._______Can a victim of a penal offense claim compensation?

a. No, the obligation arises from a crime.

b. No, satisfaction of the obligation is imperative.
c. Yes, he is not escaping from any liability.
d. Yes, compensation is by operation of law between persons of are debtors and
creditors to one another.

24._______Contracts forbidden because of private interest are called:

a. void contracts;
b. illegal per se contracts;
c. unenforceable contracts;
d. merely prohibited contracts.

25._______Sally gave Bayer one month from December 10, 2010 to decide whether to buy her
only red car or not. The car is worth PhP300,000 payable in two monthly installments. Teddy
called Sally that he is interested to buy the car. After one month, Bayer refused to buy the car.
Teddy likewise informed Sally that he is not anymore interested with the car. Sally demanded
payment from Bayer due to their pre-existing agreement. How much can Sally collect from Bayer
on January 10, 2011?

a. NONE
b. 100,000
c. 150,000
d. 300,000

26._______On the maturity date for the payment of D’s loan, C demanded payment. D replied
that he has no money yet and that he will pay his loan two days later at the office of C. When D
went to the office of C, two days later, C did not want to receive the payment and informed D
that he will file a case regarding the loan transaction against the latter instead. In this case,
there is

a. Mora solvendi
5
 b. Solvendi accipiendi
c. Compensatio morae
d. Mora accipiendi

27._______Among these, which is a valid payment?

a. Payment of a void judgment when judgment is unknown to the debtor

b. Payment by a stranger even without the debtor’s consent
c. Payment of a penalty when the main obligation lacks an essential element
d. Performance of a thing pending a suspensive condition

28._______If A pays a debt that has prescribed knowing that it has prescribed, A cannot
recover for this would be a cause of a ____________:

a. undue payment
b. natural obligation
c. civil obligation
d. moral obligation

29.________ It is a mode of extinguishing obligations to the concurrent amount of the

obligation of persons who are in their own right reciprocally debtors or creditors of each
other.

a. Novation
b. Confusion
c. Compensation
d. Condonation

30._______ Statement 1 - In case of illegal contracts, both of the contracting parties may be
allowed to recover the money paid or property delivered even though only one of them has
acted contrary to law.

Statement 2 - One of the parties in an illegal contract may be allowed by law to recover
whatever money paid or property delivered despite the fact that both of them acted contrary
to law.

a. statement (1) is correct only;

b. statement (2) is incorrect;
c. statement (1) is incorrect and statement (2) is correct;
d. both statements are correct.

31._______Statement 1 - A minor may recover what he has paid in illegal contracts if justice so
demands.
Statement 2 - A minor may recover what he has paid in illegal contracts if the purpose
has not been accomplished.

a. statement (1) is true;

b. statement (2) is true;
c. both statements are true;
d. both statements are false.

32._______Statement 1 - A debt may refer to an obligation to deliver money, to deliver a thing,

to do an act, or not to do an act.

6
 Statement 2 - A debt to deliver a thing or to render service is not understood to have
been paid unless the thing or service has been completely delivered or rendered, as the case
may be.

a. Both statements are false

b. Only statement 1 is true
c. Only statement 2 is true
d. Both statements are true

33._______The following are examples of natural obligations, except:

a. obligation to pay interest for use of money, even if not agreed upon in writing;
b. payment through a coercive process of the writ of execution issued at the instance
and insistence of the prevailing party;
c. duty to support natural or spurious children ( even if not recognized voluntarily or
by judicial compulsion and even if there is a judgment denying recognition);
d. giving of material and financial assistance to children upon their marriage.

34._______ X, in a contract of agency with B, agreed to be the agent of the latter. In the course
of the agency, the agent was given certain privileges and facilities, which however, were
not incompatible with the old agreement. Was there novation?

a. None, there was real incompatibility between the old and new agreements.
b. None, the old and new agreements are compatible.
c. Yes, the new contract merely contains supplementary agreement.
d. Yes, there was no real incompatibility between the old and new agreements.

35.________Debt shall not be understood to have been paid unless the thing or service in
which the obligation consists has been ___________

a. Completely a nullity
b. Partially delivered or rendered
c. Partially voided
d. Completely delivered or rendered

36._______When can there be no novation?

a. Without the consent of the debtor

b. With the consent of the creditor
c. With the consent of the debtor
d. Without the consent of the creditor

37._______In the following cases, a third person is bound by the contract. Which is the
exception?

a. A third person who acquires real rights over immovable properties, which had been
subject to a duly registered contract of lease.
b. A creditor being defrauded by his debtor in the alienation of the latter’s property.
c. A third person who voluntarily agreed with the debtor for the payment of the
latter’s obligation.
d. In case of stipulation pour autrui.

38._______Who may claim compensation of debts?

7
 a. A depository in a depositum
b. A lender in a commodatum
c. A taxpayer
d. A party obliged to give support

39._______Manuel issued a Special Power of Attorney to Daniel to pay his outstanding bank
loan with the petition to compromise. The bank however, refused to accept the offer as the
proposal fell way below what the bank computed. Is there a valid refusal?

a. YES, the debt shall not be understood to have been paid unless the thing in which
the obligation consists has been completely delivered
b. YES, as a person entering into a contract has the right to insist on its performance in
all particulars
c. NO, as the parties are free to stipulate subsequent agreements to the contract
d. Both (a) and (b)

40._______Statement 1 - Civil obligations give a right of action to compel their performance.

Statement 2 - Natural obligations, being based on positive law but on equity and natural
law, do not grant a right of action to enforce their performance, but after voluntary fulfilment
by the obligor, they authorize the retention of what has been delivered or rendered by
reason thereof.

a. both statements are true

b. both statements are false
c. statement (1) is correct and statement (2) is false
d. only statement (1) is false

41._______Statement 1 - A debt shall not be understood to have been paid unless the thing
was completely delivered.

Statement 2 - There is payment when the obligee issued a receipt for the current
payment of rent but reserved the right to collect the previous uncollected rents.

a. only Statement 1 is true

b. only Statement 2 is true
c. both statements are true
d. both statements are false

42._______X and Y entered into a contract. Z executed a surety undertaking for Y, the debtor. X
and Y entered into an agreement changing the interest rate. Is there novation, as to release Z?

a. None, It is a mere collateral agreement.

b. None, because the mere change of interest rate does not extinguish the surety
undertaking.
c. Yes, the surety is not liable for the increased interest if it did not f=give its consent.
d. Yes, the change of interest extinguished the security undertaking.

43._______ If payment is made with the consent of the debtor, it gives rise to:

a. moral obligation;
b. natural obligation;
c. civil obligation;
d. undue payment.
8
44._______Deto obliged himself to deliver 100 broiler chickens from his poultry to Credo on
January 10, 2011. Deto’s poultry caught bird flu. After it was declared free from bird flu,
Deto only managed to deliver 85 broiler chickens. Can Deto collect the price for the delivered
chickens?

a. YES, because there is substantial compliance and there is no indication of bad faith
from Deto
b. YES, because there was no objection when the chickens were delivered.
c. NO, because Deto did not strictly complete the whole obligation as previously
agreed upon
d. NO, because the obligation is generic.

45._______Who may set up the defense of illegality of contracts?

a. any person
b. contracting parties
c. third persons whose interests are indirectly affected
d. third persons whose interests are directly affected

46._______If A pays a debt that has prescribed not knowing that it has prescribed, A can
recover on the ground of:

a. undue payment
b. natural obligation
c. civil obligation
d. moral obligation

47._______The government entered into a contract with XYZ Association wherein the XYZ
Association will purchase 300 buses from the government in the form of a lease payable in 10
years in monthly equal installments. Eight years before the end of the contract, the
government declared a state of emergency due to the threat of rebellion. The government
seized the buses. Later on, the declaration of state of emergency was voided. The buses were
destroyed due to the attack by the alleged rebels. May XYZ Corporation collect the value of the
buses from the government?

a. YES, due to their substantial compliance in good faith, they have already paid in full
the price of the buses.
b. YES, as they have partially complied with their obligation and the government was in
bad faith.
c. NO, as the contract was a contract of lease to own, they cannot own the buses until
they are fully paid.
d. NO, as the seizure was due to a fortuitous event.

48._______Deto obliged himself to deliver 100 sacks of rice to Credo. S delivered only 90 sacks.
Was there payment of the obligation by Deto?

a. NONE, as there is only complete payment in case the thing or service is completely
delivered or rendered
b. NONE, as the obligation was irregularly complied with
c. Both (a) and (b)
d. Neither (a) nor (b)

49._______Suppose that in a second and new contract, the debtor acknowledges or ratifies the
old contract, is there a novation?
9
 a. None, both contracts can stand together.
b. None, both contracts are incompatible
c. Yes, both contracts cannot stand together
d. Yes, both contracts are incompatible.

50._______Natural obligations are based on:

a. positive law
b. equity and natural law
c. quasi-contract
d. moral law

51._______Deta borrowed Php50,000.00 from Creda. Deta issued a promissory note in favor of
Creda, stating therein that Deta should pay Creda on January 18, 2011 Php50,000.00 plus 5%
interest. The promissory note stated further that in case Deta cannot pay Creda on January 18,
2011, even without demand from Creda, the loan will incur a surcharge of 5% per month. On
January 19, 2011, Deta paid Creda Php50,000.00 only. Is Deta obliged to pay the interest?

a. NO, because the obligation is deemed complied with due to the acceptance of Creda
without objection
b. NO, because usurious transactions are condemned by law
c. YES, because the interest was in writing.
d. YES, because the promissory note indicated that even without demand, the loan is
payable on January 18, 2011, one day before Deta paid.

52._______The complete release of one party to a contract and the substitution of another
party for the released party is called

a. A substitution by law
b. A summation
c. A novation
d. An adjudication

53._______Payment in alternative obligations arise when

a. the obligor performed the obligation he chooses from the options

b. the obligor performed one partially and another partially
c. the obligor started delivering the last possible prestation
d. none of the above

54._______Deta borrowed Php50,000.00 from Creda. Deta issued a promissory note in favor of
Creda, stating therein that Deta should pay Creda on January 18, 2011 Php50,000.00 plus 5%
interest. The promissory note stated further that in case Deta cannot pay Creda on January 18,
2011, even without demand from Creda, the loan will incur a surcharge of 5% per month. On
January 19, 2011, Deta paid Creda Php50,000.00 only. Is Deta obliged to pay the
surcharge?

a. NO, because the obligation is deemed complied with due to the acceptance of Creda
without objection
b. NO, because the surcharge is demandable only when the debtor intentionally evade
payment.
c. YES, because the parties are bound by the stipulations that they were free to enter
into.

10
 d. YES, because the promissory note indicated that even without demand, the loan is
payable on January 18, 2011, one day before Deta paid.

55._______X agreed to repair the car of Y and Y agreed to draw the family portrait of X. This
innominate contract between them is called:

A. Du ut des
B. Du ut facias
C. Facio ut des
D. Facio ut facias

56._______The obligor can collect damages in case

a. of substantial performance in good faith as though there had been a strict and
complete fulfillment
b. of partial compliance accepted by the obligee without protest
c. both (a) and (b)
d. neither (a) nor (b)

57._______The creditor can refuse payment from a stranger to the contract except:

a. if there is a stipulation allowing payment by a stranger

b. if the stranger has no interest in the fulfillment of the obligation
c. if the stranger was automatically assigned by the debtor to render payment
d. none of the above

58._______ The mortgagee permits a new owner to replace the previous owner on a note
secured by a mortgage by using which of the following?

a. Release and satisfaction

b. Subordination
c. Novation
d. Acceleration

59._______Alfie owes Brandy the sum of PhP10,000. What is the effect if Teddy, a stranger,
pays the total indebtedness of Alfie?

a. If the payment was without the consent of Alfie, Teddy can be reimburse PhP10,000
from Alfie.
b. If the payment was with the consent of Alfie, Teddy can collect PhP10,000 from
Alfie.
c. Both (a) and (b)
d. Neither (a) nor (b)

60._______S sold his cell phone to X for P5,000.00 and he promised to deliver it to X on March
20, 2009. He sold it again to Y for P7,000.00 and he promised to deliver it to Y on March 20,
2009. On March 19, 2009, S sold his cell phone again Z for P6,000.00 and it was delivered to Z.
Who has the better right to the cell phone sold by S?

A. X, because he is the first buyer in good faith

B. Z, because he is the first possessor in good faith
C. Y, because he is the buyer between X and Z
D. None, because there is only one cell phone and there are three buyers

11
61.________ X sold and delivered various items of merchandise to Y amounting to P200,000.
When Y failed to pay his obligation, X sued him for collection of sum of money, but Y filed an
answer contending that there should be compensation with his commission over the
merchandise X sold and delivered to Z, as it has been the practice of X to deal with Y first before
he would deal with Z. the commission of Y is usually to be determined after an accounting is
made. Is the defense proper?

a. No, because both debts are not due.

b. No, because the claim of Y is not clear and liquidated.
c. Yes, both parties are mutually creditors and debtors - in their own right and as
principals.
d. Yes, both debts are liquidated & demandable.

62._______May the obligor recover if there be substantial compliance that will make payment
complete even if the obligor was in bad faith?

a. NONE, as the law requires that the obligor should be in good faith
b. NONE, as the oblige suffers damages due to the bad faith of obligor
c. YES, the law does not require that the obligor should be in good faith
d. None of the above

63.________ A promised to give B a car as a reward after B has killed C. Later, after killing C,
the contract was changed to a lease of a big house for a certain period. What is the status of
the second contract?

a. valid
b. void
c. inexistent
d. voidable

64._______As a general rule, there must be complete delivery of the entire prestation due to
make a valid payment. The exceptions to the completeness of the delivery are the following,
except:

a. In case of substantial performance in good faith

b. In case of change of the prestation with the consent of the creditor
c. In case of waiver of obligee or creditor
d. In case of application of payments if several debts are equally onerous

65._______Payment is valid if

a. there is delivery of the sum of money for monetary obligations

b. there is substantial compliance
c. there is partial payment
d. there is a receipt for every acceptance made

66._______May there be compensation of obligations that are not yet due?

a. No, both obligations must be due and demandable.

b. No, compensation is by operation of law.
c. Yes, when the other party forgot the due date of the obligation.
d. Yes, when agreed upon by the parties.

12
67._______D went to the residence of C to pay his obligation amounting to P100,000.00. He
was informed, however, that C was confined in the hospital. D paid his obligation to C’s
brother, who went to the hospital and spent the amount for C’s hospital and medical expenses.
One week after the release of C from the hospital, C demanded payment of D’s obligation, but
D told him that he had already paid his obligation to C’s brother. Is the payment of D to C’s
brother valid?

A. No, because payment should be made only to the creditor.

B. Yes, because his payment to C’s brother redounded to the benefit of C.
C. No, because payment to a third person is not valid.
D. Yes, because C’s brother is considered authorized to receive payment for him

68._______Statement 1 - The obligor mar recover as though there had been a complete
performance if the obligation was substantially complied with in good faith.

Statement 2 - The right to rescind cannot be used simply because there had been slight
breaches in the obligation.

a. Both statements are false

b. Only statement 1 is true
c. Both statements are true
d. Only statement 2 is true

69._______When the debtor committed fraud in the performance of his obligation, the creditor
may:

a. File an action for the annulment of the contract

b. Ask for the refund of the amount he has paid
c. File an action for damages against him
d. Set aside the contract as void

70._______Benny and some other residents within Farmville Barangay pay their monthly
electric bills to Teddy. Teddy will visit their barangay every 25 th of the month to collect the
payment. This happened for 3 months. After 3 months, the crew from the electric company cut
their services to Benny and the other residents due to nonpayment of dues. Can the residents
claim that they have paid their bills in good faith?

a. NO, as the payment due was not completely delivered to the creditor
b. NO, as they already have delinquent payment
c. YES, as it was accepted in their community that Teddy is an authorized collector
d. YES, as three months of payment to Teddy serves as estoppel to the electric
company

71._______Xera asked Zara to keep P1000 for her. Now, Xera is indebted to Zara for the
amount of P500. When Xera asks for the return of her money, Zara gives her only P500, alleging
partial compensation. Is Zara correct?

a. No, one of the debts arises from a depositum.

b. No, there can be no partial compensation.
c. Yes, both obligations are due and demandable
d. Yes, compensation is by operation of law.

72._______Payment consists of

13
 a. The delivery of money
b. Doing of an act
c. Not doing of an act
d. All of the above

73._______Statement 1 - In payment, capacity to dispose of the thing paid and capacity to

receive payment are required for debtor and creditor while in compensation, such capacity is
not necessary, because the compensation operates by law and not by the act of the parties.

Statement 2 - In payment, the performance must be complete, while in compensation,

there may be partial extinguishment of an obligation.

a. Both statements are false

b. Only statement 1 is true
c. Both statements are true
d. Only statement 2 is true

74._______Which is not a requisite of novation?

a. The intention or agreement and capacity of the parties to extinguish or modify the
obligation
b. The existence of a simultaneous valid obligation
c. The creation of a valid new obligation
d. The extinguishment or modification of the obligation

75._______Statement 1 - The obligee can claim damages when there is substantial

performance of the obligation by the obligor.

Statement 2. - The obligee can claim damages when he accepted the partial
performance with protest.

a. Both statements are true

b. Both statements are false
c. Only statement 1 is true
d. Only statement 2 is true

76._______A corporation was being established. Aya subscribed to some shares of stock in the
proposed corporation. Without Aya’s consent, the authorized capital of the corporation was
increased. Is Aya relieved of her obligation to pay for the shares?

a. No, because there is no need for the Aya’s consent when the authorized capital
stock is increased.
b. No, because novation is presumed.
c. Yes, because she did not consent to the increase of authorized capital stock.
d. Yes, because novation never took place.

77._______In partial performances, the obligation is deemed fully complied with if:

a. the obligee accepts the performance without any protest

b. the obligee issued a receipt for the payment for said installment only
c. the obligee demands damages instead of performance
d. both (a) and (c)

78._______Does payment mean only the delivery of money?

14
 a. NO. Payment means not only the delivery of money but also the performance, in
any other manner, of an obligation.
b. NO. Payment can also mean the encashment of check issued.
c. NO. Money is generic, so the payor can deliver to the payee any monetary bills
amounting to the owed money
d. YES. Delivery of money extinguished the obligation.

79._______Manuel has a two-year contract with XYZ Prime Holdings as their technical
supervisor. Two days before his contract ended, the company discovered that he was sending
confidential documents to the other rival company. Considering that only two days remain of
his contract, was there substantial compliance of his service?

a. NONE, due to the presence of bad faith

b. NONE, as substantial compliance does not include obligations to do
c. Both (a) and (b)
d. Neither (a) nor (b)

80._______ABC Corporation entered into a contract of loan with PBTC secured by a chattel
mortgage. When ABC Corporation failed to pay, the bank foreclosed the mortgage but it was
objected to by the debtor contending that there was a novation of the contract when it
executed a real estate mortgage when an extension of the loan was granted by the bank. Is
the contention of the bank correct?

a. No, mere extension of time to pay does not constitute novation.

b. No, The new contract is an additional security to the chattel mortgage.
c. Yes, there is incompatibility between the two contracts.
d. Yes, there is no novation when the period of payment is moved or changed.

81._______Bayer paid in installments the price of the land being sold by Brandy on the
condition that Bayer cannot alienate the said property until he has fully paid the price. Bayer
has already paid 80% of the price when he sold the lot to Teddy. Brandy moved to rescind the
contract. Bayer claims that he has substantially paid the price of the lot. How much portion of
the lot can Bayer appropriate by virtue of the nearly complete compliance?

a. 80%, in proportion to the price he has paid

b. 100% by virtue of his compliance
c. 50% because he violated the contract
d. NONE

82._______Lando leased his apartment to Lassy. The contract indicates that the lessor will
collect 5% interest if the lessee defaulted payment. Lando collects the rent every 5 th of the
month. The following month, Lassy paid only half of her rent stating her reason for her inability
to pay the full rent. Lando accepted the payment informing Lassy that the arrears should be
paid next month. What is the maximum amount Lando can collect the following month?

a. the rent for the said month, half the rent of the previous month, and 5% interest of
the unpaid rent
b. the rent for the said month and half the rent of the previous month
c. the rent for the said month and the 5% interest of the unpaid rent
d. the rent for the said month

83._______Statement 1 - When the contract entered into by two persons is illegal, they are
absolutely barred from recovering any money paid or property delivered.

15
 Statement 2 - In case of illegal contracts, both of them may be allowed to recover
whatever money paid or property delivered.

a. statement (1) in correct and statement (2) is incorrect;

b. statement (2) is correct and statement (1) is incorrect;
c. statement (1) in incorrect only;
d. both of the statements are incorrect.

84._______When the obligee accepts the performance, knowing its incompleteness or

irregularity, is the obligation deemed fully complied with?

a. YES, provided that the obligee should not have expressed any protest or objection
b. YES, provided that the obligee expressed any protest or objection
c. NO, because an obligation is only extinguished due to a fortuitous event and the
obligor has not incurred delay
d. NO, because it will cause damages against third persons.

85._______Acceptance of partial payment without protest from the obligee renders the
obligation:

a. existing
b. novated
c. compensated
d. extinguished

86._______Deto owed Credo PhP 10,000. Deto went to Abu Dhabi, UAE. Leslie, his lessee in
one of his apartments, paid Credo when Credo demanded the 10,000. Leslie was not able to
inform Deto of said payment until Leslie demanded payment from Deto when he arrived. How
much should Deto pay his lessee Leslie?

a. PhP10,000
b. None, because the payment was made without Deto’s consent.
c. None, because the payment was made by a stranger to the contract between Deto
and Credo and it is as if no payment was made at all
d. None, because the payment was intended to defraud Deto.

87._______ Statement 1 - In case of illegal contracts when one of the parties is incapacitated
to give consent, the incapacitated person may unilaterally revoke the contract and recover the
money paid or property delivered.

Statement 2 - The court is mandated to allow the incapacitated person to recover the
money paid or property delivered in case the contract is illegal.

a. statement (1) is correct only;

b. statement (2) is correct only;
c. statement (1) is incorrect and statement (2) is correct;
d. both statements are incorrect.

88._______Statement 1 - In reimbursement, the third person entitled by reason of payment

has merely the bare right to be refunded to the extent of the amount beneficial to the debtor.

Statement 2. In subrogation, there is no real extinction of the obligation, but only a

change of debtor.

16
 a. both statements are true
b. both statements are false
c. only statement 1 is true
d. only statement 2 is true

89._______In case an incapacitated person is a party to an illegal contract, he may be allowed

by the court to recover the money paid or property delivered if:

a. the purpose has not been accomplished;

b. the interest of justice so demands;
c. there has been no damage caused yet to third persons;
d. there was fraud on the part of the other party.

90.________ Statement 1 - Illegal per se contracts are those forbidden because of private
interests.

Statement 2 - Merely prohibited contracts are those forbidden because of public

interest.

a. statements (1) and (2) are correct;

b. statement (1) is correct but statement (2) is incorrect;
c. statement (1) is incorrect and statement (2) is correct;
d. both statements are incorrect.

91._______An indivisible contract which has illegal terms is considered:

a. valid
b. partly valid and partly void
c. entirely void
d. partly void and partly unenforceable

92._______Statement 1 - The defense of illegality of contracts is unavailable to those whose

interests are directly affected.

Statement 2 - The defense of illegality of contracts may be set up not only by those
whose interests are directly affected but also by those whose interests are indirectly affected.

a. only statement (1) is false

b. only statement (2) is false
c. both statements are false
d. both statements are true

93._______If the obligation has been ___________ performed in good faith, the obligor may
recover as though there had been a strict and complete fulfillment less damages suffered by
the oblige:

a. Completely
b. Partially
c. Forcefully
d. Substantially

94._______Aya has a P10,000 savings deposit with the Philippine National bank. One day, Aya
borrowed P2000 from the bank. Without asking permission from Aya, the bank subtracted the

17
P2000 from Ana’s account, leaving the balance of P8000 in Aya’s favor. Is the bank’s action
proper?

a. No, compensation is not proper when the obligations arise from a contract of
deposit.
b. No, the bank depositor must first give consent before compensation takes place.
c. Yes, the relationship between the bank and the depositor is that of a creditor and
debtor.
d. Yes, both obligations are due and demandable.

95._______The court ordered Deto to pay his indebtedness to Credo worth PhP300,000. Deto
delivered the check amounting to PhP300,000 to the Clerk of Court as payment of the
indebtedness. Was there valid payment already?

a. NONE, as the check was not a manager’s check

b. NONE, as the check is not a legal tender
c. Yes, because delivery of the check to the court is delivery to the creditor
d. Yes because the Court accepts payments by way of checks

96._______Can there be compensation of one’s obligation over taxes?

a. Yes, a taxpayer and the government are mutually creditors and debtors - in their
own right and as principals.
b. Yes, both debts are liquidated & demandable.
c. No, Taxes are not subject to set-off or legal compensation because the government
& taxpayers are not mutually creditors & debtors of each other.
d. No, It is an obligation in favor of government.

97._______A owes B Php 700, 000. But the debt soon prescribes. Later C, against the consent of
A, pays B the Php 700, 000. A does not have to reimburse C because he (A) has not at all been
benefited by the transaction. However, A later voluntarily reimburses C. May A recoverwhat
he has given to C?

a. no more;
b. yes, he may;
c. only to the amount the he was benefitted
d. only half the amount

98._______When the obligor has substantially complied with the obligation that as if there had
been complete performance,

a. The obligor may recover what is due him less damages suffered by the oblige,
provided that he be in good faith
b. The obligor may recover the whole payment due him as long as he is in good faith
c. The oblige can refuse to pay due to the incompleteness of the performance
d. None of the above

99._______If the ceiling price for a pack of cigarettes is pegged at Php 300.00 a carton and A
paid Php 400.00 for it. How much can A recover?

a. Php 400.00 only;

b. Php 300.00 only;
c. Php 700.00;
d. Php 100.00.

18
100. _______What is Latin term for delay?

a. culpa
b. dolo
c. mora
d. force majeure

19