PREFINAL EXAMINATION

LAW ON OBLIGATIONS AND CONTRACTS

GENERAL INSTRUCTIONS: Select the BEST answer for each of the following questions by shading the letter of your choice
on the answer sheet provided. Mark only one answer. NO ERASURES ARE ALLOWED.

1. All of the following except one are civil liabilities arising from crime.
a. Restitution c. Reparation of the damage caused
b. Imprisonment d. Indemnification for consequential damages

2. Which statements is correct?

a. Condonation is generally gratuitous. c. Condonation is gratiuitous.
b. Condonation is onerous. d. Condonation is essentially gratuitous.

3. Which of the following terms is normally not associated with extinguishing an obligation through the process of novation?
a. Expromission c. Subrogation
b. Delegacion d. Remission

4. The obligor is liable for fortuitous event except one. Which is the exception?
a. The law so provides. c. The obligation to deliver a generic thing.
b. The obligation so provides. d. The obligation to deliver a determinate thing.

5. A is obliged to deliver his TV set to B on December 1, 2010. Subsequently, A and B agreed that A shall deliver his radio as
a substitute.
a. The obligation is facultative.
b. This is real novation.
c. The obligation is extinguished by payment.
d. If the radio is lost by fortuitous event, the obligation is extinguished.

6. A is obliged to give B either objects No. 1 or No. 2 or No. 3 at B’s option. Before B communicated his choice to A. object
No. 1 had been destroyed, thru A’s fault and object No. 2 had been destroyed by a fortuitous event. B may
a. Demand object No. 3 only as it is still available.
b. Demand the price of object No. 1 only plus damages because it was destroyed by A’s fault.
c. Demand the value of object No 2 as the right of choice belongs to B.
d. Demand either object No. 3 or the price of object No. 1 plus damages.

7. This is an obligation with a resolutory obligation.

a. I’ll give you P10,000 if you pass the 2009 CPA board examination.
b. I’ll give you my car now, but should you fail in any of your subjects, it will be mine again.
c. I’ll give you P10,000 on December 31, 2009.
d. I’ll give you P10,000 if A dies of TB.

8. Lennie bought a business class ticket from Alta Airlines. As she checked in, the manager downgraded her to economy on
the ground that a Congressman had to be accommodated in the business class. Lennie suffered the discomfort and
embarrassment of the downgrade. She sued the airlines for quasi-delict but Alta Airlines countered that, since her travel was
governed by a contract between them, no quasi-delict could arise. Is the airline correct?
a. No, the breach of contract may in fact be tortious as when it is tainted as in this case with arbitrariness, gross bad faith,
and malice.
b. No, denying Lennie the comfort and amenities of the business class as provided in the ticket is a tortious act.
c. Yes, since the facts show a breach of contract, not a quasi-delict.
d. Yes, since quasi-delict presupposes the absence of a pre-existing contractual relation between the parties.

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

10. In payment by cession or when the debtor cedes or assigns his property to his creditor in payment of his debt, he shall be
released from his obligation
a. To the full extent of debtor’s obligations.
b. Only to the extent of the net proceeds of the thing assigned.
c. Only to the extent allowed by the debtors.
d. Only to the extent allowed by the creditors.

11. A thing is not deemed lost when it –

a. It perishes
b. Disappears in such a way as its existence is unknown or it cannot be recovered.
c. Goes out of commerce.
d. Deteriorates.
12. Asiong borrowed P1 million from a bank, secured by a mortgage on his land. Without his consent, his friend Boyong paid
the whole loan. Since Asiong benefited from the payment, can Boyong compel the bank to subrogate him in its right as
mortgagee of Asiong's land?
a. No, but the bank can foreclose and pay Boyong back.
b. No, since Boyong paid for Asiong’s loan without his approval.
c. Yes, since a change of creditor took place by novation with the bank’s consent.
d. Yes, since it is but right that Boyong be able to get back his money and, if not, to foreclose the mortgage in the manner
of the bank.

13. Legal compensation cannot take place in the following except –

a. When one debt arises from the obligation of a bailee in commodatum.
b. When one debt arises because of a claim for support due to gratuitous title.
c. When one debt arises from the obligations of a depositary.
d. When one debt arises from a bank deposit.

14. Check shall produce the effect of payment:

I. When the check has been encashed
II. When through the fault of the creditor the check has been impaired.
III. When a check has been cleared and credited to creditor’s account.
IV. When the creditor accepts the check as payment.
a. I, II and III c. I and II
b. I, II and IV d. All of them

15. S sold his Toyota car with Plate No. ABC 321 to B for P300,000.00. When the car was delivered to B, he found out that the
stereo and air-conditioning unit of the car were no longer there. Did S have the right to remove the car’s stereo and air-
conditioning unit?
a. Yes, because those things are not included in the sale.
b. No, because when the thing to be delivered is a generic thing, accessions and accessories are included even though not
mentioned.
c. Yes, because S is the seller.
d. No, because when what is to be delivered is a specific thing, accessions and accessories are deemed included even
though not mentioned.

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

17. True or False

I. Contracts must bind both contracting parties and its validity or compliance cannot be left to the will of one of them. This
is the principle of relativity of contracts.
II. Contracts are perfected by mere consent of the contracting parties. This is the principle of obligatory force of contracts.
a. Only I is correct. c. Only II is correct.
b. Both I and II are correct. d. Neither I nor II is correct.

18. Reluctantly and against her good sense and judgment, Tess entered into a contract for the delivery of five (5) tables to Cora
for the price of P15,000. The contract is
a. Void c. Voidable
b. Valid d. Unenforceable

19. Dolo as distinguished from culpa

a. The action enforce liability maybe waived
b. Responsibility arising therefrom is demandable
c. There is deliberate intention to cause damage to another
d. Liability maybe reduced by the courts

20. Acceptance of an offer made by letter or telegram shall bind the offeror from the time:
a. the offeree has knowledge of the offer c. the offeree sent his acceptance
b. the acceptance is communicated d. the offeror made the offer

21. D obtained a loan from C in the amount of P50,000.00. Unable to give cash on due date in payment of his loan obligation, D
proposed to C that he would be giving instead his diamond ring to settle his debt. C agreed and accepted the ring from D.
The new agreement between D and C involved both:
a. Novation and application of payment c. Novation and dacion en pago
b. Compensation and payment of cession d. Confusion and tender of payment

22. If a third person pays an obligation . What are the rights which are available to him if he pays the obligation with the
knowledge and consent of the debtor?
First Answer – He can recover from the debtor the entire amount, which he has paid.
Second Answer – He is subrogated to all of the rights of the creditor.
a. Both answer are correct c. Only the first answer is correct.
b. Both answer are wrong d. Only the second answer is correct.
23. The principle by which contracting parties are equal in the eyes of law
a. Autonomy of contracts c. Mutuality of contracts
b. Relativity of contracts d. Consensuality of contracts

24. In order that fraud may make a contract voidable

a. It may be incidental but both parties should not be in pari delicto
b. It may be serious and the parties must be in pari delicto
c. It may be incidental but should have been employed by both parties
d. It should be serious and should have not been employed by both contracting parties

25. Legal compensation will not take place if

a. The debts have different due dates
b. The debts are payable at different places
c. There is controversy or retention involving one of communicated in due time to the debtor.
d. Both debts consist in a sum of money

26. One of the following is not a requisite of an object of contract. Which is it?
a. It must be within the commerce of men.
b. It must not be intransmissible.
c. It must be contrary to law, morals, good customs, public order or public policy.
d. It must be determinate as to its kind or if its quantity is not determinate, it must be possible to determine the same without
the need of a new contract between the parties.

27. The following are the ways by which innominate contracts are regulated, except:
a. By the stipulation of the parties
b. By the general principles of quasi-contracts and delicts
c. By the rules governing most analogous nominate contract
d. By the custom of place

28. One of the following contracts is not vitiated by intimidation or violence and hence, valid. Which is it?
a. A contract of sale which was signed by a party because his arm was being twisted by a third person.
b. A contract of sale which was entered into because the other party was pointing a gun at his wife.
c. A contract where a party was compelled to assign his property to the other to pay a just debt because the latter threatened
to sue him in court if he does not pay his debt.
d. A contract of donation of a parcel of land which a party signed because the other party threatened to burn his house.

29. Payment must be made in the following, except:

a. If there is a stipulation, then in the place designated.
b. If there is no stipulation and the obligation is to give a determinate thing, wherever the thing might be at the time the
obligation was constituted.
c. If there is no stipulation and the obligation is to give a generic thing, then at the domicile of the obligee.
d. If there is no stipulation and the obligation is to do, then at the domicile of the debtor.

30. Consignation alone without tender of payment is sufficient in the following cases, except:
a. When the creditor is absent or unknown or does not appear at the place of payment.
b. When the creditor presents the title to the obligation for collection.
c. When without just cause, the creditor refuses to give a receipt.
d. When two or more persons claim the same right to collect.

31. Dacion en Pago differs from a Sale in the sense that in latter
a. the obligation is extinguished once the offer is accepted
b. there is less freedom in the determination of the price of the object
c. the cause of the contract is the price
d. there is pre-existing credit between the parties

32. A passenger on a truck was hurt but in a criminal case against the driver, said driver was acquitted. The victim now sues the
owner of the truck for culpa contractual. May the suit still prosper?
a. No, this will constitute double jeopardy
b. No, the acquittal means that the guilt of the accused was not proven by proof beyond reasonable doubt
c. Yes, it is sufficient for him to prove the existence of the contract of carriage and the injuries suffered
d. Yes, provided he can prove the negligence of the driver

33. Indivisibility as distinguished from solidarity.

a. Plurality of subject is indivisible.
b. When the obligation is converted into one of indemnity for damages because of breach, the character of the obligation
remains.
c. Refers to the legal tie or vinculum.
d. Refers to the prestation which constitutes the object of the obligation.

34. S offers 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 of price of the offer and the acceptance.
d. The contract was not perfected because the acceptance by B was qualified and it constitute a counter -offer
35. Contracts are effective and binding only between the parties, their assigns and their heirs. Three of the following
enumeration are exceptions as provided by law which does not belong to the exception?
a. Where there is stipulation in favor of a third party.
b. Where one of the parties to the contract dies and thereafter a suit is filed on the basis of the contact.
c. Where the obligations arising from contract are not transmissible by their nature.
d. Where the obligations arising from the contract are not transmissible by stipulation or by provision of law
.
36. B entered in a contract for the purchase of 5 rolls of cloth worth P20,000.00 from S. The materials which were to be used by
B in the making of school uniforms, were scheduled for delivery within 7 days. On the seventh day, S failed to deliver the
cloth despite demands from B. As a result, B could not meet his commitment to his customers and was threatened with a
court suit. S claimed that M from whom he ordered the cloth under a contract that he (S) and M entered into, did not finish
manufacturing the product as scheduled in accordance with the terms of such contract. In this case, B may not sue M for
damages under the contract between S and M under which principle of contract?
a. Principle of Liberality of Contract c. Principle of Relativity of Contract
b. Principle of Consensuality of Contract d. Principle of Mutuality of Contract

37. The following is considered fraud or fraudulent.

a. Failure to disclose facts when there is duty to reveal them.
b. The usual exaggeration in trade, when the other party had the opportunity to know the facts.
c. Misrepresentation made not in bad faith.
d. “Caveat Emptor” of let the buyer beware.

38. These statements are presented to you:

I. Option money is part of the purchase price.
II. Earnest money is proof of the perfection of a contract of sale.

In your evaluation of the foregoing statements:

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

39. I - A simple mistake of account shall give rise to its correction.

II – In order that mistake may invalidate consent, it should refer to the substance of the thing which
is the object of the contract.
a. True; False c. False; False
b. True; True d. False; True

40. S and B agreed of sale of motor vehicle whereby S sold his car to B for P200,000.00. The parties agreed that S would
deliver the car, and B would pay the price after two weeks. Before the two week period was over, S found another buyer
who was willing to pay P220,000.00 for the car. May S validly withdraw from his contract with B?
a. Yes, because B has not yet paid the price
b. Yes, because the other buyer was willing to pay more.
c. No, because S was already bound by his contract with B and he cannot unilaterally withdraw from it.
d. Yes, because S has not yet delivered the car

41. Don borrowed P100,000 from Cris payable in 2 years. The contract stipulates that Don will pay 1% monthly interest
equivalent to P1,000 per month to Emy, Cris brother, on the 25 th of each month for Emy’s support. Emy signified his
acceptance before it could be revoked.
a. Emy has no right to receive the monthly payment on the interest not being a party to the contract.
b. Emy is not entitled to the monthly interest unless the money loaned is his.
c. Emy is entitled to the monthly interest because the amount involved per month is his.
d. Emy is entitled to the monthly interest even if he is not a party to the contract because there is a clear case of the
stipulation pour autri.

42. Torrente, a supplier of typewriters, sent to several customers in various parts of the country a letter offering to sell out “all
his stock of 10 units of Olympia typewriter” at the discounted price of P3,000.00 each. The offer stated that the reply must
be received by registered mail not later than September 18. On September 14, Belleza sent a registered letter accepting the
offer. The letter was received by Torrente on September 19. On September 16, Corpuz sent a telegram accepting the offer.
The telegram was received Torrente on the same day. Whose acceptance is binding on Torrente?
a. The acceptance by Belleza because it was mailed first.
b. The acceptance by Corpuz because it was received first by Torrente
c. Neither acceptance is binding on Torrente.
d. Both the acceptance will be binding on Torrente, with the Belleza getting 5 typewriters, and Corpuz getting the other 5.

43. D owes C P500,000. Before the debt was paid, D died leaving his only son, B –
a. If the value of the properties left by D is P1,000,000, B is obliged to pay the entire P1,000,000 to C.
b. If the value of the properties left by D is P500,000, B is obliged to pay the entirety to C.
c. If the value of the properties left by D is P400,000, B is has to pay the entire P400,000 and make good the deficiency of
P100,000.
d. If B did not inherit anything from D and B is very rich in his own right, B can be compelled by C to pay the debt of his
father.

44. A contract in which a person literally contracts with himself is

a. Commutative contract c. Auto contract
b. Aleatory contract d. Unilateral contract
45. A contract may be enforced by or against a third person, except:
a. In the case of stipulation pour autrui
b. When a third person induces another to violate his contract
c. In case of contracts intended to defraud creditors
d. When the benefit to the third person is merely incidental

46. The stages of a contract according to the order of their occurrence are:
a. Birth, conception, consummation c. Conception, consummation, birth
b. Consummation, conception and birth d. Conception, birth and consummation

47. The following statements pertain to the cause of a contract. Which statement refer to motive?
a. It is the essential reason of a contract.
b. It is always known to the contracting parties
c. It is illegality does not affect the validity of the contract
d. there will be no contract without it

48. There is no contract unless the following requisites concur, except

a. Consent of the contracting parties.
b. Object certain which is the subject matter of the contract.
c. Delivery of the subject matter.
d. Cause of the obligation which is established.

49. Pat sold to Mat the computer owned by Cathy without Cathy’s authority. The contract is
a. Perfectly valid c. Void
b. Voidable d. Unenforceable

50. Cecilio kidnapped and tortured Eduardo for refusing to sell his (Eduardo’s) land to Cecilio. Eduardo who could no longer
bear the physical pains inflicted upon him signed a document of sale in favor of Cecilio. This sale is
a. Void c. Valid
b. Voidable d. Answer not given

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