University of Cebu Lapulapu and Mandaue

College of Business and Accountancy

S.Y. 2023-2024, 1st Semester

Obligations and Contracts

CONTRACTS HANDOUT

Mr. Jimwell I. Sitoy, CPA

Direc&ons: Read and select the best answer for the following ques&ons. ENCIRCLE the le>er of the best
answer.

1. It refers to a mee&ng of minds between two persons whereby one binds himself, with respect to
the other, to give something or to render some service. It is one of the five sources of civil
obliga&on.
a. Obliga&on
b. Contract
c. Right
d. Civil ac&on

2. Which of the following characteris&cs of contracts pertains to rela&vity of contract?

a. It means that the contractual provisions cons&tute the law between the par&es. Obliga&ons
arising from contracts have the force of law between the contrac&ng par&es and should be
complied with in good faith.
b. It means that the validity and performance of the contract cannot be leJ to the will of only
one of the par&es but must be mutually decided by all contrac&ng par&es.
c. It means that the contract is binding only upon the contrac&ng par&es and their successors
such as heirs or assignees, and third persons are not generally allowed to assail a contract.
d. It means that the par&es may establish such s&pula&ons, clauses, terms, and condi&ons as
they may deem convenient provided they are not contrary to law, morals, good customs,
public order, or public policy.

3. Which of the following characteris&cs of contracts pertains to autonomy of contract?

a. It means that the par&es may establish such s&pula&ons, clauses, terms, and condi&ons as
they may deem convenient provided they are not contrary to law, morals, good customs,
public order, or public policy.
b. It means that contracts are generally perfected by mere consent except in case of real
contracts that require the delivery of subject ma>er and formal or solemn contracts which
require the execu&on of formality required by law.
c. It means that contracts should not be contrary to law.
d. It means that contracts should not contain doubt or ambiguity to avoid confusion and
misunderstanding in the performance of the contract.

4. Which of the following types of elements of a contract pertain to essen&al elements of

contracts?
a. They refer to those which are required in order for a contract to exist such as consent of the
contrac&ng par&es, object certain which is the subject ma>er of the contract and cause of
the obliga&on which must be established. These elements may not be waived by the par&es.
b. They refer to those that exist in certain contracts unless set aside or suppressed by the
par&es such as warranty against evic&on and warranty against hidden defects in a contract
of sale. These elements may be waived by par&es as long as the waiver is made in good
faith.
 c. They refer to those that do not normally exist in a contract unless s&pulated by the par&es
such as terms of payment, interest rate or place of payment.

5. Which of the following statements best describes a real contract?

a. It is a contract perfected by mere consent such as a contract of lease and contract of sale.
b. It is a contract perfected by the delivery of the object of the contract such as contracts of
deposit, of pledge, of loan, and of commodatum.
c. It is a contract which must be in the form provided by law for their perfec&on such as a
contract of dona&on involving immovable property, together with the acceptance by the
donee, must be in a public instrument to be valid.

6. Which of the following statements best describes an onerous contract?

a. It is a contract whereby there is an exchange of valuable considera&on such as contracts of
sale and barter. For each contrac&ng party, the cause is the presta&on or the promise of a
thing or service by the other.
b. It is a contract whereby one party receives no equivalent considera&on such as contracts of
dona&on and commodatum. These contracts are referred to as contracts of pure
beneficence, the cause of which is the liberality of the benefactor.
c. It is a contract whereby the cause here is the service or benefit remunerated.
d. It is a contract wherein there is no cause or considera&on.

7. Which of the following statements best describes a principal contract?

a. It is a contract whose existence depends upon another contract. The examples are contracts
of pledge, of cha>el mortgage, an&chresis, guarantee, or real estate mortgage, which is
dependent upon the principal contract of the loan.
b. It is a contract which serves as a means by which other contracts may be entered into, such
as contracts of agency and partnership.
c. It is a contract that can stand by itself, such as contracts of sale and loan.
d. It is a contract that has a name under the Civil Code or special law, such as contracts of sale,
loan, and barter.
e. It is a contract without any name under the Civil Code or special law.

8. Which of the following statements best describes an aleatory contract?

a. It is a contract whereby the par&es give equivalent values such as contracts of sale and
barter, hence there is real fulfillment.
b. It is a contract whose fulfillment depends upon chance, such as an insurance contract.
c. It is a contract where only one of the par&es is obligated to give or to do something, such as
contracts of commodatum and gratuitous deposit.
d. It is a contract where both par&es are required to give or to do something, such as contracts
of sale and barter.
e. It is a contract whereby the object of the other party is also the cause of the other party and
vice versa, such as contracts of sale and barter.

9. Which of the following contracts best describes an auto-contract?

a. It is a contract which has been performed.
b. It is a contract wherein one person contracts with himself.
c. It is a contract wherein one party has already prepared a form of a contract, containing the
s&pula&ons he desires, and he simply asks the other party to agree to them if he wants to
enter into the contract.
d. It is a contract that has not yet been performed.

10. The following are the innominate contracts, except:

 a. Do ut des (I give that you may give.)
b. Do ut facias (I give that you may do.)
c. Facio ut des (I do that you may give.)
d. Facio ut facias (I do that you may do.)
e. Facias ut des (I do not do that you may not do.)

11. The following are the order of priority regarding rules that shall govern innominate contracts,
except:
a. The s&pula&on of the par&es
b. The provisions of Obliga&ons and Contracts
c. The rules governing the most analogous contracts
d. The customs of the place
e. The provisions of the Tax Code

12. Which of the following statements pertaining to the stages of a contract refers to the prepara&on
or concep&on stage?

a. It refers to the first stage that involves preliminary nego&a&ons and bargaining, discussion of
terms and condi&ons, with no arrival yet of a definite agreement.
b. It refers to the second stage that pertains to the point when there is a mee&ng of minds
between the par&es on a definite subject ma>er and valid cause.
c. It refers to the last stage that pertains to the point when the contract has been fulfilled
resul&ng in its accomplishment.

13. Freedom to contract is one of the liber&es of the people of the state as guaranteed by the due
process clause. This means that the contrac&ng par&es may establish such s&pula&ons, clauses,
terms, and condi&ons as they may deem convenient, provided they are not contrary to the
following, except:
a. Law
b. Religion
c. Morals
d. Good customs
e. Public order
f. Public policy

14. An audit staff and an audi&ng firm orally entered into a contract of employment whereby it is
s&pulated that over&me premium and holiday pay are waived. Is the waiver valid?
a. Yes, because of the mutuality of the contract.
b. Yes, because of the autonomy of the contract.
c. No, because it is contrary to law and public policy.
d. No, because it is entered into orally but not in wri&ng.

15. In an ac&on for ejectment, the lessee interposed the defense that the contract of lease
authorized them to con&nue occupying the premises so long as they pay their rents. Is the
defense of the lessee tenable?
a. No, because it violates mutuality of the contract which provides that the contract must bind
both contrac&ng par&es and its validity or compliance cannot be leJ to the will of one of
them.
b. Yes, because it is s&pulated in the contract.
c. No, because it is contrary to morals and good customs.
d. Yes, because it does not violate public order and public policy.
16. A s&pula&on provides that the student’s scholarship is good only if he con&nues in the same
school, and that he waives his right to transfer to another school without refunding the
equivalent of his scholarship in cash is null and void because it is contrary to:
a. Law
b. Morals
c. Public order
d. Public policy

17. A s&pula&on which provides that in the event of nonpayment of the debt at maturity that the
creditor may appropriate for himself the thing given as security is null and void because it is
contrary to:
a. Morals
b. Good customs
c. Law
d. Public order

18. A s&pula&on which provides that a person shall marry a person in considera&on of money is null
and void because it is contrary to:
a. Law
b. Morals and good customs
c. Public order
d. Public policy

19. The following s&pula&ons for a common carrier shall be considered unreasonable, unjust, and
contrary to public policy, therefore null and void, except:
a. That the goods are transported at the risk of the owner or shipper.
b. That the common carrier need not observe any diligence in the custody of the goods.
c. That the common carrier will not be liable for any loss, destruc&on, or deteriora&on of the
goods.
d. A s&pula&on between the common carrier and the shipper or owner limi&ng the liability of
the former for the loss, destruc&on, or deteriora&on of the goods to a degree less than
extraordinary diligence if in wri&ng and supported by valuable considera&on.

20. The following s&pula&ons for a common carrier shall be considered unreasonable, unjust, and
contrary to public policy, therefore null and void, except:
a. That the common carrier shall exercise a degree of diligence less than that of a good father
of a family or of a man of ordinary prudence in the vigilance over the movables transported.
b. That the common carrier shall exercise a degree of diligence less than that of extraordinary
diligence in the transporta&on of passengers.
c. That the common carrier shall not be responsible for the acts or omission of his or its
employees.
d. That the common carrier's liability for acts commi>ed by thieves, or of robbers who do not
act with grave or irresis&ble threat, violence or force, is dispensed with or diminished.
e. That the common carrier is not responsible for the loss, destruc&on, or deteriora&on of
goods on account of the defec&ve condi&on of the car, vehicle, ship, airplane, or other
equipment used in the contract of carriage.
f. That the common carrier is not responsible for the acts of robbers who act with grave or
irresis&ble threat, violence, or force, or that the common carrier’s responsibility is dispensed
with or diminished in the case of acts of robbers who act with grave or irresis&ble treat.

21. The hotel-keeper and the guests agree that the responsibility of the former as set forth in
Ar&cles 1998 to 2001 of Civil Code regarding necessary deposits brought by the guests is
 suppressed or diminished. It was also s&pulated that the hotel-keeper is free from responsibility
to the effect that he is not liable for the ar&cles brought by the guest. Are the s&pula&ons valid?
a. They are always void for being contrary to law and public policy.
b. They are valid if agreed to in wri&ng.
c. They are valid provided the hotel-keeper properly posted the no&ces containing the waiver
in the rooms.
d. They are only void if they are entered into orally.

22. A s&pula&on in a contract of loan providing for 10% interest per month is:
a. Usurious
b. Unconscionable
c. Voidable
d. Rescissible

23. Two persons agreed in a contract which provides for the concealment of a public offense or the
suppression of evidence or the s&fling of a criminal prosecu&on for a certain considera&on. Is the
s&pula&on valid?
a. Yes because mutuality of the contract provides that its validity or compliance cannot be leJ
to the will of one of them.
b. Yes because the obligatory force of a contract binds both contrac&ng par&es.
c. No because the s&pula&on is contrary to law and public policy.
d. No because the s&pula&on is contrary to mutuality of contract.

24. An agreement was entered into by the par&es which provides that either one of them may
terminate the contract for the viola&on of any of its terms and condi&ons. Is this s&pula&on
valid?
a. No because it violates mutuality of the contract which provides that its validity or
compliance cannot be leJ to the will of one of them.
b. Yes because the validity or compliance is not en&rely leJ to the will of one of the contrac&ng
par&es, but it merely gives the one party the right to declare such contract cancelled and of
no effect in case of breach of contract by the other party.
c. No because it violates the freedom to enter into a contract.
d. Yes because the right to rescind a contract cannot be waived.

25. The contract provides that the determina&on of the performance is leJ to a third person. Is the
s&pula&on valid?
a. No because it is contrary to law, morals, good customs, public order, or public policy.
b. No because it violates mutuality of the contract.
c. Yes because the determina&on of the performance of the contract may be leJ to a third
person, whose decision shall not be binding un&l it has been made known to both
contrac&ng par&es.
d. Yes because the determina&on of the third person is obligatory whether or not it is evidently
inequitable.

26. What is the remedy of the injured party in case the determina&on of the performance of a
contract by the third person designated by the contrac&ng par&es is evidently inequitable?
a. The injured party may ask the court for a declara&on of nullity of the contract.
b. The injured party may ask the court for the rescission of the contract.
c. The injured party may ask the court to decide what is equitable under the circumstances.
d. The injured party may ask the court for the annulment of the contract.
27. Rela&vity of the contract provides that a contract takes effect only between the following,
except:
a. Contrac&ng par&es
b. Assigns of contrac&ng par&es
c. Heirs of contrac&ng par&es
d. Third persons

28. Obliga&ons and rights arising from contracts are generally transmissible to the par&es’ heirs and
assigns. The following are considered intransmissible, except:
a. Those which are purely personal.
b. Those which are provided by law to be intransmissible.
c. Those which are s&pulated by the party to be intransmissible.
d. Those which are based on commercial transac&ons.

29. A person died leaving liabili&es. Are the heirs liable for the obliga&ons of the decedent?
a. No because there is no privity between them and the decedent.
b. No because the heirs are not the contrac&ng par&es.
c. Yes, even beyond the property they received because contracts take effect between the
par&es, their assigns, and heirs.
d. Yes, but not beyond the property they received because there is privity between them and
their predecessor.

30. A s&pula&on that is considered an excep&on to the rela&vity of the contract is called
a. S&pula&on pour autrui a.k.a. s&pula&on in favor of a third person
b. S&pula&on in favor of the heirs
c. S&pula&on in favor of assigns
d. S&pula&on in favor of contrac&ng par&es

31. The following are the requisites of s&pula&on pour autrui or s&pula&on in favor of a third person,
except
a. There must be s&pula&on in favor of a third person.
b. The s&pula&on should be a part, not the whole, of the contract.
c. The contrac&ng par&es must have clearly and deliberately conferred a favor upon a third
person and not a mere incidental benefit or interest.
d. The favorable s&pula&on should not be condi&oned or compensated by any kind of
obliga&on whatever.
e. The third person must have communicated his acceptance to the obligor before its
revoca&on.
f. One of the contrac&ng par&es does not bear the legal representa&on or authoriza&on of the
third party.
g. The s&pula&on in favor of a third person must be specified in wri&ng.

32. The following statements concerning s&pula&on pour autrui or s&pula&on in favor of a third
person are correct, except
a. A s&pula&on in favor of a third person has no binding effect in itself before its acceptance by
the party favored.
b. Before acceptance by the third person, the contrac&ng par&es; by mutual agreement, may
modify the contract or revoke it.
c. A mere incidental interest or benefit is not within the doctrine of s&pula&on pour autrui.
d. The s&pula&on pour autrui s&ll exists even if the contract is considered null and void.
33. A mortgages his land to B, and the mortgage is registered in the Registry of Property. AJerwards,
A sells the land to C. Is the mortgage contract binding upon C?
a. No because C is not a party to the contract.
b. No because there is no privity between B and C.
c. Yes, even if the mortgage contract is not registered.
d. Yes because in contracts crea&ng real rights, third persons who come into possession of the
object of the contract are bound thereby, subject to the provisions of the Mortgage Law and
Land Registra&on Laws.

34. A is a creditor of B. In order to escape the liability to A, B sells all his property to C. May A ask for
rescission of the contract of sale between B and C?
a. No because A is not a party to the contract.
b. No because A has no right of rescission.
c. Yes because creditors are protected in cases of contracts intended to defraud them.
d. Yes even if the right of levy and execu&on and accion subrogatoria are s&ll available.

35. A contract was entered into between Y and Z. X induces Y to violate the contract. May Z file an
ac&on for damages against X?
a. No because A is not a party to the contract.
b. No because it will be viola&ve of the rela&vity of the contract.
c. Yes even if X has no knowledge of the contract between Y and Z.
d. Yes because any third person who induces another to violate his contract shall be liable for
damages to the other contrac&ng party.

36. A borrowed P10,000 from B and entered into a contract of real estate mortgage involving his car.
A is also indebted to C in the amount of P100,000, but the la>er cannot a>ach the car because of
the mortgage. May C file an ac&on for the declara&on of nullity of the contract of real estate
mortgage?
a. Yes because a void contract may be assailed by a third person directly affected by such a void
contract.
b. No because C is not a party to the contract.
c. No because it will be viola&ve of the rela&vity of the contract.
d. Yes but only if A and B will give consent to the suit.

37. As an excep&on to the rela&vity of the contract, which contracts may be assailed by a third
person?
a. Voidable contract
b. Rescissible contract intended to defraud creditor and void contract that directly affected a
third person
c. Unenforceable contract
d. Valid contract

38. Consensual contracts are perfected by

a. Delivery of the object of a contract.
b. Execu&on of formali&es required by law.
c. Mere consent by contrac&ng par&es.
d. Provisions of the law.

39. Real contracts are perfected by

a. Delivery of the object of a contract.
b. Execu&on of formali&es required by law.
c. Mere consent by contrac&ng par&es.
 d. Provisions of the law.

40. Real contracts, such as contracts of deposit, of pledge, of loan, or mutuum, and of commodatum,
are perfected by
a. Delivery of the object of a contract.
b. Execu&on of formali&es required by law.
c. Mere consent by contrac&ng par&es.
d. Provisions of the law.

41. What is the nature of the contract to cons&tute a pledge, a deposit, a loan, or a commodatum?
a. Real contract
b. Consensual contract
c. Formal contract

42. Formal or solemn contracts are perfected by

a. Delivery of the object of a contract.
b. Execu&on of formali&es required by law.
c. Mere consent by contrac&ng par&es.
d. Provisions of the law.

43. As a general rule, contracts shall be obligatory, in whatever form they may have been entered
into, provided all the essen&al 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, the requirement is absolute and indispensable. The
following contracts are required to be in a certain form to be valid, also known as formal
contracts or solemn contracts, except
a. Nego&able instruments must be made strictly in the form provided by the Nego&able
Instruments Law to be considered nego&able.
b. Contract of marriage requires the contrac&ng par&es to be man and woman, both at least 18
years old, with a marriage license, and personal appearance before a solemnizing officer
with authority to solemnize marriage.
c. Dona&ons of personal property in excess of P5,000 must be made and accepted in wri&ng to
be valid.
d. Dona&ons of real property must be made and accepted in public instruments to be valid.
e. The an&chre&c agreement including the principal and interest of the contract of loan must
be specified in wri&ng to be valid for the contract of an&chresis to be valid.
f. The agreement to pay interest in a contract of loan must be in wri&ng to be valid.
g. Registra&on of cha>el mortgage is necessary for its validity.

h. A contract of partnership to which real property or real rights are contributed must be in a
public instrument, with an inventory of real a>ached there, to be valid.
i. Sale of a piece of land by the agent in the name of the principal, the authority of the agent
to sell the land must be in wri&ng for such a contract of sale to valid.
j. Sale of community/conjugal property by one of the spouses, there must be authority given
by the other spouse to the selling spouse.
k. The lease of personal property for a period longer than one year should be in wri&ng to be
valid.

44. Which of the following is a valid agreement or s&pula&on?

a. Oral agreement to pay 2% per month interest based on the principal amount of the loan
b. Oral contract of an&chresis
 c. Wri>en contract of sale of a piece of land by an agent in the name of the principal wherein
the agent has oral authority to sell the land
d. Oral contract of partnership wherein the delivery of money will be done aJer 5 years.

45. The following must appear in a public document in order to ensure its efficacy or for mere
convenience but not for its validity, except
a. Acts or contracts that have for their object the crea&on, transmission, modifica&on, or
ex&nguishment or real rights over immovable property.
b. The cession, repudia&on or renuncia&on of hereditary rights or of those of the conjugal
partnership of gains.
c. The power to administer property, or any other power which has for its object an act
appearing or which should appear in a public document, or should prejudice a third person.
d. The cession of ac&ons or rights proceeding from an act appearing in a public document
e. Contract of lease of movable property

46. Which contract must be in a wri>en instrument, either public document or private document, in
order to ensure its efficacy or for mere convenience but not for its validity?
a. Contracts where the amount involved exceeds five hundred pesos.
b. Contracts where the contrac&ng par&es are capacitated.
c. Contracts where the subject ma>er is movable or personal property
d. Contracts to be performed within one year from the making thereof.

47. If the law requires a document or other special form to a contract for mere convenience but not
for validity or enforceability, what is the right of the contrac&ng par&es once the contract is
perfected?
a. The contrac&ng par&es may annul the contract.
b. The contrac&ng par&es may rescind the contract.
c. The contrac&ng par&es may compel each other to observe the form or document required
by law.
d. The contrac&ng par&es need not execute the required form.

48. From the moment of perfec&on of a contract, what is the extent of its binding effect?
a. The par&es are bound only to the fulfillment of what has been expressly s&pulated in the
contract.
b. The par&es are bound only to the natural consequences of the contract.
c. The par&es are bound not only to the fulfillment of what has been expressly s&pulated in
the contract but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage, and law.

49. How is the nature of the contract determined by the court?

a. Contract is what the par&es choose to call them.
b. Contract is determined by the s&pula&ons of the par&es.
c. Contract is determined by the principles of law.
d. Contract is determined by the surrounding circumstances.

50. As a general rule, no one may contract in the name of another without being authorized by the
la>er or unless he has by law a right to represent him. What is the status of a contract entered
into in the name of another by one who has no authority or legal representa&on, or who has
acted beyond his powers?
a. Rescissible
b. Unenforceable
c. Voidable
 d. Null and void
51. An owner of a hacienda did not authorize his wife and children to sell the said hacienda but upon
being informed that they had done so, instead of refusing to enforce the sale, he proceeded to
collect in installments the amount of the promissory note given to the purchase. Can the buyer
of the hacienda enforce the contract of sale of land?
a. No because the contract is unenforceable considering the wife and children have no
authority to sell the land.
b. No because the contract is rescissible considering that it is entered into to defraud the
creditors.
c. Yes because the contract is only voidable and therefore enforceable.
d. Yes because the contract becomes enforceable upon the collec&on of the purchase price,
which is considered an implied ra&fica&on.

52. The following are the essen&al requisites of consensual contracts, except
a. Execu&on of formality or solemnity required by law
b. Consent of the contrac&ng par&es
c. Object certain which is the subject ma>er of the contract
d. Cause of the obliga&on which is established

53. The following are the essen&al requisites of real contracts, except
a. Delivery of the subject ma>er
b. Consent of the contrac&ng par&es
c. Object certain which is the subject ma>er of the contract
d. Cause of the obliga&on which is established
e. Execu&on of formality or solemnity required by law

54. The following are the essen&al requisites of formal or solemn contracts, except
a. Delivery of the subject ma>er
b. Consent of the contrac&ng par&es
c. Object certain which is the subject ma>er of the contract
d. Cause of the obliga&on which is established
e. Execu&on of formality or solemnity required by law

55. It refers to the mee&ng of minds between the contrac&ng par&es as regards the object and cause
of the contract. It is one of the essen&al elements of a contract.
a. Execu&on of formality or solemnity required by law
b. Consent of the contrac&ng par&es
c. Object certain which is the subject ma>er of the contract
d. Cause of the obliga&on which is established

56. Which of the following statements concerning the concept of consent is incorrect?
a. Consent is manifested by the mee&ng of the offer and the acceptance upon the thing and
the cause which are to cons&tute the contract.
b. The offer must be certain and the acceptance absolute.
c. A qualified acceptance cons&tutes a counter-offer.
d. Consent must be expressed but not implied.

57. It refers to the theory being followed by the New Civil Code of the Philippines for the
determina&on of the moment of perfec&on of a contract. It is the theory followed in Philippine
jurisdic&on.
a. Manifesta&on theory – The contract is perfected from the moment the acceptance is
declared or made.
 b. Expedi&on theory – The contract is perfected from the moment the offeree transmits the
no&fica&on of acceptance to the offeror.
c. Recep&on theory – The contract is perfected from the moment that the no&fica&on of
acceptance is in the hands of the offeror.
d. Cogni&ve theory – The contract is perfected from the moment the offeree’s acceptance
comes to the knowledge of the offeror.

58. When does the acceptance made by le>er or telegram bind the offeror?
a. From the &me he sent his offer.
b. From the &me the acceptance was sent by the other party.
c. From the &me the acceptance came to the knowledge of the offeror.
d. From the &me the par&es signed the wri>en contract.

59. A contract entered into through a le>er, telegram, or telephone is presumed to have been
entered in what place?
a. In the place where the offer was made.
b. In the place where the acceptance was made.
c. In the place where the wri>en contract was signed.
d. In the place where the object of the contract can be found.

60. The following are the requisites of an offer, except:

a. It must be definite.
b. It must be uncertain.
c. It must be complete.
d. It must be inten&onal.

61. A offers his watch to B for P500. B said that he will buy it for P450. Is the contract perfected?
a. Yes because the consent is manifested.
b. Yes provided B will pay P450.
c. No because there is no delivery of the watch.
d. No because a qualified acceptance cons&tutes a counter-offer.

62. On January 1, 2011, A wrote a le>er to B offering him to lease a building. On January 2, 2011, B
sent a le>er to A advising him that his offer was accepted. This le>er was received by A at 2:55
pm that day. On the same day, in the morning, at 11:25 am, A had already wri>en a le>er to B,
withdrawing the offer to lease the building. The le>er revoking the offer was received by B at
3:55 pm. Is the contract perfected?
a. Yes because the offer was accepted by B before the revoca&on was received by him.
b. Yes because the contract is perfected from the moment B sends the le>er of acceptance.
c. No because before the acceptance is known, the offer can be revoked, it not being
necessary, in order for the revoca&on to have the effect of impeding the perfec&on of the
contract, that it be known to the offeree.
d. No because the contract is perfected only by the execu&on of a wri>en contract.

63. The following statements concerning consent are correct, except:

a. An acceptance may be expressed or implied.
b. The person making the offer may fix the &me, place, and manner of acceptance, all of which
must be complied with.
c. An offer made through an agent is accepted from the &me acceptance is communicated to
his principal.
 d. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any &me before acceptance by communica&ng such withdrawal, except when
the op&on is founded upon a considera&on, something paid or promised.

64. Before the acceptance is conveyed, an offer becomes ineffec&ve upon the happening of the
following to either offeror or acceptor, except:
a. Civil interdic&on
b. Insanity
c. Death
d. Insolvency
e. Sickness

65. A offered B to purchase his car. A allowed B two weeks to accept the offer. A and B also entered
into a contract of op&on for the two weeks' allowance, and B paid P200 for the op&on. Can A
withdraw the offer before acceptance by B?
a. Yes because an offer may be withdrawn by the offerer before the acceptance is
communicated.
b. No because the op&on contract is supported by considera&on.
c. No because the offer cannot be withdrawn once given.
d. Yes because the contract is not yet perfected.

66. A department store adver&ses a Christmas sale of men’s and women’s shoes, those of men at a
price of P200 and above, and those of women’s at P100 and above. Can anyone from the public
make an acceptance of the offer?
a. Yes because business adver&sements of things for sale are definite offers.
b. No because adver&sements for bidders are simply invita&on to make proposals.
c. Yes because in auc&on sale the highest bidder is always the winner.
d. No because the lowest bidder should be the winner.

67. ABC Inc. makes an adver&sement for bidders of its land. J-Z is the highest bidder. Is ABC bound to
accept the offer of the highest bidder?
a. Yes because adver&sements for bidders are definite offers.
b. No because adver&sements for bidders are simply invita&on to make proposals.
c. Yes because in auc&on sale the highest bidder is always the winner.
d. No because the lowest bidder should be the winner.

68. The following persons cannot give consent to a contract, except:

a. Unemancipated minors
b. Insane except during lucid interval
c. Demented persons
d. Deaf-mutes who do not know how to write
e. Blind persons who cannot speak

69. What is the status of a contract entered into between a person who can give consent and an
unemancipated minor, insane or demented persons, or deaf-mutes who do not know how to
write?
a. Voidable on the part of the incapacitated person
b. Voidable on the part of the capacitated person
c. Unenforceable
d. Null and void
70. What is the status of a contract entered into between an unemancipated minor and an insane or
demented person?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void

71. A contract is entered into between A, a minor, and B, an insane person. C, the father of A ra&fied
the contract. What is the status of the contract aJer ra&fica&on?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void

72. What is the status of a contract entered into during a lucid interval?
a. Perfectly valid
b. Voidable
c. Rescissible
d. Unenforceable

73. What is the status of a contract agreed to in a state of drunkenness or during a hypno&c spell?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void

74. What is the status of a contract wherein consent is wan&ng and wherein consent is vi&ated,
respec&vely?
a. Valid and Voidable
b. Voidable and void
c. Void and voidable
d. Void and unenforceable

75. The following are the requisites of consent, except:

a. It should be intelligent.
b. It should be free.
c. It should be spontaneous.
d. It should be vi&ated.

76. What is the status of a contract entered into wherein consent is given through fraud, undue
influence, mistake, in&mida&on or violence (F-U-M-I-V)?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void

77. Which of the following vices of consent if commi>ed by a third person who did not take part in
the contract may annul or make the contract voidable at the judicial discre&on of the court?
a. Fraud and undue influence
b. In&mida&on and violence
c. Fraud, undue influence, and violence
d. In&mida&on, violence, and undue influence
78. The following types of mistakes may result in invalidity or voidability of a contract, except:
a. Mistake which should refer to the substance of the thing which is the object of the contract.
b. Mistake which should refer to those condi&ons which have principally moved one or both
par&es to enter into the contract.
c. Mistake as to iden&ty or qualifica&ons of one of the par&es wherein such iden&ty or
qualifica&ons have been the principal cause of the contract.
d. Mutual error as to the legal effect of an agreement when the real purpose of the par&es is
frustrated.
e. Simple mistake of account.

79. The following errors do not vi&ate consent, except:

a. Error as to the solvency of the other party.
b. Error as to the mo&ve of the party.
c. Error as to es&mates.
d. Error as to the basis of the contract.

80. A and B entered into a contract of sale of a piece of land, not knowing that the said property has
already been the object of another sale under different terms and condi&ons, by their duly
representa&ves. What is the status of the second contract?
a. Rescissible
b. Voidable
c. Unenforceable
d. Null and void

81. When one of the par&es is unable to read, or if the contract is in a language not understood by
him, and mistake or fraud is alleged, who shall shoulder the burden of proof in case of lawsuit
arising from this contract?
a. The person alleging mistake or fraud.
b. The person enforcing the contract.
c. The third person interested in the contract.
d. Any person.

82. One of the par&es agrees to an upset price in a contract of sale with full knowledge of the
favorable or unfavorable possibili&es with respect to the essen&al circumstances of the contract.
What is the status of the contract?
a. Voidable because there is a mistake in the upset price.
b. Null and void because the upset price is prohibited by law in any type of contract.
c. Valid and without defect because there is no mistake if the party alleging it knew the doubt,
con&ngency, or risk affec&ng the object of the contract.
d. Unenforceable because it violates the statute of frauds.

83. If one of the par&es believed that he received a certain amount as a loan, which the other
delivered as a real deposit, what is the status of the contract?
a. Voidable contract of loan on the part of the first party.
b. Voidable contract of real deposit on the part of the second party.
c. Valid contracts of loan and deposit on both par&es.
d. Null and void because of want of consent.

84. Which of the following statements is correct?

i. There is violence when in order to wrest consent, serious or irresis&ble force is
employed.
 ii. There is in&mida&on when one of the contrac&ng par&es 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.
a. Both I and II
b. Neither I nor II
c. I only
d. II only

85. The following are the requisites of violence to vi&ate consent, except:
a. There must be physical force.
b. The physical force must be irresis&ble.
c. It refers to moral force or compulsion.
d. The force must be the determining cause in giving the consent to the contract.

86. The following are the requisites of in&mida&on to vi&ate consent, except:
a. The in&mida&on must be the determining cause of the consent.
b. The threatened act must be just or lawful.
c. The threat must be real and serious.
d. It must produce a reasonable and well-grounded fear.

87. A borrowed money from B. Upon failure of A to pay the loan, B threatened A to file a collec&on
suit against A if the la>er will not execute the contract of mortgage. As a result of the threat, A
entered into the contract of mortgage. What is the status of the contract of mortgage?
a. Void because threat is illegal.
b. Voidable because the consent of A is vi&ated.
c. Valid and binding because the claim of B is just and legal.
d. Unenforceable because there is a viola&on of the statute of fraud.

88. Which of the following statements is correct?

i. There is undue influence when a person takes improper advantage of his power over
the will of another, depriving the la>er of a reasonable freedom of choice.
ii. There is fraud when, through insidious words or machina&ons of one of the
contrac&ng par&es, the other is induced to enter into a contract which, without
them, he would not have agreed to.
a. Both I and II
b. Neither I nor II
c. I only
d. II only

89. Which of the following statements is incorrect?

a. Violence or in&mida&on shall annul the obliga&on, although it may have been employed by
a third person who did not take part in the contract.
b. Failure to disclose facts, when there is a duty to reveal them, as when the par&es are bound
by confiden&al rela&ons, cons&tutes fraud.
c. 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.
d. The usual exaggera&ons in trade, when the other party had an opportunity to know the
facts, are in themselves fraudulent.

90. The following are the requisites of fraud to vi&ate consent, except:
a. It must have been employed by one of the contrac&ng par&es only.
 b. It must have induced the other party to enter into the contract.
c. It must have been serious.
d. It must result in injury or damage to the party asking for annulment of the contract.

91. A and B entered into a contract of sale. In the performance of the contract, A commi>ed fraud.
What is the remedy of B?
a. To ask for the annulment of the contract because there is dolo incidente.
b. To ask for damages because there is dolo causante.
c. To ask for damages because there is dolo incidente.
d. To ask for the annulment of the contract because there is dolo causante.

92. Through insidious words and fraudulent machina&ons by B, A entered into a contract with B.
What is the remedy of A?
a. To ask for the annulment of the contract because there is dolo incidente.
b. To ask for damages because there is dolo causante.
c. To ask for damages because there is dolo incidente.
d. To ask for the annulment of the contract because there is dolo causante.

93. The following statements are correct, except:

a. Misrepresenta&on by a third person does not vi&ate consent, unless such misrepresenta&on
has created substan&al mistake and the same is mutual.
b. Misrepresenta&on made in good faith is not fraudulent but may cons&tute error.
c. In order that fraud may make a contract voidable, it should be serious and should not have
been employed by both contrac&ng par&es.
d. Incidental fraud may en&tle the injured party to annulment of the contract.

94. What is the effect when both par&es use fraud reciprocally?
a. Any of the par&es may ask for annulment of the contract.
b. The contract is voidable for both par&es.
c. The fraud of one compensates that of the other, and neither party can ask for annulment of
the contract because they are in pari delicto.
d. Any of the par&es may ask for damages.

95. What is the status of an absolutely simulated or fic&&ous contract?

a. Voidable
b. Null and void, subject to ac&on for a declara&on of nullity
c. Unenforceable
d. Rescissible

96. What is the status of a rela&vely simulated contract?

a. All contracts are void.
b. The intended contract is valid, but the stated contract is void, requiring reforma&on of the
instrument.
c. The contract is voidable.
d. The contract is unenforceable.

97. Which of the following statements is correct?

i. In absolute simula&on, there is the color of a contract, without any substance
thereof, the par&es not having any inten&on to be bound.
ii. In rela&ve simula&on, the par&es have an agreement which they conceal under the
guise of another contract.
a. Both I and II
 b. Neither I nor II
c. I only
d. II only

98. What is the remedy of the par&es in the case of a rela&vely simulated contract?
a. Ask for annulment of the contract.
b. Ask for a declara&on of nullity of the contract.
c. Ask for reforma&on of the instrument.
d. Ask for rescission of the contract.

99. What is the remedy of the par&es in the case of an absolutely simulated contract?
a. Ask for annulment of the contract.
b. Ask for a declara&on of nullity of the contract.
c. Ask for reforma&on of the instrument.
d. Ask for rescission of the contract.

100. It refers to the promise or conduct to be performed in the performance of the contractual and
may consist of giving, doing, or not doing a thing. It is the thing, right, or service which is the
subject ma>er of the obliga&on arising from the contract. It is one of the essen&al elements of a
contract.
a. Execu&on of formality or solemnity required by law
b. Consent of the contrac&ng par&es
c. Object certain which is the subject ma>er of the contract
d. Cause of the obliga&on which is established

101. The following are the requisites of an object of a contract, except:

a. The object must be within the commerce of men.
b. It must be licit, or not contrary to law, morals, good customs, public order, or public policy.
c. It must be impossible.
d. It must be determinate as to its kind.

102. The following objects may be considered an object of a contract, except:

a. Future things
b. Hereditary rights
c. All rights which are not intransmissible
d. Future inheritance
e. All services not contrary to law, morals, good customs, public order, or public policy

103. Before Don Lasal dies, his heirs enter into an agreement for the par&&on of the estate of their
father. What is the status of the contract?
a. Voidable
b. Null and void because the subject ma>er is future inheritance
c. Unenforceable
d. Rescissible

104. AJer Don Miguel died, one of the heirs entered into a contract renouncing his right to inherit.
What is the status of the contract?
a. Valid and binding because the subject ma>er is a hereditary right
b. Null and void
c. Unenforceable
d. Rescissible
105. It refers to the immediate and proximate purpose of the contract or the essen&al reason which
impels the contrac&ng par&es to enter into it and which explains and jus&fies the crea&on of the
obliga&on through such a contract. It is one of the essen&al elements of the contract.
a. Object of the contract
b. Cause of the contract
c. Consent of the contract
d. Form of the contract

106. Which of the following statements concerning the cause of the contract is incorrect?
a. In onerous contracts, the cause is understood to be, for each contrac&ng party, the
presta&on or promise of a thing or service by the other.
b. In remuneratory contracts, the cause is the service or benefit which is remunerated.
c. In contracts of pure beneficence or gratuitous contracts, the cause is the mere liberality or
generosity of the benefactor.
d. The cause of the accessory contract should be different from the very cause or considera&on
of the principal contract.

107. Which of the following statements is incorrect?

i. Contracts without cause or with unlawful cause produce no effect whatever and are
considered null and void.
ii. Contracts without mo&ve or with unlawful mo&ve produce no effect whatever and
are considered null and void.
a. I only
b. II only
c. Both I and II
d. Neither I nor II

108. Which of the following statements is incorrect?

a. 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.
b. Although the cause is not stated in the contract, it is presumed that it exists and is lawful,
unless the debtor proves the contrary.
c. As a general rule, lesion or inadequacy of cause shall invalidate a contract.
d. The par&cular mo&ves of the par&es in entering into a contract are different from the cause
thereof.

109. When, there having been a mee&ng of minds of the par&es to the contract, their true inten&on is
not expressed in the instrument purpor&ng to embody the agreement, by reason of mistake,
fraud, inequitable conduct, or accident, what is the remedy of one of the par&es?
a. Ask for annulment of the contract because the consent is vi&ated.
b. Ask for reforma&on of the instrument to the end that such true inten&on may be expressed.
c. Ask for rescission of the contract.
d. Ask for indemnifica&on for damages.
110. If mistake, fraud, inequitable conduct, or accident has prevented a mee&ng of the minds of the
par&es, what is the proper remedy?
a. Ask for reforma&on of the instrument.
b. Ask for annulment of the contract.
c. Ask for rescission of the contract.
d. Ask for indemnifica&on for damages.

111. The following are the instances wherein reforma&on of the instrument is the proper remedy,
except:
 a. When a mutual mistake of the par&es results in the failure of the instrument to disclose
their real agreement.
b. If one party was mistaken and the other acted fraudulently or inequitably in such a way that
the instrument does not show their true inten&on.
c. When one party was mistaken and the other knew or believed that the instrument did not
state their real agreement, but concealed that fact from the former.
d. When, through the ignorance, lack of skill, negligence, or bad faith on the part of the person
draJing the instrument or of the clerk or typist, the instrument does not express the true
inten&on of the par&es.
e. If two par&es agree upon the mortgage or pledge of real or personal property, but the
instrument states that the property is sold absolutely or with a right of repurchase.
f. When one of the par&es was induced to enter into a contract through fraud, undue
influence, mistake, in&mida&on, or violence.

112. There shall be no reforma&on of the instrument in the following cases, except:
a. Simple dona&on inter vivos wherein no condi&on is imposed or uncondi&onal simple
dona&on.
b. Wills whether holographic or notarial.
c. When the real agreement is void.
d. Deed of pacto de retro sale.

113. The following may ask for the reforma&on of an instrument, except:
a. Either party if the mistake is mutual.
b. Injured party.
c. Successors in interest, heirs, and assigns of the injured party.
d. Guilty party.

114. One of the par&es has brought an ac&on to enforce the instrument, may he subsequently ask for
its reforma&on?
a. Yes, because the remedies are available as successive rights.
b. No, because there has been an elec&on as between inconsistent remedies.
c. Yes, because the injured party can never be estopped.
d. No, if there is a s&pula&on to that effect.

115. If the terms of a contract are clear and leave no doubt upon the inten&on of the contrac&ng
par&es, how shall the court apply or interpret the provisions of the contract?
a. The intent of the contrac&ng par&es shall s&ll be construed.
b. The literal meaning of its s&pula&on shall control.
c. The hidden meaning should be determined.
d. The contract shall be enforced even if contrary to law.

116. In case of conflict between the evident inten&on of the par&es and the words of the contract,
which shall prevail?
a. The words or le>er of the contract shall prevail over the inten&on of the par&es.
b. The inten&on of the par&es shall prevail over the words of the contract.
c. The contract shall be annulled because of ambiguity.
d. The contract shall be declared null and void.

117. The following are the rules for interpre&ng or construing a contract, except:
a. In order to judge the inten&on of the contrac&ng par&es, their contemporaneous and
subsequent acts shall be principally considered.
 b. However general the terms of a contract may be, they shall not be understood to
comprehend things that are dis&nct and cases that are different from those upon which the
par&es intended to agree.
c. If some s&pula&on of any contract should admit several meanings, it shall be understood as
bearing that import which is most adequate to render effectual.
d. The various s&pula&ons of a contract shall be interpreted together, a>ribu&ng to the
doubrul ones that sense which may result from all of them taken jointly.
e. If the contract is clear, the judge must interpret and construe it in order to determine the
hidden mo&ve of the contrac&ng par&es.

118. The following are the rules for interpre&ng or construing a contract, except:
a. Words that may have different significa&ons shall be understood in that which is most in
keeping with the nature and object of the contract.
b. The usage or custom of the place shall be borne in mind in the interpreta&on of the
ambigui&es of a contract, and shall fill the omissions of s&pula&ons which are ordinarily
established.
c. The interpreta&on of obscure words or s&pula&ons in a contract shall not favor the party
who caused the obscurity.
d. Whenever the contract provides for the payment of a penalty in case of breach, it shall be
interpreted liberally in favor of the awarding of the penalty.

119. When it is impossible to se>le doubts by the rules established in the preceding numbers, and the
doubts refer to incidental circumstances of a gratuitous contract such as dona&on or
commodatum, what shall be the interpreta&on of the contract?
a. The doubt shall be se>led in favor of the greatest reciprocity of interest.
b. The greatest transmission of rights and interest shall prevail.
c. The least transmission of rights and interest shall prevail.
d. The contract is null and void.

120. When it is impossible to se>le doubts by the rules established in the preceding numbers, and the
doubts refer to incidental circumstances of an onerous contract such as sale or lease, what shall
be the interpreta&on of the contract?
a. The least transmission of rights and interest shall prevail.
b. The doubt shall be se>led in favor of the greatest reciprocity of interest.
c. The greatest transmission of rights and interest shall prevail.
d. The doubt shall be resolved in favor of the debtor.

121. Where a contract is suscep&ble of being interpreted as a sale with a right of repurchase and as a
loan with an equitable mortgage, what shall be the interpreta&on of the contract?
a. The contract is a sale with a right of repurchase.
b. The contract is an absolute sale.
c. The contract is a lease.
d. The contract is a loan with equitable mortgage.

122. If the doubts are cast upon the principal object of the contract in such a way that it cannot be
known what may have been the inten&on or will of the par&es, what shall be the status of the
contract?
a. Valid and binding.
b. Voidable.
c. Null and void.
d. Unenforceable.
123. Indicate the proper order from least defec&ve to most defec&ve contract.
i. Rescissible contract is a contract that has caused a par&cular damage to one of the
par&es or to a third person, and which for equitable reasons may be set aside even if
it is valid.
ii. Voidable or annullable contract is a contract in which the consent of one party is
defec&ve, either because of want of capacity or because it is vi&ated, but which
contract is valid un&l set aside by a competent court.
iii. Unenforceable contract is a contract that for some reason cannot be enforced, unless
it is ra&fied in the manner provided by law.
iv. Void or inexistent contract is an absolute nullity and produces no effect, as if had
never been executed or entered into and cannot be ra&fied.
a. IV – III – II – I
b. I – II – III – IV
c. II – I – IV – III
d. I – III – II – IV

124. It is a contract that has caused par&cular damage to one of the par&es or to a third person, and
which for equitable reasons may be set aside even if it is valid.
a. Rescissible
b. Voidable
c. Unenforceable
d. Void

125. The following are the characteris&cs of rescissible contracts, except:

a. They are valid and binding un&l rescinded.
b. They are not suscep&ble to ra&fica&on but convalidated by prescrip&on.
c. The proper legal remedy is an ac&on for rescission of the contract.
d. They may not be assailed by the third persons affected by it.
e. AJer the rescission, they are no longer effec&ve and will result in mutual res&tu&on.

126. What are the two types of rescissible contracts?

a. Those contracts entered into by the debtor in fraud of creditors.
b. Those entered into by guardians or representa&ves in behalf of wards or absentee when the
la>er suffer lesion by more than ¼ value of the things which were the object thereof.
c. Both A and B.
d. Neither A nor B.

127. The following contracts are intended to defraud creditor and therefore rescissible, except:
a. Those undertaken in fraud of creditors when the la>er cannot in any other manner collect
the claims due them.
b. Those which refer to things under li&ga&on if they have been entered into by the defendant
without the knowledge and approval of the li&gants or of competent judicial authority.
c. Payments made in a state of insolvency for obliga&ons to whose fulfillment the debtor could
not be compelled at the &me they were effected.
d. All contracts by virtue of which the debtor alienates property by gratuitous &tle when the
donor did not reserve sufficient property to pay all debts contracted before the dona&on.
e. Aliena&ons by onerous &tle when made by persons against whom some judgment has been
rendered in any instance or some writ of a>achment has been issued.
f. Contracts entered into by an insolvent person if he does not retain sufficient property to pay
his obliga&ons.
g. Those entered into between two incapacitated persons.
128. Which contract is rescissible?
a. Those which are entered into by guardians whenever the wards they represent suffer lesion
by more than ¼ the value of the things which are the object thereof.
b. Those agreed upon in representa&on of absentees, if the la>er suffer lesion by more than ¼
the value of the things which are the object thereof.
c. Both A and B.
d. Neither A nor B.

129. It is a remedy granted by law to the contrac&ng par&es and even to third persons, to secure the
repara&on of damages caused to them by a contract, even if this should be valid, by means of
the restora&on of things to their condi&on at the moment prior to the celebra&on of said
contract.
a. Annulment of contract
b. Rescission of contract
c. Declara&on of nullity of contract
d. Ra&fica&on of contract

130. The following are the requisites in order that an ac&on for rescission of a contract or accion
pauliana may prosper, except
a. The contract must be rescissible.
b. The party asking for rescission must have no other legal means to obtain repara&on for
damages suffered by him.
c. The person demanding rescission must be able to return whatever he may be obliged to
restore if rescission is granted.
d. The things which are the object of the contract must not have passed legally to the
possession of a third person ac&ng in good faith.
e. The ac&on for rescission must be brought within the prescrip&ve period of 1 year.

131. The following statements concerning rescission of contracts are correct, except
a. The ac&on for rescission is a remedy of last resort because it can be ins&tuted even when
the party suffering damage has no other legal means to obtain repara&on for the same.
b. Rescission shall be only to the extent necessary to cover the damages caused.
c. Rescission creates the obliga&on to return the things which were the object of the contract,
together with their fruits, and the price with its interest; consequently, it can be carried out
only when he who demands rescission can return whatever may be obliged to restore.
d. Rescission will not prosper when the things which are the object of the contract are legally
in the possession of third persons who did not act in bad faith.
e. In case rescission is not possible, the indemnity for damages may be demanded from the
person causing the loss.
f. The ac&on for rescission may be filed only by a contrac&ng party but not by a third person
affected by such rescissible contract.

132. What is the liability of a third person who acquires in bad faith the things alienated in fraud of
creditors?
a. He shall indemnify the creditor for damages suffered by them on account of aliena&on
whenever it should be impossible for him to return them.
b. He shall not be liable for damages.
c. He shall be liable for damages even if he can return the things alienated.

133. What is the prescrip&ve period of an ac&on for rescission?

a. 4 years
b. 10 years
 c. 6 years
d. 5 years

134. The following are the rules to be observed in coun&ng the 4-year prescrip&ve period of an ac&on
for rescission, except
a. For incapacitated persons or under guardianship, 4 years shall be counted from the
termina&on of the ward’s incapacity.
b. For absentee, 4 years shall be counted from the date the domicile of absentee is known.
c. For contracts intended to defraud creditor, 4 years shall be counted from the knowledge of
the contract.
d. For contracts intended to defraud creditor but involving immovable, 4 years shall be counted
from the registra&on of the sale.
e. For all rescissible contracts, 4 years shall be counted from the date of the contract.

135. It is a contract in which the consent of one party is defec&ve, either because of want of capacity
or because it is vi&ated, but which contract is valid un&l set aside by a competent court.
a. Rescissible
b. Voidable
c. Unenforceable
d. Void

136. The following are the characteris&cs of voidable contracts, except

a. They are valid and binding un&l annulled.
b. They are suscep&ble of ra&fica&on which ex&nguishes the ac&on for annulment.
c. AJer the annulment, they are no longer effec&ve and will result in mutual res&tu&on.
d. The proper legal remedy available to the injured party is ac&on for annulment of contract.
e. They may be assailed by a third person.

137. The following contracts are voidable or annullable, even though there may have been no damage
to the contrac&ng par&es, except
a. Those where one of the par&es is incapable of giving consent to a contract.
b. Those where the consent is vi&ated by fraud, undue influence, mistake, in&mida&on or
violence.
c. Those where the contracts do not comply with statute of fraud.

138. What is the prescrip&ve period of an ac&on for annulment?

a. 4 years
b. 10 years
c. 6 years
d. 5 years

139. The following are the rules to be observed in coun&ng the 4-year period for prescrip&on of an
ac&on for annulment, except
a. In cases of in&mida&on, violence or undue influence, 4-year period shall begin from the &me
the defect of the consent ceases.
b. In cases of fraud or mistake, 4-year period shall begin from the &me of the discovery of the
same.
c. In cases of contracts entered into by wards or incapacitated persons, 4-year period shall
begin from the &me the guardianship or incapacity ceases.
d. For all voidable contracts, 4-year period shall be counted from the date of contract.

140. Which of the following ex&nguishes the ac&on to annul a voidable contract?
 a. Ceasing of the in&mida&on, violence or undue influence
b. Discovery of the mistake or fraud
c. Ceasing of the guardianship
d. Ra&fica&on

141. The following statements concerning ra&fica&on are correct, except

a. Ra&fica&on may be effected expressly or tacitly.
b. Ra&fica&on may be effected by the guardian of the incapacitated person.
c. Ra&fica&on requires conformity of the contrac&ng party who has no right to bring the ac&on
for annulment.
d. Ra&fica&on cleanses the contract from all its defects from the moment it was cons&tuted.

142. The following may ask for annulment of voidable contracts, except
a. Guardian of a minor
b. Guardian of an insane or demented person
c. Party whose consent is vi&ated
d. Party who is capable or the party who commi>ed the vices of consent

143. The following statements pertaining to the effects of annulment of contract are correct, except
a. The contrac&ng par&es shall restore to each other the things which have been the subject
ma>er of the contract with their fruits and the price with interests.
b. In obliga&ons to render service, the value thereof shall be the basis for damages.
c. When the defect of the contract consists in the incapacity of one of the par&es, the
incapacitated person is not obliged to make any res&tu&on except insofar as he has been
benefited by the thing or price received by him.
d. Annulment of contract may be availed of by the capacitated contrac&ng party or by the
contrac&ng party who vi&ated the consent of the other party.

144. The following statements pertaining to the effects of annulment of contract are correct, except
a. Whenever the person obliged by the decree of annulment to return the thing cannot do so
because it has been lost through his fault, he shall return the fruits received and the value of
the thing at the &me of the loss, with interest from the same date.
b. The ac&on for annulment of contracts shall be ex&nguished when the thing which is the
object thereof is lost thorough the fraud or fault of the person who has a right to ins&tute
the proceedings.
c. If the loss of ac&on is based upon the incapacity of any one of the contrac&ng par&es, the
loss of the thing shall not be an obstacle to the success of the ac&on, unless said loss took
place through the fraud or fault of the plain&ff.
d. One of the contrac&ng par&es may be compelled to restore what in virtue of the decree of
annulment he is bound to return even if the other does not restore what is incumbent upon
him.

145. It is a contract that for some reason cannot be enforced, unless it is ra&fied in the manner
provided by law.
a. Rescissible
b. Voidable
c. Unenforceable
d. Void

146. The following are the characteris&cs of unenforceable contracts, except

a. They are valid but not enforceable by court ac&on.
b. They are suscep&ble of ra&fica&on which makes the contract enforceable.
 c. There is no proper legal remedy but to leave the contract as it is.
d. They may be assailed by third persons.

147. The following contracts are unenforceable unless they are ra&fied, except
a. Those entered into in the name of another person by one who has been given no authority
or legal representa&ve or who has acted beyond his powers.
b. Those that do not comply with the statute of frauds.
c. Those where both par&es are incapable of giving consent to a contract.
d. Those which are absolutely simulated or fic&&ous.

148. It refers to a term which is a descrip&ve of statutes which require certain classes of contracts to
be in wri&ng and regulates the formali&es of contract necessary to render it enforceable and to
prevent fraud or perjury.
a. Statutory construc&on
b. Statute of fraud
c. Statute of liberty
d. Statute of freedom

149. The following executory contracts shall be in wri&ng to be enforceable under statute of fraud,
except
a. An agreement that by its terms is not to be performed within one year from the making
thereof.
b. A special promise to answer for the debt, default or miscarriage of another (contract of
guaranty).
c. An agreement made in considera&on of marriage, other than a mutual promise to marry.
d. An agreement for the sale of goods, cha>els or things in ac&on (movable property) at a price
not less than P500.
e. An agreement for the leasing of real property (immovable property) for a period longer than
one year regardless of rent.
f. An agreement for the sale of real property (immovable property) or of an interest therein
regardless of price.
g. A representa&on to the credit of a third person.
h. An agreement for the loan of a sum of money exceeding P500.

150. The following statements concerning ra&fica&on of unenforceable contracts are true, except
a. The sale of property made by a person without authority of the owner is unenforceable in
the beginning but aJerwards it becomes perfectly valid by the ra&fica&on of the owner.
b. Contracts infringing Statute of Frauds are ra&fied by the failure to object to the presenta&on
of oral evidence to prove the same or by the acceptance of benefits under them.
c. When a contract is enforceable under the Statute of Frauds, and a public document is
necessary for the registra&on in the Registry of Deeds, the par&es may compel each other to
execute the required form.
d. Mo&on to dismiss may s&ll be availed in an ac&on filed for exact fulfillment even the
contract has already been ra&fied.

151. The following statements concerning ra&fica&on of unenforceable contracts are true, except
a. In a contract where both par&es are incapable of giving consent, express or implied
ra&fica&on by the parent, or guardian, as the case maybe, of one of the contrac&ng par&es
shall give the contract the same effect as if only one of them were incapacitated.
b. In a contract where both par&es are incapable of giving consent and if ra&fica&on is made by
the parents or guardians, as the case may be, of both contrac&ng par&es, the contract shall
be validated from the incep&on.
 c. Ra&fica&on of unenforceable contracts will make them valid and binding.
d. Unenforceable contracts can be assailed by third persons.

152. It is a contract that is an absolute nullity and produces no effect, as if had never been executed or
entered into and cannot be ra&fied.
a. Rescissible
b. Voidable
c. Unenforceable
d. Void

153. The following are the characteris&cs of void contracts, except

a. The contracts produce no effect whatsoever either against in or in favor of anyone.
b. The proper legal remedy is ac&on for declara&on of nullity of void contract.
c. As a general rule they cannot be confirmed or ra&fied except that declara&on of nullity of
some void contracts may be barred by reason of estoppel or laches in excep&onal cases.
d. If they have been performed, the restora&on of what has been given is in order.
e. They may be assailed by any third persons whose interests are directly affected.
f. They are valid and binding un&l annulled.

154. The following contracts are inexistent and void from the beginning (Void Ab Ini&o), except
a. Those whose cause, object or purpose is contrary to law, morals, good customs, public order
or public policy.
b. Those which are absolutely simulated.
c. Those whose cause or object did not exist at the &me of the transac&on.
d. Those whose object is outside the commerce of men.
e. Those which contemplate impossible services.
f. Those where the inten&on of the par&es rela&ve to the principal object cannot be
ascertained.
g. Those expressly prohibited or declared void by law.
h. Those which are rela&vely simulated.

155. What is the remedy of the injured party in case of null and void contracts?
a. Ac&on for rescission of contract
b. Ac&on for declara&on of nullity of contract
c. Ac&on for annulment of contract
d. Ac&on subrogatoria

156. What is the prescrip&ve period for the ac&on for declara&on of nullity of void contract or defense
of nullity of a void contract?
a. 10 years
b. 4 years
c. 6 years
d. No prescrip&ve period but the ac&on may be barred by laches or estoppel

157. Which of the following void contracts may become excep&onally binding by reason of estoppel?
a. Those contracts which are illegal per se.
b. Those contracts involving crimes.
c. Those contracts which are contrary to public policy.
d. Those which fail to comply with formality required by law for validity but they do not affect
third persons.
158. What is the status of contract of lease of public streets or thoroughfares entered by a city
government with private market stallholders?
a. Voidable
b. Perfectly valid
c. Unenforceable
d. Null and void

159. The following statements concerning void contracts are correct, except:
a. The defense of illegality of contracts is available to third persons whose interests are directly
affected.
b. A contract which is the direct result of a previous illegal contract is also void and inexistent.
c. In case of a divisible contract, if the illegal terms can be separated from the legal ones, the
la>er may be enforced.
d. When the law sets or authorizes the setng of a minimum wage for laborers, and a contract
is agreed upon by which a laborer accepts a lower wage, he shall be en&tled to recover the
deficiency.
e. When the law fixes, or authorizes the fixing of the maximum number of hours of labor, and a
contract is entered into whereby a laborer undertakes to work longer than the maximum
thus fixed, he may demand addi&onal compensa&on for services rendered beyond the &me
limit.
f. When the price of any ar&cle or commodity is determined by statute or by authority of law,
any person paying any amount in excess of the maximum price allowed may recover such
excess.
g. The concept of pari delicto s&ll allows the contrac&ng party to file an ac&on for declara&on
of nullity.

160. The following statements concerning void contracts are correct, except:
a. When the agreement is not illegal per se but is merely prohibited, and the prohibi&on by law
is designed for the protec&on of the plain&ff, he may, if public policy is thereby enhanced,
recover what he has paid or delivered.
b. Where one of the par&es to an illegal contract is incapable of giving consent, the courts may,
if the interest of jus&ce so demands, allow recovery of money or property delivered by the
incapacitated person.
c. When money is paid or property delivered for an illegal purpose, the contract may be
repudiated by one the par&es before the purpose has been accomplished or before any
damage has been caused to third person. In such a case, the courts may if the public interest
will thus be sub served, allow the party repudia&ng the contract to recover the money or
property.
d. Interest paid in excess of the interest allowed by the usury laws may be recovered by the
debtor, with interest thereon from the date of payment.
e. Contracts that are products of originally void contract are also null and void.
f. Void contracts may be assailed by third persons whose interests are not directly affected by
the nullity of the contract.

161. When the nullity of the contract proceeds from the illegality of the cause or object of the
contract and the act cons&tutes a criminal offense, which of the following is incorrect?
a. When both par&es are in pari delicto, they shall have no ac&on against each other.
b. Both criminals shall be prosecuted.
c. They can recover the proceeds of the crime.
d. The instruments of the crime shall be forfeited in favor of the government.
e. If only one of the par&es is guilty, the innocent one may claim what he has given and shall
not be bound to comply with his promise.
162. If the act in which the unlawful or forbidden cause consists does not cons&tute a criminal
offense, which of the following rules are correct?
i. When the fault is on the part of both contrac&ng par&es, neither may recover what
he has given by virtue of the contract or demand the performance of the other’s
undertaking.
ii. When only one of the contrac&ng par&es is at fault, he cannot recover what he has
given by reason of the contract or ask for the annulment of what has been promised
to him. The other, who is not at fault, may demand the return of what he has given
without any obliga&on to comply with his promise.
a. Neither I nor II
b. Both I and II
c. I only
d. II only

163. It is a real and gratuitous contract wherein one of the par&es delivers to another, either
something not consumable so that the la>er may use the same for a certain &me and return it.
a. Contract of commodatum
b. Contract of lease
c. Contract of loan
d. Contract of deposit

164. It is a real and onerous or gratuitous contract wherein one of the par&es delivers to another
money or other consumable thing, upon the condi&on that the same amount of the same kind
and quality shall be paid.
a. Contract of commodatum
b. Contract of lease
c. Contract of loan or mutuum
d. Contract of deposit

165. It is a real and onerous or gratuitous contract wherein a person receives a thing belonging to
another, with the obliga&on of safely keeping it and of returning the same and the safekeeping of
the thing delivered is the principal purpose of the contract.
a. Contract of commodatum
b. Contract of lease
c. Contract of loan or mutuum
d. Contract of deposit

166. It is an accessory contract which must be in wri&ng if executory to be enforceable whereby a

person subsidiarily binds himself to the creditor to fulfil the obliga&on of the principal debtor in
case the la>er should fail to do so.
a. Contract of guaranty
b. Contract of surety
c. Contract of pledge
d. Contract of mortgage

167. It is a secondary contract to a valid obliga&on whereby a party ensures the performance of
another of an obliga&on or undertaking in favor of another party but the liability of guarantor is
solidary, direct, primary and absolute although he possesses no direct or personal interest over
the obliga&ons nor does he receive any benefit thereon.
a. Contract of guaranty
b. Contract of surety
 c. Contract of pledge
d. Contract of mortgage

168. It is a consensual and onerous contract wherein one party binds himself to give another the
enjoyment or use of a thing for a price certain, and for a period which may be definite or
indefinite.
a. Contract of loan or mutuum
b. Contract of lease
c. Contract of deposit
d. Contract of commodatum

For the following scenario, determine the status of the contract entered into:
(A)-Valid and Binding (B)- Rescissible (C)-Voidable (D)-Unenforceable (E)-Null and Void

169. A, a minor, sold in wri&ng his cellphone to B, a capacitated person for P1,000. The book value of
the cellphone is s&ll P1,500 so A suffered a lesion by more than ¼ the value of the thing which is
the object thereof.
170. A, the debtor and B, the creditor entered into a contract of loan secured by personal proper&es
of A. To defraud B, A sold in wri&ng all his proper&es to C at a price equivalent to its fair market
value. (Status of contract of sale)
171. G, the guardian of minor M, sold in wri&ng the house and lot of M at a selling price of P7M when
its book value is P10M. The sale is without prior approval of guardianship court.
172. A orally sold a piece of land to B in the amount of P200,000 payable in four installments. B
already paid P50,000 represen&ng the first installment.
173. A, agent of P, sold the land of P in P’s name to B orally. The authority of A is not in wri&ng and B
has already paid the whole purchase price to A.
174. A and B orally entered into a contract of partnership to be organized and operated two years
from today. They will contribute P5,000 cash each.
175. A, B and C orally entered into a contract partnership to be formed 3 years from today. They will
contribute a piece of land, a building and P2,000 cash.
176. A, a minor, orally sold the cell phone of his brother at a selling price of P500. The buyer already
paid P100 of the selling price to A.
177. An oral contract of construc&on of building the construc&on of which has already commenced
but to will be completed within a period of 5 years.
178. A orally entered into a contract for a piece of work of cake at a price of P500. The performance
and payment of price shall be done aJer 5 months.
179. A, agent of P, orally sold the house of P to B at a price of P499. The authority of A is not in
wri&ng. Payment and delivery have not yet been made.
180. A orally entered into a contract of barter with B involving a cellphone and a laptop. The values of
the cellphone and laptop are P5,000 and P8,000, respec&vely. The exchange will happen aJer 6
months.
181. Contract of pledge entered in a private instrument with the descrip&on and date of the thing to
be pledged but without delivery of the thing pledged.
182. Orally agreed contract of dona&on of cellphone with fair market value of P10,000 completed by
delivery by donor and oral acceptance by donee.
183. A married man of mature years donated a parcel of land to a girl of 16 subject to the condi&on
that the la>er shall cohabit with him and such condi&on is accepted by the girl.
184. A mother sold two fishponds to a daughter and the la>er, in turn, resold the same fishponds to
her stepfather.
185. A Filipino leased a parcel of land to a foreigner for 99 years with an op&on to buy the property
within 50 years provided that the la>er shall become a Filipino.
186. A wri>en contract for the transfer of a piece of land at an amount of P900,000 with a fair market
value of P1M. Delivery and payment have not yet been made.
187. An oral contract of real estate mortgage over a piece of land owned by a third person entered
into by a creditor-bank and the third person to secure the loan of the principal debtor.
188. An oral contract of commodatum of a specific bag without the delivery of the bag.
189. A wri>en contract of cha>el mortgage over shares of stocks without registra&on in the Cha>el
Mortgage Registry.
190. The wife orally sold a land which is a community property to a third person without the consent
of the husband at a price of P60,000 when its book value is P100,000.
191. A defendant in an ac&on reinvidicatoria sold in wri&ng the subject movable to a third person
during the pendency of the ac&on at a price of P75,000 when its book value is P100,000.
192. Oral contract of sale of a cellphone with a price of P400 but delivery and payment will be made
aJer 15 months.
193. Oral contract of lease of a car with an annual rental of P500 for a lease term of 10 years.
194. Oral contract of sale of a piece of land with a price of P499 but delivery and payment will be
made aJer 1 month.
195. An oral contract of guaranty.
196. A wri>en contract of sale of a piece of land with a price of P499 between a demented and an
insane person.
197. An oral contract of sale of B’s calculator at a price of P499 entered by A in B’s name without
authority from B.
198. An oral contract of lease of land with a term of 15 months. Advance rental payment has been
made by lessee to lessor.
199. G, the guardian of M, a minor, orally sold M’s cellphone at a selling price of P500 to I, an insane
person. Delivery and payment have not yet been made.
200. M, an insane person, orally sold shabu at a price of P1,000 although its book value is P1,500, to I,
an insane person. Delivery and payment have not yet been made.
201. An oral contract of lease of land for a term of 1 year entered into between A, a minor, and I, an
insane person.
202. An oral contract of sale of a house with a price of P2M and book value of P1.4M entered into by
the seller to escape liability to his creditors. Delivery and payment have not yet been made.
203. A dona&on of house and land made in a private instrument by the debtor who has a pending civil
ac&on without reserving enough property for his obliga&ons.
204. A orally entered into a contract of subscrip&on of 100 shares of stocks of ABC Corpora&on at a
price of P500. Payment of the subscribed shares will happen aJer one month.
205. An oral contract of sale of a cellphone at a price of P1,000 between husband and wife who are
covered by absolute community or conjugal property regime. Delivery and payment will happen
aJer 2 months.
206. A wri>en contract of sale of a car with a price of P70,000 and book value of P100,000 between
husband and wife who are covered by the regime of absolute or complete separa&on of
property. The husband pointed a gun at the wife to sign the deed of sale. Delivery and payment
have not yet been made.
207. The representa&ve of an absentee orally sold a bike of the la>er at a price of P40,000 when its
book value is P60,000. The buyer has already paid the price.
208. The guardian orally purchased the bike of his minor child at a price of P500 when its book value
is P800.
209. The minor orally sold the car of his guardian at the la>er’s name without prior consent. The sale
is made at a price of P30,000, and the car has a book value of P50,000. The buyer has already
paid the price to the minor.
210. An oral contract of sale of a cellphone between two capacitated persons at a price of P499 when
its book value is P700. Delivery and payment will be made aJer three years.
211. A 5-year-old child orally entered into a contract of employment as a model of a men’s magazine
without permission from DOLE.
212. A 17-year-old student orally entered into a contract of service involving sexual intercourse with a
pros&tute at a price of P500 which will be performed aJer 2 years. Payment has not yet been
made.
213. A 16-year-old student orally entered into a 5-year contract of lease of a car at a rent of P500/year
with a leasing company.
214. A wri>en contract of dona&on of a cellphone with a value of P5,001 with acceptance also made
in wri&ng made by a married man to his insane concubine.
215. An oral contract of sale of land with a selling price of P6M and book value of P10M wherein
delivery shall be made aJer 3 years. The buyer has already paid a down payment of P1M at the
perfec&on of the contract.
216. A wri>en contract of sale of the planet Jupiter at a selling price of P10M.
217. An oral contract of sale of forest land or a na&onal park at a selling price of P100M with par&al
payment of P20M.
218. A is a judgment debtor in an ac&on to collect a sum of money. A writ of a>achment has been
issued against A. The car of A is the first to be levied. A sold in wri&ng his laptop at a selling price
of P500 to B.
219. Wri>en contract of sale of the Presiden&al Chopper to President Rodrigo Duterte at a selling
price of P10M when its book value is s&ll P40M.
220. A wri>en contract of real estate mortgage entered into by A and B aJer B threatened to file a
collec&on suit against A if A will not execute the real estate mortgage to secure his matured and
demandable obliga&on to pay a sum of money.
221. A wri>en contract of sale of a cellphone at a price of P500 entered by A and B aJer B pointed a
gun at A’s wife in order for A to give consent.
222. An oral contract of sale of a T-shirt at a price of P500 entered between SM and A aJer the
saleslady of SM said that A is handsome wearing that T-shirt. A has already paid the price.
223. A wri>en contract of sale of an authen&c Coach Bag between A and B at a price of P10,000. At
the &me of delivery, A delivered a counterfeited Coach Bag.
224. An oral contract entered between A and B when A thought that the contract is one of
commodatum while B thought that the contract is one of real deposit.
225. A wri>en contract of jewelry in sale by auc&on entered by the highest bidder and seller at a price
of P10,000 when the bidding is held without giving no&ce to bidders that the auc&oneer will
employ a by-bidder.
226. A farmer and a bank entered into a contract of loan amoun&ng to P500 with real estate
mortgage over the farmer’s land. The amount of cash has already been delivered to the farmer.
However, the bank’s legal counsel executed a deed pacto de retro sale. (Status of contract of loan
and real estate mortgage)
227. An oral contract of an&chresis entered into between the debtor and creditor with a consensual
agreement on the principal and interest of the loan.
228. A wri>en contract of sale of a piece of land at a price of P1M when its book value is P1.5M. The
purchaser is the trial court judge in the levy and execu&on of such land for sa&sfac&on of
judgment debt.
229. A wri>en contract of sale of a laptop at a price of P10,000 entered into by an insane agent, on
behalf of his capacitated principal, with a domes&c corpora&on.
230. An oral contract of lease of a laptop for a period of 3 years entered into between a demented
lessee and an insane lessor, perfected during the lucid interval of the la>er. The rental is P500
per month.
231. An oral contract of agency entered into between a minor agent and an adult principal when the
commission is P500 per transac&on.
232. A wri>en contract of sale of a minor’s bag entered into by his parent at a price of P600 when its
book value is P800 with a Cer&fied Public Accountant.
233. An oral contract of lease for 2 years of absentee’s bike at a rental of P500 per month when the
prevailing monthly rental is P800 per month entered into by his legal representa&ve with a
lawyer.
234. A and B are nego&a&ng the sale of a specific house and lot owned by A. During the nego&a&on, A
fell in love with B. This prompted A to just donate the house and lot to B. Such dona&on was
sealed by a kiss.
235. A and B are nego&a&ng the sale of a specific condominium unit with a market value of
P1,500,000 owned by A. During the nego&a&on, B narrated his life story to A. Because the life
story of B is so touching, A decided to just donate his condominium unit to B, which is entered
into and accepted into orally.
236. An oral contract of sale of a bo>le of rugby at a price of P200 between ACE Hardware
Corpora&on and an 18-year-old person addicted to rugby entered into during the lucid interval of
the la>er.
237. A wri>en contract of sale of a specific chicken suffering from bird flu and a specific cow suffering
from mad cow disease at a price of P400 entered into between a demented partner and a minor.
238. A wri>en contract of sale of future inheritance entered into by the heirs of a predecessor before
his death.
239. An oral contract of subscrip&on of shares of stocks between a subscriber and a corpora&on with
an amount of P500 with delivery and payment to be made aJer one month.
240. An oral contract of sale of shares of stocks between an exis&ng stockholder and prospec&ve
investor with an amount of P500. Delivery and payment will happen aJer one week.