BUSINESS LAW REVIEW

PRELIMINARY EXAM
ANSWER KEY

1. The civil liability arising from crimes are as follows, except

a. Restitution which refers to restoration of the thing itself even though it be
found in the possession of a third person who has acquired it by lawful
means
b. Reparation of the damaged caused which shall be determined by the court
taking into consideration of the price of the thing and its sentimental
value.
c. Indemnification for consequential damages which shall include not only
those caused the injured party but also those suffered by his family or by a
third person by reason of the crime
d. Compromise of the criminal liability

2. It refers to a source of an obligation wherein a person by act or omission causes

damage to another, there being fault or negligence.
a. Contract
b. Quasi-contract
c. Quasi-delict
d. Delict

3. The following are the requisites in order that liability for quasi-delict may exist,
except
a. There is pre-existing relation between the offended and offended parties.
b. There exists a wrongful act or omission imputable to the defendant by
reason of his fault or negligence.
c. There exists a damage or injury, which must be proved by the person
claiming recovery.
d. There must be a direct causal connection or a relation of cause and effect
between the fault or negligence and the damage or injury, or that the fault
or negligence be the case of the damage or injury

4. Negligence or culpa which results to civil liability arising from quasi-delict is also
known as
a. Culpa criminal
b. Culpa aquiliana
c. Culpa contractual
d. Culpa liberal

5. The following are distinctions between quasi-delict and crime, except

a. The right violated by a quasi-delict is a public right while the right
violated by a crime is a private right.
b. Every quasi-delict gives rise to liability for damages to the injured party
but there are crimes from which no civic liability arises.
 c. Criminal liability can never be compromised but liability from quasi-delict
can be compromised.
d. In quasi-delict, criminal intent is not necessary, while in crime, criminal
intent is necessary except in criminal negligence.

6. While trying to pass each other on a narrow bridge, a passenger bus and a private
automobile collided, and two persons, A and B, were injured. A was a passenger
of the bus while B was a pedestrian. The owner of the passenger bus was made a
defendant although a chauffeur was driving the truck and the owner-driver of the
private car was also made a defendant. What can be the source of obligation of the
owner of the passenger bus as regards to A, the passenger?
a. Contract of carriage for failure to exercise extra-ordinary diligence
b. Culpa- aquiliana or quasi-delict if he exercised diligence of a good father
of a family in selecting his employees
c. Culpa criminal or crime and considered a principal liability
d. Quasi-contract

7. Using the same data in number 6, what can be the source of obligation of the
driver of passenger bus as regards to A, the passenger?
a. Contract of carriage
b. Quasi-contract
c. Law
d. Quasi-delict or crime at the option of A

8. Using the same data in number 6. What can be the source of obligation of the
owner of the passenger bus as regards to B, the pedestrian?
a. Contract of carriage
b. Culpa aquiliana if he fails to exercise the diligence of a good father of a
family in selecting his employees
c. Culpa criminal or crime and considered a principal liability
d. Quasi-contract

9. Using the same data in number 6, what can be the source of obligation of the bus
driver as regards to B, the pedestrian?
a. Contract of carriage
b. Quasi-contract
c. Law
d. Quasi-delict or crime at the option of B

10. Using the same data in number 6, what can be the source of obligation of the
owner-driver of private car as regards to B, the passenger?
a. Contract of carriage
b. Quasi-contract
c. Law
d. Quasi-delict or crime at the option of B
11. Using the same data in number 21, what can be the source of obligation of the
owner-driver of private car as regards to B, the passenger?
a. Contract of carriage
b. Quasi-contract
c. Law
d. Quasi-delict or crime at the option of B

12. When does the obligor incur delay in an obligation to do something?

a. From the time the obligee demands judicially and extra judicially the
fulfillment of obligation.
b. From the time the obligee demands judicially the fulfillment of obligation
c. From the time of the perfection of the contract
d. From the fulfillment of resolutory condition.

13. Delay can exist in the following obligations, except

a. Obligation to do
b. Obligation to give
c. Obligation not to do
d. None of the above

14. Demand by the creditor shall not be necessary in order that delay may exist for
the following, except
a. When the obligation or the law expressly so declares.
b. When from the nature and the circumstances of the obligation it appears
that the designation of the time when the thing is to be delivered or the
service is to be rendered was a controlling motive for the establishment of
the contract.
c. When there is unilateral obligation.
d. When demand would be useless, as when the obligor has rendered it
beyond his power to perform.

15. In a reciprocal obligation, when does the other party incur delay?
a. From the moment one of the parties makes a demand.
b. From the moment one of the parties fulfills his obligation
c. When both party do not comply with what is incumbent upon them.
d. When both party are not ready to comply in proper manner their
obligations.

16. Default (Mora) of the part of the debtor is called

a. Mora solvendi
b. Mora accipiendi
c. Compensatio more
d. Mora obligor

17. The following are the requisites in order that the debtor may be in default, except:
a. There must be a complaint filed in court against the debtor
 b. The obligation must be demandable and already liquidated
c. The debtor delays performance of the obligation
d. The creditor demands the performance judicially or extra judicially

18. Which of the following is the effect of delay on the part of the debtor?

I. The debtor becomes liable for damages for the delay

II. When it has for its object a determinate thing, the delay places the risk
of the thing on the debtor.

a. I only
b. II only
c. Both I and II
d. Neither I nor II

19. The following are the effects of the delay on the part of the creditor, except
a. The creditor becomes liable for damages
b. The debtor may relieve himself of the obligation by the consignation of
the thing
c. The debtor bears the risk of the loss of the thing
d. The responsibility of the debtor for the thing is reduced and limited to
fraud and gross negligence
e. All expenses for the preservation of the thing after the Mora shall be
chargeable to the creditor

20. The benefits arising from default or delay may cease upon
a. Delay of the other party
b. Rescission of the contract
c. Payment of damages
d. Renunciation of creditor or prescription

21. Article 1170 of the Civil Code provides that “the obligor shall be liable for
damages if in the fulfillment of obligation, he is guilty of” except:
a. Injury
b. Fraud
c. Negligence
d. Delay
e. Contravention of the tenor of obligation

22. Which of the following statements pertain to “fraud”?

a. It is the failure to observe the protection of the interests of another person,
that degree of care, precaution and vigilance, which the circumstances
justly demand, whereby such person suffers injury.
b. It refers to the non-fulfillment of the obligation with respect to time.
c. It refers to the deliberate and intentional evasion of the normal fulfillment
of obligation.
 d. It refers to illicit act, which impairs the strict and faithful fulfillment of the
obligation or every kind of defective performance.

23. What is the effect if the obligor voluntarily prevented the fulfillment of the
condition of an obligation?
a. The obligation is extinguished.
b. The obligation remains to be subject to the condition.
c. The condition shall be deemed fulfilled and the obligation becomes
demandable.
d. The obligation becomes with a period.

24. When shall the effects of a conditional obligation to give take effect
a. Shall be given prospective effect once the condition has been fulfilled.
b. Shall retroact to the day of the constitution of the obligation once the
condition has been fulfilled.
c. Shall not be given retroactive effect once the condition has been
fulfilled.
d. Shall be given retroactive effect even if the condition is not fulfilled.

25. X sells a piece of land on January 1, 2010 subject to a suspensive condition to

A. Then, on October 4, 2010, X sells the land unconditionally to B. The
suspensive condition happens on December 25, 2010. Who shall have the
better right assuming there is neither registration of the sale nor delivery of
possession to either A or B?
a. B because the sale to him is unconditional.
b. B because his title is older being dated October 4,2010.
c. A because his title retroacts on January 1, 2010 upon fulfillment of the
suspensive condition on December 25, 2010.
d. A because he is the first buyer.

26. In conditional reciprocal obligations to give, what is the treatment of the

fruits and interests during the pendency of the condition?
a. They shall inure to the sole benefit of the creditor
b. They shall inure to the sole benefit of the debtor.
c. They shall be deemed to have been mutually compensated.
d. They shall be forfeited in favor of the government.

27. In conditional unilateral obligation to give, what is the treatment of the fruits
and interests during the pendency of the condition.
a. They shall inure to the sole benefit of the creditor in the absence of
stipulation to the contrary
b. They shall inure to the sole benefit of the debtor in the absence of
stipulation to the contrary.
c. They shall be divided equally between the creditor and debtor.
d. They shall be forfeited in favor of the government.
28. In conditional obligation to do or not to do, what is the effect of the
fulfillment of the condition?
a. There shall be retroactive effect to the day of the constitution of the
obligation.
b. There shall be prospective effect from the moment the condition is
fulfilled.
c. The stipulation of the parties shall not be considered.
d. The courts shall determine, in each case, the retroactive effect of the
condition that has been complied with talking into account the
agreement of the parties.

29. Before the fulfillment, or pendency of the suspensive condition, what can the
creditor do?
a. Demand the specific performance of the obligation.
b. Charge damages and interests.
c. Demand the fruits and interests of the thing.
d. Bring appropriate actions for the preservation of his right.

30. During the pendency of the suspensive condition, the debtor has paid by
mistake a sum of money. What is the remedy of the debtor?
a. The debtor has cannot recover the sum of money.
b. The debtor can recover the sum of money with interests if the creditor
acted in bad faith.
c. The debtor can only recover the sum of money without interests even
if the creditor acted in bad faith.
d. The debtor can only recover the sum of money with interests if the
credited acted in good faith.

31. During the pendency of the suspensive condition, the debtor has delivered a
determinate or specific thing by mistake. What is the remedy of the debtor?
a. Accion of indemnification if the thing is still with the creditor.
b. Accion reinvidicatoria if the thing is still with the creditor.
c. Accion publiciana if the thing is still with the creditor.
d. Accion possessoria if the thing is still with the creditor.

32. The following are the rules to be observed in case of the improvement, loss or
determination of the thing during the pendency of the condition in an
obligation to give, except
a. If the thing is lost without the fault of the debtor, the obligation shall
be extinguished
b. If the thing is lost through the fault of the debtor, he shall be obliged to
pay damages
c. When the thing deteriorates without the fault of the debtor, the
impairment is to be borne by the creditor
d. If the thing is improved by its nature, or by time, the improvement
shall inure to the benefit of the debtor
 e. If it is improved at the expense of the debtor, he shall have no other
right than that granted to the usufructuary

33. When the thing deteriorates through the fault of the debtor during the
pendency of the condition in an obligation to give, what is the remedy of the
creditor?
a. He may only ask for the rescission of the obligation with indemnity for
damages.
b. He may only ask for the performance of the obligation with indemnity
for damages.
c. The debtor may choose between rescission of the obligation and its
fulfillment with indemnity for damages in either case.
d. The creditor may choose between rescission of the obligation and its
fulfillment with indemnity for damages in either case.

34. The thing is considered lost in any of the following instances, except
a. When it perishes
b. When it goes out of commerce.
c. When it disappears in such a way that its existence is unknown or it
cannot be recovered
d. When it is a destroyed generic thing.

35. When the obligation is subject to resolutory condition or when the condition
has for its purpose the extinguishment of the obligation to give, what shall be
the obligation of the parties upon the fulfillment of said condition?
a. They shall retain what they have received.
b. They shall file an action for damages.
c. They shall return to each other what they have received.
d. They shall rescind the obligation.

36. It is an obligation, which is subject to a space of time which, exerting an

influence on obligations as a consequence of a juridical act, suspends their
demandability or determines their extinguishment.
a. Conditional obligation
b. Obligation with a period
c. Pure obligation
d. Demandable obligation

37. The following statements concerning obligation with a period is correct,

except
a. Obligation for whose fulfillment a day certain has been fixed, shall be
demandable when that day comes.
b. Obligation with a resolutory period takes effect at once, but terminate
upon arrival of the day certain.
c. A day certain is understood to be that which must necessarily come,
although it may not be known when
 d. If the uncertainty consists in whether the day will come or not, the
obligation is with a period.

38. The following are the distinctions between a condition and a period, except
a. A condition is an uncertain event while a period is an event that must
necessarily come
b. While a condition gives rise to an obligation or extinguishes one
already existing, a period has no effect upon the existence of
obligation, but only its demandability or performance and thus, a
period does not carry with it retroactive effect.
c. A condition may refer to a past event and unknown to parties while a
period always refers to the future.
d. A condition, which depends exclusively on the will of the debtor does
not annul the obligation but a period left to the debtor’s will merely
empowers the court to fix such period

39. The following are the requisites of a period, except

a. It must be past
b. It must be future
c. It must be certain
d. It must be possible

40. Suspensive period and resolutory period are also known as

a. Both ex die
b. Both in diem
c. Ex die and in diem, respectively
d. In diem and ex die respectively

41. Whenever in an obligation a period is designated, to those benefit the period

is presumed to have been established?
a. Creditor only
b. Debtor only
c. Both creditor and debtor
d. Neither creditor nor debtor

42. If there is a stipulation as to whose benefit the period is established, which of

the following statements is incorrect?
a. The creditor did not demand payment before the period stipulated.
b. The debtor cannot make an effective tender a consignation of payment
before the period stipulated.
c. The term is for the benefit of both debtor and creditor.
d. The term is for the benefit of the debtor.

43. In case there is stipulation as to whose benefit the period is established,

which of the following statement is incorrect?
 a. If it is for the benefit of the creditor only, he may demand performance
at any time.
b. If it is for the benefit of the debtor only, he may oppose a premature
demand for payment.
c. If it is for the benefit of the creditor only, the debtor cannot compel
him to accept payment before the period expires.
d. If it is for the benefit of the debtor only, he cannot pay validly at any
time before the period expires.

44. The following are the instances wherein the court may fix period of an
obligation with a period, except
a. If the obligation does not fixed a period, but from its nature and the
circumstances it can be inferred that a period was interested.
b. If the period depends upon the sole will of the debtor.
c. In case of pure obligation, to prevent unreasonable interpretations of
its immediate demandability
d. If the obligation is pure, simple, unconditional and payable on
demand.

45. The following are the instances wherein the debtor shall lose every right to
make use of the period, except:
a. When after the obligation has been contracted, he becomes insolvent
and he gives a guaranty or security for the debt.
b. When he does not furnish to the creditor the guaranties or securities,
which he shas promised.
c. When by his own acts he has impaired said guaranties or securities
after their establishment, and when through a fortuitous event they
disappear, unless he immediately gives new one equally satisfactory.
d. When the debtor violates any undertaking in consideration of which
the creditor agreed to the period.
e. When the debtor attempts to abscond.

46. It is an obligation, which has an accessory undertaking to assume greater

liability in case of breach.
a. Obligation with a condition.
b. Obligation with a penal clause.
c. Obligation with a period
d. Obligation with a substitute.

47. The following statements concerning obligations with a penal clause are
correct, except
a. In obligations with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interests in case of
noncompliance
 b. In case of breach of obligations with a penal clause, damages and
interests may be demanded in addition to the penalty if there is
stipulation to that effect
c. The penalty stipulated must not be contrary to law, morals, or public
order to be enforceable
d. Obligations with a penal clause must be construed liberally.

48. The following are the rules to be observed in applying obligations with a
penal clause, except
a. Proof of actual damages suffered by the creditor is necessary in order
that the penalty may be demanded.
b. The judge shall equitably reduce the penalty when the debtor has
partly or irregularly complied with the principal obligation and even if
there has been no performance, the penalty may also be reduced by
the courts if it is iniquitous or unconscionable.
c. The nullity of the penal clause carries with it that of the principal
obligation.
d. The nullity of the principal obligation carries with it that of the penal
clause.

49. It is a mode of extinguishing obligation, which refers to the fulfillment of the

prestation due
a. Novation
b. Payment
c. Compensation
d. Merger

50. The following are the requisites of a valid payment, except

a. The payment must be in accordance with the obligation
b. The person paying as well as the one receiving payment should have
the requisite capacity
c. It should be made by the creditor to the debtor
d. It should be made at the right time and place

51. The following statements concerning payment are correct, except:

a. Payment means only delivery of money but not performance, in any
other manner, of an obligation.
b. A debt shall be understood to have been paid unless the thing or
service in which the obligation consists has been completely delivered
or to rendered, as the case may be.
c. If the obligation has been substantially performed in good faith, the
obligor may recover as though there have been a strict and complete
fulfillment less damages suffered by the obligee.
d. When the obligee accepts performances, knowing its incompleteness
or irregularity, and without expressing any protest or objection, the
obligation is deemed fully complied with.
52. Is the creditor required to accept payment or performance by a third person
that has no interest in the fulfillment of the obligation?
a. Yes, because law provides it.
b. Yes, because it is for the benefit of the creditor.
c. No, unless there is stipulation to the contrary.
d. No, under any circumstances.

53. What is the right of a third person who pays for the debtor without the
knowledge or against the will of the debtor?
a. The third person may demand the whole amount paid from the
debtor.
b. The third person cannot recover any amount.
c. The third person may compel the creditor to subrogate him in his
rights, such as those arising from mortgage, guaranty or penalty.
d. The third person may recover only insofar as the payment has been
beneficial to the debtor.

54. The following statements concerning payment made by a third person who
does not intend to be reimbursed by the debtor are correct, except
a. It is deemed to be donation.
b. It requires the debtor’s consent.
c. Payment is in any case valid as to the creditor who has accepted it.
d. The payment will subrogate the third person with creditor’s right.

55. The following are the persons to whom payment shall be made, except
a. Person in whose favor the obligation has been constituted
b. Any third person
c. Successor of interest of creditor
d. Any person authorized by the creditor to receive payment

56. Payment made to a third person shall also be valid insofar as it has
redounded to the benefit of the creditor. Such benefit to the creditor need not
be proven in the following cases, except
a. If after the payment, the third person acquires the creditor’s right
b. If the third person is not authorized by the creditor
c. If the creditor ratifies the payment to the third person
d. If by the creditor’s conduct, the debtor has led to believe that the third
person had authority to receive payment.

57. The following are the instances wherein payment made to a third person is
valid, except
a. When in good faith, the debtor pays two one in possession of the
credit.
b. When, without notice of the assignment of the credit, the debtor pays
to the original creditor.
 c. When the debtor was judicially ordered to retain the debt.
d. When the payment to a third redounded to the benefit of the creditor.

58. The following statements concerning payment are correct, except:

a. Payment made to the creditor by the debtor after the latter has been
judicially ordered to retain the debt shall not be valid.
b. The debtor of a thing shall not compel the creditor to receive a
different one, although the latter maybe one of the same value as, or
more valuable than which is due.
c. In obligation to do or not to d, an act or forbearance cannot be
subtitled by another act or forbearance against the obligee’s will.
d. When the obligation consists in the delivery of an indeterminate or
generic thing, whose quality and circumstances have not been stated,
the creditor can demand a thing of superior quality but the debtor can
deliver a thing of superior quality.

59. It refers to a special form of payment whereby property is alienated to the

creditor in satisfaction of a debt in money.
a. Application of payment
b. Payment by cession
c. Dation in payment
d. Tender of payment and consignation

60. Dation in payment as a mode of extinguishing obligation shall be governed by

the provisions of
a. Law of barter
b. Law of obligation
c. Law of sales
d. Law of credit transactions

61. Who shall shoulder the extra-judicial expenses requirement by the payment

a. Debtor
b. Creditor
c. Government
d. None of the above

62. The following statements concerning partial payment are correct, except
a. The creditor cannot be compelled partially to receive the prestations
in which the obligations consist except when there is stipulation to the
contrary.
b. The debtor maybe required by the creditor to make partial payments.
c. When the debtor is in part liquidated and in part unliqiudated, the
debtor may demand the payment of the former without waiting for
the liquidation of the latter.
 d. When the debtor is in part liquidated and in part unliqiudated, the
debtor may effect the payment of the former without waiting for the
liquidation of the latter.

63. The following are the requisites of merger or confusion, except

a. It must be gratuitous and requires acceptance by the obligor.
b. It must take place between the creditor and the principal debtor.
c. The very same obligation must be involved, for if the debtor acquires
rights from the creditor, but not the particular obligation in question,
there will be no merger.
d. The confusion or merger must be total or as regards the entire
obligation.

64. The following statements concerning merger or confusion are correct, except
a. The effect of merger is to extinguish the obligation
b. Merger which takes place in the person of the principal debtor or
creditor benefits the guarantor
c. Merger which takes place in the person of the guarantor extinguishes
the principal obligation
d. Confusion does not extinguish a joint obligation except as regards the
share corresponding to the creditor or debtor in whom the two
characters concur

65. It is a mode of extinguishing to the concurrent amount, the obligations of

those persons who in their own right are reciprocally debtors and creditors
of each other
a. Novation
b. Compensation
c. Merger
d. Remission

66. Which of the following statements pertain to facultative compensation

a. It is a compensation, which takes place by operation of law because
the requisites are present.
b. It is a compensation, which can be claimed by one of the parties who,
however, has the right to object to it, such as when one of the
obligations has a period for the benefit of one party alone and who
renounces that period so as to make the obligations due.
c. It is a compensation wherein the parties agree to compensate their
mutual obligations even if some requisite is lacking.
d. It is a compensation decreed by the court in a case where there is a
counterclaim.

67. The following are the requisites of legal compensation or compensation by

operation of law, except
 a. Each one of obligors be bound principally, and that he be at the same
time a principal creditor of the other.
b. Both debts consists in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if
the latter has been stated.
c. Both debts must be due.
d. Both debts must be unliquidated and nondemandable
e. That over neither of them there be any retension or controversy,
commenced by third persons and communicated in due time to the
debtor.

68. Which of the following debts can be the subject of compensation?

a. Valid debts only
b. Valid, rescissible, voidable, and unenforceable debts only
c. Valid, rescissible, and voidable debts only
d. Valid and rescissible debts only

69. The following statements concerning compensation are correct, except

a. The guarantor may set up compensation as regards what the creditor
may owe the principal debtor.
b. Compensation may be total or partial and when the two debts are of
the same amount, there is a total compensation.
c. The parties cannot agree upon compensation of debts, which are not
yet due.
d. If one of the parties to a suit over an obligation has a claim for
damages against the other, the former may set it off by proving his
right to said damages and the amount thereof.
e. When one or both debts are rescissible or voidable, they may be
compensated against each other before they are judicially rescinded
or avoided.

70. The following are the instances wherein the debtor may still set up
compensation, except
a. When the creditor communicated the assignment of his rights to the
third persons to the debtor and the latter did not consent thereto.
b. When the debtor has consented to the assignment of rights made by a
creditor in favor of a third person and the assignor reserved his right
to the compensation at the time he gave his consent.
c. When the assignment is made without the knowledge of the debtor
d. When the debtor has consented to the assignment of rights made by a
creditor without reservation as to his right to compensation.

71. In delegacion, will the insolvency of the new debtor, who has been proposed
by the original debtor and accepted by the creditor, revive the action of the
latter against the original obligor?
 a. No, under any circumstances because the obligation is already
extinguished
b. Yes when said insolvency was already existing and of public
knowledge, or known to the debtor, when he delegated his debt.
c. Yes even of the creditor has knowledge that the new debtor was
insolvent at the time of delegation
d. No because the debtor has not given his consent to the delegation

72. The following statements concerning novation are correct, except

a. When the principal obligation is extinguished in consequence of a
novation, accessory obligations may subsists only insofar as they may
benefit third person who did not give their consent
b. If the new obligation is void, the original obligation was extinguished,
unless the parties intended that the former should subsist in any
event
c. The novation is void if the original obligation was void, except when
annulment may be claimed only by the debtor, or when ratification
validates acts which are voidable
d. If the original obligation was subject to a suspensive or resolutory
condition, the new obligation shall be under the same condition,
unless it is otherwise stipulated

73. Which of the following statements concerning subrogation is correct?

a. Subrogation of a third person in the rights of the creditor is either
legal or conventional
b. Legal subrogation is not presumed, except in cases expressly
mentioned in this Code
c. Conventional subrogation must be clearly established in order that it
may take effect
d. Conventional subrogation of a third person requires the consent of the
original parties but not of third person

74. It refers to the transfer of all the rights of the creditor to a third person, who
substitute him in all his rights.
a. Novation
b. Compensation
c. Confusion
d. Subrogation

75. The following are the instances wherein legal subrogation is presumed,
except
a. When a creditor pays another creditor who is preferred, even without
the debtor’s knowledge
b. When a stranger pays a creditor without the knowledge of the debtor
c. When a third person, not interested in the obligation, pays with the
express or tacit approval of the debtor
 d. When even without the knowledge of the debtor, a person interested
in the fulfillment of the obligation pays, without prejudice to the effect
of confusion as to the latter’s share

76. It is a meeting of minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service.
a. Obligation
b. Contract
c. Right
d. Civil action

77. A person died leaving liabilities. Are the heirs liable for the obligations of the
decedent
a. No because there is no privity between them and the decedent
b. No because the heirs are not the contracting parties
c. Yes even beyond the property they received because contracts take
effect the parties, their assigns and heirs
d. Yes but not beyond the property they received because there is privity
between them and their predecessor.

78. A stipulation which is considered an exception to the relativity of contract is

called
a. Stipulation pour autrui
b. Stipulation in favor of the heirs
c. Stipulation in favor of assigns
d. Stipulation in favor of contracting parties

79. A mortgages his land to B and the mortgage is registered. Afterwards, 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 creating 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 Registration Laws.

80. 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 execution and accion subrogatoria are
still available

81. As a general rule, contracts are perfected by

 a. Delivery of the object of a contract
b. Execution of formalities required by law
c. Mere consent by contracting parties
d. Provisions of the law

82. From the moment of perfection of a contract, what is the extent of its binding
effect?
a. The parties are bound only to the fulfillment of what has been
expressly stipulated in the contract
b. The parties are bound only to the natural consequences of the
contract
c. The parties are bound not only to the fulfillment of what has been
expressly stipulated in the contract but also to all the consequences
which, according to their nature, may be in keeping with good faith,
usage and law.
d. The parties are not bound by what is not stipulated in the contract

83. How is the nature of the contract determined?

a. Contract is what the parties choose to call them
b. Contract is determined by the stipulations of the parties
c. Contract is determined by the principle of law
d. Contract is determined by the surrounding circumstances

84. Real contracts, such as deposit, pledge and commudatum are perfected by
a. Delivery of the object of a contract
b. Execution of formalities required by law
c. Mere consent by contracting parties
d. Provisions of the law

85. 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 constitutes a counter-offer

86. On January 1,2011 A wrote a letter to B offering him to lease a building. On

January 2, 2011, B sent a letter to A advising him that his offer was accepted.
This letter was received by A at 2:55pm that day. On the same day, in the
morning, at 11:25, a had already written a letter to B, withdrawing the offer
to lease the building. The letter revoking the offer was received by B at
3:55pm. Is the contract perfected?
a. Yes because the offer was accepted by B before the revocation was
received by him
b. Yes because the contract is perfected from the moment B send the
letter of acceptance
 c. No because before the acceptance is known, the offer can be revoked,
it not be necessary, in order for the revocation to have the effect of
impeding the perfection of the contract, that it be known to the
offeree.
d. No because the contract is perfected only by the execution of written
contract.

87. The following cannot give consent to a contract, except

a. Un emancipated minors
b. Insane or demented persons
c. Deaf-mutes who do not know how to write
d. Blind persons who cannot speak

88. What is the status of a contract entered into between a person who can give
his/her consent and an unemancipated minor, insane or demented person 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

89. What is the status of a contract entered into between an unemacipated minor
and an insane or demented person?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void

90. A contract is entered into between A, a minor and B, an insane person. C, the
father of A ratified the contract. What is the status of the contract after
ratification?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void

91. What is the status of a contract entered into during a lucid interval?
a. Valid and without any defect
b. Voidable
c. Rescissible
d. Unenforceable

92. What is the status of a contract agreed to in a state of drunkenness or during

a hypnotic spell?
a. Voidable
b. Rescissible
 c. Unenforceable
d. Null and void

93. 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 vitiated.

94. What is the status of a contract entered into wherein a consent is given
through fraud, undue influence, mistake, intimidation or violence?
a. Voidable
b. Rescissible
c. Unenforceable
d. Null and void

95. Which of the following statements is incorrect?

a. Violence or intimidation shall annul the obligation, although it may
have been employed by a third person who did not take part in the
contract.
b. Failure to disclose facts, when there is duty to reveal them, as when
the parties are bound by confidential relations, constitutes fraud.
c. The usual exaggeration in trade, when the other party had an
opportunity to know the facts, are in themselves fraudulent.
d. 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.

96. The following are the requisites of fraud, except

a. It must have been employed by one of the contracting parties.
b. It must have induced the other party to enter into the contract.
c. It must have been serious.
d. It must not result to any damage or injury to the party seeking
annulment.

97. A and B entered into a contract of sale. In the performance of the contract, A
committed fraud. What is the remedy of B?
a. To ask for 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 annulment of contract because there is dolo causante.

98. Through insidious words and fraudulent machinations by B, A entered into a

contract with B. What is the remedy of A?
a. To ask for 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 annulment because of contract because there is dolo
causante.

99. The following statements are correct, except

a. Misrepresentation by a third person does not vitiate consent, unless
such misrepresentation has created substantial mistake and the same
is mutual.
b. Misrepresentation made in good faith is not fraudulent but may
constitute error.
c. In order that fraud may make a contract voidable, it should be serious
and should have been employed by both contracting parties.
d. Incidental fraud may entitle the injured party for annulment of
contract.

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