I. 1.

MODIFIED MULTIPLE CHOICE (CITE/EXPLAIN YOUR LEGAL BASIS) 5 POINTS EACH. P appointed A as his agent to sell Ps only Honda Civic car for P400,000.00 cash. On November 7, 2002, A, pursuant to the authority granted to him by P, offered to sell the car to B at the price of P400,000.00. B accepted the offer on November 8, 2002 by sending a letter of acceptance to A, which letter of acceptance was received by A on November 9, 2002. On November 10, 2002, A informed P that B had accepted the offer. a. The contract was perfected on November 8, 2002 when B sent his letter of acceptance. b. The contract was perfected on November 9, 2002 when A received the letter of acceptance. c. The contract was perfected on November 10, 2002 when A notified P, the true owner of the car, that B had accepted the offer. d. The contract was perfected on November 7, 2002, since the acceptance by B retroacts to the date of the offer. Servando and Bernardo entered into a contract where they made it appear that Servando was mortgaging his lot and building to Bernardo to secure a contract of loan. The truth, however, was that Servando was selling his lot and building to Bernardo. Which of the following statements is true? a. The parties are bound by the contract of sale. b. The parties are bound by the contract of loan and mortgage. c. The parties are not bound at all. d. The parties are bound by the contract of sale only when third persons are affected. S sold his only car for P100,000.00 to B. Unknown to S, B bought the car from him so that he could use the same in a bank robbery. What is the status of the sale of the car by S to B? a. The sale is void because the motive of B is illegal. b. The sale is valid because the illegality of the motive of the parties to the contract does not have any effect on his validity. c. The sale is voidable because of the failure of B is disclose his motive to S. d. The sale is rescissible at the instance of S because he would be damaged by the illegal motive of B. C filed a complaint in court against D to collect a money debt amounting P500,000.00. after due hearing, the court rendered judgment in favour to C. Shortly after the rendition of the judgment and before C has collected Ds debt, D sold a parcel of land to X. Z, another creditor, learned of the sale made by D to X and now files an action to rescind the sale. a. The right to rescind the sale is exclusively granted to Z because it was he who first learned of the sale and he has still to file a claim to collect Ds debt. b. The right to rescind the sale is exclusively granted to C because it was he who obtained a favorable judgment and he has not collected Ds debt. c. Both C and Z have a right to rescind the sale since the sale is presumed in fraud of creditors having been made by party against whom judgment has been rendered. d. Neither C nor Z has a right to rescind the sale. On June 1, 2002, Mother Lilac, a movie producer, met Claudine Santos, a movie actress at the lobby of the Manila Hotel. Mother Lilac informed Claudine Santos that she was producing a movie the filming of which would start on August 1, 2003 and that she was offering Claudine Santos the starring role for a fee of P500,000.00. Claudine Santos accepted the offer and shook hands with Mother Lilac to seal their agreement. However, Mother Lilac gave Claudine Santos a check for P100,000.00 as initial payment. On August 1, 2003, Mother Lilac called Claudine Santos for the shooting of the movie but Claudine Santos refused to honor the agreement saying that it was not enforceable, not being in writing. a. Mother Lilac cannot enforce the contract against Claudine Santos because it was entered into orally. b. Mother Lilac can enforce the contract against Claudine Santos because Claudine Santos had accepted benefits under the contract. c. Claudine Santos may just return the payment because the agreement was made orally. d. Claudine Santos is not bound under her agreement with Mother Lilac because she did not sign any writing. D was driving on his way to Manila from the province when he suffered a busted tire. Not having any spare tire, he went to a nearby car spare parts store to buy a new tire. However, he did not have sufficient money with him so he phoned G, his friend, who happened to know S, the store owner. G then instructed D to give to S the telephone through which G told S Dont worry. If D cannot pay, just charge me. D was thus able to buy new tire for P6,000.00 for which S issued D a sales invoice. a. If D cannot pay, S can proceed against G to make good his promise to pay Ds debt. b. Gs promise cannot be enforced against him because he did not execute any writing for the guaranty he made. c. S can enforce Gs promise to answer for Ds debt since the guaranty was witnessed by D. d. S can enforce Gs promise because there was a writing of some kind, the invoice for the sale of the tire. A month ago, S, 17 years old, orally sold his bicycle for P2,000.00 to B, his neighbor, who was only 16 years old. M, the mother of S, learned about the sale by S of his bicycle, and demanded that S give her the amount he received. S, thus gave the proceeds of sale to his mother who spent the same for the familys daily expenses. F, the father of B, also learned about the purchase by B of the bicycle when he saw it parked at their door and began using it almost daily since bought it. Based on the foregoing facts, what was now the status of the sale entered into between S and B? a. Unenforceable because both parties were incapacitated to enter into the contract.

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b. c. d. 8.

Unenforceable because the sale was not in writing. Validated from inception because of the subsequent acts of the parent of both parties. Voidable because while B was only 16 years old, S was nearing the age of majority which 18 years.

Six years ago, Marcelo, 17 years old, sold his one-hectare agricultural lot to Betanio for P100,000.00. Marcelo invested the proceeds of the sale in a business which was successful at the start but had gone through difficult times as a result of the economic crisis. He thought of the agricultural lot that he had sold to Betanio which had been enjoying bumper crops since Betanio bought it from him. Marcelo now approaches you to seek your help on whether it would still be possible to annul the sale of the agricultural lot to Betanio. What advice will you give to Marcelo? a. Marcelo may annul the sale but not Betanio. b. Betanio may annul the sale but not Marcelo. c. Neither Marcelo nor Betanio may annul the sale. d. Bothe Marcelo and Betanio may annul the sale. D insured his house against fire with C Insurance Company. The insurance policy which was prepared nad pruinted by C Insurance Company was signed by D after reading its terms. You are to determine which of the following characterize the contract between D and C Insurance Company. I. Auto-contract. II. Contract of adhesion. III. Aleatory contract. IV. Nominate contract. The contract between D and C Insurance Company is: a. b. c. d. I, II and III II, III and IV I, II and IV I, III and IV

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10. Datiles obtained from Cortez a loan of P50,000.00 which was payable in 2 months. Datiles failed to pay the dent on the due date despite repeated demands from Cortez. When the debt was still outstanding after 6 months, Cortez asked his counsel, Atty. Antolin, to write a letter to Datiles to demand payment within one (1) week and with a threat of court action if no of the threat of a court action against him, was forced to sign a deed assigning his lot in favor of Cortez to pay his debt. a. The deed of assignment is voidable because of intimidation employed upon Datiles. b. The deed of assignment is valid and enforceable, the threat of a court action made by Cortez through the lawyer being a legitimate exercise of his right. c. The deed of assignment is voidable because of the undue influence exerted by Atty. Antolin, he counsel of Cortez, on Datiles. d. The deed of assignment is void because Datiles did not give his consent voluntarily. 11. Angel dela Guardia, guardian of Eduardo Menor, a minor, sold the palay harvested from the land belonging to Eduardo Menor for P42,000.00. The palay had a value of P50,000.00. At the time of the sale seven months ago, Eduardo was 17 years old. Eduardo wants to recover the damages he suffered under the contract entered into by his guardian. What is the remedy available to Eduardo Menor? a. Annulment because Eduardo Menor was only 17 years old at the time the sale was made by Angel dela Guardia. b. Rescission because Eduardo Menor suffered lesion of P8,000.00 c. Bothe rescission and annulment. d. Neither rescission nor annulment. 12. A, a duly authorized agent of P, wrote a letter to B on March 1, 2003 offering to sell Ps only Mercedes Benz for P200,000.00 cash. On March 3, 2003, B wrote a letter to A stating that he was accepting all the terms of the offer, which letter was received by A on March 5, 2003. Before A could relay such acceptance to P, P died in a vehicular accident on March 6, 2003. a. The contract was not perfected because P, the real party to the sale, died before the acceptance came to his knowledge. b. The contract was perfected on March 1, 2003. c. The contract was perfected on March 3, 2003. d. The contract was perfected on March 5, 2003. II. IDENTIFICATION 1. The cause, with respect to one party is the prestation or the promise of a thing or service by the other party. 2. The contracting parties may establish such terms and stipulations are they may deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. 3. The principle that contracts are perfected by mere consent. 4. A stipulation that clearly and deliberately confers a favour upon a third person. 5. The parties do not intend to be bound at all. 6. The action that is brought to set aside a voidable contract. 7. The term used when both parties to a contract are guilty.

8. Inadequacy of cause in a contract. 9. It is designed to prevent the commission of fraud by requiring certain contracts to be in writing. 10. The principle that the contract has the force of law between the contracting parties and must be complied with a good faith. 11. The particular reason of a party in entering into a contract. 12. The remedy allowed by law to the contracting parties and to third persons to repair the damages caused them by a contract. 13. It is defective by reason of the incapacity or vitiated consent of one of the parties to a contract. 14. The terms of the contract have been fulfilled resulting in its accomplishments. 15. The contract where the parties give equivalent values, hence, there is real fulfilment. 16. The principle that a contract must bind both contracting parties and that its validity or compliance cannot be left to the will of one of them. 17. An accessory penalty which deprives a person during the term of his sentence of the right to manage his property. 18. The parties hide their real agreement to which they are bound as a rule. 19. The principle that contracts take effect only between the contracting parties, their assigns and heirs. 20. They refer to the stipulations agreed upon by the contracting parties such as terms of payment, interest rate, etc. III. IV. DISCUSS FULLY: PAYMENT AS A MODE OF EXTINGUISHING AN OBLIGATION (10 POINTS) INTERPRET LEGALLY:

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1.

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C
2.

P100,000 loan
Orally Mortgage Land

M ring worth
P5,500

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3.

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B
4.

Oral Contract of sale

Agency

Contract of sale

Land P100,000

LOT

Authority to sell