OBLIGATION and CONTRACT

I. Obligation

1. Whenever in an obligation a period is designated, it is presumed to have been

established for the benefit of
a. both the creditor and the debtor c. the debtor
b. the creditor d. the third party

2. Ami, Lee and Elle are solidarily liable to Gene for P30,000 which matures on July 1,
200x. On May 1, 200x, Ami paid Gene for the whole amounts of the debt. If on
December 31, 200x, Ami will be reimbursed by Lee, the latter will be liable for:
a. P10, 000 with interest from July 1, 200X to December 31, 200x
b. P10, 000 without interest.
c. P10, 000 with interest from May 1, 200X to July 1, 200X.
d. P10, 000 with interest from May, 200X to December 31, 200x.

3. When Mary voluntarily takes charge of the neglected business of Jose without the
latters authority where reimbursement must be made for necessary and useful
expenses, there is a:
a. Quasi Delict c. Negotiorum Gestio
b. Quais- contract d. solution indebiti

4. When the debtor binds himself to pay when his means will permit him to do so, the
obligation is;
a. conditional c. simple
b. pure d. with a period

5. A and B are solidary debtors of W, X, Y, and Z, joint creditors to the amount of P8,
000. How much can W collect from A?
a. W could recover P8, 000 from A, in turn, has to give to X,Y and Z P2, 000 each.
b. W could recover P4, 000 only from A.
c. W could recover P2, 000 only from A.
d. W could recover P8, 000 from A. W, in turn does not have to give to X,Y and Z P2,
000 each.

6. This is payment in kind

a. Consignation c. dation in payment
b. payment by cession d. application for payment

7. Ay signs a promissory note and binds himself to pay Yu P100, 000 plus 15% per
annum interest on June 30, 2007.
a. Before June 30, 2007, Yu can demand payment.
b. If on June 20, 2007, Ay is paying Yu, the latter refuse the payment.
c. Ay can compel creditor Yu to accept payment before June 30, 2007.
d. Because the period is for the benefit of debtor and creditor, Yu can refuse any
tendered
payment before June 30, 2007.
8. When the obligation is extinguished because of the passage of time, this is:
a. fulfillment of resolutory condition c. prescription
b. arrival of resolutory period d. rescission

9. When the debtor transfers all his properties to his creditors so that the creditors may
sell the properties and out of the net proceeds, the creditors recover their claims,
this is called
a. dacion en pago c. payment by cession
b. tender of payment and consignation d. remission

10. When the period is on or before a date, the debtor has the benefit of the period.
This benefit is lost and the obligation becomes demandable when
a. the debtor attempts to abscond
b. after contracting the obligation, the creditor suspects the debtor of becoming
insolvent
c. The guarantee given by the debtor is not acceptable to the creditor.
d. demand by creditor could be useless.

11. Unless the law or the stipulation of the parties requires another standard of care, the
obligation to give a thing carries with it the obligation to take care of it with
a. extra-ordinary diligence c. diligence of a good father of a family
b. ordinary diligence d. any of the above.

12. A promissory note signed A and dated March 15, 2006 is worded as follows; I promise
to Pay B the sum of Fifty thousand pesos (P50, 000) provided that if she should fail in
the October, 2008 CPA Examination, she shall return to me the said amount. The
above note gives rise to an obligation with:
a. suspensive condition c. resolutory condition
b. casual condition d. obligation with a period

13. If the creditor to who, tender of payment has been made or refuses without just cause
to accept it, the debtor shall be released from responsibility by:
a. assignment of property c. adjucation or dacion en pago.
b. consignation of the thing or sum due d. condonation

14. The distinction between conventional subrogation and assignment is that in

conventional subrogation
a. it is a mere cession of right
b. an obligation is extinguished and another appears
c. the same obligation, without being extinguished, is transferred to another
d. the debtors concent is not necessary.

15. A executes a promissory note in favor of B and the promissory note is negotiated by B
and subsequently is indorsed in favor of A. The obligation to pay the promissory note is
thereby extinguished because there is.
a. confusion or merger c. remission
b. compensation d. novation
16. It presupposes not only that the obligor is able, ready and willing but more so, in the
act of performing his obligation.
a. promissory note c. tender of payment
b. bill of exchange d. obligation to sell

17. This is a promissory note: I promised to pay a, B, and C the sum of P18, 000, (signed)
D, E and f
a. F is obliged to pay C P6, 000 c. F is obliged to pay C P12, 000
b. F is obliged to pay C P2, 000 d. F is obliged to pay C P18, 000

18. Which of the following is not considered as quasi-contract?

a. solution indebiti
b. when the third person, without the knowledge of the debtor, pays the debt.
c. negotiorum gestio
d. none of the above

19. X has been missing for sometime leaving no one to manage his properties A and B
jointly took charge of the management thereof. However, due to the fault of A, the
properties of X are damaged. The liability therefore to X for damages shall be:
a. only A shall be liable
b. both shall be jointly liable
c. both shall be solidarily liable.
d. They are not liable since at fault for having abandoned his properties.

20. K by mistake delivered to A and B a sum of money which should have been
delivered to C and D. K now demands the return of the same from A and B. The
liability of the latter for the sum of money to which they are not entitled shall be:
a. A and B shall be liable solidarily
b. A and B shall be liable jointly
c. They are not liable for having received the money in good faith.
d. X has not right to recover as he was negligent in the delivery of the money

21. All are requisites of negotiorum gestio except:

a. A property or business is neglected
b. A third person voluntarily manages it.
c. Owner is benefited
d. Implied authority is given to the officious manager.

22. A owes B a sum of money evidenced by a promissory note which has prescribed. X,
without the knowledge of A, paid B his debt. Later A reimbursed X for the payment
of the latter to B although he has no obligation to do so. After payment, A now wants
to recover his payment to X on the ground that he was not obliged to reimburse him.
Which of the following is correct?
a. A can recover his reimbursement to X to prevent unjust enrichment on Xs part at the
expense of A.
b. A cannot recover because he has the obligation to reimburse X for the latter paid his debt
to B.
c. A cannot recover because he partakes of a natural obligation.
d. A cannot recover since there was reimbursement by mistakes.
23. Mr. R. De Guia bought biscuits from a grocery store and was hospitalized due to food
poisoning as a result of toxic substance contained in the biscuits sold to retailers by
the ACE Foods Inc. Mr. De Guia is now suing the said producer corporation for
damages. Decide:
a. Mr. De Guia has no right to claim damages from the producer because there was no
contract between them.
b. Ace Foods Inc. is not liable to Mr. De Guia because the latter was negligent in
eating the biscuit despite the presence of harmful substance therein.
c. Mr. De Guia must claim damages from the grocery store and not from the producer
since the grocery was the one which sold the poisoned food to him.
d. ACE Foods, Inc. is liable for damages due to quasi- delict because its negligence in
the preparationof the biscuits thus causing damage to Mr. De Guia.

24. Acceptance of a commercial document is equivalent to payment.

a. The check has been received as payment.
b. The check became valueless because of the creditors fault.
c. The check is a managers check or cashiers check.
d. The promissory note is used as payment.

25. The debt shall lose every right to make use of the period, except:
a. when after the obligations has been contracted he becomes insolvent unless he
gives a guaranty or security for the debt.
b. When he does not furnish a guaranty or security for the debt.
c. When the debtor attempts to abscond.
d. When he violates any undertaking in consideration of which the creditor agreed to
the period.

26. In three of the following cases, compensation cannot be claimed by the debtor
except;
a. by the bailee in commodatum.
b. By the depositor in a contract of deposit
c. bv the person obliged to give support due by gratuitous title.
d. by the debtor in an obligation arising from a penal offense.

27. A owes B P1M guaranteed by X. In turn, B owes A P.5M. A failed to pay B and the
latter is now collecting from X.
a. X is liable to B for P1M because the guarantor he is liable for the debt in case of
non-payment thereof.
b. X shall be liable to B for P.5M only if the latter agrees to the compensation
c. X cannot claim compensation against B because the latter owes him nothing.
d. X can set up compensation as regards what B owes A.

28. A owes B P1M due on Feb. 3, 2007. B owes A a lancer MGS worth P1M due on Feb. 4,
2007.
a. On Feb. 3, 2007, A cannot claim compensation because one of the debt is not yet
due.
b. On Feb. 4, 2007, A can claim compensation because both debts are now due.
c. The parties can agree on compensation only on Feb. 4, 2007 when both debt are
due.
 d. Legal compensation cannot take place.

29. A owes B a sum of money and secured by a pledge on his car. Later, the car is found
in the possession of A.
a. It is assumed the debt of A has been condoned.
b. It is presumed both the debt and the pledge have been remitted.
c. it is presumed the debt is extinguished.
d. it is presumed the pledge is condoned.

30. Which of the following is not a requisite of payment by cession.

a. One debtor and two or more creditors.
b. The debtor is insolvent
c. The creditors become owners of the properties assigned to them.
d. The creditors are authorized to sell the properties of the debtor.

31. Which of the following is not a requisite of dacion en payment?

a. One debtor and one creditors.
b. The debtor is not necessarily insolvent
c. The creditors become owners of the property used as payment.
d. acceptance of the creditor is not necessary.

32. D obtained a loan from C payable on or before December 31, 2007. Which of the
following statements is correct?
a. D can only pay the obligation on December 31, 2007
b. C can demand payment from D on or before December 31, 2007.
c. C can demand payment from D even before December 31, 2007.
d. D can pay before December 31, 2007.

33. C bought the only car of D on Feb. 15, 2007 and D agreed to deliver it to C on April
30, 2007. They did not agree on the place of delivery. Where is the place of delivery?
A. Domicile of the debtor c. Where the car is on April 30, 2007
b. Where the car is on Feb.15, 2007 d. domicile of the creditor

34. In alternative obligation, the right of choice belongs to:

a. the creditor c. both the creditor and the debtor
b. the debtor d. third person

35. D has the obligation to give a two-year dog to C on April 30, 2008. On April 2, 2008.
On April 2, 20085, all of the dogs of D were hit by a lightning and they all died.
Therefore:
a. The obligation of D to C is extinguished.
b. D must still give a two- year old black male dog to C.
c. C can only demand for damages from D.
d. C can demand for the dog plus damages.

36. In facultative obligation, the right of choice belongs to;

a. the creditor c. both the creditor and the debtor
b. the debtor d. third person
37. The sources of the liability for damages are the following except:
a. Fraud c. Delay
b. Negligence d. Quasi-delict

38. When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be:
a. Voidable c. Valid
b. Unenforceable d. Void

39. Z obtained a loan from X on the amount of P10, 000. Z promised to pay the said
loan of P10, 000 to X as soon as possible. Two year had elapsed but the loan is still
unpaid. The remedy available t X is:
a. To file an action against Z for collection of debt.
b. To demand payment for damages.
c. to attach the property of Z.
d. to ask (petition) the court to fix the period.

40. A, B, and C are solidarily creditors of D in the amount of P15, 000. C demand
payment from D. After the demand for payment by C. D in order to extinguish the
entire obligation may pay to:
a. A only c. C only
b. B only d. either A or B.

41. No person shall be held responsible by reason of fortuitous event except:

a. when the time is of the essence of the contract.
b. when demand would be useless.
c. when the nature of the obligation requires the assumption of risk.
d. when the obligation is purely personal in nature.

42. When the obligor voluntarily prevents the happening of the condition it is deemed
that the condition is
a. Constructively fulfilled c. constructively demandable
b. constructively extinguished d. constructively nullified.

43. A owes B P20, 000 which became due and payable last June 23, 2007. On that date,
A offered B P10, 000, the only money he then had but B refused to accept the
payment. A therefore met C, Bs 23 year old son, to whom he gave the P10, 000 with
the request that he turn the money was stolen while in Cs possession. How much
may B still recover from A?
a. P20, 000 c. P15, 000
b. P10, 000 d. Zero

44. If a third person pays an obligation. What are the rights which are available to him if
he pays the obligation with the knowledge and consent of the debtor?
1st answer- He can recover from the debtor the entire amount, which he has paid.
2nd answer- He is subrogated to all of the rights of the creditor.
a. Both answer are correct c. Only the first answer is correct
b. Both answer are wrong d. Only the first answer is wrong
45. Indivisibility as distinguished from solidarity
a. Plurality of subject is invisible.
b. When the obligation is converted into one of indemnity for damages because of
breach, the character of the obligation remains.
c. Refers to the legal tie or vinculum.
d. Refers to the prestation which constitutes the object of the obligation.

46. A source of the obligation not arising from law.

a. Negotiorum gestio c. Culpa aquiliana
b. Solutio indebiti d. Contract

47. The loss or deterioration of the thing intended as a substitute through the
negligence of the obligor does not render him liable.
A person alternatively, bound by different prestations shall completely perform one
of them.
a. True, true c. False, False
b. True, False d. False, True

48. Demand is not needed to put the debtor in default, except

a. when the demand would be useless.
b. when time is the essence
c. when the parties so stipulate
d. when the fixing of the time is the controlling motive for the establishment of the
contract.

49. A bound himself to deliver a determinate horse to B on January 14, 2008. On January
16, 2008, the horse was struck and killed by lightning.
a. A is liable for the loss because he was in delay.
b. A has the obligation to replace the horse.
c. As obligation is extinguished.
d. B may claim damages from A.

50. D owes C P1M. T, without the knowledge or against the will of D paid C P2M. Can T
get reimbursement from D and by how much?
a. Yes. P2M by way of reimbursement from D to prevent unjust enrichment on the
part of D at the expense of T.
b. Yes. P1M, only for that is the extent of benefit of D.
c. No reimbursement because the payment was not proper being without the
knowledge or against the will of D.
d. Yes. P1M plus interest from the time of payment until reimbursement.

51. Which of the following statements is true and correct?

a. Where an obligation is secured by a pledge or mortgage and it is not paid when
due, the pledgee or mortgagee may appropriate the thing given by the way of
pledge or mortgage.
b. In both pledge and mortgage, the creditor is entitled to deficiency judgment.
c. Pledge and mortgage are accessory contracts because they cannot exist by
themselves.
 d. Unless otherwise agreed upon by the parties, the sale of the mortgaged property
extinguishes in full the mortgage constituted thereon.

52. Mel sold to Joey her car and promise to deliver the car to Jay on January 30, 2008.
On January 15, 2008. Mel sold the same car to Patrick and Patrick immediately
possessed the car. As of February 5, 2008, Jay has not received the car from Mel.
a. Jay can compel the contract of sale between Mel and Patrick because the contract
of sale between him and Mel was perfected first.
b. Mel cannot considered in delay because there was no demand yet from Jay.
c. Mel is already in delay, even if there was no demand from Jay and she shall be
liable for damages.
d. The sale is rescissible because of damage caused to Jay.

53. Jose, Abad and Santos are the solidary debtors of Ninoy for the amount of P150, 000
payable as follows:
Jose- P25, 000 payable when he passed the CPA Board Exams;
Abad- P50, 000 payable on February 14, 200X;
Santos- P75, 000 payable upon completion of his construction project.
If Jose will pass the CPA Board Exams, what shall be the right of Ninoy?
a. demand P25, 000 from Jose only.
b. demand P25, 000 from Jose, Abad and Santos.
c. demand P150, 000 from Jose, Abad and Santos.
d. demand P150, 000 from Jose.

54. Jewel brought her diamond ring to a jewelry shop fro cleaning and the latter
undertook to return the ring by February 1, 2007. When the said date arrived, the
jewelry shop informed Jewel that the job was not yet finished and they asked Jewel
to return 5 days after. On February 6, 2007, Jewel went to shop to claim the ring but
she was informed that the same was stolen by a thief the night before. Decide.
a. The jewelry shop is not liable for the loss because it took place due to the force
majeure.
b. The jewelry shop is liable if it was stipulated between the parties.
c. The jewelry shop is liable for the loss despite the force majeure because of delay.
d. The jewelry shop is not liable because there was no delay on its part.

55. A obliged himself to deliver the cans of powdered milk to B from Pangasinan to
Manila. While his truck was traveling on the North Expressway, it was hi-jacked by a
band of robbers who also took the cans of milk belonging to B. Is A liable for the loss
of goods?
a. No, because they were generic things and as they cannot be lost.
b. Yes, because he was in possession of the same at the time of the loss and
therefore presumed at fault.
c. Yes, because there was no stipulation exempting him from loss in case of
fortuitous event.
d. No, because the loss was due to fortuitous event.

56. A owes B P150, 000 due on August 31, 2007. A executed a mortgage in favor of B on
As building to guaranty the obligation. On August 10, 2007, the mortgaged building
 was totally lost due to an earthquake. On August 12, 2007, B demanded payment
from A,. Is Bs demand valid?
a. No. The obligation is one with a definite period, thus the creditor cannot demand
fulfillment of the obligation before it due.
b. No. The mortgage was extinguished because the object of the contract was lost
through a fortuitous event.
c. Yes. The debt becomes due at once because the guarantee was lost although
through fortuitous event, unless the debtor can mortgage another property that is
equally satisfactory.
d. Yes. The debt becomes due at once because the periods benefits is given solely
to the creditor thereby giving the creditor the right to demand performance even
before the due date.

57. The following are the essential elements of an obligation except:

a. Active subject c. Presentation
b. Passive subject d. Juridical tie

58. I. Obligations derived from law are presumed except those found in the civil Code or
in special laws.
II. Obligation arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
a. Both statements are false c. Both statements are true
b. Only first statement is true d. Only second statement is true.

59. Which of the following is not a civil liability arising from delict?
a. Indemnification for consequential damages
b. Rescission
c. Reparation
d. Restitution

60. D borrowed from C a sum of money with a stipulated rate of interest to be paid in
three equal monthly installments from January to March. D paid an amount for which
the latter issued a receipt stating that the payment is for the month of February. In
this case:
a. The installment for the month of March is also considered paid.
b. The installment for the month of January is conclusively presumed to have been
paid
c. The installment for the month of January is disputably presumed paid.
d. The installment for the month of January is not presumed paid.

61. In the preceding case, suppose the receipt does not mention the payment of the
interest, it is:
a. Conclusively presumed the interest has been also paid.
b. Not presumed paid unless proven otherwise.
c. Prima facie presumed to have been paid.
d. Presumed disputably that only the principal has been paid.

II. Contracts
1. The following are the essential elements of a contract except one;
a. consent c. cause
b. Object d. delivery

2. Which of the following is an essential element of a real contract?

a. delivery c. warranties
b. must be in writing d. none of the above

3. Which of the following is an essential element of a real contract?

a. delivery c. warranties
b. must be in writing d. none of the above

4. The contracting parties may generally enter into any contracts as long as they are not
contrary to law, morals, public order, public policy or good customs.
a. Freedom of contracts
b. Mutuality of contracts
c. Obligatory force and compliance in good faith
d. Consensuality of contracts

5. I give that you give is an example of:

a. Innominate contract. c. void contract
b. commutative contract d. Preparatory contract

6. The contract must bind both contracting parties, its validity or compliance cannot be
left to the will of one of them.
a. Freedom of contracts c. relativity of contracts
b. Consensuality of contracts d. Mutuality of contracts

7. Contracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law.
a. Freedom of contracts c. relativity of contracts
b. Mutuality of contracts d. Consensuality of contracts

8. Obligation arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
a. Freedom of contracts
b. Mutuality of contracts
c. Obligatory force and compliance in good faith
d. Consensuality of contracts

9. 1st: Obligations derived from law are not presumed as a rule.

2nd: Obligation arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
a. true, true c. true, false
b. false, false d. false, true

10. 1st: Acceptance made by letter or telegram does not bind the offerer except from the
time it came to his knowledge.
 2nd: Acceptance must be communicated to the offerer for the contract to take place.
a. true, true c. true, false
b. false, false d. false, true

11. The following contracts are rescissible contracts except;

a. Those which are entered into by the guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things which are
object thereof.
b. Those undertaken in fraud of creditors when the latter cannot in any manner
collect the claims due them.
c. Those agreed upon in representation of absentees, if the latter suffer the lesion
stated above.
d. Those entered into in the name of another person by one who has been given no
authority or legal representation, or who has acted beyond his powers.

12. Which of the following statements is true?

a. Contracts entered into during lucid interval are void.
b. Contracts agreed to in a state of drunkenness or during hypnotic spell are also
void.
c. a contract where consent is given through vitiated consent is void contract
d. A contract where consent s given through mistake, violence, intimidation, undue
influence of fraud is voidable.

13. Which of the following is not a requisite to constitute fraud?

a. Failure to disclose facts c. There is duty to reveal the fact.
b. Parties are bound by confidential relations d. None of the above

14. Which of the following is not correct?

a. A mere expression of opinion does not signify fraud.
b. A mere expression of opinion made by an expert and the other party relied on
them signify fraud.
c. Misrepresentation made in good faith is not fraudulent and does not constitute
error.
d. Casual fraud makes the contract voidable

15. The following may not be the object of contract?

a. Services c. future inheritance
b. Future things d. Hereditary right

16. The following contracts, except one, must be in writing t be valid.

a. negotiable instruments even private one.
b. Authority of the agent to sell land belonging to the principal
c. Stipulation for the payment of interest on loans.
d. Partnership contract wherein properties contributed are movable

17. Which of the following defective contract(s) is/are can be ratified?

a. Rescissible and Void contract c. Voidable and Unenforceable contracts
b. Void and Voidable contract d. Void contract only.
18. *Which of the following is not a void contract?
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 or fictitious
c. Those which cause or object is outside the commerce of man.
d. Those which are relatively simulated contract.

19. These persons are bound by contracts

a. Contracting Parties c. Heirs
b. Assigns or assign d. All of them

20. Mr. Esguerra, a former government employee, suffered from severe paranoia and
was confined in the mental hospital in 2001. After his release, he was placed under
the guardianship of his wife to enable him to get his retirement pay. In 2004 he
became a mining prospector and sold the mining claims. In 2007, he sued to annul
the sale claiming that he was mentally incapacitated at the time of sale. The sale in
question was;
a. Illegal c. Voidable
b. Void d. Valid

21. The duty not to recover what has voluntarily been paid although payment was no
longer required:
a. natural obligation c. civil obligation
b. moral obligation d. none of the above

22. The stipulation in a contract to the effect that the debtor should remain as a servant
in the house and in the service of her creditor so long as she had not paid her debt
is void because it is;
a. contrary to good custom c. contrary to public policy
b. contrary to law and morality d. None of the above

23. Before acceptance is conveyed, an offer becomes ineffective upon the:

a. Death c. Civil interdiction
b. Insanity d. All of the above

24. An incidental element of a contract

a. Implied warranty c. Payment of the interest in a loan
b. Delivery of the object in contract of pledge d. All of the above.