Contracts

CONTRACTS
Chapter I - General Provisions
1. It is a meeting of minds between two persons whereby one bind himself, with respect to the
other, to give something or to render some service.
a. Law
b. Obligation
c. Contract
d. Memorandum of Agreement
Letter C. As stated in Art. 1305. A contract 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.
2. I. Once he minds of the contracting parties meet, a valid contract exists, whether it is reduced to
writing or not.
II. When the terms of an agreement have been reduced to writing, it is considered as containing all
the terms agree upon.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1305. A contract 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.
Hence, once the minds of the contracting parties meet, a valid contract exists, whether it is
reduced to writing or not. When the terms of an agreement have been reduced to writing, it is
considered as containing all the terms agree upon. So, both statements are true.
3. Those which have for their object the establishment of a condition in law which is necessary as a
preliminary step towards the celebration of another subsequent contract.
a. Principal
b. Preparatory
c. Accessory
d. Formal
Letter B. According to Art. 1305. A contract is a meeting of minds between two persons whereby
Provided in this Art. The classification of contracts in relation to other contracts:
1. Principal: may exist alone
2. Accessory: depends on another contract for its existence
3. Preparatory: a preliminary step towards the celebration of a subsequent contract
4. Those which cam subsist independently from other contracts and whose purpose can be fulfilled
by themselves.
a. Principal
b. Preparatory
c. Accessory
d. Formal
Letter A. According to Art. 1305. A contract is a meeting of minds between two persons whereby
5. Those which can exist only as a consequence of, or in relation with, another prior contract.
a. Principal
b. Preparatory
c. Accessory
d. Formal
6. Those which are perfected by the mere agreement of the parties.

a. Formal
b. Real
c. Consensual
d. Principal
Provided in this Art. The classification of contracts according to formation:
1. Consensual: consent is enough
2. Real: consent and delivery is required
3. Solemn or formal: special formalities are required for perfection
7. Those which require note only the consent of the parties for their perfection, but also the delivery
of the object by any one party to the other.
a. Formal
b. Real
c. Consensual
d. Principal
2. Real: consent and delivery is required
8. Those which give rise to an obligation for only one of the parties.
a. Informal
b. Formal
c. Unilateral
d. Bilateral
Provided in this Art. The classification of contracts according to nature of vinculum:
1. Unilateral: only one party is bound by the prestation
2. Bilateral (synallagmatic): where both parties are bound by reciprocal prestation
9. Those which give rise to reciprocal obligations for both parties.
a. Informal
b. Formal
c. Unilateral
d. Bilateral
Letter D. According to Art. 1305. A contract is a meeting of minds between two persons whereby
Provided in this Art. The classification of contracts according to nature of vinculum:
1. Unilateral: only one party is bound by the prestation
2. Bilateral (synallagmatic): where both parties are bound by reciprocal prestation
10. Those in which each of the parties aspires to procure for himself a benefit through the giving of
an equivalent or compensation.
a. Onerous
b. Formal
c. Unilateral
d. Gratuitous
Provided in this Art. The classification of contracts according by equivalence of prestations:
1. Gratuitous: no correlative prestation is received by a party
2. Onerous: there is an exchange of correlative prestations
3. Remuneratory: the prestation is based
11. Those in which one of the parties proposes to give to the other a benefit without any equivalent
or compensation.
a. Onerous
b. Formal
c. Unilateral
d. Gratuitous
Letter D. According to Art. 1305. A contract is a meeting of minds between two persons whereby
Provided in this Art. The classification of contracts according by equivalence of prestations:
1. Gratuitous: no correlative prestation is received by a party
2. Onerous: there is an exchange of correlative prestations
3. Remuneratory: the prestation is based
12. Those where each of the parties acquired an equivalent of his prestation and such equivalent is
pecuniarily appreciable and already determined from the moment of the celebration of the contract.
a. Unilateral
b. Commutative
c. Aleatory
d. Gratuitious
Provided in this Art. The classification of contracts according to fulfilment of prestations:
1. Commutative: fulfillment is determined in advance
2. Aleatory: fulfillment is determined by chance
13. Those where each of the parties has to account the acquisition of an equivalent of his prestation,
but such equivalent, although pecuniarily appreciable is not yet determined, at the moment of the
celebration of the contract, since it depends upon the happening of an uncertain event, thus
charging the parties with the risk of loss or gain.
a. Unilateral
b. Commutative
c. Aleatory
d. Gratuitous
Provided in this Art. The classification of contracts according to fulfilment of prestations:
1. Commutative: fulfillment is determined in advance
2. Aleatory: fulfillment is determined by chance
14. Those which have their own individually and are regulated by special provisions of law.
a. Nominate
b. Unilateral
c. Innominate
d. Gratuitous
Provided in this Art. The classification of contracts according to their designation:
1. Nominate: the law gives the contract a special designation or particular name
2. Innominate: the contract has no special name
15. Those which lack individuality and are not regulated by special provisions of law.
a. Nominate
b. Unilateral
c. Innominate
d. Gratuitous
Provided in this Art. The classification of contracts according to their designation:
1. Nominate: the law gives the contract a special designation or particular name
2. Innominate: the contract has no special name
16. Is a contract whereby almost all of its provisions are drafted by one party.
a. Nominate
b. Contract of adhesion
c. Auto-contract
d. Gratuitous
Provided in this Art. The definition of contract of adhesion or a contract whereby almost all
of its provisions are drafted by one party. The participation of the other party is limited to affixing
his signature or his “adhesion” to a contract. For this reason, contracts of adhesion are strictly
construed against the party who drafted it.
17. I. It is erroneous to conclude that contracts of adhesions are invalid per se.
II. A contract of adhesion becomes void only when the dominant party takes advantage of the
weakness of the other party.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Provided in this Art. The definition of contract of adhesion or a contract whereby almost all
of its provisions are drafted by one party.
It is erroneous to conclude that contracts of adhesions are invalid per se. They are, on the
contrary, as binding as ordinary contracts. A party in reality free to accept or reject it. A contract of
adhesion becomes void only when the dominant party takes advantage of the weakness of the other
party, completely depriving the latter of the opportunity to bargain on equal footing. Hence, both
statements are true.
18. The contracting parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy.
a. Autonomy of contract
b. Relativity of contract
c. Formality of contract
d. Consensuality of contract
Letter A. According to Art. 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy.
Provided in this Art. the characteristics of contracts:
a. Mutuality
b. Autonomy- The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals,
c. Relativity
d. Consensuality
e. Obligatory Force
19. I. The freedom of contract is absolute.

II. Laws in force at the time the contract was made generally govern its interpretation and
application.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter B. Only II is true. According to Art. 1306. The contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.
Provided in this Art. it is an elementary rule of contracts that the contracting parties are free
to stipulate the terms of their contracts for as long as the terms are not contrary to law, morals, good
customs, public order, or public policy. Although it is a rule that a contract freely entered between
the parties should be respected, since a contract is the law between the parties, said rule is not
absolute. Laws in force at the time the contract was made generally govern its interpretation and
application. Therefore, only statement II is true.
20. I. Contracts are law between the parties, and they are bound by its stipulations.
II. It is a rule that a contract freely entered between the parties should be respected, since a contract
is the law between the parties.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1306. The contracting parties may establish such stipulations, clauses,
Provided in this Art. that contracts are law between the parties, and they are bound by its
stipulations. Thus, from the moment the contract is perfected, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all consequences which, according to
their nature, may be in keeping with good faith, usage and law. It is a rule that a contract freely
entered between the parties. Therefore, both statements are true.
21. I. It is a general rule that provision of applicable law, especially provisions relating to matters
affected with public policy, are deemed written into the contract.
II. The governing principle is that parties may not contract away applicable provisions of law
peremptory provisions dealing with matter heavily impressed with public interest.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Provided in this Art. that it is a general rule that provision of applicable law, especially
provisions relating to matters affected with public policy, are deemed written into the contract. The
governing principle is that parties may not contract away applicable provisions of law peremptory
provisions dealing with matter heavily impressed with public interest. Therefore, both statements are
true.
22. It is basic that the law is deemed written into every contract.
II. It is general rule that provisions of applicable law, especially provisions relating to matter affected
with public policy, are deemed written into the contract.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Provided in this Art. that it is basic that the law is deemed written into every contract.
Although, a contract is the law between the parties, the provisions of positive law which regulates
contracts are deemed written therein and shall limit and govern the relations between the parties.
Therefore, both statements are true.
23. It is contract whereby the parties, by making reciprocal concession, avoid litigation or put an end
to one already commenced.
a. Compromise agreement
b. Auto-contract
c. Contract
d. Memorandum of agreement
Letter A. As stated in Art. 2028. A compromise is a contract whereby the parties, by making
reciprocal concessions, avoid litigation or put an end to one already commenced.
24. The following are the rules in innominate contract, except;

a. Stipulations of the parties
b. The provisions of business law on obligations and contracts.
c. The rules governing the most analogous nominate contracts.
d. The customs of the place.
Letter B. According to Art. 1307. Innominate contracts shall be regulated by the stipulations of the
parties, by the provisions of Titles I and II of this Book, by the rules governing the most analogous
nominate contracts, and by the customs of the place.
Provided in this Art. the rules governing innominate contracts:
a. The agreement of the parties
b. The provisions of the Civil Code on obligations and contracts
c. The rules governing the most analogous nominate contracts.
d. The customs of the place.
Hence, letter B is included because it must be the provisions of the Civil Code not the provisions of
business law.
25. The contract must bind both contracting parties: its validity or compliance cannot be left to the
will of the one of them.
d. Mutuality of contract
Letter D. According to Art. 1306. The contracting parties may establish such stipulations, clauses,
a. Mutuality- The contract must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them.
b. Autonomy
c. Relativity
d. Consensuality
e. Obligatory Force
26. I. It is a fundamental rule that contracts, once perfected, bind both contracting parties and
obligations arising there from have the force of law between the parties and should be complied
with in good faith.
II. There must be mutuality between the parties based on their essential equality to which is
repugnant to have one party bound by the contract leaving the other free there from.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. Both are true

Statement I. According to Art. 1266. The debtor in obligations to do shall also be released
when the prestation becomes legally or physically impossible without the fault of the obligor. It is a
fundamental rule that contracts, once perfected, bind both contracting parties and obligations arising
there from have the force of law between the parties and should be complied with in good faith. But
the law recognizes exceptions which is laid down in Art. 1266.
Statement II. Art. 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them. This provision emphasize that the contract
must bind both parties. Hence, both statements are true.
27. Contracts take effect only between the parties, their assigned and heirs, except in a case where
the right and obligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law.
d. Mutuality of contract
Letter B. According to Art. 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy.
a. Mutuality
b. Autonomy
c. Relativity- Contracts take effect only between parties, their assigns and heirs UNLESS,
obligations arising from the contract are not transmissible by their (1) nature, (2) by
stipulation or (3) by provision of law. The heir is not liable beyond the value of the
property he received from the decedent.
d. Consensuality
e. Obligatory Force
28. The exceptions in relativity of contracts are the following except:

a. Contracts are not transmissible by the nature.
b. Contracts are not transmissible by stipulations
c. Contracts are not transmissible by provision of law
d. None of the above
Provided in this Art. the definition and exceptions of relativity:
Relativity- Contracts take effect only between parties, their assigns and heirs
UNLESS, obligations arising from the contract are not transmissible by their (1) nature, (2)
by stipulation or (3) by provision of law. Hence, None of the choices.
29. I. A contract of lease is not generally transmissible to the heirs of the lessor or lessee.
II. If a contract should contain some stipulation in favor of a third person, acceptance to the obligor
before its revocation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter B. According to Art. 1311. 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. The heir is not liable beyond the value of
the property he received from the decedent.
A contract of lease is, therefore, generally transmissible to the heirs of the lessor or lessee.
If a contract should contain some stipulation in favor of a third person, he may demand its
fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere
incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly
and deliberately conferred a favor upon a third person.
Hence, only statement II is true.
30. The exceptional cases to the principle of relativity of contracts are the following except:
a. If a contract should contain some stipulation in favor of a third person, he may demand its
fulfillment provided he communicated his acceptance to the obligor before its revocation
b. In contracts creating personal rights.
c. Creditors are protected in cased of contracted intended to defraud them.
d. Any third person who induces another to violate his contract.
Letter B. According to Art. 1311. If a contract should contain some stipulation in favor of a
third person, he may demand its fulfilment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not sufficient. The
contracting parties must have clearly and deliberately conferred a favor upon a third person.
According to Art. 1312. When the third person comes into possession of the object of a
contract creating real rights.
According to Art. 1313. Where the contract is entered into in order to defraud a person.
According to Art. 1314. Where the third person induces a contracting party to violate his
contract.
Therefore, letter B is not included because it must create real rights not personal rights.
31. I. Among contracts which are intransmissible are those which are purely personal, either by
provision of law, such as in cased of partnership and agency, or by the very nature of the obligations
arising therefrom, such as those requiring special personal qualifications of the obligor.
II. Where acts stipulated in a contract require the exercise of special knowledge, genius, skill taste,
ability, experience, judgment , discretion integrity or other personal qualification of one or both
parties, agreement is on a personal nature, and terminate on the death of the party who is required to
render such service.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1347. All things which are not outside the commerce of men, including
future things, may be the object of a contract. All rights which are not intransmissible may also be
the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized by
law. All services which are not contrary to law, morals, good customs, public order or public policy
may likewise be the object of a contract.
This provision provides that among contracts which are intransmissible are those which are
purely personal, either by provision of law, such as in cased of partnership and agency, or by the
very nature of the obligations arising therefrom, such as those requiring special personal
qualifications of the obligor. In American jurisprudence, “Where acts stipulated in a contract require
the exercise of special knowledge, genius, skill taste, ability, experience, judgment , discretion
integrity or other personal qualification of one or both parties, agreement is on a personal nature,
and terminate on the death of the party who is required to render such service.”
Therefore, both statements are true.
32. The requisites of a stipulation pour autrui or a stipulation in favor of a third person are the
following except:
a. There must be a stipulation in favor of a third person.
b. The stipulation must be a part of the contract.
c. The contracting parties must have clearly and deliberately conferred a favor upon a third
person, a mere incidental benefit or interest.
d. The third person must have communicated his acceptance to the obligor before its revocation.
Provided in this Art. the requisites of a stipulation pour autrui or a stipulation in favor of a
third person:
a. There must be a stipulation in favor of a third person
b. The stipulation must be part, not the whole of the contract
c. The contracting parties must have clearly and deliberately conferred a favor upon a third
person, NOT a mere incidental benefit or interest.
d. The third person must have communicated his acceptance to the obligor before its
revocation
e. No relation of agency exists between any of the parties and the third person favored
33. I. If a contract should contain some stipulation in favor of a third person, he may demand its
fulfillment provided he communicated his acceptance to the obligor before its revocation.
II. A mere incidental benefit or interest of a person is sufficient.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Art. 1311. If a contract should contain some stipulation in favor of a third
person, he may demand its fulfilment provided he communicated his acceptance to the obligor
Provided in this Art. that if a contract should contain some stipulation in favor of a third
person, he may demand its fulfillment provided he communicated his acceptance to the obligor
contracting parties must have a clearly and deliberately conferred a favor upon a third person.
Therefore, only statement I is true.
34. Any third person so induces another to violate his contract shall liable for damages to the other
contracting party.
a. Quasi interference
b. Delict interference
c. Legal interference
d. Tort interference
Letter D. According to Art. 1314. Any third person who induces another to violate his contract shall
be liable for damages to the other contracting party.
The tort recognized in that provision is known as interference with contractual relations.
35. The elements of tort interference are the following except:

a. Existence of valid contract.
b. The third person is in good faith
c. Knowledge on the part of the third person of the existence of a contract.
d. Interference of the third person is without legal justification
Letter B. According to Art. 1314. Any third person who induces another to violate his contract shall
be liable for damages to the other contracting party.
Provided in this Art. the elements of tort interference:
a. Existence of valid contract.
b. Knowledge on the part of the third person of the existence of a contract.
c. Interference of the third person is without legal justification or excuse.
Hence, The third person is in good faith is not included.
36. The following are the stages in the life of a contract, except.
a. Preparation
b. Perfection
c. Consummation
Letter D. According to Art. 1315. Contracts are perfected by mere consent, and from that moment
the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all
the consequences which, according to their nature, may be in keeping with good faith, usage and
law.
Provided in this Art. the Stages of Contracts:

A. Preparation, conception or generation: period of negotiation and bargaining, ending at the
moment of agreement
B. Perfection or birth: the moment when the parties come to agree on the terms of the
contract
C. Consummation or death: the fulfillment or performance of the terms agreed upon.
37. Begins from the time prospective contracting parties manifest their interest in the contract and
ends at the moment of agreement of the parties.
a. Preparation
b. Perfection
c. Consummation
Letter A. According to Art. 1315. Contracts are perfected by mere consent, and from that moment
law.

moment of agreement
contract
38. Take place when the parties agree upon the essential elements of the contract.
a. Preparation
b. Consummation
c. Perfection
Letter C. According to Art. 1315. Contracts are perfected by mere consent, and from that moment
law.

moment of agreement
contract
39. The parties fulfill or perform the terms agreed upon in the contract, culminating in its
extinguishment.
a. Preparation
b. Perfection
c. Consummation
Letter C. According to Art. 1315. Contracts are perfected by mere consent, and from that moment
law.

moment of agreement
contract
40. I. When a compromise agreement is given judicial approval, it becomes more than a contract
binding upon the parties. Having been sanctioned by the court, it is entered as a determination of a
controversy and has the force and effect of a judgment.
II. A contract which required, in addition to the above, the delivery of the object of the agreement, as
in a pledge or commodatum, is commonly referred to as a formal contract.
a. Only I is true
b. One II is true
c. Both are true
d. Both are false
2. Real: consent and delivery is required,e.g. deposit, pledge
Also, stated in this Art. that when a compromise agreement is given judicial approval, it becomes
more than a contract binding upon the parties. Having been sanctioned by the court, it is entered as
a determination of a controversy and has the force and effect of a judgment. Hence, only I is true
because a contract which required, in addition to the above, the delivery of the object of the
agreement, as in a pledge or commodatum, is commonly referred to as a real contract not a formal
contract.
41. Those which are perfected by the mere agreement of the parties.
a. Consensual contract
b. Real contract
c. Formal contract
d. Unilateral contract
Letter A. According to Art. 1315. Contracts are perfected by mere consent, and from that moment
law.
42. Those which required not only the consent of the parties for the perfection, but also the delivery
of the object by any one party to the other.
b. Real Contract
c. Formal contract
Letter B. As stated in Art. 1316. Real contracts, such as deposit, pledge and Commodatum, are not
perfected until the delivery of the object of the obligation.
43. One of the parties delivers to another either something not consumable so that the latter may
use the same for a certain time and return it.
a. pledge
b. deposit
c. Formal contract
d. Commodatum
Letter D. According to Art. 1933. One of the parties delivers to another, either something not
consumable so that the latter may use the same for a certain time and return it, in which case the
contract is called a commodatum.
44. Is constituted from the moment a person received a thing belonging to another, with the
obligation of safely keeping it and of returning the same.
a. pledge
b. deposit
c. Formal contract
d. Commodatum
Letter B. According to Art. 1962. A deposit is constituted from the moment a person receives a
thing belonging to another, with the obligation of safely keeping it and of returning the same.
45. The creditor is given the right to retain his debtor’s movable property in his possession, or in
that of a third to whom it has been delivered, until the debt is paid.
a. pledge
b. deposit
c. Formal contract
d. commodatum
Letter A. According to Art. 2085. Pledge is a contract by virtue of which the debtor delivers to the
creditor or to a third person a movable or a document involving incorporeal rights for the purpose
of securing the fulfillment of a principal obligation with the understanding that when the obligation
is fulfilled, the thing delivered shall be returned with all its fruits and accessions.
46. When the law required 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, that requirement is absolute and
indispensable.
b. Real contract
c. Formal contract
Provided in this Art. The classification of contracts according to their perfection:
1. Consensual Contract
2. Real Contract
3. Solemn or formal contract- When the law required 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, that
requirement is absolute and indispensable.
47. In February 2017, X Corp. contracted the services of Y Construction Supply. The latter was to
supply labor and materials, for the construction of two cafeterias. The terms and conditions of the
contract between X Corp. and Y were expressed in the purchase orders and progress billings. In
partial payment of the project, X Corp. drew and issued Check No. 01234 and delivered the same to
Y. However, the said check was dishonored upon its presentment for payment on the ground that it
was drawn against insufficient funds.
Y was able to complete the project and turned the same over to X Corp. The total amount
due as of the final billing dated November 26, 2017 was ₱486,409. However, despite Y’s written
demand for payment, X Corp. failed to settle the balance of its obligation. Is the contract binding
between the contracting parties?
a. No, because the contract must be formalized in a public instrument

b. No, the agreement should be written in a separate document and not to be included in the
purchase orders and progress billings.
c. Yes, the terms and conditions of the contract expressed in purchase orders and progress
billings must govern the contractual relation of the parties.
d. Yes, because the meeting of the minds was put into writing
Provided in this Art. that the situation above is an example of Consensual contracts which
are perfected by the mere consent of the parties.
48. Contracts take effect only to the parties, their assigns and heirs except where the rights and
obligations arising therefrom:
a. Are not transmissible by their nature.
b. Are not transmissible by stipulation of the parties.
c. Are not transmissible by provision of law.
d. All of the above
Provided in this Art. that contracts take effect only between parties, their assigns and heirs
UNLESS, obligations arising from the contract are not transmissible by their
(1) nature,
(2) by stipulation or
(3) by provision of law. The heir is not liable beyond the value of the property he received
from the decedent.
Therefore, all of the above.
49. D borrowed a sum of money from C with a certain rate of interest. C no wants to increase the
rate of interest without the consent of D. What principle in contracts prohibits C from doing so?
a. Autonomy of contracts
b. relativity of contracts
c. mutuality of contracts
d. consensuality of contracts
Provided in this Art. the definition of mutuality of contracts:
a. Mutuality- The contract must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them.
50. Spouses H and W leased the property to X corp. The lease contract specifically state in its
provision No. 1 that “the term of the lease shall be 14 years commending from April 1, 1978 and
may be renewed for like term at the option of the lessee.
On 13 February 1991, a year before the expiration of the contract of lease, H and W notified X
corp. that they were no longer interested in renewing the lease. X corp. replied that it was exercising
its option to renew their lease under the same terms with additional proposals.
a. An express agreement which gives the lessee the sole option to renew the lease it not valid on the
parties.
b. The lessee has a right to elect whether to continue with the lessee or not, once he
exercises his option to continue and the lessor accepts, both parties are thereafter by the
new lease agreement.
c. The option, which is provided in the same lease agreement, is not fundamentally part of the
consideration in the contract.
d. The right of renewal does not constitute a part of the lessee’s interest in the land
Letter B. According to Art. 1324. When the offerer has allowed the offeree a certain period to
accept, the offer may be withdrawn at any time before acceptance by communicating such
withdrawal, except when the option is founded upon a consideration, as something paid or
promised.
Hence, Spouses can withdraw the offer by communicating such withdrawal to X Corp.
51. On August 20, 2011, X applied with Y, Inc. for a credit card. One April 18, 2016, X discovered
the loss of his credit card. One April 19, 2016 a Sunday he called up Y Inc.’s office and reported the
loss. The representative he spoke to told him that his card would be immediately included in the
circular of lost cards.
Again, on April 20, 2016, X called up Y Inc.’s to reiterate his report on the loss of his card. Y
Inc.’s representative advised him to put into writing the notice of loss and to submit it. X promptly
wrote a letter dated April 20, 2016 confirming the loss and sent it to Y, Inc. which received it on
April 22, 2016. On April 21, 2016 a day before receiving the written notice, Y, Inc. issued a special
cancellation bulleting informing its accredited establishment of the loss of the card of the
enumerated holder’s including X’s.
Unfortunately, it turned out that somebody used X’s card on April 19 and 20, 2016 to buy
commodities worth 300,000. Y Inc. then billed X for that amount. X informed Y Inc. he would not
pay for the purchased made after April 19, 2016, the day he notified Y, Inc. of the loss. After the
investigation and review, Y, Inc. confirmed that it was not X who used his credit card on April 19
and 20, 2016. Nonetheless, Y, Inc. insisted on collecting within 15 days from notice. It cited there
stipulation no. 1 which states: “Holders responsibility for all charges made through the use of the
card shall continue until a reasonable time after receipt by the Card Issued of written notice of loss
of the Card and its actual inclusion in the Cancellation Bulletin” Is the stipulation valid?
a. Yes, because the contracting parties can establish any terms and conditions
b. Yes, because such stipulation it not contrary to law or public policy,
c. No, because that is repugnant to the principle of relativity of contracts.
d. No, the stipulations in question is just a repugnant to public policy.
The effectivity of the cancellation of the lost card rests on an act entirely beyond the control
of the cardholder
52. X offers to sell his house to Y for P1,000,000. Y requested if he would accept P950,000. Which
of the following is correct?
a. The contract is void because there is no consent
b. Y’s response is counter-offer because it is not absolute
c. Y’s response is a mere request, hence the office is still effect
d. Y’s response is a counter-offer because it is qualified
Letter C. According to Art. 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract. The offer must be
certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed to have been entered into in the place where
the offer was made.
Therefore, Y did not counter the offer because Y response is a mere request only.
53. A sent B a letter wherein the former offered to sell his car to be latter P1,000,000. B signed to
show intention that he may but the same ___ letter, he gave B two week to raise the amount. After
one week, A price to P1,500,000. Can B compel A to accept the P1,000.000 offered by A and deliver
him the car?
a. Yes, since there was already offer and acceptance
b. Yes, because A cannot change his offer without the consent
c. Yes, because A cannot withdraw the offer within two weeks is under estoppel.
d. No, because there was no acceptance yet of the offer
the offer was made.
Provided that Acceptance made by letter or telegram does not bind the offerer except from
the time it came to his knowledge. Hence, there was no qualified acceptance.
54. Which of the following may not be the object of a contract of sale?
a. Things having a potential existence
b. The sale of vain hope or expectancy
c. Future goods
d. Answer not given
Letter B. According to Art. 1347. All things which are not outside the commerce of men, including
future things, may be the object of a contract. All rights which are not intransmissible may also be
the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized by
law.
All services which are not contrary to law, morals, good customs, public order or public policy may
likewise be the object of a contract.
The sale of vain hope or expectancy is one of the exceptions with regards to object of a
contract.
55. A contract is in the stage of conception when?

a. There is meeting of the minds
b. Negotiations are in progress
c. The parties come to an agreement
d. The contract is perfect
Letter B. According to Art. 1315. Contracts are perfected by mere consent, and from that moment
law.

moment of agreement
contract
56. X sold to Y a patented laptop. However, upon delivery the former substituted a fake. Y now
wants to annul the sale. Decide.
a. The contract is void
b. The contract can be annulled as it is dolo causante.
c. There is dolo incidente therefore, it can be annulled.
d. The remedy is damages.
Letter D. According to Art. 1338. There is fraud when, through insidious words or machinations of
one of the contracting parties, the other is induced to enter into a contract which, without them, he
would not have agreed to. (1269)
The fraud is committed through insidious words or machinations because the laptop
delivered was not patented or fake.
Chapter II - Essential Requisites of Contracts
1. There is no contract unless the following requisites concur, except:

a. Consent
b. Object certain
c. Cause
d. Written agreement
Letter D. According to Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Therefore, written is not included.
2. The essential elements are those without which there can be no contract.
a. Inherent element
b. Essential element
c. Natural element
d. Accidental element
Letter B. According to Art. 1318. There is no contract unless the following requisites concur:
Provided in this Art. the Classes of elements of contract:

a. Essential: Those without which the contract would not exist.
b. Natural: Those which are derived from the nature of the contract and ordinarily
accompany the same-they are presumed to exist unless the contrary is stipulated e.g.
warranty in sales
c. Accidental: Those which exist only if stipulated
3. Are those which are derived from the nature of the contract and ordinarily accompany the same.
a. Inherent element
b. Natural element
c. Essential element

accompany the same-they are presumed to exist unless the contrary is stipulated
4. Are those which exist only when the parties expressly provide for the purpose of limiting or
modifying the normal effects of the contract.
a. Inherent element
b. Natural element
c. Essential element
Letter D. According to Art. 1318. There is no contract unless the following requisites concur:

accompany the same-they are presumed to exist unless the contrary is stipulated
5. I. Contracts without cause, or with unlawful cause produce no effect whatsoever.

II. When all the essential requisites are present, a contract is obligatory in whatever form it may have
been entered into as a rule.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1352. Contracts without cause, or with unlawful cause, produce no
effect whatever. The cause is unlawful if it is contrary to law, morals, good customs, public order or
public policy.
It also provides that when all the essential requisites are present, a contract is obligatory in
whatever form it may have been entered into, save in cases where the law requires that it be in a
specific form to be valid and enforceable. Therefore, both statements are true.
6. I. Every person is presumed to be capacitated to enter into a contract until satisfactory proof to
the contrary is presented. The burden of proof is on the individual asserting a lack of capacity to
contract.
II. In a contract of sale, its perfection is consummated at the moment there is a meeting of the
minds upon the thing that is the object of the contract and upon the price.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1352. Contracts without cause, or with unlawful cause, produce no
effect whatever. The cause is unlawful if it is contrary to law, morals, good customs, public order or
public policy.
It provides that every person is presumed to be capacitated to enter into a contract until
satisfactory proof to the contrary is presented. The burden of proof is on the individual asserting a
lack of capacity to contract, and this burden has been characterized as requiring for its satisfaction
clear and convincing evidence. Also, in a contract of sale, its perfection is consummated at the
moment there is a meeting of the minds upon the thing that is the object of the contract and upon
the price. Hence, both statements are true.
7. I. A valid contract produced no effect either against or in favor in anyone and cannot be ratified.
II. The essence of consent is the conformity of the parties on the terms of the contract, that is, the
acceptance by one of the offer made by the other.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
It provides that essence of consent is the conformity of the parties on the terms of the
contract, that is, the acceptance by one of the offer made by the other and a void contract produced
no effect either against or in favor in anyone and cannot be ratified. Hence, only statement II is true.
8. Is manifested by the meeting of the offer and the acceptance upon the thing and the cause of
which are to constitute the contract.
a. Offer
b. Acceptance
c. Perfection
d. Consent
Letter D. As stated in Art. 1319. Consent is manifested by the meeting of the offer and the
the offer was made.
9. Is a unilateral proposition made by one party to another for the celebration of contract.
a. Offer
b. Acceptance
c. Perfection
d. Consent
Letter A. According to Art. 1319. Consent is manifested by the meeting of the offer and the
the offer was made.
Provided in this Art. the definition of Offer which is the proposal made by one party to
another to enter into a contract.
10. I. f or an offer to be certain, a contract must come into existence by the mere acceptance of the
offeree without any further act on the offeror’s part.
II. The offer must be definite, complete and intentional.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
the offer was made.
Provided in this Art. the definition of Offer which is the proposal made by one party to
another to enter into a contract and for an offer to be certain, a contract must come into existence
by the mere acceptance of the offeree without any further act on the offeror’s part. The offer must
be definite, complete and intentional. Hence, both statements are true.
11. An imperfect promise which is merely an offer.

a. consent
b. Policitacion
c. Acceptance
d. Option
Letter B. According to Art. 1321. The person making the offer may fix the time, place, and manner
of acceptance, all of which must be complied with.
Provided in this Art. that an imperfect promise (policitacion) which is merely an offer. An
imperfect promise that could not be considered a binding commitment.
12. This refers to qualified acceptance.

a. consent
b. Policitation
c. Counter-offer
d. Option
Letter C. According to Art. 1321. The person making the offer may fix the time, place, and manner
of acceptance, all of which must be complied with.
Provided in this Art. that Counter-offer refers to qualified acceptance. Where the parties
merely exchanged offers and counter-offers, no agreement or contract is perfected.
13. I. the offeree may fix the time, place and manner of acceptance, all of which must be complied
with.
II. Acceptance made by letter or telegram does not bind the offerer except from the time it came to
his knowledge.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter B.
Statement I. Art. 1321. The person making the offer may fix the time, place, and manner of
acceptance, all of which must be complied with.
Statement II. Art. 1319. Consent is manifested by the meeting of the offer and the
Acceptance made by letter or telegram does not bind the offerer except from the time it
came to his knowledge. The contract, in such a case, is presumed to have been entered into in the
place where the offer was made
Statement I is false because it must be the person making the offer may fix the time, place, and
manner of acceptance, all of which must be complied with not the offeree.
14. A person binds himself to render some service or to do something in representation or on behalf
of another, with the consent or authority of the latter.
a. Contract of agency
b. Contract of partnership
c. Contract of pledge
d. Contract of mortgage
Letter A. As stated in Art. 1868. By the contract of agency a person binds himself to render
some service or to do something in representation or on behalf of another, with the consent or
authority of the latter.
15. I an offer made through an agent is accepted from the time acceptance is communicated to the
principal.
II. The basis of agency is representation, that is, the agent acts for and on behalf of the principal on
matter within the scope of his authority and said acts have the same effect as if they were personally
execute by the principal.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter B. According to Art. 1322. An offer made through an agent is accepted from the time
acceptance is communicated to him.
It also provides that the basis of agency is representation, that is, the agent acts for and on behalf of
the principal on matter within the scope of his authority and said acts have the same effect as if they
were personally execute by the principal. Hence, statement I is false while statement II is true.
16. I an offer becomes effective upon the death, civil interdiction, insanity or insolvency of either
part before acceptance is conveyed.
II. The contract is perfected at any time before acceptance is conveyed.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter D. According to Art. 1323. An offer becomes ineffective upon the death, civil
interdiction, insanity, or insolvency of either party before acceptance is conveyed.
The reason for this is that the contract is not yet perfected at any time before acceptance is
conveyed; hence, the disappearance of either party or his loss of capacity before perfection prevents
the contractual tie from being formed. So, both statements are false.
17.Is contract granting a privilege to buy or sell at a determined price within an agreed time.
a. Earnest contract
b. Option contract
c. Perfected contract
d. Aleatory contracct
Letter B. According to Art. 1324. When the offerer has allowed the offeree a certain period to
promised.
Provided in this Art. the definition of option contract which is the privilege itself given to
the offeree to accept an offer within a certain period.
18. I. Public advertisements or solicitations and the like are ordinary construed as mere invitations to
make offers only as proposals.
II. If the period is not itself founded upon or supported by a consideration the offeror is still free
and has the right to withdraw the offer before acceptance, or if an acceptance has been made, before
the offeror coming to know such fact, by communicating that withdrawal to offeree.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1324. When the offerer has allowed the offeree a certain period to
promised.
Provided in this Art. that public advertisements or solicitations and the like are ordinary
construed as mere invitations to make offers only as proposals. Also. where a period is given to the
offeree within which to accept the offer, the ff. rules generally govern:
1. If the period is not itself founded upon or supported by a consideration
-the offeror is still free and has the right to withdraw the offer before acceptance, or
if an acceptance has been made, before the offeror coming to know such fact, by
communicating that withdrawal to offeree.
2. If the period has a separate consideration
- a contarct of option is deemed perfected and it would be a breach of that contract
to withdraw the offer during the agreed period.
Hence, both statements are true.
19. I. If the period has a separate consideration, a contract of “option deemed perfected, and it
would be a breach of the contract to withdraw the offer during the agreed period.
II. Business advertisements of things for sale are definite offers.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter A. Statement I. According to Art. 1324. When the offerer has allowed the offeree a certain
period to accept, the offer may be withdrawn at any time before acceptance by communicating such
promised.
Provided in this Art. that where a period is given to the offeree within which to accept the
offer, the ff. rules generally govern:
1. If the period is not itself founded upon or supported by a consideration
-the offeror is still free and has the right to withdraw the offer before acceptance, or
if an acceptance has been made, before the offeror coming to know such fact, by
communicating that withdrawal to offeree.
2. If the period has a separate consideration
- a contract of option is deemed perfected and it would be a breach of that contract
to withdraw the offer during the agreed period.
Statement II. Art. 1325. Unless it appears otherwise, business advertisements of things for sale are
not definite offers, but mere invitations to make an offer.
Hence, only statement I is true.
20. I. Advertisements for bidders are simply invitations to make proposals and the advertiser is
not bound to accept the highest or lowest bidder.
II. If the period has a separate consideration, a contract of “option” is deemed perfected, and it
would be a breach of that contract to withdraw the offer during the agreed period.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1326. Advertisements for bidders are simply invitations to make
proposals, and the advertiser is not bound to accept the highest or lowest bidder, unless the contrary
appears. (n)
21. The following are the persons incapacitated to give consent, except:
a. Minors
b. Persons under lucid interval
c. Demented persons
d. Deaf-mutes who do not know how to write
Letter B. According to Article 1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to write. (1263a)
22. A brief period during which an insane person regains sanity sufficient to have the legal capacity to
contract and act on his or her own behalf.
a. Insanity
b. Dementia
c. Lucid Interval
d. Incapacity
Letter B. According to Article 1327 of the New Civil Code: The following cannot give consent to a
contract: (1) Unemancipated minors; (2) Insane or demented persons, and deaf-mutes who do not
know how to write. Therefore, lucid interval is a brief period during which an insane person regains
sanity sufficient to have the legal capacity to contract and act on his or her own behalf.
23. I. Contracts entered into during a lucid interval are voidable.

II. Contracts agreed to in a state of drunkenness or during a hypnotic spell are valid.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter D. According to Article 1328. Contracts entered into during a lucid interval are valid. Contracts
agreed to in a state of drunkenness or during a hypnotic spell are voidable. (n)
24. The following are the so-called vices of consent, except:

a. Mistake
b. Fraud
c. Violence
d. Legal intimidation
Letter D. According to Article 1330. A contract where consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable. (1265a). Also, Article 1331. In order that mistake
may invalidate consent, it should refer to the substance of the thing which is the object of the contract,
or to those conditions which have principally moved one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such
identity or qualifications have been the principal cause of the contract. A simple mistake of account
shall give rise to its correction. (1266a)
Article 1335. There is violence when in order to wrest consent, serious or irresistible force is employed.
There is intimidation when one of the contracting parties 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. To determine the degree of
intimidation, the age, sex and condition of the person shall be borne in mind. A threat to enforce one's
claim through competent authority, if the claim is just or legal, does not vitiate consent. (1267a)
Article 1337. There is undue influence when a person takes improper advantage of his power over the
will of another, depriving the latter of a reasonable freedom of choice. The following circumstances
shall be considered: the confidential, family, spiritual and other relations between the parties, or the
fact that the person alleged to have been unduly influenced was suffering from mental weakness, or
was ignorant or in financial distress. (n) Article 1338. There is fraud when, through insidious words or
machinations of one of the contracting parties, the other is induced to enter into a contract which,
without them, he would not have agreed to. (1269)
25. The characteristics of consent are the following, except:

a. It should be intelligent.
b. It should be free.
c. It should be spontaneous.
d. It should be honest.
Letter D. According to the New Civil Code, parties’ conformity to the object, cause, terms and
condition of the contract must be intelligent, spontaneous and free from all vices of consent. Thus,
honesty is not a characteristic of consent.
26. These contracts are existent, valid, and binding, although they can be annulled because of want of
capacity or vitiated consent of the one of the parties, but before annulment, they are effective and
obligatory between parties.
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
Letter B. According to article 1390 of the Civil Code, The following contracts are voidable or
annullable, even though there may have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper authority action in court. They are
susceptible of ratification. Therefore, the definition above is voidable contracts.
27. I. There is no question that a contract where the consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable.
II. In order that fraud may invalidate consent, it should refer to the substance of the thing
which is the object of the contract, or to those conditions which principally moved one or both parties
to enter into the contract.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Article 1330 of the Civil Code of the Philippines, a contract where consent is
given through mistake, violence, intimidation, undue influence, or fraud is voidable Therefore, only I
is true.
28. A “misunderstanding of the meaning or implication of something” or “a wrong action or statement

proceeding from a faulty judgment.
a. Mistake
b. Fraud
c. Violence
d. Illegal intimidation
Letter A. According to Article 1330, Mistake is defined as a. “misunderstanding of the meaning or

implication of something” or “a wrong action or statement proceeding from a faulty judgment.”
Therefore, definition above is mistake.
29. I. Mistake should refer to the substance of the thing which is the object of the contract.
II. Mistake as to the identity or qualifications of one of the parties will vitiate consent only
when such identity or qualifications have been the subsidiary cause of the contract.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Art. 1331 of the New Civil Code, Mistake as to the identity or qualifications
of one of the parties will vitiate consent only when such identity or qualifications have been the
principal cause of the contract. Therefore, it is not that mistake as to the identity or qualifications of
one of the parties will vitiate consent only when such identity or qualifications have been the subsidiary
cause of the contract.
30. I. Mistake should refer to the substance of the thing which is the object of the contract.
II. Mistake as to the identity or qualifications of one of the parties will vitiate consent only
when such identity or qualifications have been the subsidiary cause of the contract.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1331, In order that mistake may invalidate consent, it should refer to
the substance of the thing which is the object of the contract, or to those conditions which have
principally moved one or both parties to enter into the contract. Mistake as to the identity or quality
of one of the parties will vitiate consent only when such identity or qualifications have been the
principal cause of the contract. A simple mistake of account shall give rise to the correction. There
fore, both are true.
31. I. There is mistake of fact when one or both of the contracting parties believe that a fact exists
when in reality it does not, or that such fact does not exists when in reality it does.
II. There is a mistake of law when one or both of the contracting parties arrive at an erroneous
conclusion regarding the interception of a question of law or the legal effects of a certain act or
transaction.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Legal Law Library, when there is a mutual MISTAKE OF FACT with respect
to the subject of the contract, the subjective intention of the parties is evaluated by the courts to
determine whether there had been, in fact, a meeting of the minds of the parties. When a party who
has full knowledge of the facts reaches an erroneous conclusion as to their legal effect, such
a MISTAKE OF LAW will not invalidate a contract or affect its enforceability. Therefore, both are
true.
32. I. As a general rule, it is only a mistake of law which will vitiate consent thus rendering the
contract voidable.
II. A mistake of law does not render the contract voidable because of the well-known principle
that ignorance of the law does not excuse anyone from compliance therewith.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter B. According to the Article 3 of the Civil Code of the Philippines, Ignorance of the law excuses
no one. Therefore, only II is true.
33. I. One who alleges any defect of the lack of a valid consent to a contract must establish the
same by full, clear and convincing evidence, not merely by preponderance of evidence.
II. There is mistake even if the party alleging it knew the doubt, contingency or risk affecting
the object of the contract.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Article 1333. There is no mistake if the party alleging it knew the doubt,
contingency or risk affecting the object of the contract. (n)
34. I. To invalidate consent, the error must be excusable. It must be real error and not one that
could have been avoided by the party alleging it.
II. A mistake that is caused by manifest negligence cannot invalidate a juridical act.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1333. There is no mistake if the party alleging it knew the doubt,
contingency or risk affecting the object of the contract. (n)
35. I. An example of mistake as to the object of the contract is the substitution of a specific thing
contemplated by parties with another.
II. Mistake must “refer to the substance of the thing that is the object of the contract, or to
those conditions which have principally moved one or both parties to enter into the contract.”
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1331 of the Civil Code of the Philippines, In order that mistake may
invalidate consent it should refer to the substance of the thing which is the object of contract, or to
those conditions which have principally moved one or both parties to enter into the contract. Mistakes
as to the identity or qualifications of one of the parties will vitiate consent only when such identity or
qualifications have been the principal cause of the contract. A simple mistake of account shall give
rise to its correction. Therefore, both are true.
36. I. There is intimidation when in order to wrest consent, serious or irresistible force is
employed.
II. There is intimidation when one of the contracting parties 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. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter B. According to Article 1335. There is violence when in order to wrest consent, serious or
irresistible force is employed.
There is intimidation when one of the contracting parties 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. To determine the degree of
intimidation, the age, sex and condition of the person shall be borne in mind. A threat to enforce one's
claim through competent authority, if the claim is just or legal, does not vitiate consent. (1267a)
37. I. Parties cannot be coerced to enter into a contact where no agreement is had between them
as to the principal terms and conditions of the contract.
II. Freedom to stipulate such terms and conditions is of the essence of our contractual system,
and by express provision of the statute , a contract may be annulled if tainted by violence, intimidation
or undue influence.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1306, The contracting parties may establish such stipulations, clauses
terms and conditions as may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
According to Article 1336, 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.
According to Article 1337, There is undue influence when a person takes improper advantage of his
power over the will of another, depriving the latter of a reasonable freedom of choice. The following
circumstances shall be considered: the confidential, family, spiritual and other relations between the
parties, or the fact that the person alleged to have been unduly influenced was suffering from mental
weakness, or was ignorant or in financial distress
Therefore, both are true.
38. The following are the requisites of violence:

I. The force employed to wrest consent must be serious or irresistible.
II. It must be the determining cause for the party upon whom it is employed in entering into
the contract.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1335, there is violence when in order to wrest consent, serious or
irresistible force is employed. Therefore, both are true.
39. When one of the contracting parties 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. Intimidation
b. Illegal threat
c. Violence
d. Undue influence
Letter A. According to Article 1335 of the Civil Code, there is intimidation when one of the
contracting parties 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 Therefore, definition above is intimidation.
40. The requisites of intimidation are the following, except:

a. That the intimidation must be the determining cause of the contract.
b. That the threatened act be just
c. That the threat be real and serious
d. That it produces a reasonable and well-grounded fear from the fact that the person from
whom it comes has the necessary means or ability to inflict the threatened injury.
Letter B. According to Article 1335, the following are the requisites for intimidation:
 That the intimidation must be the determining cause of the contract, or must have caused the
consent to be given.
 That the threatened act be unjust or unlawful
 That the threat be real and serious, there being an evident disproportion between the evil and
the resistance which all men can offer, leading to the choice of the contract as the lesser evil;
and
 That it produces a reasonable and well-grounded fear from the fact that the person from
whom it comes has the necessary means or ability to inflict the threatened injury.
Therefore, a just threatened act is not among the requisites of intimidation.
41. The following are the elements to consider in determining the degree of intimidation, except:
a. Age of the person
b. Sex of the person
c. The education of the person
d. Condition of the person
Letter C. According to Article 1335, to determine the degree of intimidation, the age, sex and condition
of the person shall be borne in mind. Therefore, education of the person is not among the elements
to consider in determining the degree of intimidation.
42. I. A threat to enforce one’s claim through competent authority, if the claim is just or legal,
does not vitiate consent.
II. Violence or fraud shall annul the obligation, although it may have been employed by a third
person who did not take part in the contract.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Article 1336. 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. (1268)
43. When a person takes improper advantage of his power over the will of another, depriving the latter
of a reasonable freedom of choice.
a. Fraud
b. Intimidation
c. Violence
d. Undue influence
Letter D. According to Article 1337. There is undue influence when a person takes improper
advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice.
The following circumstances shall be considered: the confidential, family, spiritual and other relations
between the parties, or the fact that the person alleged to have been unduly influenced was suffering
from mental weakness, or was ignorant or in financial distress. (n)
44. One of the following are circumstances to be considered in case of undue influence:
a. The confidential, family, spiritual and other relations between the parties.
b. The fact that the person alleged to have been unduly influence was suffering from mental
weakness.
c. The fact that the person alleged to have been unduly influenced was ignorant.
d. All of the above.
45. Is any means employed upon a party which, under the circumstances, he could not well resist and
which controlled his volition and included him to give his consent to the contract, which otherwise
he would not have entered into?
a. Fraud
b. Undue influence
c. Intimidation
d. Violence
Letter B. According to Article 1337, Undue Influence is “Any means employed upon a party which,
under the circumstances could not be resisted and has the effect of controlling his volition and
inducing him to give his consent to the contract, which otherwise, he would not have entered into.”
Therefore, the definition above is undue influence.
46. As deception used by one party prior to or simultaneous with the contract, in order to secure the
consent of the other. Needless to say, the deceit employed must be serious.
a. Fraud.
b. Casual Fraud
c. Incidental Fraud
d. Malice
Letter B. According to Article 1338, There is fraud when, through insidious words or machination of
one of the contracting parties, the other is induced to enter into a contract which, without them, he
would not have agreed to. Therefore, definition above is casual fraud.
47. That fraud which is not serious in character and without which the other party would have entered
into the contract anyway.
a. Fraud
b. Casual fraud
c. Incidental fraud
d. Malice
Letter D. According to upcounsel.com, Malice is a wicked intention to do an injury. It is not confined

to the intention of doing an injury to any particular person, but extends to an evil design, a corrupt
and wicked notion against some one at the time of committing the crime; as, if A intended to poison
B, conceals a quantity of poison in an apple and puts it in the way of B, and C, against whom he, had
no ill will, and who, on the contrary, was his friend, happened to eat it, and die, A will be guilty of
murdering C with malice aforethought. Therefore, definition above is malice.
48. The following are the requisites of casual fraud, except:
a. It must have been employed by one contracting party upon the other.
b. It must have induced the other party to enter into the contrast.
c. It must not be serious
d. It must have resulted in damage and injury to the party seeing annulment.
Letter C. According to Article 1342. Misrepresentation by a third person does not vitiate consent,
unless such misrepresentation has created substantial mistake and the same is mutual. (n); Article 1344.
In order that fraud may make a contract voidable, it should be serious and should not have been
employed by both contracting parties. Incidental fraud only obliges the person employing it to pay
damages. (1270)
Article 1338. There is fraud when, through insidious words or machinations of one of the contracting
parties, the other is induced to enter into a contract which, without them, he would not have agreed
to. (1269)
49. I. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound
by confidential relations, constitutes mistake.
II. Right of first refusal means identity of terms and conditions to be offered to the lessee and
all other prospective buyers and a contract of sale entered into violation of a right of first refusal of
another person, while valid, is rescissible.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter B. According to Article 1339. Failure to disclose facts, when there is a duty to reveal them, as
when the parties are bound by confidential relations, constitutes fraud. (n)
50. I. The usual exaggerations in trade, when the other party had an opportunity to know the facts,
are not in themselves fraudulent.
II. A mere expression of an opinion does signify fraud.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Article 1340. The usual exaggerations in trade, when the other party had an
opportunity to know the facts, are not in themselves fraudulent. (n) Article 1341. 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. (n)
51. I. Misrepresentation made in good faith is not fraudulent but may constitute error.
II. A fraud known as incidental fraud is basically a deception used by one party prior to or
simultaneous with the contract, in order to secure the consent of the other.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Article 1343. Misrepresentation made in good faith is not fraudulent but may
constitute error. (n)
52. I. Fraud must be established by clear and convincing evidence; mere preponderance of
evidence is not adequate.
II. Fraud, on the other hand, imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, not simply bad judgment or negligence.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Article 1338, the quantum of evidence states that “Fraud must be proved by
clear and convincing evidence and not mere preponderance of evidence.” Therefore, only I is true.
53. There is a colorable contract but it has no substance as the parties have no intention to be bound
it.
a. Relative simulation
b. Absolute simulation
c. Real contract
d. Personal contract
Letter B. According to Article 1345, Absolute simulation takes place when the parties do not intend
to be bound at all. Therefore, definition above is absolute simulation.
54. If the parties state a false cause in the contract to conceal their real agreement.
a. Relative simulation
b. Absolute simulation
c. Real contract
d. Personal contract
Letter A. According to article 1345, Relative simulation takes place when the parties conceal their true
agreement. Therefore, definition above is relative simulation.
55. The following are the object of contracts, except:

a. Things
b. Rights
c. Services
Letter D. According to ART. 1347. All things which are not outside the commerce of men, including
future things, may be the object of a contract. All rights which are not intransmissible may also be the
object of contracts. No contract may be entered into upon future inheritance except in cases expressly
authorized by law. All services which are not contrary to law, morals, good customs, public order or
public policy may likewise be the object of a contract. (1271a)
ART. 1348. Impossible things or services cannot be the object of contracts. (1272)
Object certain is the second essential element of a valid contract. (Ibid.) The object may be things (as
in sale of property), rights (as in assignment of credit), or services (as in agency).
56. Any property or right not in existence or capable of determination at the time of the contract, that
a person may in the future acquire by succession.
a. Present inheritance
b. Future inheritance
c. Legitimate
Letter A. For the inheritance to be considered “future”, the succession must not have been opened
at the time of the contract. A contract may be classified as a contract upon future inheritance
prohibited under the second paragraph of Art. 1347 of the New Civil Code. Therefore, definition
above is future inheritance.
57. I. Impossible things or services cannot be the object of contracts.

II. The object of every contract must be determinate as to its kind. The fact that the quantity
is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to
determine the same, without the need of a new contract between the parties.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1348. Impossible things or services cannot be the object of contracts.
(1272) Article 1349. The object of every contract must be determinate as to its kind. The fact that the
quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is
possible to determine the same, without the need of a new contract between the parties. (1273)
58. It is the why of the contract or the essential reason which moves the contracting parties to enter
into the contract.
a. Instrument
b. Consent
c. Object
d. Cause
Letter D. According to Sec. 3 – Cause of Contracts of the New Civil Code, cause is the why of the
contract or the essential reason which moves the contracting parties to enter into the contract.
Therefore, definition above is cause.
59. Is the essential reason for the contract.

a. Consent
b. Object
c. Cause
d. Motive
Letter C. According to Sec. 3 – Cause of Contracts of the New Civil Code, cause is the essential reason
for the contract. Therefore, definition above is cause.
60. The particular reason of a contracting party which does not affect the other party.
a. Consent
b. Object
c. Cause
d. Motive
Letter D. According to Sec. 3 – Cause of Contracts of the New Civil Code, motive is the particular
reason of a contracting party which does not affect the other party. Therefore, definition above is
motive.
61. I. Contracts without cause, or with unlawful cause, produce no effect.

II. The cause is unlawful if it is contrary to law, morals, good customs, public order or public
policy.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1352 of the New Civil Code, contracts without cause, or with unlawful
cause, produce no effect whatever. The cause is unlawful if it is contrary to law, morals, good customs,
public order or public policy. Therefore, both are true.
62. I. 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.
II. Although the cause is not stated in the contract, it is presumed that it exists and is lawful,
unless the debtor proves the contrary.
a. Only I is true.
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1353. 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.
(1276) Article 1354. Although the cause is not stated in the contract, it is presumed that it exists and
is lawful, unless the debtor proves the contrary. (1277)
63. Which is not an exception in the rule “lesion or inadequacy of cause shall not invalidate a contract.”
a. In cases specified by law
b. When there has been fraud.
c. When there has been mistake
d. When there has been violence.
Letter D. According to Article 1355. Except in cases specified by law, lesion or inadequacy of cause
shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (n)
64. H and W, obtained a loan of P350, 000 from Y rural bank. The loan was secured by a real estate
mortgage on H and W’s house and lot. H and W admit that the loan and mortgage contracts were
made to appear as several sugar crop loans not exceeding P50, 00 each – even if they were not – just
so Y rural bank could grant and approve the same pursuant to the Rural Banks Act. For failure of H
and W to pay the loan upon maturity, the mortgage was foreclosed. At the foreclosure sale, Y rural
bank, being the highest bidder, purchased the foreclosed properties.
H and W filed a complaint for declaration of nullity of loan and mortgage.
a. The sugar crop loans were absolutely simulated contracts and that both parties intended to
be bound thereby.
b. Although these loan and mortgage contracts were concealed and made to appear as
sugar crop loans to make them fall within the purview of the Rural Banks Act, all the essential
requisites of a contract were present.
c. The contract is voidable because the purpose thereof is illicit or is intended to circumvent
the Rural Banks Act.
d. Since the parties intended to be bound thereby, the agreement is unenforceable.
Letter B. According to Art. 1318 of the New Civil Code, There is no contract unless the following
requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject
matter of the contract; (3) Cause of the obligation which is established. Therefore, although these
loan and mortgage contracts were concealed and made to appear as sugar crop loans to make them
fall within the purview of the Rural Banks Act, all the essential requisites of a contract were present..
65. X offers to sell his house to Y for P100, 000. Y asks him if he would accept P80, 000. Which of
the following is correct?
a. Because of ambiguity, both offers are terminated by operation of law
b. Y’s response is a counter-offer effectively terminating the P100, 000 offer and instigating
an offer for P80, 000.
c. Y’s response is a rejection of the P100, 000 offer and there is no offer for P80, 000 because
it is too indefinite to be an offer
d. Y’s response is a mere inquiry, the P100, 000 offer by X is still there
Letter D. According to Art. 1319 of the New Civil Code, Consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer
must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
Therefore, Y’s response is a mere inquiry, the P100, 000 offer by X is still there.
66. X, accompanied by H, went to Z bank to apply for a loan. It was H who arranged everything about
the loan with the bank and who supplied to the latter the personal data required for X’s loan
application. After the bank approved the loan for the amount of P300, 000, X, accompanied by H and
W, his wife, signed a promissory note corresponding to his loan in favor of the bank. On the same
day, H and W obtained from the bank an equal amount to their loan in favor of the bank and had X
affixed thereon her signature as co-maker. The two loans were secured by a real-estate mortgage on
X’s house and lot.
Subsequently, M, the sheriff of Manila, sent a notice addressed to X, announcing that her
property would be sold at public auction to satisfy the obligation covering the two promissory notes.
X alleged that it was only when she received the letter from M when she learned that the mortgage
contract which was an encumbrance on her property was for P600, 000 and not for P300, 000 and
that she was made to sign as co-maker of the promissory note without her being informed of this.
On April 4, 1961, X filed a suit against Z bank, H and W, and M as defendants upon the
charge that thru mistake on her part or fraud on the part of H, she was induced to sign as co-maker
or a promissory note and to constitute a mortgage on her house and lot. At the time of filing her
complaint, X deposited the amount of P338, 300 with the court a quo in full payment of her personal
loan plus interest.
In addition, X claims she is a 70-year old widow who cannot read and write English language;
that she speak their native dialect only; that she has only finished second grade; that in December
1959, she needed money in the amount of P300, 000 to invest in the business of H and W, who
accompanied her to Z bank, an employee handed to her several forms already prepared whish she was
asked to sign on the places indicated, with no one explaining to her the nature and contents of the
documents; that she did not even received a copy thereof; that she was given a check in the amount
of P288, 285 which she delivered to H and W.
a. The bank did not commit mistake in giving its consent to the contracts.
b. The promissory note is valid between Z bank and X, the contracts may not be invalidated
insofar as they affect Z bank and X on the ground of fraud because the bank was not a participant
thereto.
c. As a result of the fraud upon X and the misrepresentation to the bank inflicted by H
and W both X and the bank committed mistake in giving their consents to the contracts. In
other words, substantial mistake vitiated their consents given.
d. A contract may not be annulled on the ground of vitiated consent of deceit by a third person,
even without connivance or complicity with one of the contracting parties resulted in mutual error on
the part of the parties to the contract.
Letter C. In order that mistake may invalidate consent, it should refer to the substance of the thing
which is the object of the contract, or to those conditions which have principally moved one or both
parties to enter into the contract. Mistake as to the identity or qualifications of one of the parties will
vitiate consent only when such identity or qualifications have been the principal cause of the
contract. A simple mistake of account shall give rise to its correction. Therefore, as a result of the
fraud upon X and the misrepresentation to the bank inflicted by H and W both X and the bank
committed mistake in giving their consents to the contracts. In other words, substantial mistake
vitiated their consents given.
67. X executed a Contract of Lease with Y Corp. involving a parcel of land. The said parcel of land
was subject of a Real Estate Mortgage executed by X to favor of Z bank. Subsequently, Z bank
foreclosed the mortgage thereon and Z bank emerged as the highest bidder. The redemption period
was set to expire on March 7, 2016. Realizing that he could not possibly raise in time the money
needed to redeem the subject property, X decided to sell the same. Since paragraph 11 of the lease
contract expressly provided that the “LESSEE shall have the right of first refusal should the LESSOR
decide to sell the property to Y Corp., through its President V, for P5, 000 per square meter. However,
V bargained for P3, 500 per square meter. X was not amenable to the said price and insisted on P 5,
000 per square meter.
Y Corp. sent a letter dated November 22, 2015, expressing Y Corp.’s interest to purchase the
subject property, increasing its offer to P5, 000 per square meter. However, X did not accede to said
price. This time he asked for P6, 000 per square meter since the value of the property in the area had
appreciated.
On December 5, 2015, T, President of C Corp., bargained for P5, 300 per square meter. X
accepted the same. However, since T did not have the amount with which to pay X, he told the latter
that he will look for a partner for that purpose. Sometime in January 2016, X, decided to approach
anew Y Corp and asked the latter to increase its offer of P5, 300 per square meter but V said that his
offer is P5, 000 per square meter. X did not agree. Sometime in February 2016, C Corp. and its partner
in the venture, H Corp., were able to come up with the amount sufficient to cover the redemption
money, with which X paid to Z Bank to redeem the subject property. Y Corp. then filed the suit. Is
there concealment as to constitute fraud?
a. Yes because should the lessor X decide to sell the leased property during the term of the
lease, such sale should first be offered to the lessee Y Corp.
b. None. Y Corp.’s approach in its negotiations with X showed crystal-clear that there
was never any need to disclose such information and doing so would be just a futile effort on
the part of X.
c. None, because there is no special duty to disclose certain facts.
d. Yes. Because Y Corp. was unwilling to budge from his offer, as evidenced by the exchange
of letters.
Letter B. According to Art. 1339 of the New Civil Code, failure to disclose facts, when there is a duty
to reveal them, as when the parties are bound by confidential relations, constitutes fraud. Therefore,
there is no concealment as to constitute fraud.
68. When the contract lacks one of the essential elements, the contract is;
a. void
b. voidable
c. rescissible
d. all of the above.
Letter A. Art. 1318 enumerates the essential requisites of the contract. There is no contract unless the
following requisites concur. Therefore, when the contract lacks one of the essential elements it is void.
69. X, a jeweler, acquired a 10 hectare property. X asked D to look for a buyer who might be interested
in the aforesaid property. D found one in the person of Y. it so happened that X had shown interest
in buying a pair of emerald-cut diamond earrings owned by Y which he has seen a few months ago
when his mother examined them as genuine. Subsequently, negotiations for the barter of the jewelry
and the aforesaid property ensued.
The, X, finally executed a deed of absolute sale through a notary public. Thereafter, X headed
for the bank. Y also arrived shortly thereafter. Y and the cashier retrieved the jewelry and handed it to
X. the latter took the jewelry against the light and examined it for then minutes. After a while, Y asked,
“Okay na ba iyan?” X expressed his satisfaction by nodding his head.
Later, at about 8:00 o’clock in the evening of the same day, X was complaining that the jewelry
given to him was fake. Y countered that X could not have been fooled because he had vast experience
regarding jewelry. Is the consent of X vitiated by fraud?
a. There is no evidence manifesting that Y employed such insidious words or
machinations to entice X into entering the contract of barter.
b. Y resorted to machinations to convince X to the contract of barter.
c. There is substantial evidence showing that ay induced X to sell his property of that cajoled
to take the earrings in exchange for said property.
d. There is evidence that Y and there notary public employed machinations to entice X into
entering the contract of barter.
Letter A. According to Art. 1338 of the New Civil Code, There is fraud when, through insidious
words or machinations of one of the contracting parties, the other is induced to enter into a contract
which, without them, he would not have agreed to. Therefore, the consent of X is not vitiated by
fraud.
70. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. Which of the following constitute an offer?
a. An offer made through an agent.
b. Business advertisement of things for sale.
c. Advertisement for bidders.
d. Answer not given.
Letter D. According to Art. 1319 of the New Civil Code, the offer must be certain and the acceptance
absolute. Therefore, none of the following constitute an offer.
71. X and Y, the parents of V, were the owners of two untitled parcels of land. X sold to M, a 20-
square meter undivided portion. Thereafter, X and V executed a Donation purportedly donating to
W, the wife of H, nephew of X. W convinced V and X that she could facilitate the titling of their
house and lot. W allegedly asked X and V who are both illiterate to sign a document to be used in
titling that property in their name.
Subsequently, X and V learned that the document they signed was a Deed of Donation of the
house and lot in favor of W, including the 20 square meter portion that was earlier sold to M. as a
consequence, X and V executed a Deed of Revocation of Donation. Is there fraud that attended the
act of W when she procured the signatures of V and X.
a. There is no fraud because V and X, intended to donate the subject property.
b. There is no fraud because the signature of X, was not procured by W through
misrepresentation.
c. There is no fraud because H and W explained to V the terms of the instrument.
d. The act of V and X of executing the Deed of Revocation of Donation shows that the
intent to donate the subject property was never present. Thus, there is fraud.
Letter D. According to Art. 1332 of the New Civil Code, When one of the parties is unable to read,
or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully explained to the former.
Since X and V are both illiterate but not explained as to how the contracts is employed. Therefore,
there is fraud.
72. H and W borrowed from X the amount of P175, 000 because of financial distress, payable within
6 months with an interest rate of 6% per month. To secure the payment of the loan, H and W
mortgaged their house and lot. H and W failed to pay the loan upon demand. Consequently, the real
estate mortgage was foreclosed. Is there an undue influence?
a. None. There is no showing that H and W’s consent to the loan and mortgage
agreements was vitiated by undue influence.
b. There is undue influence because their consent was vitiated.
c. There is undue influence as H and W were in financial distress; hence, there is deprivation
of their free agency.
d. There is undue influence because the lingering financial woes of spouses H and W can be
equated with the presence of undue influence.
Letter A. According to Art. 1337 of the New Civil Code, There is undue influence when a person takes
improper advantage of his power over the will of another, depriving the latter of a reasonable freedom
of choice. The following circumstances shall be considered: the confidential, family, spiritual and other
relations between the parties, or the fact that the person alleged to have been unduly influenced was
suffering from mental weakness, or was ignorant or in financial distress. Therefore, there is no undue
influence.
73. X was the owner of a parcel of land. His brothers are G and P. the lot was being leased by Z, Inc.
X was being paid P5, 000. Per month by the company.
X, who was single and had no children, lived with his half-sister, Y. At the time, a catheter was
attached to X’s body to help him urinate. X. had no other source of income except for the P5, 000
monthly rental. To how his gratitude to Y, X sold the said land to Y. Y’s only source of income was
her store. Sometimes, her children would give her money to help with the household expenses,
including the expenses incurred for X’s support. At times, she would also borrow money from M, a
neighbor. On December 2, 2016, X died of influenza. Did X execute the deed of sale under the undue
influence of Y?
a. No. For undue influence to be present, the influence exerted need not have so overpowered
the mind of a contracting party.
b. Yes. Undue influence can be inferred from age and sickness.
c. No. the evidence pertained more to X’s physical condition rather than his mental
condition.
d. Yes. There is sufficient proof to show that X executed the deed of sale under the undue
influence of Y.
Letter C. According to Art. 1337 of the New Civil Code, there is undue influence when a person takes
improper advantage of his power over the will of another, depriving the latter of a reasonable freedom
of choice. The following circumstances shall be considered: the confidential, family, spiritual and other
relations between the parties, or the fact that the person alleged to have been unduly influenced was
suffering from mental weakness, or was ignorant or in financial distress. Therefore, there is no undue
influence.
74. C and R are the legitimate children of H and W who later parted ways. To help support the
children, W filed a case for the dissolution and separation of the conjugal partnership. A separate lot
was adjudicated by the court in favor of H. meanwhile, H, until his death at age of 64, lived with U.
however, before his death, he conveyed the subject land to U’s sister, Y. at the time H, purportedly
sold the lot in question to Y, he was already totally blind and paralyzed. Y conveyed the parcel of land
to M.
Prior to the sale to M, C and R, filed an action for cancellation of title against Y, alleging that
the consent of their father was vitiated due to his physical infirmities. C and R, filed a supplemental
complaint, this time against M, for the nullification of the sale to the latter of the subject lot. Is the
sale between H and Y valid?
a. Yes, because H could understand the contents of the deeds of sale.
b. No. As the party seeking to enforce the contract, M should have presented evidence
showing that the terms of the deeds of sale to Y were fully explained to H.
c. Yes, because H consented to a contract whose terms he knew or understood.
d. Yes, it can be presumed that H, knew the contents of the deeds of sale disposing of his
properties.
Letter B. According to Art. 1327 of the New Civil Code, the following cannot give consent to a
contract: (1) Unemancipated minors; (2) Insane or demented persons, and deaf-mutes who do not
know how to write. Also, according to Art. 1332 of the New Civil Code, When one of the parties
is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is
alleged, the person enforcing the contract must show that the terms thereof have been fully
explained to the former. Since M should have presented evidence showing that the terms of the
deeds of sale to Y were fully explained to H. Therefore, the sale between H and Y is not valid.
Chapter III – Form of Contracts
1. I. Contracts shall be obligatory, in whatever form they may have been entered into, provided
all the essential requisites for their validity are present.
II. When, however, the law requires that a contract be in some form for it to be valid or
enforceable, that requirement must be complied with.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1278 of the New Civil Code, contracts shall be binding, whatever the form
may be in which they have been entered into, provided the essential conditions required for their
validity are present. Therefore, both are true.
2. I. When the form required is for validity, its non-observance renders the contract voidable.
II. When the required form is for enforceability, non-compliance therewith will not permit,
upon the objection of a party, the contract, although otherwise valid, to be proved or enforced by
action.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter B. According to Art. 1278 of the New Civil Code, contracts shall be binding, whatever the form
validity are present. Therefore, only II is true.
3. I. Formalities intended for grater efficacy or convenience or to bind third persons, if not done,
would adversely affect the validity or enforceability of the contract between the contracting parties
themselves.
II. When the form required is for validity, its non-observance renders the contract void and
of no effect.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
4. I. If the law requires a document or other special form, the contracting parties may compel
each other to observe that form, once the contract has been perfected.
II. Although a conveyance of land is not made in a public document, it does not affect the
validity of such conveyance.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1278 of the New Civil Code, contracts shall be binding, whatever the form
validity are present. Therefore, both are true.
5. An instrument authenticated by a notary public or a competent public official with the formalities
required by law.
a. Private document
b. Public document
c. Memorandum of understanding
d. Written of agreement
Letter B. According to Article 1358. The following must appear in a public document:
(1) Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property; sales of real property or of an interest therein
are governed by articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership
of gains;
(3) 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;
(4) The cession of actions or rights proceeding from an act appearing in a public document.
All other contracts where the amount involved exceeds five hundred pesos must appear in writing,
even a private one. But sales of goods, chattels or things in action are governed by articles, 1403, No.
2 and 1405. (1280a)
6. I. Failure to follow the proper form invalidates a contract.

II. Where a contract is not in the form prescribed by law, the parties can merely compel each
other to observe that form, once the contract has been perfected.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
7. I. once the minds of the contracting parties meet, a valid contract exists, whether it is reduced
to writing or not.
II. When the terms of an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1319 of the New Civil Code, consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract. Therefore,
both are true.
8. Those contracts which are perfected by the mere agreement of the parties.
a. Formal
b. Real
c. Consensual
d. Principal
Letter C. According to Art. 1319 of the New Civil Code, consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract. Therefore,
the definition above is consensual.
9. Those contracts which require not only the consent of the parties for their perfection, but also the
delivery of the object by any one party to the other.
a. Formal
b. Real
c. Consensual
d. Principal
Letter C. According to Art. 1316 of the New Civil Code, real contracts, such as deposit, pledge and
commodatum, are not perfected until the delivery of the object of the obligation. Therefore, the
definition above is real.
10. I. Contracts are law between the parties, and they are bound by the stipulations.
II. It is rule that a contract freely entered between the parties should respected, since a contract
is the law between the parties.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1305 of the New Civil Code, A contract 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. Also, according to Art. 1306 of the New Civil Code, The contracting parties may
establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order, or public policy. Therefore, both are
true.
Chapter IV – Reformation of Instrument
1. Is a remedy in equity whereby a written instrument is made or construed so as to express or conform

to the real intention of the parties where some error or mistake has been committed.
a. Annulment
b. Reformation
c. Construction
d. Interpretation
Letter B. According to Art. 1359 of the New Civil Code, When, there having been a meeting of the
minds of the parties to a contract, their true intention is not expressed in the instrument purporting
to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the
parties may ask for the reformation of the instrument to the end that such true intention may be
expressed. Therefore, the definition above is reformation.
2. I. In granting reformation, the remedy in equity is not making a new contract for the parties,
but establishing and perpetuating the real contract between the parties.
II. In reforming instruments, courts do not make another contract for the parties. They merely
inquire into the intention of the parties and, having found it, reform the written instrument (not the
contract) in order that it may express the real intention of the parties.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Art. 1359 of the New Civil Code, When, there having been a meeting of the
expressed. Therefore, both are true.
3. In order that an action for reformation of instrument may prosper, the following requisites must
concur, except:
a. There must have been a meeting of the minds of the parties to the contract.
b. There must have been no meeting of the minds of the parties to the contract.
c. The instrument does not express the true intention of the parties.
d. The failure of the instrument to express the true intention of the parties is due to mistake,
fraud, inequitable conduct or accident.
Letter B. According to Art. 1359 of the New Civil Code, When, there having been a meeting of the
expressed. Therefore, no meeting of the minds of the parties is not a requisites of reformation.
4. Is the act of making intelligible what was before not understood ambiguous, or not obvious.
a. Annulment
b. Reformation
c. Ratification
d. Interpretation
Letter D. According to National Irrigation Administration v. Gamit, G.R. No. 85869, November 6,
1992, 215 SCRA 436, 453, citing Martin, Comments on the Rules of Court, Vol. V, 1986 ed., p. 124,
citing Dick vs. King, 236 P. 1059, 73 Mont. 465, "Interpretation" is defined as the act of making
intelligible what was before not understood, ambiguous, or not obvious; it is a method by which the
meaning of language is ascertained. Therefore, the definition above is interpretation.
5. Is that remedy in equity by means of which a written instrument is made or construed so as to

express or conform to the real intention of the parties.
a. Annulment
b. Ratification
c. Reformation
d. Interpretation
Letter D. According to Article 1359 of the New Civil Code, When, there having been a meeting of
the minds of the parties to a contract, their true intention is not expressed in the instrument purporting
expressed. Therefore, the definition above is reformation.
6. I. In reformation of contracts, what is reformed is not the contract itself, but the instrument
embodying the contract.
II. In an instrument embodying a contract where both parties committed mutual mistake
which caused the failure of the instrument to disclose their real agreement, said instrument may be
reformed.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1361. When a mutual mistake of the parties causes the failure of the
instrument to disclose their real agreement, said instrument may be reformed.
7. I. In an instrument embodying a contract where one party was mistaken and the other acted
fraudulently or inequitably in such a way that the instrument does not show their true intention, only
the party who was mistaken may ask for reformation of the instrument or his heirs and assigns.
II. 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, the instrument may be reformed.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1361. When a mutual mistake of the parties causes the failure of the
instrument to disclose their real agreement, said instrument may be reformed.
Article 1362. If one party was mistaken and the other acted fraudulently or inequitably in such a way
that the instrument does not show their true intention, the former may ask for the reformation of the
instrument.
8. I. When through the ignorance, lack of skill, negligence or bad faith on the part of the person
drafting the instrument or of the clerk or typist, the instrument does not express the true intention of
the parties, the courts may order that the instrument be reformed.
II. If two parties 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 repurchase, annulment of the
instrument is proper.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter A. According to Article 1364. When through the ignorance, lack of skill, negligence or bad faith
on the part of the person drafting the instrument or of the clerk or typist, the instrument does not
express the true intention of the parties, the courts may order that the instrument be reformed. Article
1365. If two parties 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, reformation of the instrument
is proper.
9. There shall be no reformation in the following cases, except:

a. Memorandum of agreement
b. Wills
c. Simple donations inter vivos
d. When the real agreement is void
Letter A. According to Article 1366. There shall be no reformation in the following cases:
(1) Simple donations inter vivos wherein no condition is imposed;
(2) Wills;
(3) When the real agreement is void.
10. I. Reformation may be ordered at the instance of either party or his successors in interest, if
the mistake was mutual; otherwise, upon petition of the injured party, or his heirs and assigns.
II. When one of the parties has brought and action to enforce the instrument, he cannot
subsequently ask for its reformation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
Letter C. According to Article 1367. When one of the parties has brought an action to enforce the
instrument, he cannot subsequently ask for its reformation. Article 1368. Reformation may be ordered
at the instance of either party or his successors in interest, if the mistake was mutual; otherwise, upon
petition of the injured party, or his heirs and assigns.
11. A and B entered into a contract of mortgage. However, as written the document states it is a
contract of sale with right or repurchase, the error due to the fault of the clerk. Hence:
A. The contract of sale must be anulled since it is voidable
B. The instrument has to be enforced as it is the proof of th agreement between the parties
C. Because of the negligence of the parties in signing without first reading the instrument , they are
bound by the contents of the same.
D. The instrument may be reforned because it does not express the true agreement of the parties.
Letter D. According to NCC. The instrument may be reforned because it does not express the true
agreement of the parties. ARTICLE 1359. When, there having been a meeting of the minds of the
parties to a contract, their true intention is not expressed in the instrument purporting to embody
the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may
ask for the reformation of the instrument to the end that such true intention may be expressed.
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the
parties, the proper remedy is not reformation of the instrument but annulment of the contract.
12. A orally sold to B his house at #47 Lagaws, Mt. Province. In the written deed of sale, both
forgot the true number of the house and instead worte on the contract, #74 Lagawa, Mt. Orivince.
The remedy shall be:
A. Annulment if a voidable contact because of mutual mistake
B. Reformation of instrument because of lack of meeting of minds
C. Reformation of instrument because of mutual error
D. Declaration of nullity of the contract because of the uncertainty of th intention as to the object
Letter C. ARTICLE 1359. When, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to embody the
agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask
for the reformation of the instrument to the end that such true intention may be expressed.
ARTICLE 1361. When a mutual mistake of the parties causes the failure of the instrument to
disclose their real agreement, said instrument may be reformed.
13. Y entered into a contract of mortgage with X. T, clerk of Y typed the document. Due to T’s
negligence, the document made was that of sale instead of mortgage.
A. The remedy is annulment
B. Parties may go to court forr interpretation
C. Oparties may enforce their right because it is enforceable
D. Reformation of instrument is proper
Letter D. ARTICLE 1359. When, there having been a meeting of the minds of the parties to a
14, In order that an actio for reformation of instrument may prosper, the following requisites must
concur:
I. There must have been a meeting of the minds of the parties to the contract;
II. The instrument does noit express the true intention of the parties; and
III. The failure of the instrument to express the true intention of the parties is due to mistake, fraud,
inequitable conduct or accident.
A. Only I is true
B. Only II is true
C. I, II and III are true
D None of the above
Letter C. ARTICLE 1359. When, there having been a meeting of the minds of the parties to a
Chapter V - Interpretation of Contracts
1. It is the act of making intelligible what was before not understood, ambiguous, or not obvious.
A. Annulment
B. Reformation
C. Ratification
D. Interpretation
Letter D. According to NCC. Interpretation is the act of making intelligible what was before not
understood, ambiguous, ot no obvious. It is a mehtod by which the meaning of language is
ascertained. The “interpretation” of a contract is the determnation of the meaning attached to the
word writteb or spoken which make the contract.
2. It is the determination of the meaning attached to the words wrtitten or spoken which make the
contract
A. Annulment
B. Reformation
C. Ratification
D. Interpretation
Letter D. According to NCC. Interpretation is the act of making intelligible what was before not
ascertained. The “interpretation” of a contract is the determination of the meaning attached to the
3. The intent of the parties to an instrument is :embodied in the writing itself, amd when the words
are clear and unambiguous the ontent is to be discovered only from the express language of the
agreement.
a. Plain meaning rule
b. Four courners rule
c. Ambiguity rule
d. Reformation rule
Letter A. ARTICLE 1370. If the terms of a contract are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of its stipulations shall control.
If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over
the former.
4. A principle which allows courts in some cases to search beneath the semantic surface for clue to
meaning
A. Plain meaning rule
B. Four courners rule
C. Ambiguity rule
D. Reformation rule
Letter B. ARTICLE 1370. If the terms of a contract are clear and leave no doubt upon the intention
the former.
5. I. A court’s purpose inexamining a contract is to interpret the intent of the contracting parties , as
objectively manifested by them
II. A contract provision is ambiguos if it is suceptiible of two reasonable alternative interpretations
A. Only I istrue
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to NCC. Interpretation is the act of making intelligible what was before not
ARTICLE 1370. If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control.
the former.
6. I. The rule is that where the language of a contract is plain and unambiguous, its meaning should
be determined without reference to extrinsic facts or aids.
II. Where the language of a written cintract is clear and unambiguous, the contract must be taken to
mean that which, on its face, it purports to mean, unless some good reason can be assigned to show
that the words should be understood in a different sense.
A. Only I istrue
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to NCC. Interpretation is the act of making intelligible what was before not
ARTICLE 1370. If the terms of a contract are clear and leave no doubt upon the intention of the
the former.
7. It is a cardinal rule in the interpretation of contracts that the intention of the oarties shall be
accorded secondary consideration.
II. Courts cannot make for the parties better or more equitable agreemensts than they themselves
have been satisfied to make, or rewrite contrcats because they operate harshly or inequitably as to
one of the parties, or alter them for the benefit of one party and to the detriment of the other, or by
construction, relieve one of the parties from the terms which he voluntarily consented to, or impose
on him those which he did not.
A. Only I istrue
B. Only II is true
C. Both are true
D. Both are false
Letter B. As per thhe case of Celestino Balus vs Saturnino Balus and Leonarda Balus Vda . De
Calunod, G.R. NO. 168970, January 15, 2010. It is a cardinal rule in the interpretation of the
contracts that the intention of the parties shall be accorded primordial consideration. It is the duty
of the courts to place a practical and realistic construction upon it, giving due is intended to serve.
Such intention is determined from the express terms of their agreement, as well as their
contemporaneous and subsequent acts. Absurd and illogical interpretations should also e avoided.
8. I. In order to judge the intention of the contracting partoes, only their preceding acts shall be
principally considered.
II. However general the terms of a contract may be, they shall not be understood to comprehend
things that are distinct and cases that are different from those upon which the parties intended to
agree.
A. Only I istrue
B. Only II is true
C. Both are true
D. Both are false
Letter B. According to Article 1371 and 1372, NCC. ARTICLE 1371. In order to judge the
intention of the contracting parties, their contemporaneous and subsequent acts shall be principally
considered. (1282)
ARTICLE 1372. However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which the parties
intended to agree.
9. I. If some stipulation of any contract should admit of several meanings, it shall be understood as
bearing that import which isn most adequate to render it effectual.
II. The various stipuations of a contract shall be interpreteed together, attributing to the dobtful
ones that sense which may result fromm all of them taken jointly.
A. Only I istrue
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to Article 1371 and 1374. ARTICLE 1371. In order to judge the intention of
the contracting parties, their contemporaneous and subsequent acts shall be principally considered.
ARTICLE 1374. The various stipulations of a contract shall be interpreted together, attributing to
the doubtful ones that sense which may result from all of them taken jointly.
10-20.
Chapter VI- Rescissible Contracts
1. The following are defective contracts, except:

A. Rescissible contracts
B. Voidable contracts
C. Unenforcaeable contracts
D. Void and inexistent contracts
E. None of the above
Letter E. According to NCC. The foolwinf are defective contracts,

1.) Rescissible contracts;
2.)Voidable contracts;
3.) Unenforcaeable contracts; and
4). Void and inexistent contracts.
2. Is a remedy granted by law to the contracting parties and even to third persons, to secure the
reparation of damages caused to them by a contract, even if this should be valid, by
restoration of things to their condition at the moment prior to the celebration of the
contract.
A. Rescission
B. Annulment
C. Ratification
D. Enforceability
Letter A. ARTICLE 1385. Rescission creates the obligation 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 he may be obliged to
restore.
Neither shall rescission take place 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.
In this case, indemnity for damages may be demanded from the person causing the loss.
3. Is a relief which the law grants on the premise that the contract is valid for the protection of
one of the contracting parties and third persons from all injury and damage the contract may
cause, or to protect some incompatible and preerential right created by the contract.
A. Rescission
B. Annulment
C. Ratification
D. Enforceability
restore.
4. I. Rescission creates obligation to returm the object of the contract
II. To rescind is to declare a contract void at its inception and to put end to it as though it never
was.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. ARTICLE 1385. Rescission creates the obligation to return the things which were the
restore.
5. I. Rescission of a contract will be permitted for a slight or casual brach

II. Rescissible contracts, not being void, they remain legally effective until set aside in a
rescissory sction and may convey title.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter B. As per the case of Air France vs. CA et. al G.R. No. 104234, June 30, 1995.
Rescissible contracts not being void. They remain legally effective until set aside in a rescissory
action and may covey ttitle.
ARTICLE 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment,
if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of
a period
6. The following are rescissible contracts, except:

A. Those which are entered into by guardians whenever the wards whom they represent suffer
lesion by more thst one fourth of the value of the things which are the object thereof.
B. Those were one of the contracting party is incapacitated.
C. Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the
preceding number.
D. Those undertaken in fraud of reditors when the latter cannot in any manner collect the claims
due them.
Letter B. ARTICLE 1381. The following contracts are rescissible:
(1) Those which are entered into by guardians whenever the wards whom they represent suffer
lesion by more than one-fourth of the value of the things which are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the
preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the
claims due them;
(4) Those which refer to things under litigation if they have been entered into by the defendant
without the knowledge and approval of the litigants or of competent judicial authority;
(5) All other contracts specially declared by law to be subject to rescission.
7. The following are rescissible contracts, except:

A. Those which are entered into by guardians whenever the wards whom they represent suffer
lesion by more than one fourth of the value of the things which are the object thereof.
B. Those which refer to things under litigation if thet have been entered into by the defendant
without the knowledge and approval of the litigans or of competent judicial authority
C. Those covered by statute of frauds
D. Those undertaken in fraud of creditors when the latter cannot un any manner collect the
claims due them
Letter C. According to NCC. The following are rescissible contracts: a. Those which are entered into
by guardians whenever the wards whom they represent suffer lesion by more than one fourth of the
value of the things which are the object thereof; b. Those which refer to things under litigation if
thet have been entered into by the defendant without the knowledge and approval of the litigans or
of competent judicial authority; and c. Those undertaken in fraud of creditors when the latter cannot
un any manner collect the claims due them.
8. A person, usually a minor, who is under a guardian’s charge or protection

A. Guardian
B. Absentee
C. Representative
D. Ward
Letter D. According to ACC. A ward is a person, usually a minor, who is under a guardian’s
charge or protection.
9. I. Rescission implies that there is a contract that, while initially valid produces a lesion or
pecuniary damage to someone.
II. Elementary is the principle that the validity of a contract does precludes its rescission.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
restore.
10. I. Contracts infraud of creditors are those executed with the intention to prejudice the right
of creditors.
II. To creditors seeking contract rescission on the ground of fraudulent conveyance rest the
onus proving by competent evidence the existence of such fraudulent intent on the part of the
debtor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. ARTICLE 1387. All contracts by virtue of which the debtor alienates property by
gratuitous title are presumed to have been entered into in fraud of creditors, when the donor did not
reserve sufficient property to pay all debts contracted before the donation.
Alienations by onerous title are also presumed fraudulent when made by persons against whom
some judgment has been rendered in any instance or some writ of attachment has been issued. The
decision or attachment need not refer to the property alienated, and need not have been obtained by
the party seeking the rescission.
In addition to these presumptions, the design to defraud creditors may be proved in any other
manner recognized by the law of evidence.
11. I. It cannot be overemphasized that rescission is generally unavailing should a third person,
acting in bad faith, is in lawful possession of the property.
II. Elementary is the principle that the validity of a contract does not preclude its rescission.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter D. ARTICLE 1380. Contracts validly agreed upon may be rescinded in the cases established
by law. (1290)
ARTICLE 1381. The following contracts are rescissible:
preceding number;
claims due them;

12. The exhaustion of all remedies by the prejuduced creditor to collect claims due him before
rescission is resorted to.
A. Principal remedy
B. Subsidiary remedy
C. Primary remedy
D. Secondary remedy
Letter B. ARTICLE 1383. The action for rescission is subsidiary; it cannot be instituted except when
the party suffering damage has no other legal means to obtain reparation for the same.
13. It is when the debtor has more liabilites than his assets
A. Liquidity
B. Inliquidity
C. Solvency
D. Insolvency
Letter D. ARTICLE 1636. In the preceding articles in this Title governing the sale of goods, unless
the context or subject matter otherwise requires:
(1) “Document of title to goods” includes any bill of lading, dock warrant, “quedan,” or warehouse
receipt or order for the delivery of goods, or any other document used in the ordinary course of
business in the sale or transfer of goods, as proof of the possession or control of the goods, or
authorizing or purporting to authorize the possessor of the document to transfer or receive, either
by indorsement or by delivery, goods represented by such document.
“Goods” includes all chattels personal but not things in action or money of legal tender in the
Philippines. The term includes growing fruits or crops.
“Order” relating to documents of title means an order by indorsement on the documents.
“Quality of goods” includes their state or condition.
“Specific goods” means goods identified and agreed upon at the time a contract of sale is made.
An antecedent or pre-existing claim, whether for money or not, constitutes “value” where goods or
documents of title are taken either in satisfaction thereof or as security therefor. acd
(2) A person is insolvent within the meaning of this Title who either has ceased to pay his debts in
the ordinary course of business or cannot pay his debts as they become due, whether insolvency
proceedings have been commenced or not.
(3) Goods are in a “deliverable state” within the meaning of this Title when they are in such a state
that the buyer would, under the contract, be bound to take delivery of them. (n)
14. I. The prupose of rescission is to repair damages caused

II, Rescisiion creates the obligation to return the things which were the object of the contract,
together wit their fruits, and the price with its interest; consequently, it can be carried out only
whe he whondemands rescission can return whatever he may obliged to restore.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to Article 1384 and 1385, NCC. ARTICLE 1384. Rescission shall be only to the
extent necessary to cover the damages caused. (n)
ARTICLE 1385. Rescission creates the obligation 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 he may be obliged to restore.
15. Entails the return of the benefits that each party may have received as a result of the contract
A. Mutual restitution
B. Ratification
C. Annulment
D. Rescission
Letter A. ARTICLE 1399. When the defect of the contract consists in the incapacity of one of the
parties, the incapacitated person is not obliged to make any restitution except insofar as he has been
benefited by the thing or price received by him.
16. This means bringing the parties back to their original status prior to the inception of the
contract.
A. Mutual restitution
B. Ratification.
C. Annulment
D. Rescission
Letter B. ARTICLE 1392. Ratification extinguishes the action to annul a voidable contract. (1309a)
ARTICLE 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit
ratification if, with knowledge of the reason which renders the contract voidable and such reason
having ceased, the person who has a right to invoke it should execute an act which necessarily
implies an intention to waive his right.
17. When a decree for rescission is handed down, it is the duty of the court to require both
parties to surrender that which they have respectviely received and to place each other as fas
as practicable in his original situation.
II. Rescission has the effect of abrogationg the contract in all parts.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. ARTICLE 1386. Rescission referred to in Nos. 1 and 2 of article 1381 shall not take place
with respect to contracts approved by the courts. (1296a)
ARTICLE 1387. All contracts by virtue of which the debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of creditors, when the donor did not reserve sufficient
property to pay all debts contracted before the donation.
18. I. Mutual restitution entails the return of the benefits that each party may have received as a
result of the contract.
II. To rescind is to declare a contract void at its inception and to out an end to it as though it
never was.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. ARTICLE 1399. When the defect of the contract consists in the incapacity of one of
the parties, the incapacitated person is not obliged to make any restitution except insofar as he
has been benefited by the thing or price received by him.
19. The action to rescind contracts in fraud of creditors.

A. Accion subrogatoria
B. Accion pauliana
C. Accion redhibitoria
D. Accion quanti minoris
Letter B. according to NCC. For this action to proseper, the followujng requisties must be present.
1. The plaintiif asking for rescission has a credit prior to the alienatiom althpuigh demadable later;
2. The debtor has made a subsequent contract conveying a patrimonial benefit to a third person;
3. The creditor has no other legal remedy to satisfy his claim
4. The act being impigned is fraudulent;
5. The third person who received the property conveyed, if is by onerous title, has been an
accomplice in the frraud.
20. The following are the requisites for action to rescind contrcts in fraud of creditors, except:
A. The plaintiff asking for rescission has a credit prior to he alianation, although demandable
later.
B. The debtor has made a subsequent contract conveying a patrimonial benefit to e thir person
C. The creditor has other legal remedies to satisfy his claim
D. The act being impugned is fraudulent
Letter C. According to NCC. The following are the requisites for action to rescind contrcts in fraud
of creditors: 1. The plaintiff asking for rescission has a credit prior to he alianation, although
demandable later; 2. The debtor has made a subsequent contract conveying a patrimonial benefit to
a third person; and 3. The act being impugned is fraudulent.
21. The following are the requisites for action to rescind contracts in fraud of creditors, except:
A. The plaintiff asking for rescission has acredit prior to the alienation, although demandable later.
B. The third person who receibed the property conveyed, if it is by onerous title, has been in good
faith.
C. The debtor has made a subsequent contract conveying a patrin=monial benefit to a third person
D. The creditor has no other legal remedy to satify his claim.
Letter B. According to NCC. The following are the requisites for action to rescind contracts in fraud
of creditors: 1. The plaintiff asking for rescission has acredit prior to the alienation, although
demandable later; 2. The debtor has made a subsequent contract conveying a patrin=monial benefit
to a third person; and 3. The creditor has no other legal remedy to satify his claim
22. An accion pauliana presupposes the following except:

A. A judgement
B. The issunace by the trial court of a writ of execution for the satisfaction of the judgement
C. The failure of the sherriff to enforce and satisfy the judgement of the court
D. None of the above.
Letter D. Accoding to NCC. An accion pauliana presupposes the following:

1. A judgement
2. The issunace by the trial court of a writ of execution for the satisfaction of the judgement
3. The failure of the sherriff to enforce and satisfy the judgement of the court
An accion pauliana accrues only when the crediotr discovers that he has no other legal remedy for
the satisfaction of his claim against the debtor other than accion pauliana.
23. I. Alienations made by a debtor by gratuitous title are conclusively presumed fraudulent
when the donor did not reserve sufficient property to pay his outstanding debts.
II. Alinations by onerous title are conclusively presumed fraudulent when made by persons
against whom some judgement has been rendered or some writ of attachment has been issued.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter D. According to Article 1387, NCC. All contracts by virtue of which the debtor alienates
property by gratuitous title are presumed to have been entered into in fraud of creditors, when the
donor did not reserve sufficient property to pay all debts contracted before the donation.
24. The following instances as badges of fraud, except:

A. The fact that the consideration of the cobveyance is adequate
B. A transfer made by a debtor after suit has begun and while it is pending against him
C. A sale upon credit by an insolvent debtor
D. Evidence of large indebtedness or complete insolvency
Letter A. According to NCC. The following instances as badges of fraud: 1) A transfer made by a
debtor after suit has begun and while it is pending against him; 2.)A sale upon credit by an insolvent
debtor; and 3.) Evidence of large indebtedness or complete insolvency.
25. The following instances as badges of fraud, except:

A. The transfer of all or nearly all of his property by a debtor especially when he is insolvent or
greatly embarassed financially.
B. The fact that the transfer is made between father and son, when there are present other of the
above circumstances.
C. The failure of the vendee to take exclusive possession of all the property
D. A sale upon credit by a solvent debtor.
Letter D. The following instances as badges of fraud: 1. The transfer of all or nearly all of his
property by a debtor especially when he is insolvent or greatly embarassed financially; 2. The fact
that the transfer is made between father and son, when there are present other of the above
circumstances; and 3. The failure of the vendee to take exclusive possession of all the property.
26. I. The action to claim resciiom must be commenced within four years
II. For persons under guardiansip, prescriptive period is within four years from the time of the
termination of the incapacity of the ward.
III. For absentees, prescriptive period is within four years from the time the domicile of the
absentee is known,
A. Only I is true
B. Only II is true
C. Only III is true
D. I, II and II are true.
Letter D. According to Article 1388, NCC. ARTICLE 1388. Whoever acquires in bad faith the
things alienated in fraud of creditors, shall indemnify the latter for damages suffered by them on
account of the alienation, whenever, due to any cause, it should be impossible for him to return
them.
If there are two or more alienations, the first acquirer shall be liable first, and so on successively.
27. When the late E died, he left a lot, to his wife, F and their nine children, one of whom was
W. To enable W and her husband H to get a loan from Z bank. F sold the whole lot to
spouses H and W. Subsequently, H and W mortgaged the lot with Z bank. After H and W
failed to pay their own loan, Z bank foreclosed the mortgage on the lot and conslidated
ownership in its name.
On November 28, 1983 F and her eight children filed an actionbn for declaration of
nullity of documents against Z bank and H and W. On December 27, 1984, Z bank executed
a deed of absolute sale of the subject lot in Q’s favor. The deed of sale carried waiver of
warranty against eviction. Q having since died, Q’s heirs asked the trial court to award the lot
to them and, should it instead be given to F’s heirs, to allow Q’s heris to recover the lot’s
value form Z bank. On December 16, 1992 the trial court rendered a decision , declaring Z
bank’s sale to Q valid only with respect to the sgares of F and W in the property. The RTC
judgment became final on January 28, 1993. On June 10, 1998 Q’s heirs filed an action
against Z bank for rescission of the contract of sale between Q and Z bank and praying for
the reimbursement of the price of P78,000 that she paid the bank plus damages. Is Q’s
action for rescission already barred by prescription?
A. Yes, the law provides that prescription id four years from the time the action is
accrued, Since it accrued on January 28, 1993 when the decision ousted the heirs from a
substantial portion of the lot, the latter had only until January 28, 1997 within which to file
their action for rescission. Given that they filed their action on June 10, 1998, they did so
beyond the four-year period.
B. No, because prescription is ten years from the time the action accrued.
C. No, because prescription is four years from November 28, 1983.
D. No, because prescription is four years from December 27, 1984.
Letter A. Yes, the law provides that prescription id four years from the time the action is accrued,
Since it accrued on January 28, 1993 when the decision ousted the heirs from a substantial portion
of the lot, the latter had only until January 28, 1997 within which to file their action for rescission.
Given that they filed their action on June 10, 1998, they did so beyond the four-year period.
28. S sold to B his parcel of land worth one million pesos for only half a million pesos. After the
sale and realizing his damage, S is now seeking to set aside the sale. Decide:
A. The contract is voidable because of mistake of the seller.
B. It id rescissible because of the lesion or damage suffered by S.
C. The sale is valid but unenforceable
D. The sale is valid, binding and enforceable
Letter D. According to NCC. The sale is valid, binding and enforceable. ARTICLE 1356. Contracts
shall be obligatory, in whatever form they may have been entered into, provided all the essential
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, that
requirement is absolute and indispensable. In such cases, the right of the parties stated in the
following article cannot be exercised.
29. A made a donation to B. Later, A contracted several debts. What A has left as assests are
much less than his present liabilities. May the donation be rescinded?
A. No, because the debts were incurred after the donation
B. No, if A gave guaranty or mortgage for his debts.
C. Yes, because the donation is void being in fraud of creditors.
D. Yes, because the contract is unenforceable.
Letter A. ARTICLE 758. When the donation imposes upon the donee the obligation to pay the
debts of the donor, if the clause does not contain any declaration to the contrary, the former is
understood to be liable to pay only the debts which appear to have been previously contracted. In
no case shall the donee be responsible for the debts exceeding the value of the property donated,
unless a contrary intention clearly appears.
30. I. Guardian of W, sold W’s house valued at P50,000 for P37,500

II. X sold his house valued at P50,000 for only P300,000 because X did not know the true value
of the house.
A. I and II are rescissible
B. Only I is rescissible
C. II is voidable because there is an error
D. Both contracts are valid and enforceable
Letter D. Both contracts are valid and enforceable. ARTICLE 1356. Contracts shall be obligatory, in
whatever form they may have been entered into, provided all the essential 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, that requirement is absolute and
indispensable. In such cases, the right of the parties stated in the following article cannot be
exercised.
31. To defraud his creditor, A sold his house to X. When however, the creditor wanted to
collect his credit, somebody lent A enough money. Is the sale rescissible?
A. Yes, because it was entered into in fraud of creditors
B. No because the creditor can collect the credit due him
C. No, because the debtor has bevome in good faith when he was lent enought money to ay his
debts
D. Yes, because the debtor was in bad faith when he sold the house to X.
Letter B. No because the creditor can collect the credit due him.
32. G was appointed as the guardian of M who owns a oarcel of land valued at P1,000,000. M
sold the land only for P600,000 to B. The contract was defective because:
A. Unenforceable
B. Rescissible
C. Voidable
D. Void
Letter C. ARTICLE 1390. The following contracts are voidable or annullable, even though there
may have been no damage to the contracting parties:
These contracts are binding, unless they are annulled by a proper action in court. They are
susceptible of ratification. (n)
ARTICLE 1391. The action for annulment shall be brought within four years.
This period shall begin:
In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases.
In case of mistake or fraud, from the time of the discovery of the same.
And when the action refers to contracts entered into by minors or other incapacitated persons, from
the time the guardianship ceases.
33. Which of the following contracts is rescissible?

A. Those where one of the parties is incapable of giving consent to a contract
B. Those where both parties are incapable of giving consent to a contract
C. Those which are entered into by guardians whenever the wards whom they represent suffer a
lesion of more than 1/4 of the value of the object
D. Those which are absolutely simulated or fictitious.
Letter C. ARTICLE 1381. The following contracts are rescissible:
preceding number;
claims due them;
34. Three of the following are rescissible, which is not?

A. Sale of property under litigation made by defendant without consent of plaintiff or authority
of the court
B. Those made to defraud creditors when the latter have no other means to recover their claims
C. Those agreed upon in representationb of absentees, if the absentees suffers lesion by more
than 1/4 of the valur of the property subject of the contract,
D. Contract of sale and the price is unusually inadequate resulting to lesion
Letter D. ARTICLE 1381. The following contracts are rescissible:
preceding number;
claims due them;
35. Which of the following contracts is not rescissible

A. Those which are entered into by guardians whenevere the wards whom they represent suffer
a lesion of more than 1/4 of the value of the object of the contract
B. Those executed in representation of an absentee, if the latter suffer a lesion more than 1/4 of
the value of the object of the contract
C. Those where one of the parties is incapable of giving consent to a contract
D. Those undertaken in fraud of creditors when the latter cannot in any other manner collect
the claims due them .
Letter C. ARTICLE 1381. The following contracts are rescissible:
preceding number;
claims due them;
S owns an old yellow vintage car. Being in need of money, S sold the car to B for P300,000. After
the sale it was discovered that the car was valuable and worth P700,000.
A. S may rescind the contract due to lesion or inadequacy of cause\
B. S may annul the contract because of fraud
C. S may annul the contract on the ground of error
D. B is entitled to the benefit of the contract because it is valid and binding.
Letter D. ARTICLE 1370. If the terms of a contract are clear and leave no doubt upon the intention
the former.
Chapter VII- Voidable Contracts
1. These contracts are existent, valid and binding although they can be annulled because of want of
capacity or vitiated consent of the one of the parties, but before annulment, they are effective and
obligatory between the parties.
A. Rescissible contracts
B. Voidable contracts
C. Unenforceable contracts
D. Void ang inexistent contracts
Letter B. ARTICLE 1390. The following contracts are voidable or annullable, even though there
susceptible of ratification.
2. I. A voidable or annullable contract is one which has no force and effect from the very beginning.
II. A void or inexistent contract is one which the essential requisites for validity are present, but
vitiated by want of capacity, error, violence, intimidation, undue influence, or deceit.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter D. ARTICLE 1390. The following contracts are voidable or annullable, even though there
susceptible of ratification.
3. I. Contracts where consent is given through fraud are voidable or anullable.

II. If the contract is ratified, the action to annul is extinguished.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. ARTICLE 1392. Ratification extinguishes the action to annul a voidable contract. (1309a)
implies an intention to waive his right
4. I. If the contract is anulled, the contracting parties are restored to their respective situations
before the contract and mutual resitution folows as a consequence.
II. If the contract is ratified, the action to annul it is extinguished and the contract is cleansed from
all its defects,
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. ARTICLE 1401. The action for annulment of contracts shall be extinguished when the
thing which is the object thereof is lost through the fraud or fault of the person who has a right to
institute the proceedings.
If the right of action is based upon the incapacity of any one of the contracting parties, the loss of
the thing shall not be an obstacle to the success of the action, unless said loss took place through the
fraud or fault of the plaintiff.
5. I. For undue influence to be present, the influence exerted must have so overpowered or
subjugated the mind of a contracting party as to destroy his free agency, making him express the will
of another rather his own.
II. There is undue influence when a person takes improper advantage of his power over the will of
another, depriving the latter of a reasonable freedom of choice.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. ARTICLE 1337. There is undue influence when a person takes improper advantage of his
power over the will of another, depriving the latter of a reasonable freedom of choice. The following
circumstances shall be considered: the confidential, family, spiritual and other relations between the
parties, or the fact that the person alleged to have been unduly influenced was suffering from mental
weakness, or was ignorant or in financial distress.
6. The act or means by virtue of which efficacy is given to a contact which suffers fron avice of
curable nullity.
A. Ratification
B. Reformation
C. Interpretation
D. Annulment
Letter A. ARTICLE 1392. Ratification extinguishes the action to annul a voidable contract. (1309a).
implies an intention to waive his right
7. The requisites of ratification are the following, except:

A. The contract should be tainted with a vice which is susceptible of being cured.
B. The confirmation should be effected by the person who is entitled to do so under the law
C. It should be effected with knowledge of the reason which rendrs the contract voidable.
D. The reason which renders the contract voidable should have not disappeared.
Letter D. ARTICLE 1393. Ratification may be effected expressly or tacitly. It is understood that
there is a tacit ratification if, with knowledge of the reason which renders the contract voidable and
such reason having ceased, the person who has a right to invoke it should execute an act which
necessarily implies an intention to waive his right.
8. The action for annulment shall be brought within four years

I. In cases of intimidarion, violenve or undue influence, from the time the defect of the consent
ceases.
II. In case of mistake or fraud, from the time of the discovery of the same.
III. And when the action refers to contracts entered into by minors or other incapacitated persons,
from the time the guardianship ceases.
A. Only I is correct
B. Only II is correct
C. Only III is correct
D. I, II and II are correct
Letter D. ARTICLE 1391. The action for annulment shall be brought within four years.
In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases.
In case of mistake or fraud, from the time of the discovery of the same.
And when the action refers to contracts entered into by minors or other incapacitated persons, from
the time the guardianship ceases.
9. I. An action for annulment of contract is one filed where consent is vitiated by lack of legal
capacity of one of the contracting parties, or by mistake, violence, intimidation, undue influence or
fraud.
II. An action for declaration of nullity of contract presupposes a void contract or one where all of
the requisites prescribed by law for contracts are present but the cause, object or purpose is contrary
to law, morals, good customs, public order or public policy, prohinited by law or declared by law to
be void.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. ARTICLE 1401. The action for annulment of contracts shall be extinguished when the
thing which is the object thereof is lost through the fraud or fault of the person who has a right to
institute the proceedings.
fraud or fault of the plaintiff.
10. The effects of ratification are the following, except:

I. The action to annul a voidable comtract is extinguished; hence, the contract remains to be
voidable.
II. The contract is cleansed of its defect from the beginning.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter B. According to Article 1392, NCC. ARTICLE 1392. Ratification extinguishes the action to
annul a voidable contract.
11. I. Ratification may be effected expressly or tacitly.

III. It is understood that there is a tacit ratification if, with knowledge of the reason which renders
the contract voidable and such reason having ceased, the person who has a right to invoke it should
execue an act which necessarily implies an intention to waive his right.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to Article 1393, NCC. Ratification may be effected expressly or tacitly. It is
understood that there is a tacit ratification if, with knowledge of the reason which renders the
contract voidable and such reason having ceased, the person who has a right to invoke it should
execute an act which necessarily implies an intention to waive his right.
12. I. Ratification may be effected by the guardian of the incapacitatted person.

II. Ratification requires the conformity of the contracting party whonhas no right to bring tha action
fro annulement.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter A. According to Article 1394 and 1395, NCC. ARTICLE 1394. Ratification may be effected
by the guardian of the incapacitated person. (n)
ARTICLE 1395. Ratification does not require the conformity of the contracting party who has no
right to bring the action for annulment.
13. I. Ratfication cleanses the contract from all its defects from the moment it was constituted.
II. The action fro the annulemt of contracts may be instituted by all who are thereby obliged
principally or subsidiarily.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to Article 1396 and 1397, NCC. ARTICLE 1396. Ratification cleanses the
contract from all its defects from the moment it was constituted. (1313)
ARTICLE 1397. The action for the annulment of contracts may be instituted by all who are thereby
obliged principally or subsidiarily. However, persons who are capable cannot allege the incapacity of
those with whom they contracted; nor can those who exerted intimidation, violence, or undue
influence, or employed fraud, or caused mistake base their action upon these flaws of the contract.
14. I. An obligation having been annulled, the contracing parties shall restore to each other the
things which have been the subject matter of the contract, with their fruits, and the price with its
interest, except in cases provided by law.
II. In obligations to render service, the value thereof shall be the basis for damages.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to Article 1398, NCC. ARTICLE 1398. An obligation having been annulled, the
contracting parties shall restore to each other the things which have been the subject matter of the
contract, with their fruits, and the price with its interest, except in cases provided by law.
In obligations to render service, the value thereof shall be the basis for damages.
15. I. The effect of annulment of the contract is to wipe it pout of existance, and to restore the
parties, insofar as legally and equitably possible, to their original situation before the contract was
entered into.
II. When the defect of the contract consist in the incapacity of one of the parties, the incacitatd
person is not obliged to make any resitution except insofar as he has been benefited by the thing or
price received byb him.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to Article 1398 and 1399, NCC. ARTICLE 1398. An obligation having been
annulled, the contracting parties shall restore to each other the things which have been the subject
matter of the contract, with their fruits, and the price with its interest, except in cases provided by
law.
In obligations to render service, the value thereof shall be the basis for damages. (1303a)
ARTICLE 1399. When the defect of the contract consists in the incapacity of one of the parties, the
incapacitated person is not obliged to make any restitution except insofar as he has been benefited
by the thing or price received by him.
16. I. Where the hing is lost due to the fault of the defendant, he shall return thr fruits received and
the value of the thing at the time of the loss, with interest from the same date.
II. The action for annulment of contracts shall be extin guished when the thing which is the object
thereof is lost through the fraud or fault of the person who has a right to institte the proceedings.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to Article 1400 and 1401, NCC. ARTICLE 1400. Whenever the person obliged
by the decree of annulment to return the thing can not do so because it has been lost through his
fault, he shall return the fruits received and the value of the thing at the time of the loss, with
interest from the same date.
ARTICLE 1401. The action for annulment of contracts shall be extinguished when the thing which
is the object thereof is lost through the fraud or fault of the person who has a right to institute the
proceedings.
17. I. As long as one of the contracting parties does noy restore wgat in virtue of the decree of
annulment he is bound to return, the other cannot be compelled to comply with what is incumbent
upon him.
II. If the right of action is based upon the incapacity of any one of the contracting parties, the loss
of the thing shall not be an obstacle to the success of the action, unless said loss took placr through
the fraud or fault of the plaintiff.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
Letter C. According to Article 1401 and 1402, NCC. ARTICLE 1401. The action for annulment of
contracts shall be extinguished when the thing which is the object thereof is lost through the fraud
or fault of the person who has a right to institute the proceedings.
fraud or fault of the plaintiff. (1314a)
ARTICLE 1402. As long as one of the contracting parties does not restore what in virtue of the
decree of annulment he is bound to return, the other cannot be compelled to comply with what is
incumbent upon him.
18. A sold a parcel of land with a right of repurchase in favor of spouses H and W on December 3,
1985. On February 1, 1989, Z sold half of the same pracel of land to X and Y for the oprice of
P75,000 on the understanding that X and Y shall pay the amount of P10,000 as partial payment and
the balance to be paif by monthly installments. Z received the partial payment of P10,000 but signed
a deed of absolute sale, disposing half of the property in favor of X and Y purportedly in
consideration of the amoun received. Subsequently, X and Y defaulted on their monthly
installmentd. Z repeatedly demanded for the payment of the balance of P65,000from X and Y but
the latter refused to pay.
On August 19, 1991, Z repurchased the parcel of land from the spouses H and W, She also
offered to repurchase from X and Y the portion of the disputed land which she sold to them but the
latter refused. On Mayy 27, 1993, Z filed a complaint for the annulment of the subject deed of sale
on the basis of the previouss deed of sale with right of repurchase Z executed in favor of the
spouses H and W.
A. The sale is void becasue Z knew perfectly well that when she offered the subject property for sale
to X and Y she had already previouslt sold it to the spouses H and W. It is undeniable then that Z
fraudulently obtained the consent of X and Y in the execution of the assialed deed of sale.
B. Z’s action for annulment of the subject deed should be dismissed because the person who
employed fraud cannot base his action for the annulment of contracts upo such flaw of the contract,
C. Z employed fraud which she herself has caused. Hence, the proper remedy is rescission not
annulment.
D. Z sold the subject property to herein X and Y; hence, she no longer had any right to do so for
having previously sold the same property to other vendees. The contract is unenforceable.
Letter B. Z’s action for annulment of the subject deed should be dismissed because the person who
employed fraud cannot base his action for the annulment of contracts upo such flaw of the contract,
19. A dsold to B a genuine bottle of brand “x” wine. However, upon former substituted a fake. B
now wants to annul the sale. Decide.
A. The contract is void ab initio therefore. It van be annulled.
B. The cobtract can be annulled since it is voidable due to fraud.
C. The contract cannot be annulled because it is incidental fraud.
D. There is dolo incidente therefore, it can be annulled.
Letter C. The contract cannot be annulled because it is incidental fraud. ARTICLE 1401. The action
for annulment of contracts shall be extinguished when the thing which is the object thereof is lost
through the fraud or fault of the person who has a right to institute the proceedings.
20. The following are attributes of a voidable contract. Which is not?

A. It is binding, valid and enforceable before annulment.
B. Damage is material to be voidable contract
C. It can be capacitated cannot allege the incapacity of the other party
D. The capacitated cannot allege the incapacity of the other party.
Letter B. ARTICLE 1390. The following contracts are voidable or annullable, even though there
susceptible of ratification
21. D forced C to execute a promissory note

a. Contract is rescissible because the contract is fraudulent
b. The contract is void
c. C cannot demand payment from D because the contract is unenforceable
d. Contract remains to be valid.
Letter D. Contract remains to be valid.
22. A wanted to sell his land to B but the latter does not want to buy the same thus, A forced B to
buy his land. The contract is:
A. Not binding upon B since his consent was vitiated
B. Unenforceable as against B nut not against A
C. May be ratified expressly and tacitly by A
D. Valid, binding and enforceable
Letter D. The contract is stil valid, bondong an enforeceable.
23. S sold to B a cellphone on June 3, 2017, B discovered that the cellphone he bought from A was
an imitation. The law provides that he can annul the sale as a voidable contract within four years.
Prescription starts from:
A. June 3, 2017 when the sale was perfected
B. The time of delivery of the cellphone to B
C. The time they first talked about the sale of the cellphone
D. July 1, 2017 when the fraud was discovered
Letter D. ARTICLE 1116. Prescription already running before the effectivity of this Code shall be
governed by laws previously in force; but if since the time this Code took effect the entire period
herein required for prescription should elapse, the present Code shall be applicable, even though by
the former laws a longer period might be required
24. Which of the following contracts is voidable?

A. Those where both parties arr incapabler of giving vonsent to a contract
B. Those undertaken in fraud of creditors when the latter cannot in any manner collect the claims
due them
C. Those wehre the consent is vitiated by mistake, violence, intimidation, undue influence ir fraud.
D. Those whose object is outside the commerce of men
Letter C. ARTICLE 1390. The following contracts are voidable or annullable, even though there
25.G was appointed guardian of S, the latter being 16 years. S sold his parcel of land inwriting to B
valued at P100,000 for P65,000 suffering lesion by more than 1/4 of the value. What is the status of
the contract?
A. Rescissible
B. Unenforceable
C. Void
D. Voidable
26. S makes an offer to B on June 1 2017. B makes known hus acceptance in latter sent June 2, 2017
and received by S on June 5, 2017. Meantime, on June 3 2017, S became insane.
A. The contract is voidable because one party is insane
B. There is already a meeting of minds. The contract is perfected
C. The contract is voidable offer being ineffective
D. The contract is void the offer being ineffective
Continuation … (Emman’s Part, Corrupted)

27-28
Chapter VIII – Unenforceable Contracts
1-26
Chapter IX - Void and Inexistent Contracts

1-45
Quiz: Contracts
1-2 (Emman’s Part, Corrupted)
3. Which of the following is not a rule in the interpretation of contract?

A. If some stipulation of any contract should admit of several meanings, it shall be understood
as bearing that import which is most adequate to render the contract effectual.
B. Word which may have different significations shall be understood in that which is most in
keeping with the nature and object to the contract.
C. In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
D. Although the cause is not stated in the contract, it I presumed that it exists and is
lawful unless the debtor proves the contrary.
Letter D. The 5th chapter of the law on obligations and contracts comprises the interpretation of
contracts as the following:
Art. 1370. If the terms of a contract are clear and leave no doubt upon the intention of the
If the words appear to be contrary to the evident intention of the parties, the latter shall prevail
over the former.
Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered.
Art. 1372. However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which the parties
intended to agree.
Art. 1373. If some stipulation of any contract should admit of several meanings, it shall be
understood as bearing that import which is most adequate to render it effectual.
Art. 1374. The various stipulations of a contract shall be interpreted together, attributing to
the doubtful ones that sense which may result from all of them taken jointly.
Art. 1375. Words which may have different significations shall be understood in that which is
most in keeping with the nature and object of the contract.
Art. 1376. The usage or custom of the place shall be borne in mind in the interpretation of the
ambiguities of a contract, and shall fill the omission of stipulations which are ordinarily established.
Art. 1377. The interpretation of obscure words or stipulations in a contract shall not favor the
party who caused the obscurity.
Art. 1378. When it is absolutely impossible to settle doubts by the rules established in the
preceding articles, and the doubts refer to incidental circumstances of a gratuitous contract, the least
transmission of rights and interests shall prevail. If the contract is onerous, the doubt shall be settled
in favor of the greatest reciprocity of interests.
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 intention or will of the parties, the contract shall be null and void.
Art. 1379. The principles of interpretation stated in Rule 123 of the Rules of Court shall
likewise be observed in the construction of contracts.
Therefore, “although the cause is not stated in the contract, it I presumed that it exists and is
lawful unless the debtor proves the contrary” is not a rule in the interpretation of contracts.
4. Contracts are effective and binding only between the parties, their assigns and their heirs. Three of
following enumerations are exceptions as provided by law. Which does not belong to the exception?
A. When there is a stipulation in favor of a third party
B. Where one of the parties to the contract dies and thereafter a suit is filed on the basis
of the contract
C. Where the obligation arising from the contract are not transmissible by its nature.
D. Where the obligation arising from the contract are not transmissible by stipulation or by
provision of law.
Letter B. ART. 1311 states that, 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. The heir is not liable beyond the value of the property
he received from the decedent. Provided, that, if a contract should contain some stipulation in favor
of a third person, he may demand its fulfillment provided he communicated his acceptance to the
obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The
Therefore, “where one of the parties to the contract dies and thereafter a suit is filed on the basis of
the contract” does not take effect and is not binding only between the parties, their assigns and their
heirs.
5. In order that fraud may make a contract voidable:

A. It may be incidental but should have been employed by both parties.
B. It should be serious and the parties must be in pari delicto.
C. It should be serious and should not have been employed by both contracting parties.
D. It may be incidental but both parties should not be in pari delicto.
Letter C. The provision of Art. 1344 states that, in order that fraud may make a contract voidable, it
should be serious and should not have been employed by both contracting parties. Incidental fraud
only obliges the person employing it to pay damages.
6. A and B who are both unemancipated minor entered into a contract. The Contract entered into by
and between them is:
A. Rescissible
B. Unenforceable
C. Voidable
D. Void
Letter B. ART. 1327 states that the following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to write.
Thus, unenforceable.
7. Which of the following contracts cannot be ratified?

A. Those whose cause or object did not exist at the time to the transaction.
B. Unauthorized
C. Those where both parties are incapable of giving consent 1393
D. Those that fail to comply with the Statute of Fraud 1394
Letter A. Art. 1392, Ratification means that one under no disability voluntarily adopts and gives
sanction to some defective or unauthorized contract, act, or proceeding which, without his subsequent
sanction or consent, would not be binding or him. It is this voluntary choice, knowingly made, which
amounts to a ratification of what was theretofore unauthorized and becomes the authorized act of the
party so making the ratification.
Art. 1393, under the old Civil Code, there was a distinction between confirmation and
ratification. The first was the term used to refer to the act by which a person entitled to bring an action
for annulment validates avoidable contract, either expressly or impliedly, while the second, to the act
by which an unauthorized contract is approved by the person in whose name it was entered into.
Recognition, on the other hand, refers to an act whereby a defect of proof is remedied, such as when
an oral contract falling under the Statute of Frauds is put in writing.
Art. 1394, ratification may be effected by the guardian of the incapacitated person.
8. A guardian of B, sold B’s house and worth P480,000 for P240,000.

a. The contract can be rescinded because of inadequacy of price
b. The contract cannot be rescinded because there is no fraud, mistake or undue influence
c. Thecontract cannot be rescinded because all elements of the contract are present
d. The contract cannot be rescinded it is expressly provided by law as one of the contracts which
cannot be rescinded.
Letter A.
9. X enters into a contract with Y whereby X sold his land orally to Y. the land has been delivered and
the money has been paid. Is the oral sale of the land valid?
a. The contract is not valid because it is not in writing as required by the statute of fraud
b. The contract is not valid because the contract is not made in a public instrument
c. The contract is unenforceable
d. The contract is valid because the contract is already perfected and executed.
Letter D.
10. To defraud his creditors, A contracted with B by selling a land to B. B now seeks to register the
land with the Register of Deeds. X, a creditor of A seeks to prevent the registration on the ground
that the contract is rescissible. Despite X’s obligation, may the land be registered based on the contract
in B’s name?
a. The land cannot be registered based on the contract which is rescindable
b. The land cannot be registered because the contract is in fraud of the creditor.
c. The land can be registered based on the contract because the contract is not yet
rescinded
d. The land can be registered because the contract is valid and can be attached collaterally in a
land registration proceeding.
Letter C.
11. On July 15, 2007, X entered into a contract with Y. On February 10, 2008, X discovered that fraud
was committed at the time he entered into the contract, a fraud that vitiated his consent. The action
for annulment shall be brought:
a. Within three years from the time of the fraud
b. Within four years from February 10, 2008
c. Within four years from the time A entered into the contract
d. On February 10, 2008
Letter B.
12. X alleged that Y promised to give X one hectare of land. This is in consideration of X’s meritorious
service to Y. Y pleads in defense that since the promise was not in writing, it is unenforceable under
the Statute of Frauds.
a. The promise is unenforceable because it is not in writing
b. The statute of fraud is applied because A has rendered services already
c. The statute of fraud is inapplicable here because the promise to give a land is not a
sale of real property
d. The statute of fraud can apply to partially executed contracts.
Letter C.
13. A has a daughter, B. X has a son, Y. A, B, X and Y agree together that Y will marry B. The
agreement is oral. If later on, B refuses to marry Y who has spent for the necessary wedding
preparation. X and Y to bring an action against A and B will be the actions prosper? Decide.
a. Between Y and B, the action wil;l; not prosper because the agreement is made orally
b. In case of A and X, the action will prosper because the agreement which was made orally is
enforceable as it is based on the consideration of marriage
c. As to A and X, the action will not proper because the agreement is not they who mutually
promised to marry each other
d. The action of X and Y against A and B will prosper because the agreement is based on the
consideration of marriage other than a mutual promise to marry.
Letter D.
14. A wrote a letter to B wherein he is offering to sell a piece of land to B for P200,000. B signified
his desire to buy the land. In A’s letter, B was given a period of two months within which to produce
the P200,000. After 45 days, A told B that the price of the land is now P250,000. Can B compel A to
accept the P200,000 first offered by A and execute the Deed of Sale?
a. Yes, because there was actual meeting of the minds in the parties
b. No, for B did not signify his acceptance of A’s offer
c. Yes, because A is already estopped by his signed letter
d. Yes, because the period of two months has not expired.
Letter B.
15. These persons are bound by contracts:

a. Contracting parties
b. Heirs
c. Assigns or assign
d. All of these
Letter D.
16. Mr. S offered to sell his land to Mr. C for P500,000. Mr. C accepted the offer and paid Mr. S
P500,000 and Mr. S delivered the owner’s duplicate of the Transfer Certificate of the Land. Mr. C
wishes to register the land in his name but the Register of Deeds asked Mr. C for the Deed of Sale.
What can Mr. C do?
a. Mr. C cannot compel Mr. S to return the payment because the contract is not enforceable.
b. Mr. c may sur Mr. S to return the price under the legal maxim “no one may enrich himself at
the expense of another
c. Mr. C may compel Mr. S to execute a Deed of Sale because the contract is valid
d. Mr. C may occupy and use the land as a buyer in good faith
Letter C.
17. Mrs. G sold and delivered her diamond ring to Mrs. P. It was agreed upon that after ten days, Mrs.
P will name and fix the price. On the tenth day, Mrs. P called up by telephone Mrs. G and stated the
price of P10,000. Mrs. G accepted. Is the sale perfected?
a. Yes, the price is stated and named by one of the contracting parties and was accepted
by the other
b. No. at the time of the sale, the price was not fixed
c. No. the price was left to the discretion of one of the parties
d. No. at the time of sale the price is not known.
Letter A.
18. When the subject matter of the contact is lost through a fortuitous event, who is liable?
A. The debtor
B. The creditor
C. None of them
D. Both the creditor and debtor
Letter C. The law on obligations and contracts provides that in case of a fortuitous event, neither the
debtor nor the creditor is liable unless there is already legal delay.
19. Contracts entered into during lucid interval are:

A. Unenforceable
B. Voidable
C. Void
D. Perfectly valid
Letter D. ART. 1328 states that contracts entered into during a lucid interval are valid. Lucid interval
is a temporary period of sanity. A contract entered into by an insane or demented person during a
lucid interval is valid. It must be shown, however, that there is a full return of the mind to sanity as to
enable him to understand the contract he is entering into.
20. Three of the following may be valid objects of a contract, except:

A. All that are within the commerce of man
B. All services which are not contrary to law
C. Impossible things or services
D. All rights that are transmissible
Letter C. Art. 1347 states that all things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible may also be the object
of contracts. No contract may be entered into upon future inheritance except in cases expressly
authorized by law. All services which are not contrary to law, morals, good customs, public order or
public policy may likewise be the object of a contract.
Consequently. Art. 1348. Impossible things or services cannot be the object of contracts.
21. A contract executed by two or more parties and one of the parties is not capable of giving consent.
The contract is:
A. Voidable
B. Rescissible
C. Void
D. Unenforceable
Letter A. Art. 1390 specifically stated that, the following contracts are voidable or annullable, even
though there may have been no damage to the contracting parties:
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or
fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible
of ratification.
22. Three of the following contracts are void. Which is not?

A. Oral contract of partnership of three partners and capital contribution is more than
P3,000 in cash
B. Written contract contemplating impossible service
C. Oral contract of partnership where real estate is contributed as capital
D. Agent’s authority to sell real property is given orally.
Letter A. Art. 1490 stated that, the following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy; (2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract
cannot be ascertained;
(7) Those expressly prohibited or declared void by law. These contracts cannot be ratified.
Neither can the right to set up the defense of illegality be waived.
Therefore, choices B, C, & D are void contracts as mentioned on the Art. 1409 and choice A deemed
not to be void.
23. These are the basic principles or characteristics of a contract. Which is the exception?
A. Freedom or liberty to stipulate
B. Obligatory force and compliance in good faith
C. Binding on third parties
D. Perfection by mere consent
Letter C. Art. 1305 of the Laws on Obligations and Contracts stated the characteristics of a contracts
as follows:
(1) Freedom or autonomy of contracts. — The parties may establish such stipulations, clauses,
terms, and conditions as they may deem convenient, provided, they are not contrary to law, morals,
good customs, public order, and public policy.
(2) Obligatoriness of contracts. — Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith.
(3) Mutuality of contracts. — Contracts must bind both and not one of the contracting parties;
their validity or compliance cannot be left to the will of one of them.
(4) Consensuality of contracts. — Contracts are perfected, as a general rule, by mere consent,
and from that moment the parties are bound not only by the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in keeping with
good faith, usage and law.
(5) Relativity of contracts. — Contracts take effect only between the parties, their assigns and
heirs, except in cases where the rights and obligations arising from the contract are not transmissible
by their nature, or by stipulation, or by provision of law.
Therefore, binding on third parties is not a basic principle or characteristics of a contract.
24. The following is considered fraud or fraudulent.

A. Failure to disclose facts when there is duty to reveal them.
B. The usual exaggeration in trade, when the other party has the opportunity to know the facts.
C. Misrepresentation made in bad faith.
D. “Caveat Emptor” or Let the buyer beware.
Letter A. The statement can be found on Art. 1339 of the Laws on Obligations and Contract. Section
1339 specifically stated that, Failure to disclose facts, when there is a duty to reveal them, as when the
parties are bound by confidential relations, constitutes fraud. Therefore, choice is deemed fraudulent.
25. Which of the following can be considered as a feature of a void contract?

A. Subject to ratification
B. It exists
C. Action or defense of nullity is subject to prescription
D. Novation cannot apply
Letter D. Article 1422 of the Law on Obligations and Contracts stated that, void contract cannot be
novated. Therefore, application of novation is not considered to be a feature or a void contract.
26. Y entered into a contract of mortgage with X. T, the clerk of Y typed the document. Due to T’s
negligence, the document made was that of sale instead of mortgage.
a. The remedy is annulment
b. Parties may go to court for interpretation
c. Parties may enforce their right because it is enforceable
d. Reformation of instrument is proper
Letter D.
27. S offers to sell his house to B for P100,000. B asks him if he would accept P80,000. Which of the
following is correct?
a. Because of ambiguity, both offers are terminated by operation of law
b. B’s response is a counter-offer effectively terminating the P100,000 offer and instigating an
offer for P80,000
c. B’s response is a rejection of the P100,000 offer, and there is no offer for P80,000 because it
is too indefinite to be an offer.
d. B’s response is a mere inquiry, the P100,000 offer by S is still there.
Letter D.
28. Example no. 1: Guardian of W, sold W’s house valued P50,000 for 37,500 or a lesion by ¼ of the
value
Example no. 2: S sold his house valued at P50,000 for only P10,000 because S did not know the true
value of the house.
a. Both contracts are rescissible
b. Only no. 1 is rescissible
c. No. 2 is voidable because there is an error
d. Both contracts are valid and enforceable
Letter D.
29.Which of the following is not valid?

a. Mutual promise to marry entered into orally
b. Sale of immovable property orally entered into
c. One of the parties in a contract is incapable of giving consent
d. The stipulation is void because it is contrary to public policy
Letter D.
30. D forced C to9 execute a promissory note

a. Contract is recissible because the contract is fraudulent
b. The contract is void
c. C cannot demand payment from D because the contract is unenforceable
d. Contract remains to be valid
Letter D.
31. The following are attributes of a rescissible contract, except:

A. It is valid until rescinded.
B. Damage or lesion is absolutely material.
C. Third person whose interest is affected may ask for rescission.
D. It is a principal remedy of the creditor to collect his credit.
Letter D. Art. 1380 stated the attributes of a rescissible contract as follows:

1. It has all the elements of a valid contract;
2. It has a defect consisting in an injury to one of the contracting parties or third person, generally
in the form of economic damage or lesion, fraud, alienation of property subject of case in
court without the consent of the litigants or of the court;
3. It is valid and effective until rescinded;
4. it can be attacked only directly, either by one of the contracting parties or by an affected third
person, who is injured or defrauded by the contract;
5. It is susceptible of convalidation only by prescription. Ratification process does not apply.
32. The following are attributes of a voidable contract. Which is not?
A. It is binding, valid and enforceable before annulment.
B. Damage is material to be voidable contract.
C. It can be ratified and ratification has retroactive effect.
D. The capacitated cannot allege the incapacity of the other party.
Letter B. Art. 1390 of the Law on Obligations and Contracts states that, the following contracts are
voidable or annullable, even though there may have been no damage to the contracting parties:
fraud.
of ratification.
Therefore, the capacitated cannot allege the incapacity of the other party.
Art. 1390 also provided the binding force of voidable contract to be existent, valid and obligatory
unless annulled or set aside by a proper action in court, i.e., an action instituted for that purpose. Once
ratified, they become absolutely valid and can no longer be annulled.
Provided further that, the existence of damage is not essential for their annulment as in the case of
rescissible contracts. Therefore, choice “B” is not an attribute of a voidable contract.
33. Three of the following contracts must be in writing to be valid. Which is the exception?
A. Contract of partnership where immovable are contributed.
B. Contract of agency to sell the land of the principal.
C. Contract where the amount involved exceeds five hundred pesos.
D. Negotiable instruments.
Letter C. Art. 1356 of the Law on Obligations and Contracts stated the form for validity of the contract
as follows: there are rare cases when the law requires that a contract be in a certain form for the validity
of the contract such as those mentioned below:
(1) Donation of real property. — It must be in a public instrument. (Art. 749.)
(2) Donation of personal property the value of which exceeds P5,000.00. — The donation and
acceptance must be in writing. (Art. 748.)
(3) Sale of land through an agent. — The authority of the agent must be in writing; otherwise,
the sale is void. (Art. 1874.)
(4) Contract of antichresis. — The amount of the principal and of the interest must be
specified in writing. (Art. 2134.)
(5) Stipulation to pay interest. — It must be in writing; otherwise, no interest is due. (Art.
1956.)
(6) Contract of partnership. — If immovables are contributed, it must be in a public
instrument to which shall be attached a signed inventory of the immovable property contributed.
(Arts. 1771, 1773.)
(7) Transfer or sale of large cattle. — It must be registered (so it must be in a public instrument)
and a certificate of transfer secured. (Act No. 1147, Sec. 22.)
(8) Negotiable instruments. — They must be in writing. (Act No. 2031, Sec. 1.)
Therefore, a contract where the amount involved exceed five hundred pesos need not to be in writing
to be valid.
34. D borrowed a sum of money from C with a certain rate of interest. C now wants to increase the
rate of interest without the consent if D. What principle in contracts prohibits C from doing so?
A. Autonomy of contracts
B. Relativity of contracts
C. Mutuality of contracts
D. Consensuality of contracts
Letter C. Article 1308 stated the principle of mutuality of contract whereby the contracts must bind
both contracting parties; its validity or compliance cannot be left to the will of one of them. Therefore,
C’s decision to increase the rate of interest without the consent of D does violate the mutuality of
contracts.
35. S sold to B his parcel of land worth one million pesos for only half a million pesos. After the sale
and realizing his damage, S is now seeking to set aside the sale. Decide:
A. The contract is voidable because if mistake of the seller.

B. It is rescissible because of the lesion or damage suffered by S.
C. S has the right for an increase in the price to prevent unjust enrichment on the part of B.
D. The sale is valid, binding and enforceable because as a rule, lesion or inadequacy of
cause or price in a sale does not invalidate a contract.
Letter D. Art. 1355 provides that, except in cases specified by law, lesion or inadequacy of cause shall
not invalidate a contract, unless there has been fraud, mistake or undue influence. On the above case,
there has been no fraud, mistake or undue influence that invalidates the contract which I an exception
as regard to the validity of contract with inadequacy of price.
36. A and B entered into a contract of mortgage. However, as written the document states it is a
contract of sale with right of repurchase, the error due to the fault of the clerk/typist. Hence:
A. The contract of sale must be annulled since it is voidable.
B. The instrument has to be enforced as it is the proof of the agreement between the parties.
C. Because of the negligence of the parties in signing without first reading the instrument, they
are bound by the contents of the same.
D. The instrument may be reformed because it does not express the true agreement of
the parties.
Letter D. Art. 1359 states that, when, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to embody the agreement,
by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the
reformation of the instrument to the end that such true intention may be expressed. If mistake, fraud,
inequitable conduct, or accident has prevented a meeting of the minds of the parties, the proper
remedy is not reformation of the instrument but annulment of the contract.
Therefore, on the above case, if the parties really agreed on a contract of mortgage, but the document
as written discloses a contract of sale with right of repurchase, there is a meeting of the minds but the
document does not show their true intention. In this case, the remedy is reformation.
37. A and B agreed on a contract of pledge. However, they entered into a contract of mortgage in the
honest belief that the mortgage and pledge are the same. May the instrument be reformed?
A. No, the document cannot be reformed since the contract is void.
B. No, it cannot be changed. They are bound by the document which speaks for itself.
C. Yes, it cannot be reformed because it does not express the true agreement of the parties.
D. No, it cannot be reformed because there was no meeting if minds between the parties
and the remedy is annulment of contract.
Letter D. Art. 1359 states that, when, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to embody the agreement,
by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the
reformation of the instrument to the end that such true intention may be expressed. If mistake, fraud,
inequitable conduct, or accident has prevented a meeting of the minds of the parties, the proper
remedy is not reformation of the instrument but annulment of the contract.
Therefore, on the above case, there was no meeting of minds that render the contract reformation,
instead, the remedy available in such case was annulment.
38. S sold to B a fake Rolex watch on January 3, 2001. On January 13, 2001, B discovered that the
watch he bought from A was an imitation. The law provides that he can annul the sale as a voidable
contract within four years. Prescription starts from:
A. January 3, 2001 when the sale was perfected.
B. The time of delivery of the watch to B.
C. The time they first walked about the sale of the watch.
D. January 13, 2001 when the fraud was discovered.
Letter D. Article 1391 states that, the action for annulment shall be brought within four years.
 In cases of intimidation, violence or undue influence, from the time the defect of the consent
ceases.
 In case of mistake or fraud, from the time of the discovery of the same.
 And when the action refers to contracts entered into by minors or other incapacitated persons,
from the time the guardianship ceases.
Therefore, as the above case mentioned that the sale was a case of fraud, the prescription should start
on the time the fraud was discovered.
39. An agreement in restraint of trade or establishing monopoly is:

A. Perfectly valid
B. Voidable
C. Unenforceable
D. Void
Letter D. Section 340 of the General Business Law provided that, contracts or agreements for
monopoly or in restraint of trade illegal and void
40. Three of the following are rescissible, which is not?

A. Sale of property under litigation made by defendant without the consent of plaintiff or
authority of the court.
B. Those made to defraud creditors when the latter have no other means to recover their claims.
C. Those agreed upon in representation of absentees, if the absentee suffers lesion by more than
¼ of the value of the property subject of the contract.
D. Contract of sale and the price is unusually inadequate resulting to lesion.
Letter D. Art. 1381 of the Law on Obligations and Contracts states that, the following contracts are
rescissible:
lesion by more than onefourth of the value of the things which are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in
the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect
the claims due them;
Therefore, choice “D” as not being mentioned on the above article does not constitute a rescissible
contact.
41. In order that a stipulation in favor of a third person would be valid and binding upon the parties
thereto, the following are requisites; except:
A. There must be a stipulation in favor of a third person.
B. The contracting parties must have clearly and deliberately conferred a favor upon that third
person.
C. The third person communicated his acceptance to the obligor before its revocation.
D. That there must be an existing agency between either of the contracting parties and
the third person.
Letter D. Art. 1311 stated the requisites of stipulation pour autrui as follows:
(1) The contracting parties by their stipulation must have clearly and deliberately conferred a
favor upon a third person;
(2) The third person must have communicated his acceptance to the obligor before its
revocation by the obligee or the original parties;
(3) The stipulation in favor of the third person should be a part and not the whole of the
contract or the contract itself;
(4) The favorable stipulation should not be conditioned or compensated by any kind of
obligation whatever; and
(5) Neither of the contracting parties bears the legal representation or authorization of the
third party for otherwise the rules on agency will apply.
Therefore, choice “D” I not a requisite of a stipulation in favor of a third person or stipulation pour
autrui.
42. G was appointed guardian of S, the latter being 16 years old. S sold his parcel of land in writing to
B valued at P100,000 for P75,000 suffering lesion by ¼ of the value. What is the status of the contract?
A. Rescissible
B. Unenforceable
C. Void
D. Voidable
Letter D. Art. 1390 states that, the following contracts are voidable or annullable, even though there
fraud.
of ratification.
Therefore, S being a minor and incapable of giving consent, renders the contract voidable.
43. Must be in writing to be enforceable:

A. Lease of land for 12 months
B. Lease of car for 18 months
C. Both A and B
D. None of A and B
Letter D. An oral lease for more than 12 months is not enforceable if the statute of frauds in the
jurisdiction includes leases of more than 12 months and a lease of car, being movable, need not to be
in writing also to be enforceable.
44. Three of the following contracts are void. Which is the exception?
A. Those whose cause, object or purpose is contrary to law, morals, good custom, public order
or public policy.
B. Those which are absolutely simulated or fictitious.
C. Those whose cause or object did not exist at the time of the transaction.
D. Those where both parties are incapable of giving consent to a contract.
Letter D. ART. 1409 of the Law on Obligations and contracts states that the following contracts are
inexistent and void from the beginning:
cannot be ascertained; (7) Those expressly prohibited or declared void by law. These contracts
cannot be ratified. Neither can the right to set up the defense of illegality be waived.
Therefore, those where both parties are incapable of giving consent to a contract is not a void contract
but instead, a voidable one.
45. Essential Requisites of a contract:

A. Consent
B. Cause
C. Subject
D. All of them
Letter D. Art. 1318 state in its provision that, there is no contract unless the following requisites
concur:
Therefore, as stated on the above provision, all of them essential requisite.
46. A and B agreed on February 3, 2000 that B will construct the house of A on January 2002. The
contract was orally entered into. B received a down payment from A with the balance payable after
completion of the house.
The contract is:
A. Voidable because it is not in public instrument
B. Enforceable even if not in writing, having been ratified.
C. Unenforceable because it is not in writing and yet performance there is after one year from
perfection.
D. Void because it is not in writing as required by law.
Letter B. ART. 1403 states that the following contracts are unenforceable, unless they are ratified:
(1) Those entered into the name of another person by one who has been given no authority or legal
representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following
cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or
memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the writing, or a secondary evidence of its
contents:
(a) An agreement that by its terms is not to be performed within a year from the making
thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;
(c) An agreement made in consideration of marriage, other than a mutual promise to marry;
(d) An agreement for the sale of goods, chattels, or things in action, at a price not less than
Five hundred pesos,
unless the buyer accept and receive part of such goods and chattels, or the evidences, or some
of them, of such
things in action, or pay at the time some part of the purchase money; but when a sale is made
by auction and
entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and
kind of property
sold, terms of sale, price, names of the purchasers and person on whose account the sale is
made, it is a
sufficient memorandum;
(e) An agreement for the leasing for a longer period than one year, or for the sale of real
property or of an
interest therein;
(f) A representation as to the credit of a third person.
(3) Those where both parties are incapable of giving consent to a contract.
Therefore the case above being ratified, is enforceable already.
47. D borrowed a sum of money from with G as guarantor. The loan is in writing but the guaranty is
oral. D failed to pay C. Who now is demanding payment from G? Can G be compelled to pay?
A. Yes, because he is the guarantor obliged to pay in case the debtor defaults.
B. No, because the guaranty is void having been orally made.
C. No, because the guaranty is unenforceable against G, it being oral.
D. Yes, because the guaranty is enforceable, writing not needed.
Letter C. Article 2047 states that, by guaranty a person, called the guarantor, binds himself to the
creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3,
Title I of this Book shall be observed. In such case the contract is called a suretyship. A guaranty to
be enforceable mus be in writing unlike in suretyship. Therefore, on the above case, guaranty is
unenforceable, it being oral.
48. A gave B one million pesos for the latter to kill C. before B could accomplish his criminal intent
to kill C, A changed his mind and demanded the return of the money from B. Decide:
A. A cannot recover the payment he made to B because it was a void contract which does not
allow recovery by the guilty party.
B. A cannot recover the money because the contract is unenforceable.
C. A can recover the money although the contract is void since the crime was not
committed.
D. No recovery and both A and B will be prosecuted for their crime.
Letter C. Art. 1409 states that, void contracts are those which, because of certain defects, generally
produce no effect at all. They are considered as inexistent from its inception or from the very
beginning. Therefore, there has been no contract and since the crime was not committed, the payment
should be given back to A from B.
49. In three of the following the contract is cleansed of its defect by ratification. Which is not so
ratified?
A. Contract where the creditor was damaged by the act of the debtor who intended to
defraud him.
B. Contract entered into by a person incapable of giving consent
C. Sale of chattels orally entered into for a price not less than five hundred pesos
D. Lease of real property for more than one year orally entered into.
Letter A. ART. 1392 states that ratification extinguishes the action to annul a voidable contract
rendering choice “A” to be not so ratified. Therefore, Choices B, C and D are voidable contracts.
50. A without authority from B sold the latter’s car in the name of the latter. The contract is therefore:
A. Rescissible
B. Voidable
C. Unenforceable
D. Void
Letter C. ART. 1403 states that the following contracts are unenforceable, unless they are ratified:
contents:
thereof;
Five hundred pesos,
of them, of such
by auction and
kind of property
made, it is a
property or of an
interest therein;
Therefore, the case falls under (1) of the above provision, thus unenforceable.
51. Which of the following instruments is not subject to reformation?

A. Simple donations inter vivos wherein no condition is imposed
B. Wills
C. When agreement is void
D. All of the above
Letter D. The abovementioned choices are all not subject to reformation as Art. 1359 provided the
requisites of reformation as follows:
(1) There is a meeting of the minds of the parties to the contract;
(2) The written instrument does not express the true agreement or intention of the parties;
(3) The failure to express the true intention is due to mistake, fraud, inequitable conduct, or
accident;
(4) The facts upon which relief by way of reformation of the instrument is sought are put in
issue by the pleadings;
(5) There is clear and convincing evidence (which is more than mere preponderance of
evidence) of the mistake, fraud, inequitable conduct, or accident.
None of the choices fitted the requirements to be able to be reformed, therefore, none of them is
subject to reformation.
52. In three of the following defective contracts, ratification cleanses the defect. Which is the
exception?
A. Both parties are incapable of giving consent
B. Sale of immovable property or interest therein orally entered into
C. Sale of a piece of land thru an agent and authority is in writing.
D. Contracts is void the offer being ineffective
Letter D. Last paragraph of the provision of Article 1409 provides that void contract cannot be
ratified. Neither can the right to set up the defense of illegality be waived.
53. Which of the following contract is voidable?

A. Those whose object is outside the commerce of men
B. Those which are absolutely fictitious
C. Those where one of the parties is incapacitated
D. Those which contemplate an impossible service
Letter C. Art. 1390 states that, the following contracts are voidable or annullable, even though there
fraud.
of ratification.
54. X alleged that Y promised to give him one hectare of land. This is in consideration of X’s
meritorious services to Y. Y pleads in defense that since the promise was not in writing, it is
unenforceable under the Statute of Frauds. Decide.
A. The promise is unenforceable because it is not in writing
B. The statute of frauds is applicable because A has rendered services
C. The statute of frauds is inapplicable here, because the promise to give the land is not
a sale of real property
D. The statute of frauds can apply to partially executed contract.
Letter C. The “statutes of frauds” is a doctrine of law that requires certain contracts to be in writing
and signed by the person to be charged in order to be enforced. One such contract that falls under
the statute of frauds is a contract for the sale of real property. Therefore, the above case showed that
the promise to give a land is not a sale of real property but instead an exchange to X’s service, thus,
statute of fraud is not applicable.
55. Three of the following are void contracts. Which is the exception?
A. Contracts where the cause is immoral
B. Contracts to prevent a known supporter of a political rival from voting for his candidate for a
valuable consideration
C. Contracts with valid consideration but with unlawful motives
D. Absolutely simulated contracts
Letter C. ART. 1409 of the Law on Obligations and contracts states that the following contracts are
Therefore, choice “A” falls under (1) of the above provision, while choice “B” falls under (7) and
choice “D” falls under (2) making choice “C” the exception.
56. Statute of Frauds is applicable to:

A. Executed contract
B. Oral contract of loan
C. Contract not to be performed within a year from the making thereof
D. Mutual promise to marry
Letter D. Art. 1403 provides that a mutual promise to marry is not an unenforceable contract, thus,
perfectly valid and need not to be a writing which results to the non-applicability of the statute of
fraud.
57. Which of the following contracts must be in writing to be enforceable?
A. Acts and contracts for the creation, transmission, modification, extinguishments of real rights.
B. The cession, repudiation, renunciation of heredity rights
C. Contract of guaranty
D. Contract of partnership
Letter C. Art. 1356 of the Law on Obligations and Contracts stated the form for validity of the contract
as follows: there are rare cases when the law requires that a contract be in a certain form for the validity
of the contract such as those mentioned below:
(1) Donation of real property. — It must be in a public instrument. (Art. 749.)
(2) Donation of personal property the value of which exceeds P5,000.00. — The donation and
acceptance must be in writing. (Art. 748.)
(3) Sale of land through an agent. — The authority of the agent must be in writing; otherwise,
the sale is void. (Art. 1874.)
(4) Contract of antichresis. — The amount of the principal and of the interest must be
specified in writing. (Art. 2134.)
(5) Stipulation to pay interest. — It must be in writing; otherwise, no interest is due. (Art.
1956.)
(6) Contract of partnership. — If immovables are contributed, it must be in a public
instrument to which shall be attached a signed inventory of the immovable property contributed.
(Arts. 1771, 1773.)
(7) Transfer or sale of large cattle. — It must be registered (so it must be in a public instrument)
and a certificate of transfer secured. (Act No. 1147, Sec. 22.)
(8) Negotiable instruments. — They must be in writing. (Act No. 2031, Sec. 1.)
Therefore, a contract of guarantee need not to be in writing to be enforceable.
58. G was appointed as the guardian of M who owns a parcel of land valued at P1,000,000. M sold
the land only to B. The contract was defective because:
A. Unenforceable
B. Rescissible
C. Voidable
D. Void
Letter C. Art. 1390 states that, the following contracts are voidable or annullable, even though there
fraud.
of ratification.
Therefore, the sale of M (an incapable of giving consent to contract) renders the contract voidable.
59. A sold to be a genuine X brand of beer. However, upon delivery the former substitute a fake. B
now wants to annul the sale. Decide.
A. The contract is void ab initio therefore, it can be annulled
B. The contract can be annulled since it is voidable due to fraud
C. The contract cannot be annulled because it is only incidental fraud
D. There is dolo incidente therefore, it can be annulled
Letter C. Art. 1170 of the Law on Obligations and Contracts states that, the remedy in the case of a
causal fraud is annulment but on the above case, it is only incidental fraud which is not subject to
annulment.
60. Contract which cannot be sued upon unless ratified, thus as if they have no effect yet:
A. Voidable
B. Rescissible
C. Void
D. Unenforceable
Letter D. Art. 1403 gave the meaning of unenforceable contracts as those that cannot be enforced in
court or sued upon by reason of defects provided by law until and unless they are ratified according
to law. Therefore, the statement defines an unenforceable contract.
61. Which of the following contracts is not void ab initio?

A. Those whose object is outside the commerce of men
B. Those whose object did not exist at the time of transaction
C. Those which contemplate
D. Those undertaken in fraud of creditors
Letter D. ART. 1409 of the Law on Obligations and contracts states that the following contracts are
Therefore, contracts that are undertaken in fraud of the creditors does not constitute a void contract.
62. Which of the following is correct?

A. An action to enforce judicially a natural obligation prescribes in 4years
B. An action for annulment is imprescriptible
C. An action to declare a contract void is not subject to prescription
D. An action for rescission of contract prescribes in five years counted from the execution of the
contract
Letter C. Art. 1410 of the law on obligations and contracts states that, the action or defense for the
declaration of the inexistence of a contract does not prescribe. Therefore, choice B is a correct
statement.
63. Which of the following contracts is not rescissible?

A. Those which are entered into by guardians whenever the wards whom they represent suffer a
lesion of more than ¼ of the value of the object of the contract.
B. Those executed in representation of an absentee, id the latter suffer a lesion more than ¼ of
the value of the object of the contract
C. Those where one of the parties is incapable of giving consent to a contract
D. Those undertaken in fraud of creditors when the latter cannot in any other manner collects
the claims due them
Letter C. Art. 1390 stated that, the following contracts are voidable or annullable, even though there
fraud.
of ratification.
Therefore choice “C” is not a rescissible contract but rather a voidable contract.
64. Which of the following contracts is voidable?

A. Those where both parties are incapable of giving consent to a contract
B. Those undertaken in Fraud of creditors when the latter cannot in any manner collect the claims
due them
C. Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud
D. Those whose object is outside the commerce of men
Letter C. Art. 1390 stated that, the following contracts are voidable or annullable, even though there
fraud.
of ratification.
Therefore, not being mentioned on the above provision, choice “C” is not a voidable contract.
65. Which of the following contracts is rescissible?

A. Those where one of the parties is incapable of giving consent to a contract
B. Those where both parties are incapable of giving consent to a contract
C. Those which are entered into by guardians whenever the wards whom they represent
suffer a lesion of more than ¼ of the value of the object of the contract
D. Those which are absolutely simulated or fictitious
Letter C. Art. 1381 states that the following contracts are rescissible:
lesion by more
than one-fourth of the value of the things which are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in
the preceding
number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect
the claims due
them;
without the
knowledge and approval of the litigants or of competent judicial authority;
Therefore, of the following choices, only Those which are entered into by guardians whenever the
wards whom they represent suffer a lesion of more than ¼ of the value of the object of the contract
is a rescissible contract as mentioned on Art. 1381.
66. S orally sold to B parcel of land for which the latter paid P1 000 000. B now wants to register the
sale so that he can have a Transfer Certificate of Title in his name. Decide.
A. S cannot be compelled to execute the public document of sale because the sale is
unenforceable.
B. S can be compelled to execute the public document of sale because the sale is
enforceable
C. The sale is void and therefore cannot be registered
D. S cannot be compelled to execute the public document of sale because the sale is voidable
Letter B. According to Article 1358. The following must appear in a public document:
(1) Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property; sales of real property or of an interest therein
are governed by articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership
of gains;
(3) 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;
(4) The cession of actions or rights proceeding from an act appearing in a public document.
All other contracts where the amount involved exceeds five hundred pesos must appear in writing,
even a private one. But sales of goods, chattels or things in action are governed by articles, 1403, No.
2 and 1405. (1280a)
67. S orally lease to R his parcel of land for a term of two years. The contract is:
A. Rescissible
B. Voidable
C. Unenforceable
D. Void
Letter C. ART. 1403 states that the following contracts are unenforceable, unless they are ratified:
contents:
thereof;
Five hundred pesos,
of them, of such
by auction and
kind of property
made, it is a
property or of an
interest therein;
Therefore, item (e) explains that the agreement between S and R are unenforceable.
68. To defraud his creditors, A sold his real property to B. B now seeks to register the sale. X, a creditor
seeks to prevent the registration on the ground that it is a rescissible contract. Despite X’s objection
may the land be registered in B’ name?
A. No, because the contract is rescissible and therefore without effect
B. No, because the sale is void and after annulment is not binding
C. Yes because the contract although voidable is valid and binding
D. Yes, because the contract although rescissible is valid, binding and enforceable before
rescission
Letter D. Article 1380 provided that, rescissible contracts are those validly agreed upon because all the
essential elements exist and, therefore, legally effective, but in the cases established by law, the remedy
of rescission is granted in the interest of equity. Therefore on the above case, the rescissibility of the
contract doesn’t constitute the contract to be void so B can still register the land on his name.
69. Element without which there cannot be a contract is:
A. Essential element
B. Natural element
C. Accidental element
D. All of the above
Letter A. Art. 1318 states that, essential elements or those without which no contract can validly exist,
thus, there cannot be a contract.
70. Contracts take effect only to the parties, their assigns and heirs except where the rights and
obligations arising therefrom:
A. Is not transmissible by their nature
B. Is not transmissible by stipulation of the parties
C. Is not transmissible by provision of law
D. All of the above
Letter D. ART. 1311. 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. The heir is not liable beyond the value of the property he
received from the decedent. Provided, that, f a contract should contain some stipulation in favor of a
third person, he may demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting
parties must have clearly and deliberately conferred a favor upon a third person. Therefore, contracts
take effect only to the parties, their assigns and heirs except where the rights and obligations arising
from all the above mentioned choices.
71. Where damages is caused to either of the contracting parties or to a third person, the contact may
be:
A. Annulled
B. Rescinded
C. All of the above
D. None of the above
Letter B. The Law on Obligations and Contracts states that rescission is a remedy in case the contract
is caused to either of the contracting parties or to a third person.
72. When the contract lacks one of the essential elements, the contract is:
A. Void
B. voidable
C. Rescissible
D. All of the above
Letter A. Art. 1318 state in its provision that, there is no contract unless the following requisites
concur:
Therefore, essential elements or those without which no contract can validly exist, thus, void.
73. Is a remedy in equity by means of which a written instrument is made or constructed so as to

express or conform to the real intention of the parties when some error or mistake has been
committed?
A. Ratification
B. Reformation
C. Resolution
D. All of the above
Letter B. Chapter 5 of Law on Sales, Agency and Transactions distinguished interpretation and
reformation which it defined reformation as that remedy in equity by means of which a written
instrument is made or construed so as to express or conform to the real intention of the parties. In
granting reformation, therefore, equity is not really making a new contract for the parties but is
conforming and perpetuating the “real contract’’ between them which under the technical rules of
law, could not be enforced but for such reformation. Therefore, reformation is the one defined on
the question.
74. A qualified acceptance constitutes:

A. An absolute acceptance
B. A meeting of the minds between the parties
C. Counter offer
D. All of the above
Letter C. Art. 1319 states that consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a counter-offer. Therefore, the answer is
counter offer as mentioned under Art. 1319.
75. The span of time wherein a person is in possession, temporarily, of all his mental faculties:
A. Lucid interval
B. Option period
C. Prescriptive period
D. Reglementary period
Letter A. Art. 1328 defines Lucid Interval as a temporary period of sanity where in a person is in
possession, temporarily, of all his mental faculties.
76. The stage of “conception” of a contract is

A. When the parties come to an agreement
B. When the contract is fully executed
C. When there is meeting of minds of the parties
D. When negotiates are in progress
Letter D. Title VI of the Law on Sales, Agency and Transactions states the formation of the contract
of sale to be as follows:
(a) Preparation, conception, or generation, which is the period of negotiation and bargaining,
ending at the moment of agreement
of the parties;
(b) Perfection or birth of the contract, which is the moment when the parties come to agree
on the terms of the contract; and
(c) Consummation or death, which is the fulfillment or performance of the terms agreed upon
in the contract.
Therefore, the stage of conception of a contract happens when negotiates are in progress.
77. The essential or impelling reason why the parties enter into a contract:
A. Motive
B. Cause
C. Profit
D. All of the above
Letter B. Under Art. 1350, cause is the essential or more proximate purpose or reason which the
contracting parties have in view at the time of entering into the contract or, as expressed in another
case, it is the “why of the contract, the essential reason which moves the contracting parties to enter
into the contract.’’ Therefore, the essential or impelling reason why the parties enter into a contract is
cause.
78. Contracts entered into in a state of drunkenness or during hypnotic spell is:
A. Voidable
B. Void
C. Unenforceable
D. Rescissible
Letter A. ART. 1328 states that, contracts entered into during a lucid interval are valid. Contracts
agreed to in a state of drunkenness or during a hypnotic spell are voidable. Therefore, contracts
entered into in a state of drunkenness or during hypnotic spell is neither void, unenforceable nor
rescissible.
79. Business advertisements of the thing for sale are:

A. Definite offer
B. Invitation to make an offer
C. Counter offer
D. Acceptance of the offer
Letter B. ART. 1325 states that, unless it appears otherwise, business advertisements of things for sale
are not definite offers, but mere invitations to make an offer. Therefore it is neither a definite offer,
counter offer nor acceptance of offer.
80. A and B entered into an oral sale of the former’s car for P1M which amount has been credited to
his bank account although the car has not yet been delivered to the latter. Can B compel A to
execute the deed of sale of the car?
a. No, because the sale is unenforceable
b. Yes, because it is enforceable
c. Yes, if A used the money to paid to him
d. No, because the sale is void.
On the statement above, al the requisites are present making the contract valid and enforceable.

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CONTRACTS

Chapter I - General Provisions

6. Those which are perfected by the mere agreement of the parties.

19. I. The freedom of contract is absolute.

24. The following are the rules in innominate contract, except;

Letter C. Both are true

28. The exceptions in relativity of contracts are the following except:

35. The elements of tort interference are the following except:

Provided in this Art. the Stages of Contracts:

Provided in this Art. the Stages of Contracts:

Provided in this Art. the Stages of Contracts:

Provided in this Art. the Stages of Contracts:

a. No, because the contract must be formalized in a public instrument

55. A contract is in the stage of conception when?

Provided in this Art. the Stages of Contracts:

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

Provided in this Art. the Classes of elements of contract:

Provided in this Art. the Classes of elements of contract:

Provided in this Art. the Classes of elements of contract:

5. I. Contracts without cause, or with unlawful cause produce no effect whatsoever.

11. An imperfect promise which is merely an offer.

12. This refers to qualified acceptance.

23. I. Contracts entered into during a lucid interval are voidable.

24. The following are the so-called vices of consent, except:

25. The characteristics of consent are the following, except:

28. A “misunderstanding of the meaning or implication of something” or “a wrong action or statement

Letter A. According to Article 1330, Mistake is defined as a. “misunderstanding of the meaning or

Therefore, both are true.

38. The following are the requisites of violence:

40. The requisites of intimidation are the following, except:

Therefore, a just threatened act is not among the requisites of intimidation.

Letter D. According to upcounsel.com, Malice is a wicked intention to do an injury. It is not confined

55. The following are the object of contracts, except:

57. I. Impossible things or services cannot be the object of contracts.

59. Is the essential reason for the contract.

61. I. Contracts without cause, or with unlawful cause, produce no effect.

6. I. Failure to follow the proper form invalidates a contract.

1. Is a remedy in equity whereby a written instrument is made or construed so as to express or conform

5. Is that remedy in equity by means of which a written instrument is made or construed so as to

9. There shall be no reformation in the following cases, except:

1. The following are defective contracts, except:

Letter E. According to NCC. The foolwinf are defective contracts,

5. I. Rescission of a contract will be permitted for a slight or casual brach

6. The following are rescissible contracts, except:

(5) All other contracts specially declared by law to be subject to rescission.

7. The following are rescissible contracts, except:

8. A person, usually a minor, who is under a guardian’s charge or protection

ARTICLE 1381. The following contracts are rescissible:

(5) All other contracts specially declared by law to be subject to rescission.

“Order” relating to documents of title means an order by indorsement on the documents.

“Quality of goods” includes their state or condition.

14. I. The prupose of rescission is to repair damages caused

19. The action to rescind contracts in fraud of creditors.

22. An accion pauliana presupposes the following except:

Letter D. Accoding to NCC. An accion pauliana presupposes the following:

24. The following instances as badges of fraud, except:

25. The following instances as badges of fraud, except:

30. I. Guardian of W, sold W’s house valued at P50,000 for P37,500

This period shall begin:

33. Which of the following contracts is rescissible?

Letter C. ARTICLE 1381. The following contracts are rescissible:

(5) All other contracts specially declared by law to be subject to rescission.

34. Three of the following are rescissible, which is not?