Question 1

Which of the following statements is not true about the dragnet clause?

Accepted Answer

A) It is one specifically phrased to subsume all debts of past or future origins. 
B) It operates as a convenience and accommodation to the borrowers as it makes available additional funds without executing additional security documents. 
C) It is also known as the "blanket mortgage clause" 
D) It is different from a continuing mortgage clause. 
A) It is one specifically phrased to subsume all debts of past or future origins. 
B) It operates as a convenience and accommodation to the borrowers as it makes available additional funds without executing additional security documents. 
C) It is also known as the "blanket mortgage clause" 
D) It is different from a continuing mortgage clause. D

Question 2

When is the hotelkeeper shall be liable for the loss of the things belonging to the guests?

Accepted Answer

A) If the things were actually delivered or surrendered to the hotelkeeper. 
B) If the guests did not sign any waiver of liability. 
C) If the hotelkeeper was notified of the valuables and the guests took the necessary measure to the care and vigilance over the same. 
D) If the loss was due to the act of a thief done with the use of irresistible force. 
A) If the things were actually delivered or surrendered to the hotelkeeper. 
B) If the guests did not sign any waiver of liability. 
C) If the hotelkeeper was notified of the valuables and the guests took the necessary measure to the care and vigilance over the same. 
D) If the loss was due to the act of a thief done with the use of irresistible force. C

Question 3

In case of contract of deposit, the depository has the following rights or obligations except:

Accepted Answer

A) To keep the thing safely. 
B) To return the thing deposited. 
C) To make use of the thing deposited with the permission of the depositor. 
D) To deposit the thing deposited with a third person when there is an express stipulation allowing the same. 
A) To keep the thing safely. 
B) To return the thing deposited. 
C) To make use of the thing deposited with the permission of the depositor. 
D) To deposit the thing deposited with a third person when there is an express stipulation allowing the same. C

Question 4

A obtained ₱50,000.00 from B to be placed in A's safety deposit box. What is the nature of the contract?

Accepted Answer

A) The contract is a loan. 
B) It is a contract of lease. 
C) It is a commodatum. 
D) It is a deposit. 
A) The contract is a loan. 
B) It is a contract of lease. 
C) It is a commodatum. 
D) It is a deposit.

Question 5

A placed a bet of ₱10,000.00 that San Beda would win the NCAA basketball championship. B accepted the bet. But B refused to pay after SBC won. Is B correct?

Accepted Answer

A) Yes, because of the principle of mutuality of contracts. 
B) Yes, because of the principle of liberty of contracts. 
C) No, because the law prohibits betting in basketball even if it is not a game of chance. 
D) Yes, because basketball is a game of skill and not of chance. 
A) Yes, because of the principle of mutuality of contracts. 
B) Yes, because of the principle of liberty of contracts. 
C) No, because the law prohibits betting in basketball even if it is not a game of chance. 
D) Yes, because basketball is a game of skill and not of chance.

Question 6

X and Y entered into a contract. X agreed to deposit ₱50,000 with Y's account to make it appear that Y had sufficient capitalization in forming an incorporation. They agreed that Y should return the money plus 12% interest within 30 days. What is the nature of the contract?

Accepted Answer

A) Mutuum, because of the stipulation as to interest. 
B) Mutuum, because Y acquired ownership upon depositing the amount in his account. 
C) Commodatum, because Y never acquired ownership over the money as he was under obligation to return it and it was only for purposes of exhibiting that he had sufficient capital. 
D) Commodatum, because the stipulation for the payment of interest did not convert it to mutuum. 
A) Mutuum, because of the stipulation as to interest. 
B) Mutuum, because Y acquired ownership upon depositing the amount in his account. 
C) Commodatum, because Y never acquired ownership over the money as he was under obligation to return it and it was only for purposes of exhibiting that he had sufficient capital. 
D) Commodatum, because the stipulation for the payment of interest did not convert it to mutuum.

Question 7

The guarantor paid the obligation of the debtor when demand is made. Can he ask for reimbursement?

Accepted Answer

A) No, because he is a voluntary payor. 
B) No, because judgment has yet to be obtained against the debtor. 
C) No, because he has not been able to exercise the benefit of excussion. 
D) Yes, because the benefit of excussion is a right granted to him which can be waived. 
A) No, because he is a voluntary payor. 
B) No, because judgment has yet to be obtained against the debtor. 
C) No, because he has not been able to exercise the benefit of excussion. 
D) Yes, because the benefit of excussion is a right granted to him which can be waived.

Question 8

A & B entered into a contract of loan in the amount of ₱1M with interest at 192% per annum. When the obligation became due and demandable B failed to pay despite demand, hence, A filed a complaint against B. On the interest rate, what is a valid contention of B?

Accepted Answer

A) B can ask the court to declare it void on the ground that it is contrary to the Usury Law. 
B) B can ask the court to declare it void and be not liable at all. 
C) B can ask the court to delacre it void on the ground that it is unconscionable, hence, contrary to morals and the court may fix the interest rate at its discretion. 
D) A can contend that the interest rate is valid because of the principle of binding effect of contracts. 
A) B can ask the court to declare it void on the ground that it is contrary to the Usury Law. 
B) B can ask the court to declare it void and be not liable at all. 
C) B can ask the court to delacre it void on the ground that it is unconscionable, hence, contrary to morals and the court may fix the interest rate at its discretion. 
D) A can contend that the interest rate is valid because of the principle of binding effect of contracts.

Question 9

In the question above, suppose B failed to pay and A foreclosed the mortgage. Is A entitled to the balance?

Accepted Answer

A) No, because the law on pledge is applicable to the law on mortgages.(Arts. 2041,2087,2115,NC
C)  
B) Yes, because there is no law that prohibits recovery of deficiency under the mortgage laws. 
C) Yes, because while the law on pledge applies to the law on mortgage, the same is true if there is no inconsistency between the two (2) laws. ( Pameca Word Treatment Corp. v. C
A)  
D) No, because of the principle of solution indebt. 
A) No, because the law on pledge is applicable to the law on mortgages.(Arts. 2041,2087,2115,NC
C)  
B) Yes, because there is no law that prohibits recovery of deficiency under the mortgage laws. 
C) Yes, because while the law on pledge applies to the law on mortgage, the same is true if there is no inconsistency between the two (2) laws. ( Pameca Word Treatment Corp. v. C
A)  
D) No, because of the principle of solution indebt.

Question 10

A obtained a loan from Metrobank. As security, he delivered and deposit certificate maturing on April 29, 2011. A failed to pay, hence, the bank encashed the deposit certificate. A contended that it is pactum commissorium. Is A correct?

Accepted Answer

A) Yes, because the encashment is an automatic appropriation of the security. 
B) A is not correct because the bank had yet to perform an act to appropriate the money deposited. 
C) A is not correct because the act done was a matter of compensation. (BPI v. CA, 232 SCRA 302. Art. 1980, NC
C)  
D) A is correct because there can be no compensation since the relationship between the bank and A is one of deposit. 
A) Yes, because the encashment is an automatic appropriation of the security. 
B) A is not correct because the bank had yet to perform an act to appropriate the money deposited. 
C) A is not correct because the act done was a matter of compensation. (BPI v. CA, 232 SCRA 302. Art. 1980, NC
C)  
D) A is correct because there can be no compensation since the relationship between the bank and A is one of deposit.

Question 11

What is the nature of the contract of rent of safety deposit boxes?

Accepted Answer

A) Mutuum 
B) Commodatum 
C) Deposit 
D) Lease. 
A) Mutuum 
B) Commodatum 
C) Deposit 
D) Lease.

Question 12

A obtained a loan from B secured by a mortgage over his house & lot. B failed to pay hence, A foreclosed the mortgage but it was sold for less than the amount of the obligation. Can B recover the deficiency?

Accepted Answer

A) A cannot recover the deficiency because the law on pledges are applicable to the law on mortgages where there is a prohibition against recovery of deficiency. 
B) A can recover the deficiency as there is nothing in the law that prohibits the same. 
C) A can appropriate the object because the contract provides for it. 
D) A can sue B for sum of money and foreclose the mortgage if B cannot pay the judgment obligation. 
A) A cannot recover the deficiency because the law on pledges are applicable to the law on mortgages where there is a prohibition against recovery of deficiency. 
B) A can recover the deficiency as there is nothing in the law that prohibits the same. 
C) A can appropriate the object because the contract provides for it. 
D) A can sue B for sum of money and foreclose the mortgage if B cannot pay the judgment obligation.

Question 13

The following statements are correct, except:

Accepted Answer

A) There can be a continuing guaranty. 
B) There can be a continuing surety. 
C) There can be a continuing chattel mortgage. 
D) There can be a continuing real estate mortgage. 
A) There can be a continuing guaranty. 
B) There can be a continuing surety. 
C) There can be a continuing chattel mortgage. 
D) There can be a continuing real estate mortgage.

Question 14

A checked in at ABC Hotel Corporation with his valuables. While shopping nearby, she left the room for half a day but when she went back, all his valuables were gone as her room was ransacked with the use of force. She filed a complaint for damages. Is the hotel keeper liable?

Accepted Answer

A) The hotel keeper is liable as depositary. 
B) The hotel keeper is not liable because under the contract, it is not liable in case of loss of things belonging to the guest for any reason. 
C) The hotel keeper is not liable because of force majeure. 
D) The hotel keeper is liable because it is its duty to protect the properties of its guests. 
A) The hotel keeper is liable as depositary. 
B) The hotel keeper is not liable because under the contract, it is not liable in case of loss of things belonging to the guest for any reason. 
C) The hotel keeper is not liable because of force majeure. 
D) The hotel keeper is liable because it is its duty to protect the properties of its guests.

Question 15

To secure the payment of his obligation, A pledged to his surety C, his car who sold the car after paying the obligation of A. The obligation was ₱2M but the car was sold for only ₱1M. Can the surety recover the deficiency?

Accepted Answer

A) Yes, otherwise, there would be solution indebiti. 
B) Yes, no law prohibits him from doing so as he is not the direct creditor. 
C) No. In the foreclosure of a pledge, if the price of the sale is less than the indebtedness secured by the pledge, the creditor shall not be entitled to recover the deficiency, notwithstanding any stipulation to the contrary. 
D) Yes, if there is a stipulation. 
A) Yes, otherwise, there would be solution indebiti. 
B) Yes, no law prohibits him from doing so as he is not the direct creditor. 
C) No. In the foreclosure of a pledge, if the price of the sale is less than the indebtedness secured by the pledge, the creditor shall not be entitled to recover the deficiency, notwithstanding any stipulation to the contrary. 
D) Yes, if there is a stipulation.

Question 16

A sold his car to B, but the latter failed to register the car under his name. While B was driving the car, it met an accident resulting in injuries to C. Who may be liable?

Accepted Answer

A) C can hold A liable alone as he is the registered owner of the car. 
B) C can sue A and B as they are solidarily liable. 
C) C can sue B alone as the execution of the document of sale and delivery of the car conferred ownership upon him. 
D) C can sue B, but A can file a third party complaint against B for reimbursement if he is adjudged liable. 
A) C can hold A liable alone as he is the registered owner of the car. 
B) C can sue A and B as they are solidarily liable. 
C) C can sue B alone as the execution of the document of sale and delivery of the car conferred ownership upon him. 
D) C can sue B, but A can file a third party complaint against B for reimbursement if he is adjudged liable.

Question 17

A & B entered into a contract of pledge, where B delivered his car to A as security for the payment of an obligation in the amount of ₱2M. For failure of B to pay what is the remedy of A?

Accepted Answer

A) Appropriate the car as his own as provided for in the contract 
B) Sell the car but must deliver to B the excess. 
C) Sell the car but cannot recover any deficiency despite the agreement. 
D) Sell the car and recover the deficiency because of the agreement in the contract of pledge. 
A) Appropriate the car as his own as provided for in the contract 
B) Sell the car but must deliver to B the excess. 
C) Sell the car but cannot recover any deficiency despite the agreement. 
D) Sell the car and recover the deficiency because of the agreement in the contract of pledge.

Question 18

A entered into a contract whereby he obligated himself to pay B on or before September in the form of Australian currency. When the obligation became due and demandable, A delivered to B Australian currency. Is A correct?

Accepted Answer

A) B can refuse to accept the payment because the currency being offered is not legal tender in the Philippines. 
B) A is correct in offering Australian currency because of the contract. 
C) A is not correct because the stipulation to pay in Australian currency is void because it is contrary to law. 
D) A is not correct because the stipulation to pay in the form of another currency is void because it is contrary to public policy. (RA 8183) 
A) B can refuse to accept the payment because the currency being offered is not legal tender in the Philippines. 
B) A is correct in offering Australian currency because of the contract. 
C) A is not correct because the stipulation to pay in Australian currency is void because it is contrary to law. 
D) A is not correct because the stipulation to pay in the form of another currency is void because it is contrary to public policy. (RA 8183)

Question 19

A lent money to B in the amount of ₱3M and executed a mortgage over his house and lot to secure the payment of the obligation with a condition that if he fails to pay, A shall became the owner of the property. Is the stipulation valid?

Accepted Answer

A) Yes, because the contract is the law between the parties. 
B) Yes, because of the doctrine of mutuality of contracts 
C) No, because it is a case of pactum commissorium. 
D) Yes, because of the liberty of contracts. 
A) Yes, because the contract is the law between the parties. 
B) Yes, because of the doctrine of mutuality of contracts 
C) No, because it is a case of pactum commissorium. 
D) Yes, because of the liberty of contracts.

Question 20

Which of the following is correct if the interest rate in a loan is void?

Accepted Answer

A) The contract is totally inexistent. 
B) The creditor cannot recover interest at all. 
C) The creditor can recover legal rate of interest. 
D) The court shall rule as if no interest has been agreed upon and contrary to law. 
A) The contract is totally inexistent. 
B) The creditor cannot recover interest at all. 
C) The creditor can recover legal rate of interest. 
D) The court shall rule as if no interest has been agreed upon and contrary to law.

Exam 22: Contractual Obligations and Liabilities

Which of the following statements is not true about the dragnet clause?

When is the hotelkeeper shall be liable for the loss of the things belonging to the guests?

In case of contract of deposit, the depository has the following rights or obligations except:

A obtained ₱50,000.00 from B to be placed in A's safety deposit box. What is the nature of the contract?

A placed a bet of ₱10,000.00 that San Beda would win the NCAA basketball championship. B accepted the bet. But B refused to pay after SBC won. Is B correct?

X and Y entered into a contract. X agreed to deposit ₱50,000 with Y's account to make it appear that Y had sufficient capitalization in forming an incorporation. They agreed that Y should return the money plus 12% interest within 30 days. What is the nature of the contract?

The guarantor paid the obligation of the debtor when demand is made. Can he ask for reimbursement?

A & B entered into a contract of loan in the amount of ₱1M with interest at 192% per annum. When the obligation became due and demandable B failed to pay despite demand, hence, A filed a complaint against B. On the interest rate, what is a valid contention of B?

In the question above, suppose B failed to pay and A foreclosed the mortgage. Is A entitled to the balance?

A obtained a loan from Metrobank. As security, he delivered and deposit certificate maturing on April 29, 2011. A failed to pay, hence, the bank encashed the deposit certificate. A contended that it is pactum commissorium. Is A correct?

What is the nature of the contract of rent of safety deposit boxes?

A obtained a loan from B secured by a mortgage over his house & lot. B failed to pay hence, A foreclosed the mortgage but it was sold for less than the amount of the obligation. Can B recover the deficiency?

The following statements are correct, except:

A checked in at ABC Hotel Corporation with his valuables. While shopping nearby, she left the room for half a day but when she went back, all his valuables were gone as her room was ransacked with the use of force. She filed a complaint for damages. Is the hotel keeper liable?

To secure the payment of his obligation, A pledged to his surety C, his car who sold the car after paying the obligation of A. The obligation was ₱2M but the car was sold for only ₱1M. Can the surety recover the deficiency?

A sold his car to B, but the latter failed to register the car under his name. While B was driving the car, it met an accident resulting in injuries to C. Who may be liable?

A & B entered into a contract of pledge, where B delivered his car to A as security for the payment of an obligation in the amount of ₱2M. For failure of B to pay what is the remedy of A?

A entered into a contract whereby he obligated himself to pay B on or before September in the form of Australian currency. When the obligation became due and demandable, A delivered to B Australian currency. Is A correct?

A lent money to B in the amount of ₱3M and executed a mortgage over his house and lot to secure the payment of the obligation with a condition that if he fails to pay, A shall became the owner of the property. Is the stipulation valid?

Which of the following is correct if the interest rate in a loan is void?

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