Question 1

In which of the following is a contract of sale not perfected?

Accepted Answer

A)  Giving of downpayment.
B)  Giving of earnest money.
C)  Giving of option money.
D)  Accepting the offer. C

Question 2

State the effect of illegal or immoral conditions in donations con causa onerosa. (onerous donations.)

Accepted Answer

A)  The condition is considered as not imposed regardless of whether negative or positive.
B)  Since the donations are governed by the law on contracts, the impossible or illicit conditions annul the obligation dependent upon the condition where the condition is positive and suspensive.
C)  The illegal condition annulled the donation/contract even if the impossibility merely supervened.
D)  Impossible or illegal conditions do not annul totally the obligations which depend upon them. B

Question 3

A entered into a contract of sale over B's house and lot but since there is a balance which remained unpaid, A executed a mortgage over the house and lot. A failed to pay. Can B rescind the contract?

Accepted Answer

A)  Yes, because of material and substantial breach.
B)  Yes, because there was delay in the payment of the price.
C)  No, because the relationship is no longer that of buyer and seller, but mortgagor and mortgagee.
D)  No, because the remedy is to foreclose the mortgage, rescission not being the principal remedy, but merely subsidiary. D

Question 4

A school granted scholarship to EC but subject to the condition that if he will transfer to another school, he will refund all benefits he has already enjoyed. Is the stipulation valid?

Accepted Answer

A)  Yes, because of the principle of mutuality of contracts.
B)  Yes, because of the principle of relativity of contract.
C)  No, because it is contrary to morals and public policy.
D)  No, because it is contrary to law.

Question 5

A & B are married. Out of the inheritance of A in the amount of ₱10M, they bought a house and lot and registered it under the name of B. State the relationship between A & B?

Accepted Answer

A)  B can claim to be the exclusive owner being the registered owner.
B)  B is holding the property for the conjugal partnership since there is a presumption of conjugality of a property acquired by onerous title during the marriage.
C)  B is holding the property in trust in favor of A.
D)  B can properly contend that the property shall be divided into two(2)  upon the dissolution of their marriage.

Question 6

A, was a consistent scholar at a prestigious university enjoying free tuition fees, books, clothing and housing allowances and was given a cash allowance of ₱25,000.00 per month. Due to some family problems, he decided to go back to General Santos City and enrolled at Holy trinity College, but before he could obtain his credentials, he was required to refund the amount of ₱300,000.00 equivalent to the privileges he enjoyed as that was the condition in the scholarship grant. Can he recover the amount?

Accepted Answer

A)  No, because the contract is the law between the parties.
B)  No, because of the principle of mutuality of contracts.
C)  Yes, because the stipulation is contrary to morals and public policy. (Cui v. Arellano Univ., May 30, 1961. Art. 1306, NC
C)  
D)  No, because of the principle of solution indebiti.

Question 7

X and Y executed a contract of lease, which provides as follows: "In the event that the lessee fails to pay on or before the due date of payment herein specified, the contract is deemed automatically terminated" and the lessee can be evicted without need of judicial order. Suppose that Y, the lessee fails to pay the rentals after giving a demand letter, may X, the lessor evict Y immediately?

Accepted Answer

A)  No, because it is a principle in law that a person cannot take the law into his own hands.
B)  No, because judicial order is required.
C)  Yes, because X, as the owner has a superior right to possess the property.
D)  Yes, under the principle of mutuality of contract.

Question 8

X brought a house and lot from Y valued at ₱5M. He paid ₱3M and for the balance, he executed a promissory note with interest at 10% to be paid within 90 days. ABC Corporation executed a surety for the balance. X failed to pay, hence, ABC paid the amount and sued X for the interest and the principal. X contended that he is not bound due to novation when Y accepted the security. Is X correct?

Accepted Answer

A)  Yes, because there is complete incompatibility between the PN and the surety bond.
B)  No, because the two contracts, PN and surety can stand together, the surety being merely an accessory to the original contract.
C)  Yes, because of implied novation.
D)  Yes, because the surety is a new and separate contract.

Question 9

All the statements below are correct, except:

Accepted Answer

A)  An option contract is separate and distinct from the contract of sale.
B)  An option contract must be supported by consideration distinct from the price.
C)  An option contract can only be supported by consideration in the form of money.
D)  An option contract can be supported by consideration in the form of an undertaking.

Question 10

A sent a document letter to B and obligated himself to give him ₱10M when he will feel like doing it. A year later, B wanted to enforce the commitment of A. What would be your advice if you were the counsel?

Accepted Answer

A)  I would advice him to enforce it because the letter is akin to a contract.
B)  I would advice him to enforce it because the letter is a source of a demandable obligation.
C)  I would not advice him to enforce since the promise is void as the performance depends upon the sole will of A. (Art. 1182, NC
C)  
D)  I would advice him to enforce because the letter is an express acknowledgment of an obligation.

Question 11

What is the remedy of a party whose right of first refusal to buy a property was violated?

Accepted Answer

A)  Action for declaration of nullity of the contract.
B)  Action for rescission.
C)  Action for annulment.
D)  Action to declare the contract unenforceable.

Question 12

A and B entered into a contract for A to construct a 20-door apartment for B. Payment shall start after the construction of ten (10). A subsequent agreement was entered into that payment will start after construction of seven (7). What is the effect of the subsequent agreement?

Accepted Answer

A)  It is extinguished the obligation partly because of novation.
B)  It is a modificatory novation as there was a change in the principal terms and conditions of the contract.
C)  It is an extinctive novation as the two (2)  agreements are incompatible.
D)  It did not alter the relationship as it has no effect at all.

Question 13

What is the remedy if a document does not reflect the true intention of the parties?

Accepted Answer

A)  File an action to annul.
B)  File an action to nullify.
C)  File an action for reformation.
D)  File an action to enforce.

Question 14

A and B entered into a contract of sale over A's property. The document that evidences the contract did not state how much was paid, but A delivered the property to B. What is the nature of the contract?

Accepted Answer

A)  Void.
B)  Valid.
C)  Unenforceable.
D)  Rescissible.

Question 15

A sold his house and lot to B for ₱10M payable in 10 monthly installments. B paid ₱9M but failed to pay the last installment. What is the remedy of A?

Accepted Answer

A)  Can file an action to declare the contract void.
B)  Can file an action to rescind the contract.
C)  Can file an action to enforce and collect the balance.
D)  Can file an action to rescind.

Question 16

The following statements are correct, except:

Accepted Answer

A)  A right of first refusal is without any consideration.
B)  In granting a right of first refusal, the period has yet to be determined at a future time.
C)  In granting a right of first refusal, the amount to be paid will be determined at a future time.
D)  A right of first refusal must be supported by a consideration in the form of money to be binding. (Vasquez v. C
A)

Question 17

What is the nature of a contract where the buyer did not pay the price?

Accepted Answer

A)  Void.
B)  Rescissible
C)  Voidable.
D)  Unenforceable.

Question 18

When A borrowed money from B, the latter gave him a check for ₱10M as it was a Sunday. Was the contract of mutuum perfected?

Accepted Answer

A)  Yes, because the contract is valid in any form.
B)  Yes, because the delivery of the check in an evidence of perfection.
C)  Yes, because of the principle of mutuality.
D)  No, unless the proceeds of the check shall have been delivered.

Question 19

X, Y & Z entered into a contract of loan with A obligating themselves solidarily to pay to A without need of demand on June 16. A condoned X's obligation; Y is insolvent. How much can A collect if the amount is ₱900,000.00?

Accepted Answer

A)  The full amount because anyone of the solidary debtors can be required to pay.
B)  ₱300,000.00 because of the condonation and insolvency of two (2)  of the solidary debtors.
C)  ₱600,000.00 by suing X & Z where Z will pay ₱300,000.00 plus ₱150,000.00 as his share in Y's obligation and where X will pay ₱150,000.l00 as his share in Y's obligation, but with a right of reimbursement.
D)  ₱900,000.00 chargeable against Z but with right of reimbursement.

Question 20

A induced B to violate his contract with C resulting in damage to C. Under what rule is A liable for damages?

Accepted Answer

A)  Liability is based on contract.
B)  Liability is based on crime.
C)  Liability is based on tort.
D)  there is no basis for liability of A die to lack of privity.

Exam 19: Contractual Obligations and Remedies