Question 1

The renunciation of the principal debt shall not extinguish the accessory obligations.
Response: False

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Question 2
A mode of extinguishing obligations up to their concurrent amount when two persons
are principal debtors and creditors of each other is called:
Response: compensation

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Question 3
Waiver of an action for future fraud is valid and legally binding to contracting parties.
Response: False

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Question 4
Daniel borrowed from Chino P 500,000. The obligation is secured by a chattel
mortgage on Daniel's Toyota car. Subsequently, Daniel paid to Chino P200,000.
Unknown to Daniel, Tito, s third person, pays Chino P 500,000 believing that Daniel still
owed Chino such amount.
Response: none of the above.

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Question 5
Ratification does not extinguish the action to annul a voidable contract.
Response: False

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Question 6
_____ takes place when a third person of his own initiative and without knowledge or
against the will of the original debtor assumes the latter's obligation with the consent of
the creditor.
Response: Expromision
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Question 7
Tender of payment shall be made by depositing the things due at the disposal of
judicial authority
Response: False

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Question 8
Contracts undertaken in fraud of creditors when the latter cannot in any other manner
collect the claims due them are considered:
Response: rescissible contracts

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Question 9
The passage of time as a mode of acquiring or losing a right including the
extinguishment of an obligation is called:
Response: prescription

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Question 10
In obligations with a penal clause, the creditor as a rule may recover from the debtor in
case of breach of the following:
Response: No appropriate correct answer.

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Question 11
Ratification may be effected by the guardian of the incapacitated person.
Response: True

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Question 12
 Every person obliged to give something is also obliged to take care of it with the proper
diligence of a good father of a family, unless the law or the stipulation of the parties
requires another standard of care.
Response: True

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Question 13
Those suffering from civil interdiction, lepers, prodigals, deaf-mute who cannot read
and write are considered _____.
Response: incompetent

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Question 14
The payment of debts in money shall be made in the currency stipulated, and if it is not
possible to deliver such currency, then in the currency which is legal tender in the
Philippines.
Response: True

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Question 15
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.
Response: True

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Question 16
He who has various debts of the same kind in favor of one and the same creditor, may
declare at the time of making the payment, to which of them the same must be applied.
Unless the parties so stipulate, or when the application of payment is made by the party
for whose benefit the term has been constituted, application shall not be made as to
debts which are not yet due.
Response: True

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Question 17
 Lizardo is a lesse of Oscar's condominium. Under the lease agreement, Lizardo must
pay the monthly rental of P 20,000 to Oscar at the latter's office within the first 5 days of
the month. On the sixth month of the lease, Lizardo went to Oscar's office to pay the
rental but he was told by Elbert, an employee of Oscar, that Oscar was confined at the
DLSU Hospital. Elbert told Lizardo that he could entrust the payment to him. Santy, son
of Oscar, who happened to be around,however, demanded that Lizardo must pay to him
claiming that as Oscar's son, he was the one authorized to receive the payment. Given
the situation, where do you not know to whom you will give your payment, which of the
following modes of payment you will avail if you were Lizardo?
Response: application of payment

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Question 18
Dino obtained a loan of P 50,000 from Carlo who is engaged in the business of
financing. The written contract of the parties provided that the loan shall bear 12%
interest per annum and shall be paid in full together with the interest at the end of 12
months at Carlo's business office. On due date, Dino proceeded to Carlo's business
office to pay his debt but the place was padlocked and showed no signs that it had been
occupied for some time. Dino is now at loss on what to do as Carlo did not forward his
present address to him. Dino does not want to have any outstanding obligation at the
end of the year and incur further interest. Which course of action will you recommend to
Dino?
Response: No appropriate correct answer.

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Question 19
The obligation having been extinguished by the loss of the thing, the creditor shall have
all the rights of action which the debtor may have against third persons by reason of the
loss
Response: True

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Question 20
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.
Response: True

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 Question 21
Proof of actual damages suffered by the creditor is necessary in order that the penalty
may be demanded.
Response: False

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Question 22
A _____ obligation is one where only one prestation is due but the debtor may
substitute another.
Response: facultative

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Question 23
Condonation or remission is essentially gratuitous, which does not require the
acceptance by the obligor.
Response: False

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Question 24
An expression made by an expert where the other party has relied on the former's
special knowledge and turned out to be false shall be treated as fraud that will vitiate
consent.
Response: True

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Question 25
Rudolf borrowed P1 million from Rodrigo and Fernando who acted as
solidary creditors. When the loan matured, Rodrigo wrote a letter to Rudolf,
demanding payment of the loan directly to him. Before Rudolf could comply,
Fernando went to see him personally to collect and he paid him. Did Rudolf
make a valid payment?
Response: No, since Rodrigo, the other solidary creditor, already made a prior demand
for payment from Rudolf.

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 Question 26
Daryl bought a plane ticket for Hong Kong from Fly Travel Company. Later, however,
Daryl cancelled his flight because of the SARS epidemic in the place. Upon being
informed of the cancellation, Fly Travel told Daryl that the latter could not get his refund
of plane ticket within 2 days. In the meantime, Daryl thought of going to Australia so he
called Fly Travel to send him a ticket at Brisbane promising to pay the cost of the tickets
in 2 days. Assuming that the refund due to Daryl for his unused plane ticket Hong Kong
is of the same amount as the cost of his plane ticket to Australia, Daryl need not pay Fly
Travel by reason of:
Response: compensation

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Question 27
David owes Chad P 20,000 due on March 25. Chad, on the other hand, owes David the
following debts: P 8,000 due on March 1, P 3,000 due on March 8, P 5,000 due on
March 14, and P 2,000 due on March 24. On March 18, Chad assigned his credit right
to Tito without informing David who learned of the assignment on March 20. On March
25, Tito may collect from David:
Response: none, because the assignment made by Chad was without the knowledge of
David.

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Question 28
Pre-nuptial agreement signed between future husband and wife is excluded from the
requirements of Statute of Frauds.
Response: False

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Question 29
Rescission shall be only to the extent necessary to cover the damages caused.
Response: True

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Question 30
If a contract entered into where one of the parties is incapable of giving consent to a
contract, the same is a:
 Response: voidable contract

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Question 31
_____ takes place when the creditor accepts a third person to take place of the debtor
at the instance of the latter.
Response: Novation

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Question 32
Diana obtained a loan from Carla in the amount of P 50,000. Unable to give cash on
due date in payment of her loan obligation, Diana proposed to Carla that Diana would
be giving instead her diamond ring to settle her debt. Carla agreed and accepted the
ring from Diana. The new agreement between Diana and Carla involved both:
Response: novation and dacion en pago

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Question 33
In an obligation to deliver a generic thing, the loss or destruction of anything of the
same kind does not extinguish the obligation.
Response: True

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Question 34
Pre-nuptial agreement signed between future husband and wife is excluded from the
requirements of Statute of Frauds.
Response: False

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Question 35
In onerous contracts the cause is understood to be, for each contracting party, the
prestation or promise of a thing or service by the other; in remuneratory ones, the
service or benefit which is remunerated; and in contracts of pure beneficence, the mere
liberality of the benefactor.
Response: True
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Question 36
Those contracts that do not comply with the Statute of Frauds are considered:
Response: unenforceable contracts

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Question 37
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.
Response: True

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Question 38
Contracts 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 are considered:
Response: rescissible contracts

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Question 39
Alex sold his condominium unit to Brian. Alex thought that Brian, a licensed architect,
was a chemist who shares with Alex's interest. The mistake here is material to avoid the
contract.
Response: False

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Question 40
A contract where both parties are incapable of giving consent to a contract is
considered a:
Response: unenforceable contract.

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 Question 41
Contracts where the intention of the parties relative to the principal object of the
contract cannot be ascertained are considered:
Response: void contracts

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Question 42
A threat to enforce one's claim through competent authority, even if the claim is just or
legal, will vitiate consent.
Response: False

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Question 43
An obligation which consists in the delivery of a determinate thing shall be extinguished
if it should be lost or destroyed even with the fault of the debtor.
Response: False

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Question 44
The receipt of the principal by the creditor without reservation with respect to the
interest, shall give rise to the
presumption that said interest has been paid.
Response: True

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Question 45
An _____ contract is one entered into in the name of another by one who has no
authority, is unenforceable against the former unless ratified.
Response: unenforceable

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Question 46
 _____ arises from an ignorance of some provision of law, or from an erroneous
interpretation of its meaning, or from an erroneous conclusion as to the legal effect of an
agreement, on the part of one of the parties.
Response: Mistake

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Question 47
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.
Response: True

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Question 48
Maya made a non-negotiable promissory note with Pia as payee. Pia assigned the note
to Albert; Albert assigned the note to Bea; Bea assigned the note to Carlo; Carlo
assigned the note to Hubert; and Hubert assigned it back to Maya.
Response: Maya's obligation is extinguished by confusion.

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Question 49
Debtor obtained from ABC Bank a loan of P 12 Million payable at the end of 10 years.
Before maturity, an extraordinary inflation supervened causing the value of the debt to
fall to P 4 Million on the date of maturity. On due date, Debtor must pay ABC Bank:
Response: Php 12 Million

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Question 50
Whoever pays on behalf of the debtor without the knowledge or against the will of the
latter, may compel the creditor to subrogate him in his rights, such as those arising from
a mortgage, guaranty, or penalty
Response: False

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Question 51
 Reformation of instruments is allowed in wills of a deceased person to indicate the real
intention of the testator.
Response: True

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Question 52
Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. If the obligation
is divisible, that part thereof which is not affected by the impossible or unlawful condition
shall be valid.
Response: True

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Question 53
In extinguishing an obligation,payment shall only mean the delivery of money to the
creditor.
Response: False

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Question 54
Alex owes Brian P 10,000.00 in cash. Brian, later owes Alex a television set worth P
10,000.00. Generally speaking, compensation will take place to extinguish the
obligations here.
Response: True

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Question 55
The following statements pertain to either payment by cession or dacion en pago.
I. The debtor is insolvent.
II. Ownership of the thing/s is transferred to the creditor/s.
III. Plurality of creditors required.
IV. Obligations are totally extinguished as a rule.
Response: Statements II and IV pertain to dacion en pago.

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Question 56
 Upon the proposal of a third person, a new debtor substituted the original
debtor without the latter’s consent. The creditor accepted the substitution. Later,
however, the new debtor became insolvent and defaulted in his obligation. What
is the effect of the new debtor’s default upon the original debtor?
Response: The original debtor is freed of liability since novation took place and this
relieved him of his obligation.

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Question 57
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the
minds of the parties, the proper remedy is reformation of the instrument.
Response: False

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Question 58
Payments made in a state of insolvency for obligations to whose fulfillment the debtor
could not be compelled at the time they were effected, are unenforceable contracts.
Response: False

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Question 59
A third person who has an interest in the fulfillment of the obligation, such as a
guarantor, may compel the creditor to accept payment.
Response: False

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Question 60
Alex, Brian and Carl are solidary debtors of Xavier, Yuan and Zian, solidary creditors, in
the amount of P 2,700. Xavier renounces the whole obligation without the consent of
Yuan and Zian. The debtors accepted the renunciation.
Response: the whole obligation is extinguished

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Question 61
 In obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance, if there is no
stipulation to the contrary.
Response: True

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Question 62
When the obligee accepts the performance, knowing its incompleteness or irregularity,
and without expressing any protest or objection, the obligation shall remain not fully
complied with.
Response: False

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Question 63
Ace ordered 6 units of "Borden" typewriters from Central at the price of P 8,000 per
unit. However, Central delivered to Ace 6 units of "Remington" typewriters, a superior
brand, which was priced at P 8,500 per unit. Central informed Ace that it will bill the
latter for the "Remington" typewriters at P 8,000 only. Ace refused to accept the
"Remington" typewriters.
Response: Cetral cannot compel Ace to accept "Remington" typewriters although they
are of superior quality.

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Question 64
Whenever the private document in which the debt appears is found in the possession
of the debtor, it shall be presumed that the creditor delivered it under force or
intimidation.
Response: False

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Question 65
For dacion en pago to apply, the debtor must be insolvent.
Response: False

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