OBLIGATIONS AND CONTRACTS REVIEWER

INSTRUCTIONS: Select the best answer for each of the following questions. Mark
only one answer for each item by marking the box corresponding to the letter of
your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED.

1. This special form of payment is the conveyance of the ownership of a

thing as accepted equivalent of performance:
a) Dation in payment or dacion en pago.
b) Assignment of property or cession en pago.
c) Application of payment.
d) Tender of payment and consignation.
2. X sold his car to Y for P 50,000. No date was fixed for the performance
of the obligations of the seller to the buyer. The obligation of X is:
a) To deliver the car immediately because the sale is a perfected
contract
b) To deliver the car only after Y writes to X demanding the delivery if
the car
c) To deliver the car after Y pays X the P50,000.00
d) To rescind the contract because there is no time fixed for the
delivery
3. The creditor shall have a right to indemnity for damages when, through
the fault of the debtor, all the things which are alternatively the objects
of the obligation have been lost or compliance of the obligation has
become impossible. The indemnity shall be fixed taking as basis:
a) The value of the least expensive thing
b) The value of the most expensive thing
c) The value of the last thing which disappeared
d) The value of the first which disappeared
4. Mr. ABC is obliged to give Mr. XYZ his only car on July 15, 1987. Mr. ABC
did not deliver the car on July 15, 1987. On July 20 1987, an
earthquake destroyed the building where the car was garaged and the
car was destroyed. Is Mr. ABC still liable:
a) No, considering that no demand to deliver was made by Mr. XYZ and
the specific thing was lost due fortuitous event, hence the obligation
is extinguished.
b) No, the obligation is extinguished, even if the debtor is already in
default, because the debtor can plead impossibility of performance
c) Yes, Mr. ABC is already in legal delay, thus the obligation to deliver
the lost specific thing is converted into monetary claim for damages
d) Yes, the creditor can instead demand for a substitute equivalent
value from the debtor

5. A, B and C borrowed P24, 000.00 from Y and Z and signed a promissory

note dated, January 15, 1987 and due within six(6) months. How much
can Y collect from A?
a) P12,000.00
c) P8,000.00
b) P4,000.00
d)P24,000.00
6. When the subject matter of a contract is lost through a fortuitous
event, who is liable?
a) The debtor
c) the creditor
b) None of them
both creditor and debtor
7. In three of the following cases, advanced payment by the debtor is not
recoverable. Which is the exception?
a) The obligation was not yet due and demandable but the debtor
believed it was already due and demandable
b) The payment is only for interest and credited to the proper period
c) The advanced payment were made by both parties reciprocally
d) The debtor was not aware of the period
8. This kind of defective contract refers to that contract which is validly
agreed upon because all the essential elements exist, but the courts
can nullify it when there is damage or prejudice to one of the parties or
to a third person. Its enforcement would cause injustice by reason of
some external facts.
a) Voidable contract
c) Rescissible Contract
b) Void or inexistent contract
d) Unenforceable contract
9. An Offered to sell his lot to B for P100,000.00. In his offer to sell it was
stated that B is given 60 days to prepare the P100,000.00 and as soon
as B is ready with the money a will execute a deed of sale. Before the
end of 60 days, An informed B that the price of the lot was increased to
P120,000.00. May B compel A to accept P100,000.00 offered
previously by A and make him execute the deed of sale?
a) Yes, because A already signed his offer
b) No, for B never signified his acceptance of the As offer
c) Yes, because there was actual meeting of minds between the
parties
d) Answer not any of the above
10.
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
11.
A wrote a letter to B wherein A offered to sell a piece of land to B
for P200,000.00. B signified his desire to buy the land. In As letter, he
gives B a period of two (2) months within which to produce the

P200,000.00. After 45 days, A told B that the price of the land is now
P250,000.00 Can B compel A to accept the P200,000.00 first offered
by A and execute the deed of sale?
a) Yes, because there was actual meeting of the minds of the parties
b) No, for B did not signify his acceptance of As offer
c) Yes, because A is already estopped by his signed letter
d) Yes, because the period of two(2) months has not expired
12.
Mr. Guzman sold his owner-type jeep to Mr. Montano for
P100,000.00. There was no date fixed for the performance of the
obligation of Mr. Guzman and Mr. Montano. The obligation of Mr.
Guzman is:
a) To deliver the jeep immediately as there is a perfect contract
b) To wait for Mr. Montano to pay P100,000.00 and deliver the jeep
c) The rescind the contract because no time or date is fixed for the
performance of their respective obligations
d) To deliver the jeep after Mr. Montano demands for the delivery of
the jeep
13.
Contracts entered into during lucid interval are:
a) Unenforceable
c) void
b) Voidable
d) none of the three
14.
The action to annul a voidable contract, such as a contract where
one of the parties is incapable of giving consent to the contract is
extinguished by:
a) Novation
c) rescission
b) Ratification
d) answer not given
15.
In order that fraud may make a contract voidable:
a) It may be incidental but both parties must not be in pari delicto
b) It may be serious and the parties must be in pari delicto
c) It may be incidental but should have been employed by both parties
d) It should be serious and should have not been employed by both
parties
16.
In a sale, this is actual delivery:
a) Execution and signing of the sale document.
b) When the goods sold are placed in the control and possession of the
buyer.
c) Delivery by the seller to the buyer of the key where the goods sold
are kept.
d) The buyer us already in actual possession of the goods.
17.
Sale is distinguished from dation in payment in that in sale:
a) There is pre-existing obligation or credit.
b) The cause is the price.
c) It is a mode of extinguishing an obligation in the form of payment.
d) Answer not given.

18.
On April 10, 1992, Mr. Seller offered to sell to Mr. Buy a Nissan
Sentra car for P250,000 Mr. Buyer agreed and both executed a contract
wherein Mr. Buyer will pay Mr. Seller will deliver the car to Mr. Buyer.
On May 10, 1992, Mr. Seller sold the car to Mr. Third Person, who took
possession. The recourse of Mr. Buyer :
a) Wait for July 10, 1992 and sue Mr. Seller for damages
b) If Mr. Third Person acted in bad faith, Mr. Buyer may sue Mr. Third
Person
c) Mr. Buyer may sue Mr. Seller for damages even before July 10, 1992.
d) Even if Mr. Third Person acted in bad faith, Mr. Buyer cannot sue Mr.
Third Person
19.
This is a mode to extinguish an agency:
a) Death of the principal, but the agency is for the interest of the
principal and agent
b) Partial accomplishment of the agency
c) Upon withdrawal of the principal
d) Insanity of the principal or agent
20.
Which of the following cases does not terminate the agency?
a) A issued a general power of attorney to B on February 10, 1993 and
later issued another power of attorney to C after notifying B.
b) A writes his principal giving authority to C to take delivery of sugar
on behalf of A without time limit for the authority.
c) A the agent sues B the principal in court.
d) A writes his principal that he could no longer administer the latters
property and turn over the administration to C after rendering his
account.
21.
In the contract of agency, which of the following is not true and
incorrect?
a) A the agent of P is expressly prohibited from appointing a
substitute.
A violates this prohibition by appointing C in his stead. P can refuse
to recognize the acts of C but A is not liable for damages to P.
b) A and P appoint C as their agent for a common transaction. A can
revoke the agency even without the consent of P.
c) P sells his dry goods to Q provided P shall be made the manager
hereof. Q cannot revoke the agency of P at will.
d) If A, an agent with the power to appoint a substitute who is not
named, appoints P, who is a well known ESTAFADOR in the
community, then A must answer for the acts of P.
22.
B pledged his Rolex to C for P4,000. B failed to pay C the P4,000
on due date. C sold the Rolex watch at public auction to the highest
bidder at P3,500.
a) C can recover the deficiency of P500

b)
c)
d)
23.
a)
b)
c)
d)

C can recover the deficiency of P500 even without stipulation

C cannot recover the deficiency of P500 unless there is stipulation
C cannot recover the deficiency of P500 even if there is stipulation
The following are requisites of pledge, except:
The disposal of the property by the pledge.
Absolute ownership of the property pledged
The thing pledge may be placed in the possession of a third person.
To bind a third person, it must be recorded in the office of the
Register of Deeds.
24.
Which of the following is common requisite for pledge, chattel
mortgage and antichrises?
a) The amount of the principal and interest must be in writing.
b) The property must be in the possession of the creditor.
c) To bind third persons, they must be duly recorded in the office of the
Register of Deeds.
d) It is constituted to secure the fulfillment of a principal obligation.
25.
Chattel Mortgage as distinguished from pledge:
a) The excess of the amount due; after foreclosure, goes to the debtor.
b) The sale of the object in an auction extinguishes the obligation.
c) The delivery of personal property is necessary.
d) The registration of the personal property in the Registry of Property
is not necessary.
26.
A and B entered into a universal partnership of all present
property. The common property of the partnership shall be:
a) All the properties which belonged to each of the partners at the
time of the constitution of the partnership
b) All the properties which shall belong to each of the partners after
the constitution of the partnership
c) All the properties which belonged to each of the partners at the
time of the constitution of the partnership as well as the profits
which they may acquire therewith
d) All the properties which belonged to each of the partners at the
time of the constitution of the partnership as well as properties
which each may acquire thereafter
27.
X, Y and and Z are equal partners of XYZ Partnership. A owes
the XYZ Partnership for P9,000. Z, a partner collected from A P3,000
before X and Y received anything . Z issued s receipt on the P3,000 as
his share of what A owes. When X any Y collected from A, A was
insolvent.
a) Partner Z shall share partners X and Y with the P3,000
b) Z cannot be required to share X and Y with the P3,000
c) X and Y should exhaust all remedies to collect from A

d) X and Y can automatically deduct from the capital contribution of Z

in the partnership their respective share in the P3,000
28.
A and B are partners in a real estate business. A and B were
approached by X, who offered to buy a parcel of land owned by the
partnership. Thereafter, B sold to A Bs share in the partnership. Then
A sold the land to X at a big profit.
a) A is liable to B for Bs share in the profit
b) The partnership is dissolved when A became the sole owner
c) A is not liable to B for the latters share in the profit
d) The sale of the land to X is void
29.
A, B and C are partners in ABC company. D introduced himself as
a partner in ABC company to X, who in the belief of such introduction,
extended a P40,000.00 credit to ABC Company. These facts are known
to A who did not oppose. Who shall be held liable to X?
a) Since X extended the credit to ABC Company, a partnership liability
exists, thus, partners A, B, C and D are liable
b) Only A, who knows the transactions, and D are partners by estoppel
who are liable pro-rata to X
c) D who represented himself as partner in ABC Company is liable
d) A,B and C, who benefited in the P60,000.00 credit shall be liable to
X
30.
When cash or property worth P3,000.00 or more is contributed as
capital, the Articles of Co-partnership shall be in public instrument and
be registered with the Securities and Exchange Commission. If the
said requirements are not complied with:
a) It will render the partnership void
b) It will not affect the liability of the partnership and the partners to
third parties
c) It will not give legal personality to the partnership
d) It will give the partnership a de-facto existence
31.
In ABC Partnership, A and B contributed P20,000.00 each and C
his services. After paying all creditors if the partnership, only
P18,000.00 in cash remains. In the absence of terms to the contrary,
the share of C is equal to:
a) P6,000.00
c) the share of B
b) The share of A
d) nothing
32.
A and B are capitalist partners, with C as industrial partner. A
and B contributed P15,000.00 each to the capital of the partnership . A
contractual liability of P40,000.00 was incurred by the partnership in
favor of X. In the case at bar, the capital assets of P30,000.00 shall
first be exhausted thereby leaving an unsatisfied liability of P10,000.00
. X can recover the amount from:

a) A and B only
b) A, B and C
c) A, B and C and C can recover reimbursement from A and B
d) Answer not given
33.
The nationality of a corporation is determined by the law of its
domicile or place of principal business. The test is known as:
a) The control theory
c) the incorporation theory
b) The full absorption theory
d) the management theory
34.
The power to deny pre-emptive right as a corporate power is
classified as an:
a) Express power
c) Implied power
b) Incidental power
d) Discretionary power
35.
This shall constitute a quorum for the transaction of corporate
business:
a) Majority of the members
b) Majority of directors
c) Majority of the stockholders
d) All of them
36.
A private corporation organized under the corporation law
commences to have corporate existence and juridical personality and
is deemed incorporated from:
a) The date when the articles of incorporation is signed by the
incorporation
b) When the articles and incorporation and by laws are presented and
received by the Securities and Exchange Commission And the filing
fee is paid
c) From the date the SEC issues a certificate of incorporation under its
official seal
d) When the articles of incorporations is notarized by a Notary Public
37.
The following are some of the requisites of a de-facto
corporation. Choose the exception.
a) Valid law under which it is incorporated
b) Attempt to incorporate
c) Assumption of corporate power
d) None of the above
38.
Directors or trustees who willfully and knowingly vote or assent
to patently unlawful act of the corporation or who are guilty of gross
negligence or bad faith in directing the affairs of the corporation or
acquire any personal or pecuniary interest in conflict with their duty
shall be liable:
a) As trustee for the corporation
b) Criminally for violation of the Corporation Code
c) Jointly and severally for the damages suffered by the corporation
d) None of the above

39.
This is the equitable right of the stockholders to subscribe to
newly issued shares in order to maintain their equity corporation.
a) Right of redemption
c) Right to sue and be sued
b) Concept of corporate entity
d) Pre-emptive
right
40.
One of the following is a limitation on proxies. Which is?
a) Proxy acquires legal title to the shares of stock
b) A proxy votes even in the presence of the stockholder
c) The proxy is voted only for the meeting for which it was intended
d) A proxy is revocable at any time
41.
Give the instrument listed herein which is not negotiable as it is
beyond the scope of Negotiable Instruments Law.
a) Certificate of Deposit
c) Postal Money Order
b) Due bill
d) Trade Acceptance
42.
Under the Negotiable Instrument Law, a certificate of stock is not
negotiable because it lacks the requisites of:
a) The instrument must be writing and signed by the maker or drawer
b) It must contain an unconditional promise or order to pay a sum
certain in money
c) It must be payable on demand or at a fixed or determinable future
time
d) It must be payable to order or bearer
43.
This negotiable instrument is always drawn against a bank:
a) Bill of Exchange
c) Due bill
b) Check
d) Promissory Note
44.
Which of the following instrument is not payable to bearer?
a) Pay to the order of bearer P1,000.00
To: X Sgd. A
b) Pay the bearer the Sum of P1,000.00
To : X Sgd. A
c) Pay to B or bearer the sum of P1,000.00
To: X Sgd. A
d) Pay to cash the sum of P1,000.00
To: X Sgd. A
45.
A presented a bill to B, the drawee. B destroyed the bill. What
can A do?
a) A may sue for the destruction of his property
b) A may go after the drawer of the bill
c) A may no longer collect since the bill was destroyed
d) A may consider the bill as impliedly accepted by B
46.
Which of the following instrument is not negotiable?
a) I agree to pay to the order of A P30,000.00. (Sgd. X)
b) Good to A order P30,000.00. (Sgd.X)
c) I promise to pay to A or order P30,000 on June 30. (Sgd. X)
d) I promise to pay to A or order P5,000.00. (Sgd. X)

47.
The following instrument is not negotiable:
a) pay to C or order P20,000.00 with exchange at 2.5% (To: TP;
signed; M)
b) Pay to the order of C within 6 months from date, the sum of
P20,000.00 with the interest at 12% per anmum. (To: TP; signed M)
c) Pay to C or bearer P20,000.00 6 months after date. If not paid on
due date, I agree to pay collection and attorneys fees. (To: TP;
signed M)
d) Pay to C or order P20,000.00 in installment. (To: TP; signed M)
48.
An indorser of a note or bill is:
a) Secondarily liable
c) Primarily liable
b) Tertiary liable
d) Not liable
49.
A contract or receipt for the transport of goods and their delivery
to the person named therein to order or to bearer is a:
a) Warehouse receipt
c) Bill lading
b) Dock warrant
d) Answer not given
50.
Marcelo makes a note payable to the order to Patricio, who
indorse it to Alfonso. Fidel obtains possession of the note fraudulently,
forges Alfonsos signature and indorses it to Bartolome, who in turn
indorses it to Catalino. In this case, Catalino can:
a) Enforce the instrument against Marcelo and Patricio
b) Enforce the instrument against Alfonso
c) Enforce the instrument against Bartolome
d) Answer not given

OBLICON
Key Answer1.
2.
3.
4.
5.
6.

A
C
C
A
B
B

7. D
8. C
9. B
10.
11.
12.
13.
14.
15.
16.
17.
18.

C
B
B
D
B
D
B
B
C

19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.

D
A
A
D
D
D
A
C
A
C
B
B
D
C
C
A
D

36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.

C
D
C
D
C
C
B
B
A
D
C
D
A
C
C