BL121 (Law on Obligations and Contracts)
NAME:_______________________________ SECTION:_________
Instructions: Write the letter of the correct answer on the sheet provided. Write your FINAL answer using black or blue
inked pen. NO ERASURES.
1. If the law requires a document or other special
form, what is the right of the contracting parties
once the contract is perfected?
a. The contracting parties may annul the contract
b. The contracting parties may rescind the contract
c. The contracting parties may compel each other
to observe the form or document required by law
d. The contracting parties need not execute the
required form
2. The following must appear in a public document in
order to insure its efficacy but not to for its
validity, except
a. Acts or contracts which have for their object
the creation, transmission, modification or
extinguishment or real rights over immovable
property
b. The cession, repudiation or renunciation of
hereditary rights or of those of the conjugal
partnership of gains
c. 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
d. The cession of actions or rights proceeding from
an act appearing in a public document
e. Contracts where the amount involved exceeds
five hundred pesos
3. When, there having been a meeting of minds of the
parties to the contract, their true intention is not
expressed in the instrument purporting to embody the
agreement, by reason of mistake, fraud, inequitable
conduct or accident, what is the remedy of one of
the parties?
a. Ask for annulment of the contract because the
consent is vitiated
b. Ask for reformation of the instrument to the
end that such true intention may be expressed
c. Ask for rescission of the contract
d. Ask for indemnification
4. If mistake, fraud, inequitable conduct or accident
has prevented a meeting of the minds of the parties,
what is the proper remedy?
a. Ask for reformation of the instrument
b. Ask for annulment of the contract
c. Ask for rescission of the contract
d. Ask for indemnification for damages
5. The following are the instances wherein reformation
of the instrument is the proper remedy, except
a. When a mutual mistake of the parties the failure
of the instrument to disclose their real
agreement
b. If one party was mistaken and the other acted
fraudulently or inequitably in such a way that
the instrument does not show their true
c. When 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
d. 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 express the true
intention of the parties
e. When one of the parties was induced to enter
into a contract through fraud, undue influence,
mistake, intimidation or violence
f. 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
6. There shall be no reformation of instrument in the
following cases, except
a. Simple donation inter vivos wherein no condition
is imposed
FINAL EXAMINATION
DATE:_______________
b. Wills
c. When the real agreement is void
d. Contracts of sales
7. The following may ask for the reformation of an
instrument, except
a. Either party if the mistake is mutual
b. Injured party
c. Successors in interest, heirs and assigns of
injured party
d. Guilty party
8. One of the parties has brought an action to enforce
the instrument, can he subsequently ask for its
reformation?
a. Yes because the remedies are available as
successive rights
b. No because there has been election between
inconsistent remedies
c. Yes because the injured party can never be
estopped
d. No if there is stipulation to that effect
9. If the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties,
what shall be the interpretation of contracts?
a. The intent of the contracting parties shall
still be construed
b. The literal meaning of its stipulation shall
control
c. The hidden meaning should be determined
d. The contract shall be enforced even if contrary
to law
10. In case of conflict between the evident intention of
the parties and the words of contract, which shall
prevail?
a. The words or letter of the contract shall
prevail over the intentions of the parties
b. The intention of the parties shall prevail over
the words of the contract
c. The contract shall be annulled because of
ambiguity
d. The contract shall be declared null and void
11. The following are the rules for interpreting or
construing a contract, except:
a. In order to judge the intention of the
contracting parties, their contemporaneous and
subsequent acts shall be principally considered
b. However general terms of a contract may be,
they shall always be understood to comprehend
things that are distinct and cases that are
different from those upon which the parties
intended to agree
c. If some stipulation of any contract should admit
several meanings, it shall be understood as
bearing that import which is most adequate to
render in effectual
d. 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
12. When it is impossible to settle doubts by the rules
established, and the doubts refer to incidental
circumstances of a gratuitous contract, what shall
be the interpretation of the contract?
a. The doubt shall be settled in favor of the
greatest reciprocity of interest
b. The greatest transmission of rights and interest
shall prevail
c. The least transmission of rights and interest
shall prevail
d. The contract is null and void
13. When it is impossible to settle doubts by the rules,
and the doubts refer to incidental circumstances of
an onerous contract, what shall be the
interpretation of the contract?
 a. The doubt shall be settled in favor of the
greatest reciprocity of interest
b. The greatest transmission of rights and interest
shall prevail
c. The least transmission of rights and interest
shall prevail
d. The contract is null and void
14. Where a contract is susceptible of being interpreted
as a sale with a right of repurchase and as a loan
with a mortgage, what shall be the interpretation of
the contract?
a. The contract is a sale with a right to
repurchase
b. The contract is an absolute sale
c. The contract is an ordinary loan
d. The contract is a loan with a mortgage
15. 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, what shall be the status of the contract?
a. Valid
b. Voidable
c. Null and Void
d. Unenforceable
16. Indicate the proper order from least defective to
most defective contract
I. Rescissible contract which is a contract that
has caused a particular damage to one of the parties
or to a third person and which for equitable reasons
may be set aside even if it is valid
II. Voidable or annullable contract, which is
contract in which the consent of one party is
defective, either because of want of capacity or
because it is vitiated, but which contract is valid
until set aside by a competent court
III. Unenforceable contract which is a contract that
for some reason cannot be enforced, unless it is
ratified in the manner provided by law
IV. Void or inexistent contract which is an absolute
nullity and produces no effect, as if had never been
executed or entered into and cannot be ratified
a. IV-III-II-I
b. I-II-III-IV
c. II-I-IV-III
d. I-III-II-IV
17. It is a remedy granted by law to the contracting
parties and even to third persons, to secure the
reparation of damages of damages caused to them by a
contract, even if this should be valid, by means of
the restoration of things to their condition at the
moment prior to the celebration of said contract.
a. Annulment of contrsct
b. Rescission of contract
c. Declaration of nullity of contrsct
d. Ratification of contract
18. The following are the requisites in order that an
action for rescission of a contract or accion
pauliana may prosper, except:
a. The contract must be rescissible
b. The person demanding rescission must be able to
return whatever he may be obliged to restore if
rescission is granted
c. The things which are the object of the contract
must not have passed legally to the possession
of a third person acting in good faith
d. The action for rescission must be brought
within the prescriptive period of five years
19. The following contracts are considered rescissible,
except:
a. Those which are entered into by guardians
whenever the wards they represent suffer lesion
by more than ¼ the value of the things which are
the object thereof
b. Those agreed upon in representation of
absentees, if the latter suffer more than ¼ the
value of the things which are the object thereof
c. Those undertaken in fraud of creditors when the
latter cannot in any other manner collect the
claims due them
d. Those which refer to things under litigation if
they have been entered into by the defendant
with the knowledge and approval of the
litigants or of competent judicial authority
e. Payments made in a state of insolvency for
obligations to whose fulfilment the debtor could
not be compelled at the time they were effected
20. The following statements concerning rescission of
contracts are correct, except:
a. The action for rescission is a preferred action
because it can be instituted even when the
party suffering damage has other legal means to
obtain reparation for the same
b. Rescission shall be only to the extent necessary
to cover damages caused
c. Rescission creates the obligation to return
things which were 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 may be obliged to restore
d. Rescission will not prosper 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
e. In case rescission is not possible, the
ind7emnity for damages may be demanded from the
person causing the loss
21. The following contracts are presumed in fraud of
creditors and considered rescissible, except
a. All contracts by virtue of which the debtor
alienates property by gratuitous title when the
donor did not reserve sufficient property to pay
all debts contracted before the donation
b. Alienations by onerous title when made by
persons against whom some judgment has been
rendered in any instance or some writ of
attachment has been issued
c. Any contracts entered into by a solvent person
22. What is the liability of a third person who acquires
in bad faith the things alienated in fraud in
creditors?
a. He shall indemnify the creditor for damages
suffered by them on account of alienation
whenever it should be impossible for him to
return them
b. He shall not be liable for damages
c. He shall be liable for damages even if he can
return the things alienated
23. What is the prescriptive period of an action for
rescission? (TYPO: 4 YEARS)
a. None
b. 10 years
c. 3 years
d. 5 years
24. The following are the rules to be observed in
counting the period for prescription of an action
for rescission, except:
a. For incapacitated persons or under guardianship,
it shall be counted from the termination of the
ward’s incapacity
b. For absentee, it shall be counted from the date
the domicile of the absentee is known
c. For contracts intended to defraud creditors, it
shall be counted from the knowledge of the
contract
d. For all rescissible contracts, it shall be
counted from the date of the contract
25. The following contracts are voidable or annullable,
even though there may have been no damage to the
contracting parties, except:
a. Those where one of the parties is incapable of
giving consent to a contract
b. Those where the contracts do not comply with
statute of frauds
c. Those where the consent is vitiated by fraud,
undue influence, mistake, intimidation or
violence
26. The following statements concerning voidable
contracts are true, except
 a. They are valid and binding until annulled
b. They are susceptible of ratification
c. After the annulment, they are no longer
effective and obligatory between the parties
d. They may be assailed by third persons
27. The following are the rules to be observed in
counting the period for prescription of an action
for annulment, except:
a. In cases of intimidation, violence or undue
influence, it shall begin from the time the
defect of the consent ceases
b. In cases of fraud o mistake, it shall begin from
the discovery thereof
c. In cases of contracts entered into by wards or
incapacitated persons, it shall begin from the
time the guardianship ceases
d. For all voidable contracts, it shall be counted
from the date of the contract
28. Which of the following extinguishes the action to
annul a voidable contract?
a. Ceasing of the intimidation, violence or undue
influence
b. Discovery of the mistake or fraud
c. Ceasing of the guardianship
d. Ratification
29. The following statements concerning ratification are
correct, except
a. Ratification may be effected expressly or
tacitly
b. Ratification may be effected by the guardian of
the incapacitated person
c. Ratification requires conformity of the
contracting party who has no right to bring the
action for annulment
d. Ratification cleanses the contract from all its
defects from the moment it was constituted
30. The following may ask for annulment of voidable
contracts, except
a. Guardian of a minor
b. Guardian of an insane or demented person
c. Party whose consent is vitiated
d. Party who is capable
31. The following statements pertaining to the effects
of annulment are correct, except
a. 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 interests
b. In obligations to render service, the value
thereof shall be the basis for damages
c. 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
d. Annulment of the contract may be availed to by
the capacitated contracting party or by the
party who vitiated the consent of the other
party
32. The following statements pertaining to the effects
of annulment are correct, except
a. Whenever the person obliged by the degree of
annulment to return the thing cannot 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
b. One of the contracting parties may be compelled
to restore what in virtue of the decree of
annulment he is bound to return even if the
other does not restore what is incumbent upon
him
c. 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
d. If the loss 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 of fault
of the plaintiff
33. The following are characteristics of an
unenforceable contracts, except:
a. They are valid but not enforceable by court
action
b. They are susceptible of ratification which makes
the contract enforceable
c. There is not proper legal remedy but to leave it
as it is
d. They may be assailed by third persons
34. The following contracts are unenforceable unless
they are ratified, except
a. Those entered into in the name of another person
by one who has been given no authority or legal
representative or who has acted beyond his
powers
b. Those that do not comply with the statute of
frauds
c. Those where both parties are incapable of giving
consent to a contract
d. Those which are absolutely simulated or
fictitious
35. It refers to a term which is a descriptive of
statutes which require certain classes of contracts
to be in writing and regulates the formalities of
contract necessary to render it enforceable and to
prevent fraud or perjury.
a. Statutory construction
b. Statute of fraud
c. Statute of Liberty
d. Statute of freedom
36. The following executory contracts shall be in
writing to be enforceable under statute of fraud,
except:
a. An agreement that by its term is 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 P500
pesos
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 representative to the credit of a third person
37. The following statements concerning ratification of
unenforceable contracts are true, except:
a. The sale of property made by a person without
authority of the owner is unenforceable in the
beginning but afterwards it becomes perfectly
valid by the ratification of the owner
b. Contracts infringing Statute of Frauds are
ratified by the failure to object to the
presentation of oral evidence to prove the same
or by the acceptance of benefits under them
c. When a contract is enforceable under the Statute
of Frauds, and a public document is necessary for
the registration in the Registry of Deeds, the
parties may compel each other to execute the
required form
d. Unenforceable contracts can be assailed by third
persons
38. The following contracts are inexistent and void from
the beginning, except
a. Those whose cause, object or purpose is contrary
to law, morals, good customs, public order or
public policy
b. Those which are relatively simulated
c. Those whose cause or object did not exist at the
time of the transaction
d. Those whose object is outside the commerce of men
e. Those which contemplate an impossible services
39. If the act in which the unlawful or forbidden cause
consists does not constitute a criminal offense,
which of the following rules are incorrect?
 i. When the fault is on the part of both contracting
parties, neither may recover what he has given by
virtue of the contract or demand the performance of
the other’s undertaking
ii. When only one of the contracting parties is at
fault, he cannot recover what he has given by reason
of the contract or ask for the annulment of what has
been promised to him. The other, who is not at
fault, may demand the return of what he has given
without any obligation to comply with his promise
a. Only I
b. Only II
c. Both I and II
d. Neither I nor II
40. The following are characteristics of void contracts,
except:
a. The contracts produce no effect whatsoever either
against in or in favour of anyone
b. The proper legal remedy is action for declaration
of nullity of void contract
c. As a general rule, the cannot be confirmed nor
ratified
d. They are valid and binding until annulled

A. Perfectly Valid B. Rescissible C. Voidable D. Unenforceable E. Void

41. A orally entered into a contract for a piece of work of a cake at a price of 500php. The performance and payment of
price shall be done after 5 months. VALID
42. A orally entered into a contract of barter with B involving a cellphone and a laptop. The values of the cellphone
and laptop are 5,000php and 8,000php, respectively. The exchange will happened after 6 months. VALID
43. A orally agreed to a contract of donation of cellphone with fair market value of 10,000php completed by delivery by
donor and acceptance by donee. VOID
44. The wife orally sold a land which is a community property to a third person without the consent of the husband at a
price of 60,000php when its book value is 100,000php. VOID
45. An oral contract of guaranty or surety. UNENFORCEABLE
46. The representative of an absentee orally sold a bike of the latter at a price of 40,000php when its book value is
60,000. The buyer has already paid the price. RESCISSIBLE
47. A is a judgement debtor in an action to collect a sum of money. A writ of attachment has been issued against A. the
car of A is the first to be levied. A sold in writing his laptop at a selling price of 500php.RESCISSIBLE
48. Oral contract of lease of laptop for a period of 3 years entered into between a demented lessee and an insane
lessor, perfected during the lucid interval of the latter. The rental is 500php a month. VOIDABLE
49. Oral contract of agency entered into between a minor agent and an adult principal when the commission is 500php per
transaction. VOIDABLE
50. A minor orally sold the car of his guardian at the latter’s name without prior consent. The sale is made at a price
of 30,000php and the car has a book value of 50,000php. The buyer has already paid the price to the minor.
UNENFORCEABLE

“And whatsoever we ask, we receive of him, because we keep his commandments, and do those things that are pleasing in
his sight." -- 1 John 3:22, KJV