ST. ANNE COLLEGE LUCENA, INC.

SACLI: The Landscape of Learning

SCHOOL OF BUSINESS ACCOUNTANCY AND TECHNOLOGY

Law on Obligations and Contracts

Prelim Exam

Name:________________________________________________Course:_________Score:______________

Encircle the letter with the correct answer for the given question. ANY ERASURES ON THIS
MULTIPLE CHOICE WILL BE CONSIDERED WRONG.

1. Which of the following statements concerning delay is incorrect?

a. there is no delay in obligations not to do
b. delay, as a rule, exists, when the debtor does not perform his obligation on the
date it is due
c. demand, as a rule, is required, in order for delay to exist
d. when time is of the essence of the contract, delay on the part of the debtor
exists despite the absence of demand

2. XYZ is a cooperative store. On July 1, 2014, it paid the Government of the City of
Manila certain taxes believing that it owed the same. After six months, XYZ learned
that it was not subject to the said taxes. Accordingly, it sought to recover the said
taxes it previously paid. The obligation of the Government of the City of Manila to
return the said taxes paid is based on
a. negotiorum gestio b. solution indebiti
c. quasi-delict d. the Government is exempt from giving tax refunds

3. S sold his only horse to B for P10,000.00 cash. The parties agreed that S shall
deliver the horse within one week from their agreement. Nothing is mentioned in the
agreement on how the horse will be cared for by S before delivery.
a. S must take care of the horse with the diligence of a good father of a family
before delivery
b. S need not take care of the horse because nothing was mentioned in the agreement
on how the horse will be cared for
c. S must take care of the horse with extraordinary diligence
d. The absence of a stipulation on how the horse must be cared for renders the sale
void because such stipulation is an essential element of the contract

4. P took a public bus in going to his office. Although P paid his fare, the bus
conductor did not issue to him a ticket. Along the way, the bus met an accident
causing a slight injury to P and other passengers. If P is to recover damages from the
bus owner, the source of the bus owner’s liability is
a. contract b. quasi-delict
c. law d. P cannot recover any amount because no ticket was issued

5. One of the following obligations is void. Which is it?

a. D to give C P50,000.00 if C does not run 100 miles without stopping
b. D to give C P50,000.00 when D has the means
c. D to give C P50,000.00 if D buys a brand new car
d. D to give C P50,000.00 if C runs for barangay chairman next year

6. Which of the following obligations is a pure obligation and is demandable at once?

a. D to allow C to use D’s car until December 31, 2015
b. D to allow C to use D’s car until C finishes his course in Accounting
c. D to give C his car. No mention is made when D shall give the car
d. D to give C a car if C finishes his course in Accounting

7. A and B are the owners of adjacent poultry and piggery farms. One day, B got sick and
failed to visit his farm. When A notice that B was not again around during the second
day, he himself took care of the animals by feeding them and cleaning the pig and
poultry pens. A did this for the next three days until B returned. A incurred
necessary and useful expenses amounting to P5,000.00 in the process. Under the
circumstances, B is obliged to reimburse A for such expenses which the latter incurred
by reason of
a. contract b. solutio indebiti c. negotiorum gestio d. quasi-delict

8. D stole the carabao of C. D was arrested, tried in court and convicted. Aside from
being sentenced to a prison term, D was also ordered by the court to return the
carabao. However, the carabao died before D could deliver it to C.
a. D is not liable to C if the cause of the death of the carabao is a fortuitous
event
b. D is liable to C only if the carabao died because of D’s fault
c. D is liable to C whatever may be the cause of death of the carabao
 d. D has no liability to C whatever may be the cause of the death of the carabao
because his obligation to return the carabao was due to an order of the court
and not on his own volition

9. The following are obligations with a term or period, except

a. D to give C P50,000.00 on December 1, 2015
b. D to give C P50,000.00 on Christmas day next year
c. D to give C P50,000.00 upon the death of C’s father
d. D to give C P50,000.00 if C’s father dies within 2 years

10. Ace Realty Company (Ace) ordered 6 units of “Borden” typewriters from Central Office
Machines (Central) at the price of P8,000.00 per unit. However, Central delivered to
Ace 6 units of “Remington” typewriters, a superior brand, which was priced at
P8,500.00 per unit. Central informed Ace that it will bill the latter for the
“Remington” typewriters at P8,000.00 only. Ace refused to accept the “Remington”
typewriters.
a. Central can compel Ace to accept the “Remington” typewriters since they are of
superior quality
b. Central cannot compel Ace to accept the “Remington” typewriters although they
are of superior quality
c. Central can compel Ace to accept the “Remington” typewriters since Ace is
required to pay only the price of “Borden” typewriters
d. Central can compel Ace to accept the “Remington” typewriters since all that is
required of Central is to deliver a typewriter that can perform the same
function as the one that was ordered

11. Prime Engineering Review Center (PERC) stated in the leaflets it distributed last
January that any reviewee who places first in the licensure examinations for
engineers this year will receive a cash prize of P150,000.00
a. the obligation of PERC is subject to a suspensive condition
b. the obligation of PERC is subject to a resolutory condition
c. the obligation of PERC is a pure obligation
d. the obligation of PERC is an obligation with a suspensive period

12. Three of the following statements pertain to natural obligation. Which one does not?
a. it is not enforceable in a court of justice
b. obligation exists by reason of equity and moral justice
c. if performed voluntarily, recovery can no longer be made
d. there is juridical necessity to perform it

13. On December 1, 2014, Miss Santos, a professor of Manila College, engaged the services
of Lepanto Transport to bring her class to Calamba, Laguna in time for the Rizal Day
celebration on December 30, 2014 which would start at nine o’clock in the morning.
The contract signed by the parties specified that a bus would be in the school
premises at six o’clock in the morning and would leave at exact 6:30 a.m. However,
Lepanto Transport failed to send a bus on the date, time and place agreed upon. As a
result, Miss Santos and her class failed to attend the celebration. Ms. Santos sued
Lepanto Transport for damages on the ground of delay in the performance of its
obligation. For its defense, Lepanto Transport claimed there was no delay because
Miss Santos never made a demand.
a. there was no delay because Miss Santos did not make any demand
b. Lepanto Transport was in delay since demand was not required
c. Miss Santos should have obtained the services of another company when the bus of
Lupanto Transport did not arrive
d. Miss Santos should have reminded Lepanto Transport from time to time before the
due date of its obligation to provide for a bus

14. Leveriza, the owner of an apartment, leased the premises to Toribio. The terms of the
lease provide for a monthly rental of P6,000.00 which Toribio must pay at the
residence of Leveriza about two blocks from the apartment. For the month of December,
Toribio when to the residence of Leveriza but the latter was not around to receive
the payment. Not wanting to go back, Toribio left the payment with Nograles, a
neighbor of Leveriza, who promised to give the payment to Leveriza. However, Nograles
spent the amount he received for himself. Based on the foregoing facts, which of the
following statements is incorrect?
a. the payment by Toribio to Nograles is valid since the latter is a neighbor for
Leveriza
b. the payment by Toribio is not valid because Nograles was not authorized to
receive the payment
c. Leveriza can demand payment from Toribio for the December rental
d. Toribio can go after Nograles for the amount misspent by Nograles

15. On May 31, 2014, D promised to give a specific house and lot to C if C passes the Bar
Examination. On September 24, 2014, C took the Bar Examiantion. The result of the Bar
Examination which C took was released on March 26, 2015 and C passed it. C shall be
entitled to the house and lot
 a. on May 31, 2014 b. on September 24, 2014
c. on March 26, 2015 d. when he received his rating

16. O was cleaning the glass window of his building when a large piece of broken glass
fell down directly hitting the roof of a car which was parked below. C, the owner of
the car, was not around. Sensing that he would be made liable for the damage on the
car, O immediately went down and cleaned the mess. O, seeing that W had witnessed all
that happened, proposed to give W P2,000.00 so that W would not testify in case a
course case is filed. W agreed to the proposal and accepted the money. Based on the
foregoing facts, which of the following statements is incorrect?
a. O’s liability, if any, is based on quasi-delict
b. The agreement between O and W is binding on both of them
c. W may testify in court despite the agreement
d. The agreement between O and W is void

17. S, a supplier of fresh fish from Lucena City, hired T, the owner of a trucking
company, for a fee of P3,000.00 to bring the fish catch of S to the Dampa Market in
Paranaque City which ordered the fish for a price of P20,000.00. In so far as S is
concerned, his prestation in his contract with T is
a. the sale of the fish b. the transport of the fish
c. the payment of P3,000.00 d. the payment of P20,000.00

18. Refer to the preceding number. In the contract between S and T

a. S is the obligor and T is the obligee b. S is the obligee and T is the obligor
c. Both S and T are obligors and obligees of each other
d. The Dampa Market is the obligee of both S and T

19. D, a depositor of ABC Bank, visited the branch of the bank at Espana Boulevard to
withdraw from its automated teller machine (ATM). After pressing correctly the amount
of P500.00, the machine dispensed 10 pieces of P500.00 bills or a total of P5,000.00.
The receipt released by the ATM showed that only P500.00 was withdrawn.
a. D does not have to return the excess of P4,500.00 because it was not his fault
that the ATM would dispense more than what he wanted to withdraw
b. D does not have to return the excess of P4,500.00 because the receipt did not
indicate that the said amount was withdrawn
c. D must return the excess of P4,500.00 because it was a case of payment that was
not due
d. D must return the excess of P4,500.00 because the bank will likely to discover
that he was the one using the ATM when the overpayment was made

20. D is obliged to deliver a specific Toyota car to C. The parties agreed that should D
so desire, he may deliver his only Lancer car to C as substitute. Before D could make
any substitution, the Lancer car was damaged beyond repair through the fault of D.
a. D’s obligation to deliver the Toyota car is extinguished
b. D is obliged to pay damages to C for the loss of the Lancer car
c. D is still obliged to deliver the Toyota car to C on due date
d. D is obliged to get another Lancer car as a substitute

21. D, a professional singer, agreed to sing for a gee of P20,000.00 at the birthday
party of C who was a fan of D. Due to numerous commitments, D could not go to the
party of C. So he sent X, another professional singer who was known to sing better
than D, to sing at C’s party, and informed C that the latter needed to pay only
P10,000.00
a. D may validly assign his obligation to sing because the reduced fee was
advantageous to C
b. D may validly assign his obligation to sing because X could perform the
obligation better that him
c. D may not validly assign his obligation to sing because it is personal in nature
d. C cannot refuse the performance of the obligation by X because the obligation to
sing is transmissible since it would not require much effort on the part of
either D or X who are both professional singers

22. D received a check for P5,000.00 drawn against ABC Bank in payment of a debt due him.
Upon cashing the check, D requested the teller to give him 10 pieces of P500.00 bill
and to place the money in an envelope. As he was in a hurry, D left the bank without
bothering to count the cash. Shortly after reaching his office, D counted the money
in the envelope and discovered that it contained 10 pieces of P1,000.00 bill or an
excess of P5,000.00
a. D does not have the obligation to return the excess of P5,000.00 because it was
not his fault that the teller would pay him an amount in excess of what was
stated in the check
b. D does not have the obligation to return the excess of P5,000.00 because the
bank will not likely known who among the bank clients received such excess
amount
c. D must return the excess of P5,000.00 because he has the obligation to do so
under the principle of solutio indebiti
 d. D must return the excess of P5,000.00 because he has the obligation to do so
under the principle of negotiorum gestio

23. The following cases are presented to you for evaluation:

I. D is obliged to deliver a specific computer to C. Before the scheduled delivery,
the computer was lost in a fire through no fault of D.
II. D is obliged to deliver 10 sacks of rice to C. Before the scheduled delivery,
the warehouse of D containing 500 sacks of rice from which D intended to get 10
sacks of rice for delivery to C, was razed in a fire together with the tock of
rice through no fault of D.
In your evaluation of the above cases, the obligation is extinguished
a. Both I and II b. Neither I nor II c. I only d. II only

24. Which of the following obligations is void?

a. D agreed to hire C as manager of his (D’s) business if C is willing to relocate
to Cebu
b. D agreed to paint the portrait of C if D will enroll in a painting class this
coming month
c. D promised to pay his debt to C amounting to P20,000.00 as soon as possible
d. D agreed to give a monthly support of P5,000.00 to C until D ends his contract
of employment overseas

25. D is obliged to deliver 20 sacks of “Dinorado” rice to C. The parties agreed that
should D fail to perform his obligation as stipulated, D will pay a penalty of
P1,000.00. On due date, D made a delivery of 20 sacks of rice but each sack contained
a mixture of “Dinorado” rice and another variety of lower quality. C discovered the
fraud.
a. C may demand the payment of the stipulated penalty only
b. C may demand the payment of the stipulated penalty as well as damages although
there was no stipulation with respect to damages
c. C may demand the payment of damages in addition to the stipulated penalty only
if there was a stipulation with respect to damages
d. C may demand the payment of damages in addition to the stipulated penalty only
if D refuses to pay the penalty

26. D obtained a loan of P50,000.00 from C. The loan was evidence by a promissory note
executed by D which said nothing about the transmissibility of the loan obligation or
the right to collect it. A month before the due date of the loan, C died leaving S,
his son, as heir. On due date, S presented the promissory note to D for payment, but
D refused claiming that he owed C but not S.
a. D may refuse to pay because the right to collect belonged only to C
b. D may not refuse to pay because the right of C to collect was transmitted to S
who was the heir of C notwithstanding the absence of an agreement to that effect
c. D may refuse to pay because there was not stipulation that right to collect the
loan would be transmitted to C’s heirs
d. D may refuse to pay because the transmission of the credit right is prohibited
by law

27. On January 1, 2014, D and C agreed that D would deliver to C a specific agricultural
land on July 1, 2014. From January 1 to June 30, 2014, D harvested palay from the
land worth P20,000.00 D actually delivered the land to C on September 30, 2014. At
that time, crops valued at P15,000.00 that grew beginning on July 1, 2014 remained
unharvested. C had a personal right against D for the delivery of the thing and its
fruits beginning on
a. January 1, 2014 b. June 30, 2014 c. July 1, 2014 d. September 30, 2014

28. C acquired a real right over the thing and its fruits on
a. January 1, 2014 b. June 30, 2014 c. July 1, 2014 d. September 30, 2014

29. The palay harvested from the harvested from the agricultural land mention in item 27
is an example of
a. industrial fruit b. natural fruit c. civil fruit d. it is not a fruit

30. D is obliged to deliver his only horse to C on May 31, 2014. C made a demand against
D for the delivery of the horse on May 31, 2014. However, D failed to deliver the
horse. In view thereof, C consulted you and ask which of the following remedies are
available to him
I. compel D to deliver the horse to him
II. get a horse from another person at D’s expense
III. demand payment of damages from D
Which of the foregoing remedies may be availed of by C?
a. I and III b. II and III c. I only d. II only

31. D is obliged to repair the car of C. D failed to repair the car despite the demand
made by C. D wants to know from you which of the following remedies are available to
him
 I. compel D repair the car
II. have the car repaired by another person at D’s expense
III. demand payment of damages from D
Which of the foregoing remedies may be availed of by C?
a. I and III b. II and III c. I only d. II only

32. The kind of fraud which renders a contract voidable is

a. causal fraud b. incidental fraud c. fraud in performance d. future fraud

33. D was obliged to deliver a specific car to C on May 31, 2015. On such date, however,
D failed to deliver the car. C also did not make any demand for the delivery of the
car.
a. D was in delay when he failed to deliver the car on due date
b. D was not in delay when he failed to deliver the car on due date
c. D would be on delay only if C made a demand for the delivery of the car on or
before due date
d. D was in delay whether demand was made or not since time was of the essence of
the contract

34. D appointed C as his agent to purchase a parcel of land belonging to X. D promised to

give a commission of P10,000.00 to C if C can present to D the deed of absolute sale
signed by X in favor of D on or before December 31, 2014. The condition of the
obligation is
a. negative b. positive c. impossible d. no condition exists

35. Refer to No. 34. Which of the following statements is incorrect?

a. D’s obligation is extinguished if it is already January 1, 2015 and C has not
yet presented to D the deed of absolute sale duly signed by X
b. D’s obligation is extinguished on December 5, 2014 if X dies on such date
without his having signed the deed of absolute sale
c. D’s obligation is demandable if C presents to D on or before December 31, 2014
the deed of absolute sale duly signed by X
d. D’s obligation is demandable if it is already January 1, 2015 and C has not yet
presented to D the deed of absolute sale duly signed by X

36. D promised to give P20,000.00 to C provided C does not sign a contract with X on or
before December 31, 2014. The condition of the obligation is
a. negative b. positive c. impossible d. no condition exists

37. Refer to No. 36. Which of the following statements is incorrect?

a. D’s obligation becomes demandable if it is already January 1, 2015 and C has not
yet signed the contract with X
b. D’s obligation becomes demandable on December 5, 2014 if X dies on such date
without C having signed the contract with X
c. D’s obligation is extinguished if C signs the contract with X on or before
December 31, 2014
d. D’s obligation is extinguished if it is already January 1, 2015 and C has not
yet signed the contract with X

38. D is obliged to give P50,000.00 to C if C tops the CPA Examination and a specific lot
if C can reduce the taxes to be paid by D in D’s tax return by unlawful means
a. Both conditions must be fulfilled so that C may demand the payment of P50,000.00
and the delivery of the specific lot
b. C may demand the payment of P50,000.00 if he tops the CPA Examination
c. C may demand the delivery of the specific lot if he can reduce through unlawful
means the taxes to be paid by D
d. C may not demand the payment of P50,000.00 and the delivery of the specific lot
even if he fulfills both conditions since the conditions indivisible

39. Three of the following are the characteristics of a condition. Which is the
exception?
a. it may or may not happen b. it may refer to the future
c. it merely fixes the time for the efficaciousness of an obligation
d. it may refer to a past even unknown to the parties

40. The obligation is not extinguished by reason of the loss of the thing through a
fortuitous event in three of the following cases. Which is the exception?
a. when the nature of the obligation requires the assumption of risks
b. when the debtor has incurred in delay
c. when the obligation is to give a determinate thing and the parties have not
stipulated whether or not there shall be liability in case of fortuitous events
d. when the debtor has promised to deliver the same thing to two or more persons
who do not have the same interest
41. D is obliged to deliver a specific horse to C for entry in the derby. The day before
the agreed date of delivery, the horse broke its right front leg. While it could
still walk, it could no longer run.
a. the obligation to deliver the horse is not extinguished since only one leg of
the horse was injured
b. the obligation is extinguished because the injury to the right front leg of the
horse is a partial loss that is so important in relation to obligation
c. the obligation to deliver the horse is not extinguished because the horse could
still walk
d. the obligation of D is not extinguished because he can get a horse from other
sources

42. During a flood, the properties of D were saved from destruction by C without the
knowledge of D who was then away. C incurred necessary and useful expenses in the act
of saving D’s properties. For such expenses
a. D must reimburse C although C acted without the consent of D
b. D is not required to reimburse C because C acted without D’s consent
c. D must reimburse C because there was an implied contract between D and C
d. D need not reimburse C because C’s act of saving D’s properties is a gratuitous
act that requires no compensation

43. D is obliged to give his only car to C on December 1, 2014. On December 1, 2014, D
did not deliver the car. The following day, armed men forcibly took the car from D’s
garage.
a. D’s obligation to give the car is extinguished
b. D must give another car of the same kind and quality to C because he was already
in delay when the loss took place
c. D is obliged to pay damages to C
d. D must give another car or pay damages at the option of C

44. Orlando brought his typewriter at the shop of Remigio for repair. Orlando made
several demands for the repair work to be done but Remigio did not undertake the
repairs. Eventually, Remigio returned the typewriter unrepaired and with several
parts missing.
I. Orlando can have the typewriter repaired by another repair shop with the repair
cost thereof chargeable to Remigio.
II. Orlando can compel Remigio to undertake the repairs.
III. Orlando can ask for damages for the missing parts of the typewriter at the
expense of Remigio.
Which of the above remedies may be availed of by Orlando?
a. I and II b. II and III c. I and III d. All of I, II and III

45. The following obligations are demandable at once, except

a. an obligation with a condition antecedent
b. an obligation without any term or condition
c. an obligation with an in diem period
d. an obligation with a condition not to do an impossible thing

46. The following statements are presented to you:

I. It may or may not happen II. It always refers to the future
III. It may refer to a past event unknown to the parties
IV. It merely fixed the time for the efficaciousness of an obligation
In your evaluation of the foregoing statements
a. I and III refer to a period b. I and III refer to a condition
c. II and IV refer to a condition d. III and IV refer to a period

47. The creditor has a right to the fruits of the thing from the time
a. the thing and its fruits have actually been delivered
b. the contract is perfected c. the obligation to deliver the thing arises
d. the payment of the price of the thing and its fruits has been made

48. One of the following is an obligation with a period with a suspensive effect. Which
is it?
a. I will give you P5,000.00 per month as support beginning January 1 next year.
b. I will give you P5,000.00 per month as support until you finish your law course.
c. I will give you P5,000.00 per month for your medicines if your physical
examinations says you are sick
d. I will give you P5,000.00 per month as support until you are able to find work.

49. These statements are presented to you:

I. a stipulation that an obligation shall be paid in a currency other than
Philippine legal tender is void.
II. a cashier’s check is as good as cash; hence, it is legal tender.
In your evaluation of the foregoing statements
a. both statements are true b. both statements are false
c. only statement I is true d. only statement II is true
50. Which of the following is a void obligation?
a. D to give C P50,000.00 if C does not fly to the moon.
b. D to give C P50,000.00 if D wins in the sweepstakes. D has not yet bought the
sweepstakes ticket.
c. D to give C P50,000.00 if D marries X.
d. D to give C P50,000.00 if C marries X.

- END -

PROF. ROJOHN M. VALENZUELA, CPA PROF. JULIANA LALAINE P. MANLANGIT

Program Chair, Accountancy Dean, SBAT