BSA I Obligations and Contracts Comprehensive Exam final PDF

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Law on Obligations and Contracts Comprehensive Examination 2 nd semester, 2018- Test QuestionDirections: Read the question very carefully. You have 3 hours to answer the test question. Place your answer on the Answer Sheet provided. Make sure that there are no items that were left unshaded. DO NOT W...

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Law on Obligations and Contracts Comprehensive Examination 2nd semester, 2018-2019 Test Question Directions: Read the question very carefully. You have 3 hours to answer the test question. Place your answer on the Answer Sheet provided. Make sure that there are no items that were left unshaded. DO NOT WRITE ANYTHING ON THIS TEST QUESTION. A separate solution sheet will be provided. Good luck! 1. A owns a row of apartments which rents out to tenants. On the 4 April 2015 he left for the United States without appointing any administrator to manage his apartments. B, a niece of A, concerned with the interest of her uncle, took it upon herself to manage the property. The juridical relation between A and B is: a. quasi-contract b. contract c. innominate contract d. negotiorum gestio 2. A himself to sell to B his house and lot which was being rented by another person, if B passes the CPA examination. Luckily for B, he passed the said examination. However, A sold the said property to C after the agreement was entered into by A and B. Was the sale valid? a. The sale was not valid because the property was already sold by A to B although it was subject to a suspensive condition. b. The same was not valid if the buyer was aware of the promise to sell of A to B. c. It was a valid sale because A was still the owner of the house and lot at the time of the sale but with resolutory condition d. It was a valid sale if the buyer was in good faith and for value and without knowledge of the promise to sell of A to B. 3. A was hired by B as its chief accountant to serve for two years per contract between the parties. But after serving only for two months, he resigned to join C Corporation, which enticed him to leave B Corporation by offering more advantageous terms of employment. B sued A for damages for breach of contract and C also for damages. Decide. a. C is liable for breach of contract entered into between A and B b. C is not liable for damages because it was not a party to the contract of employment between A and B c. C is liable for its act of inducing A to violate his contract with B although it is not a party thereto d. C is liable to pay damages to B even if it were in good faith because A is liable for breach of contract 4. In the preceding case in No. 2, assuming that it was B who was entitled to the property, is she entitled to the rentals collected by A prior to B’s passing the CPA examination? a. B is entitled to the rentals base on the fact that her ownership wold retract to the day of the constitution of the obligation. b. B is not entitled to the rentals because the happening of the suspensive condition does not retroact as regards the fruits. c. B is not entitled to the rentals if he was aware of the existence of the lease of the property of other person. d. B s not entitled to the rentals taken if it was so stipulated between A and B. 5. In reformation of instruments it is necessary that the contract is perfectly valid and the instrument does not express the true intention of the parties. If the doubt is cast upon the intention of the parties upon the object of the contract and the contract is onerous, the doubt shall be resolved in favour of greatest reciprocity of interests. a. Both statements are false b. First is false, second is true c. First is true, second is false d. Both are true 6. A, B and C are solidary debtors for a loan of P3M. The creditor has condones C’s entire share in the debt. Since B has become insolvent, the creditor demands payment from A. How much, if any, may A be compelled to pay? a. A is liable only for the amount of P1M as his share because B has become insolvent and therefore the latter’s fault shall not make A answerable for his share. b. A may be compelled to pay P2M only in view of the remission of the share of C o P1M. c. A may not be compelled to pay any amount because since the obligation is solidary, the remission made by the creditor shall extinguish the entire obligation of the debtors. d. A is liable only for P2M provided C gives him his share of P1M because only B is insolvent and both of them shall share the latter’s share of the obligation. 7. A leased his house to B with the agreement that the telephone bills shall be shouldered by B. Six months later, B left the premises leaving behind the unpaid telephone bills. A

refuses to pay the unpaid bills on the ground that B had already substituted him as a customer of the telephone company. Decide. a. A is correct to asset no liability to the telephone company due to novation of the contract by way of substitution debtor.

b. A is not liable because the telephone company failed to exercise due diligence in collecting from his unpaid bills. c. A is liable to the telephone company subsidiarily, only after it fails to collect from B. d. A is liable for the unpaid bills of B because the contract was between A and the telephone company and A cannot be substituted by B without the consent of the company. 8. In the preceding case in No. 6, to what extent, if at all, can C be compelled by A to contribute to such payment? a. C cannot be compelled to contribute because his entire share in the debt has been condoned by the creditor. b. C can only be compelled to contribute P.5M, the share of B equally shared by A and C. c. C can be compelled to pay P1M because A paid the creditor of P2M and therefore both A and C shall equally share in the payment. d. C is liable to contribute only after he has collected from B his share of the debt. 9. For value received, A promised to deliver to B on or before August 15 his only BMW car, as well a 2000 model Sony TV set, 21”. Unfortunately, before the scheduled delivery date, both the car and the TV set which A intended to deliver were lost in an accidental fire. Has the obligation of A been extinguished? a. The obligation to deliver both objects was extinguished because they were lost due to a fortuitous event. b. The obligation to deliver both was not extinguished because it was not agreed upon by the parties that fortuitous event shall absolve the debtor from responsibility for the loss. c. The obligation to delivery the TV set is extinguished but not the obligation to deliver the BMW car. d. The obligation to deliver the car is extinguished but not the obligation to deliver the TV set. 10. Legal subrogation is presumed in the following, except a. When a third person, not interest in the obligation, pays with the approval of the creditor. b. When a creditor pays another creditor who is preferred even without the debtor’s knowledge. c. When a third person, not interest in the obligation, pays with the express or tacit approval of the debtor. d. When, even without the knowledge of the debtor, a person interested in the fulfilment of the obligation pays. 11. X, a customer, drinks a bottle of soft drinks in a restaurant and his hospitalized due to harmful substance in the beverage. Is the manufacturer liable for damages in the absence of contractual relation between them? a. Yes, because there is actually a contract between them, the restaurant being the agent of the manufacturer. b. Yes, because its liability arises out of quasi-contract. c. No, there being no contract from which liability may arise. d. Yes, because of quasi-delict. 12. A granted B the exclusive right to sell his brand of Maong pants with the price payable in two months form delivery and promising B a 20% commission on all sales. After delivery of the merchandise to B but before he could sell them. B’s store was burned without his fault, together with all of the pants. Must B pay A for the pants? a. B has no obligation to pay A because the pants were lost due to fortuitous event and without B’s fault b. B need not pay A because as agent he has no obligation to pay the price to his principal A when the loss was without his fault. c. B must pay A the value of the pants at the time of the loss since he was already the owner thereof upon delivery to him. d. B must pay A the price agreed upon because there was sale and he became the owner thereof after delivery. 13. A sold to B a fake Rolex watch on January 3, 2015. On January 13, 2015, B discovered that the watch he bought from A was imitation. The law provides that he can annul the sale as voidable contract within four years. Prescription starts from: a. January 3, 2015 when the sale was perfected. b. The time of delivery of the watch to B. c. The time they first talked about the sale of the watch. d. January 13, 2015 when the fraud was discovered by B. 14. Which of the following contracts of sale is void?

a. Sale of EGM’s car by KRP. EGM’s agent, whose authority is not reduced into writing. b. Sale of EGM’s piece of land by KRP, EGM’s agent, whose authority is not reduced into writing.

c. Sale of EGM’s car by KRP, a person stranger to EGM, without EGM’s consent or authority. d. Sale of EGM’s piece of and by KRP, a person stranger to EGM, without EGM’s consent or authority. 15. Without authority from P, A sold P’s car in P’s name. Contract is: a. void b. voidable c. valid d. unenforceable 16. Which phrase most accurately completed the statement-if at the time of the contract of sale is perfected, the thing which is the object of the contract has been entirely lost: a. The buyer bears the risk of loss. b. The contract shall be without any effect. c. The seller bears the risk of loss. d. The buyer may withdraw from the contract. 17. A sold to B a particular pencil for P250.00. The sale is oral. It was agreed that the payment and delivery are to be made after two years from the sale. At the stipulated period, A refused to deliver alleging he has no obligation to do so. Is a correct? a. Yes, because the sale is voidable and cannot be enforced. b. Yes, because the contract is unenforceable it being an oral contract. c. No, because the contract is enforceable since the price is less than five hundred pesos. d. No, the contract is valid, binding and therefore must be given effect. 18. When a. b. c. d.

does From From From From

the the the the the

buyer of time the time the time the time the

a thing have the right to the fruits of the thing bought? fruits are delivered. obligation to deliver the thing bought arises. sale is perfected. thing bought is delivered.

19. A sold to B orally a parcel of land for P5M. Delivery and payment were to be made four months later. When the said date arrived, A refused to deliver the land. Can B compel A to deliver? a. Yes, because the sale has been perfected already and obligations of the parties are reciprocally demandable. b. Yes, because there was an agreement to deliver after four months and that should be respected by the parties. c. No, because the sale although valid is unenforceable. d. No, because the sale is void, being orally entered into. 20. A contract granting a privilege to a person, for which he has paid a consideration, which gives him the right to buy certain merchandise or specified property, from another person, at any time within the agreed period, at a fixed price. What contract is being referred to? a. Option contract b. Contract to sell c. Contract of sale d. Lease 21. Without authority from P, A sold P’s car in A’s name. Contract is: a. void b. voidable c. valid

d. unenforceable

22. P sold to R the former’s car on April 1, 2015 for P300,000.00. P promised to deliver the car on April 15, 2015, but R did not make any promise when to pay. a. P on April 15, 2015 can demand payment from R because the obligation is not subject to any condition. b. R will be obligated to pay only at or after delivery. c. P can demand payment before he delivers the car. d. R can compel P to deliver the car before April 15, 2015 upon payment of the selling price. 23. C is the creditor of D in the amount of P50,000. G is the guarantor of D. D paid C partially with P20,000. A, not knowing the partial payment of D and against the will of D, paid C the amount of P50,000. What is the effect of this payment in the obligation? a. The obligation is extinguished. A cannot recover any amount from D, but A can demand reimbursement from G in the amount of P50,000. b. The obligation is extinguished. A can demand P30,000 from D because this amount benefited D, or, A having been subrogated into the rights of C, can proceed against G. c. The obligation is not extinguished. A’s payment being against the will of D does not extinguished the obligation. d. The obligation is extinguished. A can demand P30,000 from D, but if D cannot pay, A cannot ordinarily proceed against guarantor G because A is not entitled to subrogation. 24. In two separate documents signed by A, he “obligated” himself each to B and c, thus:

“To B, my true love, I obligate myself to give you my one and only car when I feel I like it.” “To C, my true sweetheart I obligated myself to pay you the P1M I owe you when I feel I like it.”

Which of the two “obligations” is A liable? a. A is liable to B because of his written promise to give his which is enforceable when he likes to do so. b. A is not liable to B because the obligation is void being one with a void potestative condition. c. A is liable to C because the obligation is one with a suspensive condition which is valid. d. A is liable to C because the obligation is one with a period which depends upon the will of the debtor. 25. A, B, C and D are joint creditors of E and F, solidary debtors in the amount of P40,000.00. How much can A, B and C collect from E? a. A, B and C could collect P20,000.00 from E. b. A, B and C could collect P30,000.00 from E. c. A, B and C could collect all the P40,000.00 from E. d. A, B and C could collect P20,000.00 from E and P10,000.00 from F. 26. A, B and C borrowed P12,000.00 from X evidenced by a promissory note binding to pay jointly and severally. However, it was stipulated that A will pay on June 15, 2015; B shall pay on July 15, 2015, while C shall pay on August 15, 2015. On June 15, 2015, A paid 4,000.0 to X and refused to pay the balance. Is A obliged to pay the whole amount of indebtedness on June 15, 2015? a. A is obliged to pay the whole amount because their obligation is solidary and anyone is liable for the entire debt. b. A is liable only for his share of 1/3 of the loan because the obligation is joint. c. A is liable only for 1/3 of the loan on June 15, 2015 despite the obligation being solidary. d. A is liable only for 1/3 of the loan and later B for 1/3 on July 15, 2015 and C for 1/3 on August 15, 2015. 27. This is payment in kind: a. consignation c. dation in payment

b. payment by cession d. application for payment

28. C, husband of D, sold the property of D, without her consent, in her name. The sale is: a. rescissible b. voidable c. unenforceable d. void 29. A obliged himself to pay X P100,000 in 30 days plus a penalty of P20,000 if he fails to pay the obligation in due time. A failed to pay the obligation in 30 days. X can demand from A. a. The principal of P100,000 plus P20,000 penalty b. The principal of P100,000 plus P20,000 penalty, plus legal interest c. The principal of P100,000 plus legal interest d. The principal of P100,000 plus P20,000 penalty, plus legal interest, plus damages 30. The contract must bind both contracting parties and its validity or compliance cannot be left to the will of one of them. This is the principle of relativity of contracts. Contracts are perfected by mere consent of the contracting parties. This is the principle of obligatory force of contracts. a. Both statements are false b. First is false, second is true c. First is true, second is false d. Both are true 31. In three (3) of the following cases advance 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 advance payments were made by both parties reciprocally d. The debtor was aware of the period 32. D sold a second hand car to E for P1M with P.5M upon delivery of the car and the balance payable in ten equal monthly instalments. Less than one month after delivery, the car was stolen from the garage of E with no fault of E’s part and was never recovered. Is E still liable to pay the balance? a. E is no longer liable to pay the balance because the car was lost due to fortuitous event. b. E is not liable for the loss because it took place without his fault. c. E is liable to pay the balance because he was the owner at the time of the loss. d. E is liable for the balance but based on the value at the time of loss, that is, proportionate liability. 33. X obliged to give Y a specific car on July 15, 2015. X did not deliver the car on July 15, 2015. On July 20, 2015, an earthquake destroyed the building where the car was

parked and the car was destroyed. Is X still liable? a. No. Considering that not demand to deliver was made by Y and the specific thing was lost due to 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. X is already in legal delay, thus the obligation to deliver the lost specified thing is converted into monetary claim for damages. d. Yes. The creditor can instead demand for a substitute of equivalent value from the debtor. 34. In June 2015, A obtained a loan from B and executed with C as solidary co-maker a promissory note in favour of B for the sum loaned which shall be payable ten equal monthly payments with interest. To secure the payment of the loan, A put up as security a chattel mortgage on his car. Because of the failure of A and C to pay the loan, the mortgage was extra judicially foreclosed. B acquired the car as highest bidder at P1M although the loan was P1.5M. B is now demanding payment from C. Is C liable for said deficiency? a. C is not liable because of the provision on Recto Law. b. C is liable for the deficiency be being solidary debtor. c. C is liable only after A was failed to pay the deficiency. d. C is liable but only one half of the deficiency as co-maker. 35. If the cause is not stated in the contract, it is presume that it does not exist. Lesion or inadequacy of cause as a rule invalidates a contract. a. First statement is false; second is true. b. First is true; second is false c. Both are true d. Both are false 36. A offered to sell her car to B for P1M. After inspecting the car, B offered to buy it for P5M which offer was accepted by A. The next day, A offered to deliver the car but B, being short of funds, secured postponement of the deliver, promising to pay the price upon the arrival of the ship “Joyce”. The ship however never arrived because it sunk due to tsunami. Can A compel B to pay the price and accept the car? a. No, B cannot compelled to do so because the sale was conditional upon the arrival of the ship which however did not arrive. b. No, B cannot be compelled to do so because there was no perfected sale. B made a counter-offer which in reality was a qualified acceptance. c. Yes, B can be compelled to do so but since the ship did not arrive obligation to pay was extinguished. d. Yes, B may be compelled to do so as there was already a perfected sale although the payment of the price was subject to a period. 37. Three of the following contracts must be in writing to be valid. Which is the exception? a. Contract of partnership where immovables are contributed. b. Contract of agency to sell the land of the principal. c. Contract where the amount involved exceeds five hundred pesos. d. Negotiable instruments. 38. A obtained a loan from B payable within a year. As security for its payment, A mortgages his uninsured house. Three months after the loan was given, A’s house was gutted by an accidental fire. Thereupon, B demanded payment immediately from A, who refused to pay contending that the loan was for a one-year period. Is A’s contention valid? a. A’s contention is valid because the contract of loan is explicit that payment is within one year and the creditor can only demand payment at the end of the year. b. A’s contention is not valid because payment is within a year and therefore t...