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Law on Contracts
1. Contract is a meeting of minds between two persons whereby one binds himself, with respect to the
other, to give something or to render some service. It is one of the five sources of civil obligations.
The essence of a contract is the presence of meeting of minds between the parties. Sanchez Roman
defines contract as a juridical convention manifested in legal form, by virtue of which one or more
persons bind themselves in favour of another or others, or reciprocally, to the fulfilment of a
prestation to give, to do or not to do.
a) Principles on Obligations arising from Contract
i. Obligations arising from contracts have the force of law between contracting parties.
ii. Obligations arising from contracts should be complied with in good faith.
2. Stages of Contract
a) Conception or preparation or generation stage is the first stage of contract that involves
preliminary negotiations and bargaining, discussion of terms and conditions, with no arrival yet
of a definite agreement. This stage ends at the moment of agreement of the parties.
b) Perfection or birth stage is the second stage of contract when there is meeting of minds between
the parties on a definite subject matter and valid cause. It is the moment when the parties come
to agree on the terms of the contract.
c) Termination or consummation stage is the last stage of contract when the contract has been
fulfilled resulting in its accomplishment. It refers to the performance of the terms agreed.
3. Characteristics of Contracts
a) Obligatory force of contract means that the contractual agreement constitutes the law as between
the parties.
b) Mutuality of contract means that the validity or compliance of contract cannot be left to the will
of only one of the parties. The contract must bind both contracting parties. i. Determination of
the performance of contract
1. The determination or validity or compliance of a contract cannot be left to the
judgment of one the parties only because it violates mutuality of contract.
2. The determination of the performance of contract may be left to a third person, whose
decision shall not be binding until it has been made known to both contracting parties.
3. If the determination of the performance of the contract of a third person designated by
the contract parties is evidently inequitable, the court shall decide what is equitable
under the circumstances.
c) Relativity of contract means that contract is binding only upon the contracting parties and their
successors such as their heirs and assignees. i. Principles on Relativity of Contract
1.
The heirs are liable to the debts of the decedent but only up to the extent of the
property they inherited. It is only the natural obligation of the heirs to pay the unpaid
debts of their predecessors beyond the value of the properties they inherited.
2. As a general rule, rights and obligations arising from contracts are
transmissible. However, the following are the exceptional rights and
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obligations arising from contracts which are intransmissible: a) Those
rights which are provided by law to be intransmissible.
Example: Right to vote in national or local election
b) Those rights which are stipulated in the contract to be intransmissible.
Example: Membership in SNR Exclusive Shopping
c) Those rights which are purely personal in nature
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Examples: (1) Membership in a nonstock nonprofit corporation or (2) Being a Partner in
a Partnership
ii.
Exceptions to Relativity of Contract — The following are the instances wherein third
parties may be bound or may be affected by contracts
1. Stipulation in favor of third person or stipulation pour autrui
a) Requisites of stipulation pour autrui or stipulation in favor of third
person
There must be stipulation in favor of a third person.
ii. The stipulation should be a part, not the whole, of the contract.
iii. The contracting parties must have clearly and deliberately conferred a favor
upon a third person and not a mere incidental benefit or interest.
iv. The favorable stipulation should not be conditioned or compensated by any
kind of obligation whatever.
v. The third person must have communicated his acceptance to the obligor
before its revocation.
vi. One of the contracting parties does not bear the legal representation or
authorization of the third party.
b)
Concepts of Stipulation Pour Autrui
A stipulation in favor of third person has no binding effect in itself before its
acceptance by the party favored.
ii. Before acceptance by the third person, the contracting parties; by mutual
agreement, may modify the contract or revoke it.
iii. A mere incidental interest or benefit is not within the doctrine of stipulation
pour autrui. iv. The stipulation pour autrui does not exist if the contract is
considered null and void.
2. Contracts creating real rights which are registered with Registry of Deeds
such as registered real estate mortgage or registered pacto de retro sale/
sale with a right to repurchase — The registration to Registry of
Property/Deeds is considered a constructive notice to the whole world.
Any person who will acquire such property will be bound by the
annotated lien.
3.
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Contracts intended to defraud creditor — The defrauded creditor may file an action for
cancellation of contract entered by the debtor to defraud the creditor.
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When third person induces a party to the contract to violate the contract — A
contracting party may file an action for damages against a third person who induced a
contracting party to violate a contract.
5.
Void contract that directly affected a third person — A third person directly affected by
a void contract may file an action for declaration of nullity of such contract in order to
protect his right.
iii. Contracts that may be not assailed by a third person 1. Perfectly valid
contract
2.
3.
Voidable contract
Unenforceable contract
iv. Exceptional contracts that may be assailed by a third person 1. Rescissible
contract intended to defraud creditor
2.
Void contract that directly affects a third person
a) Autonomy of Contract means that the contracting parties may establish such stipulations, clauses,
terms, and conditions as they may deem convenient, provided they are not contrary to any of
the following: i. Law ii. Morals iii. Good customs iv. Public order v. Public policy
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b) Consensuality of contract means that contracts are as a general rule perfected by mere consent
except in case of real contracts which are perfected by delivery of object of contract and in case
of formal or solemn contracts which are perfected by the execution of formality or solemnity
required by law.
c) Legality of contract means that contracts should not be contrary to law.
2. Types of Elements of Contract
a) Essential elements refer to those which are required in order for a contract to exist. They are
necessary for validity of contract and may not be waived by the parties. Absence of any of the
essential elements will make the contract void the remedy of which of injured party is
declaration of nullity.
Consensual Contract
1. Consent of the contracting parties
2. Object certain which is the subject matter of the contract
3. Cause of the obligation which is established
ii. Real Contract
1.
2.
3.
4.
Consent of the contracting parties
Object certain which is the subject matter of the contract
Cause of the obligation which is established
Delivery of the subject matter
iii. Solemn or Formal Contract
1.
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Consent of the contracting parties
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Object certain which is the subject matter of the contract
Cause of the obligation which is established
Formality or solemnity required by law
b) Natural elements refer to those which already exist in certain contract unless set aside or
suppressed by the parties. They may be waived by the parties as long as the waiver is made in
good faith.
i.
ii.
Warranty against eviction in a contract of sale.
Warranty against hidden defects in a contract of sale. iii. Warranty for merchantability in a
contract of sale.
iv. Warranty against hidden and unregistered encumbrance in a contract of sale.
c) Accidental elements refer to those that do not normally exist in a contract unless stipulated or
provided by the parties.
i. Terms of payment in a contract of sale. ii. Conventional interest in a contract of loan.
3. Types of Contracts
a) As to Perfection of Contract
Consensual contract is a contract perfected by mere consent or by the meeting of minds of the
contracting parties.
1. Contract of lease
2. Contract of sale
3. Contract of partnership
4. Contract of agency
5. Contract of real estate mortgage
6. Contract of common carrier
ii.
Real contract is a contract perfected by the delivery of the object of contract.
1. Contract of loan or mutuum
2. Contract of commodatum
3. Contract of deposit
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4. Contract of pledge
iii. Solemn or Formal contract is a contract perfected by the execution of the formality or
solemnity required by law.
1. Negotiable instruments must be made strictly in the form provided by the Negotiable
2.
3.
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Instruments Law in ordered to be considered negotiable. However, nonnegotiable
instruments remain to be valid and binding.
Contract of marriage must have all the solemnities required by Family Code of the
Philippines for it to be valid such as marriage license, capacity of contracting parties,
authority of solemnizing officer and personal appearance of contracting parties.
Contract of donation of personal property in excess of P5,OOO must be made and
accepted in writing to be valid.
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4. Contract of donation of real property must be made and accepted in public instruments
to be valid. The notarized deeds of donation and acceptance may be made in a single
document or separate documents.
5. Contract of antichresis requires that the agreement of antichresis including the
principal and interest of secured contract of loan a must be specified in writing to be
valid.
6. Agreement or stipulation to pay interest in contract of loan must be in writing in order
for such agreement to be valid. However, contract of loan is not required to be in
writing to be valid because it is a real contract.
7. Contract of chattel mortgage requires it to be registered with Chattel Mortgage
Registry to be valid.
8. Contract of partnership to which real properties or real rights are contributed must be
in a public instrument, with an inventory of real property attached thereto, for the
contract of partnership to be valid.
9. Sale of a piece of land by the agent in the name of the principal, the authority of the
agent to sell the land must be in writing for the contract sale of such land to be valid.
10. Sale of community or conjugal property by one of the spouses, there must be authority
given by the other spouse to the selling spouse. However, the sale made by the one
spouse without the authority of the other constitutes a continuing offer on the latter.
4. Form of Contract
a) Contracts shall be obligatory, in whatever form they may have been entered into, provided all
the essential requisites for their validity are present. However, when the law requires that a
contract be in some form in order that it may be valid or enforceable, or that a contract be
proved in a certain way, that requirement is absolute and indispensable. In such cases, the right
of the parties to compel the other party to observe the formality required by law for mere
convenience cannot be exercised.
b) If the law requires a document or other special form, as in the acts and contracts, for the
convenience of the contracting parties, the contracting parties may compel each other to observe
that form, once the contract has been perfected. This right may be exercised simultaneously
with the action upon the contract.
5. Remedy to compel the other party to observe the formality required by law for mere convenience is a
legal remedy available only if the contract is valid and enforceable. This legal action will not prosper
if the contract is either unenforceable or void.
a) Contracts required to be in Public Document for mere convenience but not for
validity
Acts or contracts which have for their object the creation, transmission, modification or
extinguishment or real rights over immovable property.
ii.
The cession, repudiation or renunciation of hereditary rights or of those of the conjugal
partnership of gains.
iii. 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
iv. The cession of actions or rights proceeding from an act appearing in a public document
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b) Contracts required to be in written instrument, whether public instrument or
private instrument, for mere convenience but not for validity
Contracts where the amount involved exceeds five hundred pesos
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c) Note: The formality provided in letter (a) and (b) is neither for validity nor enforceability but for
mere convenience. Thus, the contracts mentioned above are perfected by mere consent.
Therefore, the contracting parties may compel each other to observe that form, once the contract
has been perfected.
6. As to Cause of the Contract
a) Onerous contract is a contract whereby there is an exchange of valuable consideration. For each
contracting party, the cause is the prestation or the promise of a thing or service by the other.
Contract of sale ii.
Contract of lease iii. Contract of barter
b) Gratuitous contract is a contract whereby one party receives no equivalent consideration. These
contracts are referred to as contracts of pure beneficence, the cause of which is the liberality or
generosity of the benefactor. i. Contract of donation ii. Contract of commodatum
c) Remuneratory contract is a contract whereby the cause here is the service or benefit
remunerated.
Contract of service ii.
Contract of employment
7. Other Contracts
a) Principal contract is a contract that can stand by itself. . Contract of sale ii. Contract of loan
b) Accessory contract is a contract whose existence depends upon another contract known as
principal contract.
i. Contract of pledge ii. Contract
of chattel mortgage iii. Contract
of antichresis iv. Contract of real
estate mortgage v. Contract of
guarantee
c) Preparatory contract is a contract which serves as a means by which other contracts may be
entered into.
i. Contract of agency ii. Contract
of partnership
d) Nominate contract is a contract which has a name under the Civil Code or special law. i.
Contract of sale ii. Contract of agency iii. Contract of partnership iv. Contract of insurance v.
Contract of marriage
e) Innominate contract is a contract without any name under the Civil Code or special law.
i. Do ut des (I give that you may give.) ii. Do ut facias (I give that you may do.) iii. Facio ut des
(I do that you may give.) iv. Facio ut facias (I do that you may do.)
1. Order of Priority on Rules that shall govern innominate contract
a) The stipulation of the parties
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b) The provisions of Obligations and Contracts
c) The rules governing the most analogous contracts
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d) The customs of the place
f) Commutative contract is a contract whereby the parties give almost equivalent values; hence,
there is real fulfillment.
i. Contract of sale ii.
Contract of lease iii.
Contract of barter
g) Aleatory contract is a contract whose fulfillment depends upon chance.
i. Contract of insurance
h) Unilateral contract is a contract whereby only one of the parties is obligated to give or to do
something.
i) Contract of commodatum (bailee) ii. Contract of gratuitous deposit (depositary)
i) Bilateral
contract is a contract whereby both parties are required to give or to do something. i.
Contract of sale ii. Contract of lease
j) Reciprocal contract is a contract whereby the cause on the other party is the object on the other
party.
i. Contract of sale ii.
Contract of barter
k) Auto-contract is a contract wherein one person contracts with himself.
l)
Contract of adhesion is a contract wherein one party has already prepared the form of the
contract, containing the stipulations he desires, and he simply asks the other party to agree to
them if he wants to enter into the contract. In case of ambiguity or doubt, it shall be construed
strictly against the preparer of the document of the contract. It is also known as "fine print
contract" or "take it or leave it contract."
i. Contract of insurance ii.
Contract of enrollment
m) Executory contract is a contract that has not yet been performed. Certain executory contracts are
covered by Statute of Fraud and required to be in writing in order for them to be enforceable.
n) Executed contract is a contract which has been performed. It is a contract not covered by Statute
of Fraud.
8.
Moment of Perfection of Contract
a) In case of consensual contract, upon consent of contracting parties or upon meeting of minds of
contracting parties
b) In case of real contract, upon delivery of the subject matter
c) In case of formal contract or solemn contract, upon execution of formalities or solemnities
required by law
9.
Extent of Binding Effect of Contract
a) The parties are bound not only to the fulfilment of what has been expressly stipulated in the
contract but also to all the consequences which, according to their nature, may be in keeping
with good faith, usage and law.
10. Nature of contract
a) The nature of contract is determined by the principles of law.
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11. Consent is one of the essential elements of contract. It refers to the meeting of minds between the
contracting parties as regards the object and cause of contract.
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12. Principles of Consent
a) Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract.
b) The offer must be certain and the acceptance absolute.
c) A qualified acceptance constitutes a counter-offer.
d) Consent may be expressed or implied.
13. Binding Effect of Acceptance Through Telegram
a) The contract entered into through telegram is perfected from the time the acceptance came to the
knowledge of the offerer also known as Cognitive Theory.
14. Place of Perfection of Contract entered Through Telegram, Letter or Telephone
a) The place of perfection of contract entered through telegram, letter or telephone is disputably
presumed by law to be entered in the place where the offer was made.
15. Requisites of an Offer in Order to have Meeting of Minds or Consent
a) It must be definite.
b) It must be certain.
c) It must be complete.
d) It must be intentional.
16. Concepts concerning Acceptance
a) An acceptance may be expressed or implied.
b) The person making the offer may fix the time, place and manner of acceptance, all of which
must be complied with.
c) An offer made through an agent is accepted from the time acceptance is communicated to the
agent not necessarily to the principal.
d) When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn
at any time before acceptance by communicating such withdrawal, except when the option is
founded upon a consideration, something paid or promised.
17. Instances which if happened to either Offerer or Acceptor before acceptance will
make the offer ineffective resulting to nullity of contract a) Civil interdiction
b) Insanity
c) Death
d) Insolvency
18. Principles of Acceptance
a) An option contract supported by consideration or option premium is valid and binding and may
not be withdrawn.
b) Business advertisements are mere invitations to make an offer.
c) Advertisements for bidders are simply invitations to make proposals.
19. Incapacitated Persons to give Consent to a Contract
a) Unemancipated minors or persons below 18 years of age
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c)
d)
e)
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Insane except during lucid interval
Demented persons
Deaf-mutes who do not know how to read and write
Drunken person
Hypnotized person
20. Status of Contract entered into by Incapacitated Persons to give Consent to a Contract
a) Only one party is incapable. (Voidable on the part of incapacitated person)
b) Both parties are incapable. (Unenforceable until ratified by the guardian of the incapacitated
contracting parties)
21. Difference between contract wherein consent of either or both contracting parties is
wanting and contract wherein consent of one of the contracting parties is vitiated a)
The contract is void if the consent is wanting requiring declaration of nullity of
contract.
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b) The contract is voidable if the consent is vitiated requiring annulment of contract.
22. Requisites of Consent to Make the Contract Perfect Valid and Not Voidable or
Unenforceable
a) It should be intelligent.
b) It should be free.
c) It should be spontaneous.
d) It should not be vitiated.
23. Vices of Consent (FUMIV) which make the contract voidable
a) There is violence when in order to wrest consent, serious or irresistible force is employed.
Requisites of violence to vitiate consent
1. There must be physical force.
2. The physical force must be irresistible.
3. The physical force must be the determining cause in giving the consent to the contract.
b) There is intimidation when one of the contracting parties is compelled by a reasonable and wellgrounded fear of an imminent and grave evil upon his person or property, or upon the person or
property of his spouse, descendants or ascendants, to give his consent. i. Requisites of
intimidation to vitiate consent
1. The intimidation must be the determining cause of the consent.
2. The threatened act must be unjust or unlawful.
3. The threat must be real and serious.
4. The threat must produce a reasonable and well-grounded fear.
c) There is undue influence when a person takes improper advantage of his power over the will of
another, depriving the latter of a reasonable freedom of choice.
d) There is causal fraud when, through insidious words or machinations of one of the contracting
parties, the other is induced to enter into a contract which, without them, he would not have
agreed to.
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Requisites of fraud to vitiate consent
1.
2.
3.
4.
It must have been employed by one of the contracting parties only.
It must have induced the other party to enter into the contract.
It must have been serious.
It may or may not result to damage or injury to the contracting parties. Presence of
injury on the complainant is not necessary for the action for annulment of voidable
contract to prosper.
e) Mistake which should be substantial.
Mistakes that may vitiate consent resulting to voidability of a contract
1.
2.
3.
4.
Mistake which should refer to the substance of the thing which is the object of the
contract.
Mistake which should refer to those conditions which have principally moved one or
both parties to enter into the contract.
Mistake as to identity or qualifications of one of the parties wherein such identity or
qualifications have been the principal cause of the contract.
Mutual error as to the legal effect of an agreement when the real purpose of the parties
is frustrated.
ii. Errors that do not vitiate consent maintaining the perfect validity of a contract
1.
2.
3.
Error as to the solvency of the other party.
Error as to the motive of the party.
Error as to estimates.
24. Difference between causal fraud (Dolo causante) and incidental fraud (Dolo
incidente)
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a) In causal fraud, the contract is voidable requiring annulment of contract.
b) In incidental fraud, the contract is perfectly valid but action for damages is the proper remedy.
25. Principles governing Vices of Consent
a) Violence or intimidation shall annul the obligation, although it may have been employed by a
third person who did not take part in the contract.
b) Failure to disclose facts, when there is duty to reveal them, as when the parties are bound by
confidential relations, constitutes fraud.
c) The usual exaggerations in trade, when the other party had an opportunity to know the facts, are
not in themselves fraudulent.
d) A mere expression of an opinion does not signify fraud, unless made by an expert and the other
party has relied on the former's special knowledge.
26. Principles governing Causal Fraud
a) Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has
created substantial mistake and the same is mutual.
b) Misrepresentation made in good faith is not fraudulent but may constitute error.
c) In order that fraud may make a contract voidable, it should be serious and should not have been
employed by both contracting parties.
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d) Causal fraud may entitle the injured party for annulment of contract while incidental fraud may
e)
entitle the injured party to action for damages.
In case both parties use fraud reciprocally, the fraud of one compensates that of the other, and
neither party can ask for annulment of the contract because they are in pari delicto.
27. Absolutely Simulated Contract vs. Relatively Simulated Contract
a) In absolute simulation, there is color of a contract, without any substance thereof, the parties not
having any intention to be bound. The proper legal remedy is action for declaration of nullity.
b) In relative simulation, the parties have an agreement which they conceal under the guise of
another contract. The proper legal remedy is action for reformation of instrument.
28. Object or Prestation is one of the essential elements of contract. It refers to the promise or conduct to
be performed in the fulfillment or rendition of the obligations of contract and it may consist of
giving, doing or not doing a thing.
a) Requisites of an object of a contract (Prestation)
It must be within the commerce of men.
ii.
It must be licit, or not contrary to law, morals, good customs, public order or public
policy. It must be possible.
iv. It must be determinate as to its kind.
b) Allowed object or prestation of a contract
Future things ii. All rights which are not intransmissible iii. All services not contrary to law,
morals, good customs, public order or public policy iv.
Hereditary rights
c) Prohibited object or prestation of a contract
Immoral object or prestation ii. Illegal object or prestation iii. Impossible object or prestation
iv. Object or prestation outside the commerce of men
iv. Object or prestation that did not exist at the time of the transaction vi. Future inheritance
vii. Vain hope
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29. Cause of contract is one of the essential elements of contract. It refers to the immediate and
proximate purpose of the contract or the essential reason which impels the contracting parties to enter
into it and which explains and justifies the creation of the obligation through such contract.
a) Causes of different types of contract
In onerous contract the cause is understood to be, for each contracting party, the prestation or
promise of a thing or service by the other. There is valuable consideration in an onerous
contract.
ii. In remuneratory contract, the cause is the service or benefit which is remunerated. In
contract of pure beneficence or gratuitous contract, the cause is the mere liberality or
generosity of the benefactor.
iv. The cause of accessory contract is the very cause or consideration of the principal contract.
30. Difference between cause and motive
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a) Contracts without cause or with unlawful cause produce no effect whatever and are considered
null and void.
b) Contracts without motive or with unlawful motive remain to be valid.
31. Principles concerning cause
a) The statement of a false cause in contracts shall render them void, if it should not be proved that
they were founded upon another cause which is true and lawful.
b) Although the cause is not stated in the contract, it is presumed that it exists and is lawful, unless
the debtor proves the contrary.
c) As a general rule, lesion or inadequacy of cause does not invalidate a contract.
d) The particular motives of the parties in entering into a contract are different from the cause
thereof.
32. Reformation of instrument is the legal remedy available to the injured party in a contract when the
instrument or document that serves as tangible evidence of the contract does not express the true
intention of the contracting parties. However, if mistake, fraud, inequitable conduct, or accident has
prevented a meeting of the minds of the parties, the proper remedy is not reformation of the
instrument but annulment of the contract.
a) Instances wherein reformation of the instrument is the proper remedy
When a mutual mistake of the parties results to the failure of the instrument to disclose their
real agreement.
ii. If one party was mistaken and the other acted fraudulently or inequitably in such a way that
the instrument does not show their true intention.
iii. When one 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.
iv. 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 not express the true
intention of the parties.
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.
b) Documents or Instrument which cannot be reformed or reformation of instrument
is not allowed
Simple donation inter vivos wherein no condition is imposed or unconditional donation inter
vivos ii. Last will and testament whether holographic will or notarial will iii. When the real
agreement is void
c) Parties who may ask for the reformation of an instrument Either party if the mistake is mutual.
ii. Injured party iii. Successors in interest, heirs and assigns of injured party
d) Action for reformation of instrument and Action to enforce the instrument are inconsistent
remedies and the complainant cannot have both.
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33. Rules on Interpretation of Contract
a) If the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning shall be applied by the court.
b) If there is conflict between evident intention and words of contract, the intention of the parties
shall prevail.
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c) The interpretation of obscure words or stipulations in a contract shall not favor the party who
caused the obscurity.
d) Incidental circumstances of a gratuitous contract shall be interpreted with the least transmission
of rights and interest.
e) Incidental circumstances of an onerous contract shall be interpreted with greatest reciprocity of
f)
g)
h)
i)
j)
k)
interest.
In case of doubt whether the contract is one of loan with mortgage or one of pacto de retro sale,
it shall be interpreted as loan with equitable mortgage in favor of social justice.
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, the contract is void.
In order to judge the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered.
However general the terms of a contract may be, they shall not be understood to comprehend
things that are distinct and cases that are different from those upon which the parties intended to
agree.
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.
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.
l)
Words which may have different significations shall be understood in that which is most in
keeping with the nature and object of the contract.
m) The usage or custom of the place shall be borne in mind in the interpretation of the ambiguities
of a contract, and shall fill the omissions of stipulations which are ordinarily established.
34. Types of Defective Contracts from Least Defective to Most Defective
a) Rescissible contract is a defective contract that is valid and binding until rescinded by the court.
It 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. The proper legal remedy is
action for rescission of rescissible contract.
b) Voidable or annullable contract is a defective contract that is valid and binding until annulled by
c)
d)
the contract. It is a 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. The proper legal remedy is action for annulment of voidable contract.
Unenforceable contract is a defective contract that is valid although not binding until ratified. It
is a contract that for some reason cannot be enforced, unless it is ratified in the manner provided
by law. There is no legal remedy required but to leave the contract as it is.
Void or inexistent contract is a defective contract that is valid and therefore not binding. It is an
absolute nullity and produces no effect, as if had never been executed or entered into and cannot
be ratified. The proper legal remedy is action for declaration of nullity of void contract.
35. Rescissible contract is a defective contract that is valid and binding until rescinded by the court. It 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. The proper legal remedy is action for rescission
of rescissible contract.
a) Characteristics of Rescissible Contracts
They are valid and binding until rescinded.
ii. They are not susceptible of ratification but convalidated by prescription. iii. After the
rescission, they are no longer effective and will result to mutual restitution. iv. The proper
legal remedy is action for rescission of contract.
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v. The prescriptive period of an action for rescssion is 4 years. vi.
They may be assailed by a third person affected by it.
b) Examples of Rescissible Contracts
Il l
Those contracts wherein the ward or absentee suffered lesion by more than 1/4
the value of the things on the contracts entered into by their guardian or
representative.
1. Those which are entered into by guardians whenever the wards they represent suffer
2.
lesion by more than 1/4 the value of the things which are the object thereof.
Those agreed upon in representation of absentees, if the latter suffer lesion more than
1
/4 the value of the things which are the object thereof.
ii. Those contracts entered into to defraud creditors.
1.
2.
3.
4.
5.
6.
Those undertaken in fraud of creditors when the latter cannot in any other manner
collect the claims due them.
Those 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.
Payments made in a state of insolvency for obligations to whose fulfillment the debtor
could not be compelled at the time they were effected.
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.
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.
Contracts entered into by an insolvent person to defraud creditors.
c) Rescission of contract is a remedy granted by law to the contracting parties and even to third
persons, to secure the reparation 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. This action may be filed by a third person directly affected by such
rescissible contract.
Requisites of an action for rescission of contract
1. The contract must be rescissible.
2. The party asking for rescission must have no other legal means to obtain reparation for
3.
4.
5.
damages suffered by him.
The person demanding rescission must be able to return whatever he may be obliged to
restore if rescission is granted.
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.
The action for rescission must be brought within the prescriptive period of four years.
d) Rules to be observed in counting the 4-year period for prescription of an action
for rescission
For incapacitated persons or under guardianship, 4 years shall be counted from the termination
of the ward's incapacity.
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ii.
For absentee, 4 years shall be counted from the date the domicile of absentee is known.
For contracts intended to defraud creditor, 4 years shall be counted from the knowledge of
the contract.
iv. For contracts intended to defraud creditor but involving immovable, 4 years shall be counted
from the registration of the sale.
e) Principles on rescission of contracts
The action for rescission is a remedy of last resort. It can be instituted only when the party
suffering damage has no other legal means to obtain reparation for the same.
ii. Rescission shall be only to the extent necessary to cover the damages caused. iii.
Rescission creates the obligation to return the things which were the 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.
iv. 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.
v. In case rescission is not possible, the indemnity for damages may be demanded from the
person causing the loss.
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36. Voidable or annullable contract is a defective contract that is valid and binding until annulled by the
court. It is a 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. The
proper legal remedy is action for annulment of voidable contract.
a) Characteristics of Voidable Contracts
They are valid and binding until annulled. ii. They are susceptible of ratification which
extinguishes the action for annulment iii. After the annulment, they are no longer effective
and will result to mutual restitution. iv. The proper legal remedy is action for annulment of
contract.
The prescriptive period of an action for annulment is 4 years vi.
They cannot be assailed by a third person.
b) Examples of Voidable Contracts
Those where one of the parties is incapable of giving consent to a contract.
ii. Those where the consent is vitiated by fraud, undue influence, mistake, intimidation or
violence.
c) Annulment of contract is a legal remedy granted by law to the injured party to a voidable
contract to ask for its annulment because of defect in the consent of the injured party either due
to incapacity or vitiation of consent. This action does not require presence of injury or damage to
the complainant for it to prosper. This action may be filed by the injured contracting party or
guardian of incapacitated party in a voidable contract but neither by the guilty party/capacitated
party nor a third person.
d) Rules to be observed in counting the 4-year period for prescription of an action
for annulment.
In cases of intimidation, violence or undue influence, 4 years shall begin from the time the
defect of the consent ceases.
ii. In cases of fraud or mistake, 4 years shall begin from the time of the discovery of the fraud
or mistake.
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In cases of contracts entered into by wards or incapacitated persons, 4 years shall begin from
the time the guardianship or incapacity ceases.
e) Parties who may ask for annulment of voidable contracts
Guardian of a ward, minor, insane or demented person ii.
Party whose consent is vitiated
f) Principles of Ratification of Voidable Contract
Ratification may be effected expressly or tacitly.
ii. Ratification may be effected by the guardian of the incapacitated person. iii. Ratification
does not require conformity of the contracting party who has no right to bring the action for
annulment.
iv. Ratification cleanses the contract from all its defects from the moment it was constituted.
g) Effects of annulment of contract
The 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.
ii. In obligations to render service, the value thereof shall be the basis for damages. iii. 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.
iv. Whenever the person obliged by the decree 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.
v. One of the contracting parties may not be compelled to restore what in virtue of the decree
of annulment he is bound to return if the other does not restore what is incumbent upon
him.
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vi. The action for annulment of contracts shall be extinguished when the thing which is the
object thereof is lost thorough the fraud or fault of the person who has a right to institute the
proceedings.
vii. 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 or fault of the plaintiff.
37. Unenforceable contract is a defective contract that is valid although not binding until ratified. It is a
contract that for some reason cannot be enforced, unless it is ratified in the manner provided by law.
There is no legal remedy required but to leave the contract as it is.
a) Characteristics of Unenforceable Contracts
They are valid but not binding and therefore not enforceable by court action. ii. They are
susceptible of ratification which makes the contract enforceable.
iii. Before its ratification, there is no proper legal remedy but to leave the contract as it is. iv.
They cannot be assailed by a third person.
b) Examples of Unenforceable contracts until ratified
Those contracts 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. ii. Those where both
parties are incapable of giving consent to a contract.
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iii. Those oral executory contracts for failure to comply with Statute of Fraud
c) Executory Contracts which shall be in writing to be enforceable under Statute of
Fraud
An agreement that by its terms is not to be performed within one year from the making thereof.
ii. A special promise to answer for the debt, default or miscarriage of another.
(Contract of guaranty) iii. An agreement made in consideration of marriage, other than
a mutual promise to marry.
iv. An agreement for the sale of goods, chattels or things in action (movable property or
personal property) at a price not less than P500 pesos.
v. An agreement for the leasing of real property or immovable property for a longer period
than one year regardless of rent.
vi. An agreement for the sale of real property or immovable property or of an interest therein
regardless of price.
vii. A representation to the credit of a third person.
d) Motion to dismiss is a legal remedy granted by law to the defendant in an action for exact
fulfillment or specific performance filed by one of the parties in an unenforceable contract to ask
for the dismissal of the contract although valid because it is unenforceable or not binding unless
ratified by the party or parties to the contract. Once the unenforceable contract is ratified by the
appropriate party, it becomes a valid and binding contract that can be enforced by court action.
e) Principles on Ratification of Unenforceable Contract
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. ii.
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.
iii. 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.
iv. In a contract where both parties are incapable of giving consent, express or implied
ratification by the parent, or guardian, as the case maybe, of one of the contracting parties
shall give the contract the same effect as if only one of them were incapacitated.
v. In a contract where both parties are incapable of giving consent and if ratification is made
by the parents or guardians, as the case may be, of both contracting parties, the contract
shall be validated from the inception.
vi. Unenforceable contracts cannot be assailed by third persons.
14 1
38. Void or inexistent contract is a defective contract that is invalid and therefore not binding. It is an
absolute nullity and produces no effect, as if had never been executed or entered into and cannot be
ratified. The proper legal remedy is action for declaration of nullity of void contract.
a) Characteristics of void contracts
They are invalid and therefore not binding.
ii. The contracts produce no effect whatsoever either against in or in favor of anyone. iii. The
proper legal remedy is action for declaration of nullity of void contract. iv. As a general
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rule they cannot be confirmed or ratified except that declaration of nullity of some void
contracts may be barred by reason of estoppel or laches in exceptional cases.
v. If they have been performed, the restoration of what has been given is in order. vi.
They may be assailed by a third person directly affected by it.
b) Examples of Void Contracts
Those whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy.
ii. Those which are absolutely simulated.
iii. Those whose cause or object did not exist at the time of the transaction.
iv. Those whose object is outside the commerce of men. v. Those which contemplate
impossible services. vi. Those where the intention of the parties relative to the principal
object cannot be ascertained.
vii. Those expressly prohibited by law. viii.
Those expressly declared void by law.
c) Declaration of nullity is a legal remedy granted by law to the injured party or to a third person to
ask for the nullification of a void contract because of the absence of any of the essential elements
of contract necessary for its validity. This action may be filed by the injured contracting party in
a void contract or by a third person directly affected by such void contract.
d) Principles of Void Contracts
The defense of illegality of contracts is available to third persons whose interests are directly
affected.
ii. A contract which is the direct result of a previous illegal contract is also void and
inexistent. In case of a divisible contract, if the illegal terms can be separated from the
legal ones, the latter may be enforced.
iv. When the law sets or authorizes the setting of a minimum wage for laborers, and a contract
is agreed upon by which a laborer accepts a lower wage, he shall be entitled to recover the
deficiency.
v.
When the law fixes, or authorizes the fixing of the maximum number of hours of labor, and
a contract is entered into whereby a laborer undertakes to work longer than the maximum
thus fixed, he may demand additional compensation for services rendered beyond the time
limit.
vi. When the price of any article or commodity is determined by statute or by authority of law,
any person paying any amount in excess of the maximum price allowed may recover such
excess.
vii. When the agreement is not illegal per se but is merely prohibited, and the prohibition by
law is designed for the protection of the plaintiff, he may, if public policy is thereby
enhanced, recover what he has paid or delivered.
viii. Where one of the parties to an illegal contract is incapable of giving consent, the courts
may, if the interest of justice so demands, allow recovery of money or property delivered
by the incapacitated person.
ix. When money is paid or property delivered for an illegal purpose, the contract may be
repudiated by one the parties before the purpose has been accomplished or before any
damage has been caused to third person. In such a case, the courts may if the public interest
will thus be sub served, allow the party repudiating the contract to recover the money or
property.
x. Interest paid in excess of the interest allowed by the usury laws may be recovered by the
debtor, with interest thereon from the date of payment. Although Usury Law has been
suspended by the BSP Monetary Board Circular allowing the contracting parties to
stipulate a conventional interest rate higher than the legal interest rate, such contractually
agreed
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rate should neither be unconscionable nor excessive, otherwise it will be declared void for
being contra bonus mores or being immoral.
e) Effects of nullity of contract for being illegal or criminal contract (Illegal Per Se
Void Contract)
ii.
When both parties are in pari delicto, they shall have no action against each other.
Both criminals shall be prosecuted. iii. They cannot recover the proceeds of the crime. iv.
The instruments of the crime shall be forfeited in favor of the government.
v. If only one of the parties is guilty, the innocent one may claim what he has given and shall not
be bound to comply with his promise.
f) Effects of nullity of contract for being illegal but not criminal contract (Unlawful
but not illegal per se Contract)
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.
ii. The other, who is not at fault, may demand the return of what he has given without any
obligation to comply with his promise.
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Distinctions of Defective Contracts
to
Validity
As to Legal
Remedy to
injured
party
Prescriptive
period of
Action
Capability
for
Ratification
which will
clean the
defects of
the
contract.
As
to
assailment
by
third person
to
presence of
injury to
complainant
Examples
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Rescissible Contract
Voidable
Contract
Unenforceable
Contract
Void Contract
Valid
and
binding
until rescinded
Action for Rescission
Valid and binding Valid but unenforceable Invalid
until annulled
by court action
ction for
None
Action for Declaration of Nullity
Annulment
4 years
4 years
N/A
No Prescriptive Period
Not subject to ratification
but may be convalidated by
prescription.
May be ratified.
May be ratified.
1)
Those illegal per se can
never be ratified.
2)
The declaration of nullity
of those which are not illegal per
se may be barred by estoppel or
laches in exceptional cases.
May be assailed by a third May not
be
person affected by it
assailed by a third
person
May not be assailed by a May be assailed by a third person
third person
directly affected by it
Required
Not required
Not
required
unless
the
complainant is a third person
a.
a. Those whose cause, object or
Those which
are ntered into by
guardians henever the wards
they epresent suffer lesion by
more han 1/4 the value of the
things hich are the object
thereof;
Those agreed upon
n representation of absentees,
f the latter suffer lesion by
ore than 1/4 the value of the
hings which are the object
hereof;
Those undertaken in
aud of creditors when the
atter cannot in any other
anner collect the claims due
hem;
Those which refer
to hings under litigation if
they ave been entered into by
the efendant
without
the nowledge and
approval of the itigants or of
competent udicial authority;
Payments made in a
te of
insolvency for
bligations to whose
fulfillment he debtor could
not be ompelled at the time
they ere effected.
All contracts by
virtue f which the debtor
alienates
roperty
by
gratuitous title hen the donor
did not reserve ufficient
property to pay all ebts
Not required
a. Those where
one of the
parties
is
incapable of
giving
consent to a
contract.
b. Those where
the consent is
vitiated
by
fraud, undue
influence,
mistake,
intimidation
or violence.
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.
b.
c.
d.
f.
g.
purpose is contrary to law,
morals, good customs, public
order or public policy.
Those which are absolutely
simulated.
Those whose cause or object
did not exist at the time of the
transaction.
Those whose object is outside
the commerce of men.
Those which contemplate an
impossible services.
Those where the intention of
the parties relative to the
principal object cannot be
ascertained.
Those expressly prohibited or
declared void by law.
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contracted
before
the
onation.
Alienations
by
nerous title when made by
ersons against whom some
•udgment has been rendered
in ny instance or some writ of
ttachment has been issued.
Contracts entered
nto by an insolvent person if
he oes not retain sufficient
roperty to pay his obligations.
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Law on Contract Quizzer
1. It refers to a meeting of minds between two persons whereby one binds himself, with respect to
the other, to give something or to render some service. It is one of the five sources of civil
obligation.
a. Obligation
b. Contract
c. Right
d. Civil action
2. Which of the following characteristics of contracts pertains to relativity of contract?
a. It means that the contractual provisions constitute the law between the parties.
Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith.
b. It means that the validity and performance of contract cannot be left to the will of only
one of the parties but must be mutually decided by all contracting parties.
c. It means that the contract is binding only upon the contracting parties and their successors
such as heirs or assignees and third persons are not generally allowed to assail a contract.
d. It means that the parties may establish such stipulations, clauses, terms, and conditions
as they may deem convenient provided they are not contrary to law, morals, good
customs, public order or public policy.
3. Which of the following characteristics of contracts pertains to autonomy of contract?
a. It means that the parties may establish such stipulations, clauses, terms, and conditions as
they may deem convenient provided they are not contrary to law, morals, good customs,
public order or public policy.
b. It means that contracts are generally perfected by mere consent except in case real
contracts that require delivery of subject matter and formal or solemn contracts which
require execution of formality required by law.
c. It means that contracts should not be contrary to law.
d. It means that contracts should not contain doubt or ambiguity to avoid confusion and
misunderstanding in the performance of contract.
4. Which of the following types of elements of contract pertain to essential elements of contracts?
a. They refer to those which are required in order for a contract to exist such as consent of
the contracting parties, object certain which is the subject matter of the contract and cause
of the obligation which must be established. These elements may not be waived by the
parties.
b. They refer to those that exist in certain contract unless set aside or suppressed by the
parties such as warranty against eviction and warranty against hidden defects in a contract
of sale. These elements may be waived by parties as long as the waiver is made in good
faith.
c. They refer to those that do not normally exist in a contract unless stipulated by the parties
such as terms of payment, interest rate or place of payment.
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5. Which of the following statements best describes a real contract?
a. It is a contract perfected by mere consent such as contract of lease and contract of sale.
b. It is a contract perfected by the delivery of the object of the contract such as contracts of
deposit, of pledge, of loan and of commodatum.
c. It is a contract which must be in the form provided by law for their perfection such as
contract of donation involving immovable property, together with the acceptance by the
donee, must be in a public instrument to be valid.
6. Which of the following statements best describes an onerous contract?
a. It is a contract whereby there is an exchange of valuable consideration such as contracts
of sale and barter. For each contracting party, the cause is the prestation or the promise of
a thing or service by the other.
b. It is a contract whereby one party receives no equivalent consideration such as contracts
of donation and commodatum. These contracts are referred to as contracts of pure
beneficence, the cause of which is the liberality of the benefactor.
c. It is a contract whereby the cause here is the service or benefit remunerated.
18 1
d. It is a contract wherein there is no cause or consideration.
7. Which of the following statements best describes principal contract?
a. It is a contract whose existence depends upon another contract. The examples are
contracts of pledge, of chattel mortgage, antichresis, guarantee or real estate mortgage
which is dependent upon the principal contract of loan.
b. It is a contract which serves as a means by which other contracts may be entered into such
as contracts of agency and partnership.
c. It is a contract that can stand by itself such as contracts of sale and loan.
d. It is a contract which has a name under the Civil Code or special law such as contracts of
sale, loan and barter.
e. It is a contract without any name under the Civil Code or special law.
8. Which of the following statements best describes aleatory contract?
a. It is a contract whereby the parties give equivalent values such as contracts of sale and
b.
c.
d.
e.
barter hence, there is real fulfillment.
It is a contract whose fulfillment depends upon chance such as insurance contract.
It is a contract where only one of the parties is obligated to give or to do something such
as contracts of commodatum and gratuitous deposit.
It is a contract where both parties are required to give or to do something such as
contracts of sale and barter.
It is a contract whereby the object of the other party is also the cause of the other party
and vice versa such as contracts of sale and barter.
9. Which of the following contracts best describes auto-contract?
a. It is a contract which has been performed.
b. It is a contract wherein one person contracts with himself.
c. It is a contract wherein one party has already prepared form of a contract, containing the
stipulations he desires, and he simply asks the other party to agree to them if he wants to
enter into the contract.
d. It is a contract that has not yet been performed.
10. The following are the innominate contracts, except
a. Do ut des (I give that you may give.)
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b.
c.
d.
e.
Contracts
Do ut facias (I give that you may do.)
Facio ut des (I do that you may give.)
Facio ut facias (I do that you may do.)
Facias ut des (I do not do that you may not do.)
11. The following are the order of priority regarding rules that shall govern innominate contracts,
except
a.
b.
c.
d.
e.
The stipulation of the parties
The provisions of Obligations and Contracts
The rules governing the most analogous contracts
The customs of the place
The provisions of Tax Code
12. Which of the following statements pertaining to the stages of a contract refers to preparation or
conception stage?
a. It refers to the first stage that involves preliminary negotiations and bargaining, discussion
of terms and conditions, with no arrival yet of a definite agreement.
b. It refers to the second stage that pertains to the point when there is meeting of minds
between the parties on a definite subject matter and valid cause.
c. It refers to the last stage that pertains to the point when the contract has been fulfilled
resulting in its accomplishment.
13. Freedom to contract is one of the liberties of the people of the state as guaranteed by due process
clause. This means that the contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to the following, except
a. Law
b. Religion
c. Morals
d. Good customs
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e. Public order
f. Public policy
14. An audit staff and an auditing firm orally entered into a contract of employment whereby it is
stipulated that overtime premium and holiday pay are waived. Is the waiver valid?
a. Yes because of mutuality of contract.
b. Yes because of autonomy of contract.
c. No because it is contrary to law and public policy.
d. No because it is entered into orally but not in writing.
15. In an action for ejectment, the lessee interposed the defense that the contract of lease authorized
them to continue occupying the premises so long as they pay their rents. Is the defense of the
lessee tenable?
a. No because it violates mutuality of contract which provides that the contract must bind
both contracting parties and its validity or compliance cannot be left to the will of one of
them.
b. Yes because it is stipulated in the contract.
c. No because it is contrary to morals and good customs.
d. Yes because it does not violate public order and public policy.
16. A stipulation provides that the student's scholarship is good only if he continues in the same
school, and that he waives his right to transfer to another school without refunding the equivalent
of his scholarship in cash is null and void because it is contrary to
a. Law
b. Morals
c. Public order
d. Public policy
17. A stipulation which provides that in the event of nonpayment of the debt at maturity that the
creditor may appropriate for himself the thing given as security is null and void because it is
contrary to
a. Morals
b. Good customs
c. Law
d. Public order
18. A stipulation which provides that a person shall marry a person in consideration of money is null
and void because it is contrary to
a. Law
b. Morals and good customs
c. Public order
d. Public policy
19. The following stipulations for common carrier shall be considered unreasonable, unjust and
contrary to public policy, therefore null and void, except
a. That the goods are transported at the risk of the owner or shipper.
b. That the common carrier need not observe any diligence in the custody of the goods.
c. That the common carrier will not be liable for any loss, destruction, or deterioration of
the goods.
d. A stipulation between the common carrier and the shipper or owner limiting the liability
of the former for the loss, destruction, or deterioration of the goods to a degree less than
extraordinary diligence if in writing and supported by a valuable consideration.
20. The following stipulations for common carrier shall be considered unreasonable, unjust and
contrary to public policy, therefore null and void, except
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a. That the common carrier shall exercise a degree of diligence less than that of a good
b.
c.
d.
e.
f.
father of a family, or of a man of ordinary prudence in the vigilance over the movables
transported.
That the common carrier shall exercise a degree of diligence less than that of
extraordinary diligence in the transportation of passengers.
That the common carrier shall not be responsible for the acts or omission of his or its
employees.
That the common carrier's liability for acts committed by thieves, or of robbers who do
not act with grave or irresistible threat, violence or force, is dispensed with or
diminished.
That the common carrier is not responsible for the loss, destruction, or deterioration of
goods on account of the defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
That the common carrier is not responsible for the acts of robbers who act with grave or
irresistible threat, violence or force, or that the common carrier's responsibility is
dispensed with or diminished in case of acts of robbers who act with grave or irresistible
treat.
21. The hotel-keeper and the guests agree that the responsibility of the former as set forth in Articles
1998 to 2001 of Civil Code regarding necessary deposits brought by the guests is suppressed or
diminished. It was also stipulated that the hotel-keeper is free from responsibility to the effect
that he is not liable for the articles brought by the guest. Are the stipulations valid?
a. They are always void for being contrary to law and public policy.
b. They are valid if agreed to in writing.
c. They are valid provided the hotel-keeper properly posted the notices containing the
waiver in the rooms.
d. They are only void if they are entered into orally.
22. A stipulation in a contract of loan providing for 10% interest per month is
a. Usurious
b. Unconscionable
c. Voidable
d. Rescissible
23. Two persons agreed in a contract which provides for the concealment of a public offense or the
suppression of evidence or the stifling of a criminal prosecution for a certain consideration. Is the
stipulation valid?
a. Yes because mutuality of contract provides that its validity or compliance cannot be left
to the will of one of them.
b. Yes because the obligatory force of a contract bind both contracting parties.
c. No because the stipulation is contrary to law and public policy.
d. No because the stipulation is contrary to mutuality of contract.
24. An agreement was entered into by the parties which provides that either one of them may
terminate the contract for the violation of any of its terms and conditions. Is this stipulation
valid? a. No because it violates mutuality of contract which provides that its validity or
compliance cannot be left to the will of one of them.
b. Yes because the validity or compliance is not entirely left to the will of one of the
contracting parties, but it merely gives the one party the right to declare such contract
cancelled and of no effect in case of breach of contract by other party.
c. No because it violates the freedom to enter into contract.
d. Yes because the right to rescind a contract cannot be waived.
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25. The contract provides that the determination of the performance is left to of a third person. Is the
stipulation valid?
a. No because it is contrary to law, morals, good customs, public order or public policy.
b. No because it violates mutuality of contract.
c. Yes because the determination of the performance of contract may be left to a third
person, whose decision shall not be binding until it has been made known to both
contracting parties.
d. Yes because the determination of the third person is obligatory whether or not it is
evidently inequitable.
26. What is the remedy of the injured party in case the determination of the performance of contract
by the third person designated by the contracting parties is evidently inequitable?
a. The injured party may ask the court for declaration of nullity of contract.
b. The injured party may ask the court for the rescission of contract.
c. The injured party may ask the court to decide what is equitable under the circumstances.
d. The injured party may ask the court for annulment of contract.
27. Relativity of contract provides that contract takes effect only between the following, except?
a. Contracting parties
b. Assigns of contracting parties
c. Heirs of contracting parties
d. Third persons
28. Obligations and rights arising from contracts are generally transmissible to the parties' heirs and
assigns. The following are considered intransmissible, except
a. Those which are purely personal.
b. Those which are provided by law to be intransmissible.
c. Those which are stipulated by the party to be intransmissible.
d. Those which are based on commercial transactions.
29. A person died leaving liabilities. Are the heirs liable for the obligations of the decedent?
a. No because there is no privity between them and the decedent.
b. No because the heirs are not the contracting parties.
c. Yes even beyond the property they received because contracts take effect between the
parties, their assigns and heirs.
d. Yes but not beyond the property they received because there is privity between them and
their predecessor.
30. A stipulation which is considered an exception to the relativity of contract is called
a. Stipulation pour autrui a.k.a. stipulation in favor of third person
b. Stipulation in favor of the heirs
c. Stipulation in favor of assigns
d. Stipulation in favor of contracting parties
31. The following are the requisites of stipulation pour autrui or stipulation in favor of third person,
except
a. There must be stipulation in favor of a third person.
b. The stipulation should be a part, not the whole, of the contract.
c. The contracting parties must have clearly and deliberately conferred a favor upon a third
person and not a mere incidental benefit or interest.
d. The favorable stipulation should not be conditioned or compensated by any kind of
obligation whatever.
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e. The third person must have communicated his acceptance to the obligor before its
revocation.
f. One of the contracting parties does not bear the legal representation or authorization of
the third party.
g. The stipulation in favor of third person must be specified in writing.
32. The following statements concerning stipulation pour autrui or stipulation in favor of third
person are correct, except
a. A stipulation in favor of third person has no binding effect in itself before its acceptance
by the party favored.
b. Before acceptance by the third person, the contracting parties; by mutual agreement, may
modify the contract or revoke it.
c. A mere incidental interest or benefit is not within the doctrine of stipulation pour autrui.
d. The stipulation pour autrui still exists even if the contract is considered null and void.
33. A mortgages his land to B and the mortgage is registered in Registry of Property. Afterwards, A
sells the land to C. Is the mortgage contract binding upon C?
a. No because C is not a party to the contract.
b. No because there is no privity between B and C.
c. Yes even if the mortgage contract is not registered.
d. Yes because in contracts creating real rights, third persons who come into possession of
the object of the contract are bound thereby, subject to the provisions of the Mortgage
Law and Land Registration Laws.
34. A is a creditor of B. In order to escape the liability to A, B sells all his property to C. May A ask
for rescission of the contract of sale between B and C?
a. No because A is not a party to the contract.
b. No because A has no right of rescission.
c. Yes because creditors are protected in cases of contracts intended to defraud them.
d. Yes even if the right of levy and execution and accion subrogatoria are still available.
35. A contract was entered into between Y and Z. X induces Y to violate the contract. May Z file an
action for damages against X?
a. No because A is not a party to the contract.
b. No because it will be violative of relativity of contract.
c. Yes even if X has no knowledge of the contract between Y and Z.
d. Yes because any third person who induces another to violate his contract shall be liable
for damages to the other contracting party.
36. A borrowed PIO,OOO from B and entered into a contract of real estate mortgage involving his
car. A is also indebted to C in the amount of PIOO,OOO but the latter cannot attach the car
because of the mortgage. May C file an action for declaration of nullity of contract of real estate
mortgage?
a. Yes because a void contract may be assailed by a third person directly affected by such
void contract.
b. No because C is not a party to the contract.
c. No because it will be violative of relative of contract.
d. Yes but only if A and B will give consent to the suit.
37. As an exception to relativity of contract, which contracts may be assailed by a third person?
a. Voidable contract
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b. Rescissible contract intended to defraud creditor and void contract that directly affected a
third person
c. Unenforceable contract
d. Valid contract
38. Consensual contracts are perfected by
a. Delivery of the object of a contract.
b. Execution of formalities required by law.
c. Mere consent by contracting parties.
d. Provisions of the law.
39. Real contracts are perfected by
a. Delivery of the object of a contract.
b. Execution of formalities required by law.
c. Mere consent by contracting parties.
d. Provisions of the law.
40. Real contracts, such as contracts of deposit, of pledge, of loan or muttum and of commodatum
are perfected by
a. Delivery of the object of a contract.
b. Execution of formalities required by law.
c. Mere consent by contracting parties.
d. Provisions of the law.
41. What is the nature of contract to constitute a pledge, a deposit, a loan or a commodatum?
a. Real contract
b. Consensual contract
c. Formal contract
42. Formal or solemn contracts are perfected by
a. Delivery of the object of a contract.
b. Execution of formalities required by law.
c. Mere consent by contracting parties.
d. Provisions of the law.
43. As a general rule, contracts shall be obligatory, in whatever form they may have been entered
into, provided all the essential requisites for their validity are present. However, when the law
requires that a contract be in some form in order that it may be valid or enforceable, or that a
contract be proved in a certain way, the requirement is absolute and indispensable. The following
contracts are required to be in certain form to be valid also known as formal contracts or solemn
contracts, except
a. Negotiable instruments must be made strictly in the form provided by the Negotiable
Instruments Law to be considered negotiable.
b. Contract of marriage requires the contracting parties to be man and woman, both at least
18 years old, with marriage license, and personal appearance before solemnizing officer
with authority to solemnize marriage.
c. Donations of personal property in excess of P5,000 must be made and accepted in
writing to be valid.
d. Donations of real property must be made and accepted in public instruments to be valid.
e. The antichretic agreement including the principal and interest of the contract of loan
must be specified in writing to be valid for the contract of antichresis to be valid.
f. The agreement to pay interest in a contract of loan must be in writing to be valid.
g. Registration of chattel mortgage is necessary for its validity.
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h. A contract of partnership to which real property or real rights are contributed must be in a
public instrument, with an inventory of real attached there, to be valid.
Sale of a piece of land by the agent in the name of the principal, the authority of the agent to
sell the land must be in writing for such contract of sale to valid.
j. Sale of community/conjugal property by one of the spouses, there must be authority
given by the other spouse to the selling spouse.
k. The lease of personal property for a period longer than one year should be in writing to
be valid.
44. Which of the following is a valid agreement or stipulation?
a. Oral agreement to pay 2% per month interest based on the principal amount of the loan
b. Oral contract of antichresis
c. Written contract of sale of a piece of land by an agent in the name of the principal
wherein the agent has oral authority to sell the land
d. Oral contract of partnership wherein the delivery of money will be done after 5 years.
45. The following must appear in a public document in order to insure its efficacy or for mere
convenience but not 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. Contract of lease of movable property
46. Which contract must be in a written instrument, either public document or private document, in
order to insure its efficacy or for mere convenience but not for its validity? a. Contracts where
the amount involved exceeds five hundred pesos.
b. Contracts where the contracting parties are capacitated.
c. Contracts where the subject matter is movable or personal property
d. Contracts to be performed within one year from the making thereof.
47. If the law requires a document or other special form to a contract for mere convenience but not
for validity or enforceability, 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.
48. From the moment of perfection of a contract, what is the extent of its binding effect?
a. The parties are bound only to the fulfillment of what has been expressly stipulated in the
contract.
b. The parties are bound only to the natural consequences of the contract.
c. The parties are bound not only to the fulfillment of what has been expressly stipulated in
the contract but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law.
49. How is the nature of the contract determined by the court?
a. Contract is what the parties choose to call them.
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b. Contract is determined by the stipulations of the parties.
c. Contract is determined by the principles of law.
d. Contract is determined by the surrounding circumstances.
50. As a general rule, no one may contract in the name of another without being authorized by the
latter or unless he has by law a right to represent him. What is the status of a contract entered into
in the name of another by one who has no authority or legal representation, or who has acted
beyond his powers?
a. Rescissible
b. Unenforceable
c. Voidable
d. Null and void
51. An owner of hacienda did not authorize his wife and children to sell the said hacienda but upon
being informed that they had done so, instead of refusing to enforce of the sale, he proceeded to
collect in installments the amount of promissory note given to the purchase. Can the buyer of the
hacienda enforce the contract of sale of land?
a. No because the contract is unenforceable considering the wife and children has no
authority to sell the land.
b. No because the contract is rescissible considering that it is entered into to defraud the
creditors.
c. Yes because the contract is only voidable and therefore enforceable.
d. Yes because the contract becomes enforceable upon the collection of the purchase price
which is considered an implied ratification.
52. The following are the essential requisites of consensual contracts, except
a. Execution of formality or solemnity required by law
b. Consent of the contracting parties
c. Object certain which is the subject matter of the contract
d. Cause of the obligation which is established
53. The following are the essential requisites of real contracts, except
a. Delivery of the subject matter
b. Consent of the contracting parties
c. Object certain which is the subject matter of the contract
d. Cause of the obligation which is established
e. Execution of formality or solemnity required by law
54. The following are the essential requisites of formal or solemn contracts, except
a. Delivery of the subject matter
b. Consent of the contracting parties
c. Object certain which is the subject matter of the contract
d. Cause of the obligation which is established
e. Execution of formality or solemnity required by law
55. It refers to the meeting of minds between the contracting parties as regards to the object and
cause of contract. It is one of the essential elements of contract.
a. Execution of formality or solemnity required by law
b. Consent of the contracting parties
c. Object certain which is the subject matter of the contract
d. Cause of the obligation which is established
56. Which of the following statements concerning the concept of consent is incorrect?
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a. Consent is manifested by the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract.
b. The offer must be certain and the acceptance absolute.
c. A qualified acceptance constitutes a counter-offer.
d. Consent must be expressed but not implied.
57. It refers to the theory being followed by the New Civil Code of the Philippines for the
determination of moment of perfection of contract. It is the theory followed in Philippine
jurisdiction.
a. Manifestation theory — The contract is perfected from the moment the acceptance is
declared or made.
b. Expedition theory — The contract is perfected from the moment the offeree transmits the
notification of acceptance to the offeror.
c. Reception theory — The contract is perfected from the moment that the notification of
acceptance is in the hands of the offeror.
d. Cognitive theory — The contract is perfected from the moment the offeree's acceptance
comes to the knowledge of the offeror.
58. When does the acceptance made by letter or telegram bind the offerer?
a. From the time he sent his offer.
b. From the time the acceptance was sent by the other party.
c. From the time the acceptance came to the knowledge of the offerer.
d. From the time the parties signed the written contract.
59. A contract entered into through letter, telegram or telephone is presumed to have been entered in
what place?
a. In the place where the offer was made.
b. In the place where the acceptance was made.
c. In the place where the written contract was signed.
d. In the place where the object of the contract can be found.
60. The following are the requisites of an offer, except
a. It must be definite.
b. It must be uncertain.
c. It must be complete.
d. It must be intentional.
61. A offers his watch to B for P500. B said that he will buy it for P450. Is the contract perfected?
a. Yes because the consent is manifested.
b. Yes provided B will pay P450.
c. No because there is no delivery of the watch.
d. No because a qualified acceptance constitutes a counter-offer.
62. On January 1,2011, A wrote a letter to B offering him to lease a building. On January 2,2011, B
sent a letter to A advising him that his offer was accepted. This letter was received by A at
2:55pm that day. On the same day, in the morning, at 11:25, A had already written a letter to B,
withdrawing the offer to lease the building. The letter revoking the offer was received by B at
3:55pm. Is the contract perfected?
a. Yes because the offer was accepted by B before the revocation was received by him
b. Yes because the contract is perfected from the moment B send the letter of acceptance.
c. No because before the acceptance is known, the offer can be revoked, it not being
necessary, in order for the revocation to have the effect of impeding the perfection of the
contract, that it be known to the offeree.
d. No because the contract is perfected only by the execution of written contract.
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63. The following statements concerning consent are correct, except
a. An acceptance may be expressed or implied.
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b. The person making the offer may fix the time, place and manner of acceptance, all of
which must be complied with.
c. An offer made through an agent is accepted from the time acceptance is communicated to
his principal.
d. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except
when the option is founded upon a consideration, something paid or promised.
64. Before the acceptance is conveyed, an offer becomes ineffective upon the happening of the following
to either offeror or acceptor, except
a. Civil interdiction
b. Insanity
c. Death
d. Insolvency
e. Sickness
65. A offered B to purchase his car. A allowed B two weeks to accept the offer. A and B also entered into
a contract of option for the two weeks allowance and B paid P200 for the option. Can A withdraw the
offer before acceptance by B?
a. Yes because an offer may be withdrawn by offerer before the acceptance is
communicated.
b. No because the option contract is supported by a consideration.
c. No because the offer cannot be withdrawn once given.
d. Yes because the contract is not yet perfected.
66. A department store advertises a Christmas sale of men's and women's shoes, those of men at a price
of P200 and above, and those of women's at PIOO and above. Can anyone of the public make an
acceptance of the offer?
a. Yes because business advertisements of things for sale are definite offers.
b. No because business advertisements are mere invitations to make an offer.
c. Yes because those who advertises are estopped.
d. No because an offer cannot be made through an advertisement.
67. ABC Inc. makes an advertisement for bidders of its land. J-Z is the highest bidder. Is ABC bound to
accept the offer of the highest bidder?
a. Yes because advertisements for bidders are definite offers.
b. No because advertisements for bidders are simply invitation to make proposals.
c. Yes because in auction sale the highest bidder is always the winner.
d. No because the lowest bidder should be the winner.
68. The following persons cannot give consent to a contract, except
a. Unemancipated minors
b. Insane except during lucid interval
c. Demented persons
d. Deaf-mutes who do not know how to read and write
e. Blind persons who cannot speak
69. What is the status of a contract entered into between a person who can give consent and an
unemanciated minor, insane or demented persons or deaf-mutes who do not know how to write?
a. Voidable on the part of the incapacitated person
b. Voidable on the part of the capacitated person
c. Uenforceable
d. Null and void
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70. What is the status of a contract entered into between an unemancipated minor and an insane or
demented person? a. Voidable
b. Rescissible
c. Uenforceable
d. Null and void
71. A contract is entered into between A, a minor and B, an insane person. C, the father of A ratified the
contract. What is the status of the contract after ratification?
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a.
b.
c.
d.
Voidable
Rescissible
Uenforceable
Null and void
72. What is the status of a contract entered into during a lucid interval?
a. Perfectly valid
b. Voidable
c. Rescissible
d. Unenforceable
73. What is the status of a contract agreed to in a state of drunkenness or during a hypnotic spell? a.
Voidable
b. Rescissible
c. Unenforceable
d. Null and void
74. What is the status of a contract wherein consent is wanting and wherein consent is vitiated,
respectively?
a. Valid and Voidable
b. Voidable and void
c. Void and voidable
d. Void and unenforceable
75. The following are the requisites of consent, except
a. It should be intelligent.
b. It should be free.
c. It should be spontaneous.
d. It should be vitiated.
76. What is the status of a contract entered into wherein consent is given through fraud, undue
influence, mistake, intimidation or violence (F-U-M-I-V)?
a. Voidable
b. Rescissible
c. Uenforceable
d. Null and void
77. Which of the following vices of consent if committed by a third person who did not take part in
the contract may annul or make the contract voidable at the judicial discretion of the court?
a. Fraud and undue influence
b. Intimidation and violence
c. Fraud, undue influence and violence
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d. Intimidation, violence and undue influence
78. The following types of mistakes may result to invalidity or voidability of a contract, except
a. Mistake which should refer to the substance of the thing which is the object of the
contract.
b. Mistake which should refer to those conditions which have principally moved one or
both parties to enter into the contract.
c. Mistake as to identity or qualifications of one of the parties wherein such identity or
qualifications have been the principal cause of the contract.
d. Mutual error as to the legal effect of an agreement when the real purpose of the parties is
frustrated.
e. Simple mistake of account.
79. The following errors do not vitiate consent, except
a. Error as to the solvency of the other party.
b. Error as to the motive of the party.
c. Error as to estimates.
d. Error as to basis of contract.
80. A and B entered into a contract of sale of a piece of land, not knowing that the said property has
already been the object of another sale under different terms and conditions, by their duly
representatives. What is the status of the second contract?
a. Rescissible
b. Voidable
c. Unenforceable
d. Null and void
81. When one of the parties is unable to read, or if the contract is in a language not understood by
him, and mistake or fraud is alleged, who shall shoulder the burden of proof in case of lawsuit
arising from this contract?
a. The person alleging mistake or fraud.
b. The person enforcing the contract.
c. Third person interested in the contract.
d. Any person.
82. One of the parties agrees to an upset price in a contract of sale with full knowledge of the
favorable or unfavorable possibilities with respect to the essential circumstances of the contract.
What is the status of the contract?
a. Voidable because there is mistake in the upset price.
b. Null and void because upset price is prohibited by law in any type of contract.
c. Valid and without defect because there is no mistake if the party alleging it knew the
doubt, contingency or risk affecting the object of the contract.
d. Unenforceable because it violates statute of frauds.
83. If one of the parties believed that he received a certain amount as a loan, which the other
delivered as a real deposit, what is the status of the contract?
a. Voidable contract of loan on the part of the first party.
b. Voidable contract of real deposit on the part of the second party.
c. Valid contracts of loan and deposit on both parties.
d. Null and void because of want of consent.
84. Which of the following statements is correct?
1.
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There is violence when in order to wrest consent, serious or irresistible force is employed.
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11. There is intimidation when one of the contracting parties is compelled by a reasonable and wellgrounded fear of an imminent and grave evil upon his person or property, or upon the person
or property of his spouse, descendants or ascendants, to give his consent. a. Both I and Il
b. Neither I nor Il
c. I only
d. Il only
85. The following are the requisites of violence to vitiate consent, except
a. There must be physical force.
b. The physical force must be irresistible.
c. It refers to moral force or compulsion.
d. The force must be the determining cause in giving the consent to the contract.
86. The following are the requisites of intimidation to vitiate consent, except
a. The intimidation must be the determining cause of the consent.
b. The threatened act must be just or lawful.
c. The threat must be real and serious.
d. It must produce a reasonable and well-grounded fear.
87. A borrowed money from B. Upon failure of A to pay the loan, B threatened A to file a collection
suit against A if the latter will not execute the contract of mortgage. As a result of the threat, A
entered into the contract of mortgage. What is the status of the contract of mortgage?
a. Void because threat is illegal.
b. Voidable because the consent of A is vitiated.
c. Valid and binding because the claim of B is just and legal.
d. Unenforceable because there is violation of statute of fraud.
88. Which of the following statements is correct?
1. There is undue influence when a person takes improper advantage of his power over the will of
another, depriving the latter of a reasonable freedom of choice.
11. There is fraud when, through insidious words or machinations of one of the contracting parties,
the other is induced to enter into a contract which, without them, he would not have agreed
to.
a. Both I and Il
b. Neither I nor Il
c. I only
d. Il only
89. Which of the following statements is incorrect?
a. Violence or intimidation shall annul the obligation, although it may have been employed
by a third person who did not take part in the contract.
b. Failure to disclose facts, when there is duty to reveal them, as when the parties are bound
by confidential relations, constitutes fraud.
c. A mere expression of an opinion does not signify fraud, unless made by an expert and the
other party has relied on the former's special knowledge.
d. The usual exaggerations in trade, when the other party had an opportunity to know the
facts, are in themselves fraudulent.
90. The following are the requisites of fraud to vitiate a consent, except
a. It must have been employed by one of the contracting parties only.
b. It must have induced the other party to enter into the contract.
c. It must have been serious.
d. It must result to injury or damage to the party asking for annulment of contract.
91. A and B entered into a contract of sale. In the performance of the contract, A committed fraud.
What is the remedy of B?
a. To ask for annulment of contract because there is dolo incidente.
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b. To ask for damages because there is dolo causante.
c. To ask for damages because there is dolo incidente.
d. To ask for annulment of contract because there is dolo causante.
92. Through insidious words and fraudulent machinations by B, A entered into a contract with B.
What is the remedy of A?
a. To ask for annulment of contract because there is dolo incidente.
b. To ask for damages because there is dolo causante.
c. To ask for damages because there is dolo incidente.
d. To ask for annulment of contract because there is dolo causante.
93. The following statements are correct, except
a. Misrepresentation by a third person does not vitiate consent, unless such
misrepresentation has created substantial mistake and the same is mutual.
b. Misrepresentation made in good faith is not fraudulent but may constitute error.
c. In order that fraud may make a contract voidable, it should be serious and should not
have been employed by both contracting parties.
d. Incidental fraud may entitle the injured party for annulment of contract.
94. What is the effect when both parties use fraud reciprocally?
a. Any of the parties may ask for annulment of contract.
b. The contract is voidable for both parties.
c. The fraud of one compensates that of the other, and neither party can ask for annulment
of the contract because they are in pari delicto.
d. Any of the parties may ask for damages.
95. What is the status of absolutely simulated or fictitious contract?
a. Voidable
b. Null and void which is subject to action for declaration of nullity
c. Unenforceable
d. Rescissible
96. What is the status of relatively simulated contract?
a. All contracts are void.
b. The intended contract is valid but the stated contract is void requiring reformation of
instrument.
c. The contract is voidable.
d. The contract is unenforceable.
97. Which of the following statements is correct?
1. In absolute simulation, there is color of a contract, without any substance thereof, the parties not
having any intention to be bound.
11. In relative simulation, the parties have an agreement which they conceal under the guise of
another contract.
a. Both I and Il
b. Neither I nor Il
c. I only
d. 11 only
98.
a.
b.
c.
d.
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What is the remedy of the parties in case of relatively simulated contract?
Ask for annulment of contract.
Ask for declaration of nullity of contract.
Ask for reformation of instrument.
Ask for rescission of contract.
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99.
a.
b.
c.
d.
What is the remedy of the parties in case of absolutely simulated contract?
Ask for annulment of contract.
Ask for declaration of nullity of contract.
Ask for reformation of instrument.
Ask for rescission of contract
a.
b.
c.
d.
It refers to the promise or conduct to be performed in the performance of the contractual,
and may consist of giving, doing or not doing a thing. It is the thing, right or service
which is the subject matter of the obligation, arising from the contract. It is one of the
essential elements of contract.
Execution of formality or solemnity required by law
Consent of the contracting parties
Object certain which is the subject matter of the contract
Cause of the obligation which is established
100.
101.
c.
d.
The following are the requisites of an object of a contract, except
The object must be within the commerce of men.
It must be licit, or not contrary to law, morals, good customs, public order or public
policy.
It must be impossible.
It must be determinate as to its kind.
b.
c.
d.
e.
The following objects may be considered an object of a contract, except a. Future things
Hereditary rights
All rights which are not intransmissible
Future inheritance
All services not contrary to law, morals, good customs, public order or public policy
a.
b.
c.
d.
Before Don Lasal dies, his heirs enter into an agreement for the partition of the estate of
their father. What is the status of the contract?
Voidable
Null and void because the subject matter is future inheritance
Unenforceable
Rescissible
a.
b.
c.
d.
After Don Miguel died, one of the heirs entered into a contract renouncing his right to
inherit. What is the status of the contract?
Valid and binding because the subject matter is a hereditary right
Null and void
Unenforceable
Rescissible
a.
b.
102.
103.
104.
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Contracts
105.
It refers to the immediate and proximate purpose of the contract or the essential reason
which impels the contracting parties to enter into it and which explains and justifies the
creation of the obligation through such contract. It is one of the essential elements of
contract. a. Object of contract
b. Cause of contract
c. Consent of contract
d. Form of contract
106.
Which of the following statements concerning the cause of the contract is incorrect?
a. 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.
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b. In remuneratory contracts, the cause is the service or benefit which is remunerated.
c. In contracts of pure beneficence or gratuitous contract, the cause is the mere liberality or
generosity of the benefactor.
d. The cause of accessory contract should be different from the very cause or consideration
of the principal contract.
107.
Which of the following statements is incorrect?
1. Contracts without cause or with unlawful cause produce no effect whatever and are considered null
and void.
11. Contracts without motive or with unlawful motive produce no effect whatever and are considered
null and void.
a. I only
b. 11 only
c. Both I and Il
d. Neither I nor Il
108.
Which of the following statements is incorrect?
a. The statement of a false cause in contracts shall render them void, if it should not be
proved that they were founded upon another cause which is true and lawful.
b. Although the cause is not stated in the contract, it is presumed that it exists and is lawful,
unless the debtor proves the contrary.
c. As a general rule, lesion or inadequacy of cause shall invalidate a contract.
d. The particular motives of the parties in entering into a contract are different from the
cause thereof.
109.
c.
d.
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?
Ask for annulment of the contract because the consent is vitiated.
Ask for reformation of the instrument to the end that such true intention may be
expressed.
Ask for rescission of the contract.
Ask for indemnification for damages.
a.
b.
c.
d.
If mistake, fraud, inequitable conduct or accident has prevented a meeting of the minds
of the parties, what is the proper remedy?
Ask for reformation of the instrument.
Ask for annulment of the contract.
Ask for rescission of the contract.
Ask for indemnification for damages.
a.
b.
110.
111.
a.
b.
c.
d.
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The following are the instances wherein reformation of the instrument is the proper
remedy, except
When a mutual mistake of the parties results to the failure of the instrument to disclose
their real agreement.
If one party was mistaken and the other acted fraudulently or inequitably in such a way
that the instrument does not show their true intention.
When one 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.
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 not express
the true intention of the parties.
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e. If two parties agree upon the mortgage or pledge of real or personal property, but the
f.
112.
a.
b.
c.
d.
113.
instrument states that the property is sold absolutely or with a right of repurchase.
When one of the parties was induced to enter into a contract through fraud, undue
influence, mistake, intimidation or violence.
There shall be no reformation of instrument in the following cases, except
Simple donation inter vivos wherein no condition is imposed or unconditional simple
donation
Wills whether holographic or notarial
When the real agreement is void
Deed of pacto de retro sale
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
114.
a.
b.
c.
d.
One of the parties has brought an action to enforce the instrument, may he subsequently
ask for its reformation?
Yes because the remedies are available as successive rights.
No because there has been an election as between inconsistent remedies.
Yes because the injured party can never be estopped.
No if there is stipulation to that effect.
a.
b.
c.
d.
If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, how shall the court apply or interpret the provisions of the contract?
The intent of the contracting parties shall still be construed.
The literal meaning of its stipulation shall control.
The hidden meaning should be determined.
The contract shall be enforced even if contrary to law.
a.
b.
c.
d.
In case of conflict between the evident intention of the parties and the words of contract,
which shall prevail?
The words or letter of the contract shall prevail over the intention of the parties.
The intention of the parties shall prevail over the words of the contract.
The contract shall be annulled because of ambiguity.
The contract shall be declared null and void.
115.
116.
117.
a.
b.
c.
d.
e.
118.
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The following are the rules for interpreting or construing a contract, except
In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which
the parties intended to agree.
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.
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.
If the contract is clear, the judge must interpret and construe it in order to determine the
hidden motive of the contracting parties.
The following are the rules for interpreting or construing a contract, except
Words which may have different significations shall be understood in that which is most
in keeping with the nature and object of the contract.
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b. The usage or custom of the place shall be borne in mind in the interpretation of the
ambiguities of a contract, and shall fill the omissions of stipulations which are ordinarily
established.
c. The interpretation of obscure words or stipulations in a contract shall not favor the party
who caused the obscurity.
d. Whenever the contract provides for payment of penalty in case of breach, it shall be
interpreted liberally in favor of the awarding of penalty.
119.
a.
b.
c.
d.
When it is impossible to settle doubts by the rules established in the preceding numbers,
and the doubts refer to incidental circumstances of a gratuitous contract such as donation
or commodatum, what shall be the interpretation of the contract?
The doubt shall be settled in favor of the greatest reciprocity of interest.
The greatest transmission of rights and interest shall prevail.
The least transmission of rights and interest shall prevail.
The contract is null and void.
a.
b.
c.
d.
When it is impossible to settle doubts by the rules established in the preceding numbers
and the doubts refer to incidental circumstances of an onerous contract such as sale or
lease, what shall be the interpretation of the contract?
The least transmission of rights and interest shall prevail.
The doubt shall be settled in favor of the greatest reciprocity of interest.
The greatest transmission of rights and interest shall prevail.
The doubt shall be resolved in favor of the debtor.
a.
b.
c.
d.
Where a contract is susceptible of being interpreted as a sale with a right of repurchase
and as a loan with a equitable mortgage, what shall be the interpretation of the contract?
The contract is a sale with a right of repurchase.
The contract is an absolute sale.
The contract is a lease.
The contract is a loan with equitable mortgage.
a.
b.
c.
d.
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?
Valid and binding
Voidable
Null and void
Unenforceable
120.
121.
122.
123.
Indicate the proper order from least defective to most defective contract.
1. Rescissible contract 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.
11. Voidable or annullable contract 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.
111. Unenforceable contract 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 is an absolute nullity and produces no effect, as if had never been
executed or entered into and cannot be ratified. a. IV — Ill - 11 - 1
124.
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b.
1 - 11 - 111 - IV
c.
d.
11 - I - IV - 111
1 111 - 11 -IV
It is 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. a. Rescissible
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b. Voidable
c. Unenforceable
d. Void
125.
b.
c.
d.
e.
126.
a.
b.
c.
d.
127.
b.
c.
d.
e.
f.
g.
128.
The following are the characteristics of rescissible contracts, except They are valid and
binding until rescinded.
They are not susceptible of ratification but convalidated by prescription.
The proper legal remedy is an action for rescission of contract.
They may not be assailed by the third persons affected by it.
After the rescission, they are no longer effective and will result to mutual restitution.
What are the two types of rescissible contracts?
Those contracts entered into by the debtor in fraud of creditors.
Those entered into by guardians or representatives in behalf of wards or absentee when
the latter suffer lesion by more than 1/4 value of the things which were the object thereof.
Both A and B.
Neither A nor B.
The following contracts are intended to defraud creditor and therefore rescissible, except
a. Those undertaken in fraud of creditors when the latter cannot in any other manner
collect the claims due them.
Those 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.
Payments made in a state of insolvency for obligations to whose fulfillment the debtor
could not be compelled at the time they were effected.
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.
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.
Contracts entered into by an insolvent person if he does not retain sufficient property to
pay his obligations.
Those entered into between two incapacitated persons.
Which contract is rescissible?
a. Those which are entered into by guardians whenever the wards they represent suffer
lesion by more than 1/4 the value of the things which are the object thereof.
b. Those agreed upon in representation of absentees, if the latter suffer lesion by more than
1
/4 the value of the things which are the object thereof.
c. Both A and B.
d. Neither A nor B.
129.
a.
b.
c.
d.
130.
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It is a remedy granted by law to the contracting parties and even to third persons, to
secure the reparation 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.
Annulment of contract
Rescission of contract
Declaration of nullity of contract
Ratification of contract
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.
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b. The party asking for rescission must have no other legal means to obtain reparation for
c.
d.
e.
131.
c.
d.
e.
f.
132.
What is the liability of a third person who acquires in bad faith the things alienated in
fraud of 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.
133.
What is the prescriptive period of an action for rescission?
4 years b.
10 years
c. 6 years
d. 5 years
134.
a.
b.
c.
d.
e.
135.
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The following are the rules to be observed in counting the 4-year prescriptive period of
an action for rescission, except
For incapacitated persons or under guardianship, 4 years shall be counted from the
termination of the ward's incapacity.
For absentee, 4 years shall be counted from the date the domicile of absentee is known.
For contracts intended to defraud creditor, 4 years shall be counted from the knowledge
of the contract.
For contracts intended to defraud creditor but involving immovable, 4 years shall be
counted from the registration of the sale.
For all rescissible contracts, 4 years shall be counted from the date of the contract.
It is a 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.
a. Rescissible
b. Voidable
c. Unenforceable
d.
43
damages suffered by him.
The person demanding rescission must be able to return whatever he may be obliged to
restore if rescission is granted.
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.
The action for rescission must be brought within the prescriptive period of 1 year.
The following statements concerning rescission of contracts are correct, except The
action for rescission is a remedy of last resort because it can be instituted even when the
party suffering damage has no other legal means to obtain reparation for the same. b.
Rescission shall be only to the extent necessary to cover the damages caused.
Rescission creates the obligation to return the things which were the 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.
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.
In case rescission is not possible, the indemnity for damages may be demanded from the
person causing the loss.
The action for rescission may be filed only by a contracting party but not by a third
person affected by such rescissible contract.
Void
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136.
a.
b.
c.
d.
137.
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The following are the characteristics of voidable contracts, except
They are valid and binding until annulled.
They are susceptible of ratification which extinguishes the action for annulment.
After the annulment, they are no longer effective and will result to mutual restitution.
The proper legal remedy available to the injured party is action for annulment of
contract. e. They may be assailed by a third person.
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 consent is vitiated by fraud, undue influence, mistake, intimidation or
violence.
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c. Those where the contracts do not comply with statute of fraud.
138.
What is the prescriptive period of an action for annulment?
4 years
b. 10 years
c. 6 years
d. 5 years
139.
d.
The following are the rules to be observed in counting the 4-year period for prescription
of an action for annulment, except
In cases of intimidation, violence or undue influence, 4-year period shall begin from the
time the defect of the consent ceases.
In cases of fraud or mistake, 4-year period shall begin from the time of the discovery of
the same.
In cases of contracts entered into by wards or incapacitated persons, 4-year period shall
begin from the time the guardianship or incapacity ceases.
For all voidable contracts, 4-year period shall be counted from the date of contract.
a.
b.
c.
d.
Which of the following extinguishes the action to annul a voidable contract?
Ceasing of the intimidation, violence or undue influence
Discovery of the mistake or fraud
Ceasing of the guardianship
Ratification
a.
b.
c.
140.
141.
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.
142.
a.
b.
c.
d.
143.
a.
b.
c.
d.
The following may ask for annulment of voidable contracts, except
Guardian of a minor
Guardian of an insane or demented person
Party whose consent is vitiated
Party who is capable or the party who committed the vices of consent
The following statements pertaining to the effects of annulment of contract are correct,
except
The 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.
In obligations to render service, the value thereof shall be the basis for damages.
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.
Annulment of contract may be availed to by the capacitated contracting party or by the
contracting party who vitiated the consent of the other party.
The following statements pertaining to the effects of annulment of contract are correct,
except
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a. Whenever the person obliged by the decree 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. The action for annulment of contracts shall be extinguished when the thing which is the
object thereof is lost thorough the fraud or fault of the person who has a right to institute
the proceedings.
37 1
c. 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 or fault of the plaintiff.
d. 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.
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145.
It is a contract that for some reason cannot be enforced, unless it is ratified in the manner
provided by law.
a. Rescissible
b. Voidable
c. Unenforceable
d.
Void
a.
b.
c.
d.
The following are the characteristics of unenforceable contracts, except
They are valid but not enforceable by court action.
They are susceptible of ratification which makes the contract enforceable.
There is no proper legal remedy but to leave the contract as it is.
They may be assailed by third persons.
146.
147.
b.
c.
d.
The following contracts are unenforceable unless they are ratified, except
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.
Those that do not comply with the statute of frauds.
Those where both parties are incapable of giving consent to a contract.
Those which are absolutely simulated or fictitious.
a.
b.
c.
d.
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.
Statutory construction
Statute of fraud
Statute of liberty
Statute of freedom
a.
148.
149.
a.
b.
c.
d.
e.
f.
g.
h.
150.
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The following executory contracts shall be in writing to be enforceable under statute of
fraud, except
An agreement that by its terms is not to be performed within one year from the making
thereof.
A special promise to answer for the debt, default or miscarriage of another (contract of
guaranty).
An agreement made in consideration of marriage, other than a mutual promise to marry.
An agreement for the sale of goods, chattels or things in action (movable property) at a
price not less than P500.
An agreement for the leasing of real property (immovable property) for a period longer
than one year regardless of rent.
An agreement for the sale of real property (immovable property) or of an interest therein
regardless of price.
A representation to the credit of a third person.
An agreement for the loan of a sum of money exceeding P500.
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.
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d. Motion to dismiss may still be availed in an action filed for exact fulfillment even the
contract has already been ratified.
151.
a.
b.
c.
d.
152.
The following statements concerning ratification of unenforceable contracts are true,
except
In a contract where both parties are incapable of giving consent, express or implied
ratification by the parent, or guardian, as the case maybe, of one of the contracting
parties shall give the contract the same effect as if only one of them were incapacitated.
In a contract where both parties are incapable of giving consent and if ratification is
made by the parents or guardians, as the case may be, of both contracting parties, the
contract shall be validated from the inception.
Ratification of unenforceable contracts will make them valid and binding.
Unenforceable contracts can be assailed by third persons.
It is a contract that is an absolute nullity and produces no effect, as if had never been
executed or entered into and cannot be ratified.
a. Rescissible
b. Voidable
c. Unenforceable
d.
153.
Void
The following are the characteristics of void contracts, except
a. The contracts produce no effect whatsoever either against in or in favor of anyone.
b. The proper legal remedy is action for declaration of nullity of void contract.
c. As a general rule they cannot be confirmed or ratified except that declaration of nullity of
some void contracts may be barred by reason of estoppel or laches in exceptional cases.
d. If they have been performed, the restoration of what has been given is in order.
e. They may be assailed by any third persons whose interests are directly affected.
f. They are valid and binding until annulled.
154.
g.
h.
The following contracts are inexistent and void from the beginning (Void Ab Initio),
except
Those whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy.
Those which are absolutely simulated.
Those whose cause or object did not exist at the time of the transaction.
Those whose object is outside the commerce of men.
Those which contemplate impossible services.
Those where the intention of the parties relative to the principal object cannot be
ascertained.
Those expressly prohibited or declared void by law.
Those which are relatively simulated.
a.
b.
c.
d.
What is the remedy of the injured party in case of null and void contracts?
Action for rescission of contract
Action for declaration of nullity of contract
Action for annulment of contract
Action subrogatoria
a.
b.
c.
d.
e.
f.
155.
156.
What is the prescriptive period for the action for declaration of nullity of void contract or
defense of nullity of a void contract?
a. 10 years
b. 4 years
c. 6 years
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Batch 2021
Contracts
d. No prescriptive period but the action may be barred by laches or estoppel
157.
a.
b.
c.
d.
158.
a.
b.
c.
d.
159.
a.
b.
c.
d.
e.
f.
g.
160.
a.
b.
c.
d.
e.
f.
49
| P age
Which of the following void contracts may become exceptionally binding by reason of
estoppel?
Those contracts which are illegal per se.
Those contracts involving crimes.
Those contracts which are contrary to public policy.
Those which fail to comply with formality required by law for validity but they do not
affect third persons.
What is the status of contract of lease of public streets or thoroughfares entered by a city
government with private market stallholders?
Voidable
Perfectly valid
Unenforceable
Null and void
The following statements concerning void contracts are correct, except
The defense of illegality of contracts is available to third persons whose interests are
directly affected.
A contract which is the direct result of a previous illegal contract is also void and
inexistent.
In case of a divisible contract, if the illegal terms can be separated from the legal ones,
the latter may be enforced.
When the law sets or authorizes the setting of a minimum wage for laborers, and a
contract is agreed upon by which a laborer accepts a lower wage, he shall be entitled to
recover the deficiency.
When the law fixes, or authorizes the fixing of the maximum number of hours of labor,
and a contract is entered into whereby a laborer undertakes to work longer than the
maximum thus fixed, he may demand additional compensation for services rendered
beyond the time limit.
When the price of any article or commodity is determined by statute or by authority of
law, any person paying any amount in excess of the maximum price allowed may recover
such excess.
The concept of pari delicto still allows the contracting party to file an action for
declaration of nullity.
The following statements concerning void contracts are correct, except
When the agreement is not illegal per se but is merely prohibited, and the prohibition by
law is designed for the protection of the plaintiff, he may, if public policy is thereby
enhanced, recover what he has paid or delivered.
Where one of the parties to an illegal contract is incapable of giving consent, the courts
may, if the interest of justice so demands, allow recovery of money or property delivered
by the incapacitated person.
When money is paid or property delivered for an illegal purpose, the contract may be
repudiated by one the parties before the purpose has been accomplished or before any
damage has been caused to third person. In such a case, the courts may if the public
interest will thus be sub served, allow the party repudiating the contract to recover the
money or property.
Interest paid in excess of the interest allowed by the usury laws may be recovered by the
debtor, with interest thereon from the date of payment.
Contracts that are products of originally void contract are also null and void.
Void contracts may be assailed by third persons whose interests are not directly affected
by the nullity of the contract.
RFBT - 02
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Batch 2021
161.
a.
b.
c.
d.
e.
Contracts
When the nullity of the contract proceeds from the illegality of the cause or object of the
contract and the act constitutes a criminal offense, which of the following is incorrect?
When both parties are in pari delicto, they shall have no action against each other.
Both criminals shall be prosecuted.
They can recover the proceeds of the crime.
The instruments of the crime shall be forfeited in favor of the government.
If only one of the parties is guilty, the innocent one may claim what he has given and
shall not be bound to comply with his promise.
162.
If the act in which the unlawful or forbidden cause consists does not constitute a criminal
offense, which of the following rules are correct?
1. 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.
11. 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. Neither I nor Il
b. Both I and Il
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Contracts
c. I only
d. 11 only
163.
a.
b.
c.
d.
It is a real and gratuitous contract wherein one of the parties delivers to another, either
something not consumable so that the latter may use the same for a certain time and
return it.
Contract of commodatum
Contract of lease
Contract of loan
Contract of deposit
a.
b.
c.
d.
It is a real and onerous or gratuitous contract wherein one of the parties delivers to
another money or other consumable thing, upon the condition that the same amount of
the same kind and quality shall be paid.
Contract of commodatum
Contract of lease
Contract of loan or mutuum
Contract of deposit
a.
b.
c.
d.
It is a real and onerous or gratuitous contract wherein a person receives a thing belonging
to another, with the obligation of safely keeping it and of returning the same and the the
safekeeping of the thing delivered is the principal purpose of the contract.
Contract of commodatum
Contract of lease
Contract of loan or mutuum
Contract of deposit
a.
b.
c.
d.
It is an accessory contract which must be in writing if executory to be enforceable
whereby a person subsidiarily binds himself to the creditor to fulfil the obligation of the
principal debtor in case the latter should fail to do so.
Contract of guaranty
Contract of surety
Contract of pledge
Contract of mortgage
a.
b.
c.
d.
It is a secondary contract to a valid obligation whereby a party ensures the performance
of another of an obligation or undertaking in favor of another party but the liability of
guarantor is solidary, direct, primary and absolute although he possesses no direct or
personal interest over the obligations nor does he receive any benefit thereon.
Contract of guaranty
Contract of surety
Contract of pledge
Contract of mortgage
a.
b.
c.
d.
It is a consensual and onerous contract wherein one party binds himself to give another
the enjoyment or use of a thing for a price certain, and for a period which may be definite
or indefinite.
Contract of loan or mutuum
Contract of lease
Contract of deposit
Contract of commodatum
164.
165.
166.
167.
168.
P age
RFBT
- 02
RFBT
- 02
CvSU
Batch 2021
Contracts
For the following scenario, determine the status of the contract entered into: (A)-Valid and Binding
(B)Rescissible (C)-Voidable (D)-Unenforceable (E)-Null and Void
169.
A, a minor, sold in writing his cellphone to B, a capacitated person for PI,OOO. The
book value of the cellphone is still PI,500 so A suffered a lesion by more than 1/4 the
value of the thing which is the object thereof.
170.
A, the debtor and B, the creditor entered into a contract of loan secured by personal
properties of A. To defraud B, A sold in writing all his properties to C at a price
equivalent to its fair market value. (Status of contract of sale)
171.
G, the guardian of minor M, sold in writing the house and lot of M at a selling price of
PIM when its book value is PIOM. The sale is without prior approval of guardianship
court.
172.
A orally sold a piece of land to B in the amount of P200,000 payable in four installments.
B already paid P50,000 representing the first installment.
173.
A, agent of P, sold the land of P in P's name to B orally. The authority of A is not in
writing and B has already paid the whole purchase price to A.
174.
A and B orally entered into a contract of partnership to be organized and operated two
years from today. They will contribute P5,000 cash each.
175.
A, B and C orally entered into a contract partnership to be formed 3 years from today.
They will contribute a piece of land, a building and P2,000 cash.
176.
A, a minor, orally sold the cell phone of his brother at a selling price of P500. The buyer
already paid PIOO of the selling price to A.
177.
An oral contract of construction of building the construction of which has already
commenced but to be completed within a period of 5 years.
178.
A orally entered into a contract for a piece of work of cake at a price of P500. The
performance and payment of price shall be done after 5 months.
179.
A, agent of P, orally sold the house of P to B at a price of P499. The authority of A is not
in writing. Payment and delivery have not yet been made.
180.
A orally entered into a contract of barter with B involving a cellphone and a laptop. The
values of the cellphone and laptop are P5,000 and P8,000, respectively. The exchange
will happen after 6 months.
181.
Contract of pledge entered in a private instrument with the description and date of the
thing to be pledged but without delivery of the thing pledged.
182.
Orally agreed contract of donation of cellphone with fair market value of P 10,000
completed by delivery by donor and oral acceptance by donee.
183.
A married man of mature years donated a parcel of land to a girl of 16 subject to the
condition that the latter shall cohabit with him and such condition is accepted by the girl.
184.
A mother sold two fishponds to a daughter and the latter, in turn, resold the same
fishponds to her stepfather.
42 1
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185.
A Filipino leased a parcel of land to a foreigner for 99 years with an option to buy the
property within 50 years provided that the latter shall become a Filipino.
186.
A written contract for the transfer of piece of land at an amount of P900,000 with a fair
market value of PIM. Delivery and payment have not yet been made.
187.
An oral contract of real estate mortgage over a piece of land owned by third person
entered into by a creditor-bank and third person to secure the loan of principal debtor.
188.
An oral contract of commodatum of a specific bag without delivery of the bag.
189.
Written contract of chattel mortgage over shares of stocks without registration in Chattel
Mortgage Registry.
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 P60,000 when its book value is PIOO,OOO.
190.
53
Contracts
191.
A defendant in an action reinvidicatoria sold in writing the subject movable to a third
person during the pendency of the action at a price of P75,000 when its book value is
PIOO,OOO.
192.
Oral contract of sale of a cellphone with a price of P400 but delivery and payment will
be made after 15 months
193.
Oral contract of lease of car with an annual rental of P500 for a lease term of 10 years.
194.
Oral contract of sale of a piece of land with a price of P499 but delivery and payment
will be made after 1 month.
195.
An oral contract of guaranty.
196.
A written contract of sale of a piece of land with a price of P499 between a demented and
an insane person
197.
An oral contract of sale of B's calculator at a price of P499 entered by A in B's name
without authority from B.
198.
An oral contract of lease of land with a term of 15 months. Advance rental payment has
been made by lessee to lessor.
199.
G, the guardian of M, a minor, orally sold M's cellphone at a selling price of P500 to I, an
insane person. Delivery and payment have not yet been made.
200.
M, an insane orally sold a shabu at a price of PI,OOO although its book value is PI,500,
to I, an insane person. Delivery and payment have not yet been made.
201.
An oral contract of lease of land for a term of 1 year entered into between A, a minor and
I, an insane person.
202.
An oral contract of sale of house with a price of P2M and book value of Pl.4M entered
into by seller to escape liability to his creditors. Delivery and payment have not yet been
made.
203.
A donation of house and land made in private instrument by the debtor who has a
pending civil action without reserving enough property for his obligations.
204.
A orally entered into a contract of subscription of 100 shares of stocks of ABC
Corporation at a price of P500. Payment of the subscribed shares will happen after one
month.
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205.
An oral contract of sale of cellphone at a price of PI,OOO between husband and wife
who are covered by absolute community or conjugal property regime. Delivery and
payment will happen after 2 months.
206.
A written contract of sale of car with a price of P70,000 and book value of PIOO,OOO
between husband and wife who are covered by regime of complete separation of
property . The husband pointed a gun to the wife to sign the deed of sale. Delivery and
payment have not yet been made.
207.
The representative of an absentee orally sold a bike of the latter at a price of P40,000
when its book value is P60,000. The buyer has already paid the price.
208.
The guardian orally purchased the bike of his minor child at a price of P500 when its
book value is P800.
The minor orally sold the car of his guardian at the latter's name without prior consent.
The sale is made at a price of P30,000 and the car has a book value of P50,000. The
buyer has already paid the price to the minor.
209.
54
Contracts
210.
An oral contract of sale of a cellphone between two capacitated persons at a price of
P499 when its book value is P700. Delivery and payment will be made after three years.
211.
A 5-year old child orally entered into a contract of employment as a model of a men's
magazine without permission from DOLE.
212.
A 17-year old student orally entered into a contract of service involving sexual
intercourse with a prostitute at a price of P500 which will be performed after 2 years.
Payment has not yet been made.
213.
A 16-year old student orally entered into a 5-year contract of lease of car at a rent of
P500/year with a leasing company.
214.
A written contract of donation of cellphone with a value of P5,001 with acceptance also
made in writing made by a married man to his insane concubine.
215.
An oral contract of sale of land with a selling price of P6M and book value of PIOM
wherein delivery shall be made after 3 years. The buyer has already paid a down
payment of PIM at the perfection of the contract.
216.
A written contract of sale of planet Jupiter at a selling price of P 10M.
217.
An oral contract of sale of forest land or national park at a selling price of PIOOM with
partial payment of P20M.
218.
A is a judgment 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 P500 to B.
219.
Written contract of sale of Presidential Chopper to President Rodrigo Duterte at a selling
price of PIOM when its book value is still P40M.
220.
Written contract of real estate mortgage entered into by A and B after B threatened to file
a collection suit against A if A will not execute the real estate mortgage to secure his
matured and demandable obligation to pay a sum of money.
221.
Written contract of sale of cellphone at a price of P500 entered by A and B after B
pointed a gun to A's wife in order for A to give consent.
| P age
RFBT - 02
RFBT
- 02
CvSU
Batch 2021
222.
Oral contract of sale of T-shirt at a price of P500 entered between SM and A after the
saleslady of SM said that A is handsome wearing that T-shirt. A has already paid the
price.
223.
Written contract of sale of authentic Coach Bag between A and B at a price of PIO,OOO.
At the time of delivery, A delivered a counterfeited Coach Bag.
224.
Oral contract entered between A and B when A thought that the contract is one of
commodatum while B thought that the contract is one of real deposit.
225.
Written contract of jewelry in sale by auction entered by the highest bidder and seller at a
price of PIO,OOO when the bidding is held without giving notice to bidders that the
auctioneer will employ a by-bidder.
226.
A farmer and a bank entered into a contract of loan amounting to P500 with real estate
mortgage over the farmer's land. The amount of cash has already been delivered to the
farmer. However, the bank's legal counsel executed a deed pacto de retro sale. (Status of
contract of loan and real estate mortgage)
Oral contract of antichresis entered into between the debtor and creditor with consensual
agreement on the principal and interest of the loan.
Written contract of sale of piece of land at a price of PIM when its book value is Pl.5M.
The purchaser is the trial court judge in the levy and execution of such land for
satisfaction of judgment debt.
227.
228.
55
Contracts
229.
Written contract of sale of laptop at a price of PIO,OOO entered into by an insane agent,
in behalf of his capacitated principal, with a domestic corporation.
230.
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
P500 per month.
231.
Oral contract of agency entered into between a minor agent and an adult principal when
the commission is P500 per transaction.
232.
Written contract of sale of minor's bag entered into by his parent at a price of P600 when
its book value is P800 with Certified Public Accountant.
233.
Oral contract of lease for 2 years of absentee's bike at a rental of P500 per month when
prevailing monthly rental is P800 per month entered into by his legal representative with
a lawyer.
234.
A and B are negotiating the sale of a specific house and lot owned by A. During the
negotiation, A fell in love with B. This prompted A to just donate the house and lot to B.
Such donation was sealed by a kiss.
235.
A and B are negotiating the sale of a specific condominium unit with a market value of
owned by A. During the negotiation, B narrated his life story to A. Because the
life story of B is so touching, A decided to just donate his condominium unit to B which
is entered into and accepted into orally.
236.
Oral contract of sale of a bottle of rugby at a price of P200 between ACE Hardware
Corporation and an 18-year old person addicted to rugby entered into during the lucid
interval of the latter.
237.
Written contract of sale of a specific chicken suffering from bird flu and a specific cow
suffering from mad cow disease at a price of P400 entered into between a demented
partner and a minor.
| P age
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Contracts
238.
Written contract of sale of future inheritance entered into by the heirs of a predecessor
before his death.
239.
Oral contract of subscription of shares of stocks between a subscriber and a corporation
with amount of P500 with delivery and payment to be made after one month.
240.
Oral contract of sale of shares of stocks between an existing stockholder and prospective
investor with amount of P500. Delivery and payment will happen after one week.
241.
It is one of the five sources of civil obligation. It refers to a meeting of minds between
two persons whereby one binds himself, with respect to the other, to give something or to
render some service.
Crime
Quasi-contract
Contract
Quasi-delict
This stage of contract involves preliminary negotiations and bargaining, discussion of
terms and conditions, with no arrival yet of a definite agreement.
Conception stage
Perfection stage
Consummation stage
Operation stage
This principle of contract means that the parties may establish such stipulations, clauses,
terms, and conditions as they may deem convenient provided they are not contrary law,
morals, good customs, public order or public policy.
Mutuality of contract
Autonomy of contract
Obligatory force of contract
Relativity of contract
a.
b.
c.
d.
242.
a.
b.
c.
d.
243.
a.
b.
c.
d.
Maria Clara is an enrolled student of College of Holy Spirit. Aside from that, she is a current
lessee of ABC Dormitory near the said school. College of Holy Spirit decided to close
the operation of the school which prompted Maria Clara to leave his dormitory before the
end of the lease term. As a result, ABC Dormitory filed a civil action against College of
Holy Spirit. What principle of contract is violated by this action of ABC Dormitory?
a. Mutuality of contract
b. Autonomy of contract
c. Obligatory force of contract
d. Relativity of contract
245.
a.
b.
c.
d.
Which of the following contracts may be validly assailed by a third party?
Voidable contract and unenforceable contract
Rescissible contract and void contract
Voidable contract and void contract
Rescissible contract and unenforceable contract
a.
b.
c.
d.
There elements of contract refer to those which already exist in certain contract unless
validly set aside or suppressed by the parties.
Essential elements
Mandatory elements
Accidental elements
Natural elements
246.
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247.
Which of the following is not an essential element of contract?
a.
b.
c.
d.
248.
Consideration
Warranty
Prestation
a.
b.
c.
d.
a.
b.
c.
d.
Which of the following contracts is required to be in public instrument to be valid and
enforceable?
Contract of guaranty
Contract of sale of a real property
Contract of donation of immovable property
Contract of sale of a personal property at a price of P500
250.
a.
b.
c.
d.
251.
a.
b.
c.
d.
| P age
Meeting of minds
Which of the following contracts is perfected by delivery of the subject matter of
contract?
Real contract
Consensual contract
Formal contract
Solemn contract
249.
57
Contracts
In which of the following contracts may the interested contracting party compel the other
party to observe the formality of contract for convenience of the contracting parties?
Executory oral contract of lease of real property for two years
Oral contract of loan with principal amount of PI,OOO
Oral contract of donation of movable with value of P6,000
Executory oral agreement to form a partnership three years from the date of oral
agreement
It refers to a type of contract whereby the cause is the service or benefit compensated.
Onerous contract
Commutative contract
Remuneratory contract
Gratuitous contract
RFBT - 02
RFBT
- 02
CvSU
Batch 2021
252.
253.
Contracts
Which of the following contracts can exist on its own?
Contract of loan
Contract of pledge
Contract of mortgage
Contract of guaranty
It is a contract which serves as a means by which other contracts may be entered into. a.
Principal contract
b. Preparatory contract
c. Nominate contract
d. Reciprocal contract
254.
Which of the following contracts means "I do that you may give"?
a. Do ut des b. Do ut facias c. Facio ut des
d. Facio ut facias
255.
a.
b.
c.
d.
Which of the following shall primarily govern innominate contracts?
Valid stipulation of the contracting parties
Provisions of law on obligation and contracts
Rules governing the most analogous contracts
Customs of the place
a.
b.
c.
d.
It refers to a contract wherein one person contracts with himself.
Contract of adhesion
Auto-contract
Executory contract
Aleatory contract
a.
b.
c.
d.
It refers to a contract whereby the cause of the other party is the object on the other party
and vice versa.
Unilateral contract
Bilateral contract
Reciprocal contract
Commutative contract
a.
b.
c.
d.
What is the exact moment of perfection of solemn contract?
Upon meeting of minds of contracting parties
Upon delivery of the subject matter
Upon execution of formality required by law
Upon operation of law
a.
b.
c.
d.
How shall the court determine the nature of a contract?
By the principles of law
By stipulation of the contracting parties
By public opinion
By the provisions of the bible
a.
b.
c.
d.
What theory is followed by the New Civil Code of the Philippines to determine the exact
moment of perfection of contract entered through letter or telegram?
Reception theory
Cognitive theory
Manifestation theory
Expedition theory
256.
257.
258.
259.
260.
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261.
a.
b.
c.
d.
262.
Contracts
Before acceptance, to whom shall civil interdiction, insanity, death or insolvency must
happen in order to make the offer ineffective?
Offeror
Offeree
Either offeror or offeree
Both offeror or offeree
Which of the following statements concerning acceptance is correct?
a. Business advertisements are definite offers that can be validly accepted.
b. Advertisements for bidders are definite offers that can be validly accepted.
c. An offer made through an agent is accepted only from the time acceptance is
communicated to the principal.
d. The person making the offer may fix the time, place and manner of acceptance, all of
which must be complied with.
e. When the offerer has allowed the offeree a certain period to accept, the offer may not be
withdrawn at any time before acceptance by communicating such withdrawal despite the
absence of option money.
263.
Who among the following is capacitated to give consent to a contract?
a. Deaf-mutes who do not know how to read and write
b. Minors
c. Insane person during his lucid interval
d. Demented persons
264.
a.
b.
c.
d.
265.
What is the status of contract entered by an insane person and a demented person? a.
Rescissible contract
b. Voidable contract
c. Unenforceable contract
d. Void contract
266.
a.
b.
c.
d.
267.
268.
What is the status of contract entered by a drunken person or a hypnotized with a
capacitated person?
Rescissible contract
Voidable contract
Unenforceable contract
Void contract
What is the status of contract (1) if the consent is wanting or absent or (2) if the consent
is vitiated by fraud, undue influence, mistake, intimidation or violence, respectively?
Rescissible contract and unenforceable contract
Voidable contract and void contract
Void contract and voidable contract
Unenforceable contract and rescissible contract
Which vices of consent committed by a third party may make the contract voidable? a.
Fraud and mistake
b. Undue influence and fraud
c. Mistake and fraud
d. Violence and intimidation
Which type of fraud may make the contract voidable?
a. Incidental fraud or dolo incidente
b. Causal fraud or dolo causante
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Contracts
c. Both a and b
d. Neither a nor b
269.
a.
b.
c.
d.
What is the status of absolutely simulated contract?
Rescissible contract
Voidable contract
Unenforceable contract
Void contract
a.
b.
c.
d.
What is the remedy for relatively simulated contract?
Action for annulment of contract
Action for reformation of instrument
Action for declaration of nullity of contract
Action for rescission of contract
270.
271.
Which of the following may become the subject matter of a contract of sale? Future
inheritance Vain hope Future thing
Public land
272.
Which of the following is not allowed to become a subject matter of a contract?
Patrimonial property of the state
Sexual intercourse
Prestation within the commerce of men
Possible object
a.
b.
c.
d.
273.
It refers to the immediate and proximate purpose of the contract or the essential reason
which impels the contracting parties to enter into it and which explains and justifies the
creation of the obligation through such contract.
a. Prestation
b. Meeting of minds
c. Consideration
d. Subject matter
274.
a.
b.
c.
d.
In which type of contract is generosity or liberality the cause of contract?
Onerous contract
Gratuitous contract
Remuneratory contract
Accessory contract
a.
b.
c.
d.
Which of the following will nullify a contract?
Immoral motive of contracting party
Illegal motive of contracting party
Absence of cause of contract
All of the above
a.
b.
c.
d.
In the absence of relevant facts, as a general rule, what is the status of contract if there is
lesion or inadequacy of cause of contract?
Perfectly valid contract
Voidable contract
Rescissible contract
Void contract
275.
276.
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277.
a.
b.
c.
d.
278.
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Contracts
It is the legal remedy available to the injured party in a contract when the instrument or
document that serves as tangible evidence of the contract does not express the true
intention of the contracting parties.
Action for annulment of contract
Action for reformation of instrument
Action for declaration of nullity of contract
Action for rescission of contract
It is the legal remedy available to the injured party in a contract when mistake, fraud,
inequitable conduct, or accident has prevented a meeting of the minds of the parties.
a. Action for annulment of contract
b. Action for reformation of instrument
c. Action for declaration of nullity of contract
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d. Action for rescission of contract
279.
Which of the following may become the subject matter of reformation of instrument? a.
Notarial will
b. Holographic will
c. Document evidencing a void agreement
d. Donation inter vivos wherein a simple condition is imposed
280.
a.
b.
c.
d.
281.
a.
b.
c.
d.
282.
Which of the following rules on construction of ambiguities of contract is incorrect?
If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning shall be applied by the court.
If there is conflict between evident intention and words of contract, the intention of the
parties shall prevail.
The interpretation of obscure words or stipulations in a contract shall favor the party who
caused the obscurity.
In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
a.
b.
c.
d.
How shall the incidental circumstances of a gratuitous contract be interpreted?
In favor of least transmission of rights
In favor of greatest reciprocity of interests
In favor of least reciprocity of interests
In favour of greatest transmission of rights
a.
b.
c.
d.
How shall the incidental circumstances of an onerous contract be interpreted?
In favor of least transmission of rights
In favor of greatest reciprocity of interests
In favor of least reciprocity of interests
In favour of greatest transmission of rights
a.
b.
c.
d.
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 is the
status of contract?
Rescissible contract
Voidable contract
Unenforceable contract
Void contract
a.
b.
c.
d.
It is a defective contract that is valid and binding until rescinded by the court. It 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.
Rescissible contract
Voidable contract
Unenforceable contract
Void contract
283.
284.
285.
P age
If you are an injured party in a contract evidenced by an instrument, what legal remedies
may you avail?
Action for reformation of instrument
Action to enforce the instrument
Either a or b
Both a and b
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286.
a.
b.
c.
d.
Contracts
Which of the following is not a characteristic of rescissible contract?
It is a valid contract.
It is not susceptible of ratification but may be convalidated by prescription.
It may not be assailed by a third person.
It is a binding contract until rescinded by the court.
52 1
287.
a.
b.
c.
d.
288.
a.
b.
c.
d.
289.
290.
a.
b.
c.
d.
a.
b.
c.
d.
Which of the following is not a characteristic of a voidable contract?
It is a valid contract.
It is a binding contract until annulled by the court.
It is susceptible of ratification which cleanses the defect of contract.
It may be assailed by a third person affected by it.
292.
a.
b.
c.
d.
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What is the legal remedy available to interested party in case of rescissible contract?
Action for annulment of contract
Action for reformation of instrument
Action for declaration of nullity of contract
Action for rescission of contract
What is the prescriptive period for action for rescission of contract?
4 years
5 years
6 years
10 years
It is a defective contract that is valid and binding until annulled by the court. It is a
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.
Rescissible contract
Voidable contract
Unenforceable contract
Void contract
291.
293.
Which of the following are considered rescissible contracts?
Those contracts which are entered into by guardians whenever the wards they represent
suffered lesion by more than 1/4 the value of the things which are the object thereof
Those contracts agreed upon in representation of absentees, if the latter suffered lesion
more than 1/4 the value of the things which are the object thereof
Those contracts intended to defraud creditor
All of the above
Which of the following contracts are considered voidable?
Those contracts where one of the contracting parties is incapable of giving consent to a
contract such as minor, insane, demented person or deaf-mute who do not know to read
and write
Those contracts whereby the consent of one of the contract parties is vitiated by fraud,
undue influence, mistake, intimidation or violence
Both a and b
Neither a nor b
What is the legal remedy available to injured party or guardian of incapacitated party to
give consent in a voidable contract?
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a.
b.
c.
d.
294.
Action for annulment of contract
Action for reformation of instrument
Action for declaration of nullity of contract
Action for rescission of contract
What is the prescriptive period for action for annulment of contract?
4 years b.
5 years
c. 6 years
d. 10 years
295.
Who may file an action for annulment of voidable contract?
a.
b.
c.
d.
Minor
a.
b.
c.
d.
Party who caused the vitiation of consent
Capacitated party who entered a contract with a demented person
Guardian of the ward
Which of the following will bar the filing of action for annulment of contract?
Emancipation of minor
Lucid interval of insane
Ratification of contract
Loss of the object of contract by the incapacitated party
a.
b.
c.
d.
It is a defective contract that is valid although not binding until ratified. It is a contract
that for some reason cannot be enforced, unless it is ratified in the manner provided by
law.
Rescissible contract
Voidable contract
Unenforceable contract
Void contract
296.
297.
P age
Contracts
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54 1
298.
Which of the following is not a characteristic of an unenforceable contract?
a.lt is a valid contract.
b.lt is not binding unless properly ratified in the manner provided by law.
c.lt is susceptible of ratification which makes it enforceable.
d.lt may be assailed by a third person affected by it.
299.
b.
c.
d.
Which of the following contracts are considered unenforceable?
Those contracts 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.
Those where both parties are incapable of giving consent to a contract.
Those oral executory contracts for failure to comply with Statute of Fraud
d. All of the above
a.
b.
c.
d.
It refers to a provision of New Civil Code of the Philippines that requires certain contracts if
executory to be in writing not for its validity but for its enforceability so that fraud will be
prevented in these contracts.
Statute of limitation
Statute of fraud
Statute of liberty
Statute of freedom
a.
300.
301.
g.
h.
Which of the following executor contracts is not covered by statute of fraud?
An agreement that by its terms is not to be performed within one year from the making
thereof.
A special promise to answer for the debt, default or miscarriage of another. (Contract of
guaranty)
An agreement made in consideration of marriage, other than a mutual promise to marry.
An agreement for the sale of goods, chattels or things in action (movable property or
personal property) at a price not less than P500 pesos.
An agreement for the leasing of real property or immovable property for a longer period than
one year regardless of rent.
An agreement for the sale of real property or immovable property or of an interest therein
regardless of price.
A representation to the credit of a third person.
A contract of loan whereby the principal amount exceeds P500
a.
b.
c.
d.
It is a defective contract that is invalid and therefore not binding. It is an absolute nullity
and ,as a general rule, produces no effect, as if had never been executed or entered into and,
as a general rule, cannot be ratified.
Rescissible contract
Voidable contract
Unenforceable contract
Void contract
a.
b.
c.
d.
Which of the following is not a characteristic of a void contract?
It is an invalid contract.
It is not binding unless the contracting parties are guilty of estoppel, laches or pari delicto.
It cannot be confirmed or ratified unless the principle of operative fact will apply.
It can never be assailed by a third person.
a.
b.
c.
d.
e.
f.
302.
303.
304.
Which of the following is a valid contract?
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.
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c.
d.
e.
f.
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Those whose cause or object did not exist at the time of the transaction.
Those whose object is outside the commerce of men.
Those which contemplate impossible services.
Those where the intention of the parties relative to the principal object cannot be ascertained.
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g. Those expressly prohibited by law.
h. Those expressly declared void by law.
305.
306.
What is the legal remedy available to interested in a void contract?
a.Action for annulment of contract
b. Action for reformation of instrument
c.Action for declaration of nullity of contract
d.Action for rescission of contract
As a general rule, what is the prescriptive period of action for declaration of nullity of
contract?
a. 4 year
b. 5 years
c. 10 years
d. None
307.
a.
b.
c.
d.
e.
308.
c.
d.
What is the effect of unlawful but not illegal per se contract?
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.
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.
Both a and b
Neither a nor b
a.
b.
c.
d.
Which of the following contracts is consensual?
Contract of guaranty wherein principal of the secured contract of loan is at least P500
Contract of donation of condominium unit with fair market value of less than P5,000
Contract of antichresis covering a land with fair market value of at least P500
Contract of chattel mortgage covering a car with fair market value of at least P500
a.
b.
309.
310.
Which of the following effects of nullity of illegal per se void contract such as crime is
incorrect?
When both parties are in pari delicto, they shall have no action against each other.
Both criminals shall be prosecuted.
They can recover the proceeds of the crime.
The instruments of the crime shall be forfeited in favor of the government.
If only one of the parties is guilty, the innocent one may claim what he has given and
shall not be bound to comply with his promise.
W and H are legally married under property regime of absolute community. W orally
sold his specific laptop to H at a price of P500 when its book value is still P800 after H
pointed a gun to W. Delivery and payment will happen after two years. What is the status
of contract of sale of the specific laptop between W and H?
a. Unenforceable
b. Void
c. Voidable
d. Rescissible
311.
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| P age
S and B entered into a written contract for the sale of authentic IphoneX. At the date of
delivery of the phone, S delivered a counterfeited replica of IphoneX. What is the
appropriate legal remedy to be availed by B?
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a.
b.
c.
d.
312.
Contracts
Action for annulment of contract of sale
Action for declaration of nullity of contract of sale
Action for damages for breach of contract of sale
Action for reformation of instrument evidencing the contract of sale
Which of the following innominate contracts means "Do ut facias"?
I give that you may give.
I give that you may do.
I do that you may give.
I do that you may do.
In case of doubt in the incidental circumstances of contract of lease, what is the rule to
be applied in the interpretation of the ambiguity in this contract? a. It shall be resolved in
favor of least transmission of rights.
b. It shall be resolved in favor of greatest transmission of rights.
c. It shall be resolved in favor of least reciprocity of interests.
d. It shall be resolved in favor of greatest reciprocity of interests.
a.
b.
c.
d.
313.
314.
a.
b.
c.
d.
315.
a.
b.
c.
d.
316.
a.
b.
c.
d.
317.
68
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Which of the following contracts is subject to declaration of nullity?
Those which are absolutely simulated
Those entered into when one of the contracting parties is incapacitated
Those oral executory contracts that are covered by Statute of Frauds
Those undertaken in fraud of creditors
Which of the following is a proper ground for reformation of instrument?
When a mutual mistake of the parties results to the failure of the instrument to disclose
their real agreement
When the consent of one of the parties in the contract is vitiated by fraud, undue
influence, mistake, intimidation or violence
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds
of the parties
When the consent of the contracting parties is absolutely simulated
Which is not an essential element of contract?
a.
b.
c.
d.
318.
Which of the following contracts is not rescissible?
Those which are entered into by guardians whenever the wards they represent suffer
lesion by more than 1/4 the value of the things which are the object thereo
Those undertaken in fraud of creditors when the latter cannot in any other manner collect
the claims due them.
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.
Those agreed upon in representation of absentees, if the latter suffer lesion by 1/4 of the
value of the things which are the object thereof
Motive
Cause
Object
Consent
Which of the following may not become the object or subject matter of a contract?
a. Patrimonial property of the Manila City
b. Future inheritance
c. Shares of stocks of Government Owned and Controlled Corporation
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d. Private property of the Republic of the Philippines
319.
a.
b.
c.
d.
320.
a.
b.
c.
d.
321.
a.
b.
c.
322.
How is a contract to constitute a deposit perfected?
By mere consent
By delivery of the subject matter of the contract
By execution of the formality required by law
By performance of the contract
a.
b.
c.
d.
Mr. A orally sold his specific land to Mr. B at a selling price of P499. The delivery and
payment will be made after two months. On the agreed date of performance of contract,
Mr A did not perform his obligation. What is the remedy available to Mr. B?
File an action for specific performance
He has no remedy.
File an action to compel Mr. A to execute a written contract
File an action for declaration of nullity
a.
b.
c.
d.
A and B orally entered into a contract of sale of a specific authentic Coach bag at a price
of PIO,OOO. A paid an arras money at the time of constitution of the contract. The
parties agreed that the balance of the price will be paid after one month while the said
bag will delivered after one week. At the agreed date of delivery of the bag, B delivered
a counterfeited coach bag. What is the best legal remedy available to A?
File an action for damages for breach of contract of sale.
File an action for annulment of voidable contract of sale.
File an action for declaration of nullity of void contract of sale.
He has no action because the contract of sale is unenforceable.
324.
69
| P age
Which of the following may make the contract voidable?
Culpa contractual
Mora accipiendi
Dolo causante
Culpa aquiliana
Which of the following statements concerning the rules on interpretation of ambiguity in
a contract is correct?
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 ineffectual.
The interpretation of obscure words or stipulations in a contract shall favor the party who
caused the obscurity.
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, the contract is
voidable. d. The usage or custom of the place shall be borne in mind in the interpretation
of the ambiguities of a contract, and shall fill the omissions of stipulations which are
ordinarily established.
a.
b.
c.
d.
323.
325.
Which of the following executory contracts is covered by statute of fraud?
Contract of guaranty
Contract of real estate mortgage involving real property
Contract for a piece of work of furniture at a price of P500 or more
Contract of lease of car for a period longer than one year
Which of the following statements concerning the characteristics of different types of
contract is correct?
a. Contract of loan is a consensual contract because it is perfected by mere consent on the
amount of consumable thing to be delivered.
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b. Contract of sales is a real contract because the delivery of the determinate thing is
necessary for the transfer of ownership to the buyer.
c. Contract of real estate mortgage is a principal contract because it is extinguished when
the contract of loan is settled.
d. Contract of agency is a preparatory contract because it is a means by which other
contracts may be entered into.
326.
a.
b.
c.
d.
P orally authorized A to sell his land at a price of PIOO,OOO. A orally sold the land in
P's name to B, an insane person, at a price of P20,000. Delivery and payment will
happen after one month. What proper legal remedy is applicable to the injured party?
Action for declaration of nullity
Action for annulment of contract
Action for rescission of contract
None because the contract is unenforceable
a.
b.
c.
d.
Which of the following contracts is consensual?
Contract of pledge
Contract of deposit
Contract of loan
Contract of sale
327.
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RFBT
- 02
CvSU
Batch 2021
328.
Contracts
Which of the following is an accidental element of contract
Interest in a contract of loan
Determinate thing in a contract of sale
Warranty against eviction in a contract of partnership
Meeting of minds in a contract of marriage
a.
b.
c.
d.
329.
G, the guardian of M, a minor, leased a real property of M for three months at a monthly rent
of PI,OOO when the prevailing monthly rent is PI,500. What is the status of the contract of
lease?
a. Rescissible
b. Voidable
c. Unenforceable
d.
330.
D is a judgment debtor in a civil action filed by C. The trial court issued a writ of attachment
upon the motion of C. D'S bank deposit became the subject matter of garnishment.
Afterwards, D sold in writing his specific car to B. What is the status of contract of sale of
car? a. Rescissible
b. Voidable
c. Unenforceable
d.
331.
Void
B orally borrowed PI,OOO from P. In o rder to secure the fulfilment of the loan, G orally
guaranteed the payment of B's loan to P What is the status of the contract of guaranty?
a. Rescissible
b. Voidable
c. Unenforceable
d.
P age
Void
P authorized A to sell his land. However, A leased out in writing the said land to T in the
name of P. What is the status of the contract of lease?
a. Rescissible
b. Voidable
c. Unenforceable
d.
334.
Void
H and W are legally married and are covered by property regime of complete separation of
property. After the marriage, H pointed a gun to W to compel the latter to sell her farm lot in
writing. This prompted W to sign the deed of sale of the farm lot which H unilaterally
prepared. What is the status of contract of sale of farm lot?
a. Rescissible
b. Voidable
c. Unenforceable
d.
333.
Void
D, a demented person, and I, an insane person, entered into a written contract of sale of
specific cellphone during the lucid interval of the latter. What is the status of contract of sale
of cellphone?
a. Rescissible
b. Voidable
c. Unenforceable
d.
332.
Void
Void
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B and S orally entered into a contract of sale of specific cellphone at a price of P500 with
delivery of cellphone to be made after two years from the date of oral agreement. At the time
of perfection of contract of sale, B paid PIOO arras money to S with the balance to be made
at the date of delivery of cellphone. What is the status of the contract of sale of cellphone?
a. Valid and binding
b. Voidable
59 1
c. Unenforceable
d. Void
336.
a.
b.
c.
d.
337.
Which of the following contracts is not covered by statute of fraud?
Executory contract of sale of house at a selling price of P400
Executory contract of lease of land for a term of two years at monthly rental of P300
Executory contract of sale of cellphone at a selling price of P500
Executory contract for a piece of work of furniture at a contract price of PI,OOO
What is the status of the written contract of lease of public streets or thoroughfares
entered into by the city government with the private market stallholders and operators? e.
Rescissible
a. Voidable
b. Unenforceable
c.
Void
a.
b.
c.
d.
Which of the following contracts is not valid?
Unenforceable contract
Voidable contract
Both a and b
Neither a nor b
338.
339.
Which elements of contract are mandatory in order for the contract to be valid? a.
Essential elements
b. Natural elements
c. Accidental elements
d. All of the above
340.
Which of the following contracts is perfected by the execution of formality required by
law?
Contract of guaranty
Contract of sale of land
Contract of lease of condominium unit
None of the above
a.
b.
c.
d.
341.
It is one of the five sources of civil obligation. It is a meeting of minds between two
persons whereby one binds himself, with respect to the other, to give something or to
render some service.
a) Quasi-delict
b) Crime
c) Quasi-contract
d) Contract
P age
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Contracts
342. Which of the following statements pertains to the stage of contract that involves preliminary
negotiations and bargaining, discussion of terms and conditions, with no arrival yet of a definite
agreement?
a) Conception stage
b) Perfection stage
c) Termination stage
d) None of the above
343. What legal principle of contract means that the contractual agreement constitutes the law as between
the parties?
a) Autonomy of contract
b) Relativity of contract
c) Mutuality of contract
d) Obligatory force of contract
344. What legal principle of contract means that the parties may establish such stipulations, clauses,
terms, and conditions as they may deem convenient provided they are not contrary to law, morals,
good customs, public order or public policy? a) Autonomy of contract
60 |
b) Relativity of contract
c) Mutuality of contract
d) Obligatory force of contract
345.What legal principle of contract is violated when a partner, on his own, designated the rule on
distribution of partnership profit or loss without the consent of the other partners?
a) Autonomy of contract
b) Relativity of contract
c) Mutuality of contract
d) Obligatory force of contract
346. This legal principle of contract prohibits a third person who doesn't not have legal interest in a
contract to assail its validity. a) Autonomy of contract
b) Relativity of contract
c) Mutuality of contract
d) Obligatory force of contract
347. Which of the following stipulations is an exception to relativity of contract?
a) Stipulation pour autrui
b) Stipulation in favor of one of the contract parties
c) Stipulation in favor of both contracting parties
d) None of the above
348. Which of the following contracts may never be assailed by a third person?
a) Rescissible contract and voidable contract
b) Voidable contract and unenforceable contract
c) Void contract and rescissible contract
d) Unenforceable contract and void contract
349. These elements of contract are required in order for a contract to exist.
a) Essential elements
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Contracts
b) Natural elements
c) Accidental elements
d) None of the above
350. Which of the following is an example of accidental element in a contract?
a) Conventional interest in a contract of loan
b) Warranty against eviction in a contract of sale
c) Delivery in a contract of deposit
d) Marriage license in a contract of marriage
351. Which of the following contracts is perfected by the execution of the formality required by law for
its validity?
a) Consensual contract
b) Real contract
c) Solemn contract
d) None of the above
352. Which of the following contracts must be in writing and public instruments in order to be both
enforceable and valid?
a) Contract of real estate mortgage
b) Contract of sale of real property
c) Contract of donation of immovable property
d) Contract of pledge of car
353. Which of the following contracts is perfected by delivery of the subject matter?
a) Contract of mutuum
b) Contract of sale
c) Contract of partnership
d) Contract of antichresis
354. Which of the following contracts is perfected by mere consent?
a) Contract of subscription of shares of stocks
b) Contract of chattel mortgage of motor vehicle
c) Contract of commodatum of a book
d) Contract of donation of movable
355.S and B orally agreed on the sale of specific house and lot at a price of PIOO,OOO with the delivery
to be made after full payment of price. On the date of oral agreement, B paid an arras money of
P20,000 with the balance to be made after one month. On the maturity date of the balance of
P80,000, B tendered the P80,000 Philippine peso bills to S who refused such payment. Which of the
following statements is correct?
a) B may legally compel S to sign the notarized deed of sale.
b) The contract of sale is unenforceable.
c) The contract of sale is void.
d) S may refuse to sign the notarized deed of sale.
356. Which of the following contracts is consensual is a principal, preparatory and consensual contract at
the same time?
a) Contract of loan
b) Contract of agency
c) Contract of sale
d) Contract of chattel mortgage
P age
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Contracts
357. Which of the following innominate contracts means "I give that you may do."? a) Do ut des
b) Facio ut facias
c) Facio ut des
d) Do ut facias
358. Which of the following shall primarily govern innominate contracts?
a) The stipulation of the parties
b) The provisions of Law on Obligations and Contracts
c) The rules governing the most analogous contracts
d) The customs of the place
359. It is a contract contract whereby the parties give almost equivalent values; hence, there is real
fulfillment.
a) Aleatory contract
b) Commutative contract
c) Executory contract
d) Executed contract
360. It is a contract wherein one party has already prepared the form of the contract, containing the
stipulations he desires, and he simply asks the other party to agree to them if he wants to enter into
the contract. It is commonly known in layman's term as "take it or leave it" contract or "fine print"
contract.
a) Contract of adhesion
b) Auto contract
c) Reciprocal contract
d) Unilateral contract
361. What is the exact moment of perfection of real contract?
a) Upon meeting of minds of contracting parties
b) Upon delivery of the subject matter of contract
c) Upon execution of formality required by law
d) None of the above
362. How is the nature of a contract determined by court of law?
a) By principles of law
b) By agreement of parties
c) By customs of the place
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d) By current market situation
363. It refers to the meeting of minds between the contracting parties as regards to the object and cause of
contract.
a) Prestation
b) Vinculum
c) Consent
d) Consideration
364.Which of the following statements about consent is incorrect?
a) Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract.
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b) The offer must be certain and the acceptance absolute.
c) A qualified acceptance constitutes a counter-offer.
d) Consent must only be expressed but can never be implied.
365. Under Cognitive Theory, when is the contract entered into through telegram perfected?
a) From the time the offeree's acceptance came to the knowledge of the offerer
b) From the time the offeree's acceptance was sent to the offerer
c) From the time the offeree's acceptance was received by the offerer
d) From the time the offeree's acceptance came to the knowledge of the public authority
366. What is the disputable place of perfection of contract entered through telegram, letter or telephone?
a) In the place where the acceptance was made
b) In the place where the offer was made
c) In the place where the agreement was registered
d) In the place where the credit was domiciled
367. Which of the following is not a requisite in order to have a meeting of minds?
a) It must be definite.
b) It must be certain.
c) It must be complete.
d) It must be unintentional.
368. Which of the following statements about the principles of acceptance of offer is incorrect?
a) The person making the offer may fix the time, place and manner of acceptance, all of which
must be complied with.
b) An offer made through an agent is accepted from the time acceptance is communicated to the
agent not necessarily to the principal.
c) When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn
at any time before acceptance by communicating such withdrawal, except when the option is
founded upon a consideration, something paid or promised.
d) An acceptance must only be expressed but can never be implied.
369. Which of the following statements about acceptance of offer is correct?
a) An option contract supported by consideration also known as option money (premium) is valid
and binding and may not be validly withdrawn.
b) Business advertisements are mere invitations to make an offer.
c) Advertisements for bidders are simply invitations to make proposals.
d) All of the above
370. The following are the instances which if happened to either offeror or offeree before meeting of
minds between parties will make the offer ineffective resulting to nullity of contract, except
a) Sickness
b) Insanity
c) Civil interdiction
d) Insolvency
e) Death
371. Who among the following persons is capacitated to give consent to a contract?
a) Minor or Person below 18 years of age
b) Insane during his lucid interval
c) Demented person
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d) Deaf mute who do not know how to read and write
e) Drunken or hypnotized person
372. What is the status of an ordinary contract between a minor and an adult?
a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
373.What is the status of an contract between an insane and a demented person?
a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
374. What is the legal remedy available to the innocent party when the consent is wanting or absent in a
contract?
a) Action for rescission of contract
b) Action for annulment of contract
c) Action for reformation of instrument
d) Action for declaration of nullity of contract
375. What is the legal remedy available to the contracting party whose consent is vitiated by fraud, undue
influence, mistakt, intimidation or violence? a) Action for rescission of contract
b) Action for annulment of contract
c) Action for reformation of instrument
d) Action for declaration of nullity of contract
376. Which of the following instances will make the contract voidable?
a) Just and lawful intimidation that induced a party to give consent to a contract
b) Violence committed in the performance of contract
c) Mistake as to the estimate or motive of other party or solvency of other party d) Causal fraud
377. S sold a specific authentic "Coach" bag to B. After the payment of the price by B to S, the latter
delivered a counterfeited "Coach" bag to B. What is the proper legal remedy available to B? a)
Action for rescission of contract
b) Action for annulment of contract
c) Action for damages for breach of contract
d) Action for declaration of nullity of contract
378. Which of the following statements about vices of consent is incorrect?
a) Violence or intimidation shall annul the obligation, although it may have been employed by a
third person who did not take part in the contract.
b) Failure to disclose facts, when there is duty to reveal them, as when the parties are bound by
confidential relations, constitutes fraud.
c) A mere expression of an opinion does not signify fraud, unless made by an expert and the other
party has relied on the former's special knowledge.
d) The usual exaggerations in trade, when the other party had an opportunity to know the facts, are
in themselves fraudulent and make the contract voidable.
379. What is the proper legal remedy available to injured party in absolutely simulated contract? a)
Action for rescission of contract
b) Action for annulment of contract
c) Action for reformation of instrument
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d) Action for declaration of nullity of contract
380. What is the proper legal remedy available to injured party in relatively simulated contract? a) Action
for rescission of contract
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b) Action for annulment of contract
c) Action for reformation of instrument
d) Action for declaration of nullity of contract
381. It refers to the promise or conduct to be performed in the fulfillment or rendition of the obligations
of contract and it may consist of giving, doing or not doing a thing. a) Prestation
b) Vinculum
c) Consideration
d) Meeting of minds
382.Which of the following is not a requisite of an object of contract?
a) It must be within the commerce of men.
b) It must be licit or not contrary to law, morals, good customs, public order or public policy. c) It
must be impossible.
d) It must be determinate as to its kind.
383. Which of the following may become a valid object of contract of sale?
a) Hereditary right
b) Public land
c) Vain hope
d) Animal suffering from contagious disease
384. Which of the following is not allowed to become a subject matter of contract?
a) Patrimonial property of the state
b) Future thing
c) Medical marijuana
d) Private property of local government units
385. It refers to the immediate and proximate purpose of the contract or the essential reason which impels
the contracting parties to enter into it and which explains and justifies the creation of the obligation
through such contract. a) Cause
b) Prestation
c) Object
d) Consent
386. What is the cause in a remuneratory contract?
a) The exchanged valuable consideration
b) Service or benefit remunerated
c) Cause of principal contract
d) Liberality or generosity of benefactor
387. Which of the following will not make the contract void?
a) Unlawful cause
b) Immoral consideration
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c) Illegal motive
d) Absence of cause
388. It refers to legal remedy available to the injured party in a contract when the instrument or document
that serves as tangible evidence of the contract does not express the intended agreement of the
contracting parties.
a) Action for rescission of contract
b) Action for annulment of contract
c) Action for reformation of instrument
d) Action for declaration of nullity of contract
389. If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the
parties, what is the proper legal remedy to the injured party? a) Action for rescission of contract
b) Action for annulment of contract
c) Action for reformation of instrument
d) Action for declaration of nullity of contract
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390. Which of the following documents may become the subject matter of legal remedy of reformation of
instrument?
a)
b)
c)
d)
Deed of simple donation inter vivos wherein no condition is imposed
Last will and testament whether notarial will or holographic will
Instrument when the real agreement is void
Deed of pacto de retro sale intended to be loan with mortgage
391.Which of the following legal remedies may be availed by the injured party in a contract evidenced
by an instrument?
a) Action for reformation of instrument
b) Action to enforce the instrument
c) Either a or b
d) Both a and b
392. Which of the following rules on interpretation of contract is incorrect?
a) If the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning shall be applied by the court.
b) If there is conflict between evident intention and words of contract, the letter of the instrument
shall prevail over the spirit of the contract.
c) The interpretation of obscure words or stipulations in a contract shall not favor the party who
caused the obscurity.
d) In order to judge the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered.
393. What is the interpretation of ambiguity of incidental circumstances of a gratuitous contract?
a) In favor of least transmission of rights
b) In favor of greatest transmission of rights
c) In favor of least reciprocity of interest
d) In favor of greatest reciprocity of interest
394. What is the interpretation of ambiguity of incidental circumstances of a onerous contract?
a) In favor of least transmission of rights
b) In favor of greatest transmission of rights
c) In favor of least reciprocity of interest
d) In favor of greatest reciprocity of interest
395. 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 is the status of the contract? a)
Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
396. Which of the following defective contracts is valid?
a) Rescissible
b) Rescissible and voidable
c) Rescissible, voidable and unenforceable
d) Rescissible, voidable, unenforceable and void
397. Which of the following defective contracts is binding?
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a)
b)
c)
d)
Rescissible
Rescissible and voidable
Rescissible, voidable and unenforceable
Rescissible, voidable, unenforceable and void
398. It is a defective contract that is valid and binding until rescinded by the court. It 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. a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
399. Which of the following is not a characteristic of a rescissible contract?
a) It is valid and binding until rescinded by the court.
b) It is incapable of ratification but can be convalidated by prescription.
c) After its rescission by the court, it is no longer effective and there will be mutual restitution to
the contracting parties.
d) It may never be assailed by a third person.
400.Which of the following contracts is considered rescissible?
a) Those contracts of administration entered into by guardian or representative wherein the ward
or absentee he represent suffered lesion by more than 1/4 the value of the things on the
contracts.
b) Those contracts entered into to defraud creditors.
c) Either A or B
d) Neither A nor B
401. C prevailed over D in an action to collect a sum of money filed by the former against the latter. The
trial court judge already issued a writ of attachment to execute the money judgment. The first
property of D attached by the sheriff is D'S specific car. This prompted D to sell the said car and to
to sell his specific farm lot. Which contract of sale is rescissible? a) Sale of D'S specific car
b) Sale of D'S specific farm lot
c) Both a and b
d) Neither a nor b
402. R, the court appointed representative of A who is a judicially declared absentee, orally leased A's
investment property for a period of one year for a monthly rent of PIO,OOO when the prevailing
monthly rent for such type of real property is P7,000. What is the status of the contract of lease of
investment property?
a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
403. G, the legal guardian of minor M, orally sold M's house and lot at a price of
when its
book value is still P740,000 to a lawyer. The buyer lawyer has already paid P50,000 arras money to
G at the date of oral agreement. What is the status of contract of sale of M's house and lot?
a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
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404. What is the legal remedy available to the affected contracting party or affected third person by a
rescissible contract?
a) Action for rescission of contract
b) Action for reformation of instrument
c) Action for annulment of contract
d) Action for declaration of nullity of contract
405. What is the prescriptive period for filing action for rescission of rescissible contract?
a) 4 years
b) 5 years
c) 6 years
d) 10 years
406. It is a defective contract that is valid and binding until annulled by the court. It is a contract in which
the consent of one party is defective, either because of want of capacity to give consent to a contract
or because consent is vitiated, but which contract is valid and binding until set aside by a competent
court.
a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
407. Which of the following is not a characteristic of voidable contract?
a) It is valid and binding until annulled.
b) It is capable of ratification which cleanses its defect and prohibits any further action for
annulment.
c) After its annulment, it is no longer effective and annulment will result to mutual restitution.
d) It may be assailed by a third person affected by it.
408.Which of the following contracts is voidable?
a) Those where one of the contracting parties is incapable of giving consent to a contract such as
minor, insane, demented person, deaf-mute who do not know how to read and write, drunken or
hypnotized person.
b) Those where the consent of one of the contracting parties is vitiated by fraud, undue influence,
mistake, intimidation or violence.
c) Either a or b
d) Neither a nor b
409. D, a demented person, sold in writing his specific laptop to I, an insane person, during the latter's
lucid interval at a price of PIO,OOO. What is the status of contract of sale of specific laptop?
a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
410. D borrowed PIO,OOO cash from C. C threatened to file a civil action to collect a sum of money
against D if the latter will not sign the deed of real estate over D'S lot to secure the loan. Because of
the intimidation, D reluctantly signed the deed of real estate mortgage. What is the status of contract
of real estate mortgage?
a) Perfectly valid
b) Voidable contract
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c) Unenforceable contract
d) Void contract
411. What is the legal remedy available to guardian of incapacited contracting party or contracting party
whose consent is vitiated regarding voidable contract? a) Action for rescission of contract
b) Action for reformation of instrument
c) Action for annulment of contract
d) Action for declaration of nullity of contract
412. What is the prescriptive period for filing an action for annulment of ordinary contract?
a) 4 years
b) 5 years
c) 6 years
d) 10 years
413. On January 1, 2021, M, a 16-year old minor, borrowed PIOO,OOO from A, an adult, with a
stipulation that it is payable in ten equal annual installments starting on December 31, 2021. M
regularly paid the annual installments for the first three years. Afterwards, who may file an action
for annulment of this voidable contract of loan?
a)
c) Guardian of M
d) None of the above
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414. It is a defective contract that is valid although not binding and not enforceable in a court of law until
ratified it is ratified in the manner provided by law. a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
415. Which of the following is not a characteristic of an unenforceable contract?
a) It is valid but not binding and therefore not enforceable by court action.
b) It is susceptible of ratification which makes the contract enforceable.
c) There is no proper legal remedy before ratification but to leave the contract as it is.
d) It can be assailed by a third person directly affected by it.
416.Which of the following is not an unenforceable contract?
a) Contract entered into in the name of another person by one who has been given no authority or
legal representative or by agent who has acted beyond his powers
b) Contract where both parties are incapable of giving consent to a contract
c) Oral executory contract that does not with Statute of Fraud
d) Absolutely simulated contract
417. Which of the following oral executory contracts is not covered by statute of fraud?
a) Oral executory contract of sale of movable property at a price of P500 or more.
b) Oral executory contract of lease of personal property for a period of more than one year with
monthly rental of less than P500.
c) Oral executory contract of guaranty securing a contract of loan with principal amount
exceeding P500
d) Oral executory contract of subscription of shares of stocks at price of at least P500.
418. Which of the following oral executory contracts is covered by statute of fraud?
a) Oral executory agreement to establish a partnership business within one year from such oral
agreement
b) Oral executory contract of sale of real property at a price of P499
c) Oral executory contract of lease of immovable property at a montly rent of P500 for a period of
one year
d) Oral executory contract for a piece of work of movable property at a price of P500 or more
419. P authorized A to sell his car at a selling price of PIOO,OOO. However, against the said instruction
of P, A sold in writing the said car in P's name at a selling price of P120,000 to B. What is the status
of contract of sale of car?
a) Perfectly valid
b) Voidable contract
c) Unenforceable contract
d) Void contract
420. M, a minor, orally sold a specific bike to D, a demented person at a price of P400. What is the status
of contract of sale of specific bike?
a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
421. S orally sold a specific car to B at a price of PIOO,OOO when its book value is still P150,000. On
the date of oral agreement, B paid P5,000 arras money to S with the balance of P95,000 payable on
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the date of delivery of the specific car to be made one month after the oral agreement. After one
month, B tendered P95,000 in P20-Bills to S who refused such tender of payment. Which of the
following statements is correct?
a) The contract of sale is unenforceable because it is an oral contract covered by statute of fraud.
b) The legal remedy of B is to consign the P95,000 in P20-Bills to a court of law.
c) B cannot compel S to sign the notarized deed of sale because such formality is not required by
law.
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d) S can ask for rescission of contract of sale because he suffered lesion more than 1/4 the value of
the said car.
422. It a defective contract that is invalid and therefore not binding. It is an absolute nullity and generally
produces no effect, as if had never been executed or entered into and generally cannot be ratified.
a) Rescissible contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
423. Which of the following is not a characteristic of a void contract?
a) It is invalid and therefore not binding.
b) As a general rule, it produces no effect whatsoever either against in or in favor of anyone.
c) As a general rule, it can neither be confirmed nor ratified except that action for declaration of
nullity of some void contracts may be barred by reason of estoppel or laches in proper cases.
d) It may not be assailed even by a third person directly affected by it.
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424.Which of the following contracts is a valid contract?
a) Contract which is relatively simulated
b) Contract whose cause or object did not exist at the time of the transaction
c) Contract whose object is outside the commerce of men
d) Contract which contemplate impossible services
425. Which of the following contracts is a valid contract?
a) Contract where the intention of the parties relative to the principal object cannot be ascertained
b) Contract expressly prohibited by law
c) Contract whose contracting party's motive is contrary to law, morals, good customs, public
order or public policy
d) Contract expressly declared void by law
426. What is the legal remedy available to innocent contracting party or third person directly affected by
a void contract?
a) Action for rescission of contract
b) Action for reformation of instrument
c) Action for annulment of contract
d) Action for declaration of nullity of contract
427. What is the prescriptive period for filing an action for declaration of nullity of void contract? a) 4
years
b) 5 years
c) 10 years
d) It does not prescribe but such action for declaration of nullity of void contract may be barred by
estoppel by laches or by concept of pari delicto.
428. City of Caloocan leased in a notarized document its public streets and thoroughfares to private
market stallholders. What is the status of contract of least? a) Perfectly valid contract
b) Voidable contract
c) Unenforceable contract
d) Void contract
429. The following are the effects of nullity of contract for being illegal or criminal contract also known
as illegal per se void contract, except
a) When both parties are in pari delicto, they shall have no action against each other.
b) Both criminals shall be prosecuted.
c) They cannot recover the proceeds of the crime.
d) The instruments of the crime shall be forfeited in favor of the government.
e) If only one of the parties is guilty of the crime, the innocent cannot claim what he has given and
shall still be bound to comply with his promise.
430. The following are the effects of nullity of contract for being illegal but not criminal contract also
known as unlawful but not illegal per se contract, except
a) 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 on the basis of
equitable doctrine of "pari delicto".
b) 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.
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c) The other, who is not at fault, may demand the return of what he has given without any
obligation to comply with his promise.
d) None of the above
-END"For the Glory of God"