1st Final Departmental Examinations Reviewer

A.Y. 2023 - 2024

Subject Code: Law 101

Course Subject: Law on Obligations and Contracts

1. It involves the employment of serious or irresistible force to obtain consent.

a) Intimidation
b) Threat
c) Violence
d) Moral coercion

2. Not a requisite of stipulation pour autrui

a) The contracting parties must have clearly and deliberately conferred a favor upon third
person
b) The stipulation must be part of the contract
c) The third person communicated his acceptance to the obligor before its revocation
d) There must be an agency between either of the parties and the third person

3. Which is not a real contract?

a) Commodatum
b) Pledge
c) Deposit
d) Sale

4. True or False: Violence or force brought upon the spouse of a contracting party
and not on the contracting party himself/herself does not vitiate consent.
a) True
b) False

5. The statement in Article 1311 of the Civil Code that “Contracts take effect only
between the parties, their assigns and heirs…” expresses the principle of
a) Relativity of contract
b) Freedom of contract
c) Consensuality of contracts
d) Limitations on contract stipulations
6. Megumi Fushiguro mortgaged his land to Sukuna Ryomen to secure the payment
of a debt. This mortgage appears in a public document. The decision by Sukuna
Ryomen of his right, as a mortgagee, to Yuji Itadori must also be in a public
document.
a) Power to administer property.
b) Cession of actions or rights.
c) Cession or renunciation of hereditary rights or those of conjugal partnership of gains.
d) Creation, etc., of real rights over immovable property.

7. A written or oral agreement between 2 parties.

a) Memo
b) Invoice
c) Contract
d) Requisition

8. The following are the effects of a contract whose cause or object constitutes a
criminal offense and both parties are in pari delicto or equally guilty, EXCEPT:
a) The party bearing a more substantial guilt shall be prosecuted
b) The parties shall have no action against each other
c) The things or the price of the contract, as the effects or instruments of the crime, shall
be confiscated in favor of the government
d) Both parties shall be prosecuted

9. Mr. Jungwon sold his Rolex watch and 2 packs of drug paraphernalia to Mr.
Honoracio for P485,000.00. Is there a valid contract between the two?
a) Yes, there is a valid contract between the two.
b) Yes, the contract is divisible so the contract of sale for the Rolex is valid. The latter,
however, is void and unenforceable.
c) No, the contract is indivisible, and since it involves the sale of an illegal drug, the entire
transaction will be void and unenforceable.
d) No, the contract is indivisible and since a part of the contract is illegal, the contract will
be voidable.

10. It refers to agreements that lack one or some or all of the elements (i.e.,
consent, object, and cause) or do not comply with formalities which are essential for
the existence of a contract.
 a) Voidable Contracts
b) Rescissible Contracts
c) Inexistent Contracts
d) Unenforceable Contracts

11. Bella learned that Bada intended to bid out her champion race horse named
Edgar in 10 days. She called Bada telling she wanted to buy Edgar for P10 million
but that she needed 30 days within which to raise the money. Bada in turn offered
not to bid out Edgar and instead give Bela 30 days to raise the money if Bella paid
her 100 thousand and to this offer Bella agreed. The contract Bada and Edgar
entered into is called a/an ________ contract
a) Merger
b) Prescription
c) Option
d) Compensation

12. The contract between Taylor the farmer and Swift the trader was for the sale of
15 tons of aromatic rice to be harvested in 3 months from the present plantation of
Taylor for P100,000 pesos. The contract is
a) Valid
b) Void
c) Unenforceable
d) Voidable

13. It exists when a person takes improper advantage of his power over the will of
another depriving the latter of a reasonable freedom of choice.
a) Intimidation
b) Duress
c) Threat
d) Undue Influence

14. An oral sale of a lot worth P50,000.00 between seller S and buyer B. S has not
delivered the lot, but B has given a down payment of P5,000.00.
a) Valid and enforceable
b) Rescissible
c) Voidable
 d) Void

15. Which of the following is NOT a restriction on one’s capacity to act such as to
give consent to a contract?
a) Deaf-mute
b) Marriage
c) Civil Interdiction
d) Minority

16. What is the first element of a contract?

a) Consideration
b) Acceptance
c) Capacity
d) Offer

17. Cabs, a minor, sold a parcel of land to Jenny. Upon reaching legal age and having
full knowledge of her rights on the premises, Cabs collected the remaining unpaid
balance from Jenny. Is the contract binding or voidable? Why?
a) Yes, the contract is binding. Cabs’ action upon reaching legal age ratified the contract
tacitly.
b) Yes, the contract is binding because Cabs reached the age of majority.
c) No, the contract is voidable because Cabs has yet to formalize a ratification.
d) No, the contract is voidable. Cabs still have a period of 4 years to bring an action for
annulment upon reaching the age of majority.

18. An order form or receipt is an example of this type of contract.

a) Written
b) Oral
c) Implied
d) Express

19. A written contract in which the subject is clearly stated and all details are
included. Most enforceable type of contract by law.
a) Oral
b) Implies
c) Express
 d) Analytical

20. True or False: Under Article 1395, ratification requires the conformity of the
contracting party who has no right to bring the action for annulment.
a) True
b) False

21. Near the end of the semester, professor Yoonji in the BSA course subject
“Investment Instruments” where stocks, bonds, exchange-traded funds, mutual
funds, index funds, and etcetera are discussed, sold to a number of her students
stocks in MAGULANG Inc. To convince the students, Yoonji took her students to free
lunches and dinners several times, told them that she had information that the price
of said stocks would soon jump by more than 500%, and hinted at giving higher
grades to students who will buy the stocks. The consent of the students may have
been vitiated by
a) Intimidation
b) Violence
c) Mistake
d) Undue influence

22. Real contracts are perfected:

a) By mere consent
b) Upon delivery of the thing subject matter of the contract
c) Upon compliance with formalities
d) All of the above

23. Article 1306 of the Civil Code states in part “The contracting parties may
establish such stipulations, clauses, terms and conditions as they may deem
convenient…” This expresses -
a) Consensuality of contract
b) Limitations on contractual stipulations
c) Incorporation Principle
d) Freedom to contract
24. Statement 1: A Deed of Donation and Acceptance over a parcel of land was
signed by Donor Minah and Donee Yeni who paid P3 million pesos for the parcel.
This is an absolute simulation of a contract.
Statement 2: In a contract where Bebe sells the family ancestral house to Jam
Republic for P5 million pesos, for Jam Republic , the cause of the contract is the P5
million pesos.
a) Both statements are true
b) Both statements are false
c) Only statement I is true
d) Only statement II is true

25. 105-year old Lolo JR has been known for 10 years to have lost his mind to
Alzheimer’s Disease but the neighborhood knows that, at around 3 pm everyday, he
gets back the function of his brain for 2 hours and often tells the neighborhood kids
vivid stories of the horrors of World War II. One day, while telling one of his WWII
stories, he was interrupted to sign a contract selling his house and lot for the sum of
P1 million pesos. The contract is
a) Unenforceable
b) Void
c) Voidable
d) Valid

26. It is a remedy allowed by the law by means of which a written instrument is

amended or rectified so as to express or conform to the real agreement or intention
of the parties when by reason of mistake, fraud, inequitable conduct, or accident the
instrument fails to express such agreement or intention.
a) Reformation
b) Annulment
c) Rescission
d) Instrumentation

27. What is the proper remedy if mistake, fraud, inequitable conduct, or accident
has prevented a meeting of minds of the party?
a) Reformation
b) Annulment
c) Rescission
 d) Instrumentation

28. On November 30, 2022, Akiri entered into an oral contract with Ethan for the
construction of Akiri’s rest house in Tagaytay. The construction of the rest house
will begin on September 18, 2023. Is the contract enforceable?
a) Yes, the contract is enforceable because there is an agreement between Ethan and Akiri.
b) No, the contract must be in writing to be enforceable.
c) Yes, the contract is legally enforceable because the construction is performed within a
year from the date of agreement.
d) No, because according to the Statute of Fraud, the contract must be in writing to be
enforceable for agreements not to be performed within the same year.

29. A contract which is the direct result of a previous illegal contract, is also ______.
a) Unenforceable
b) Void
c) Rescissible
d) Voidable

30. Statement 1: Ratification is a form of approval that extinguishes the action to

annul a voidable contract and is covered by the Art. 1394.
Statement 2: Art. 1390 states that rescissible contracts are binding unless
annulled by a proper action in court. It is also susceptible to ratification.
a) Both statements are true
b) Both statements are false
c) Only statement I is true
d) Only statement II is true

31. It is the mistake of fact that is common to both parties of the instrument which
causes the failure of the instrument to express their true intention.
a) One-sided
b) Mutual Mistake
c) Dual Mistake
d) Double Mistake

32. True or False: Under Art 1363, the right to ask for reformation is granted only to
the party who was mistaken in good faith. Here, the mistake is not mutual.
 a) True
b) False

33. It is a donation that takes effect after the donors' death.

a) Donation
b) Mortis Causa
c) Inter vivos
d) Will

34. Which of the following instances will deem the contract as void and inexistent
from the beginning?
a) Contracts that do not comply with the Statute of Frauds
b) Contracts whose object is outside the commerce of man
c) Contracts entered into by an incapacitated person
d) Contracts which refer to things under litigation

35. True or False: The action for rescission is subsidiary; it cannot be instituted
except when the party suffering damage has no other legal means to obtain
reparation of the same.
a) True
b) False

36. In this contract, the parties are reciprocally obligated to each other.
a) Onerous
b) Remuneratory
c) Gratuitous
d) Causa

37. On September 29, 2021, In Jung offered to sell a specific car to Aiki for
P1,000,000.00. Aiki sent her letter of acceptance to In Jung on October 6, 2021. On
October 8, 2021, however, In Jung died in a vehicular accident and her secretary
received the letter of acceptance on October 10, 2021, unaware that In Jung had
already died.
a) The contract was perfected on October 6, 2021 when Aiki sent her letter of acceptance.
b) The contract was perfected on October 10, 2021 when the secretary of In Jung received
the letter of acceptance.
 c) The contract was not perfected because the offer of In Jung became ineffective when
she died
d) The contract was perfected on September 29, 2021 because the acceptance made by
Aiki on October 6, 2021 retroacts to the date of the offer

38. Where a term of a contract is worded broadly to cover a number of potential

breaches and it is not possible to decide whether breach of the term would have
important or trivial consequences that term is described as:
a) A condition
b) A representation
c) A warranty
d) An innominate term

39. S and T orally entered into a contract whereby S sold his one-year production of
eggs in his poultry farm to T for P60,000.00 which amount T immediately gave in
cash to S. The contract between S and T is?
a) Rescissible because T will likely suffer damage if the eggs do not come into existence.
b) Valid because future things may be the object of contracts.
c) Unenforceable because the contract was not in writing.
d) Void because the object was not existing at the time of execution of the contract.

40. Because of the representations by PK that “These phones are the best phones
your money can buy” and “They are state-of-the-art”, Ria was prompted to purchase
several mobile phone units. Ria was however disappointed when she got home and
tested the mobile phones. May the representations of PK be considered fraudulent?
a) No. As these cannot be proven.
b) No. The usual exaggerations in trade are not in themselves fraudulent especially if the
other party has the opportunity to know the facts.
c) Yes. It constitutes insidious words or machinations to lure the other party to enter into a
contract.
d) Yes. As the same was not true.

41. Mr. Jaekhyung leased his car to Mr. Dan and the latter, as stated in the contract,
is prohibited to sublease the car to anyone without Mr. Jaekhyung written consent.
Another stipulation referring to that condition was stated and that Mr. Dan would be
ejected from the contract as a violation for that condition. Has Mr. Jaekhyung the
right to demand P2,000.00 from Mr. Dan as a penalty?
a) Maybe, because he violated the condition.
b) Yes, it is stipulated in the contract.
c) No, in the light of the clause stating the penalty for the violation of the condition.
d) None of the above

42. Gojo Satoru and Geto Suguru entered into a contract whereby Gojo Satoru
designed and supervised the house of Geto Suguru located in Tokyo, Shibuya
However, the amount for the professional fee of Gojo Satoru was not provided.
Where should the amount for the professional fee of Gojo Satoru be based?
a) Usage or custom of the place.
b) In the terms stipulated in their contract.
c) In the rate customarily paid in Tokyo, Shibuya.
d) All of the above.

43. True or False: Article 1377 is applicable where the evident intention of
the parties can be readily discerned by their contemporaneous and
subsequent acts.
a) True
b) False

44. If the contract in question is onerous, _______.

a) such interpretation should be made which would result in the least transmission of rights
and interests.
b) the doubts should be resolved in favor of the greatest reciprocity of interests.
c) such doubt cannot be resolved, thereby leaving the intention of the parties unknown

45. True or False: In case of conflict between a general and a particular provision,
the former shall prevail.
a) True
b) False

46. Under Art. 1389, the following are persons entitled to bring an action for
rescission, EXCEPT:
a) Heirs, assigns, or successors of interest
 b) Injured party
c) Defrauded creditors
d) None of the above

47. The action for annulment of voidable contracts shall be brought upon within ___
years.
a) Two
b) Five
c) Four
d) Three

48. These contracts are those which possess all the essential requisites of a valid
contract but one of the parties is incapable of giving consent, or whose consent is
vitiated by mistake, violence, intimidation, undue influence, or fraud.
a) Rescissible Contracts
b) Voidable Contracts
c) Unenforceable Contracts
d) Void Contracts

49. It refers to contracts that are valid but cannot be enforced unless ratified by the
law.
a) Unenforceable Contracts
b) Rescissible Contracts
c) Void or Inexistent Contracts
d) Voidable Contracts

50. Jake is indebted to Mr. Henry Lopez for P500,000.00. Subsequently, they made
an agreement that Jake would clean Mr. Lopez's house every Sunday for free until
he has paid his debt. The contract is:
a) Valid
b) Unenforceable
c) Void
d) Rescissible

51. True or False: The contract which constitutes a promise to answer for the debt,
default, or miscarriage of another has to be in writing to be enforced legally.
 a) True
b) False

52. Statement 1: Unauthorized contracts are those entered into in the name of
another person by one who has been given an authority or legal representation to
act beyond his powers.
Statement 2: Rescissible contracts are valid and enforceable unless annulled or
rescinded, while unenforceable contracts are valid but unenforceable unless ratified
by law.
a) Both statements are true
b) Both statements are false
c) Only statement I is true
d) Only statement II is true

53. The ______ is a remedy by law to declare the inefficacy of a contract based on a
defect or vice in the consent of one of the contracting parties in order to restore
them to their original position they were in before the contract.
a) Annulment
b) Ratification
c) Rescission
d) None of the above

54. The following contracts are rescissible, EXCEPT:

(1) Those which are entered into by guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things which are
the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion
stated in the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them;
(4) Those which refer to things under litigation if they have been entered into by the
defendant
(5) None of the above
a) 1
b) 2
c) 3
 d) 4
e) 5

55. ________ the cause of action is subordinated to the existence of that prejudice,
because it is the raison d’etre as well as the measure of the right to rescind.
a) Rescission by reason of lesion.
b) Rescission for breach of contract.
c) Both Answers are correct

56. Mr. Heli, the guardian of Shion, a minor, sold one of the latter’s cars worth
P800,000.000 for only P500,000.00. The contract is:
a) Rescissible
b) Inexistent
c) Voidable
d) Valid

57. Angelika agreed to kill Faye, a political rival of Raven, in consideration of

P20,000.00 given by Raven. Later, Raven changed her mind and told Angelika to
forget their agreement and return the money. Is Raven still entitled to recover the
money from Angelika?
a) No, because the contract was illegal and void in the first place.
b) No, because both parties are in pari delicto.
c) Yes, because the contract was repudiated before it was accomplished.
d) Yes, because Angelika failed to perform her obligation.

58. Under Article 1384, only the creditor who brought action for rescission benefit
from the rescission; This means that ____.
a) Those who are strangers to the action cannot benefit from its effects
b) Those who are strangers to the action may benefit from its effects.

59. Toji Fushiguro made a donation of a parcel of land to the Zenin Clan. Before the
date of the donation, Toji Fushiguro had contracted several debts. With the donation
to the Zenin Clan, the remaining property of Toji Fushiguro is not sufficient to pay
all his debts.
Under the first paragraph, the donation is presumed fraudulent unless proved
otherwise.
 a) Alienation by gratuitous title.
b) Alienation by onerous title.

60. As a general rule, the prescriptive period within which to file a rescissory action
is ____ years.
a) Ten
b) Four
c) Five
d) Eight
 Summary of Answers

1. C 31. B
2. D 32. B
3. D 33. B
4. B 34. B
5. A 35. A
6. B 36. A
7. C 37. C
8. A 38. D
9. C 39. B
10. C 40. B
11. C 41. C
12. A 42. C
13. D 43. B
14. A 44. B
15. B 45. B
16. D 46. D
17. A 47. C
18. A 48. B
19. C 49. A
20. B 50. C
21. D 51. A
22. B 52. D
23. D 53. A
24. B 54. E
25. D 55. C
26. A 56. A
27. B 57. C
28. C 58. A
29. B 59. A
30. B 60. B
 Summary of Answers - Explained

1. (C) Art. 1335. - There is violence when in order to wrest consent, serious or irresistible
force is employed.

2. (D) According to G.R. No. 126260 - The requisites of a stipulation pour autrui or a
stipulation in favor of a third person are the following: (1) there must be a stipulation in
favor of a third person, (2) the stipulation must be a part, not the whole, of the contract,
(3) the contracting parties must have clearly and deliberately conferred a favor upon a
third person, not a mere incidental benefit or interest, (4) the third person must have
communicated his acceptance to the obligor before its revocation, and (5) neither of the
contracting parties bears the legal representation or authorization of the third party.

3. (D) Real Contract examples are depositum, pledge and commodatum.

4. (B) Nature of intimidation or threat: (1) it must produce a reasonable and

well-grounded fear of an evil, (2) the evil must be imminent and grave, (3) The evil
must be upon his person or property, or that of his spouse, descendants, or ascendants,
and (4) it is the reason why he enters into the contract.

5. (A)

6. (B)

7. (C)

8. (A) The following are the effects of a contract whose cause or object constitutes a
criminal offense and both parties are in pari delicto, that is, equally guilty: (a) the
parties shall have no action against each other, (b) both shall be prosecuted, (c) the
things or the price of the contract, as the effects or instruments of the crime, shall be
confiscated in favor of the government.

9. (C) Under the effects of illegality where a contract is indivisible/divisible, when the
consideration is entire and single, the contract is indivisible so that if part of such
consideration is illegal, the whole contract is void and unenforceable.
10. (C)

11. (C) Option Contract - is one giving a person for a consideration a certain period within
which to accept the offer of the offeror. It is separate and distinct from the contract
which will be perfected upon the acceptance of the offer.

12. (A)

13. (D) Art. 1337 - 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.

14. (A)

15. (B) Art. 1327 - The following cannot give consent to a contract: Unemancipated minors;
Insane or demented persons, and deaf-mutes who do not know how to write.

16. (D)

17. (A) Art. 1393 - Ratification may be effected expressly or tacitly. It is understood that
there is a tacit ratification if, with knowledge of the reason which renders the contract
voidable and such reason having ceased, the person who has a right to invoke it should
execute an act which necessarily implies an intention to waive his right.

18. (A)

19. (C)

20. (B) Art. 1395 - Ratification does NOT require the conformity of the contracting party who
has no right to bring the action for annulment.

21. (D) Art. 1337 - The following circumstances shall be considered: the confidential, family,
spiritual and other relations between the parties, or the fact that the person alleged to
have been unduly influenced was suffering from mental weakness, or was ignorant or in
financial distress.
22. (B) Real Contract or that which is perfected by the delivery of the subject matter of the
contract.

23. (D)

24. (B) Statement 1: Absolute simulation - when the contract does not really exist and the
parties do not intend to be bound at all.
Statement 2: Art. 1350 - 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; in
remuneratory ones, the service or benefit which is remunerated; and in contracts of
pure beneficence, the mere liberality of the benefactor. In this case, the cause of the
contract for Jam Republic is the ancestral house.

25. (D) Art. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed
to in a state of drunkenness or during a hypnotic spell are voidable.

26. (A) Art.1359

27. (B)

28. (C) The following are the agreements within the scope of the Statute of Frauds: (a)
agreement not to be performed within one year from the making thereof, (b) promise to
answer for the debt, default, or miscarriage of another, ( c) agreement in consideration
of marriage other than mutual promise to marry, (d) agreement for sale of goods, etc. at
price not less than P500, (e) agreement for leasing for a longer period than one year, (f)
agreement for the sale of real property or of an interest therein, (g) representation as to
the credit of a third person.

29. (B) Art. 1422

30. (B) Statement 1: Art. 1392 - Ratification extinguishes the action to annul a voidable
contract.
Statement 2: Art. 1390 states that voidable contracts are binding unless annulled by a
proper action in court. It is also susceptible to ratification.

31. (B)
32. (B) It is under Art. 1362.

33. (B)

34. (B) Instances of void or inexistent contracts: (1) contracts whose cause, object or
purpose is contrary to law, etc., (2) contracts which are absolutely simulated and
fictitious, (3) contracts without cause or object, (4) contracts whose object is outside the
commerce of men, (5) contracts which contemplate an impossible service, (6) contracts
where the intention of the parties relative to the object cannot be ascertained, (7)
contracts expressly prohibited or declared void by law.

35. (A)

36. (A)

37. (C) Art. 1323 - An offer becomes ineffective upon the death, civil interdiction, insanity, or
insolvency of either party before acceptance is conveyed.

38. (D) Innominate Contracts or those which have no specific name or designation in law.

39. (B) Art. 1347 - All things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible may also
be the object of contracts. No contract may be entered into upon future inheritance
except in cases expressly authorized by law. All services which are not contrary to law,
morals, good customs, public order or public policy may likewise be the object of a
contract.

40. (B) Art. 1340 - The usual exaggerations in trade, when the other party had an
opportunity to know the facts, are not in themselves fraudulent.

41. (C)

42. (C)

43. (B) Article 1377 is NOT applicable where the evident intention of the parties can be
readily discerned by their contemporaneous and subsequent acts.
44. (B)

45. (B)

46. (D) Under Art. 1389, the action for rescission may be brought by: (1) the injured party
or the defrauded creditor, (2) his heirs, assigns, or successors in interest, (3) the
creditors of the above entitled to subrogation.

47. (C) Art. 1391 - The action for annulment of voidable contracts shall be brought upon
within four years.

48. (B) Art. 1390

49. (A)

50. (C) Art. 1409 - Contracts whose cause, object or purpose is contrary to law, morals,
good customs, public order and public policy are inexistent and void from the beginning.

51. (A)

52. (D) Statement 1: Unauthorized contracts are those entered into in the name of another
person by one who has been given NO authority or legal representation or who has
acted beyond his powers.

53. (A)

54. (E)

55. (C)

56. (A) Under Art. 1381, contracts entered into by guardians whenever the wards whom
they represent suffer lesion by more than one-fourth of the value of the things which are
the object thereof are rescissible. In the problem, Shion suffered a lesion of P
300,000.00 which is more than one-fourth of the actual worth of his car.
57. (C) Art. 1414 - When money is paid or property delivered for an illegal purpose, the
contract may be repudiated by one of the parties before the purpose has been
accomplished, or before any damage has been caused to a third person. In such a case,
the courts may, if the public interest will thus be subserved, allow the party repudiating
the contract to recover the money or property.

58. (A)

59. (A)

60. (B) Art. 1389 - The action to claim rescission must be commenced within four years.