1. Obligations and Contracts

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GENERAL ENGINEERING & APPLIED SCIENCESLAWS AND ETHICS

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is a juridical necessity to give, to do or not to do. It comes from the Latin word obligare which means to bind.

GENERAL PROVISIONS

Nature of obligations under Civil Code Civil Obligations legally demandable and the courts of justice may compel their performance.

Natural Obligations based on morality, natural law and conscience, they are not legally demandable.

Requisites of Obligations Juridical or legal tie the vinculum or the link that binds the party

Prestation - consist in giving, doing or not doing something

Active subject person who can demand the performance of the obligation or known as the creditor or oblige

Passive subject the person from whom prestation is demandable or known as the debtor or obligor

Illustration:A entered into a contract with B whereby A agreed to deliver to B a washing machine on Monday. The juridical tie is the contract, the prestation is the delivery of the washing machine, the active subjectis B, and the passive subject is A.

Sources of Obligations Law imposed by the law itself

Illustration:By provision of law, a husband and wife are obliged to live together, observe mutual respect and fidelity, and render mutual help and support.

Contracts the meeting of minds between two persons whereby one binds himself with respect to the other to give something or to render service.

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GENERAL ENGINEERING & APPLIED SCIENCES

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Quasi-contracts the act of a person, permitted by law, by which he obligates himself towards another, or by which another binds himself to him, without any agreement between them.

Illustration:Suppose A owes B the sum of P50.00, but by mistake A pays B the amount of P100.00. In this case, B must return to A the P50.00 because as to the excess, that is payment of something not owing (Solutio Indebiti).

Acts or omissions punished by law refers to a crime or a penal offense, like murder.

Illustration:Supposing A kills B. If the court finds that A is guilty, A will be sentenced either to imprisonment or death, depending on the gravity of the offense.

Quasi-delicts a legal wrong, committed through fault or negligence, on a person or property, independent of contract.

Illustration:Supposing Maria, while watering her flower pot in her house, negligently caused the same to fall, hitting Jose who suffered injuries. Maria is then obliged to pay for the damage sustained by Jose.

Requisites of Quasi-delicts An act or omission; Accompanied by fault or negligence; Causing damage to another; There must be no pre-existing contractual relation between the

parties.

GENERAL ENGINEERING AND APPLIED SCIENCES

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DIFFERENT KINDS OF OBLIGATIONS

Pure and Conditional Obligations

Pure Obligations one which is not subject to conditions nor does it mention a specific date for its fulfillment

Illustration:Juan obliged himself to deliver a refrigerator to Pedro.

Conditional Obligations is one which is subject to a condition

Two Kinds of ConditionsSuspensive Condition a condition which suspends the demandability of the obligation until the fulfilment of the condition.

Illustration:I will give you a car if you pass the ECE examinations.

Resolutory Condition produces the extinguishment of an obligation upon the happening of the event.

Illustration:I will let you use my car until you finish your course in business administration.

Obligations With a Period those whose consequences are subjected in one way or the other to the expiration of said term.

Illustration:A borrowed money from B in the amount of P50.00 promising to pay the amount as soon as possible. If later on, they cannot agree on the specific date of payment, the remedy of B is to go to court and ask the court to fix the date when the debt is to be paid.

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Kinds of PeriodEx die a period with suspensive effect In diem a period with a resolutory effect and the validity of obligation is up to a certain date Other Kinds:

Legal period period established by law Voluntary period period agreed to by the parties Judicial period period authorized by the court

Alternative Obligations is one wherein various things are due, but the payment of one of them is sufficient, determined by the choice which as a general rule belongs to the obligor.

Illustration:Marc obliged himself to deliver to Edwin either a piano or a refrigerator. The delivery of the piano or the refrigerator is sufficient compliance with the obligation. Marc could not compel Edwin to accept only a part of the piano or a part of the refrigerator because in alternative obligations complete performance of one of the prestations is necessary.

Joint and Solidary Obligations

Joint Obligations is one which each of the debtors is answerable only for a proportionate part of the debt and each one of the creditors is entitled to a proportionate part of the credit.

Illustration:Juan and Pedro are jointly indebted to Jose the amount of P100.00. As such, Juan is liable to Jose for the amount of P50.00 only, while Pedro is also liable to Jose for the same amount of P50.00. Jose, the creditor, is entitled to demand from Juan and Pedro P50.00 each.

Solidary Obligations is one which each of the debtors is liable for the whole obligation and each of the creditors may demand compliance of the entire obligation.


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Illustration:Juan and Pedro are the solidary debtors of Jose for the amount of P100.00. Hence either of them may be compelled by Jose to pay the whole amount of P100.00. So Jose can demand from Juan the amount of P100.00. Jose can also demand from Pedro the amount of P100.00. However, if Juan pays P100.00, then the obligation is extinguished and the paying debtor (Juan) is entitled to be reimbursed by his co-debtor (Pedro) for his part of the debt, which is P50.00.

Kinds of SolidarityActive Solidarity when the solidarity exists among the creditors only. Passive Solidarity when the solidarity takes place among the debtors only. Mixed Solidarity when the solidarity exists both among the creditors and the debtors at the same time.

Divisible and Indivisible Obligations Divisible Obligation is one which is capable of partial performance. Illustration:Juan obliged himself to deliver to Pedro six sacks of rice as follows: Three sacks of rice to be delivered by Juan on May 1st, and Pedro to pay Juan the amount of P150.00. Another three sacks of rice to be delivered by Juan on June 1st, and Pedro to pay Juan the same amount of P150.00. The obligation of Juan to Pedro to deliver rice is divisible because the parties intended partial performance.

Indivisible Obligation is one which is not capable of partial performance.

Illustration:In the preceding example, if Juan and Pedro agreed that all the six sacks of rice should be deliver on May 1st, then notwithstanding that the object of the obligation is physically divisible. Nevertheless, it is indivisible because the parties intended complete performance at one given time. Juan, therefore, must deliver all the six sacks of rice on May 1st. he cannot deliver two or three or even five, because that case the delivery still constitutes partial performance.

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Three Classes of DivisionsQualitative depends on quality rather than quantity Quantitative depends on quantity rather than quality Ideal also known as moral, intellectual or mental division

Obligations With a penal Clause

Definition of Penal Clause an accessory undertaking to assume greater liability in case of a breach.

Illustration:A stipulation in the contract for the sale of a residential lot, that the vendee would complete within two years from the date of the sale 50% of his residence on the lot, and, in the event of failure to do so, the vendee would pay the vendor the sum of P10,000.00.

Two Classifications of Penal ClauseSubsidiary when only the penalty can be demanded

Illustration:A binds himself to deliver to B a Honda Civic car at the end of the current year. They agree in writing that should A fail to deliver the car on a specified date, A shall pay B as penalty P10,000.00. A fails to make the delivery. B could demand the payment of P10,000.00 against A. B, however could not compel A to deliver the car and pay the penalty at the same time. The payment of the penalty takes the place of the principal obligation.

Joint when both the principal contract and the penal clause can be enforced

Illustration:A borrowed from B the amount of P100.00 payable on October 10, 2007. They agreed further that should A fail to pay the amount on the said date, A shall pay B the amount of P10.00 as penalty. On October



10, 2007, A failed to pay B. In such case, B could go to the court and demand payment of the principal amount of P100.00 and also the penalty of P10.00. However, if the penalty is iniquitous, merciless and shocking to conscience, it shall not be enforced. Instead it may be reduced by the court.

EXTINGUISHMENT OF OBLIGATIONS

By Payment or Performance payment means not only the delivery of money but also the performance, in any other manner, of an obligation.

By the loss of the thing due when it perishes or goes out of commerce or disappears in such a way that its existence is unknown or it cannot be recovered.

By the condition or remission of the debt it is an act of liberality by which the oblige, who receives no price or equivalent thereof, renounces the enforcement of the obligation, which is extinguished in its entirely or in that part or aspect of the same to which the remission refers.

Kinds of Condonation or RemissionComplete when the enforcement of the obligation is waived or renounced totally Partial when the waiver or renunciation refers only to a part of the obligation. Express when it is shown by words or declaration of the obligee. Implied when it is inferred from the acts or conduct of the obligee.

By the confusion or merger of the rights of creditor and debtor it is the meeting in one person of the qualities of obligee and obligor with respect to the same obligation.

By compensation takes place when two persons, in their own right, are creditors and debtors of each other.

Kinds of CompensationLegal compensation takes place when compensation extinguishes the two debts in their concurrent amounts even without the express agreement of the parties. Voluntary compensation takes place when there is compensation by agreement of the parties as in the case of mutual set off of accounts.

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Judicial compensation takes place when the court permits the counterclaim of the defendant as against the claim of the plaintiff. Partial compensation takes place when the two obligations are of different amounts and a balance remains unextinguished after the compensation. Total compensation takes place when the obligations are of the same amount and compensation extinguishes the obligations entirely.

Illustration:A is indebted to B in the amount of P100.00. On the other hand, B is also indebted to A in the amount of P100.00. Both debts are due. Compensation will take place because both are, in their own right, creditors and debtors of each other.

By novation it is the change, substitution, or renewal of an obligation or obligatory relation, with the intention of extinguishing or modifying essentially the former, debitum pro debito (new debt for old debt).

Kinds of NovationReal novation the change in the object or principal conditions of the obligation.

Illustration:A obliged himself to deliver to B a car. Subsequently, they entered into another contract whereby instead of A delivering a car, A would deliver a truck. The object of the obligation was changed, so the novation was a real novation.

Personal novation another person is sustained in place of the debtor or he is subrogated to the rights of the creditor.

Illustration:A is indebted to B in the amount of P100.00. A now requests B to accept C as debtor in his (As) place. If B accepts C as his new debtor, who assumes the obligation of A, then there is a novation by the substitution of the person of the debtor. If it is B who requests that he be changed by C and A agrees, then there is also novation



this time by the subrogation of a third person in the place of the creditor.

Mixed novation the change in the person of the parties and the objects or modification of principal condition. Illustration:A obliged himself to deliver to B a carabao. Subsequently A proposed that C would take his place but instead of delivering a carabao he would deliver a horse. If B and C agreed, then there was a mixed novation because the object of the obligation and the person of the obligor were changed.

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is the meeting of the minds between two persons whereby one binds himself with respect to the other to give something or to render service. It comes from the Latin word contractus which signifies an agreement.

GENERAL PROVISIONS

Elements of Contracts Essential Elements

consent of the parties object or subject matter cause or consideration

Natural elements are those the existence of which is presumed by law unless there is an agreement to the contrary

Accidental elements consist of the unusual stipulation of the parties such as conditions, terms, etc.

Stages of a Contract: Preparation or Conception includes all the initial stages up to the time the parties agree upon the terms of the contract.

Illustration:Juan offers to sell his horse to Pedro for P2,000.00. Pedro asks Juan to bring his horse to his place to enable him to see whether the horse is fit for carretela purposes. Juan brings the horse to Pedros place and the latter is allowed by Juan to use his horse in pulling Pedros carretela to enable the latter to see whether the horse has sufficient speed, is physically fit, etc. After trying the horse, Pedro bargains with Juan as to the price. Up to this stage, the parties are doing things leading to the meeting of the minds.

Perfection or Birth the time when the minds of the parties meet in agreement upon the object or subject matter as well as to the price or consideration. Illustration:



Juan agrees to receive P2,000.00 for his horse and Pedro agrees to take the horse for that amount. The contract here is perfected because there is already a meeting of the minds.

Consummation or Termination

Illustration:Juan delivers the horse to Pedro and the same is accepted. Pedro gives the amount P2,000.00 as purchase price and the latter receives it. In here, the contract is consummated and terminated.

Classification of ContractsExpress and Implied Contracts is one written in the intent of the parties is shown by words, oral or written.

Executed and Executory Contracts

Executed contract is one that has already been performed Executory contract is one that is not yet performed

Consensual and Real Contracts

Consensual contract is one perfected by mere consent Real contract is one perfected by the delivery of the thing which is the object of the contract

Unilateral and Bilateral Contracts

Unilateral contract only one of the parties has an obligation Bilateral contract both parties has an obligation

Limitations upon the right to contractContrary to law The parties to a contract cannot agree to an object or purpose which is against the law.

Illustration:A, for and in consideration of P1,000.00, entered into a contract with B whereby the latter agreed to murder C.

Against morals No contact may be entered into which is against virtuous conduct and ethical precept.

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Illustration:A entered into a contract with B whereby for and in consideration of P1,000.00 the latter agrees to live with A without the benefit of marriage.

Contrary to good customs The contracting parties are prohibited from entering into contracts which conflict with good and established practice or customs.

Illustration:Pedro and Maria decided to get married on October 10, 2007. Invitations were printed and distributed to relatives and friends and apparel were purchased including matrimonial bed. Pedro, however walked out of it and was never heard of again.

Contrary to public order Signifies the public weal which are permanent and essential in institutions.

Illustration:An agreement that the creditor can use force or violence to compel the debtor to pay is contrary to public order.

Contrary to public policy Refers not only to public safety but also to considerations which are moved by the common good.

Illustration:A entered into a contract with B wherby A will not enter into any enterprise whatever in the Philippines. This is against public policy as it is a contract in restraint of trade.

ESSENTIAL REQUISITES OF CONTRACTS

Consent manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract

Object of Contracts it may be things, rights and services Things must be within the commerce of men, must not be impossible, either physical or legally and must be determinate as to their kind.



Rights may be transmissible or not transmissible. Examples of these rights are the right to vote, rights flowing from a contract of marriage, parental authority, etc.

Cause of Contracts the immediate, direct and proximate reason which justifies the creation of an obligation thru the will of the contracting parties.

Illustration:Juan offers to sell to Jose his only white horse for P500.00. Jose accepts the offer. Here, the consent of the parties is manifested by the concurrence of their wills as to the white horse and as to the price. The object is the white horse and the cause is P500.00.

Classification of Contracts as to its CauseOnerous Contract the cause is the mutual undertaking or promise of either of the contracting parties.

Illustration:Juan sells his car to Pedro for P10,000.00.This contract of sale creates a reciprocal obligation in both parties. Juan is obliged to deliver the car to Pedro and the latter is obliged to pay Juan the purchase price of P10,000.00.

Remunetory Contract the cause is the service or benefit for which the remuneration is given.

Illustration:Juan is accused for a crime in court. He retains the services of Atty. Dela Cruz as his defense counsel for P5,000.00. The P5,000.00 to be given by Juan to Atty. Dela Cruz is for the professional services of Atty. Dela Cruz.

Gratuitous Contract the cause is the pure liberality of the giver.

Illustration:Pedro donated a parcel of land to the municipality of Naic, Cavite, to be used as the municipal cemetery without receiving any valuable consideration for the same. Here, the cause of the contract of donation is the mere liberality of Pedro, the benefactor.

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Requisites of a valid cause or consideration The cause must be in existence. That the cause must be lawful and not contrary to law, morals, good

customs, public policy, and The cause must be true because the statement of a false cause renders

the contract void.

REFORMATION OF INSTRUMENTS

Reformation is a remedy in equity by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when some error or mistake has been committed.

Requisites of Reformation There is a valid contract; The contract is in writing; The written contract fails to express the true intention of the parties The failure of the written contract to express the true intention is due to

mutual mistake, fraud, inequitable conduct, or accident.

DEFECTIVE CONTRACTS

Types of Defective ContractsRescissible Contract it has all the essential requisites of a contract and the contract itself is valid, but by reason of injury or damage to third persons, such as creditors, the contract may be rescinded.

Example of rescissible contracts 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;

Those agreed upon in representation of absentees if the latter suffer the lesion stated in the preceding number;

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;

All other contracts specially declared by law to be subject to rescission.



Lesion damage or injury suffered by the party seeking rescission by reason of the fact that the price is unjust or inadequate

Voidable Contracts is one that possesses all the essential requisites of a valid contract, namely, consent, object and cause or consideration. It is a valid contract until it is annulled.

Contracts that is voidable even though there may have been no damage to the contracting parties Those where one of the parties is incapable of giving consent to a

contract; Those where the consent is vitiated by mistake, violence,

intimidation, undue influence or fraud.

Unenforceable Contracts a contract is said to be unenforceable when it cannot be sued upon or enforced in court unless it is ratified.

The following contracts are unenforceable unless they are ratified Those entered into the name of another person by one who has

been given no authority or legal representation, or who has acted beyond his powers;

Those that do not comply with the statute of frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, thereof, of the agreement cannot be received without the writing, or a secondary evidence of its contents.

Those were both parties are incapable of giving consent to a contract.

Void or Inexistent Contracts one which is absolutely without legal force or effect. It is not susceptible of ratification.

Contracts that are inexistent and void from the beginning Those whose cause, object or purpose is contrary to law, morals,

good customs, public order or public policy; Those which are absolutely simulated or fictitious; 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 service;

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Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;

Those expressly prohibited or declared void by law.

Characteristics of void contracts Void or inexistent contracts produce no legal effects whatsoever. Void or inexistent contracts cannot be ratified. The right to set up the defense of inexistence or absolute nullity

cannot be waived or renounced. The action or defense for the declaration of their inexistence or

absolute nullity is imprescriptible. The inexistence or absolute nullity of a contract cannot be invoked

by a person whose interests are not directly affected.



is the sum of money which the law awards or imposes as percuniary compensation, recompense, or satisfaction for an injury done or a wrong sustained as a consequence either of a breach of a contractual obligation or a tortious act.

Injury Denotes the illegal act

Types of Damages Actual or Compensatory Damages damages that cover actual injury or economic loss. It is intended to put the injured party in the position he was in prior to the injury. It typically includes medical expenses, lost wages and the repair or replacement of property.

Moral Damages includes physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

Nominal Damages these are small and trivial sums awarded for a technical injury due to a violation of some legal right, and as a consequence of which some damages must be awarded to determine the right.

Temperate or Moderate Damages Temperate damages are such damages as are reasonable compensation for the injury. They are more than nominal damages but less than compensatory damages and may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.

Liquidated Damages the amount of which has been agreed upon by the parties or fixed by the judgement of a competent court.

Exemplary or Corrective Damages damages which are given in enhancement merely of the ordinary damages on account of wanton, reckless, malicious, or oppressive character of the acts complained of.

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is a branch of the unwritten law which was originally founded on the customs of merchants, mariners and business men generally in their dealings with one another throughout the civilized countries of the world.

The following are considered to be merchants Those who, having legal capacity to engage in commerce, habitually

devote themselves to it. Commercial or industrial companies which may be created in

accordance with law.

Legal qualifications of merchants Those who have completed the age of 21; Not being subject to the authority of the father or the mother, nor to

marital authority and; Have the free disposition of their property.

Persons not qualified to engage in commerce Persons sentenced to civil interdiction; Persons who have been declared bankrupts and; Persons who are prohibited from trading under special laws.

Persons not qualified to engage in business: Officers and employees in the civil service, whether classified or

unclassified, shall not engage in any private business, vocation, or profession, or be connected with any commercial undertaking, without written permission from the chief of the bureau or office in which they are serving, and of the President of the Republic or proper department head.

The heads of departments and chiefs of bureaus or offices and their assistants shall not, during their continuance in office, engage in the practice of any profession or intervene, directly or indirectly, in the management or control of any private enterprise which in any way may be affected by the functions of their office; nor shall they, directly or indirectly, be financially interested in any contract with the Government, or any subdivision or instrumentality thereof.



Registration of MerchantsBureau of Commerce for those merchants having their place of business in Manila Register of Deeds for those in the provinces Securities and Exchange Commission for corporations and all partnerships with a capital of three thousand pesos (P3,000.00) or more Bureau of Customs in the case of vessels, those more than 3 tons gross

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1. A juridical necessity to give, to do, or not to do.

A. Contracts B. Obligation C. Quasi-delicts D. Condition

2. Obligation comes from the latin word ________ which means to bind.

A. Obligum B. Obligate C. Obligare D. Obligus

3. A legal wrong, committed through fault or negligence, on a person or property, independent of contract.


4. A nature of obligation under civil code which is legally demandable and the courts of justice may compel their performance.

A. Civil Obligations B. Natural Obligation C. Pure Obligation D. Condition

5. A nature of obligation under civil code based on morality, natural law and conscience, they are not legally demandable.

A. Civil Obligations B. Natural Obligation C. Pure Obligation D. Condition



6. Requisites of obligations which is the vinculum or the link that binds the party

A. Juridical or legal tie B. Prestation C. Active subject D. Passive subject

7. Requisites of obligation consist in giving, doing or not doing something


8. Requisites of obligation that refers to a person who can demand the performance of the obligation or known as the creditor or oblige


9. Requisites of obligation that refers to a person from whom prestation is demandable or known as the debtor or obligor


10. One of the following is not considered as a source of obligation.

A. Law B. Contracts C. Quasi-delicts D. Work

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11. The following are requisites of Quasi-delicts except

A. An act or omission B. Accompanied by fault or negligence C. There must be no pre-existing contractual relation between the parties. D. Acts or omissions punished by law

12. An obligation which is not subject to conditions or burdens nor does it mention a specific date for its fulfilment and as such it is immediately demandable.

A. Pure obligation B. Conditional obligation C. Reciprocal obligation D. Alternative obligation

13. An uncertain event which wields an influence on a legal relation.

A. Pure obligation B. Condition C. Reciprocal obligation D. Alternative obligation

14. An obligation which is a subject to a condition.

A. Pure obligation B. Conditional obligation C. Reciprocal obligation D. Alternative obligation

15. A kind of condition which suspends the demandability of the obligation until the fulfilment of the condition.

A. Suspensive Condition B. Alternative obligation C. Reciprocal obligation D. Resolutory Condition



16. A kind of condition that produces the extinguishment of an obligation upon the happening of the event.

A. Suspensive Condition B. Alternative obligation C. Reciprocal obligation D. Resolutory Condition

17. An obligation whose consequences are subjected in one way or the other to the expiration of said term.

A. Pure obligation B. Obligations with a period C. Reciprocal obligation D. Alternative obligation

18. A borrowed money from B in the amount of P50.00 promising to pay the amount as soon as possible. If later on, they cannot agree on the specific date of payment, the remedy of B is to go to court and ask the court to fix the date when the debt is to be paid. This illustrates:

A. Pure obligation B. Obligations with a period C. Reciprocal obligation D. Alternative obligation

19. A kind of period with suspensive effect.

A. Ex die B. In diem C. Legal period D. Voluntary period

20. A kind of period with a resolutory effect and the validity of obligation is up to a certain date


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21. A period established by law.


22. A period agreed to by the parties.

A. Judicial period B. In diem C. Legal period D. Voluntary period

23. A period authorized by the court.

A. Judicial period B. In diem C. Legal period D. Voluntary period

24. An obligation where two parties are mutually obliged to do or to give something.


25. Marc obliged himself to deliver to Edwin either a piano or a refrigerator. The delivery of the piano or the refrigerator is sufficient compliance with the obligation. Marc could not compel Edwin to accept only a part of the piano or a part of the refrigerator because this illustrates:




26. An obligation wherein various things are due, but the payment of one of them is sufficient, determined by the choice which as a general rule belongs to the obligor.


27. One in which each of the debtors is answerable only for a proportionate part of the debt, and each one of the creditors is entitled to a proportionate part of the credit

A. Joint obligation B. Solidary obligation C. Divisible obligation D. Indivisible obligation

28. One in which each of the debtors is liable for the whole obligation and each of the creditors may demand compliance of the entire obligation.


29. A kind of solidarity when it exists among the creditors only.

A. Active Solidarity B. Passive Solidarity C. Mixed Solidarity D. Solo Solidarity

30. When the solidarity takes place among the debtors only, it is called


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31. When the solidarity exists both among the creditors and the debtors at the same time, this is called


32. An obligation which is capable of partial performance.


33. Juan obliged himself to deliver to Pedro six sacks of rice as follows: Three sacks of rice to be delivered by Juan on May 1st, and Pedro to pay Juan the amount of P150.00. Another three sacks of rice to be delivered by Juan on June 1st, and Pedro to pay Juan the same amount of P150.00. This illustrates:


34. A type division that depends on quality rather than quantity

A. Qualitative B. Quantitative C. Ideal D. Moral

35. A type of division that depends on quantity rather than quality A. Qualitative B. Quantitative C. Ideal D. Mental



36. A type of division also known as moral, intellectual or mental division A. Qualitative B. Quantitative C. Ideal D. All of the above

37. It is an accessory undertaking to assume greater liability in case of breach.

A. Law B. Penal clause C. Stipulation D. Preceding

38. A binds himself to deliver to B a Honda Civic car at the end of the current year. They agree in writing that should A fail to deliver the car on a specified date, A shall pay B as penalty P10,000.00. A fails to make the delivery. B could demand the payment of P10,000.00 against A. B, however could not compel A to deliver the car and pay the penalty at the same time. This is ______ type of penal clause:

A. Joint B. Subsidiary C. Solo D. Partial

39. A classification of penal clause when both the principal contract and the penal clause can be enforced.

A. Joint B. Subsidiary C. Solo D. Partial

40. An obligation can be extinguished by the following except

A. By Payment or Performance B. By the condition or remission of the debt C. By altering the signature D. By the loss of the thing due

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41. An obligation which is not capable of partial performance.


42. A kind of remission when the enforcement of the obligation is waived or renounced totally.

A. Partial B. Complete C. Express D. Implied

43. A remission when the waiver or renunciation refers only to a part of the obligation.


44. A remission when it is shown by words or declaration of the obligee.


45. A remission when it is inferred from the acts or conduct of the obligee.




46. A type of compensation that takes place when compensation extinguishes the two debts in their concurrent amounts even without the express agreement of the parties. Judicial compensation

A. Legal compensation B. Voluntary compensation C. Judicial compensation D. Partial compensation

47. A type of compensation that takes place when there is compensation by agreement of the parties as in the case of mutual set off of accounts.

A. Legal compensation B. Voluntary compensation C. Judicial compensation D. Partial compensation

48. A type of compensation that takes place when the court permits the counterclaim of the defendant as against the claim of the plaintiff.

A. Legal compensation B. Total compensation C. Judicial compensation D. Partial compensation

49. A type of compensation that takes place when the two obligations are of different amounts and a balance remains unextinguished after the compensation.


50. A type of compensation that takes place when the obligations are of the same amount and compensation extinguishes the obligations entirely.


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51. A. novation where the principal conditions of the obligation is change.

A. True novation B. Real novation C. Personal novation D. Substitute novation

52. A obliged himself to deliver to B a car. Subsequently, they entered into another contract whereby instead of A delivering a car, A would deliver a truck. This illustrates:


53. A novation where another person is sustained in place of the debtor or he is subrogated to the rights of the creditor.


54. A novation where there is a change in the person of the parties and the objects or modification of principal condition.

A. Mixed novation B. Real novation C. Personal novation D. Substitute novation

55. It is the meeting of minds between two persons whereby one binds himself with respect to the other to give something or to render some service.




56. A contract comes from the Latin word ______ which signifies an agreement.

A. Kontrus B. contractus C. Tractum D. contractumus

57. The following are considered to be the essential elements of contracts except

A. consent of the parties B. object or subject matter C. cause or consideration D. effects to the subject

58. An element of contracts which refers to those the existence of which is presumed by law unless there is an agreement to the contrary A. Essential element

B. Natural elements C. Accidental elements D. Unnatural elements

59. Refers to an element of contracts that consist of the unusual stipulation of the parties such as conditions, terms, etc.

A. Essential element B. Natural elements C. Accidental elements D. Unnatural elements

60. A stage of a contract that includes all the initial stages up to the time the parties agree upon the terms of the contract.

A. Preparation or Conception B. Perfection or Birth C. Consummation or Termination D. Deliberation

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61. A stage of a contract that refers to the time when the minds of the parties meet in agreement upon the object or subject matter as well as to the price or consideration.


62. Juan agrees to receive P2,000.00 for his horse and Pedro agrees to take the horse for that amount. This refers to what stage of the contract


63. Juan delivers the horse to Pedro and the same is accepted. Pedro gives the amount P2,000.00 as purchase price and the latter receives it. This is an example of what stage of the contract


64. A contract wherein the intent of the parties is shown by words, oral or written.

A. Express contract B. Implied contracts C. Executed contracts D. Executory contracts

65. A contract wherein the intent of the parties is shown by conduct.




66. A contract that has already been performed. A. Express contract B. Implied contracts C. Executed contracts D. Executory contracts

67. A contract that has not yet performed.


68. A contract that is perfected by mere consent, such as a contract of sale.

A. Consensual contract B. Bilateral contract C. Real contract D. Unilateral contract

69. A contract that is perfected by delivery of the thing which is the object of the contract.


70. A contract where only one of the parties has an obligation such as in commodatum or gratuitous deposit.


71. A contract that creates reciprocal obligations.


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72. A, for and in consideration of P1,000.00, entered into a contract with B whereby the latter agreed to murder C. This limitation upon the right to contract that refers to

A. Contrary to law B. Against moral C. Contrary to good customs D. Contrary to public order

73. A entered into a contract with B whereby for and in consideration of P100,000.00 the latter agrees to live with A without the benefit of marriage. This limitation upon the right to contract that refers to


74. Pedro and Maria decided to get married on October 10, 2007. Invitations were printed and distributed to relatives and friends and apparel were purchased including matrimonial bed. Pedro, however walked out of it and was never heard of again. This limitation upon the right to contract that refers to


75. A entered into a contract with B wherby A will not enter into any enterprise whatever in the Philippines. This limitation upon the right to contract that refers to




76. The following are requisites of contracts except A. Consent B. Object of contract C. Cause of contract D. Effect of contract

77. A classification of contracts as to its cause where the cause is the pure liberality of the giver.

A. Gratuitous Contract B. Remunetory Contract C. Onerous Contract D. Liberation Contract

78. A classification of contracts as to its cause where the cause is the service or benefit for which the remuneration is given.


79. A classification of contracts as to its cause where the cause is the mutual undertaking or promise of either of the contracting parties.


80. Remedy in equity by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when some error or mistake has been committed.

A. Reformation B. Novation C. Defect D. Erroneous

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81. Which of the following cannot be considered as a requisite of reformation

A. There is a valid contract; B. The contract is in writing; C. The oral contract expresses the true intention of the parties D. The failure of the written contract to express the true intention is

due to mutual mistake, fraud, inequitable conduct, or accident.

82. A defective contract where it has all the essential requisites of a contract and the contract itself is valid, but by reason of injury or damage to third persons, such as creditors, the contract may be rescinded.

A. Rescissible Contract B. Voidable Contracts C. Unenforceable Contracts D. Void or Inexistent Contracts

83. A damage or injury suffered by the party seeking rescission by reason of the fact that the price is unjust or inadequate.

A. damage B. effect C. lesion D. payment

84. A contract which possesses all the essential requisites of a valid contract, namely, consent, object and cause or consideration. It is a valid contract until it is annulled.

A. Void or Inexistent contract B. Unenforceable contracts C. Voidable contracts D. Negotiorum Gestio

85. A contract which is absolutely without legal force or effect.




86. When a contract cannot be sued upon or enforced in court unless it is ratified is said to be


87. It is the voluntary administration of the abandoned business or property belonging to another without the consent of the latter.


88. It is the sum of money which the law awards or imposes as percuniary compensation, recompense, or satisfaction for an injury done or a wrong sustained as a consequence either of a breach of a contractual obligation or a tortious act.

A. Payment B. Injury C. Damages D. Compensation

89. Damages that cover actual injury or economic loss. It typically includes medical expenses, lost wages and the repair or replacement of property.

A. Actual or Compensatory Damages B. Nominal Damages C. Moral Damages D. Temperate or Moderate Damages

90. Damages that includes physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.


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91. Damages which are small and trivial sums awarded for a technical injury due to a violation of some legal right, and as a consequence of which some damages must be awarded to determine the right.


92. Damages that are reasonable compensation for the injury.

A. Actual or Compensatory Damages B. Nominal Damages

C. Moral Damages D. Temperate or Moderate Damages

93. Damages where the amount of which has been agreed upon by the parties or fixed by the judgement of a competent court.

A. Liquidated Damages B. Exemplary Damages C. Corrective Damages D. Compensatory Damages

94. Damages which are given in enhancement merely of the ordinary damages on account of wanton, reckless, malicious, or oppressive character of the acts complained of.

A. Actual or Compensatory Damages B. Nominal Damages C. Moral Damages D. Exemplary or Corrective Damages

95. Branch of the unwritten law which was originally founded on the customs of merchants, mariners and business men generally in their dealings with one another throughout the civilized countries of the world.

A. Law Merchant B. Law of businessmen C. Law of mariners D. Law of people

1. Obligations and Contracts

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Transcript of 1. Obligations and Contracts