Obligations and Contracts

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GENERAL ENGINEERING & APPLIED SCIENCES
LAWS 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 subject
is 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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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.
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L!S and ETHICS
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 Conditions
Suspensive 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 Period
Ex 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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L!S and ETHICS
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 Solidarity
Active 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 Divisions
Qualitative 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 Clause
Subsidiary 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
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L!S and ETHICS
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 Remission
Complete 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 Compensation
Legal 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 Novation
Real 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
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L!S and ETHICS
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:
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L!S and ETHICS
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 Contracts
Express 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 contract
Contrary 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.
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L!S and ETHICS
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 Cause
Onerous 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 Contracts
Rescissible 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.
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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.

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|||. 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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|V |||||! 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.
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L!S and ETHICS
Registration of Merchants
Bureau 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.
A. Contracts
B. Obligation
C. Quasi-delicts
D. Condition
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
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L!S and ETHICS
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
B. Prestation
C. Active subject
D. Passive subject
8. Requisites of obligation that refers to a person who can demand the
performance of the obligation or known as the creditor or oblige
B. Prestation
C. Active subject
D. Passive subject
9. Requisites of obligation that refers to a person from whom prestation is
demandable or known as the debtor or obligor
B. Prestation
C. Active subject
D. Passive subject
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
14. An obligation which is a subject to a condition.
A. Pure obligation
B. Conditional 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
D. Resolutory Condition
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L!S and ETHICS
16. A kind of condition that produces the extinguishment of an obligation
upon the happening of the event.
A. Suspensive Condition
B. Alternative 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
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
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
A. Ex die
B. In diem
C. Legal period
D. Voluntary period
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21. A period established by law.
A. Ex die
B. In diem
C. Legal period
D. Voluntary period
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.
A. Pure obligation
B. Condition
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:
A. Pure obligation
B. Condition
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L!S and ETHICS
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.
A. Pure obligation
B. Condition
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.
A. Joint 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
C. Mixed Solidarity
D. Solo Solidarity
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31. When the solidarity exists both among the creditors and the debtors at
the same time, this is called
C. Mixed Solidarity
D. Solo Solidarity
32. An obligation which is capable of partial performance.
A. Joint obligation
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:
A. Joint obligation
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
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L!S and ETHICS
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.
A. Joint obligation
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.
A. Partial
B. Complete
C. Express
D. Implied
44. A remission when it is shown by words or declaration of the obligee.
A. Partial
B. Complete
C. Express
D. Implied
45. A remission when it is inferred from the acts or conduct of the obligee.
A. Partial
B. Complete
C. Express
D. Implied
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L!S and ETHICS
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.
B. Voluntary 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.
B. Total 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:
A. True novation
B. Real novation
53. A novation where another person is sustained in place of the debtor or
he is subrogated to the rights of the creditor.
A. True novation
B. Real novation
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
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.
A. Contracts
B. Obligation
C. Quasi-delicts
D. Condition
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L!S and ETHICS
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.
D. Deliberation
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
D. Deliberation
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
D. Deliberation
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.
A. Express contract
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L!S and ETHICS
66. A contract that has already been performed.
A. Express contract
67. A contract that has not yet performed.
A. Express contract
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.
C. Real contract
70. A contract where only one of the parties has an obligation such as in
commodatum or gratuitous deposit.
C. Real contract
71. A contract that creates reciprocal obligations.
C. Real contract
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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
A. Contrary to law
B. Against moral
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
A. Contrary to law
B. Against moral
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
A. Contrary to law
B. Against moral
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L!S and ETHICS
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.
C. Onerous Contract
79. A classification of contracts as to its cause where the cause is the
mutual undertaking or promise of either of the contracting parties.
C. Onerous Contract
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.
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L!S and ETHICS
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.
B. Nominal Damages
C. Moral Damages
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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.
B. Nominal Damages
C. Moral Damages
92. Damages that are reasonable compensation for the injury.
B. Nominal Damages
C. Moral 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.
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

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