Deck 22: Contractual Obligations and Liabilities

Question 1

The guarantor paid the obligation of the debtor when demand is made. Can he ask for reimbursement?

A)No, because he is a voluntary payor.
B)No, because judgment has yet to be obtained against the debtor.
C)No, because he has not been able to exercise the benefit of excussion.
D)Yes, because the benefit of excussion is a right granted to him which can be waived.

Answer 1

Yes, because the benefit of excussion is a right granted to him which can be waived.

Question 2

The following statements are correct, except:

A)There can be a continuing guaranty.
B)There can be a continuing surety.
C)There can be a continuing chattel mortgage.
D)There can be a continuing real estate mortgage.

Answer 2

There can be a continuing chattel mortgage.

Question 3

A obtained a loan from Metrobank. As security, he delivered and deposit certificate maturing on April 29, 2011. A failed to pay, hence, the bank encashed the deposit certificate. A contended that it is pactum commissorium. Is A correct?

A)Yes, because the encashment is an automatic appropriation of the security.
B)A is not correct because the bank had yet to perform an act to appropriate the money deposited.
C)A is not correct because the act done was a matter of compensation. (BPI v. CA, 232 SCRA 302. Art. 1980, NCC)
D)A is correct because there can be no compensation since the relationship between the bank and A is one of deposit.

Answer 3

A is not correct because the act done was a matter of compensation. (BPI v. CA, 232 SCRA 302. Art. 1980, NCC)

Question 4

A entered into a contract whereby he obligated himself to pay B on or before September in the form of Australian currency. When the obligation became due and demandable, A delivered to B Australian currency. Is A correct?

A)B can refuse to accept the payment because the currency being offered is not legal tender in the Philippines.
B)A is correct in offering Australian currency because of the contract.
C)A is not correct because the stipulation to pay in Australian currency is void because it is contrary to law.
D)A is not correct because the stipulation to pay in the form of another currency is void because it is contrary to public policy. (RA 8183)

Question 5

A & B entered into a contract of loan in the amount of ₱1M with interest at 192% per annum. When the obligation became due and demandable B failed to pay despite demand, hence, A filed a complaint against B. On the interest rate, what is a valid contention of B?

A)B can ask the court to declare it void on the ground that it is contrary to the Usury Law.
B)B can ask the court to declare it void and be not liable at all.
C)B can ask the court to delacre it void on the ground that it is unconscionable, hence, contrary to morals and the court may fix the interest rate at its discretion.
D)A can contend that the interest rate is valid because of the principle of binding effect of contracts.

Question 6

X and Y entered into a contract. X agreed to deposit ₱50,000 with Y's account to make it appear that Y had sufficient capitalization in forming an incorporation. They agreed that Y should return the money plus 12% interest within 30 days. What is the nature of the contract?

A)Mutuum, because of the stipulation as to interest.
B)Mutuum, because Y acquired ownership upon depositing the amount in his account.
C)Commodatum, because Y never acquired ownership over the money as he was under obligation to return it and it was only for purposes of exhibiting that he had sufficient capital.
D)Commodatum, because the stipulation for the payment of interest did not convert it to mutuum.

Question 7

Which of the following statements is not true about the dragnet clause?

A)It is one specifically phrased to subsume all debts of past or future origins.
B)It operates as a convenience and accommodation to the borrowers as it makes available additional funds without executing additional security documents.
C)It is also known as the "blanket mortgage clause"
D)It is different from a continuing mortgage clause.

Question 8

What is a contract of precarium?

A)It is a contract by virtue of which a person called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.
B)It is a contract by virtue of which a person binds himself solidarily with the principal debtor to fulfill the obligation.
C)It is an accessory, real and unilateral contract by virtue of which the debtor or a third person delivers to the creditor or to a third person movable property as security for the performance of the principal obligation.
D)It is a contract of commodatum where the bailor has the right to demand the return of the thing which is the object of the contract at will.

Question 9

A entered into a contract of loan with a bank. They stipulated that if there will be a law or BSP circular that will allow the increase in the interest rate, the bank will increase it. Is the stipulation valid?

A)Yes, because of the principle of liberty of contracts.
B)Yes, because of the principle of mutuality of contracts.
C)No, considering that there is no corresponding de-escalation clause.
D)Yes, because the increase is not unilateral.

Question 10

Which of the following is correct if the interest rate in a loan is void?

A)The contract is totally inexistent.
B)The creditor cannot recover interest at all.
C)The creditor can recover legal rate of interest.
D)The court shall rule as if no interest has been agreed upon and contrary to law.

Question 11

A checked in at ABC Hotel Corporation with his valuables. While shopping nearby, she left the room for half a day but when she went back, all his valuables were gone as her room was ransacked with the use of force. She filed a complaint for damages. Is the hotel keeper liable?

A)The hotel keeper is liable as depositary.
B)The hotel keeper is not liable because under the contract, it is not liable in case of loss of things belonging to the guest for any reason.
C)The hotel keeper is not liable because of force majeure.
D)The hotel keeper is liable because it is its duty to protect the properties of its guests.

Question 12

A obtained ₱50,000.00 from B to be placed in A's safety deposit box. What is the nature of the contract?

A)The contract is a loan.
B)It is a contract of lease.
C)It is a commodatum.
D)It is a deposit.

Question 13

In case of contract of deposit, the depository has the following rights or obligations except:

A)To keep the thing safely.
B)To return the thing deposited.
C)To make use of the thing deposited with the permission of the depositor.
D)To deposit the thing deposited with a third person when there is an express stipulation allowing the same.

Question 14

What is the nature of the contract of rent of safety deposit boxes?

A)Mutuum
B)Commodatum
C)Deposit
D)Lease.

Question 15

When is the hotelkeeper shall be liable for the loss of the things belonging to the guests?

A)If the things were actually delivered or surrendered to the hotelkeeper.
B)If the guests did not sign any waiver of liability.
C)If the hotelkeeper was notified of the valuables and the guests took the necessary measure to the care and vigilance over the same.
D)If the loss was due to the act of a thief done with the use of irresistible force.

Question 16

A lent money to B in the amount of ₱3M and executed a mortgage over his house and lot to secure the payment of the obligation with a condition that if he fails to pay, A shall became the owner of the property. Is the stipulation valid?

A)Yes, because the contract is the law between the parties.
B)Yes, because of the doctrine of mutuality of contracts
C)No, because it is a case of pactum commissorium.
D)Yes, because of the liberty of contracts.

Question 17

In the question above, suppose B failed to pay and A foreclosed the mortgage. Is A entitled to the balance?

A)No, because the law on pledge is applicable to the law on mortgages.(Arts. 2041,2087,2115,NCC)
B)Yes, because there is no law that prohibits recovery of deficiency under the mortgage laws.
C)Yes, because while the law on pledge applies to the law on mortgage, the same is true if there is no inconsistency between the two (2) laws. ( Pameca Word Treatment Corp. v. CA)
D)No, because of the principle of solution indebt.

Question 18

A & B entered into a contract of pledge, where B delivered his car to A as security for the payment of an obligation in the amount of ₱2M. For failure of B to pay what is the remedy of A?

A)Appropriate the car as his own as provided for in the contract
B)Sell the car but must deliver to B the excess.
C)Sell the car but cannot recover any deficiency despite the agreement.
D)Sell the car and recover the deficiency because of the agreement in the contract of pledge.

Question 19

To secure the payment of his obligation, A pledged to his surety C, his car who sold the car after paying the obligation of A. The obligation was ₱2M but the car was sold for only ₱1M. Can the surety recover the deficiency?

A)Yes, otherwise, there would be solution indebiti.
B)Yes, no law prohibits him from doing so as he is not the direct creditor.
C)No. In the foreclosure of a pledge, if the price of the sale is less than the indebtedness secured by the pledge, the creditor shall not be entitled to recover the deficiency, notwithstanding any stipulation to the contrary.
D)Yes, if there is a stipulation.

Question 20

A obtained a loan from B secured by a mortgage over his house & lot. B failed to pay hence, A foreclosed the mortgage but it was sold for less than the amount of the obligation. Can B recover the deficiency?

A)A cannot recover the deficiency because the law on pledges are applicable to the law on mortgages where there is a prohibition against recovery of deficiency.
B)A can recover the deficiency as there is nothing in the law that prohibits the same.
C)A can appropriate the object because the contract provides for it.
D)A can sue B for sum of money and foreclose the mortgage if B cannot pay the judgment obligation.

Question 21

A placed a bet of ₱10,000.00 that San Beda would win the NCAA basketball championship. B accepted the bet. But B refused to pay after SBC won. Is B correct?

A)Yes, because of the principle of mutuality of contracts.
B)Yes, because of the principle of liberty of contracts.
C)No, because the law prohibits betting in basketball even if it is not a game of chance.
D)Yes, because basketball is a game of skill and not of chance.

Question 22

A sold his car to B, but the latter failed to register the car under his name. While B was driving the car, it met an accident resulting in injuries to C. Who may be liable?

A)C can hold A liable alone as he is the registered owner of the car.
B)C can sue A and B as they are solidarily liable.
C)C can sue B alone as the execution of the document of sale and delivery of the car conferred ownership upon him.
D)C can sue B, but A can file a third party complaint against B for reimbursement if he is adjudged liable.