Question 1

ABS-CBN entered into a contract with WR under certain terms and conditions. Both parties violated their contract, to the extent that WR transferred to another station despite the contract.
A)ABS-CBN can rescind the contract because of material breach committed by WR.
B)WR can rescind the contract due to violations committed by ABS-CBN.
C)The court will not grant rescission because of mutual breach.
D)The court will not rescind the contract, but will just temper the award of damages in its judgment.

Accepted Answer

D

Question 2

What is the remedy if a document does not reflect the true intention of the parties?
A)File an action to annul.
B)File an action to nullify.
C)File an action for reformation.
D)File an action to enforce.

Accepted Answer

An action for reformation is the appropriate remedy when a written document fails to reflect the true intentions of the parties involved due to a mistake in drafting. This legal action seeks to reform the document to accurately represent the agreement or intention of the parties.

Question 3

Who may file an action to annul a contract?
A)Any person.
B)A party primarily or subsidiarily bound.
C)The State as protector of the rights of its citizens.
D)Heirs of a party.

Accepted Answer

A party primarily or subsidiarily bound may file an action to annul a contract because they have a direct interest in the contract's validity.

Question 4

What is the remedy of a party whose right of first refusal to buy a property was violated?
A)Action for declaration of nullity of the contract.
B)Action for rescission.
C)Action for annulment.
D)Action to declare the contract unenforceable.

Accepted Answer

The remedy for a violation of a right of first refusal is typically an action for rescission, which seeks to undo the contract made in violation of that right.

Question 5

In which of the following is a contract of sale not perfected?
A)Giving of downpayment.
B)Giving of earnest money.
C)Giving of option money.
D)Accepting the offer.

Accepted Answer

A contract of sale is not perfected with the giving of option money, as option money is merely an amount paid to bind an offer and give the payer the right to buy at a later date, but does not in itself create an obligation to buy or sell.

Question 6

The following statements are correct, except:
A)A right of first refusal is without any consideration.
B)In granting a right of first refusal, the period has yet to be determined at a future time.
C)In granting a right of first refusal, the amount to be paid will be determined at a future time.
D)A right of first refusal must be supported by a consideration in the form of money to be binding. (Vasquez v. CA)

Accepted Answer

A right of first refusal does not necessarily need to be supported by monetary consideration to be binding, as long as there is some form of consideration.

Question 7

All the statements below are correct, except:
A)An option contract is separate and distinct from the contract of sale.
B)An option contract must be supported by consideration distinct from the price.
C)An option contract can only be supported by consideration in the form of money.
D)An option contract can be supported by consideration in the form of an undertaking.

Accepted Answer

An option contract can be supported by consideration in various forms, not just money. Consideration can include any value given by one party to another, such as an undertaking, service, or even another item of value.

Question 8

A and B entered into a contract for A to construct a 20-door apartment for B. Payment shall start after the construction of ten (10). A subsequent agreement was entered into that payment will start after construction of seven (7). What is the effect of the subsequent agreement?
A)It is extinguished the obligation partly because of novation.
B)It is a modificatory novation as there was a change in the principal terms and conditions of the contract.
C)It is an extinctive novation as the two (2) agreements are incompatible.
D)It did not alter the relationship as it has no effect at all.

Accepted Answer

The subsequent agreement changed the original terms regarding when payment should start, from after the construction of ten doors to after seven. This constitutes a modificatory novation, as it modifies the principal conditions of the original contract without extinguishing it.

Question 9

A entered into a contract of sale over B's house and lot but since there is a balance which remained unpaid, A executed a mortgage over the house and lot. A failed to pay. Can B rescind the contract?
A)Yes, because of material and substantial breach.
B)Yes, because there was delay in the payment of the price.
C)No, because the relationship is no longer that of buyer and seller, but mortgagor and mortgagee.
D)No, because the remedy is to foreclose the mortgage, rescission not being the principal remedy, but merely subsidiary.

Accepted Answer

The primary remedy for non-payment in a mortgage is foreclosure, not rescission, which is a subsidiary remedy.

Question 10

A, was a consistent scholar at a prestigious university enjoying free tuition fees, books, clothing and housing allowances and was given a cash allowance of ₱25,000.00 per month. Due to some family problems, he decided to go back to General Santos City and enrolled at Holy trinity College, but before he could obtain his credentials, he was required to refund the amount of ₱300,000.00 equivalent to the privileges he enjoyed as that was the condition in the scholarship grant. Can he recover the amount?
A)No, because the contract is the law between the parties.
B)No, because of the principle of mutuality of contracts.
C)Yes, because the stipulation is contrary to morals and public policy. (Cui v. Arellano Univ., May 30, 1961. Art. 1306, NCC)
D)No, because of the principle of solution indebiti.

Accepted Answer

The correct answer is C because the stipulation requiring the refund of the benefits received under the scholarship upon leaving the university is considered contrary to morals and public policy, as established in the case of Cui v. Arellano University.

Question 11

X brought a house and lot from Y valued at ₱5M. He paid ₱3M and for the balance, he executed a promissory note with interest at 10% to be paid within 90 days. ABC Corporation executed a surety for the balance. X failed to pay, hence, ABC paid the amount and sued X for the interest and the principal. X contended that he is not bound due to novation when Y accepted the security. Is X correct?
A)Yes, because there is complete incompatibility between the PN and the surety bond.
B)No, because the two contracts, PN and surety can stand together, the surety being merely an accessory to the original contract.
C)Yes, because of implied novation.
D)Yes, because the surety is a new and separate contract.

Accepted Answer

The correct answer is B because the presence of a surety agreement does not extinguish the original obligation under the promissory note. The surety agreement acts as an accessory contract, providing additional security for the fulfillment of the principal obligation. There is no novation unless there is a clear and unequivocal agreement to replace the original obligation with a new one, which is not implied by merely taking a surety.

Question 12

State the effect of illegal or immoral conditions in donations con causa onerosa. (onerous donations.)
A)The condition is considered as not imposed regardless of whether negative or positive.
B)Since the donations are governed by the law on contracts, the impossible or illicit conditions annul the obligation dependent upon the condition where the condition is positive and suspensive.
C)The illegal condition annulled the donation/contract even if the impossibility merely supervened.
D)Impossible or illegal conditions do not annul totally the obligations which depend upon them.

Accepted Answer

Since onerous donations are treated similarly to contracts, the law on contracts applies, which states that impossible or illicit conditions in a positive and suspensive manner annul the obligation that depends on such conditions.

Question 13

A sent a document letter to B and obligated himself to give him ₱10M when he will feel like doing it. A year later, B wanted to enforce the commitment of A. What would be your advice if you were the counsel?
A)I would advice him to enforce it because the letter is akin to a contract.
B)I would advice him to enforce it because the letter is a source of a demandable obligation.
C)I would not advice him to enforce since the promise is void as the performance depends upon the sole will of A. (Art. 1182, NCC)
D)I would advice him to enforce because the letter is an express acknowledgment of an obligation.

Accepted Answer

The promise made by A is void because its fulfillment is solely based on A's discretion or will, making it non-binding and unenforceable as per Article 1182 of the New Civil Code (NCC).

Question 14

A and B entered into a contract of sale over A's property. The document that evidences the contract did not state how much was paid, but A delivered the property to B. What is the nature of the contract?
A)Void.
B)Valid.
C)Unenforceable.
D)Rescissible.

Accepted Answer

The contract is valid because the essential element of consent and object are present. The absence of a stated price does not automatically invalidate a contract of sale, especially if the property has been delivered, indicating agreement between the parties.

Question 15

A school granted scholarship to EC but subject to the condition that if he will transfer to another school, he will refund all benefits he has already enjoyed. Is the stipulation valid?
A)Yes, because of the principle of mutuality of contracts.
B)Yes, because of the principle of relativity of contract.
C)No, because it is contrary to morals and public policy.
D)No, because it is contrary to law.

Accepted Answer

The answer of A school granted scholarship to EC but...

Question 16

When A borrowed money from B, the latter gave him a check for ₱10M as it was a Sunday. Was the contract of mutuum perfected?
A)Yes, because the contract is valid in any form.
B)Yes, because the delivery of the check in an evidence of perfection.
C)Yes, because of the principle of mutuality.
D)No, unless the proceeds of the check shall have been delivered.

Accepted Answer

The contract of mutuum, which is a loan of money, is perfected upon the delivery of the object of the contract. In this case, the delivery of the check does not constitute delivery of the money itself. The contract is only perfected when the proceeds of the check are actually delivered to the borrower.

Question 17

A induced B to violate his contract with C resulting in damage to C. Under what rule is A liable for damages?
A)Liability is based on contract.
B)Liability is based on crime.
C)Liability is based on tort.
D)there is no basis for liability of A die to lack of privity.

Accepted Answer

Liability is based on tort because inducing someone to breach a contract falls under the category of tortious interference with a contract, which is a civil wrong.

Question 18

The following are void contracts, except:
A)Where the stipulation is contrary to law, public order, public policy, morals.
B)Where the object is inexistent.
C)Where the price or consideration is not reflected in the document that evidences that contract.
D)Where the stipulation refers to an impossible condition.

Accepted Answer

Contracts where the price or consideration is not reflected in the document are not automatically void. The absence of a stated price or consideration in the contract document does not necessarily render a contract void, as the price can sometimes be determined by the context of the agreement or by applicable laws or regulations. In contrast, contracts with objects that are inexistent, stipulations contrary to law, public order, public policy, morals, or that refer to impossible conditions are generally considered void.

Question 19

What is the nature of a contract where the buyer did not pay the price?
A)Void.
B)Rescissible
C)Voidable.
D)Unenforceable.

Accepted Answer

A contract where the buyer did not pay the price is rescissible. This means that the contract is valid until it is rescinded or annulled due to the failure of the buyer to fulfill the obligation of payment.

Question 20

A sold his house and lot to B for ₱10M payable in 10 monthly installments. B paid ₱9M but failed to pay the last installment. What is the remedy of A?
A)Can file an action to declare the contract void.
B)Can file an action to rescind the contract.
C)Can file an action to enforce and collect the balance.
D)Can file an action to rescind.

Accepted Answer

C)Can file an action to enforce and collect the balance. This is because B has already paid a significant portion of the price, and A's primary interest is likely in collecting the remaining balance rather than rescinding the contract entirely.

Quiz 19: Contractual Obligations and Remedies

ABS-CBN entered into a contract with WR under certain terms and conditions. Both parties violated their contract, to the extent that WR transferred to another station despite the contract.

What is the remedy if a document does not reflect the true intention of the parties?

Who may file an action to annul a contract?

What is the remedy of a party whose right of first refusal to buy a property was violated?

In which of the following is a contract of sale not perfected?

The following statements are correct, except:

All the statements below are correct, except:

A and B entered into a contract for A to construct a 20-door apartment for B. Payment shall start after the construction of ten (10) . A subsequent agreement was entered into that payment will start after construction of seven (7) . What is the effect of the subsequent agreement?

A entered into a contract of sale over B's house and lot but since there is a balance which remained unpaid, A executed a mortgage over the house and lot. A failed to pay. Can B rescind the contract?

State the effect of illegal or immoral conditions in donations con causa onerosa. (onerous donations.)

A sent a document letter to B and obligated himself to give him ₱10M when he will feel like doing it. A year later, B wanted to enforce the commitment of A. What would be your advice if you were the counsel?

A and B entered into a contract of sale over A's property. The document that evidences the contract did not state how much was paid, but A delivered the property to B. What is the nature of the contract?

A school granted scholarship to EC but subject to the condition that if he will transfer to another school, he will refund all benefits he has already enjoyed. Is the stipulation valid?

When A borrowed money from B, the latter gave him a check for ₱10M as it was a Sunday. Was the contract of mutuum perfected?

A induced B to violate his contract with C resulting in damage to C. Under what rule is A liable for damages?

The following are void contracts, except:

What is the nature of a contract where the buyer did not pay the price?

A sold his house and lot to B for ₱10M payable in 10 monthly installments. B paid ₱9M but failed to pay the last installment. What is the remedy of A?