No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

Regulatory Framework for Business Transactions

Law on Obligation (Part - Two)

1) Which of the following is not a mode of extinguishment of an obligation?

a. Fulfillment of resolutory condition
b. Arrival of period ex die
c. Arrival of period in diem
d. None of the above

2) What is the nature of remission as a mode of extinguishing obligation?

a. It is essentially gratuitous and requires acceptance by the obligor.
b. It is generally gratuitous and requires acceptance by the obligor.
c. It is essentially gratuitous and requires acceptance by the obligee.
d. It is generally gratuitous and requires acceptance by the obligee.

3) What is the effect of prescription to an obligation?

a. It makes the obligation voidable.
b. It converts the natural obligation into a civil obligation.
c. It makes the obligation unenforceable by court action.
d. It nullifies the obligation.

4) Which of the following combinations of prescriptive period of the right to file an action over a civil
obligation is correct?
a. Quasi-contract – Ten (10) years
b. Written contract – Six (6) years
c. Quasi-delict – Four (4) years
d. Oral contract – five (5) years

5) Mr. D borrowed P100,000 from Mr. C with maturity date on December 31, 2001. Mr. C failed to
assert his right for almost 9 years and 6 months. What defense may be set up by Mr. D if C will
file an action to collect a sum of money against D?
a. Estoppel by laches
b. Estoppel by deed
c. Estoppel in pais
d. Prescription

6) Mr. Ant Man posted in his facebook public account that he is the managing partner of ABC Law
Firm when in fact he is not connected such law firm. In case of bankruptcy of ABC Law Firm,
what type of estoppel may be invoked by the creditors of ABC Law Firm to make Mr. Ant Man
personally liable to the unpaid obligations of ABC Law Firm?
a. Estoppel by laches
b. Estoppel by deed
c. Estoppel in pais
d. None of the above

7) D obliged himself to deliver a specific car to C if the latter will pass the CPA Board Examination.
After C passes the CPA Board Examination, D delivered the agreed car to C. What mode of
extinguishing obligation is present above?
a. Remission
b. Payment
c. Confusion
d. Compensation

8) D borrowed P10,000 from C, a minor. At the maturity date of the loan, D paid P10,000 to C, who
is already of age of majority. After such payment, C deposited P1,000 to his bank account and
used P2,000 for his tuition fees. Unfortunately, he lost the remaining P7,000. Up to what extent
is the payment of D to C valid?
a. P1,000
b. P2,000
c. P3,000
d. P10,000

1|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

9) D has an obligation to deliver a specific Toyota Fortuner car to C. Which of the following
statements is incorrect?
a. D cannot compel C to accept a specific Toyota Landcruiser even it is more valuable than
the Toyota Fortuner car.
b. C cannot ask a third person to deliver the specific Toyota Fortuner if D refuses to perform
his obligation despite repeated demands from C.
c. D may deliver a specific Toyota FJ Cruiser instead of the specific Toyota Fortuner if C
agrees.
d. C may compel D to deliver a specific Toyota Landcruiser if C will not be able to perform
the prestation despite repeated demands.

10) C is an avid fan of D. D has an obligation to dance on the birthday celebration of C. Which of the
following statements is incorrect?
a. D cannot validly perform a song number instead of a dance number on the birthday
celebration of C even if the fair value of the services of singing is more than the value of
dancing.
b. C may file an action for exact fulfillment against D if the latter will not able to perform
the prestation despite repeated demands from D.
c. D is not allowed perform a song number instead of a dance number even if C agrees.
d. C may ask a third person to perform the dance number at the expense of D provided
there is an agreement with D.

11) D has an obligation to deliver 10 sacks of rice for the food business of C. Which of the following
statements is incorrect?
a. C may compel D to deliver Japanese brown rice, the most expensive and highest quality
rice in the market.
b. D may compel C to accept WagWag rice, the cheapest and least quality rice in the
market.
c. Both a and b
d. Neither a nor b

12) What currency shall be used to settle debts in money?

a. Foreign currency
b. Philippine Peso currency
c. Currency stipulated by the contracting parties
d. Legal tender in the Philippines

13) Which of the following is considered legal tender in the Philippines?

a. Manager’s check
b. Cashier’s check
c. Both a and b
d. Neither a nor b

14) Which of the following statements about the limitation of legal tender is incorrect?
a. Manager’s check or cashier’s check is as good as cash, therefore, considered a legal
tender.
b. The legal tender power of Philippine centavo coins is up to P100 only.
c. The legal tender power of Philippine peso coins is up to P1,000 only.
d. The legal tender power of Philippine peso currencies (paper bills) is unlimited.

15) D is indebted in the amount of P5,000 to C. D issued a check to C who voluntarily accepted such
form of payment. When will this check produce the effect of payment?
a. From the date the check becomes stale.
b. From the date the check is certified by the drawee-bank
c. From the date the check is encashed
d. Any of the above

16) In case an extraordinary inflation or deflation of the currency stipulated should supervene in an
obligation to pay a sum of money, what value of currency shall be used for the basis of payment
in the absence of agreement to the contrary?
a. The value of the currency at the time of establishment of the obligation.
b. The value of the currency at the time of actual payment of the obligation.
c. The value of the currency at the agreed time of payment of the obligation.
d. The value of the currency at the end of reporting period.

2|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

17) What is the place for the performance of an obligation to give?

a. Place designated in the obligation
b. Place where the thing is located at the time of constitution of obligation
c. Place where the debtor is domiciled
d. Place where the creditor is domiciled.

18) D, a resident of Manila City, is liable to deliver a 2021 Limited Edition Landcruiser to C, a resident
of Taguig City. At the time of constitution of the obligation, a 2021 Limited Edition Landcruiser
was located in Makati City while another 2021 Limited Edition Landcruiser was located in Pasay
City at the agreed date of delivery. Where shall the car be delivered?
a. Manila City
b. Taguig City
c. Makati City
d. Pasay City

19) D, a resident of Lipa City, is liable to deliver a car with plate number ABC-123 to C, a resident of
Batangas City. At the time of constitution of the obligation, the said car was located in Tanauan
City while at the date of delivery, the said car was located in Santo Tomas City. Where shall the
car be delivered?
a. Lipa City
b. Batangas City
c. Tanauan City
d. Santo Tomas City

20) D is indebted in the amount of P100,000 to C. The said loan was secured by mortgage on M’s
land. Aside from that, G guarantees in writing the payment of the loan. On the maturity date of
the loan, T paid P120,000 to C for D’s loan without D’s knowledge. Which of the following
statements is incorrect?
a. T cannot go after G in case D will become insolvent.
b. T cannot foreclose the mortgage on M’s land in case D will default on the payment of the
loan.
c. T may ask for reimbursement from D in the amount of P120,000.
d. T may ask for reimbursement from D in the amount of P100,000.

21) When is payment by a debtor of his obligation to a third person instead of a creditor valid?
a. When in bad faith, the debtor pays to one in possession of the credit.
b. When, with notice of the assignment of the credit, the debtor pays to the original
creditor.
c. When the payment to a third person redounded to the benefit of the creditor.
d. Any of the above

22) D is indebted in the amount of P12,000 to C. At the maturity date of the obligation, D and C
agreed that a specific laptop of D will be transferred to C in satisfaction of the loan. The fair
value of the said laptop is P10,000 while its historical cost is P11,000 with accumulated
depreciation of P2,000. What special mode of payment happened after the delivery of the said
laptop to C?
a. Application of payment
b. Dation in payment
c. Payment by cession
d. Tender of payment plus consigation

23) Using the same data in number 22, what law shall govern this special mode of payment?
a. Law on sales
b. Law on obligation
c. Law on contract
d. Financial Rehabilitation and Insolvency Act of 2010

24) Using the same data in number 22, how much obligation of D is extinguished by this special
mode of payment in the absence of contrary agreement?
a. P9,000
b. P10,000
c. P11,000
d. P12,000

3|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

25) It refers to a special form of payment which involves the voluntary abandonment of the
universality of the property of the debtor for the benefit of his creditors, in order that such
property may be applied to the payment of the credits.
a. Application of payment
b. Dation in payment
c. Payment by cession
d. Tender of payment plus consigation

26) Using the same data in number 25, what law shall govern this special mode of payment?
a. Law on sales
b. Law on obligation
c. Law on contract
d. Financial Rehabilitation and Insolvency Act of 2010

27) In the absence of agreement to the contrary, who has the right of application of payments?
a. Debtor
b. Creditor
c. Both debtor and creditor
d. Third person

28) D has several matured obligations to C consisting of: Accounts Payable – P3,000,000; Note
Payable – P1,000,000; Loan Payable of P5,000,000 with accrued Interest Payable of P500,000;
and Mortgage Payable – P2,500,000. D paid P3,000,000 to C and the former designated the
payment to the accounts payable. In which obligation shall the P3,000,000 payment be applied?
a. Accounts payable
b. Note payable
c. Loan payable and interest payable
d. Mortgage payable

29) Using the same data in preceding number but assuming D paid P9,000,000 to C without
designating his payment, how much out of P9,000,000 shall be applied to note payable?
a. P1,000,000
b. P750,000
c. P250,000
d. None

30) It is the manifestation made by the debtor to the creditor of his desire to comply with his
obligation with the offer of immediate performance.
a. Tender of payment
b. Consignation
c. Dacion en pago
d. Cession

31) D is indebted in the amount of P100,000 to C. At the maturity date of the loan, D tendered
P100,000 cash in the form of P20 bills (Philippine peso currency) to C who refused to accept the
form of payment due to inconvenience. What is the legal remedy available to D?
a. Dacion en pago
b. Application of payment
c. Consignation
d. Cession

32) In which of the following instances is prior valid tender of payment by the debtor no longer
necessary in order for the consignation to be valid?
a. When the creditor is present
b. When, with just cause, the creditor refuses to give a receipt
c. When the title of the obligation has been lost
d. When creditor is incapacitated to receive the payment at the time it is due

33) When two or more persons claim the same right to collect the prestation from the debtor in the
same obligation, what special civil action shall be filed by the debtor before the trial court in
order to determine a matter of claim or right to property held by a third party?
a. Special civil action of mandamus
b. Special civil action of quo warranto

4|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

c. Special civil action of interpleader

d. Special civil action of injunction

34) In observance of right to procedural due process of the creditor, how many notices must be
given by the debtor to the creditor in order for the consignation to be valid?
a. At least one notice
b. At least two notices
c. At least three notices
d. At least four notices

35) A, B and C wrote a promissory note which states “I promise to pay P30,000 to D.” The said loan
is secured by a written contract of guaranty signed by G. At the maturity date of the loan, A
tendered P30,000 cash to D as payment for the loan but the latter refused to accept the payment
which resulted to the consignation of the said legal tender to the trial court. After the
consignation, instead of obtaining the P30,000 cash from the trial court, D authorized A to
withdraw the P30,000 cash from the court. After A’s withdrawal of P30,000 from the court, which
of the following statements is incorrect?
a. D may still go after G.
b. D may legally compel B to pay P10,000.
c. D may legally compel C to pay P10,000.
d. D may legally compel A to pay P30,000.

36) In which type of obligation to deliver a thing is extinguishment of obligation by reason of loss due
to fortuitous event inapplicable?
a. Obligation to deliver a specific thing
b. Obligation to deliver a generic thing
c. Both a and b
d. Neither a nor b

37) When is the debtor fully exempted from liability as a result of loss due to fortuitous event?
a. When the loss occurs after the debtor has incurred delay
b. When the debtor has promised to deliver the same thing to two or more different parties
c. When the fault or negligence of the debtor concurs with the fortuitous event in causing
the loss
d. When fortuitous event is the sole, immediate and proximate cause of the loss

38) D is liable to deliver a specific car to C. At the maturity date of the obligation, the said car was
robbed by R. After the robbery, the car was destroyed by a lightning. Which of the following
statements is correct?
a. D is the only person who can file a civil action against R.
b. C may file a civil action against R car regardless of the consent of D.
c. Due to fortuitous event, the obligation of R is extinguished.
d. None of the above

39) Which of the following modes of extinguishment of obligation may result to tax liability for
donor’s tax on the part of the creditor?
a. Merger
b. Novation
c. Remission
d. Compensation

40) M borrowed P4,000 from C evidenced by a promissory note issued by M to C. In order to secure
the said loan, P pledged and delivered his specific laptop to C. At the maturity date of the loan, C
voluntarily returned the specific laptop to P. Which contract is extinguished?
a. Contract of loan
b. Contract of pledge
c. Both a and b
d. Neither a nor b

41) M borrowed P3,000 from C evidenced by a promissory note issued by M to C. In order to secure
the said loan, G signed a deed of guaranty in favor of C. At the maturity date of the loan, C
voluntarily returned promissory note to M. Which contract is extinguished?
a. Contract of loan
b. Contract of guaranty

5|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

c. Both a and b
d. Neither a nor b

42) It is a mode of extinguishing obligation that occurs where there is meeting in one person of the
qualities of creditor and debtor with respect to the same obligation.
a. Offset
b. Novation
c. Confusion
d. Renunciation

43) M issued a negotiable promissory note payable to order of P. P indorsed and delivered the note
to A who subsequently indorsed and delivered the note to B. Afterwards, B indorsed and
delivered the note to C who subsequently indorsed and delivered the note to N. Which contract is
extinguished?
a. Contract of loan made by M
b. Contract of guaranty made by P
c. Contract of guaranty made by A
d. All of the above

44) Using the same data in preceding number but assuming C subsequently indorsed and delivered
the note to M, which contract is extinguished?
a. Contract of loan made by M
b. Contract of guaranty made by P
c. Contract of guaranty made by A
d. All of the above

45) A, B and C issued a promissory note which states “We promise to pay P60,000 to D and E.” E
indorsed and delivered the note to A. How much obligation is extinguished by merger?
a. P10,000
b. P20,000
c. P30,000
d. P60,000

46) A and B issued a promissory note which states “I promise to pay P60,000 to C, D and E.” D
indorsed and delivered the note to B. How much obligation is extinguished by merger?
a. P10,000
b. P20,000
c. P30,000
d. P60,000

47) A, B and C issued a promissory note which states “We promise to pay P60,000 to D and E,
solidary creditors.” E indorsed and delivered the note to C. How much obligation is extinguished
by merger?
a. P10,000
b. P20,000
c. P30,000
d. P60,000

48) A and B issued a promissory note which states “I promise to pay P60,000 to C, D and E, solidary
creditors.” C indorsed and delivered the note to A. How much obligation is extinguished by
merger?
a. P10,000
b. P20,000
c. P30,000
d. P60,000

49) It is a mode of extinguishing to the concurrent amount, the obligations of those persons who in
their own right are reciprocally debtors and creditors of each other.
a. Remission
b. Compensation
c. Merger
d. Novation

6|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

50) It is a type of compensation which can be claimed by one of the parties who, however, has the
right to object to it.
a. Legal compensation
b. Conventional compensation
c. Judicial compensation
d. Facultative compensation

51) A has matured obligation to deliver one 30grams piatos cheese flavor to B while the latter has
matured obligation deliver one piatos one 30grams piatos barbeque flavor to former. What type
of compensation is applicable to this case?
a. Legal compensation
b. Conventional compensation
c. Judicial compensation
d. Facultative compensation

52) Ms. Yna deposited P1,000,000 cash to BPI under savings deposit account. Afterwards, Ms. Yna
applied for a credit card with BPI. She used his credit card and borrowed P100,000 from BPI with
maturity value of P103,000 on June 30, 2021. Upon arrival of June 30, 2021, how are the
obligations extinguished?
a. By legal compensation
b. By conventional compensation
c. By judicial compensation
d. By facultative compensation

53) Which of the following debts may become the subject matter of legal compensation?
a. Voidable debts
b. Unenforceable debts
c. Void debts
d. None of the above

54) Which of the following obligations may become the subject matter of legal compensation?
a. Obligation of a depositary in contract of deposit (depositum)
b. Obligation of a bailee in contract of commodatum
c. Obligation of a borrower in a contract of loan (mutuum)
d. Obligation to pay taxes

55) Which of the following obligations may become the subject matter of legal compensation?
a. Claim for future support due by a gratuitous title
b. Obligation to pay penalty in obligation with a penal clause
c. Civil obligation to pay damages arising from a crime
d. None of the above

56) L lend P100,000 cash to B. Due to B’s default in the payment of obligation, L posted malicious
and libelous statement in facebook against B. As a result, B filed a criminal case of libel against L
who was duly convicted by final judgment. The court awarded civil damages amounting to
P100,000 to B. Which of the following statements is correct?
a. L may legally collect P100,000 from B.
b. B may legally collect P100,000 from L.
c. Neither L nor B may collect from each other.
d. Both obligations are extinguished by legal compensation.

57) H and W are legally married. On June 1, 2021, W borrowed P100,000 cash from H that matures
on July 1, 2021. H is legally required to provide legal support to W in the amount of P50,000 per
month to be given at the start of each month. H has not yet provided to W the legal support for
the months of June 2021 and July 2021. If today is July 1, 2021, which of the following
statements is correct?
a. W may legally collect the June 2021 P50,000 monthly support from H.
b. H may legally collect the loan of P50,000 from W.
c. W may legally collect the July 2021 P50,000 monthly support from H.
d. H may legally collect the loan of P100,000 from W.

7|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

58) It is a mode of extinguishment of an obligation by the substitution or change of the obligation by

a subsequent one which extinguishes or modifies the first obligation.
a. Offset
b. Condonation
c. Merger
d. Novation

59) It is a type of novation that occurs there is such an incompatibility between the old and the new
obligations that they cannot stand together.
a. Subjective novation
b. Implied novation
c. Partial novation
d. Objective novation

60) Which of the following modification of terms of loan result to implied novation?
a. Shortening the term of the loan
b. Extension of the term of the loan
c. Both a and b
d. Neither a nor b

61) D borrowed (10-year) P100,000 with 12% per annum from C. C and D agreed that the 12%
interest will be given to T, who accepted the stipulation in his favor. The loan provides that in
case of non-payment of interest, the maturity value of the loan will become due and
demandable. The loan was secured by a mortgage on D’s land. D requested for the restructuring
of the loan from C that resulted to decrease in the term of a loan to 3 years without the
knowledge of T. Which of the following provisions is extinguished by the novation?
a. Contract of mortgage
b. Stipulation of 12% interest in favor of T
c. Acceleration clause in case of default in payment of loan
d. All of the above

62) In which type of novation involving the change of debtor is the consent of the creditor
mandatory?
a. Expromission
b. Delegacion
c. Both a and b
d. Neither a nor b

63) It is a type of novation involving the change of the debtor whereby the initiative does not
emanate from the original debtor and may be made even without his knowledge, since it consists
in a third person assuming the obligation and it logically requires the consent of the third person
(new debtor) and the creditor.
a. Expromission
b. Delegacion
c. Legal subrogation
d. Conventional subrogation

64) It is a type of novation involving the change of the debtor whereby the original debtor
(delegante) offers and the creditor (delegatario) accepts a third person (delegado) (new debtor)
who consents to the substitution, so that the consent of the three parties is necessary.
a. Expromission
b. Delegacion
c. Legal subrogation
d. Conventional subrogation

65) In which type of novation involving the change of debtor shall the new debtor's insolvency or
non-fulfillment of the obligations not give rise to any liability on the part of the original debtor?
a. Expromission
b. Delegacion
c. If the substitution of the debtor is without the knowledge or against the will of the debtor
d. Both a and c

8|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

66) In which type of novation involving the change of debtor will the new debtor's insolvency or non-
fulfillment of the obligations give rise to any liability on the part of the original debtor?
a. When said insolvency of new debtor was already existing and of public knowledge when
the original debtor delegated his debt
b. When said insolvency of new debtor is known to the old debtor when he delegated his
debt
c. Either a or b
d. Neither a nor b

67) It refers to a type of novation that resulted to the transfer of all the rights of the creditor to a
third person, who substitute him in all his rights.
a. Subrogation
b. Delegacion
c. Expromission
d. Confusion

68) It refers to a type of subrogation that resulted to substitution of creditor by agreement of original
parties and the new creditor.
a. Conventional subrogation
b. Legal subrogation
c. Delegacion
d. Expromission

69) D is indebted in the amount of P10,000 to C. With the agreement of D, T paid P8,000 to C for D’s
obligation to C. After such payment, D has remaining assets with realizable value of P3,000. How
much will be received by T out of such remaining assets of P3,000?
a. P3,000
b. P2,000
c. P1,000
d. P2,400

70) It refers to a type of subrogation which is never presumed and the substitution of new creditor is
applicable only exceptional cases provided by law.
a. Conventional subrogation
b. Legal subrogation
c. Delegacion
d. Expromission

71) Which of the following instances is not considered legal subrogation?

a. When a creditor pays another creditor who is preferred, even without the debtor’s
knowledge
b. When, even without the knowledge of the debtor, a person interested in the fulfillment of
the obligation pays, without prejudice to the effects of confusion as to the latter’s share
c. In contract of property insurance, when the insurance company pays the insured
d. When the voluntary payment by a third person of debtor’s obligation resulted to benefit
on the part of the debtor

72) D has two matured obligations to: (1) Creditor A amounting to P10,000 secured by chattel
mortgage on A’s car and (2) Creditor B amounting to P20,000 unsecured by any collateral. Which
voluntary payment will result to legal subrogation?
a. If Creditor A pays P20,000 to B in order to settle D’s obligation to B
b. If Creditor B pays P10,000 to A in order to settle D’s obligation to A
c. If Third Person T pays P20,000 to B in order to settle D’s obligation to B
d. If Third Person T P10,000 to A in order to settle D’s obligation to A

73) A, B and C issued a promissory note which states “We promise to pay P30,000 to D.” If A
voluntarily paid P30,000 to D at the maturity of the loan, what is the source of obligation by B
and C to A?
a. Legal subrogation
b. Quasi-contract
c. Quasi-delict
d. Crime

9|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : [email protected]

74) Using the same data in preceding number, how much may A validly collect from B if C becomes
insolvent?
a. P10,000
b. P20,000
c. P30,000
d. P15,000

75) A, B and C issued a promissory note which states “I promise to pay P30,000 to D.” If A
voluntarily paid P30,000 to D at the maturity of the loan, what is the source of obligation by B
and C to A?
a. Legal subrogation
b. Quasi-contract
c. Quasi-delict
d. Crime

76) Using the same data in preceding number, how much may A validly collect from B if C becomes
insolvent?
a. P10,000
b. P20,000
c. P30,000
d. P15,000

77) D is indebted in the amount of P1,000,000 to C. The said loan was secured by mortgage on M’s
land. Aside from that, G guarantees in writing the payment of the loan. On the maturity date of
the loan, M paid P1,000,000 to C for D’s loan without D’s knowledge. Which of the following
statements is correct?
a. M may go after G in case D will become insolvent.
b. The contract of loan and contract of mortgage remain to exist
c. M cannot go after D because the payment is without D’s knowledge.
d. T may only go after D.

78) O applied for property and accident insurance on his luxury car. While parked in a mall, his car
was accidentally bumped by the car driven by R. Since O’s luxury car is insured, he was able to
recover the damages caused to his car amounting to P100,000 from the insurance company
which paid the claim despite the absence of knowledge of R. Which of the following statements is
correct?
a. The insurance company may go after R despite the absence of consent of O.
b. The insurance company cannot go after R.
c. The insurance company may go after R but only in so far as the payment is beneficial.
d. The insurance company does not have action against R.

79) D deposited P400,000 cash to Banco Filipino which became bankrupt. D filed a claim before PDIC
who paid P400,000 cash to D. May PDIC go after the assets of Banco Filipino?
a. No unless Banco Filipino consent to such payment.
b. Yes but only in so far as the payment is beneficial to Banco Filipino.
c. Yes by virtue of legal subrogation.
d. No if the payment is against the will of Banco Filipino.

80) Which of the following modes of payment is onerous?

a. Novation
b. Compensation
c. Merger
d. All of the above

81) What is the term for the condition when the obligation will only arise after the arrival of
suspensive condition?
a. Condition precedent
b. Condition subsequent
c. Condition antecedent
d. Condition subsequent

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82) A owed B P10,000. B owed C P10,000. C owed A P10,000. What mode of extinguishing obligation
is present?
a. Confusion
b. Compensation
c. Merger
d. None of the above

83) Which of the following statements is the best description of a condition?

a. A term in a contract which provides that the contract will terminate on the happening of
a particular event.
b. A term in a contract, the consequences of breach of which cannot be determine until
after the breach has occurred and the seriousness of the effects of the breach can be
ascertained.
c. A term which must be satisfied before a contract can come into existence.
d. A term in a contract, nonperformance of which may result in rescission of the contract
and/or damage to the plaintiff.

84) ABC Furniture undertook to deliver to Mr. M specified pieces of tables. The contract had a penal
clause that any violation of the contract would entitle the aggrieved party to damages in the
amount of P10,000. The furniture delivered by ABC Furniture was made of substandard
materials. In a case filed by Mr. M, he was able to prove actual damages he sustained in the
amount of P20,000. If you were to decide based on legal ground, how much would you award to
Mr. M?
a. P30,000
b. P20,000
c. P10,000
d. P5,000

85) Roy and Carlos both undertook a contract to deliver to Sam in Manila a boat docked in Subic.
Before they could deliver it, however, the boat sank in a storm. The contract provides that
fortuitous event shall not exempt Roy and Carlos from their obligation. Owing to the loss of the
motor boat, such obligation is deemed converted into one of indemnity for damages. Is the
liability of Roy and Carlos joint or solidary?
a. Neither solidary nor joint since they cannot waive the defense of fortuitous event to
which they are entitled.
b. Solidary or joint upon the discretion of Sam.
c. Solidary since Roy and Carlos failed to perform their obligation to deliver the motor boat.
d. Joint since the conversion of their liability to one of indemnity for damages made it joint.

86) Demand is necessary in this situation for the debtor to be in delay:

a. When the time is a controlling motive.
b. When the obligor has rendered it beyond his power to perform.
c. When the obligation has been fulfilled.
d. When the debtor delivers a wrong thing on due date.

87) A, a minor, 15 years of age, together with her sisters B and C, both of legal age are jointly and
severally liable in a contract of loan to pay D the amount of P12,000. Upon maturity of the
obligation, A:
a. is liable to pay only the amount which benefits her.
b. is liable to pay the amount of P60,000.
c. is liable to pay the amount of P30,000.
d. is liable to pay her the whole amount of P120,000.

88) Which of the following circumstances will payment of lesser amount fail to discharge a debt,
despite a creditor’s promise to accept the lesser amount in full satisfaction of the debt?

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a. When the creditor has requested that the debtor pay the lesser amount by cheque
instead of cash.
b. Where the creditor has required that the debtor pay the lesser amount on an earlier
date.
c. Where the creditor has requested that the debtor accompany the payment of the lesser
amount with some other act they were not originally bound by the contract to perform.
d. Where the creditor has requested that the debtor pay the lesser amount at a different
place.

89) Which of the following condonations will not extinguish the debtor’s obligation?
a. The condonation and the acceptance are in a public instrument. The condonation
involves a parcel of land.
b. The condonation is in a public instrument while the acceptance is made in a private
instrument. The condonation involves a laptop worth P20,000.
c. The condonation is in a public instrument. The acceptance is made orally. The
condonation involves a cellphone whose value is P4,000.
d. The condonation and acceptance are made orally with the creditor delivering to the
debtor simultanteously the promissory note amounting to P10,000.

90) Under the law, anything paid or delivered before the arrival of the suspensive period the obligor
being unaware of the period, may be recovered with the fruits and interest. Which is the
exception?
a. The period is for the benefit of the creditor and debtor.
b. The obligor delivered before the period.
c. The obligor is not aware of the period.
d. The obligation involved is an obligation to do and not to do.

91) Which of the following is not a requisite of filing of subrogatory action?

a. The creditor has a right of credit against the debtor although at the moment is not
liquidated.
b. The act being impugned is fraudulent.
c. There must be a failure of the debtor to collect from third persons whether willfully or
through negligence.
d. The credit must be due and demandable.

92) What cannot be demanded at once?

a. Obligations subject to a resolutory period.
b. Deliverable subject to a resolutory condition.
c. Obligations subject to no condition.
d. Agreements subject to a suspensive period.

93) Which is not a requisite of rescissory action?

a. The third person who received the property conveyed of, by onerous title, has been an
accomplice in the fraud.
b. The right and actions are not purely personal or inherent in the person of the debtor.
c. The act being impurged is fraudulent.
d. The debtor has made a subsequent contract conveying a patrimonial benefit to a third
person.

94) Lennie bought a business class ticket from Alta Airlines. As she checked in, the manager
downgraded her to economy on the ground that a Congressman had to be accommodated in the
business class. Lennie suffered the discomfort and embarrassment of the downgrade. She sued
the airlines for quasi-delict but Alta Airlines countered that, since her travel was governed by a
contract between them, no quasi-delict could arise. Is the airline correct?
a. No, the breach of contract may in fact be tortious as when it is tainted as in this case
with arbitrariness, gross bad faith, and malice.
b. No, denying Lennie the comfort and amenities of the business class as provided in the
ticket is a tortious act.
c. Yes, since the facts show a breach of contract, not a quasi-delict.
d. Yes, since quasi-delict presupposes the absence of a pre-existing contractual relation
between the parties.

-End-
For the Glory of God

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