REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

COVERAGE: Law on Obligation

Direction: Read and select the best answer for the following questions.

1. Which of the following obligations is not enforceable by a court action?

a. Legal obligation
b. Contractual obligation
c. Civil obligation
d. Natural obligation

2. It is a source of an obligation that refers to a juridical relation which arises from certain lawful, voluntary and unilateral
act, to the end that no one may be unjustly enriched or benefited at the expense of another.
a. Delict
b. Quasi-contract
c. Contract
d. Quasi-delict

3. The civil liabilities arising from crimes are as follows, except

a. Restitution
b. Reparation
c. Indemnification
d. Rescission

4. What minimum degree of evidence must be proved by the private offended party to be entitled to civil damages arising
from crime or delict?
a. At least Proof beyond reasonable doubt
b. At least Clear and convincing evidence
c. At least Preponderance of evidence
d. At least Substantial evidence

5. The following are the requisites in order that civil liability for quasi-delict or torts may exist, except
a. There is pre-existing relation between the offender and offended parties.
b. There exists a wrongful act or omission imputable to the defendant by reason of his fault or negligence.
c. There exists a damage or injury which must be proved by the person claiming recovery.
d. There must be a direct causal connection or a relation of cause and effect between the fault or negligence and
the damage or injury, or that the fault or negligence be the cause of the damage or injury.

6. Negligence or culpa which results to civil liability arising from quasi-delict or torts is also known as
a. Culpa criminal
b. Culpa aquiliana
c. Culpa contractual
d. Culpa liberal

7. While trying to pass each other on a narrow bridge, a passenger bus and a private automobile collided, and two persons,
A and B, were injured. A was a passenger of the bus while B was a pedestrian. The bus company was made a defendant
although its employee driver was the one driving the bus and the owner-driver of the private car was also made a
defendant. What can be the source of obligation of the bus company as regards to B, the pedestrian?
a. Contract of common carrier
b. Solution Indebiti
c. Negotiorum Gestio
d. Culpa Acquiliana

8. In an obligation to deliver a determinate or specific or delimited generic thing, when is the creditor or obligee entitled
to the fruits of the determinate thing or when does the creditor obtain personal rights over the fruits of the determinate
or specific or delimited generic thing?
a. From the time of the perfection of the contract.
b. From the time the obligation to deliver the determinate thing arises.
c. From the time it is delivered physically or constructively.
d. From the fulfillment of resolutory condition.

9. In an obligation to do whereby only the debtor can do the thing, what is the remedy of the creditor if the debtor fails to
do the prestation?
a. Action for specific performance with damages.
b. Action for annulment of obligation with damages.
c. The creditor or third person may do it in a proper manner at the expense of the debtor.
d. Action for indemnification for damages.
10. Delay can exist in the following obligations, except
a. Positive obligation
b. Real obligation
c. Personal obligation
d. Negative obligation

11. Delay or Default (Mora) on the part of the debtor or obligor is called
a. Mora solvendi
b. Mora accipiendi
c. Compensatio morae
d. Mora obligor

12. This action may be exercised by the creditor in the place of his negligent debtor in order to preserve or recover for the
patrimony of the debtor the product of such actions, and then obtain therefrom the satisfaction of his own credit. It
refers to the right of unpaid creditor to exercise the right of his debtor.
a. Accion reindivicatoria
b. Accion subrogatoria
c. Accion pauliana
d. Accion publiciana

13. When the debtor binds himself to pay when his “means permit him to do so” or “as soon as possible” or “as soon as
he has the money”, the obligation shall be deemed to be
a. Obligation with a suspensive condition
b. Pure obligation
c. Obligation in diem
d. Obligation ex die

14. The following obligations are subject to suspensive conditions, except

a. I will give you P1,000 if you pass the CPA board exam.
b. You can use the book until you graduate in law school.
c. He will dance if he wins in lotto.
d. She will work if KFC becomes number 1.

15. Suspensive period and resolutory period are also known as

a. Both ex die
b. Both in diem
c. Ex die and in diem, respectively
d. In diem and ex die, respectively

16. Whenever in an obligation a period is designated, to whose benefit the period is presumed to have been established?
a. Creditor only
b. Debtor only
c. Both creditor and debtor
d. Neither creditor and debtor

17. Who has the right of choice in case of alternative obligations?

a. Creditor, unless it has been expressly granted to the debtor.
b. Debtor, unless it has been expressly granted to the creditor.
c. Always with the debtor.
d. Always with the creditor.

18. It is an obligation wherein only one prestation has been agreed upon but the obligor may render another in substitution.
a. Alternative obligations
b. Conjunctive obligations
c. Facultative obligations
d. Composite obligations

19. The following are the exceptional instances when the obligation is considered solidary, except
a. When the obligation expressly so states that it is solidary.
b. When the law requires the obligation to be solidary.
c. When the nature of the obligation requires the obligation to be solidary.
d. When the obligation is indivisible.

20. The following are the defenses that may be availed of by the solidary debtor in actions filed by the creditor, except
a. Defenses which are inherent from the nature of the obligation such as illegality or prescription
b. Defenses personal to defendant-debtor such as minority or insanity or incapacity
c. Defenses personal to other co-solidary debtors such as minority or insanity or incapacity but only as regards to
that part of the debt for which incapacitated co-solidary debtors are responsible
d. Defense of insolvency of one of solidary debtors up to the extent of share of such insolvent debtor
21. What is the remedy of the creditor in case one of the debtors does not comply with his undertaking in a joint indivisible
obligation but the other debtors are willing and ready?
a. Action for specific performance
b. Ask third person to fulfill the obligation at the expense of all the debtors
c. Ask for indemnity for losses and damages or convert the action to monetary amount
d. Ask the other co-debtors to fulfill the entire obligation

22. It is an obligation which has an accessory undertaking to assume greater liability in case of breach.
a. Obligation with a condition
b. Obligation with a penal clause
c. Obligation with a period
d. Obligation with a substitute

23. What is the prescriptive period for civil action based on solutio indebiti?
a. 6 years
b. 10 years
c. 4 years
d. 8 years

24. This equitable doctrine is based on the principle that a person shall be precluded from denying an admission or
representation against the person who has relied on such admission or representation.
a. Estoppel
b. Laches
c. Prescription
d. Novation

25. It refers to such currency which in a given jurisdiction can be used for the payment of debts, public or private, and
which cannot be refused by the creditor.
a. Legal tender
b. Foreign currency
c. Local currency
d. International currency

26. In the absence of express stipulation as to the place of payment, where shall payment of an obligation to deliver an
indeterminate or generic thing be made?
a. Wherever the thing might be at the moment the obligation was constituted or perfected.
b. Place designated by third party.
c. Domicile of the debtor.
d. Domicile of the creditor.

27. What law shall be govern dation in payment or dacion en pago as a mode of extinguishing obligation?
a. Law on Barter
b. Law on Obligation
c. Law on Sales
d. Law on Credit Transactions

28. What is the remedy of the debtor if the creditor to whom tender of payment has been validly made refuses without just
cause to accept it?
a. Consign or deposit the thing or sum due to the court
b. Payment by cession
c. Dation in payment
d. Application of payments

29. As a general rule, the loss of the specific thing on account of fortuitous event shall extinguish the obligation. The
following are the exceptions to the general rule wherein the debtor shall still be liable even there is fortuitous event,
except
a. When the fault or negligence of the debtor concurs with the fortuitous event in causing the loss.
b. When the loss occurs after the debtor has incurred in delay.
c. When the debtor has promised to deliver the same thing to two or more different parties.
d. When the fortuitous event is the immediate, exclusive and proximate cause of loss.

30. It is a mode of extinguishing obligation which is an act of liberality, by virtue of which, without receiving any
equivalent, the creditor renounces the enforcement of the obligation, which is extinguished in its entirety or in that part
or aspect of the same.
a. Compensation
b. Confusion
c. Remission
d. Novation
31. It is a mode of extinguishing obligation that refers to the meeting in one person of the qualities of creditor and debtor
with respect to the same obligation.
a. Compensation
b. Condonation
c. Merger
d. Novation

32. The following are the exceptional instances wherein legal compensation may not take place even if all the requisites for
legal compensation concur but facultative compensation may take place, except
a. When one of the debts arises from the obligations of a depositary in depositum
b. When one of the debts arises from the obligations of a bailee in commodatum.
c. When the one of the creditor has a claim for support due by gratuitous title.
d. When the debts arise from contract of mutuum

33. 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.
a. Compensation
b. Novation
c. Condonation
d. Merger

34. It is one of the two types of novation involving the change of original debtor wherein 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 third person and the creditor.
a. Expromission
b. Delegacion
c. Legal subrogation
d. Conventional subrogation

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

36. It is a type of novation which refers to the transfer of all the rights of the creditor to a third person, who substitute him
in all his rights. It transfers to the person subrogated the credit with all the rights thereto appertaining, either against the
debtor or against third persons, be they guarantors or possessors of mortgages, subject to stipulation in a conventional
subrogation.
a. Novation
b. Compensation
c. Confusion
d. Subrogation

37. It is one of the two types of subrogation wherein the debtor, original creditor and third person agree to the substitution
of creditor.
a. Expromission
b. Delegacion
c. Legal subrogation
d. Conventional subrogation

38. It is one of the two types of subrogation which is not presumed but despite the absence of agreement of the original parties
the third person is legally subrogated to the place of creditor by operation of law in exceptional cases mentioned in Civil
Code or Special Law.
a. Expromission
b. Delegacion
c. Legal subrogation
d. Conventional subrogation

39. It refers to the juridical tie or efficient cause the binds the parties to the obligation.
a. Obligee
b. Obligor
c. Prestation
d. Vinculum
40. In what type of obligation of obligation to deliver a thing is loss due to fortuitous event as a mode of extinguishing the
obligation applicable?
a. Obligation to deliver a generic thing
b. Obligation to deliver a specific thing
c. Obligation to deliver an indeterminate thing
d. Obligation to deliver a common thing

41. A, B, C wrote a promissory note which states "We promise to pay P60,000 to D and E." D indorsed back the promissory note
to A. How much obligation is extinguished by confusion or merger?
a. P10,000
b. P20,000
c. P30,000
d. P60,000

42. A, a minor, B and C wrote a promissory note which states "I promise to pay P30,000 to D." How much may D validly collect
from C if B becomes insolvent?
a. P30,000
b. P20,000
c. P10,000
d. None

43. A, B and C obliged themselves to deliver a specific car worth P300,000 to D. A and B are willing to deliver the car but C
refused to perform the obligation despite repeated demands from D. What is the proper legal remedy available to D?
a. File an action for exact fulfilment with damages against C.
b. File an action for exact fulfilment with damages against A, B and C.
c. File an action for monetary amount against A and B for P100,000 without damages each and against C for
P100,000 plus damages.
d. File an action for rescission of obligation plus damages against A, B and C.

44. In which of the following civil obligations is the right to file an action prescribe in four years?
a. Written contract
b. Quasi-delict
c. Oral contract
d. Quasi-contract

45. A has checking account in BDO Unibank with positive balance of P1,000,000. A borrowed P1,000,000 from the same bank.
At the maturity date of the loan payable of A, what mode of extinguishing obligation is present?
a. Condonation
b. Merger
c. Compensation
d. Delegacion

46. Which obligation may become the subject matter of legal compensation or offset?
a. Obligation of borrower in a contract of loan or mutuum
b. Obligation of bailee in a contract of commodatum
c. Obligation of depositary in a contract of deposit
d. Obligation of convicted person arising from his crime

47. If the law or contract does not state the diligence to be observed in the performance of the obligation, what degree of
diligence shall be observed?
a. Extraordinary diligence
b. Diligence of a father of a good family
c. Ordinary diligence
d. Diligence of a good mother of a family

48. The following obligations are demandable at once or immediately demandable, except
a. Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event
unknown to the parties.
b. Pure obligation
c. Every obligation which contains a resolutory condition without prejudice to the effects of the happening of the
event or obligation with a resolutory period (in diem)
d. Suspensive conditional obligation or obligation with a suspensive period (ex die).

49. The following conditions shall annul the obligation which depends upon them, except
a. Impossible conditions
b. Suspensive conditions which depend upon chance and will of the debtor
c. Conditions contrary to good customs or public policy
d. Conditions prohibited by law
50. What is the effect of the condition not to do an impossible thing?
a. It shall be considered as having agreed upon.
b. The obligation will become null and void.
c. The obligation is subject to a condition.
d. The obligation is pure and demandable.

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