MULTIPLE CHOICE

1. Which of the following is

not an obligation with a period?
a. "Payable soonest"
b. An obligation payable littleby little
c. Will pay you P 10,000 "if I like"
d. Payable "within2 years from todayø
e. All of the above

2. If the obligation is payable in foreign currency

a. the obligation is void.

b. the obligation is valid, but the stipulation is void.
c. the creditor can compel the debtor to pay in foreign
currency as per agreement.
d. The stipulation and the obligation are void.

3. Which of the following statements is false?

a. The nullity of the principal carries with itthat of the pe-

nal clause.
b. Proofofactual damages sufferedbytheæditoris not
necessary in order that the penalty may damanded.
c. I will pay you PIO.OOO"soonest"
debtor.
d. Condonation is essentiallygratuitous.

4. give you mycaroneyear afteryourdeath.'Theobliga-

tjonis

a. valid, becausethe
b. valid, obl(gation
 Oblig
pad 1 /

134 condition.
the
but disregard
c. valid,not legally possible.
d. void, date was stipulate
No
B forP2,500.
cow to
5. A sold his of the cow
delivery
the calf.
gave birth to a
the cow was born before
calfbecause it
to
entitled the arises.
a. Ais deliver the cow
paid the price.
obligation to B has not
the calf as
b. Ais entitled thecalfwhich was born after the
to perfe
c. Bis entitledto
tion of the contract. to the calf, should pay addi
entitled
d. B, in order to be to be agreed upon by both par-
tionalcost for the calf
ties.

Statement No. 1: The concurrence ofmore than one credi-

6. sariööbtrjäS
tor or more than one debtor in one and the
tion implies solidarity:

Statement No. 2: In alternative obligations where the right

ofchoice is exercised by the creditor, consent of the debtor
as to the creditor's choice of which prestation to perform
is necessary.

a.- Both statements are tiue.

b. Both statements
are false.
c. StatementNo.1 is
truewhile statement No. 2 is false,
d. Statement No. 1
is false while
statement No. 2 is true,
7. The
kindofcompensation
creditorand notby which may only be raised by the
the debtor in the
obligation to give gra-
 in Business Law For CPA Reviewees 135
pointers

a. judicial compensation
b. conventional compensation
c. facultative compensation
d. legal compensation

8. statement No. 1: Legal compensation takes place by op-

eration of law even if the parties may not be aware of it.

statement No. indivisibilityof an obligation neces-

sarily implies solidarity.

a. Both statements are true.

b. Both statements are false.
c. Statement No. 1 is true while statement No. 2 is false.
d. Statement No. 1 is false while statement No. 2 is true.

9. Statement No. 1: Responsibility arising from fraud is de-

mandable in all obligations. A waiver of an action for future
fraud is void.

Statement No. 2: When the fulfillment of the condition de-

pends upon the sole will of the debtor, the conditional obli-
gation shall be void. If it depends upon chance or upon the
will of a third person, the obligationshall take effect in
confirmity with the provisions of laws.

a. Both statements are true.

b. Both statements are false.
e. No. 1 is false,'No. 2 is true.
d. No 1 is true, No. 2 is false.
 ations and
part 1 / Obli C

136
himself to give C a spf

1: D obliged tomorrow after

No. to deliver
Statement failed
10.
tomorrow. If D to do his obligaiton and I

car may compelP

is made,C
damages.
ask for
himself to deliver a car
2: D obliged
Statement No. deliver tomorrow after demanc
failed to
tomorrow. If D ask a third person
to deliver a car

C's right is to
made, damage.
the expense of D plus
himat

a. Bothare true.
b. Both are false.
false.
c. No. 1 is true; No. 2 is
true.
d. No. 1 is false; No. 2 is
must preserve
11. A personobligedto give something the

object using a standard ofcare or diligence. This standard

of care or diligence may be:

a. diligence provided by law.

b. diligenceprovidedby agreement of the parties.
c. diligenceofa good father of the family.
d. anyofthe above.

12. An obligationwherein various things areduebuUhecom-

plete performance ofall of them is
necessary to extinguish
the obligation.

a. Facultative obligation.
b. Conjointobligation.
c. Altemative obligation.
d. Pure or simple
obligation.
 13. DI, D2 and D3 are solidary debtors of C for P30,000. The
obligation was in writing. After the lapsed of the ten-year
prescriptive period, which of the following statement is in-
correct.

a. If DI paid C knowing that the obligation has already

prescribed, DI cannot ask reimbursementfrom D2 and
D3.
b. If DI paid C not knowing thatthe obligation has already
prescribed, DI cannot ask reimbursementfrom D2 and
D3.
c. If DI paid C not knowing thatthe obligation has already
prescribed, his right is to proceed against C because
there was undue payment.
d. None of the above.
14. S owns specific ring and sells it to B for P 10,000.
B paid S the price, and S promised to deliver the ring five
(5) days after. After the sale, S gets a loan from X and
pledged the ring in a private instrument.

Statement 1 —Between B and X, B has got a better title

because the pledge did not appear in a public instrument.

Statement 2 —However, if S delivers the ring to X, X will

have a better title because there was delivery.

a. Both are true.

b. Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No. 2 is true.

15. S sold to B a specific car for P 10,000 and promised to

deliver on December 25, 2010. The next day, after the sale
•ismade, he sold the same car to X and delivered it to X on
the same day. If no delivery is made by S to B on Decem-
ber 26, 2010, which of the following is correct?
 because there was no demand
a. Sis notin defaultØntract between S and X because
b. B can cancel theand B was perfected ahead of
the contract of S value of the car plus damages
Sis liable to Bforthe
c. iftherewas no demand. Hence
d. Sis in default,even
damages.
will answer for

Change of persons or objects:

16.
c. Solutio indebiti
a. Confusion
h Novation d. None of the above

Statement No. 1: In solutio indebiti, the contract of the par.

17.
case of non-performance,
ties is the basis for damages in

Statement No. 2: "Dolo",as ä ground for awarding dam-

damage or injury
ages, is the deliberate intention to cause
to another person.

a. Both are true.

b. Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No. 2 is true.

18. Statement No. 1: "l Willgive you a specific car if you will not
marry X this year (2010). If by the end of 2010, both parties
are alive and no marriage has taken place, my obligatior
is extinguished.

Statement No. 2: "l will give you PI 0,000 if you cannot mak
a dead man alive. This is an impossible condition, oblig
tion not demandable.
 in Business Law For CPA Reviewees
pointers 139

a. Both are true.

b.- Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No. 2 is true.
19. A, B and C are joint debtors of joint creditors W, X, Y and Z
in the amount of P300,000. How much can W and X collect
fromB?
a. p 75,000 b. PIOO,OOO
b. P150,OOO c. None of the above

20. Which of the following is considered as quasi-contract?

a. Solutio indebiti.
b. When the fhird person, withoutthe knowledge of the
debtor, pays the debt.
c. Reimbursement due the person who saved property
during fire or storm without the knowledge of the owner.
d. All of the above.

21. Statement No. 1: The receipt of the principal obligation

without reservation as to the payment of interest shall raise
a conclusive presumption that the interest is also paid.

Staternent No. 2: The receipt of the latter installment of a

debt without reservation as to prior installment, shall not
raise a conclusive presumption thatthe prior installment is
also paid.
a. Both are true.
b. Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No. 2 is true.
 the obligation
l) 22. fromits nature and the circumstance z
a periodwas intended, the court may
that
Once 'Itis fixed by the court, the
thereof. for
date performance
changethe fixed
give you PI 0,000
StatementNo. 2'.UIwill as
with a period
for
and creditor.
both the debtor
c. No. 1 istrue;
a. Both are true.
b. Botharefalse. d. No. 1 is

D obliged himself to give C

23. Example No. 1:
However,the day before the obligation fall. due, DS
mentwascompletelygutted by accidental fire.
questionthat the money was also razed by fire.
gation of D is totally extinguished because of fortuitu:

event.

Example No. 2: D obliged himself to pay C P 10,000w

6% interest On the due date, D tendered P 10,000wii

promise to pay theP600 interest the day after. If C refu
to accept,he can be compelled to accept thetend
payment because the obligation is divisbile.

a. Both are true.

b. Bothare false.
c. No. is true',
No. 2is false.
d. No. 1 is false;
No.2istrue.

24. Example No.

1: Dfor P 10,000 mortgaged his lanc
instead of a deed of a dee(
and let D sign his mortgage executed
name. D'S right is to go to court
for annulment.
 Example No. 2: D obliged himself to give object No. 1 or
object No. 2 to C. In here, both objects are-due.

a. Both are true.

b. Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No. 2 is true.

25. s owns an oil painting. Being in need of money, S sold the

painting to B for PI ,000. After the sale, S discovered that
the painting was valuable and was worth P5,000.

a. S may rescind the contract on ground of lesion or inad-

equacy of cause.
b. S may annul the contract on ground of fraud.
c. S may annul the contract on ground of error.
d. B is entitled to the benefit of the contract because it is
valid and binding.

26. G was appointed guardian of S, the latter being 16 years

old. S sold his parcel of land in writingto B valued at
PI 00,000 for P 75,000, suffering lesion by 1/4 of the value.
What is the status of the contract?

a. Rescissible c. Enforceable
b. Unenforceable d. Voidable

27. On June 1, 2010, S sold to B the former's horse for

PI 0,000. S promised to deliver on June 25, 2010, while B
did not promise when to pay.

a. B can demand delivery from S anytime after June 1,

upon payment of the price of the sale.
b. S cannot demand payment until he delivers the horse.
 to pay is subject to the condition
B th
c. Obligation of horse.
will deliver the B payment anytime from
from June
d. S can demand obligationis not subject to any
because B's conditio{
owes C PIO,OOO due on December
D
28. Example No. 1: due on December 25. D'S obligation 2i
C owes D P6,000 the due date, D is insolvent. G
i:
guaranteed by G. On
0,000, he (G) cannöt set up compensation
able to C for PI
is not a principle debtor.
because he
payable on Decem.
Example No. 2: D owes C P 10,000
was able to makec
ber 25. Later, D, through intimidation,
C is indebted toD
sign a promissory note stating that
the same amount. In here, D cannot be acquired to payc
PI 0,000 because he (D) can set up compensation against
c.

a. Both examples are true.

b. Both are false.
c. Only No. 1 is true; No. 2 is false.
d. Only No. 1 is false; No. 2 is true.

29. In which of these cases is advanced payment recoverabl

by the debtor?

a. If the payment is only of interest credited for the proV

period.
b. If the debtor voluntarily paid the obligaiton knowingt
it is not yet due and demandable.
If the debtorwas unaware of the period.
ff. lithe obligationis reciprocal and both parties advar
payment.
30. A judicial relation known
as NegotiorumGestio takes place.
a, When a person
voluntarilytakes charge of another's
abandoned business or
propertywithout{he owner's
consent.
b. When something
is received and there is no right to
demand it and it was delivered
c. through mistake.
When a person is appointed
by a court to take the prop-
erty or business of another.
d. None of the above.

31. A owes B P2,000 demandable

and due on September
10, 2010. B, on the other hand, owes A P2,000 demand-
able and due on or before September 30, 2010. If B claims
compensation on September 10, 2010, can A rightfully
oppose?

a No. B, who was giving the benefitof the term, may claim
compensation because he could then choose to pay
his debt on September 10, 2010 which is actually "on
or before September 30, 2010."
b. Yes, A can properlyoppose because for compensa-
tion to take place, mutual consent of both parties is nec-
essary.
c. Yes, A can properly oppose and if B still refuses to ac-
cept his payment made on September 30, 2010, A can
deposit his payment in court.
d. None of the above.

32. The wrongful act or tortwhich causes loss or harm to an-

other is called:

a. Damages c. Injury
c. Damage None of the above
 suffered by one person on his property
33. The loss or harm is
called:

Damages c. Injury
d. None of the above
b. Damage
pay when his means
34. When the debtorbinds himself to
mit him to do so, the obligation is:

a. Pure d. Simple
b. Conditional e. None of the above
c. Witha period
35. Every obligationwhose performance does not depend
upon a future or uncertain event, or upon a past event un-
known to the parties, is demandable at once. This refers
to:

a. Divisible and Indivisible obligations

b. Joint and Solidary obligations
c. Obligations with a period
d. Pure obligation

36. When there is a returnof what was not lawfully required,

there is:

a. Solution indebiti.
b. Negotiorum gestio.
c. Cession en pago.
d. None of the above.
pointersin Business Law For CPA Reviewees 145

37. consignation alone shall give rise to the extinguishment of

an obligation, EXCEPT:
a. When the creditor is absent or unknown, or does not
appear at the place of payment.
b. When he is incapacitated to receive the payment at the
time it is due.
c. When two or more persons claim the same right to col-
lect.
When the title of the obligation has been lost.
e None of the above

38. Obligation may be modifiedby:

a. Changing their object or principal conditions.
b. Substituting the person of the debtor.
c. Subrogating a third person in the rights of the creditor.
g; All of the above.

39. The following are causes vitiatingconsent, EXCEPT:

a. Violence d. Fraud
b. Intimidation e. None of the above

40. D owes C P 10,000 payable on December 25. Later, D

forced C to sign a promissory note for P 10,000 payable
on December 25. If all the other requisites of compensa-
tionare present, are both debts extinguished?

a Yes, under legal compensation.

No, B's consent was obtained by force.
c. Yes, with the approval of the court.
d. Not given.
 146

following is not a conditional

41. Which of the
give C PI ,000, if C passes the examination
a. D to C has the means.
pay C PI ,000, if
/ b D to C marries X.
Ca horse, if
c. D to give
d. None of the above.
the obligation:
42. The passage of timeextinguishes

a. Prescription
(b. Fulfillment of resolutory condition
c. Arrival of resolutory period
d. Remission
e. Rescission
43. The delivery and transmission of ownership of thing bythe
debtor to the creditor as an accepted equivalent perfor.
mance of an obligationis called:

a. Dacion en pago c. Consignation

b. Payment by cession d. Remission

44. Which of the followingis nota special mode of payment?

a. Dacion en pago
b. Payment by cession
c. Tender of payment and consignation
d. Consignation alone without the need of tender of pay'
ment in cases provided for by law
None of the above
(9
45, Example 1 —D obliged himself to give C a specific ring
upon failure to give C P 10,000.
 147
pointersin Business Law For CPA Reviewees

Example 2 —D obliged himselfto give C a specific ring.

However, if he so desires, D may instead give C PI 0,000.

a Both are valid 091igations.

Only o, 2 isvålld.
c. only o. 1 is valid.
de Both obligations are invalid because botn depends
upon the sole will of D

46. A and B are solidary debtors of X and Y, solidary creditors

to the amount Of P4,000. On the due date, X renounced in
favor of A the entire obligation. Which of the following is
correct?

a. Bshall give A P2,OOO.

b. Y can still collect from A or B P2,000.
Y can collect fromX P2,000.
d. Any of the three.
e. None of the above.
in
47. The extinguishment of obligations when two persons,
their own right, are debtors and creditors of each other is
called

a. Compensation c. Remission
bf Merger d. Novation

Meeting in one person of the characteristics ofboth debtor

48. extinguishes
in one and the same obligation
and creditor
the obligation.by way of:

a. novation
b. merger of confusion
compensation or set-off
d. condonation or remission
148
of
of
alone, undoc ony
49. consignation obligation
exception?
extinguish the
Which is unknown or does
stances. or if)
absent,
is
creditor
Whenthe place of payment. to rocoivc
appearin the is capacitated
When thecreditorrefuses to issue receipts.
b. creditor persons clairning
Whenthe two or more
there are
d. When same
obligation:
one and the obligation has been lost.
title to the same
e. When
all his properties in favor of his
50. The actofabandoningmay cause their sale and apply the
tors so that the latter claims proportionately is called
proceeds thereof to their

a. dacion en pago
b. setoff
c. paymentby cession
d. tender.ofpayment with consignation

51. Conrad and Charlie are jointly indebted to Pete for

PI 00,000.Pete assigned his interest to Crispin whoas
signed it back to Conrad.

a. The debtis totallyextinguished by

b. compensation.
The debtis totallyextinguished
c. by merger.
The debtis partially
d] extinguished by compensation.
The debtis paitially
extinguished by merger.
 pointersin Business Law For CPA Reviewees 149

52. Which obligation is not valid?

a. "1promise to give you P
b. "1promise to give you 100,000 on December 25, 2010.
P 100,000, if I go to Sampaloc,
Quezon this weekend".
c. "1promise to give you P 100,000
d. "1promise to give you P if your patient dies".
100,000 if you pass the May
2010 CPA Board Examination."
53. Three of these are characteristics of payment by cession.
Which is the exception?

a. complete or partial insolvency.

b. more than one debt;
c. abandonement of all the debtor's properties except
those exempt from execution.
de one debtor, öne creditor.

54. Asource ofobligation where there exists criminal negligence

a. culpa contractual
b. quasi-contract
c culpa delictual
d: culpa aquiliana

55. Statement No. 1: When the prestation is negative and the

debtor is precluded from doing an impossible or unlawful
condition, the entire obligation, including the condition, is
null and void.

Statement No. 2: In an obligation subject to a period, what

is suspended is the birth of the obligation.

a. Both statements are true.

b Both statements are false.
No. 1 is true while statement No. 2 is false.
c. Statement
1 is false while statement No. 2 is true.
d. Statement No.
56. Which of the followingis an obligation with a period
the creditor?
benefit of both the debtor and fot

a. Payable if I like
b. Payable when you like
c. Payable on or beforeDecember 25, 2010
d. Payable on December24, 2010
57. Statement No. 1: In culpa aquiliana, negligence on
of the debtor is a substantial issue which must bethe
by the creditor in order to be entitled to an award of damagq
provec

Statement No. 2: The highest standard of care thata

son obliged to give something is that diligence ofa
father of a family.

a. Both statements are true.

b. Both statements are false.
c, Statement No. 1 is true while statement No. 2 isfalse
d. Statement No. 2 is false while statement No. 2 isfrue

58. Which ofthe followingobligations is not subjecttoa period?

a. payable soonest
b. payable "littleby little"
c. payable whenever "l like it"
c. payable "when my means permits me to"

59. The following, except one, are secondary modes ofextlP

guishing obligåtions. Which is that exception?

a. death of both parties

b. prescription
c. compromise
d. changing the object of the obligation with the
of the parties
pointersin Business Law (For CPA Reviewees) 151

60. Which of the following is not a generic obligation?

a. obligation to pay P5,000

b. obligation to deliver 2009 Nissan Sentra Series Ill
c. obligation to deliver 50 cavans of rice
d. obligation to give a delimitedgeneric object

61. Statement No. 1: D obliged himself "to pay C the sum of

P50,000 which he owes him when he (D) feels like it".This
kind of obligation is valid and legally enforceable.

Statement No. 2: After the Obligationbecame due and

demandable, the creditor agreed to a proposal by the
debtor to give him a specific cow instead of paying
P25,000. This is a case of novationby changing the term
or the object of an obligation.

a. Both are true.

b. Both are false.
c. No. 1 is true, No. 2 is false.
d. No. 1 is false, No. 2 is true.

62. A and B are the debtors and X and Y are the creditors in a
solidary obligation to the tune of P80,000. On due date, X
renounced in favor of A the entire obligation which was
validly accepted by A. Which of the following is true?

a. Bshall give P40,OOOto A.

Y can collect fromX P40,000.
c. Y can still collect from Aor B the whole amount.
d. Acan collect P40,000 from B.
 alternativeobligations, it is
63. tpperförm måde by the debtor
of which prestation obligation into a pure or simple
conven the alternative

2: In facultative obligations, the right

Statement No.
tothe creditor.
stitution may be transferred

a. Both statements are true.

Both statement are false.
c. Statement No. I is true while statement No. 2 is false
d. Statement No. 1 is false while statement No. 2 istrue

64. The following,except one, are requisites of paymentasa

mode of extinguishing an ordinary obligation. Which is
exception?

a. complete or full payment

b. payment in due course when the obligation is dueand
demandable
c. payment using negotiable instrument
d. paymentusing legal tender, except if payable infor •

eign currency

65. Nota groundfor damages:

a. culpa
b. bad faith
dolo causante
d. mora
66. Statement No. 1: An
obligation which has for its object
delivery of a "delimited lost bYre
generic" object may be
son of fortuitousvent.