OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R.

Soriano

TEST 1 – MULTIPLE CHOICE. Select the best 8. One of the following is determinate thing. Which is
answer by writing the letter of your choice. it?
a. A cow
1. The following are the requisite of an obligation,
b. A orse
except:
c. A Toyota car with engine no. 12345, body
no. 35787 and plate no. ABC 123.
a. Passive subject, debtor or obligor
d. A ring with diamond embellishment
b. Active subject, creditor or oblige
c. Efficient cause
9. Demand must be made on the due date of the
d. Demand
obligation in order for delay to exist in one of the
following cases. Which is it?
2. Obligations may arise from any of the following,
except:
a. When it was stipulated by the parties that
demand need not be made.
a. Contracts
b. When the law provides that demand need
b. Quasi-contracts
not be made.
c. Law
c. When the obligation does not indicate
d. Prestation
whether demand must be made or not on
due date.
3. It is the voluntary administration of the property of d. When time is of the essence of the contract.
another without his consent.
10. This refers on the delay on the part of the creditor.
a. Negotiorum gestio
b. Solution indebiti
a. Mora solvendi ex re
c. Quasi-delict
b. Compensation morae
d. Contracts
c. Mora solvendi ex personae
d. Mora accipiendi
4. It is a wrong committed without any pre-existing
relations between the parties.
11. There shall be no liability for loss due to fortuitous
events in one of the following cases. Which is it?
a. Natural obligation
b. Quasi-delict
a. When the debtor delays.
c. Quasi-contract
b. When the parties so stipulated that there
d. Crime
shall be liability even in case of loss due to
fortuitous events.
5. Unless the law or the stipulations of the parties
c. When the nature of the obligation requires
require another standard of care, every person
the assumption of risks.
obliged to give something is also obliged to take
d. When the obligation is to deliver a
care of it with:
determinate thing and there was no
stipulation as to the liability of the debtor in
a. Extra-ordinary diligence
case of loss due to fortuitous events.
b. Diligence of a father of a good family
c. Diligence of a good father of a family
12. The following are the remedies of the creditor to
d. Good diligence of a father of a family
pursue his claims against the debtor, except to:
6. The creditor has a right that is enforceable against a
a. Pursue the property owned and in possession
definite passive subject. The right is known as:
of the debtor.
b. Exercise all the rights and bring all the
a. Personal right
actions of the debtor (accion subrogatoria)
b. Real right
c. Impugn the acts which the debtor may have
c. Natural right
done to defraud his creditors (accion
d. Civil right
pauliana)
d. Compel the debtor to perform the service in
7. It is a thing that is particularly designated or obligations to do.
physically segregated from all others of the same
class.
13. D borrowed P50, 000 from C. C dies before he has
collected the debt leaving S, his son, as heir. Which
a. Generic thing of the following statements is correct?
b. Indeterminate thing
c. Determinate thing
d. Real thing
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OBLIGATIONS – DAIGNOSTIC EXERCISES
a. S can collect from D although D and C did
not agree that the credit right will pass on
to the heirs of C.
b. S cannot collect because the credit right is
personal to C.
c. S can collect only f D and C agreed that the
credit right will pass on the heirs of C.
d. S cannot collect because the law prohibits
the transmission of the credit right.
14. D is obliged to give C a specific car if C passes the
CPA Licensure Examination. D’s obligation is an
example of:
a. A pure obligation
b. An obligation with a suspensive condition
c. An obligation with a resolutory condition
d. An obligation with a period
15. One of the following obligations is not immediately
demandable.
a. Pure obligation
b. Obligation with a resolutory condition
c. Obligation with an in diem period
d. Obligation with ex die period
16. One of the following is a void obligation:
a. D is obliged to give C P5,000.00 if C does
not go to the moon.
b. D is obliged to give C P5,000.00 if D does
not go to Baguio.
c. D is obliged to give C P5,000.00 if C does
not go to Baguio.
d. D is obliged to give C P5,000.00 if D wins
first prize in the sweepstakes on a ticket that
he had already purchased.
17. D is obliged to give C P10,000.00 if X dies. This is
an example of:
a. An obligation with a suspensive condition
b. An obligation with a resolutory condition
c. An obligation with a period
d. A pure obligation
18. When the debtor binds himself to pay when his
means permit him to do so, the obligation is:
a. An obligation with a resolutory condition
b. A pure obligation
c. An obligation with a suspensive condition
d. An obligation with a suspensive period
19. Whenever a period is designated in an obligation,
the said period shall be presumed to have been
established for the benefit of:
a. The debtor
Notes in Business Law by Fidelito R. Soriano
b. The creditor
c. Both the debtor and the creditor
d. Neither of the parties
20. The debtor shall lose the right to make use of the
period in the following cases, except when he:
a. Becomes insolvent.
b. Violates any undertaking in consideration of
which the creditor agreed to the period.
c. Attempts to abscond.
d. Does not furnish any guaranty or security to
the creditor.
21. An obligation ceases to be alternative and becomes a
simple obligation in the following cases, except
when:
a. The debtor has communicated his choice to
the creditor.
b. The right of choice has been expressly
granted to the creditor and his choice has
been communicated to the debtor.
c. Among the several prestations that are due
only one is practicable.
d. Three prestations are due but one of them is
unlawful or impossible.
22. D s obliged to give C a specific watch, a specific
ring, or a specific bracelet. The parties agreed that C
will have the right to choose the thing which will be
given to him. Before C could make his choice, the
watch and the ring are lost through D’s fault,
successively.
What is the right of C?
a. C may choose the delivery to him of the
bracelet, or the price of watch or the price of
the ring plus damages.
b. C cannot choose the price of the watch or
the price of the ring because the said objects
have already been lost.
c. C can only choose to have the bracelet
because anyway, D can still perform his
obligation.
d. C can only choose to have delivery of the
bracelet or the price of the ring which was
the last item that was lost plus damages.
23. D is obliged to give C a specific ring. The parties
agreed that D may give a specific bracelet as
substitute. Which of the following statements is
true?
a. If the ring is lost through a fortuitous event
before substitution, the obligation is
extinguished.
b. If the bracelet is lost through a fortuitous
event before the substitution, the obligation
is extinguished.
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OBLIGATIONS – DAIGNOSTIC EXERCISES
c. If the ring is lost through a fortuitous event
after substitution, the obligation is
extinguished.
d. If the ring is lost through the debtor’s fault
after substitution, the debtor shall pay
damages.
24. A, B, C and D are obliged to give V, W, X, Y and Z
P20,000.00.
a. V may collect from A P20,000.00
b. V may collect from A P5,000.00
c. V may collect from A P1,000.00
d. V may collect from A P4,000.00\
25. A, B, C and D joint debtors, are obliged to give V,
W, X, Y and Z, solidary creditors, P20,000.00.
a. V may collect from B P20,000.00
b. V may collect from B P4,000.00
c. V may collect from B P5,000.00
d. V may collect from B P1,000.00
26. A, B, C and D, solidary debtors, are obliged to give
V, W, X, Y and Z, joint creditors, P20,000.00.
a. V may collect from B P20,000.00
b. V may collect from B P4,000.00
c. V may collect from B P5,000.00
d. V may collect from B P1,000.00
27. A, B, C and D, solidary debtors, are obliged to give
V, W, X, Y and Z, solidary creditors, P20,000.00.
a. V may collect from B P20,000.00
b. V may collect from B P4,000.00
c. V may collect from B P5,000.00
d. V may collect from B P1,000.00
28. A, 25, B, 35, and C, 17, are solidary debtors of X in
the amount of P9,000.00.
a. X may collect from A P9,000.00
b. X may collect from A P6,000.00
c. X may collect from A P1,000.00
d. X may collect nothing because the
obligation is voidable, C being a minor.
29. The following obligations are divisible, except an
obligation:
a. To give definite things.
b. Which has for its object the execution of a
certain number of days of work.
c. Which has for its object the accomplishment
of work by metrical units.
d. Which by its nature is susceptible of partial
performance.
Notes in Business Law by Fidelito R. Soriano
30. In obligations with a penal clause, the creditor as a
rule may recover from the debtor in case of breach
the following:
a. The penalty as agreed upon, plus damages
and interest.
b. The penalty and damages.
c. The penalty and interest.
d. Only the penalty
31. Consider the following statements:
I. The nullity of the principal obligation carries
with it the nullity of the penal clause.
II. The nullity of the principal obligation does not
carry with it the nullity of the penal clause.
III. The nullity of the penal clause carries with it the
nullity of the principal obligation. IV. The
nullity of the penal clause does not carry with it
the nullity of the principal obligation.
a. Statements I and III are true.
b. Statements I and IV are true.
c. Statements II and III are true.
d. Statements II and IV are true.
32. D borrowed from C P50,000.00. the obligation is
secured by a chattel mortgage on D’s Toyota car.
Subsequently, D paid C P20,000.00. unknown to D,
T, a third person, pays C P50,000.00 believing that
D still owed C such amount.
a. T can recover P50,000.00 from D. if D
cannot pay, T can foreclose the mortgage on
D’s Toyota car.
b. T can recover nothing from D because he
paid C without the knowledge and consent
of D.
c. T can recover P30,000.00 from D. If D
cannot pay, T can foreclose the mortgage on
D’s Toyota car.
d. T can recover P30,000.00 from D. if D
cannot pay, T cannot foreclose the mortgage
on D’s
Toyota car.
33. The following statements concerning payment by
cession are true, except one. Which is it?
a. The creditors become the owners of the
properties of the debtor that were ceded to
them.
b. Payment by cession extinguishes the
obligation only to the extent covered by the
proceeds of the sale of the debtor’s
properties.
c. The debtor must be insolvent.
d. Cession affects all the properties of the
debtor except those exempt from execution.
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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

34. D obtained from ABC Bank a loan of P12,000.00
payable at the end of 10 years. Before maturity, an
extraordinary inflation supervened causing the value
of the debt to fall to P4,000,000.00 on the date of
maturity. On due date, D must pay ABC Bank:
d. D may apply the payment to any of the four
debts.
39. The offer made by the debtor to pay his obligation to
his creditor is known as:

a. P12,000,00.00 a. Consignation
b. P4,000,000.00 b. Tender of payment
c. P36,000,000.00 c. Application of payment
d. P3,000,000.00 d. Dation in payment

35. D borrowed from XYZ Bank P2,000,000.00 payable 40. Consignation alone without any tender of payment is
at the end of 5 years. Before maturity, an sufficient in the following cases except:
extraordinary deflation supervened causing the value
of the debt to rise to P5,000,000.00 on the date of a. When the creditor is absent or unknown or
maturity. On due date, B must pay XYZ Bank: does not appear at the place of payment.
b. When the creditor presents the title to the
a. P2,000,000.00 obligation for collection.
b. P5,000,000.00 c. When without just cause, the creditor refuses
c. P800,000.00 to give a receipt.
d. P20,000,000.00 d. When two or more persons claim the same
right to collect.
36. The money or currency which the debtor may
compel the creditor to accept in payment of a debt, 41. M owes P P10,000.00. the obligation is evidenced
whether public or private, is known as: by a promissory note. Subsequently, P assigned the
note to A, A to B, B to C, and C back to M. the
a. Notes payable to order obligation of M is extinguished by:
b. Legal tender
c. Bill of exchange a. Compensation
d. Mercantile document b. Confusion
c. Condonation
37. The delivery and transmission of ownership of a d. The obligation is not extinguished because
thing by the debtor to the creditor as an accepted there was no payment.
equivalent of performance is known as:
42. In order that condonation may extinguish an
a. Payment by cession obligation involving a movable property whose
b. Dation in payment value exceeds P5,000.00 –
c. Application of payment
d. Consignation a. It is sufficient that the condonation and the
acceptance are in writing, even a private
38. D owes C the following debts: P6,000.00 due on one.
June 12; P6,000.00 due on June 15; P6,000.00 due b. It is required that the condonation and the
on June 18; and P6,000.00 due in June 20. All debts acceptance be in a public instrument.
are unsecured except the debt due on June 20 which c. The delivery of the document evidencing the
is secured by a pledge of D’s diamond ring to C. By debt is sufficient since the property is
agreement, the benefit of the term on the 4 debts was movable.
granted to C. assuming that D has P6,000.00 on June d. The condonation and the acceptance may be
18 and is ready to pay C, which of the following made orally.
statements is correct?
43. One of the following is not a requisite of legal
a. D may apply his payment of P6,000.00 to compensation, which is it?
any of the debts due on June 12, June 15,
and June 18 since they are all due as of June a. That each one of the obligors be bound
18. principally, and that he be at the same time a
b. D may apply his payment only to the debt principal creditor of the other.
due on June 20 because it is the most b. That the two debts be due.
burdensome to him. c. That both debts be liquidated and
c. D must apply the payment proportionately to demandable.
the debts due as of June 18 at P2,000.00 d. That the debts are payable at the same place.
each.

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OBLIGATIONS – DAIGNOSTIC EXERCISES
44. Henry, husband, and Wilma, wife, are legally
separated. By order of the court which decreed the
legal separation, Henry is obliged to give a monthly
support of P10,000.00 to Wilma payable within the
first five days of the month. Wilma owes Henry
P10,000.00 by way of a business loan. On the other
hand, Henry has not yet given Wilma’s support of
P10,000.00 for this month. Both debts are already
due. Which of the following statements is correct?
a. Both debts are extinguished by legal
compensation because both are already due.
b. Wilma can claim compensation but not
Henry.
c. Henry can claim compensation but not
Wilma.
d. Neither one may claim compensation
because the debts are not of the same kind.
45. D owes C P10,000.00 with G as guarantor. C, on the
other hand, owes D, P8,000.00. both debts are
already due but D is insolvent. In this case –
a. C may collect from G P10,000.00
b. C may collect from G P2,000.00 because a
guarantor can set up compensation as
regards what the creditor owes the principal
debtor.
c. C may collect nothing from G because D is
insolvent.
d. C may collect P8,000.00 from G.
46. D borrowed P50,000.00 from C. subsequently, D
proposed to C that T would assume his (D’s) debt. C
accepted the proposal of D. This substitution of the
debtor is known as –
a. Expromision
b. Delegacion
c. Tradition
d. Dation en pago
47. Refer to the facts of No. 46. Assume also that on due
date, T could not pay because of his insolvency
which was in fact subsisting but was known to D or
of public knowledge at the time that D delegated his
debt. In this case –
a. C can revive D’s debt because T’s
insolvency was already existing at the time
that D delegated his debt.
b. C can revive D’s debt whether or not he (D)
was aware of T’s insolvency since he (D)
proposed the substitution.
c. C cannot hold D liable because his (D’s)
obligation was extinguished when he was
substituted by T.
d. The novation is void because D did not take
steps to determine the solvency of T when
he (D) delegated his debt.
Notes in Business Law by Fidelito R. Soriano
48. D obliged himself to give 5 grams of “shabu” to C.
later, the parties agreed that D would instead give to
C 5 sacks of rice. Which of the following statements
is correct?
a. The novation is void because the original
obligation is void. Hence, C cannot demand
the delivery of 5 sacks of rice from D.
b. The novation is valid because the new
obligation is valid. Hence, C can demand the
delivery of 5 sacks of rice from D.
c. The original obligation although void is
validated by the new obligation. Hence, C
can demand the delivery of 5 sacks of rice
from D.
d. The new obligation is only voidable because
had not yet performed the original obligation
at the time of the novation. Accordingly, the
new obligation is binding and C may
demand the delivery of 5 sacks of rice from
D until the new obligation is annulled by a
proper action in court.
49. On July 1, 2015, D obliged himself to give C
P50,000.00 if C will marry X on or before December
31, 2015. The condition of the obligation is a:
a. Positive condition
b. Negative condition
c. Joint condition
d. Impossible condition
50. Refer to No. 49. Which of the following statements
is incorrect?
a. The obligation of D is demandable if C
marries X on or before December 31, 2015.
b. The obligation of D is extinguished if it is
already January 1, 2016 and C has not yet
married X.
c. The obligation of D is extinguished on
December 2, 2015 if X dies on the same date
and C has not yet married X.
d. The obligation is demandable if C marries X
on January 1, 2016.
51. On July 1, 2015, D obliged himself to give C a
specific car if C will not marry X on or before
December 31, 2015. The condition of the obligation
is a:
a. Positive condition
b. Negative condition
c. Divisible condition
d. Impossible condition.
52. Refer to N. 51. Which of the following statements is
incorrect?
a. The obligation of D is demandable if C
marries X on January 1, 2015.
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OBLIGATIONS – DAIGNOSTIC EXERCISES
b. The obligation of D is demandable on
December 2, 2015 if X dies on the same date
and D has not yet married X.
c. The obligation of D is demandable if it is
already January 1, 2016 and D has not yet
married X.
d. The obligation is demandable if C marries X
on December 2. 2015.
53. D owes C P5,000.00. T, a third person and without
any intention to be reimbursed by D, paid the debt
without the consent of D. C accepted the payment.
a. The payment did not extinguish the debt of
D to C because it was made without the
consent of D.
b. The payment did not extinguish the debt
because it was not made by D himself.
c. The payment is considered valid because it
was accepted by the creditor.
d. The payment may be considered valid if T
had the intention to be reimbursed.
54. A mode of extinguishing obligations up to their
concurrent amount when two persons are principal
debtors and creditors of each other is called:
a. Novation
b. Payment
c. Compensation
d. Merger
55. D owes C P6,000.00. No date for payment was
stipulated by the parties.
a. C cannot require D to pay because there is
no date for payment.
b. C can require D to pay at any time.
c. D is not liable to C because the obligation is
void there being no date of payment.
d. D is not required to pay unless C goes to
court and asks the court to fix a period for
the payment.
56. Under a contract executed on November 1, 2015, D
obliged himself to give a specific horse to C on
December 10, 2015. On December 8, 2015, C
demanded the delivery of the horse but D did not
comply. The following day, the horse was struck by
lightning and died instantly.
a. The obligation of D is extinguished because
the loss is due to fortuitous event and D was
not in default.
b. The obligation of D is not extinguished
because D can deliver another horse.
c. The obligation of D is not extinguished
because D was in default.
d. The obligation of D is not extinguished
because the demand was not made on due
Notes in Business Law by Fidelito R. Soriano
date.
57. Which of the following is not considered a
conditional obligation?
a. D to pay c P5,000.00 as soon as D has the
means.
b. D to pay c P5,000.00 if C marries X.
c. D to pay c P5,000.00 if C tops the CPA
Examinations.
d. D to pay C if X dies of malaria.
58. The distinction between merger and compensation is
that in merger:
a. The two debts may be payable at different
places.
b. Two persons are in their own right debtors
and creditors of each other.
c. The debtor and creditor may agree on the
set-off of debts that are not yet due.
d. The debtor and the creditor refer to only one
person.
59. The passage of time as a mode of acquiring or losing
a right including the extinguishment of an obligation
is called:
a. Remission
b. Novation
c. Prescription
d. Merger
60. Legal compensation shall not be proper in three of
the following cases. Which is the exception?
a. Commodatum
b. Civil liability arising from a criminal offense
c. Gratuitous support
d. Bank deposit
61. Cecilia, the owner of a sari-sari store, purchased
several bags of “Dulcita” candy worth of P5,000.00
from Olga, an authorized dealer of the product. On
due date, Cecilia, who sells the candies at P1.00
each, tendered her payment to Olga consisting of
5,000 pieces of P1.00 coins.
a. Olga may refuse to accept the payment and
demand that she be paid in bills.
b. Olga may not refuse to accept the payment
because what Cecilia was offering as
payment is money circulated in the
Philippines.
c. Cecilia may consign the payment in court if
Olga refuses to accept it.
d. The tender made by Cecilia was valid
because the P1.00 coins came from her sales
and she had plenty of them.
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OBLIGATIONS – DAIGNOSTIC EXERCISES
62. Dominico and Domingo are jointly and severally
liable to Crispino for P100,000.00. the obligation is
due on June 30, 2015. On June 25, 2015, Domingo
paid the whole amount of the note to Crispino. If
Domingo reimburses Dominico on July 15, 2015,
Dominico is entitled to receive from Domingo:
a. P50,000.00 plus interest from June 25 to
July 15, 2015.
b. P50,000.00 plus interest from June 25 to
June 30, 2015.
c. P50,000.00 plus interest from June 30 to
July 15, 2015.
d. P50,000.00 with no interest because
Dominico paid the note before due date.
63. One of the following statements does not pertain to
dacion en pago. Which is it?
a. Ownership of the thing is transferred to the
creditor.
b. The debtor must be insolvent.
c. It does not affect all the properties of the
debtor.
d. It does not require plurality of creditors.
64. One of the following does not apply to payment by
cession. Which is it?
a. Ownership of the debtor’s properties is
transferred to the creditor.
b. The debtor must be insolvent
c. It affects all the properties of the debtor
except from execution.
d. There are several creditors.
65. A, B and C are solidarily liable to X for P30,000.00.
A pays X the whole amount due. C, however, is
insolvent.
a. A alone will bear the share of c who is
insolvent since he (A) made the payment.
b. A can collect from B P10,000.00.
c. A can collect from B P15,000.00.
d. A can demand a refund of P10,000.00 from
X pertaining to C’s share since C is
insolvent.
66. Anna Almeda, Belinda Bersola, and Claudia Cabrera
executed the following promissory note:
“ I promise to pay Dolores Dominguez or order the
sum of P30,000.00 on June 30, 2015.
(Sgd.) Anna Alameda
(Sgd.) Belinda Bersola
(Sgd.) Claudia Cabrera”
On June 30, 2010, Dolores Dominguez can collect
from Anna Almeda:
Notes in Business Law by Fidelito R. Soriano
a. P10,000.00
b. P30,000.00
c. P20,000.00
d. Nothing, because the note is void since it says “I
promise” but was signed by three persons.
67. One of the following is a valid obligation. Which is
it?
a. D promised to give C P50,000.00 if C will
not swim across the Pacific Ocean.
b. D promised to give C P50,000.00 if D goes
to Tokyo.
c. D promised to give C P50,000.00 if C can
fly to the moon.
d. D promised to give C P50,000.00 if C gives
him 5 grams of marijuana.
68. An obligation where various prestations are due but
the performance of all of them is required in order to
extinguish the obligation is known as:
a. Alternative obligation
b. Facultative obligation
c. Conjunctive obligation
d. Simple obligation
69. A, B and C are solidary debtors of X in the amount
of P9,000.00. subsequently, X renounced the share
of A. A accepted the renunciation of his share. On
due date, B paid X P6,000.00. B demanded
reimbursement from C but C is insolvent. In this
case:
a. B may demand the payment of P3,000.00
from A.
b. B may not demand any payment from A
because the share of A had already been
renounced or condoned.
c. B may demand P1,500.00 from A
representing A’s share in C’s insolvency.
d. B may demand from A P4,500.00 so that
their sharing in the total debt is equal.
70. D is indebted to C for P20,000.00 which is due on
June 10. C owes D 15,000.00 which is due on June
5. On June 8, C assigned his credit rights to T. D
gave his consent to the assignment but did not
reserve his right to the compensation. On June 10,
how much may T collect from D?
a. P20,000.00
b. P15,000.00
c. P5,000.00
d. Nothing.
71. On May 1, 2015, D executed a written undertaking
obliging himself to deliver 100 sacks of rice to C on
May 31, 2015. On May 28, 2015, C demanded the
delivery of 100 sacks of rice from D but D did not
comply. The following day, a fire of undetermined
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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

origin destroyed D’s warehouse together with about Which of the rights of X arising from the said
500 sacks of rice stored therein and from which D documents/contacts will be transmitted to the heirs
intended to get 100 sacks of rice for delivery to C. of X
a. I and II
a. D’s obligation to deliver 100 sacks of rice to
b. II and III
C is extinguished, the cause of the loss being
c. III and IV
a fortuitous event.
d. I and IV
b. D’s obligation to deliver 100 sacks of rice to
74. The following statements pertain to either payment
C is not extinguished because he can get 100
by cession or dacion en pago.
sacks of rice from other sources.
c. D’s obligation to deliver 100 sacks of rice to
I. The debtor is insolvent.
C is not extinguished because D was in
II. Ownership of the thing/s is transferred to
default.
the creditor/s.
d. D’s obligation is to pay damages because he
III. Plurality of creditors is required.
was in default.
IV. Obligations are totally extinguished as a
rule.
72. On June 1, 2014, Demetrio obtained a loan of
P100,000.00 from Cornelio. The loan, which is
a. Statement I and IV pertain to payment by
payable on or before June 1, 2015, is secured by a
cession.
chattel mortgage on Demetrio’s brand-new Toyota
b. Statement I and III pertain to dacion en
car with plate number XYZ 123. On February 1,
pago.
2015, while Demetrio was opening the trunk of his
c. Statement II and IV pertain to dacion en
car at the parking lot of a grocery store to place the
pago.
groceries he had just purchased, three unidentified
d. Statement III and IV pertain to payment by
men approached him and took his car at gunpoint.
cession.
He reported the carnapping to the authorities but his
75. The return of what has been paid by mistake is
car has not been recovered.
known as:
a. Cornelio may demand immediate payment
of the loan unless Demetrio gives another a. Solution indebiti
security therefore. b. Negotiorum gestio.
b. Cornelio may demand payment only on June c. Quasi-delict.
1, 2010 because Demetrio has the benefit of d. Natural obligation.
the period and the loss of the car was due to
force majeure. Items 76, 77, and 78 are based on the following
c. Cornelio may no longer demand payment information:
since the loan was extinguished by reason of
the loss of the car due to fortuitous event. Dolores borrowed P15,000.00 from Consuelo. On due
d. Cornelio may demand immediate payment date, Dolores was not able to pay but she promised to
even if Demetrio offered another security give Consuelo a specific ring, a specific bracelet, or a
because the car is determinate and could not specific necklace, in payment of the debt. Consuelo
be replaced. accepted the offer of Dolores.

73. The estate of X who died recently, shows among 76. What kind of obligation is the new obligation of
other documents/contracts, the following: Dolores?

I. A certificate from Harvard University a. Facultative obligation

granting a scholarship to X. X was b. Compound obligation
subjected to exhaustive examination and c. Alternative obligation
interviews before he was granted the d. Simple obligation
scholarship. He was supposed to start
studying at Harvard in 3 months’ time. 77. How was the obligation of Dolores to pay
II. Articles of partnership of XYZ Enterprise P15,000.00 extinguished?
showing X as a general partner.
III. A stock certificate of DEF Corporation a. By compensation
showing X as the owner of P5,000.00 b. By novation
shares of stock. c. By confusion
IV. A promissory not amounting to d. By condonation
P100,000.00 executed by M in favor of X.
the note is due after 90 days. 78. Assume that before Dolores could deliver any of the
ring, bracelet or necklace, the ring and the bracelet
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OBLIGATIONS – DAIGNOSTIC EXERCISES
were lost successively through the fault of Dolores.
In this case:
a. Consuelo may demand the payment of the
price of the ring or the price of the bracelet
plus damages, or the delivery of the
necklace.
b. Dolores may deliver the necklace to
Consuelo without any obligation to pay
damages.
c. Dolores may deliver the necklace to
Consuelo with the obligations to pay
damages because the ring and the necklace
were lost through her fault.
d. Consuelo may demand the payment of the
price of the bracelet which was the last item
that was lost, plus damages.
79. D obtained a loan of P100,000.00 from C. D used
the amount as placement fee for a job in the Middle
East. The loan agreement showed that the loan was
payable within one year with interest at 6% per
annum. However, there was no provision saying that
the rights and obligations of the parties would be
transmitted to their heirs or successors-ininterest.
Before maturity, D died leaving his son as heir.
Which of the following is correct?
a. C cannot collect from S because no mention
was made in the agreement between D and
C that the rights and obligations of the
parties would be transmitted to their heirs.
b. C can collect from S although no mention
was made in the agreement that rights and
obligations would be transmitted to the
heirs.
c. C cannot collect from S because the
obligation is personal to D.
d. C cannot collect from S because the law
prohibits the transmission of the obligation.
80. Hilario, husband, and Wynona, wife, are legally
separated. By order of the court which decreed the
legal separation, Hilario is obliged to give a monthly
support of P20,000.00 to Wynona payable in
advance within the first five days of the month.
Wynona owes Hilario P20,000.00 by way of loan.
On the other hand, Hilario has not yet given
Wynona’s support of P20,000.00 for the preceding
month and another P20,000.00 for the present
month. All the debts are already due. Based on the
foregoing facts, which of the following statements is
incorrect?
a. If Wynona demands her support for the
preceding month, Hilario may set up
compensation as regards the loan that
Wynona owes him.
b. If Wynina demands her support for the
current month, Hilario may claim
Notes in Business Law by Fidelito R. Soriano
compensation as regards the loan that
Wynona owes him.
c. If Hilario demands the payment of the loan,
Wynona may set up compensation as
regards her support for the preceding month
that Hilario owes her.
d. If Hilario demands payment of the loan,
Wynona may set up compensation as
regards her support for the current month
that Hilario owes her.
81. One of the following is not demandable at once.
Which is it?
a. D to give his car to C. No date was fived by
the parties for the date of the delivery.
b. D to give his car to C until C completes his
course in BS Accountancy.
c. D to give his car to C until X dies.
d. D to give C his car should C enroll in BS
Accountancy.
82. D owes C the following debts: P6,000.00 due on
January 1; P6,000.00 due on January 15; P6,000.00
due on January 31; P6,000.00 due on February 15;
P6,000.00 due on February 28; and P6,000.00 due
on March 15. All the debts are unsecured except the
one on February 28. The parties stipulated that C
may demand payment on or before due date of each
debt. Assume that today is February 16. D, however,
has not yet paid any of the debts. He has in
possession P6,000.00 which he intends to pay C.
a. D may apply the payment to the debt due on
February 28 because it is the most
burdensome to him.
b. D may apply the payment to any of the five
unsecured debts.
c. D may apply the payment to any of the four
debts that have become due as of today,
February 16.
d. D may apply the payment to all of the debts
that have become due as of today, February
16, proportionately at P1,500.00 each.
83. D made a promise to give a ring to C. Before D
could deliver a ring to C, C borrowed D’s ring. After
a week, D demanded the return of the ring that he
had lent to C. c refused to return the ring claiming
that there was compensation between his obligation
to return the ring of D and D’s obligation to give
him a ring. Based on the foregoing facts, which of
the following statements is incorrect?
a. C entitled to claim compensation.
b. C is not entitled to claim compensation.
c. D may oppose the compensation being
claimed by C.
d. Only D may claim the compensation should
C demand the delivery of a ring from him
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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

(D). of:

84. Maila made a non-negotiable promissory note with a. Confusion.

Pia as payee. Pia assigned the note to Aiko, Aiko b. Novation.
signed the note to Bea, Bea assigned the not to c. Compensation.
Carmina, Carmina signed the note to Helen, and d. Condonation.
Helen assigned it back to Maila.
88. On a certain year, D was obliged under a contract
a. Maila’s obligation is extinguished by executed on March 1 to deliver an agricultural land
condonation. to C on April 1. D, however, actually delivered the
b. Maila’s obligation is extinguished by land and the fruits thereof to C on May 1. C had the
confusion. right to the fruits of the agricultural land beginning
c. Maila’s obligation is extinguished by on:
compensation.
d. Maila’s obligation is not extinguished a. March 1
because the note is not negotiable. b. April 1
c. May 1
85. Lafuente is a lessee of Oberon’s building. Under the d. The period should be fixed by the court so
lease contract, Lafuente must pay the monthly rental that it can be determined when C is entitled
of P10,000.00 to Oberon at Oberon’s office within to the fruits.
the first 5 days of the month in advance. On the sixth
month of the lease, Lafuente went to Oberon’s office 89. Refer to the foregoing number. C became the owner
to pay the rental but he as told by Elcano, an of agricultural land and the fruits thereof on:
employee of Oberon, that Oberon was confined at
the hospital. Elcano told Lafuente that he could a. March 1
entrust the payment to him. Santiago, a son of b. April 1
Oberon, who happened to be around, however, c. May 1
demanded that Lafuente must pay to him claiming d. The period should be fixed by the court so
that as Oberon’s son, he was the one authorized to that it can be determined when C actually
receive the payment. Given the situation where you became the owner of the agricultural land
do not know to whom you will give your payment, and its fruits.
which of the following mode of payment would you
avail yourself of if you were Lafuente? 90. The right of C before the delivery, on one hand, and
his right after the delivery, on the other hand, of the
a. Dacion en pago agricultural land and its fruits, to him are referred to
b. Payment by cession as:
c. Consignation
d. Application of payment a. Personal right and real right, respectively.
b. Real right and personal right, respectively.
86. D promised to give C 10 sacks of rice when X, C’s c. Both are considered a personal right.
father, dies. The obligation of D to C s: d. Both are considered real right.

a. An obligation with a suspensive condition. 91. Assuming that in No. 88, D did not deliver the land
b. An obligation with a resolutory condition. and its fruits to C. instead, he delivered the same to
c. An obligation with a period. X, who was in good faith when he acquired the land
d. A pure obligation. and its fruits, on April 30.

87. D bought a plane ticket for Hong Kong from Wings a. X is the rightful owner of the land.
Travel Company. Later, however, D cancelled his b. C is the rightful owner of the land.
flight to Hong Kong because of the SARS epidemic c. C has a right of action against X.
in the place. Upon being informed of the d. C cannot ask for damages against D.
cancellation, Wings Travel told D that D could get
the refund of his plane ticket within two days. In the 92. Which of the following is not a proper remedy for
meantime, D thought of going instead to Australia so the creditor?
he called Wings Travel to send him a ticket for
Brisbane promising to pay the cost of the ticket in a. To compel the debtor to make the delivery,
two days. Assuming that the refund due to D for his if the obligation is to deliver a determinate
unused plane ticket to Hong Kong is of the same thing.
amount as the cost of his plane ticket to Australia, D
two days later need not pay Wings Travel by reason

Page 10 of 37
OBLIGATIONS – DAIGNOSTIC EXERCISES
b. To ask that the obligation be complied with
at the expense of the debtor, if the obligation
is to deliver a generic thing.
c. To compel the debtor to perform the
obligation, if the obligation is an obligation
to do.
d. To ask the debtor that what has been done be
undone, if the obligation is an obligation not
to do.
93. The delivery of the creditor of mercantile documents
such as checks shall produce the effect of payment:
a. Upon the delivery.
b. When they have been cashed.
c. When through the fault of the debtor they
have been impaired.
d. When they are deposited in the bank.
94. Which of the following statements concerning delay
is incorrect?
a. There is no delay in obligations not to do.
b. Delay, as a rule, exists, when the debtor does
not perform his obligation on the date it is
due.
c. Demand, as a rule, is required, in order for
delay to exists.
d. When time is of the essence of the contact,
delay on part of the debtor exists despite the
absence of demand.
95. When the debtor and the creditor agree to a dacion
en pago (transfer of ownership of property to the
creditor to settle a monetary obligation), before such
transfer of ownership, there is actually a:
a. Compensation
b. Confusion
c. Condonation
d. Novation
96. The delivery of mercantile documents such as
checks will produce the effect of payment:
a. When through the fault of the creditor they
have been impaired.
b. Upon delivery of the mercantile document.
c. When they are certified by the bank.
d. When they are presented to the bank for
payment.
97. XYZ is a cooperative store. On July 1, 2015, it paid
the Government of the City of Manila certain taxes
believing that it owed the same. After six months,
XYZ learned that it was not subject to the said taxes.
Accordingly, it sought to recover the said taxes it
previously paid. The obligation of the Government
of the City of Manila to return the said taxes paid is
Notes in Business Law by Fidelito R. Soriano
based on:
a. Negotiorum gestio.
b. Solution indebiti.
c. Quasi-delict.
d. The Government is exempt from giving tax
refunds.
98. S sold 100 bottles of imported “Fundador” brandy to
B who paid immediately the pricethereof amounting
to P20,000.00. S promised to deliver the brandy to B
within one week from their agreement. On the
agreed date of delivery, S delivered to B 100 bottles
of fake “Fundador” brandy. The contract between S
and B is:
a. Voidable
b. Void
c. Valid
d. Rescissible
99. D obtained a loan from C amounting to P50,000.00
which is payable in 10 equal monthly installments.
The loans bears interests of 1% per month which D
agreed to give to T, a student whom C is sending to
school. To secure the loan, D executed a chattel
mortgage on his car. Although D has been paying
the monthly interest to T, D could not pay any of the
installments due. In view thereof, D proposed, and C
accepted that D should give instead a diamond ring
to C in place of the loan of P50,000.00 within two
months from their new agreement. T, however, was
not notified of the new obligation. Based on the
forgoing facts, which of the following statements is
incorrect?
a. D’s obligation to give C P50,000.00 is
extinguished by novation.
b. The accessory contract of the chattel
mortgage is extinguished by the new
agreement between D and C.
c. T is a party to the original agreement
between D and C.
d. The new contract did not extinguish D’s
liability to pay interest to T.
100. Alternative obligation and facultative obligation
are similar in which of the following respects?
a. The right of choice may be given either to
the debtor or creditor.
b. Several prestations are due.
c. Only one prestation is due but the debtor
may render another in substitution.
d. The obligation becomes a simple obligation
once the choice of the prestation is made and
communicated.
101. D borrowed P5,000.00 from C. the obligation is
payable in full after 30 days. In which of the
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OBLIGATIONS – DAIGNOSTIC EXERCISES
following cases is D justified in making a
consignation of his payment in court?
a. If C refuses to accept the payment in the
form of a check which is certified by the
bank to be supported by sufficient funds.
b. If C refuses to accept the payment consisting
of 5,000 pieces of P1.00 coins.
c. If C refuses to accept the first instalment in
the form of a P1,000.00 bill, D promising to
pay the balance of the debt in 4 equal
monthly installments.
d. If C refuses to accept the payment consisting
of 250 pieces of P20.00 bills.
102. Which of the following condonations will not
extinguish the debtor’s obligation?
a. The condonation is in a public instrument.
The acceptance is made orally. The
condonation involves a computer printer
whose value is P4,000.00.
b. The condonation and the acceptance are in a
public instrument. The condonation involves
a parcel of land.
c. The condonation and the acceptance are
made orally with the creditor delivering to
the debtor simultaneously the promissory
note amounting to P10,000.00.
d. The condonation is in a public instrument.
The acceptance is made in a private
instrument. The condonation involves a
television set worth P20,000.00.
103. In which of the following independent cases is
the payor of the debtor’s debt not subrogated to the
rights of the creditor?
a. D owes C P10,000.00. The debt is secured
by a pledge of D’s ring to C. D also owes X,
P8,000.00. X pays C P10,000.00 without the
knowledge of D.
b. D owes C P10,000.00. the debt is secured by
a pledge of D’s ring to C. X pays C
P10,000.00 with the consent of D.
c. D owes C P10,000.00. the obligation is
guaranteed by G. G pays C P10,000.00
without the knowledge of D.
d. D owes C P10,000.00. The obligation is
guaranteed by G. X pays C P10,000.00
without the knowledge of D.
104. S sold his only horse to B for P10,000.00 cash.
The parties agreed that S shall deliver the within one
week from their agreement. Nothing is mentioned in
the agreement on how the horse will be cared for by
S before delivery.
a. S must take care of the horse with the
diligence of a good father of a family before
delivery.
Notes in Business Law by Fidelito R. Soriano
b. S need not take care of the horse because
nothing was mentioned in the agreement on
how the horse will be cared for.
c. S must take care of the horse with
extraordinary diligence.
d. The absence of a stipulation on how the
horse must be cared for renders the sale void
because such stipulation is an essential
element of the contract.
105. D owes C the following debts: P3,000.00 due on
August 10; P3,000.00 due on August 15; and
P3,000.00 due on August 25which is secured by a
pledge of D’s ring. If today is August 22, and D pays
C P3,000.00 with neither D nor C designating the
debt to which the payment shall pay, the payment
shall be applied:
a. To the debt due on August 10, following the
“first-due, first-pay” basis.
b. To the debts due on August 10, August 15,
and August 20, proportionately at P1,000.00
each.
c. To the debt due on August 25, since it is the
most onerous to D.
d. To all the debts proportionately at P750.00
each.
106. M executed a promissory note payable to P for
P100,000.00. the note, which bears interest at 2%
per month, is payable after 60 days. On the date of
maturity, P proceeded to M’s place to collect but
when M demanded the presentation of the
promissory note, P could not present it claiming that
it had been lost. M is able and willing to pay the
whole amount due including the interest but he is at
loss on what to do because P does not have the
instrument. On the other hand, if he does not pay the
amount due, the interest on the principal will
continue to accrue. If you were M, the remedy that
you will likely avail yourself of is:
a. Dacion en pago
b. Payment by cession
c. Consignation
d. Application of payment
107. A, B,C, and D owe X, Y and Z the sum of
P12,000.00. based on the foregoing data, which of
the following statements is incorrect?
a. The obligation is joint.
b. There are seven distinct debts in the
obligation.
c. Each debtor is liable only for a total
P3,000.00.
d. Each creditor is entitled to collect a
maximum of P4,000.00.
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OBLIGATIONS – DAIGNOSTIC EXERCISES
108. P took a public bus in going to his office.
Although P paid his fare, the bus conductor does not
issue to him a ticket. Along the way, the met an
accident causing a slight injury to P and other
passengers. If P is to recover damages from the bus
owner, the source of the bus owner’s liability is:
a. Contract
b. Quasi-delict
c. Law
d. P cannot recover any amount because no
ticket was not issued.
109. One of the following obligations is void. Which
is it?
a. D to give C P50,000.00 if C does not run
100 miles without stopping.
b. D to give C P50,000.00 when D has the
means.
c. D to give C P50,00000 if D buys a brand-
new car.
d. D to give C P50,000.00 if C runs for
barangay chairman next year.
110. Which of the following obligation is a pure
obligation and is demandable at once?
a. D to allow C to use D’s car until December
31, 2011.
b. D to allow C to use D’s car until C finishes
his course in accounting.
c. D to give C his car. No mention is made
when D shall give the car.
d. D to give C a car if C finishes his course in
accounting.
111. On January 1, 2010, D obtained a loan of
P100,000.00 from C. the loan is secured by a chattel
mortgage on D’s car and is payable on December 31,
2010. On September 26, 2010, the car was taken at
gunpoint from D while he was starting its engine at
the parking lot of a department store.
a. D’s loan obligation is extinguished.
However, D must give a property which C
may sell to satisfy his claim.
b. D’s loan obligation is subsists. However, C
may demand its immediate payment unless
D gives another security.
c. D’s loan obligation subsists. However, C
may not demand immediate payment since
the loss of the security was without the fault
of D. D, moreover, is not required to give a
new security.
d. D’s obligation is extinguished together with
the mortgage since the loss of the car was
without the fault of D.
112. A and B are the owners of adjacent poultry and
piggery farms. One day, B got sick and failed to visit
Notes in Business Law by Fidelito R. Soriano
the farm. When A noticed that B was not again
around during the second day, he himself took care
of the animals by feeding them and cleaning the pig
and poultry pens. A did this for the next three days
until B returned. A incurred necessary and useful
expenses amounting to P5,000.00 in the process.
Under the circumstances, B is obliged to reimburse
A for such expenses which the latter incurred by
reason of:
a. Contract
b. Solutio indebiti
c. Negotiorum gestio
d. Quasi-delict
113. D has a savings deposit with XYZ Bank in the
amount of P20,000.00 which D may withdraw
anytime from the bank. He also has a loan obligation
to XYZ Bank amounting to P20,000.00 which has
become due. D wants to withdraw his savings
deposit but XYZ Bank informs D that it has claimed
compensation of D’s deposit and his loan obligation.
a. Both D and XYZ Bank may claim
compensation.
b. Neither D nor Xyz bank may claim
compensation
c. Only D may claim or oppose compensation
d. Only XYZ Bank may claim or oppose
compensation
114. Which of the following is an indivisible
obligation?
a. To give a rendition tonight of Handel’s
“Messiah” in a concert at the Folks Arts
Theater.
b. To construct a pavement measuring 2 meters
wide and 10 meters long.
c. To lecture for 5 Saturdays in a tax seminar.
d. To pay a loan obligation of P100,000.00 in
10 equal monthly installments.
115. Devera obtained a loan of P50,000.00 from
Centeno who is engaged in the business of
financing. The written contract of the parties
provides that the loan shall bear interest of 12% per
annum and shall be paid in full together with the
interest at the end of 12 months at Centeno’s
business office. On due date, Devera proceeded to
Centeno’s business office to pay his debt but the
place was padlocked and shows no signs that it had
been occupied for some time. Devera is now at a
loss on what to do as Centeno did not forward his
present address to him. Devera does not want to
have any outstanding obligation at the end of the
year and incur further interest. Which course of
action will you recommend to Devera?
a. Tender of payment
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OBLIGATIONS – DAIGNOSTIC EXERCISES
b. Compensation
c. Consignation
d. Application of payment
116. D borrowed P100,000.00 from C. the parties
agreed at the time the obligation was constituted that
should D so desire, he may give his agricultural land
to C by way of dacion en pago to pay his loan
obligation on due date. The obligation of D to C is:
a. A conjunctive obligation
b. A simple obligation
c. An alternative obligation
d. A facultative obligation
117. One of the distinctions between a facultative
obligation and an alternative obligation is that in an
alternative obligation.
a. Only one thing is principally due.
b. The right of choice belongs to the debtor
alone.
c. If the obligation to give a principal thing is
void, the obligation to give the substitute is
also void.
d. If all prestations except one are impossible,
that which is possible must still be given.
118. D stole the carabao of C. D was arrested, tried in
court and convicted. Aside from being sentenced to
a prison term, D was also ordered by the court to
return the carabao. However, the carabao died before
D could deliver it to C.
a. D is not liable to C if the cause of the death
of the carabao is a fortuitous event.
b. D is liable to C only if the carabao died
because of D’s fault.
c. D is liable to C whatever may be the cause
of death of the carabao.
d. D has no liability to C whatever may be the
cause of the death of the carabao because his
obligation to return the carabao was due to
an order of the court and not on his own
volition.
119. Under a contract between 0 and C, D is obliged
to deliver 10 bags of detergent soap to C 10 days
after the execution of their agreement. On due date,
D delivered to C 10 bags of detergent soap which he
mixed with chalk.
a. The contract entered into between D and C
is voidable because of the.-fraud employed
by D.
b. The contract is valid. The fraud employed
by D does not affect the validity' of the
contract but D is obliged to pay damages to
C.
Notes in Business Law by Fidelito R. Soriano
c. The contract is void because of the fraud
employed by D in the performance of his
obligation.
d. The contract is rescissible because of the
damages suffered by C.
120. D obtained a loan from C in the amount of
P50,000.00. Unable to give cash on due date in
payment of his loan obligation, D proposed to C that
he would be giving instead his diamond ring to settle
his debt. C agreed and accepted the ring from D. The
new agreement between D and C involved both:
a. Novation and application of payment.
b. Novation and dacion enpago.
c. Compensation and payment by cession.
d. Confusion and tender of payment.
121. Salas and Bersamin entered into a contract
whereby Salas would deliver 5 pieces of genuine
Rolex wristwatches to Bersamin. Salas proposed to
Bersamin that should Salas deliver 5 units of fake
pieces of Rolex wristwatches by reason of financial
difficulties on his part, Bersamin would not sue him
for damages on the ground of fraud. Bersamin
accepted the proposal. On due date, Salas delivered
5 pieces of fake Rolex wristwatches. Upon discovery
of the fraud, Bersamin sues Salas for damages. Salas
contends that he cannot be held liable for damages
because Bersamin waived his right to hold him
(Salas) liable on the ground of fraud if the reason
thereof is the financial difficulties of Salas.
a. Bersanding cannot sue Salas for damages
because the reason for the waiver is valid,
i.e., financial difficulties of Salas, which is a
valid reason for the waiver.
b. Bersamin can sue Salas for the annulment of
the contract since it is voidable.
c. Bersamin can sue Salas for damages because
the waiver he made is void. Nonetheless, the
contract is valid.
d. Bersamin can sue Sales for the rescission of
the contract since it is rescissible.
122. B ordered 10 boxes of "X" shirts worth
P2,000.00 per box from S paying immediately the
total, price of P20,000.00. While inspecting the
goods after their delivery to his store, discovered
that one box was missing. Upon being informed,
apologized for the error and promised to refund the
price ofP2,000.00 within three days as there was no
more stock of "X" shirts available. In the meantime,
B ordered and received from Sone box of "Y" shirts
which was also worth P2, 000.00 promising to pay
the same within three days. On the third day,
assuming that S had not yet refunded the price of the
undelivered "X" shirts to B, B need not pay S the
price of "Y" shirts by claiming:
Page 14 of 37
OBLIGATIONS – DAIGNOSTIC EXERCISES
a. Consignation.
b. Compensation.
c. Condonation.
d. Novation.
123. The following are obligations with a term or
period, except?
a. D to give C P50, 000.00 on December 1,
2011.
b. D to give C P50, 000.00 on Christmas day
next year.
c. D to give C P50, 000.00 upon the death of
C's father.
d. D to give C P50, 000.00 if C's father dies
within 2 years.
124. A, B and C are liable, in solidum to X for
P12,000.00. X renounced the share of A who
accepted it. Later, B becomes insolvent.
a. X can collect from C P8,000.00.
b. X can collect from C P4,000.00.
c. X can collect from C P12,000.00.
d. X can collect nothing from C.
125. Ace Realty Company (Ace) ordered6units of
"Bordenoftypewriters from Central Office Machines
(Central) at the priceunitsP8,000.00 per unit.
However, Central delivered to Ace 6 units of
"Remington" typewriters, a superior brand, which
was priced P8,500,00 per unit. Central informed Ace
that it will bill the latter for the “Remington
typewriters at P8,000.00 only. Ace refused to accept
the "Remington" typewriters.
a. Central can compel Ace to the accept the
"Remington" typewriters since they are of
superior quality.
b. Central cannot compel Ace to the accept the
"Remington" typewriters although they are
of superior quality.
c. Central can compel Ace to accept the
"Remington" typewriters since Ace is
required to pay only the price of "Borden"
typewriters.
d. Central can compel Ace to accept the
"Remington" typewriters since all that is
required of Central is to deliver a typewriter
that can perform the same function as the
one that was ordered.
126. Prime Engineering Review Center (PERC)
stated in the leaflets it distributed last January that
any reviewee who places first in licensure
examinations for engineers this year will receive a
cash prize of P150,000.00.
a. The obligation of PERC is subject to a
suspensive condition.
Notes in Business Law by Fidelito R. Soriano
b. The obligation of PERC is subject to a
resolutory condition.
c. The obligation of PERC is a pure obligation.
d. The obligation of PERC is an obligation
with suspensive period.
127. Three of the following statements pertain to
natural obligation. Which one does not?
a. It is not enforceable in a court of justice.
b. Obligation exists by reason of equity and
moral justice.
c. If performed voluntarily, recovery can no
longer be made.
d. There is juridical necessity to perform
128. D has a grains warehouse in Davao, while C has
a grains in Cebu. D borrowed10sacks of rice
worthP10,000.00 from C for D's customer in Cebu.
Later, C borrowed sacks of rice which was also
worth P10,000.00 from D for C's in Davao. Both the
obligations are already due. Transport costs to
Davao amount to P1,000.00, while those for Cebu
amount to P800.00.
a. D and C need not pay each other since their
debts compensated each other.
b. D and C need not pay each other since their
debts compensated each other, except for the
delivery charges which C must pay to D in
the amount of P200.00(P1,000.00 less
P800.00).
c. Compensation cannot take place because the
debts are payable at different places.
d. D must pay C P10,800.00, while C must pay
D P11,000.00.
129. D owes C P20,000.00 due on March 25. C, on
the other hand, owes D the following debts:
P8,000.00due on March1,P3,000.00 due on March 8,
P5,000.00 due -on March 14, andP2,000.00 due on
March 24. On March 18 , C assigned his credit right
to T without informing D who learned of the
assignment on March 20. On March 25, T may
collect from D:
a. P20, 000:00.
b. P2, 000.00.
c. P4,000.00.
d. None, because the assignment made by C
was without the knowledge of D.
130. D owes C P20,000.00 due on March 15. C, on
the other hand, owes D the following debts:
P8,000.00 due on March 1,P3,000.00 due on March
8, P5,000.00 due on March 14. On March 12, C
assigned his right to T with notice to D but with D
not giving his consent to the assignment. On March
15, T can collect from u:
Page 15 of 37
OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

a. P20,000.00. execution) to his creditors in payment of his debts.

b. P9,000.00. The creditors accept the offer and are able to sell the
c. P4,000.00. debtor’s properties for P70,000.00. Based on the
d. None, because the assignment made by C foregoing facts, which of the following is incorrect?
was without the consent of D.
a. The special mode of payment availed of by
131. On December 1, 2009, Miss Santos, a professor D is payment by cession.
of Manila College, engaged the services of Lepanto b. D is released from his total liability of
Transport to bring her class to Calamba, Laguna in P100,000.00 even if there is no stipulation to
time for the Rizal Day celebration on December 30, that effect.
2009 which would start at nine o'clock in the c. D is released from his liability only to the
morning, The contract signed by the parties specified extent of P70,000.00 in the absence of any
that a bus would be in the school premises at six stipulation giving him total release.
o'clock in the morning and would leave at exactly d. The creditors did not become owners of D’s
6:320 a. m. However, Lepanto Transport failed to properties at the time of assignment.
send a busy on the date, time and place agreed upon.
As a result, Miss Santos and her class failed to 134. On May 31, 2014, D promised to give a specific
attend the celebration. Ms. Santos sued Lepanto house and lot to C if C passes the Bar Examination.
Transportation for damages. For its defense, Lepanto On September 21, 2014, C took the Bar
Transport claimed there was no delay because Miss Examination. The result of the Bar Examination
Santos never made a demand. which C took was released on March 26, 2015 and C
passed it. C shall been titled to the house and lot:
a. There was no delay because miss Santos did
not make any demand. a. on May 31, 2014
b. Lepanto Transport was in delay since b. on September 24, 2014
demand was not required. c. on March 26, 2015
c. Miss Santos should have obtained the d. when he receives his rating
services of another company when the bus
of Lepanto Transport did not arrive. Items 135, 136 and 137 are based on the following
d. Miss Santos should have reminded Lepanto information: A and B are indebted to X and Y for
Transport from time to time before the due 10,000.00. A and B share in the debt in the ratio of
date of its obligation to provide for a bus. 1:3;while X and Y share in the credit in the ratio of 2:3.
135. How much may X collect from A if the debtors
132. Leveriza, the owner of an apartment, leased the are joint debtors, while the creditors are joint
premises to Toribio. The terms of the lease provide creditors?
for a monthly rental of P6,000.00 which Toribio
must pay at the residence of Leveriza about two a. P10,000.00
blocks from the apartment. For the month of b. P2,500.00
December, Toribio went to the residence of Leveriza c. P4,000.00
but the latter was not around to receive the payment. d. P1,000.00
Not wanting to go back, Toribio left the payment
with Nograles, a neighbor of Leveriza, who 136. How much may X collect from A if there is
promised to give the payment to Leveriza. However, active solidarity?
Nograles spent the amount he received for himself.
Based on the foregoing facts, which of the following a. P10,000.00
statements is incorrect? b. P2,500.00
c. P4,000.00
a. The payment by Toribio to Nograles is valid d. P1,000.00
since the latter is a neighbor of Leveriza.
b. The payment by Toribio is not valid because
137. How much may X collect from A if there is
Nograles was not authorized to receive
passive solidarity?
thepayment.
c. Leveriza can demand payment from Toribio
a. P10,000.000
for the December rental.
b. P2,500.00
d. Toribio can go after Nograles for the amount
c. P4,000.00
misspent by Nograles.
d. P1,000.00
133. D owes the following creditors: X for
138. A, B and C are solidary debtors of X, Y and Z,
P20,000.00; Y for P30,000.00; and Z for
solidary creditors, in the amount ofP2,700.00. X
P50,000.00. D is insolvent so he offers to assign all
renounces the whole obligation without the consent
his properties (except those exempt from the
Page 16 of 37
OBLIGATIONS – DAIGNOSTIC EXERCISES
of Y and Z. The debtors accepted the renunciation.
a. The whole obligation is extinguished.
b. Only P900.00 is extinguished.
c. No part of the obligation is extinguished
because not all the creditors consented to the
renunciation.
d. Only P300.00 is extinguished.
139. A, B and C are solidary debtors of X in the
amount of P3,000.00. X renounces the share ofA and
A accepts the renunciation. Thereafter, B becomes
insolvent. Ultimately:
a. C alone will shoulder the balance of
P2,000.00
b. A will shoulder P500.00, while C will
shoulder P1,500.00
c. C will shoulder only his share of P1,000. A
will no longer shoulder any amount since his
share was already renounced by X.
d. A will shoulder P1,000.00, for the remaining
balance of P2,000.00
140. A, B, and C are obliged to deliver a specific
horse to X, Y, and Z.
a. A demand made by X against A, B, and C is
a valid demand against all the debtors.
b. A demand made by X, Y and Z against A is
a valid demand against all the debtors.
c. If a valid demand is made against all the
debtors but debtor C cannot comply with his
part of the obligation, the obligation to pay
the value of the horse plus damages.
d. If the debtors default in their obligation
because C is insolvent, A and B will be
liable for C’s share of the obligation.
141. O was cleaning the glass window of his building
when a large piece of broken glass fell down directly
hitting the roof of a car which was parked below. C,
the owner of the car, was not around. Sensing that he
would be made liable for the damage on the car, O
immediately went down and cleaned the mess. O,
seeing that W had witnessed all that happened,
proposed to give W P2,000.00 so that W agreed to
the proposal and accepted the money. Based on the
foregoing facts, which of the following statements is
incorrect?
a. O’s liability, if any, is based on quasi-delict.
b. The agreement between O and W is binding
on both of them.
c. W may testify in court despite the
agreement.
d. The agreement between O and W is void.
142. A, B and C are solidary debtors of X and Y for
P30,000.00, joint creditors.
Notes in Business Law by Fidelito R. Soriano
a. X may collect P30,000.00 from either A, B
or C. Thereafter, he must give to Y
P15,000.00 representing the share of Y.
b. X may collect P30,000.00 from the debtors
but not more than P10,000.00 from each of
them. Thereafter, he must give to Y
P15,000.00 representing the share of Y.
c. X may collect P15,000.00 from either A, B
or C. Thereafter, he is not obligated to give
any amount to Y.
d. X may collect P15,000.00 from the debtors
but not more than P5,000.00 from each of
them. Thereafter, he is not obligated to give
any amount to Y.
143. S, a supplier of fresh fish from Lucena City,
hired T, the owner of a trucking company, for a fee
of P3,000.00 to bring the fish catch of S to the
Dampa Market in Paranaque City which ordered the
fish for a price of P20,000.00. In so far S is
concerned, his prestation in his contract with T is:
a. the sale of the fish
b. the transport of the fish
c. the payment of p3,000.00
d. the payment of p20,000.00
144. Refer to the preceding number. In the contract
between S and T:
a. S is the obligor and T is the oblige.
b. S is the oblige and T is the obligor.
c. Both S and T are obligors and oblige of each
other.
d. The Dampa Marktet is the oblige of both S
and T.
145. D obtained a loan of P200,000.00 from C. Not
having any cash on due date when C visited him to
demand payment, D offered to C to accept, at C’s
choice, either D’s necklace, diamond ring, or a
parcel of land, all of which D showed to C. C
accepted the proposal, but requested that he be given
one week to decide which item to take. Before the
week was over, however, armed men forcibly took
the necklace and diamond ring from D’s house.
a. D’s obligation became a simple obligation to
deliver the parcel of land.
b. D’s obligation to give P200,000.00 is
revived because C was deprived of his right
to choose.
c. D’s obligation to give P200,000.00 was
extinguished by personal novation.
d. D’s obligation is now to give the parcel of
land or P200,000.00, at C’s option.
146. The following characteristic of a facultative
obligation, except:
a. Only one thing is principally due.
Page 17 of 37
OBLIGATIONS – DAIGNOSTIC EXERCISES
b. The right of choice cannot be given to the
creditor.
c. The debtor must give the substitute in case
the principal thing is lost due to the debtor’s
fault before substitution.
d. If the principal is void, the debtor is not
obliged to give the substitute.
147. D owes C the following debts: P5,000.00 due on
January 1; P7,000.00 on January 5; P8,000.00 due
on January 10; P10,000 due on January 15; and
P5,000.00 due on January 20. By agreement of the
parties, D was given the benefit of the period. As of
January 17, D has not paid any of the debts. He has
P5,000.00 which he wants to remit to C.
a. D may apply the payment to any of the five
debts.
b. D may apply the payment to any of the four
debts that have become due as of January
17.
c. D may apply the payment either to the debt
due on January 1 or January 20.
d. D may apply the payment only to the debt
due on January 1.
148. Refer to the preceding number. Assume that D
did not designate the debt to which the payment
shall apply. In this case:
a. C may apply the payment to any of the five
debts.
b. C may apply the payment to any of the four
debts that have become due as of January
17.
c. C may apply the payment either to the debt
due on January 1 or January 20 only since
the amount of the payment is the same as the
amount of each debt.
d. C may apply the payment to the debt due on
January 1 only.
149. Refer to no. 147. Assume the creditor did not
also designate the debt to which the payment shall
apply. In such a case:
a. Payment shall be applied proportionately to
the five debts.
b. Payments shall be applied proportionately to
the four debts that have become due as of
January 17.
c. Payment shall be applied only to the debt
due on January 1 since it is the first debt that
has become due.
d. Payment shall be applied proportionately to
the debit due on January 1 and January 20
since the amount of each debt is of the same
amount as the payment.
Notes in Business Law by Fidelito R. Soriano
150. Dacion en pago and payment by cession are
special forms of payment. They are similar in which
of the following respects?
a. On the number of creditors involved.
b. On the extent of the properties involved in
the payment.
c. On the purpose of the payment.
d. On whether the debtor is released
completely from his obligation/s.
151. D is indebted to C for P52,000.00. On due date,
D tendered payment amounting to P52,000.00 which
consisted of the following: 47 pieces of P1,000.00
bills for a total of P47,000.00; and 250 pieces of
P20.00 bills for a total of P5,000.00. C refused to
accept the payment and demanded that D make his
payment all in P1,000 bills since, according to him,
the P20.00 bills were too bulky and inconvenient for
him to carry.
a. D may consign the payment since the refusal
by C to accept the payment was not justified.
b. C's reason for refusing to accept the
payment was justified. Hence, D cannot
consign the payment.
c. D cannot compel C to accept the payment he
was offering because a debtor must make his
payment according to the wishes of his
creditor.
d. D may make his payment in check and
compel C to accept the payment since this
form is the most convenient for C.
152. Which of the following is a characteristic of
expromision but not of delegacion?
a. It is made with or without the consent of the
debtor.
b. The third person who makes the payment to
the creditor is always entitled to
subrogation.
c. In case of insolvency of the new debtor, the
creditor may still recover from the original
debtor under certain circumstances.
d. It is initiated by the debtor himself.
153. D, a depositor of ABC Bank, visited the branch
of the bank at España Boulevard to withdraw from
its automated teller machine (ATM). After pressing
correctly the amount of P500.00, the machine
dispensed 10 piece of P500.00 bills or a total of
P5,000.00. The receipt released by the ATM showed
that only P500.00 was withdrawn.
a. D does not have to return the excess of
P4,500.00 because it was not his fault that
the ATM would dispense more than what he
wanted to withdraw.
b. D does not have to return the excess of
P4,500.00 because the receipt did not
Page 18 of 37
OBLIGATIONS – DAIGNOSTIC EXERCISES
indicate that the said amount was
withdrawn.
c. D must return the excess of P4,500.00
because it was a case of payment that was
not due.
d. D must return the excess of P4,500.00
because the bank will likely discover that he
was the one using the ATM when the
overpayment was made.
154. D is indebted to C in the amount of
P100,000.00. The debt is secured by a mortgage of
the lot of D and the guaranty by G. G, without
informing D, paid the total amount of the loan to C.
a. G cannot collect from D. He cannot also
foreclose the mortgage.
b. G can collect from D. However, if D cannot
pay, G cannot foreclose the mortgage.
c. G can collect from D. If D cannot pay, G
can foreclose the mortgage.
d. G cannot collect from D. However, G can
foreclose the mortgage.
155. A, B and C are liable to X in the amount of
P30,000.00. The debt is evidenced by a promissory
note which reads "I promise to pay X or order
P30,000.00". The note is signed by A, B and C. X
indorsed the note to Y, Y to Z, and Z to A for
merchandise Z bought from A.
a. The obligation under the note is totally
extinguished.
b. The obligation under the note is
extinguished only up to P10,000.00.
c. The obligation under the note is
extinguished only up to P20,000.00.
d. No part of the obligation is extinguished.
156. When two persons are claiming the same right
to collect from you and you are in doubt as to whom
you will give your payment, your remedy so that you
will not pay to the wrong person is:
a. tender of payment.
b. application of payment
c. dacion en pago.
d. consignation.
157. Decoroso borrowed P50,000.00 from Collantes
with Gualberto as guarantor. However, Collantes is
also indebted to Decoroso in the amount of
P30,000.00. Both debts have become due. Collantes
demanded payment from Decoroso but Decoroso has
become insolvent with assets of only P15,000.00
which he used in partial payment of his debt to
Collantes. In this case:
a. Collantes can hold Gualberto liable for the
remaining P35,000.00. Gualberto cannot set
Notes in Business Law by Fidelito R. Soriano
up compensation as regards the amount that
Collantes owes Decoroso because he
(Gualberto) is not a principal debtor.
b. Collantes can hold Gualberto liable for only
P5,000.00 because Gualberto can set up
compensation as regards the amount that
Collantes owes Decoroso.
c. Collantes can hold Gualberto liable for the
amount of P30,000.00 only because that is
the amount that Collantes owes Decoroso.
d. Collantes cannot hold Gualberto liable for
any amount because the insolvency of
Decoroso released Gualberto from liability.
158. A and B are joint debtors of W, X, Y and Z,
solidary creditors, in the amount of P20,000.00. In
this case:
a. W can collect from either A or B
P20,000.00. Then W must give P5,000.00
each to X, Y and Z.
b. W can collect only the maximum amount of
P10,000.00 each from A and B. If W is able
to collect P10,000.00 from A, W must give
P2,500.00 each to X, Y and Z. If W is able
to collect P10,000.00 from B, W must give
P2,500.00 each to X, Y and Z.
c. W can collect only the amount of P5000.00
from either A or B. When he collects the
said amount, W does not have to give the
amount of P1,250.00 each to X, Y and Z.
d. W can collect only the maximum amount of
P2,500.00 each from A and B. When he
collects the total amount of P5,000.00, W
does not have to give the amount of
P1,250.00 each to X, Y and Z.
159. D owes C P6,000.00 which is due on January
10, and another debt of P12,000.00 which is due on
January 20. Both debts are unsecured and non-
interest bearing and are already due. D, however, has
only P3,000.00 which he gives to C without
informing C as to which debt the payment shall
apply. C also did not indicate on the receipt he
issued to D to which of the two debts the payment
shall apply. In this case:
a. The payment of P3,000.00 shall be applied
to the debt due on January 10 because it was
the first to become due.
b. The payment of P3,000.00 shall be applied
to the debt due on January 20 because it is of
a greater amount.
c. Payment cannot be applied to either of the
two debts because it is incomplete.
d. The payment of P3,000.00 shall be applied
proportionately in the amount of P1,000.00
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OBLIGATIONS – DAIGNOSTIC EXERCISES
to the debt due on January 10, and P2,000.00
to the debt due on January 20.
160. D obtained a loan of P500,000.00 from C on
January 1, 2014. The loan, which D has the option of
paying on or before December 31, 2014, is secured
by a building owned by D and bears interest of 1%
per month. On June 30,2014, the building was razed
in a fire without the fault of D.
a. C may demand immediate payment of the
loan from D on June 30, 2014 since the
security therefor was lost, unless D gives
another security.
b. C may not demand immediate payment of
the loan from D because the loss of the
building was due to fortuitous event.
c. C may demand payment of the loan from D
only on December 31, 2014 because the
benefit of the period was given to D who
was given the option to pay on or before the
due date.
d. C may no longer demand payment since the
loan was extinguished by reason of the loss
of the building.
161. Mario Marquez executed a promissory note
which reads as follows:
I to pay to the order of Pablo Perez the
sum of P50,000. 00 on January 31, 2016.
(Sgd.) Mariano Marquez (Sgd.) Gilbert
Garcia
Maker Guarantor
Pablo Perez indorsed the note to Alfonso Abad,
Alfonso Abad to Benito Buenviaje, Benito
Buenviaje to Carlos Cuaresma, and Carlos Cuaresma
to Gilbert Garcia. The negotiation of the note to
Gilbert Garcia produced the effect of:
a. extinguishing both the loan and the
guaranty.
b. extinguishing the loan but not the guaranty.
c. extinguishing the guaranty but not the loan.
d. neither extinguishing the loan nor the
guaranty.
162. D borrowed P50,000.00 from C. On due date, D
did not have any money to pay the debt so he
proposed to C that the latter accept a ring to settle
the debt. C accepted the proposal and received the
ring. Immediately after receiving the ring, C sold it
to B. D's obligation to give P50, 000.00 to C is
extinguished by:
a. dacion en pago.
Notes in Business Law by Fidelito R. Soriano
b. payment by cession.
c. sale.
d. application of payment.
163. D is obliged to deliver a specific Toyota car to
C. The parties agreed that should D so desire, he
may deliver his only Lancer car to C as a substitute.
Before D could make any substitution, the Lancer
car was damaged beyond repair through the fault of
D.
a. D's obligation to deliver the Toyota car is
extinguished.
b. D is obliged to pay damages to C for the loss
of the Lancer car.
c. D is still obliged to deliver the Toyota car to
C on due date.
d. D is obliged to get another Lancer car as a
substitute.
164. D is obliged to deliver either a specific bracelet,
a specific necklace, or a specific ring to C. No
mention was made in the agreement of the parties as
to who has the right of choice. Before due date, C
wrote D informing the latter that he (C) preferred
that the ring be delivered to him. D received the
letter but did not give any response to C.
Subsequently was lost through a fortuitous event.
a. D's obligation to C is extinguished by
fortuitous
b. D is obliged to pay damages to C because he
was in default when he did not respond to
the letter.
c. D's obligation is not extinguished as he may
deliver either the bracelet or the necklace.
d. D's obligation became a simple obligation
when C informed D of his (C's) preference
on the object to be given to him.
165. D, a professional singer, agreed to sing for a fee
of P20,000.00 at the birthday party of C who was a
fan of D. Due to numerous commitments, D could
not go to the party of C. So he sent X, another
professional singer who was known to sing better
than D, to sing at C's party, and informed C that the
latter needed to pay only P10,000.00.
a. D may validly assign his obligation to sing
because the reduced fee was advantageous to
C.
b. D may validly assign his obligation to sing
because X could perform the obligation
better than him.
c. D may not validly assign his obligation to
sing because it is personal in nature.
d. C cannot refuse the performance of the
obligation by X because the obligation to
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OBLIGATIONS – DAIGNOSTIC EXERCISES
sing is transmissible since it would not
require much effort on the part of either D or
X who are both professional singers.
166. D received a check for P5,000.00 drawn against
ABC Bank in payment of a debt due him. Upon
cashing the check, D requested the teller to give him
10 pieces of P500.00 bill and to place the money in
an envelope. As he was in a hurry, D left the bank
without bothering to count the cash. Shortly after
reaching his office, D counted the money in the
envelope and discovered that it contained 10 pieces
of P1,000.00 bill or an excess of P5,000.00.
a. D does not have the obligation to return the
excess of P5,000.00 because it was not his
fault that the teller would pay him an amount
in excess of what was stated in the check.
b. D does not have the obligation to return the
excess of P5,000.00 because the bank will
not likely know who among the bank clients
received such excess amount.
c. D must return the excess of P5,000.00
because he has the obligation to do so under
the principle of solutio indebiti.
d. D must return the excess of P5,000.00
because he has the obligation to do so under
the principle of negotiorum gestio.
167. The following condonations are presented to you
for evaluation:
I. A condonation involving a debt of an
immovable property which was embodied in a
private instrument together with the
acceptance thereof.
II. A condonation involving a money debt of
P6,000.00 made and accepted orally with the
creditor making a simultaneous delivery to the
debtor of the promissory note evidencing the
credit.
In your evaluation of the above condonations, the
obligation is:
a. extinguished in both I and II.
b. extinguished in I only.
c. not extinguished in either I or II.
d. extinguished in II only.
168. The following cases are presented to you for
evaluation:
I. D is obliged to deliver a specific computer to
C. Before the scheduled delivery, the
computer was lost in a fire through no fault of
D.
Notes in Business Law by Fidelito R. Soriano
II. D is obliged to deliver 10 sacks of rice to C.
Before the scheduled delivery, the warehouse
of D containing 500 sacks of rice from which
D intended to get 10 sacks of rice for delivery
to C, was razed in a fire together with the
stock of rice through no fault of D
In your evaluation of the above cases, the obligation
is extinguished by loss in:
a. Both I and II.
b. Neither I nor II.
c. I only.
d. II only.
169. Which of the following obligations is void?
a. D agreed to hire C as manager of his (D's)
business if C is willing to relocate to Cebu.
b. D agreed to paint the portrait of C if D will
enroll in a painting class this coming month.
c. D promised to pay his debt to C amounting
to P20,000.00 as soon as possible.
d. D agreed to give a monthly support of
P5,000.00 to C until D ends his contract of
employment overseas.
170. D owes C P50,000.00. The obligation is secured
by the guaranty of G and a real mortgage on D'S lot.
Subsequently, G, without the knowledge of D, paid
C the amount of P50,000.00.
a. G can go after D to collect and if D cannot
pay, G can foreclose the mortgage because
he is entitled to subrogation.
b. G can go after D to collect and if D cannot
pay, G can foreclose the mortgage because
he is entitled to compensation.
c. G can go after D to collect and if D cannot
pay, G can foreclose the mortgage because
he is entitled to condonation.
d. G can go after D to collect but he is not
entitled to any other right because the
payment he made to C was without the
knowledge of D.
171. One peso, P5.00 and P 10.00 coins are legal
tender up to:
a. P100.00
b. P500.00
c. P1,000.00
d. Any amount.
172. One centavo, P0.05, PO0.10 and P0.25 centavo
coins are legal tender up to:
a. P100.00
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OBLIGATIONS – DAIGNOSTIC EXERCISES
b. P500.00
c. P1,000.00
d. Amy Amount.
173. All bills are legal tender up to:
a. P5,000.00.
b. P10,000.00.
c. P100,000.00
d. Any amount.
174. D obtained a loan of P5,000.00 from C. On due
date, D tendered payment amounting to P5,000.00
consisting of 5,000 pieces of P1.00 coin.
a. The payment offered by D is legal tender.
b. C may not refuse to accept the payment.
c. Should C refuse to accept the payment, D
may resort to consignation (deposit of the
payment in court).
d. C may demand that he be paid in bills.
175. D is obliged to deliver 20 sacks of "Dinorado"
rice to C. The parties agreed that should D fail to
perform his obligation as stipulated, D will pay a
penalty of P1,000.00. On due date, D made a
delivery of 20 sacks of rice but each sack contained
a mixture of "Dinorado" rice and another variety of
lower quality. C discovered the fraud.
a. C may demand the payment of the stipulated
penalty only.
b. C may demand the payment of the stipulated
penalty as well as damages although there
was no stipulation on the latter.
c. C may demand the payment of damages in
addition to the stipulated penalty only if
there was a stipulation with respect to
damages.
d. C may demand the payment of damages in
addition to the stipulated penalty only if D
refuses to pay the penalty.
176. D obtained a loan of P50,000.00 from C. The
loan was evidenced by a promissory note executed
by D which said nothing about the transmissibility of
the loan obligation or the right to collect it. A month
before the due date of the loan, C died leaving S, his
son, as heir. On due date, S presented the promissory
note to D for payment, but D refused claiming that
he owed C but not S.
a. D may refuse to pay because the right to
collect belonged only to C.
b. D may not refuse to pay because the right of C
to collect was transmitted to S who was the
Notes in Business Law by Fidelito R. Soriano
heir of C notwithstanding the absence of an
agreement to that effect.
c. D may refuse to pay because there was no
stipulation that the right to collect the loan
would be transmitted to C's heirs.
d. D may refuse to pay because the transmission
of the credit right is prohibited by law.
177. These statements are presented to you:
I. Several prestations are due but all must be
performed to extinguish the obligation.
II. If there are void prestations, the other
prestations may still be valid; hence, the
obligation remains.
In your evaluation of the foregoing statements:
a. Both statements refer to an alternation
obligation.
b. Neither statement refers to an alternative
obligation.
c. Only Statement I refers to an alternative
obligation.
d. Only Statement II refers to an alternative
obligation.
178. D obtained a loan of P50,000.00 from C. The
same is payable after 60 days. On due date, D, not
having sufficient cash, offered to give either his ring
or his bracelet to C. C accepted the offer. Based on
the foregoing facts, which of the following
statements is incorrect?
a. The original obligation of D is an obligation
with a period.
b. The original obligation of D is extinguished
by novation.
c. The right to choose the item to be given
belongs to C.
d. The new obligation is an alternative
obligation.
179. D borrowed P50,000.00 from C. The debt,
which is payable within one year, is secured by a
mortgage that D constituted on his lot. The mortgage
is recorded in the Registry of Property. C dies before
the due date of the debt and was not able to collect
any amount of his loan receivable from D. He was
survived by S, his only son and heir. D, taking
advantage of the situation, sold the lot to T who was
not aware of the mortgage constituted thereon.
a. The mortgage is not binding on T since he
was not aware of it at the time he bought the
lot.
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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

b. S, the son of C, has the right to collect the II. Get a horse from another person at D's
amount of the note from D and foreclose the expense.
mortgage if the D cannot pay. III. Demand payment of damages from D.
c. The mortgage is not binding on T since D
was in bad faith when he sold the lot to T. Which of the foregoing remedies may be availed of
d. The right to collect the loan and foreclose by C?
the mortgage were extinguished upon the
death of C. a. I and III
b. II and III
180. A, an agent of P, owes B P20,000.00. B, on the c. I only
other hand, owes P, P20,000.00. Both debts are due. d. II only

a. P may claim legal compensation. 185. D is obliged to repair the car of C. D failed to
b. A may claim legal compensation. repair the car despite the demands made by C. D
c. B may claim legal compensation. wants to know from you which of the following
d. Neither P, A nor B may claim legal remedies are available to him:
compensation.
I. Compel D repair the car.
181. On January 1, 2014, D and C agreed that D II. Have the car repaired by another person at
would deliver to C a specific agricultural land on D's expense.
July 1, 2014. From January 1 to June 30, 2014, D III. Demand payment of damages from D.
harvested palay from the land worth P20,000.00. D
actually delivered the land to C on September 30, Which of the foregoing remedies may be availed of
2014. At that time, crops valued at P15,000.00 that by C?
grew beginning on July 1, 2014 remained
a. I and III
unharvested. C had a personal right against D for the
b. II and III
delivery of the thing and its fruits beginning on:
c. I only.
d. II only.
a. January 1, 2014
b. June 30, 2014.
186. The kind of fraud which renders a contract
c. July 1, 2014.
voidable is:
d. September 30, 2014.

a. Casual fraud.
182. C acquired a real right over the thing and its
b. incidental fraud.
fruits on:
c. fraud in performance.
d. future fraud.
a. January 1, 2014.
b. June 30, 2014.
187. D was obliged to deliver a specific car to C on
c. July 1, 2014.
May 31, 2015. On such date, however, D failed to
d. September 30, 2014.
deliver the car. C also did not make any demand for
the delivery of the car.
183. The palay harvested from the agricultural land
mentioned in Item 181 is an example of:
a. D was in delay when he failed to deliver the car
on due date.
a. industrial fruit.
b. D was not in delay when he failed to deliver the
b. natural fruit.
car on due date.
c. civil fruit.
c. D would be on delay only if C made a demand
d. It is not a fruit.
for the delivery of the car on or before due date.
184. D is obliged to deliver his only horse to C on d. D was in delay whether demand was made or
May 31, 2014. C made a demand against D for the not since time was of the essence of the contract.
delivery of the horse on May 31, 2014. However, D
188. D appointed C as his agent to purchase a parcel
failed to deliver the horse. In view thereof, C
of land belonging to X. D promised to give a
consulted you and ask which of the following
commission of P10,000.00 to C if C can present to D
remedies are available to him.
the deed of absolute sale signed by X in favor of D
on or before December 31, 2014. The condition of
I. Compel D to deliver the horse to him.
the obligation is:
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OBLIGATIONS – DAIGNOSTIC EXERCISES
a. negative.
b. positive.
c. impossible.
d. no condition exists.
189. Refer to No. 188. Which of the following
statements is incorrect?
a. D's obligation is extinguished if it is already
January 1, 2015 and C has not yet presented
to D the deed of absolute sale duly signed by
X.
b. D's obligation is extinguished on December
5, 2014 if X dies on such date without him
having signed the deed of absolute sale.
c. D's obligation is demandable if C presents to
D on or before December 31, 2014 the deed
of absolute sale duly signed by X
d. D's obligation is demandable if it is already
January 1, 2015 and C has not yet presented
to D the deed of absolute sale duly signed by
X.
190. D promised to give P20,OOO.OO to C provided
C does not sign a contract with X on or before
December 31, 2014 The condition of the obligation
is:
a. negative.
b. positive.
c. impossible.
d. no condition exists.
191. Refer to No. 190. Which of the following
statements is incorrect?
a. D'S obligation becomes demandable if it is
already January 1, 2015 and C has not yet
signed the contract with X.
b. D'S obligation becomes demandable on
December 5, 2014 if X dies on such date
without C having signed the contract with
X.
c. D'S obligation is extinguished if C signs the
contract with X on or before December 31,
2014.
d. D'S obligation is extinguished if it is
already January 1, 2015 and C has not yet
signed the contract with X.
192. D is obliged to give P50,000.OO to C if C tops
the CPA Examination and a specific lot if C can
reduce the taxes to be paid by D in D'S tax return by
unlawful means.
a. Both conditions must be fulfilled so that C
may demand the payment of P50,OOO.OO
and the delivery of the specific lot.
Notes in Business Law by Fidelito R. Soriano
b. C may demand the payment of P50,000.00 if
he tops the CPA Examination.
c. C may demand the delivery of the specific
lot if he can reduce through unlawful
means the taxes to be paid by D.
d. C may not demand the payment of
P50,000.00 and the delivery of the specific
lot even if he fulfills both conditions since
the conditions are indivisible.
193. Three of the following are the characteristics of
a condition. Which is the exception?
a. It may or may not happen.
b. It may refer to the future.
c. It merely fixes the time for the
efficaciousness of an obligation.
d. It may refer to a past event unknown to the
parties.
194. A, B and C are solidary debtors of X in the
amount of P30,000.00. C was insane at the time the
obligation was constituted.
a. X may possibly collect from A the amount
of P30,000.00.
b. X may possibly collect from A the amount
of P20, 000.00.
c. X may possible collect from A the amount
of P10, 000.00.
d. X may not be able to collect anything from
A since the insanity of C at the time the
obligation was constituted rendered the
whole obligation voidable.
195. The delivery of promissory notes payable to
order or other bills of exchange or other mercantile
documents shall produce the effect of payment when
they are:
a. delivered.
b. cashed.
c. have been impaired through the fault of the
debtor.
d. deposited in the bank.
196. D owes C P 10,000.00. T offers to pay D'S
obligation and tells D that D need not reimburse
him. However, D does not give his consent to T 's
offer not to be reimbursed. C, nonetheless, accepts
the payment from T.
a. The payment is valid insofar as C is
concerned since he accepted the payment.
b. The payment is not valid because D did not
give his consent to T's offer not to be
reimbursed for the payment.
c. The payment is not valid because it was not
D himself who made the payment.
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OBLIGATIONS – DAIGNOSTIC EXERCISES
d. The payment will be valid if T had the
intention to be reimbursed and D consented
to the payment.
197. Which of the following payments is not valid?
a. Payment to the person in Whose
favor the obligation was constituted.
b. Payment to the creditor's successor
in interest.
c. Payment to the creditor's heirs.
d. Payment made by the debtor to the
person in possession of an order
instrument evidencing the credit but
such person is not the indorsee
thereof.
198. D obtained a loan of PIO,OOO.OO from C who
was in his right mind at the time he granted the loan
to D. On due date, D paid his loan obligation of P
10,000.00 to C who had since become insane. Of the
total amount received, C lost P4, 000.00 and spent
P6,000.00 for his food and other necessary
expenses.
a. The obligation is totally extinguished
because C received the payment in full.
b. The obligation is extinguished up to
P4,000.00.
c. The obligation is extinguished up to
P6,000.00.
d. No part of the obligation is extinguished
because C was insane at the time he received
the payment.
199. Which of the following payments is not valid?
a. Payment to a third person who acquires the
creditor's right after the payment.
b. Payment which, although made to a third
person, was ratified by the creditor.
c. Payment to a third person who does not have
the authority to receive the payment but the
creditor, by his conduct, has led the debtor
to believe that the third person had authority
to received payment.
d. Payment made in good faith to a person in
possession of the instrument but not the
credit.
200. The following statements concerning payment
by cession are true, except:
a. the creditors become the owners of the
properties of the debtor that were ceded to
them.
b. payment by cession extinguishes the
obligations only to the extent covered by the
proceeds of the sale of the debtor's
properties.
c. the debtor must be insolvent.
Notes in Business Law by Fidelito R. Soriano
d. it affects all the properties of the debtor
those exempt from execution.
201. Refer to No. 201. Assuming that D did not
designate the debt to be paid when he remitted the
amount of P4,000.00 to C on May 31. C issued a
receipt for the payment he received from D but he
did not also designate the debt that was being paid.
In this case:
a. D may apply the payment to the debt due on
June 5.
b. D must apply the payment proportionately to
the 5 debts that have become as of May 31
at P800.00 each.
c. D may apply the payment to the debt due on
May 22 which is the most burdensome to
him.
d. D must apply the payment to all the debts
proportionately at P666.67 each.
202. Refer to No. 201. Assuming that D did not
designate the debt to be paid when he remitted the
amount of P4,000.00 to C on May 31. C issued a
receipt for the payment he received from D but he
did not also designate the debt that was being paid.
In this case:
a. The payment shall be applied
proportionately to the debts that have
become due as of May 31 proportionately at
P800.00 each.
b. The payment shall be applied to the debt due
on May 22 since it is the debt that is most
onerous to
c. The payment shall be applied to all debts
proportionately at P666.67.
d. The payment shall not be applied to any debt
because there was no designation by the
parties.
203. D issued a promissory note payable to the order
of C for a debt of P 10,000.00 which bears interest at
2% per month. On due date, X went to the place of
D to collect the debt claiming that C assigned the
note to him. X, however could not present the
promissory note claiming that he had lost it. D wants
to make the payment because he does not want the
interest to accrue but he is at a loss as to whether he
would make the payment to X. In this case the
course of action that you will advise D to take is:
a. consignation.
b. tender of payment.
c. application of payment.
d. dation in payment.
204. The obligation is not extinguished by reason of
the loss of the thing through a fortuitous event in
three of the following cases. Which is the exception?
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OBLIGATIONS – DAIGNOSTIC EXERCISES
a. When the nature of the obligation requires
the assumption of risks.
b. When the debtor has incurred in delay.
c. When the obligation is to give a determinate
thing and the parties have not stipulated
whether or not there shall be liability in case
of fortuitous events.
d. When the debtor has promised to deliver the
same thing to two or more persons who do
not have the same interest.
205. In order that condonation may extinguish an 209.
obligation involving a movable property whose
value exceeds P5,000.00
a. It is sufficient that the condonation and
acceptance are in writing, even a private
one.
b. It is required that the condonation and
acceptance must be in a public instrument.
c. The delivery of the document evidencing the
debt is sufficient since the property is
movable. 210.
d. The condonation and acceptance may be
made
206. In order for legal compensation to take place,
two of the requisites are: that each one of the
obligors be bound principally, and that he be at the
same time a principal creditor of the other, and that
the two debts must be due. In addition, the following
requisites must be present, except:
a. That both debts consist of a sum of money
or if the things due are consumable, that they
211.
be of the same kind and also of the same
quality if the latter has been stated.
b. That both debts be liquidated and
demandable.
c. That the debts must have the same amount.
d. That over neither of them there should be
any retention or controversy commenced by
third persons and communicated in due time
to the debtor.
207. D owes C P20,000.00 due on June 20. C owes D
P 14,000.00 due on June 15. On June 12, C assigned
his right to X. D consented to such assignment
without any reservation of his right to the
compensation. On June 20, X may collect from D:
a. P20,000.00.
b. P6,000.00.
c. P14,000.00 212.
d. Nothing.
208. D owes C P30,OOO.00 due on June 20. C owes
D the following debts: P 15,000.00 due on June 2;
P4,000.00 due on June 14; P6,000.00 due on June
Notes in Business Law by Fidelito R. Soriano
16; and P3,000.O due on June 18. On June 17, C
assigned his right to X. C notified D of the
assignment but D did not give his consent thereto.
On June 20, X may collect from D:
a. P30,000.00
b. P5,000.00.
c. P2,000.00.
d. Nothing.
Refer to No. 208. Assume the same facts except
that when C made the assignment of his credit to X,
C did not notify D about it. It was only on June 20
when X went to D to collect that D learned of the
assignment. In this case, X may collect from D:
a. P30,000.00.
b. P5,000.00
c. P2,000.00
d. Nothing.
D owes C P50, 000. 00. Subsequently, D
proposed to C that T will assume his (D's) debt. C
accepted the proposal of D. This type of novation
which involves the substitution of the debtor is
known as:
a. Delegacion.
b. Expromision.
c. Objective novation.
d. Subrogation.
Assume the facts in No. 210. Assume also that
on due date, T could not pay because of his
insolvency which was in fact subsisting but was not
known to D or of public knowledge at the time that
he delegated his debt. In this case:
a. C can revive D'S debt because T's
insolvency was already existing at the time
that D delegated his debt.
b. C can revive D'S debt whether or not he (D)
was aware of T's insolvency since he (D)
proposed the substitution.
c. C cannot hold D liable because his (D's)
obligation was extinguished when he was
substituted by T
d. The novation is void because D did not take
steps to determine the solvency of T when
he (D) delegated his debt.
D is obliged to deliver a specific horse to C for
entry in the derby. The day before the agreed date of
delivery, the horse broke its right front leg. While it
could still walk, it could no longer run.
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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

a. The obligation to deliver the horse is not

extinguished since only one leg of the horse
was injured.
b. The obligation is extinguished because the
injury to the right front leg of the horse is a 218. Refer to No. 217. Assume the same facts except
partial loss that is so important in relation to that the debtors are solidarily bound. How much
obligation. may X collect from B?
c. The obligation to deliver the horse is not
extinguished because the horse could still a. P3,000.00.
walk'. b. P2,000.00.
d. The obligation of D is not extinguished c. P1, 500.00.
because he can get a horse from other d. PI,000.00.
sources.
219. A, B and C are jointly liable to X in the amount
213. D is obliged to pay C P 10,000.00 on or before of P 12,000.00. On due date, X demanded payment
June 30. C is obliged to pay D P 10,000.00 on June from A but A refused to pay. How much may X
15. Who may claim compensation on June 15? collect from B?

a. D only. a. PI 2,000.00 plus damages for delay.

b. C only. b. P8,000.00 plus damages for delay.
c. Either D or C. c. P4,000.00 plus damages for delay.
d. Neither D nor C. d. P4,000.00 without any damages.

214. D is obliged to pay C P 10,000.00 on or before 220. Refer to No. 219. Assume the same facts except
June 15. C is obliged to pay D P 10,000.00 on June that A, B and C are solidarily liable to X in the
30. Who may claim compensation on June 15? amount of P 12,000.00. On due date, X demanded
payment from A but A refused to pay. How much
a. D only. may X collect from B?
b. C only.
c. Either D or C. a. P 12,000.00 plus damages for delay.
d. Neither D nor C. b. P8,000a00 plus damages for delay.
c. P4,000. 00 plus damages for delay.
215. A, 17 years old, B, 25, and C, 30, jointly d. P4,000.00 without any damages.
borrowed P6,OOO.OO from X. How much may X
collect from B? 221. During a flood, the properties of D were saved
from destruction by C without the knowledge of D
a. P6,000.00 who was then away. C incurred necessary and useful
b. P4,000.00. expenses in the act of saving D'S properties. For
c. P2,000.00. such expenses:
d. Nothing, because A was a minor at the time
the obligation was constituted. a. D must reimburse C although C acted
without the consent of D.
216. Refer to No. 215. Assume the same facts except b. D is not required to reimburse C because C
that the debtors are bound solidarily. How much acted without D'S consent.
may X collect from B? c. D must reimburse C because there was an
implied contract between D and C.
a. P6,000.00. d. D need not reimburse C because C's• act of
b. P4,000.00. saving D'S properties is a gratuitous act that
c. P2,000.00. requires no compensation.
d. Nothing, because A was a minor at the time
the obligation was constituted. 222. D is obliged to give his only car to C on
December 1, 2014' On December 1, 2014, D did not
217. A, B and C jointly borrowed P3,000.00 from X. deliver the car. The following day, armed men
On due date, A was insolvent. How much may X forcibly took the car from D'S garage.
collect from B?
a. D'S obligation to give the car is
a. P3,000.00. extinguished.
b. P2,000.00. b. D must give another car of the same kind
c. PI,500.00. and quality to C because he was already in
d. PI,000.00 delay when the loss took place.

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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

c. D is obliged to pay damages to C. III. It may refer to a past event unknown to the
d. D must give another car or pay damages at parties.
the option of C. IV. It merely fixes the time for the
efficaciousness of an obligation.
223. Orlando brought his typewriter at the shop of
In your evaluation of the foregoing statements:
Remigio for repair. Orlando made several demands
for the repair work to be done but Remigio did not a. I and Ill refer to period.
undertake the repairs. Eventually, Remigio returned b. I and Ill refer to condition.
the typewriter, unrepaired and with several parts c. Il and IV refer to condition.
missing. d. Ill and IV refer to period.
I. Orlando can have the typewriter repaired by
another repair shop with the repair cost 227. The creditor has a right to the fruits of the thing
thereof chargeable to Remigio. from the time:
II. Orlando can compel Remigio to undertake
the repairs. a. the thing and its fruits have actually been
III. Orlando can ask for damages for the delivered.
missing parts of the typewriter at the b. the contract is perfected.
expense of Remigio. c. the obligation to deliver the thing arises.
d. the payment of the price of the thing and its
Which of the above remedies may be availed of by
fruits has been made.
Orlando?
a. I and II. 228. One of the following is an obligation with a
b. II and III. period with a suspensive effect. Which is it?
c. I and III.
d. All of I, II and III a. "I will give you P 5,000.00 per month as
support beginning January 1 of next year."
224. D obtained a loan of P30,000.00 from C with G b. "I will give you P5,000.00 per month as
Aa guarantor. C, on the other hand, owes G support until you finish your law course."
P30,000.00. Both debts are due. c. "I will give you P5,000.00 per month for
your medicines if your physical examination
I. If C sues D, D may successfully put up the says you are sick."
defense of compensation because C owes d. "I will give you P5,000.00 per month as
G, D'S guarantor. support until you are able to find work."
II. If C sues D, D may not put up the defense
of compensation as to what C owes G. 229. D is obliged to give Object I, Object 2 or Object
III. If D cannot pay and C sues G, G can put up 3 to Cs the right of choice as to which object will be
compensation because C owes him delivered to C belongs to:
P30,000.00.
IV. Both D'S debt to C and C's debt to G are a. both the parties.
extinguished by legal compensation. b. D only.
c. C only.
In your evaluation of the foregoing statements:
d. neither of the parties.
a. I and Ill are true.
b. b. Il and IV are true. 230. The obligation referred to in the preceding
c. I and IV are true. number is:
d. Il and Ill are true.
a. an alternative obligation.
225. The following obligations are demandable at b. a facultative obligation.
once, except: c. a conjunctive obligation.
d. a simple obligation
a. An obligation with a condition antecedent.
b. An obligation without any term or condition. 231. Refer to No. 229. Assume the following:
c. An obligation with an in diem period. I. Object 1 and Object 2 are lost through D'S fault,
d. An obligation with a condition not to do an and later Object 3 is lost through a fortuitous event.
impossible thing. II. Object 1 and Object 2 are lost through a
fortuitous event, and later Object 3 is lost through
226. The following statements are presented to you: D'S fault.
I. It may or may not happen.
In your evaluation of the foregoing statements, D'S
II. It always refers to the future.
obligation is extinguished in:

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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

a. both I and Il. a. P30,000.00.

b. neither I nor Il. b. P10,000.00
c. I only. c. P20,000.00.
d. IL only. d. P15,000.00
238. A, B and C are solidary debtors of X in the
232. D owes C P20,000.00 with G as guarantor. C, on
amount of P60,000.00e A, however, was a minor at the
the other hand, owes D, P15,000.00. Both debts are
time the obligation was constituted. If X sues B, B will
already due but D is insolvent. In this case —
be liable to X for:
a. C may collect from G P20,OOO.00.
b. C may collect from G P5,000.00 because a a. P60,000.00
guarantor can set up compensation as b. P40, 000.00
regards what the creditor may owe the c. P20, 000.00
principal debtor. d. P30, 000.00
c. C may collect nothing from G because D is
insolvent. 239. Donita owed Carmina P200,000.00. The loan is
d. C may collect P15,000.00 from G. secured by a mortgage of Donita's lot. After a month
Donita paid P20, 000.00.. Without the knowledge of
233. It transfers to the person taking the place of the Donita, Teresa paid Carmina P200, 000. 00 believing
creditor all the rights pertaining to the credit, either that Donita still owed the amount of P200,000.00.
against the debtor or against third persons, be they
guarantors or possessors of mortgages. a. Teresa can demand P200,000.00 from
Donita, and if Donita cannot pay, Teresa can
a. Substitution. foreclose the mortgage on the lot.
b. Subrogation. b. Teresa cannot claim reimbursement from
c. Transfiguration. Donita because she paid Carmina without
d. Transformation. Donita's knowledge.
c. Teresa can demand P180,000.00 from
234. These statements are presented to you:
Donita, and if Donita cannot pay, Teresa
I. A stipulation that an obligation shall be cannot foreclose the mortgage on the lot.
paid in a currency other than Philippine d. Teresa can recover the amount of
legal tender is void. P200,000.00 from Carmina if Donita refuses
II. A cashier's check is as good as cash; hence, to reimburse Teresa.
it is legal tender.
240. D borrowed P50,000.00 from C. Not having
In your evaluation of the foregoing statements: sufficient cash to pay the debt, D proposed to pay the
debt by giving his diamond ring. C accepted the proposal
a. Both statements are true.
and received the ring.
b. Both statements are false.
c. Only Statement I is true. a. D'S obligation is extinguished by payment
d. Only Statement Il is true. by cession.
b. D'S obligation is extinguished by
235. If there is a concurrence of two or more creditors
consignation
and/or two or more debtors in one and the same
c. D'S obligation is extinguished by dacion en
obligation, the obligation is presumed to be:
Pago.
a. individual and collective. d. D'S obligation is not extinguished at all
b. solidary. because the payment should have been in
c. joint and several. cash.
d. joint.
241. Legal compensation will not take place if:
236. A, B and C are joint debtors of W, X, Y and Z,
a. the debts have different due dates.
joint creditors, in the amount of P24,000.00. In this case,
b. the debts are payable at different places.
W can demand:
c. there is a controversy or retention involving
a. P8,000.00 from A, P8,000.00 from B, and one of the debts commenced by third
P8,000.00 from C. persons and communicated in due time to
b. P24,000.00 from either A, B or C. the debtor.
c. P2,000.00 from A, P2,000.00 from B, and d. both debts consist in a sum of money.
P2,000.00 from C.
242. D owes C the following debts: P3,000.00 due on
d. P6,000.00 from either A, B or C.
July P5, 000.00 due on July 6, P2, 000.00 due on July
237. A, B and C are solidary debtors of X in the 15, and P2,000.00 due on July 25. If today is July 22,
amount of P30,000.OOe If A is insolvent, how much and D gives P2,000.00 to C but neither he nor C
may X collect

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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

indicates the debt to which the payment shall apply, the now confused on whom to pay. He is worried that the
payment shall be applied to: interest will keep on accruing if he does not pay. If you
were in the position of M, the safest thing that you will
a. The debt due on July 15 or July 25 because
do is:
the payment is of the same amount as the
said debts. a. Pay to H because as holder and indorsee, he
b. To any of the debts due on July 1 or July 6 acquired title to the note.
in partial payment or to the debt due on b. Pay to R because as the agent of C, he is an
July 15 in full payment, since the said debts extension of the personality of C.
have already become due as of the time the c. Go to court and deposit the payment by way
payment is made. of consignation.
c. To the debts due on July 1, July 6 and July d. Just ignore the two. It is not your fault that
15 proportionately at P600.00, P 1,000.00, they have conflicting claims.
and P400.00, respectively.
247. When the debtor binds himself to pay as soon as
d. To all the debts proportionately in the ratio
he has the means is:
of
a. The obligation is void because payment
243. Which of the following is a void obligation?
dependent upon a condition that is
a. “D to give C P50,000.00 if C does not fly to potestative on.
the moon." b. The obligation is valid, but the creditor must
b. "D to give C P50,000.00 if D wins in the go to and ask the court to fix the period for
sweepstakes." D has not yet bought the the payment of the obligation.
sweepstakes ticket. c. The obligation is void because there is no
c. "D to give C P50, 000. 00 if D marries X." meeting of minds between the parties as to
d. "D to give C P50, 000.00 if C marries X." an essential element thereof.
d. The obligation is suspended until the debtor
244. D borrowed P200,000.00 from C. The debt is
has the means to pay his debt.
payable after 6 months and is secured by a chattel
mortgage on D'S growing crops. A month before due 248. The obligation of a school to provide its students
date, the crops were completely destroyed by Typhoon a safe and secure environment and an atmosphere
"Ondoy." conducing to learning is an obligation arising from:
a. D'S obligation to pay the loan is a. law.
extinguished. b. contract.
b. C may now demand immediate payment of c. quasi-contract.
the loan unless D furnishes another security. d. quasi-delict.
a. c. C must wait for the due date before he
249. These statements are presented to you:
can demand payment because the loss of
the security is without the fault of D. I. There is no delay in obligations not to do.
c. Both the loan obligation and the chattel II. Delay is applicable only to the debtor, never
mortgage are extinguished due to fortuitous to the creditor.
event.
In your evaluation of the foregoing
245. M obtained a loan of P50,000.00 from P. The statements:
loan is evidenced by promissory note executed by M
with G signing as a guarantor of the debt. P assigns the a. Both statements are true.
note to A, A to B, B to C, and C to G. The assignment of b. Both statements are false.
the note to G extinguished c. Only Statement I is true.
d. Only Statement Il is true.
a. both the loan and the guaranty.
b. only the loan. 250. The principle of negotiorum gestio does not
c. only the guaranty. apply:
d. neither the loan nor the guaranty with G now a. When the property or business is not
as the new creditor. neglected or abandoned.
246. M makes an interest-bearing promissory note b. When the officious manager has been tacitly
amounting to P 100,000.00 payable to the order of P. authorized by the owner.
The back of the promissory note contains the following c. In both (a) and (b).
indorsements: P to A, A to B, B to C, and C to H who is d. In neither (a) nor (b).
now in possession of the note. On due date, H goes to 251. A, B and C are indebted to W, X, Y and Z in the
the office of M to collect but he finds R who is trying to amount of P240,000. 00. In this case:
collect the amount on the note based on a power of
attorney supposedly executed in his favor by C. M is
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OBLIGATIONS – DAIGNOSTIC EXERCISES
a. W can collect P8,000.00 each from A, B and
C. Then, he must give P6, 000.00 each to X,
Y and Z.
b. W can collect P2, 000.00 each from A, B
and C. Then, he need not give any amount to
X, Y and Z.
c. W can collect P6,000.00 from either A, B or
C. Then, he need not give any amount to X,
Y and Z, from the amount he collected.
d. W can collect P24,000.00 from either A, B
or C. Then, he must give P6,000.00 each to
X, Y and Z.
252. Delia obtained a loan of p50,000.00 from
Corazon payable on January 31. On January 25, Delia
offered to deliver her diamond ring of the same value on
January 31 to Corazon to settle the debt. Corazon
accepted the offer on the same date. Thus, on January
31, Delia delivered her diamond ring to Corazon. Based
on the foregoing facts, which of the following statements
is incorrect?
a. Delia's loan obligation of P50,000.00 was
extinguished on January 25.
b. Delia had an obligation to give the diamond
ring to C on January 31.
c. Delia's loan obligation of P50,000.00 was
extinguished on January 31 when she
delivered her diamond ring to Corazon.
d. Delia's loan obligation of P50,000.00 was
extinguished by novation.
253. A, B and C are liable individually and
collectively to X in the amount of P30,000.00. On due
date, X demanded payment from A. However, C is
insolvent. In this case:
a. X may collect P20,000.00 only from either
A or B.
b. X may collect P30,000.00 from either A or
B.
c. X may collect from A P 15,000.00 only, and
from B, P15, 000.00 only.
d. X may collect from A P 10,000.00 only, and
from B, P10,000.00 only.
254. D obliged himself to give P50,000.00 to C if C
does not fly to the moon.
a. The obligation is immediately demandable.
b. Both the obligation and the condition are
void.
c. The condition of the obligation is Physically
impossible
d. The obligation becomes demandable at some
future time.
255. On January I, 2015, D borrowed The P50,
000.00 from and C with interest at 10% per annum the
interest are due on December 31, 2015.
a. D may compel C to accept payment before
December 31, 2015.
Notes in Business Law by Fidelito R. Soriano
b. C may compel D to make payment before
December 31, 2015.
c. Both (a) and (b) are correct.
d. Both (a) and (b) are incorrect.
256. Refer to the facts in the preceding number.
Assuming that on due date, D has only P50, 000. 00 and
he offers this amount to C who is willing to accept it as
partial payment.
a. The payment shall applied in its entirety to
the principal. D still owes C the interest of
P50, 000.00.
b. The payment shall be applied first to the
interest of P50,000.00. The balance of
P450,000.00 shall be applied to the
principal; hence, D still owes C P50,000.00
for the principal which will continue to bear
interest.
c. The payment of P500,000.00 shall be
applied proportionately to the principal and
interest.
d. The entire obligation (principal and interest)
is extinguished because C accepted the
payment without any protest or objection.
257. D obtained a loan of P from C. The debt' which
is due on December 31, 2015, is secured by chattel
mortgage of D'S brand-new Toyota Innova van. On June
1, 2015, the van was swept away by flood waters at the
height of Typhoon Olga and could no longer be found.
a. D'S obligation to extinguished because the
security thereof was lost due to fortuitous
event.
b. D'S obligation P 1,000,000.00 became
demandable on June 1, 2015, unless he gives
another security.
c. D'S obligation to give P 1,000,000.00 and
the chattel mortgage are extinguished by
reason of fortuitous event.
a. d. D'S obligation to give P 1,000,000.00
subsists, but C cannot demand its payment
before December 31, 2015.
258. These statements are presented to you:
I. Payment is still possible when two persons are
debtors and creditors of each other.
II. Payment is impossible when a person is both the
debtor and the creditor of the same obligation.
In your evaluation of the foregoing statements:
a. Both statements are true.
b. Both statements are false.
c. Only Statement I is true.
d. Only Statement I false.
259. These statements. are presented to you:
I. A quasi-contract is an implied contract.
II. There is no delay in obligations not to do.
In your evaluation of the foregoing statements:
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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

a. Both statements are true. d. The debtor is totally released from his
b. Both statements are false. liabilities
c. Only Statement I is true.
265. Which of the following is not a feature of
d. Only Statement I false.
dacion en pago?
260. D borrowed P50,000.00 from C. On due date, D
a. There may be two or more creditors
offered to give his ring, his bracelet or his necklace in
involved.
payment of the debt five days from the due date of the
b. The debtor must be insolvent.
original obligation. C accepted the offer. Two days
c. Not all the properties of the debtor are
before the new due date, D'S ring was lost through his
involved.
fault.
d. The debtor is generally released from his
a. D'S new obligation is a facultative obligation/ s.
obligation.
266. D borrowed P 10,000.00 from C. On due date, C
b. D is not obliged to pay damages to C for the
was already insane. Nonetheless, D gave C P 10,000.00
loss of the ring due to his fault.
to settle the debt. When C's guardian learned of the
c. The right of choice as to which thing will be
payment made by D, C was found to have only
delivered belongs to C.
P3,000.00 left in his wallet and that he had lost P
d. The loss of the ring deprived D of the right
1,500.00 in a gambling game, and used P5,500.OO to
of choice.
buy his food. In this case:
261. The waiver of an action for fraud is valid in the
a. Payment is valid only up to P3,000.00.
case of:
b. Payment is valid only up to P8,500.00.
a. A future fraud. c. Payment is valid up to P 10,000.00.
b. B. past fraud. d. The total payment is not valid because C
c. C. both (a) and (b) was incapacitated at the time, he received
d. D. in neither (a) nor (b). the payment.
262. D is indebted to C for P100,000 which is already 267. Consignation, without any tender of payment,
due. D offers to give a certified check to C to settle the will release the debtor from liability in the following
debt. cases, except when:
a. If C refuses to accept the check, D may a. The creditor is absent or unknown, or does
resort to its consignation to settle the not appear at the place of payment.
obligation. b. The creditor is capacitated to receive
b. If C refuses to accept the check, D may payment.
replace the check with 100,000 pieces of PI . c. Without just cause, the creditor refuses to
00 coin and compel C to accept it. give a receipt.
c. If C refuses to accept the check, D may d. Two or more persons claim the same right to
replace the check with 5,000 pieces of collect.
P20.OO bill, and if C refuses to accept it, D
268. D owes C P20,000.00 payable on or before
may consign the payment.
March 31, 20150 C is obliged to pay D P20,OOO.OO on
d. If C accepts the certified check, D'S
March 15, 2015. As a result, which of the following is
obligation is automatically extinguished.
incorrect?
263. Which of the following statements concerning
a. C may claim compensation on March 15,
facultative obligation is correct?
2015.
a. Two or more prestations are due. b. D may claim compensation on March 15,
b. The right to make the substitution belongs to 2015.
the debtor only. c. may claim compensation on March 31, 2015
c. The loss of the substitute due to the fault of if his debt to C, and D'S debt to him,
the debtor will make him liable for damages. remained unpaid as of such date.
d. The loss of the principal thing due to d. D may claim compensation on March 31,
fortuitous event will make the debtor 2015 if C's debt to him, and his own debt to
obliged to deliver the substitute. C, remained unpaid as of such date.
264. Which of the following is not a feature of 269. D owes C P30, 000.00. due on April 1, 2015. C
payment by cession? owes D compensation may possibly take place today if
today is February 14, 2015?
a. There is a plurality of creditors.
b. The debtor must be insolvent. a. Voluntary
c. All the debtor's properties are generally b. Legal
involved in the cession c. Facultative
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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

d. Judicial I. Legal compensation cannot take place if the

debts have different due dates.
270. When a third person pays the creditor without
II. Legal compensation may take place although the
intending to be reimbursed and the debtor did not give
debts are payable at different places.
his consent to the donation:
In your evaluation of the foregoing statements:
a. The payment is valid as to the creditor who
accepted it. a. Both statements are true.
b. The debtor is under no obligation to b. Both statements are false.
reimburse the third person. c. Only Statement I is true.
c. The payment is not valid because no one can d. Only Statement Il is true.
pay the debt of another.
277. A, B and C are solidarily indebted to X for
d. The creditor is obliged to return the payment
P9,000.00. X is indebted to A for P9,000.00. Both debts
to the third person.
are due.
271. The following obligations are immediately
a. There is legal compensation up to P3, 000.
demandable, except:
b. There is legal compensation up to
a. pure obligation P6,000.00.
b. obligation with a period with a resolutory c. There is legal compensation up to P9,000.00
effect. d. A has no right to demand reimbursement
c. obligation with a negative impossible from B and C at P3, 000.00 each.
condition.
278. Refer to the same facts in the preceding number
d. obligation with a condition antecedent.
except that the debtors are jointly liable to X. As a result,
272. These statements are presented to you: which of the following statements is incorrect?
I. An obligation cannot exist without a contract. a. there is legal compensation up to P3,000.00
II. A contract can exist without an obligation. b. B and C are still indebted to X for P3,000.00
each.
In your evaluation of the foregoing statements:
c. X still owes A P6,000.00.
a. Both statements are true. d. There is no legal compensation at all.
b. Both statements are false.
279. It is a mode of extinguishing an obligation
c. Only Statement I is true.
which has a two-fold function: One is to extinguish an
d. Only Statement Il is true.
old obligation and the other to substitute a new one in its
273. D borrowed P500,000.00 from C payable at the place.
end of five years. Due to supervening extraordinary
a. Novation
inflation the value of the debt fell to P250,000.00 on the
b. Compensation
date of maturity. How much must D pay C on the date of
c. Remission
maturity?
d. Consignation
a. P500, 000.00.
280. D owes C the following debts: P4,000.00 due on
b. P250, 000.00.
February 1, P7, 000.00due on February 5, P5,000.00due
c. P1,000,000.00
on February 10, and P4,000.00 due on February 20. By
d. Some other amount.
agreement of the parties, the benefit of the period was
274. A stipulation that demand shall not be required in given to D. If today is February 14, and D has not paid
order to make the debtor in delay is generally to the any of the said debts, but is offering P4,000.00 to C as
disadvantage payment today, to which debt may D apply the payment?

a. debtor. a. To the debt due on February 1 amounting to

b. creditor. P4, 000.00only.
c. both the debtor and the creditor. b. To the debt due on February 20 amounting
d. neither the debtor nor the creditor. to P4, 000.00only.
c. To the debt due on February 1 or February
275. The absence of stipulation on liability in case of 20, at his option.
fortuitous event is generally to the advantage of the: d. To all the debts proportionately at P800.00,
a. debtor. P1,400.00, P1,000.00, and P800.00,
b. Creditor respectively.
c. both the debtor and the creditor. 281. Refer to the preceding number. Supposing that
d. neither the debtor nor the creditor. when D gave the payment to C, D did not designate the
276. These statements concerning legal compensation debt to which the payment shall apply. Neither did C
are presented to you:
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OBLIGATIONS – DAIGNOSTIC EXERCISES Notes in Business Law by Fidelito R. Soriano

indicate in the receipt that he issued to D which debt was 1. Solutio indebiti
being paid' Which debt is being paid? 2. Obligation with a penal clause
3. Delegacion
a. The debt due on February 1 amounting to
4. Real right
P4,000.00 only.
5. Alternative obligation
b. The debt due on February 20 amounting to
6. Ex die
P4,000.00 only.
7. Passive solidarity
c. To the debts due on February 1, February 5
8. Joint obligation
and February 10 proportionately at
9. Personal right
PI,000.00, PI,750.00, and PI,250.00
10. Efficient cause
respectively.
11. Determinate thing
d. To all the debts proportionately at P800.00,
12. Payment by cession
P1,4000.00, P1,000.00, and P800.00,
13. Fortuitous event
respectively.
14. Day certain
282. The young and other products of animals, 15. Active solidarity
produced with the intervention of human labor are 16. Application of payment
considered as: 17. Dation in payment
18. Potestative condition
a. civil fruits 19. Accessories
b. industrial fruits 20. Prestation
c. natural fruits 21. Natural fruits
d. accessions 22. Penal clause
283. If two or more persons claim the same right to 23. Unilateral obligation
collect from the debtor, the debtor's appropriate remedy 24. Subrogation
is: 25. Action pauliana
26. Obligation
a. tender of payment. 27. Mora accipiendi
b. consignation. 28. Positive condition
c. payment by cession. 29. Inflation
d. dation in payment. 30. Indivisible obligation
31. Solidary obligation
284. D promised to deliver a specific horse to C on
32. Negligence
October 31, 2015, with the stipulation that he will give C
33. Expromision
100 grams of "shabu" as penalty if he fails to deliver the
34. Industrial fruits
horse on the said date. Which obligation is void?
35. Reciprocal obligation
a. The principal obligation only. 36. In diem
b. The penalty only. 37. Suspensive condition
c. Both the principal obligation and the 38. Condonation
penalty. 39. Deflation
d. Neither the principal obligation nor the 40. Facultative obligation
penalty. 41. Negative condition
42. Negotiorum gestion
285. D is a debtor of C for P20,000.00. The debt is 43. Condition
secured by a pledge of D'S diamond ring which is in C's 44. Payment
possession. Before the due date, C voluntarily returned 45. Legal tender
the diamond ring to D. Which was extinguished by the 46. Generic thing
return of the ring? 47. Civil fruits
a. Both the debt of P20,000.00 and the pledge of 48. Resolutory condition
the diamond ring. 49. Consignation
b. The debt of P20,000.00 only. 50. Confusion
c. The pledge of the diamond ring only. Statements
d. Neither the debt of P20,000.00 nor the pledge of
the diamond ring is extinguished. A. The happening thereof extinguishes the
obligation.
B. The reason why the obligation exists.
TEST II – MATCHING TYPE. Indicate your answers C. Several prestations are due but the complete
by writing the letter representing the statement or phrase performance of one of them extinguishes the
that best describes, defines or explains the numbered obligation.
items. D. Assumption of the obligation by a third person
upon the initiative of the debtor.
Terms E. Return of what has been paid by mistake.
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OBLIGATIONS – DAIGNOSTIC EXERCISES
F. An accessory undertaking to assume greater
liability in case of breach in the obligation.
G. It cannot be foreseen, or even if foreseen is
inevitable.
H. There is a greater liability in case of breach in
performance.
I. Enforceable only against a definite passive
subject.
J. Choosing the debt to which payment is to be
applied.
K. It never perishes.
L. Only one of the parties to the obligation is
obliged to comply with a prestation.
M. Spontaneous products of the soil and the young
and other products of animals.
N. Added to a thing for its better use, enjoyment or
perfection.
O. Assignment of the debtor's properties to his
creditors.
P. It consists of giving, doing or not doing
something.
Q. The obligations arise out of the same cause and
must be fulfilled at the same time.
R. Only one prestation is due but the debtor may
render another in substitution.
S. Delivery of money or performance of an
obligation in any other manner.
T. Juridical necessity to give, to do or not to do.
U. The substitution of another person in the place
of the creditor, where the former succeeds to the
right of the creditor in relation to the debt.
V. That which the debtor may compel the creditor
to accept as payment.
W. Products of the soil with the intervention of
human labor.
X. That which must necessarily come although it
may not be known when.
Y. Delay on the part of the creditor.
Z. A sharp sudden increase in money or credit or
both without a corresponding increase in
business transactions.
AA. Management of the property or affairs of
another without his consent.
BB. One who has the right to demand performance
of the obligation.
CC. Obligation not susceptible of partial
performance.
DD. Enforceable against the whole world.
EE. The remedy of creditors to impugn contracts
entered into by the debtor to defraud them.
FF. Period with a suspensive effect.
GG. They refer to those arising out of a
juridical relation, such as the rent of an
apartment.
HH. An uncertain event that wields an
influence on a legal relation.
II. Delivery and transmission of ownership of a
thing by the debtor to his creditor to settle a
monetary obligation.
JJ. Any one of the debtors may be held liable for
the whole obligation, and any one of the
Notes in Business Law by Fidelito R. Soriano
creditors is entitled to demand payment of the
whole obligation.
KK. The condition that some event will not
happen at a determinate time.
LL. Delivery of the sum or thing due with the
judicial authority.
MM. Solidarity on the part of the debtors.
NN. Depends upon the sole will of one of the
contracting parties.
OO. Omission of the diligence required by
the nature of the obligation and corresponds with
the circumstances of the person, of the time, and
of the place.
PP. Each debtor is liable only for a proportionate
part of the debt, and each creditor is entitled
only to a proportionate part of the credit.
QQ. Period with a resolutory effect.
RR.The reduction in volume in circulation of the
medium of exchange.
SS. Substitution of debtor initiated by a third person.
TT. Gratuitous abandonment by the creditor of his
right to the obligation.
UU. Qualities of debtor and creditor are
merged in the same person.
VV. The happening thereof gives rise to an
obligation.
WW. The condition that some event happens
at a determinate time.
XX. Particularly designated or physically
segregated from all others of the same class.
YY. None of the foregoing.
TEST III – TRUE OR FALSE. Write the word
"TRUE" if the statement is true, and the word 'FALSE' if
the statement is false
1. In an obligation to give a determinate thing which is
subject to a suspensive condition, the creditor has a
right to the fruits of the thing upon the perfection of
the obligation.
2. A person criminally liable is also civilly liable.
3. Obligations arising from contracts have the force of
law between the contracting parties.
4. A natural obligation cannot be enforced in a court of
5. A person obliged to give something is also obliged
to take care of it with the diligence of a father of a
good family, unless the law or stipulation of the
parties requires a greater degree of care.
6. If the debtor fails to perform an obligation to do, the
creditor may compel the debtor to comply with the
obligation.
7. If an obligation to do has been poorly done, the
creditor may have the same be undone at the
expense of the debtor.
8. As a general rule, the debtor incurs in delay if he
does not perform his obligation on the date it is due.
9. If the obligation consists in the delivery of a
determinate thing, the debtor who incurs in delay
shall not be responsible for loss due to fortuitous
event.
10. A waiver of an action for future fraud is valid.
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OBLIGATIONS – DAIGNOSTIC EXERCISES
11. In an obligation to give an indeterminate thing, the
loss or destruction of anything of the same kind will
extinguish the obligation if the cause of the loss is a
fortuitous event.
12. Acts of men such as armed robbery or piracy are
considered fortuitous events if they occur
independently of the debtor's will.
13. As a general rule, rights acquired in virtue of an
obligation are not transmissible.
14. An obligation subject to a resolutory condition is
demandable at once.
15. An obligation which is subject to a suspensive
condition that is potestative on the part of the debtor
at the same time, is valid.
16. An obligation where the debtor binds himself to pay
when his means permit him to do so is a conditional
obligation.
17. An obligation which is demandable upon the death
of a person is an obligation with a period.
18. The condition not to do an impossible thing shall be
considered as not having been agreed upon. In such
case, the obligation is immediately demandable.
19. The condition that some event happen at a
determinate time shall extinguish the obligation as
soon as the time expires or it has become indubitable
that the event will not take place.
20. The condition shall be deemed fulfilled if the debtor
voluntarily prevents its fulfillment.
21. The effects of a conditional obligation to give, once
the condition has been fulfilled shall retroact to the
day of the constitution of the obligation.
22. A thing, although it still physically exists, may be
considered lost if it goes out of commerce.
23. In an obligation to give a determinate thing which is
subject to a suspensive condition, the deterioration
of the thing without the debtor's fault shall render
the debtor liable for damages.
24. A condition may refer to a past event unknown to
the parties.
25. If the thing is improved at the expense of the debtor
before the fulfillment of a suspensive condition, the
debtor may demand reimbursement of such
expense from the creditor.
26. Whenever a period is designated in an obligation, it
shall be presumed to have been established for the
benefit of the debtor.
27. The debtor does not lose the right to make use of the
period if the security that he has given is lost due to
a fortuitous event.
28. The period in an obligation always refers to the
future.
29. In alternative obligations, the right of choice belongs
to the creditor unless it has been expressly granted to
the debtor.
30. In alternative obligations, the creditor may be
compelled to receive part of one and part of another
undertaking.
31. In a facultative obligation, the loss of the substitute
through a fortuitous event before the substitution has
been made by the debtor, shall have effect on the
debtor's obligation to deliver the principal thing.
Notes in Business Law by Fidelito R. Soriano
32. When there are two or more debtors and/or two or
more creditors in one and the same obligation, the
obligation is presumed to be a solidary obligation.
33. Solidarity may exist although the creditors and
debtors may not be bound in the same manner and
by the same periods and conditions.
34. Where an instrument containing the words "I
promise to pay", is signed by two or more persons,
they are deemed to be jointly and severally liable.
35. In a joint indivisible obligation, a demand made by
one of the joint creditors against all the joint debtors
is a valid demand.
36. A solidary debtor who obtains remission of the
whole obligation is entitled to reimbursement from
his co debtors.
37. A solidary creditor may assign his rights in the
obligation the consent of the other creditors.
38. If an insolvent solidary debtor cannot reimburse his
share to the debtor paying the obligation, such
share shall be borne by all his co-debtors in
proportion to the debt of each.
39. A joint creditor in a joint indivisible obligation may
validly renounce or condone the whole obligation.
40. In obligations with a penal clause, the penalty shall
substitute the indemnity for damages and the
payment of interests, if there is no stipulation to the
contrary.
41. The nullity of the penal clause in an obligation
carries with it the nullity of the principal obligation.
42. As a rule, the creditor may demand fulfillment of the
obligation and the penalty at the same time.
43. Payment means not only the delivery of money but
also to the performance of the obligation in any
other manner.
44. A third person who has an interest in the fulfillment
of the obligation, such as a guarantor, may compel
the creditor to accept payment.
45. Payment made in good faith by the debtor to a
person in possession of the credit releases him from
liability.
46. Payment made for an obligation which is interest-
bearing must first be applied to the principal before
the interest.
47. Payment to an incapacitated creditor shall be valid if
he has kept the payment.
48. The debtor of a thing may compel the creditor to
accept a different one if the latter is more valuable
than that which is due.
49. If an obligation is physically divisible, the debtor
may compel the creditor to accept partial payments.
50. When the debt is in part liquidated and part
unliquidated the creditor may demand and the debtor
may affect the payment of the former without
waiting for the liquidation
51. The debtor may compel the creditor to accept a
certified check as payment since the bank guarantees
the check to be covered with sufficient funds.
52. Payment by a third person who does not intend to be
reimbursed by the debtor shall be deemed to be a
donation which requires the consent of the debtor.
However, even if the debtor does not give his
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consent payment shall nevertheless be valid with 75. When the principal obligation is extinguished as a
respect to the creditor consequence of novation, accessory obligations are
53. Payment may be applied to a debt not yet due if the extinguished except if they may benefit third persons
term was constituted in favor of the party making the who did not give their consent.
application.
54. For dacion en pago to apply, the debtor must be
insolvent.
55. In payment by cession, the creditors become the
owners of the properties abandoned by the debtor for
the payment of his debts.
56. Whenever the thing is lost while in the possession of
the debtor, it shall be presumed to have been lost
through his fault.
57. The debtor shall be released totally from his debts
when he assigns his properties to his creditors.
58. Consignation without tender of payment is sufficient
if two or more persons claim the same right to
collect.
59. Before the court has declared that the consignation
has been properly made or the creditor has accepted
the consignation, the debtor may withdraw the sum
or thing deposited in court as a matter of right.
60. When the debt of a thing certain proceeds from a
criminal offense, the debtor shall be exempted from
the payment of the price if the thing is lost through a
fortuitous event.
61. In obligations to do, the debtor's obligation is
extinguished if the prestation becomes physically
impossible due to his fault.
62. The condonation or remission of an obligation must
be accepted in order for it to be extinguished.
63. Merger which takes place in the person of the
principal debtor or creditor extinguishes the
obligation of guaranty.
64. A debt which consists in sum of money and another
debt which consists in a consumable thing are
extinguished by legal compensation as long as both
debts have the same amount and are already due.
65. The condonation of a debt in money exceeding
P15,00.00 to be valid requires that the condonation
and the acceptance must be in public instrument.
66. The remission of the principal obligation carries
with it the remission of the accessory obligation.
67. Confusion which takes place in the person of the
guarantor extinguishes the principal obligation
68. The parties may agree upon the compensation of
debts that are not yet due.
69. Legal compensation takes place by operation of law
even if the debts are payable at different places.
70. Compensation cannot be set up against a creditor
who has a claim for support by gratuitous title.
71. Novation may take place by changing the object or
principal conditions of the obligation.
72. If the old obligation is void, the novation will still be
valid if the new obligation is valid.
73. If the new obligation is void, the original one shall
subsist, unless the parties intended that the old
obligation shall be extinguished in any event.
74. Conventional subrogation requires the consent of the
original parties and the third person.

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