NATIONAL COLLEGE OF BUSINESS AND ARTS

BUSINESS LAW 1
Midterm Examination
April 8-10, 2021

NAME: Malambut, Faidah A.___ SCORE: _______ %: __________

MULTIPLE CHOICE. Select the best answer by Writing your choice in

capital letter in your Answer Sheet your choice based on the principles of
Obligations and Contracts.

1. Should a principal specific object is lost in a facultative obligation

through fortuitous event after substitution. What will happen to the
obligation?
a. Obligation to deliver principal subsists.
b. The substitute shall be delivered in place of the principal
c. The obligation is extinguished
d. No effect on the obligation
2. X and Y are solidary creditors of A, B and C (Solidary debtors) to
the amount of Php 30,000.00. How much could X collect from B?
a. Php 30,000
b. Php 20,000
c. Php 10,000
d. Php 5,000.00
3. A,B and C are joint debtors of W to the amount of P300,000.00. B
paid W Php 100,000.00. How much is the outstanding liability of
A to W?
a. Php 100,000
b. No more
c. Php 200,000
d. Php 300,000
4. Juan owes Pedro the following, namely: A, Php 1,000.00 payable
on January 31, 2006 with an interest of 12% per annum, B, Php
1,000.00 payable on February 2, 2006 with no interest, C, Php
1,000.00 payable on December 31, 2006. On February 1, 2006
made a payment to Pedro of Php 1,000.00 without indication on
which loan to apply. Where should the payment applied?
a. Php 1,000 due on January 31, 2006 12% interest per annum.
b. Php 1,000 due on February 2, 2006 with no interest
c. It depends upon the creditor
d. Php 1,000 payable on December 31, 2006
5. I will give you a free ticket of the movie “Beowolf” shown at
Rockwell Power Plant should you get 80% in the Midterm Exam in
Business Law 1 is a
a. A casual conditional obligation
b. A resolutory conditional obligation
c. A suspensive conditional obligation
d. A potestative conditional obligation

6. Obligations which are demandable at once, except:

 a. Pure obligation
b. Suspensive conditional obligation
c. Resolutory conditional obligation
d. None of the above
7. The following are elements of an obligation, except:
a. Active Subject
b. Prestation
c. Motive
d. Vinculum juris
8. Carlo earns P8,000.00 per month as a Computer Analyst in a firm.
He is a member of the rank and file union. He has the right to
receive 14th month pay because of what source of obligation.
a. Contract
b. Law
c. Delict
d. Quasi contract
9. A package addressed to your neighbor is misdelivered to your
address. It is your obligation to see it that your neighbor gets it,
because
a. Negotiurum Gestio
b. It is a solution indebiti
c. Culpa Contractual
d. Mora Accipiende
10.Ana entered into a contract for services of a household helper in
Manila which provides that Ana will receive P800.00 a month with
no day off is
a. Valid c. voidable
b. Void d. unenforceable
11.The degree of care required for driver of common carrier vehicles
in the performance of their duty to carry their passengers to their
destination is
a. Ordinary diligence c. Contractual diligence
b. Extra-ordinary diligence d. None of the above
12.Obligations and contracts are governed by
a. 1987 Philippine Constitution c. Code of Commerce
b. New Civil Code of the Philippines d. None of the above
13.A vehicle was brought to a shop for repair for an agreed period of
20 days. After 20 days, it was yet unfinished and the shop didn’t
deliver after demand. While said vehicle was on a road test, it was
car napped. Is the repair shop liable?
a. No, there was fortuitous event c. Both A & B
b. Yes, there was delay on its part d. None of the above
14.Receipt of the principal amount without indication as to the receipt
of interest is payment of both principal plus interest:
a. This statement is false
b. This is a rebuttable presumption
c. This is a conclusive presumption
d. None of the above

15.If the specific thing deteriorates without fault of the obligor:

 a. The deterioration shall be shouldered by the obligor
b. The deterioration shall be shouldered by the creditor
c. The deterioration shall be divided by the creditor and debtor
d. The credit has the option to accept delivery or ask for rescission
with damages
16.Loss of the Principal object through fortuitous event before
substitution
a. Will extinguish the obligation
b. Obligation to deliver substitute subsists
c. Both statements are true.
d. Both statements are false
17.B obliged himself to give C a diamond ring on July 12, 2006 and if
B fails to do so B will pay C, P50,000.00 as a penalty. This is
obligation with a penal clause which is
a. Subsidiary c. Both (a) and (b)
b. Joint d. None of the above
18.In contract to Sell, the non payment of balance of the price of the
sale as agreed upon constitutes as non happening of the event due
to.
a. Resolutory Condition
b. Suspensive Condition
c. Impossible Condition
d. Casual Condition
19.The period in the obligation is for the benefit of
a. Debtor
b. Creditor
c. Both Debtor and Creditor
d. Third Person
20.Two taxicabs, one owned and operated by “X and Co. “and the
other by “Z and Co.” have figured in a collision. Both drivers of
the taxicabs are negligent. As a result of the incident “A” a
passenger of the taxicabs owned by X and Co, suffers injuries.
Which of the following is true?
a. The primary liability of X and Co. is based on quasi delict
b. X and Co., may raise the defense of due diligence in the
selection of its employee.
c. Z and Co., may raise the defense of due diligence in the
selection of its employee
d. The liability of Z and Co., is primarily based on contract
21.It refers to an interval of time which is definite to happen in the
future
a. Period c. ratification
b. Condition d. diligence
22.Fitness to be subject of legal relation
a. Capacity to act c. Obligation
b. Juridical Capacity d. Condition
23.Mora is
a. Fault c. Delay
b. Diligence d. Delivery

24.Unless the law or the stipulation of the parties requires another

standard of care, the obligation to give a thing carries with it the
obligation to take care of it with:
 a. extra-ordinary diligence c. diligence of a good father of a
family
b. limited diligence d. answer not given
25.When the debtor binds himself to pay when his means permit him
to do so, the obligation is considered one:
a. with the condition dependent upon the debtor’s sole will
b. with a period
c. that is void
d. answer not given
26. This is a promissory note: “I promise to pay Dalsa, Cristina and
Catherine the sum of P18,000.00” (Signed) Jeng, Bambi and Gail.
a. Gail is obliged to pay Catherine P6,000.00
b. Gail os obliged to pay Catherine P2,000.00
c. Gail is obliged to pay Catherine P12,000.00
d. Gail is obliged to pay Dalsa, Bambi and Catherine P18,000.00
27.Carlo and Cleo are solidary debtors of Corrina, Luis, Edward and
Abelito, joint creditors in the amount of P20,000.00. How much
can Corrina collect from Carlo?
a. Corrina could collect P2,500 from Carlo
b. Corrina could collect P10,000.00 from Carlo. Corrina is then
obliged to give P2,500.00 each to Luis Edward and Abelito
c. Corrina could collect P5,000.00 from Carlo
d. Corrina could collect the whole P20,000.00 from Carlo but will
in turn give P5,000.00 each to Luis, Edward and Abelito
30. In an obligation where only one (1) prestation has been agreed
upon, but to extinguish the obligation the debtor is allowed and does render
another substitute, the obligation is:
a. facultative obligation c. alternative obligation
b. simple obligation d. joint obligation
31. In a joint obligation, A, B and C are debtors of joint creditors,
D, E and F in the amount of P180,000.00. A’s obligation is:
a. Pay D P60,000.00
b. Pay D,E and F, P180,000.00
c. Pay D P120,000.00
d. Pay D P20,000.00
32. Should a substitute specific object is lost in a facultative obligation
through fortuitous event before substitution. What will happen to the
obligation.
e. Obligation to deliver principal subsists.
f. The substitute shall be delivered in place of the principal
g. The obligation is extinguished
h. No effect on the obligation
33.Ramil earns P8,000.00 per month as a Computer Analyst in a firm.
He is a member of the rank and file union. He has the obligation to
pay his union dues because of what source of obligation.
a. Contract
b. Law
c. Delict
d. Quasi contract

34.It is delay on the part of the creditor to accept the object of obligation
a. Negotiurum Gestio
b. Mora Solvendi
 c. Compensatio morae
d. Mora Accipiende
35.A, B and C are solidarily indebted to X in the sum of P600,000.00
payable on July 31, 2013. On August 31, 2013 X remitted the share
of A. On October 1, 2013, B paid X P600,000.00.
a. Only A’s debt is condoned.
b. C is still liable in spite of the remission by X
c. A and C must reimburse B P40,000.00
d. Obligation is extinguished because of condonation
36.B obliged himself to give C a diamond ring on July 12, 2006 and if B
fails to do so B will pay C, P50,000.00 as a penalty. This is obligation
with a penal clause which is
a. Subsidiary c. Both (a) and (b)
b. Joint d. None of the above
37. A, B, C and D are solidary debtor of E, in the amount of P40,000.
Because A is a friend of E, he asked E to remit the entire debt. Which
is true?
a. The remission is not allowed because they are solidary
debtors.
b. A could ask for reimbursement from B,C and D of their share
c. A cannot ask for reimbursement from B, C and D
d. All of the above
38.The expenses for consignation is for the account of
a. Debtor
b. Creditor
c. Both Debtor and Creditor
d. Third Person
39.Change in the person of the debtor with consent is
a. Substitution c. Delegacion
b. Subrogation d. Expromission
40.Unless the law or the stipulation of the parties requires another
standard of care, the obligation to give a thing carries with it the
obligation to take care of it with:
a. extra-ordinary diligence c. diligence of a good father of a
family
b. limited diligence d. answer not given
41. This is a promissory note: “We promise to pay Dalsa, Cristina and
Catherine the sum of P18,000.00” (Signed) Jeng, Bambi and Gail.
a. Gail is obliged to pay Catherine P6,000.00
b. Gail os obliged to pay Catherine P2,000.00
c. Gail is obliged to pay Catherine P12,000.00
d. Gail is obliged to pay Dalsa, Bambi and Catherine P18,000.00
42.In an obligation where only one (1) prestation has been agreed upon,
but to extinguish the obligation the debtor is allowed and does render
another substitute, the obligation is:
a. facultative obligation c. alternative obligation
b. simple obligation d. joint obligation

43.If the specific thing deteriorates without fault of the obligor:

a. The deterioration shall be shouldered by the obligor
b. The deterioration shall be shouldered by the creditor
 c. The deterioration shall be divided by the creditor and debtor
d. The creditor has the option to accept delivery or ask for
rescission with damages
44.D is indebted to solidary creditors A and B for P10,000.00. A is
likewise indebted to D in the sum of P10,000.00.
a. Obligation is extinguished by merger of rights
b. Obligation is extinguished by compensation
c. Obligation is ended by payment
d. Obligation is ended by novation
45.The transportation Company printed in its ticket “This company will
not responsible for the damage that may result in your travel while in
this vehicle”. This is
a. valid
b. contrary to public order
c. contrary to public policy
d. contrary to customs
46.Expenses for registration and taxes shall be on the account of
a. Debtor/Seller c. 3rd person
b. Creditor/Buyer d. both debtor and creditor
47.In the following case consignation without valid tender of payment is
allowed, which is the exception
a. When the creditor does not appear in the place of payment
b. When creditor unjustly refused to accept payment
c. When the title of the obligation has been lost
d. When the creditor is incapacitated to receive payment at the
time it is due
48.Compensation is not proper on the following cases.
a. Obligation arising from deposit
b. Obligation arising from commodatum
c. Obligation arising from support.
d. All of the above
49.Change in the person of the creditor is
a. Substitution c. Delegacion
b. Subrogation d. Expromission
50.In an obligation to give, the debtor may compel the creditor to accept a
different one provided it:
a. is more valuable than that which is due
b. is of the same value as that which is due
c. has the same function as that which is due
d. No, the debtor cannot compel the creditor to accept a thing
that is different from that which is due.
51.It refers to the money or currency which a debtor may compel a
creditor to accept in payment of his debt, whether public or private.
a. Bills and coins
b. Legal tender
c. Certified check
d. Bill of exchange

52. Five peso coins and other coins of higher denomination are legal
tender up to;
a. P100.00
b. P50.00
 c. P1000.00
d. P500.00
53.The delivery of promissory notes payable to order, or bills of exchange
or another mercantile documents shall produce the effect of payment
when they:
a. have been cashed
b. are delivered
c. are deposited in the bank
d. have been impaired without the fault of the creditor
54.It refers to the sharp sudden increase in money or credit or both
without a corresponding increase in business transactions.
a. Inflation
b. Deflation
c. Buyer’s market
d. Seller’s market
55.D obtained a loan of P500,000 from C. The loan is payable at the end
of 10 years. Before the maturity of the loan, an extraordinary inflation
supervened causing the value of P500,000.00 to fall to P1000,000.00
on the date of maturity. At maturity, D will have to pay C:
a. P100,000.00
b. P500,000.00
c. P2,500,000.00
d. Some other amount
56.Property is alienated to the creditor in payment of a monetary debt.
This is:
a. payment by cession
b. dation in payment
c. application of payment
d. tender of payment and consignation
57.Dacion en pago is governed by the law of sales. However, dacion en
pago is different from sale in that in dacion en pago:
a. There is no pre existing credit.
b. Obligation are created
c. There is more freedom in fixing the price
d. An act of novation takes place
58.If refers to the designation of the debt to which a payment shall apply.
a. Tender of payment
b. Consignation
c. Application of payment
d. Assignment

59.D owed C the following debts: P12,000.00 due on May 1; P12,000.00

due on May 5; P12,000.00 due on May 15 (secured by a pledge of D’s
ring); and P12,000.00 due on May 25. On May 22, D wanted to tender
payment to C but he had been paid. In this case, D may apply the
payment to:
 a. Any of the four debts since each one is of the same amount as
the payment
b. All debts proportionately at P3, 000.00 each.
c. Only to the debt due on May 15 since it is the most onerous
debt to D.
d. To any of the debts due on May 1, May 5 and May 15, since
they have all become due as of May 22.
60.It refers to the assignment by the debtor of all his properties in favor of
his creditors so that the latter may sell them and recover their claims
out of the proceeds.
a. Payment by cession
b. Dation in payment
c. Tender of payment

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It’s your move” (Og Mandino)