Regulatory framework for business transactions

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : www.icarecpareview@gmail.com
Regulatory Framework for Business Transactions
Law on Obligation
1. Definition of Obligation: Article 1156 of the Civil Code defines an obligation as a juridical
necessity to give, to do or not to do. Civil obligation may be defined as the juridical relation,
created by virtue of certain facts, between two or more persons, whereby one of them, known as
the creditor or oblige, may demand of the other, known as the debtor or obligator, a definite
prestation. It is also a juridical relation whereby a person called the creditor may demand from
another person called the debtor the observance of a determinate conduct, and in case of
breach, may obtain satisfaction from the assets of the latter.
2. Essential Elements or Requisites of an Obligation (Civil Obligation)
a. Active subject a.k.a. obligee or creditor refers to the party who has the right or
power to demand the performance of prestation from the obligor or debtor.
b. Passive subject a.k.a. obligor or debtor refers to the party who has the juridical
necessity of adjusting his conduct to the demand of the creditor or obligee pursuant to
the obligatory tie.
c. Object or prestation refers to the promise or particular conduct to be performed in the

fulfilment or rendition of the obligation. Object or prestation may consist of giving,
doing or not doing a thing.
i. Requisites of an Object or Prestation of an Obligation

1. It must be possible, physically and juridically.
2. It must be determinate, or, at least, determinable according to pre-
established elements or criteria.
3. It must have possible equivalent in money.
d. Efficient cause a.k.a. vinculum refers to the juridical tie which binds the parties to the
obligation.
i. Examples of juridical tie or vinculum or efficient cause

1. Relation established by law
2. Relation established by contract
3. Relation established by quasi-contract such as (1) negotiorum gestio and
(2) solutio indebiti
4. Relation established quasi-delict or culpa aquiliania or tort
5. Relation established by crime or delict
3. Types of Civil Obligation based on the definition under the Civil Code
a. Positive obligation refers to an obligation which consists of giving or doing something.
i. Types of Positive Obligation
1. Real obligation (Civil Obligation to Give) refers to a positive obligation

which consists of the delivery or giving of personal or real object. The
examples of real obligations are the obligations of the parties in a
contract of sale or barter or deposit or loan.
2. Personal obligation (Civil Obligation to Do) refers to a positive

obligation which consists of doing a particular prestation but not delivery
of an object An example of personal obligation is rendition of services.
b. Negative obligation (Civil Obligation Not to Do or Not to Give) refers to an obligation

which consists of abstaining from some act. An example of a negative obligation is the
legal obligation not to commit jay walking.
i. Note: Delay or Default or Mora is not applicable in negative obligation.
1|P a g e RLACO/DSALES/NVALDERRAM A
No. 125 Brgy. San Sebastian
Mobile : 0927 283 8234
Telephone : (043) 723 8412
4. Distinctions between Civil Obligation and Natural Obligation
I. As to binding force, Civil Obligations derive their binding force from positive law or
substantive law (Civil Obligation of Parents to give support to their children under Family
Code), while Natural Obligations derive their binding effect from equity and natural
justice (1) Natural Obligation of successors or heirs to pay the debts of predecessor
beyond the property they inherited or (2) Civil obligations that have already prescribed)
II. As to enforceability, Civil Obligations can be enforced by court action or the coercive
power of public authority while the fulfillment of natural obligations cannot be
compelled by court action but depends exclusively upon the good conscience of the
debtor. However, after voluntary fulfilment by the debtor of a natural obligation, the
creditor is authorized to retain what has been delivered or rendered by reason thereof.
III. As to examples, the examples of Civil Obligations are: (1) Legal obligation of parents
to give support to their children under Family Code and (2) Contractual obligation of
review center to provide preweek lectures to their reviewees despite cancellation of
board exam while the examples of Natural Obligations are: (1) Natural Obligation of
successors or heirs to pay the debts of predecessor beyond the property they inherited
and (2) Unpaid civil obligations that have already prescribed.
5. Sources of civil obligation demandable in a court of law
a. Law refers to the principles and regulations established in a community by some

authority and applicable to its people, whether in the form of legislation or of custom and
policies recognized and enforced by judicial decision.
i. Principles applicable to legal obligation
1. The obligations derived from law are never presumed.

2. Only obligations expressly determined in the Civil Code or in special laws
are demandable.
3. The law cannot exist as a source of obligations, unless the acts to which
its principles may be applied exist.
4. The obligations and correlative rights arising from law shall be governed
by the law by which they are created.
b. Contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.
i. Principles application to contractual obligation
1. Obligations arising from contracts have the force of law between

contracting parties.
2. Obligations arising from contracts should be complied with in good faith.
c. Quasi-contract is a juridical relation which arises from certain lawful, voluntary and
unilateral act, to the end that no one may be unjustly enriched or benefited at the
expense of another. Quasi-contract is based on fairness and equitable principle of
unjust enrichment.
i. Two Types of Quasi-Contracts
1. Negotiorum Gestio refers to the voluntary management of the

property or affairs of another without the knowledge or consent of the
latter.
i. Nature of Liability of Officious Managers in Negotiorum
Gestio - The nature of liability of officious managers in
negotirum gestio is generally solidary unless the officious
management was done under imminent danger which will make
their obligatio joint.
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ii. Examples of Negotiorum Gestio

a. A person voluntary takes charge of the agency or management
of business or property of another without authority or consent
of the latter.
b. A stranger gives support to a child of another person without the
knowledge of the person obliged to give support.
c. A person saves the property of another person during fire, flood,
storm or other calamity without the knowledge of the owner.
2. Solutio Indebiti refers to the juridical relation that is created when

something is received when there is no right to demand it and it was
unduly delivered through mistake.
i. Nature of Liability of Payees in Solutio Indebiti – The
nature of liability of payees in solutio indebiti is solidary.
ii. Example of Solutio Indebiti
a. A person receives something when there is no right to demand it
or it was unduly delivered through mistake.
d. Quasi-delict or culpa aquiliana or torts refers to a source of a civil obligation

wherein a person by act or omission causes damage to another, there being fault or
negligence.
i. Nature of Liability joint tortfeasors or two or more persons liable
for quasi-delict - The nature of liability of joint tortfeasors or two
or more persons liable for quasi-delict is solidary.
Requisites of Civil Action based on Quasi-Delict or Culpa-Aquiliana or Tort

i. There is no pre-existing relation (contract) between the offender (respondent-
dependant) and offended parties (complainant-plaintiff). (However, exceptional
cases allow filing of civil action based on quasi-delict despite the presence of
contractual relations if the act that violated the contract constitutes a tortuous
act on itself.)
ii. There exists a wrongful act or omission imputable on the defendant by reason of
his fault or negligence.
iii. There exists a damage or injury which must be proved by the person (plaintiff-
complainant) claiming recovery.
iv. There must be a direct causal connection or a relation of cause and effect
between the fault or negligence of respondent and the damage or injury to the
plaintiff, or that the fault or negligence of the respondent be the cause of the
damage or injury to the plaintiff.
e. Crime or delict refers to any act or omission which is punishable by law.
i. Nature of Liability of Criminals – The nature of liability of two or

more persons guilty of a crime is solidary.
i. Persons who are exempted from criminal liability (imprisonment and

fines) but still civilly liable (civil damages) for the crime they have
committed
1. An imbecile or an insane person

2. A person under 18 years of age a.k.a. minor
3. Any person who acts under the compulsion of an irresistible force
4. Any person who acts under the impulse of an uncontrollable fear of an
equal or greater injury
ii. Persons who are exempted from both criminal liability (imprisonment
and fines) and civil liability (civil damages)
1. Any person who acts in defense of one-self, in defense of relatives or in

defense of strangers
2. Any person who acts in the performance of his legal duties
3. Any person who acts in the performance of his contractual obligations
4. Any person suffering from battered woman syndrome
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Telephone : (043) 723 8412
iii. Components of Civil Liability arising from Crime or Delicto
1. Restitution refers to the restoration of the thing itself even though it be

found in the possession of a third person who has acquired it by lawful
means.
2. Reparation of the damage caused shall be determined by the Court
taking into consideration of the price of the thing and its sentimental
value.
3. Indemnification for consequential damages shall include not only
those caused the injured party but also those suffered by his family or by
a third person by reason of the crime.
6. Distinctions between quasi-delict (tort or culpa aquiliana) and crime (delict)
a. As to the nature of right violated, the right violated by a quasi-delict is a private right
while the right violated by a crime is a public right.
b. As to the name of the case, in quasi-delict the name of the case is Private-Plaintiff vs.
Respondent or Defendant while in crime the name of the case is People of the
Philippines vs. Accused.
c. As to award of civil damages, every quasi-delict gives rise to liability for damages to
the injured party but there are crimes from which no civil liability arises.
d. As to possibility of compromise, quasi-delict can be compromised but criminal
liability for imprisonment and fines can never be compromised except in case of
criminal negligence.
e. As to requirement of criminal intent, in quasi-delict, criminal intent is not necessary,
while in crime, criminal intent is necessary except in (1) criminal negligence and (2)
mala prohibita or crimes where good faith is not a defense, thus, criminal intent is not
required.
f. As to quantum of evidence, claims arising from quasi delict must be proven by
preponderance of evidence while conviction for crime must be proven by proof beyond
reasonable doubt although civil damages arising from crime may be proven only by
preponderance of evidence by the private offended party plaintiff or victim of the crime.
7. Principles on Sources of Civil Obligations and Awarding of Damages
a. A single act by the defendant-respondent may result to two or more sources of civil
obligation. However, the plaintiff cannot recover twice damages for all cases filed
involving the single act because the purpose of awarding civil damages is to compensate
the plaintiff for the injury suffered by him but not to unjustly enrich the plaintiff at the
expense of the defendant.
b. The constitutional prohibition against double jeopardy applies to criminal cases only but
neither civil nor administrative proceedings. That means, for example, that a defendant
convicted or acquitted of a crime is not immune from a civil lawsuit for damages from the
victim (private offended party) of the crime.
8. Kinds of Thing or Object in Obligation to Deliver a Thing
a. A generic thing or indeterminate thing is only indicated by its kind, without being
designated and distinguished from others of the same kind. (Note: Generic thing
never perishes.)
b. A determinate thing or specific thing or delimited generic thing is one that is

individualized and can be identified or distinguished from others of its kind.
i. Note: Loss of thing due to fortuitous event as a mode of extinguishing an
obligation is applicable only to obligation to deliver a determinate thing or
specific thing or delimited generic thing but not to obligation to deliver a generic
thing or indeterminate thing because generic thing never perishes.
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Telephone : (043) 723 8412
9. Incidental or Accessory obligations in an Obligation to Deliver a Determinate Thing or

a Specific Thing or a Delimited Generic Thing
a. Obligation to Preserve the Determinate Thing or Specific Thing or Delimited

Generic Thing with Due Care
i. Degree of Diligence to be Exercised by the Obligor or Debtor in the

Preservation of Determinate Thing or Specific Thing or Delimited
Generic Thing
1. Diligence Required by Law
a. Contract of common carrier - Common carriers, from the nature
of their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods
transported by them, according to all the circumstances of each
case.
b. Necessary deposit (Things brought in hotel or motel) – Hotel
business is imbued with public interest, which demands that
hotelkeepers are bound to provide not only lodging for hotel
guests but also security to their persons and belongings with
extraordinary diligence. The law does not allow such duty to the
public to be negated or diluted by any contrary stipulation that
ordinarily appear in prepared forms imposed by hotel keepers on
guests for their signature.
2. Diligence Validly Stipulated by the Contracting Parties

a. Based on autonomy of contract, the contracting parties may
establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy. The
stipulated degree of diligence must be valid. Waiver of future
fraud or future gross negligence is null and void because that is
contrary to law and public policy.
3. Ordinary Diligence or Diligence of a Good Father of a Family or

Diligence of a Reasonably Prudent Person
a. Diligence of a good father of a family means an ordinary care.
Just like a father of a family, it is a care that an average person
would do in taking care of his property. Diligence of a good
father of a family depends upon the facts and circumstances of
each case.
b. Obligation to Deliver the Fruits of the Determinate Thing if the Fruits occur
After the Obligation to Deliver the Determinate Thing arises
i. Kinds of Fruits under the Civil Code

1. Natural fruits are the spontaneous products of the soil, and the young
and other products of animals.
2. Industrial fruits are those produced by lands of any kind through
cultivation or labor.
3. Civil fruits are fruits as a result of civilization or fruit arising out of a
juridical relation or contracts such as are the rents of buildings, the price
of leases of lands and other property and the amount of perpetual or life
annuities or other similar income.
c. Obligation to Deliver the Accessions and Accessories of the Determinate Thing
i. Accessories refer to those which are destined for the embellishment, use or for
the preservation of another thing which is of more importance, have for their
object the completion of the latter for which they are indispensable or
convenient.
ii. Accessions include everything which is produced by a thing, or which is
incorporated or attached thereto, either naturally or artificially.
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10. Types of Rights of Creditor over the Determinate Thing and its Fruits and the Specific
Moment the Right is acquired by Creditor
a. A personal right is the power belonging to one person to demand of another, as a
definite passive subject, the fulfillment of a prestation to give, to do or not to do. It
refers to a right that can be exercised only against a specific person thereby prohibiting
an action to recover the ownership or possession of a specific thing if it is already with a
third person but it only allows action for damages against a specific person. Personal
right over a determinate thing is acquired from the moment provided by the Civil Code
or Special Law.
b. A real right is the power belonging to a person over a specific thing, without a passive
subject individually determined, against whom such right may be personally exercised. It
refers to a right that can be exercised against the whole world thereby allowing an action
to recover the ownership or possession of a specific thing regardless of the possessor of
such thing. Real right over a determinate thing or its fruits is acquired from the moment
of its or their actual delivery or constructive delivery.
11. General Remedies Available to Creditor when the Debtor Fails to Comply with his
Obligation
a. Action for specific performance of obligation (exact fulfillment of obligation) with
damages; or
b. Action to rescind the obligation (cancellation of obligation) with damages; or
c. Action for damages (indemnification for damages)
12. Successive Remedies of the Creditor in case the Debtor Fails to Comply with his
Obligation to Deliver a Determinate Thing or a Specific Thing or a Delimited Generic
Thing
a. Action for specific performance of obligation (exact fulfilment of obligation) plus damages
for breach of obligation under Article 1170; then
b. Action for damages if action for specific performance becomes legally impossible
13. Alternative Remedies of the Creditor in Case the Debtor Fails to Comply with his
Obligation to Deliver an Indeterminate Thing or a Generic Thing
a. Action for specific performance of obligation (exact fulfilment of obligation) with
damages; or
b. He may ask the obligation to be complied with by a third person at the expense of the
debtor with damages.
i. Note: For practicality, the second remedy of asking a third person to comply the
obligation at the expense of the debtor plus damages is more practicable.
14. Remedy of the Creditor if the Debtor Fails to do the Prestation in Obligation to do that
can be done by other persons
a. The creditor or third person may do it in a proper manner at the expense of the debtor.
15. Remedy of the Creditor if the Debtor Fails to do the Prestation in an Obligation to do
whereby only the Debtor can do the Prestation
a. Action for indemnification for damages
16. Constitutional Right Against Involuntary Servitude

a. Article III Section 18 paragraph 2 of the 1987 Philippine Constitution provides
that “No involuntary servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.” As a result, in obligation to do, action
for specific performance of obligation or exact fulfilment of obligation is not an available
remedy to the creditor in case the debtor refuses to perform his obligation.
17. Remedy of the Injured Person in case a Public Official or Officer of a Private
Corporation Refuses to Perform his Ministerial Duty
a. Special civil action of mandamus
18. Remedy of the Creditor in Case the Debtor Performed the Obligation to Do in
Contravention of the Tenor of the Obligation or in Case the Debtor Performed the
Obligation to Do Poorly
a. The creditor or third person may do it in a proper manner at the expense of debtor; or
b. The court may decree that what had been poorly done be undone at the expense of the
debtor.
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19. Remedy of the Creditor in Case the Debtor does what has been Forbidden him in an
obligation not to do or in a negative obligation
a. It shall be undone at the expense of debtor with indemnification for damages.
20. Definition of Delay or Default or Mora

a. Delay or Default or Mora refers to the non-fulfilment of the obligation with respect to
time.
21. Requisites in order that the debtor may be in default or in order for debtor’s delay or
mora solvendi to exist
a. The obligation must be demandable and already liquidated.

b. The creditor demands the performance either judicially or extrajudicially.
c. The debtor delays performance of the obligation despite the demand from the creditor.
22. As a general rule, demand (juridical or extrajudicial) is necessary for delay to exist.
However, the following are the exceptional instances when demand by the creditor to
the debtor shall not be necessary in order that debtor’s delay (mora solvendi) may
exist:
a. When the obligation expressly so declares that demand is excused or waived.
i. Example: Contract of Loan with a financing company whereby demand is
categorically waived by the debtor for his delay to exist.
b. When the law expressly so declares that demand is excused or waived.
i. Example: Under Law on Partnership, A partner who has undertaken to
contribute a sum of money and fails to do so becomes a debtor for the interest
and damages from the time he should have complied with his obligation. The
same rule applies to any amount he may have taken from the partnership
coffers, and his liability shall begin from the time he converted the amount to his
own use. Demand is not necessary for the partner to be liable for damages and
interests under the abovementioned cases.
c. When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the contract.
i. Example: Obligation to be rendered during special occasion such as Marriage or
Birthday or Interment/Burial
d. When demand would be useless, as when the obligor or debtor has rendered it beyond
his power to perform.
i. Example: (1) The debtor destroyed the specific thing or (2) The debtor, in bad
faith, sold and delivered the specific thing to a person other than the creditor.)
23. Moment of Delay in Reciprocal Obligation

a. In reciprocal obligations, neither party incurs in delay if the other does not comply or
is not ready to comply in a proper manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation in a reciprocal obligations, delay by
the other begins.
24. Types of Delay or Default or Mora
a. Mora solvendi refers to the delay or default on the part of the debtor or obligor.
i. Effects of delay on the part of the debtor or obligor
1. The debtor becomes liable for damages for the delay or default or mora.
2. When the obligation has for its object a determinate thing, the delay or
default or mora places the risk of loss of the deteminate thing on the
debtor.
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b. Mora accipiendi refers to the delay or default on the part of creditor or obligee.
i. Effects of the delay on the part of the creditor
1. The creditor becomes liable for damages.

2. The debtor may relieve himself of the obligation by the consignation of
the thing after a valid tender of payment to the creditor.
3. When the obligation has for its object a determinate thing, the creditor
bears the risk of the loss of the determinate thing.
4. The responsibility of the debtor for the loss of the determinate thing is
reduced and limited to fraud and gross negligence.
5. All expenses for the preservation of the determinate thing after the delay
or default or mora shall be chargeable to the creditor.
c. Compensatio morae refers to the delay or default of both debtor and creditor.
i. Effect of compensatio morae
1. The delays of both debtor and creditor are compensated or offsetted.

Therefore, no one will be liable for damages by reason of delay.
25. Grounds for Damages in the Breach of Performance of Obligation under Article 1170
a. Delay – Default – Mora refers to the non-fulfilment of the obligation with respect to
time.
b. Fraud – Dolo (Incidental Fraud or Dolo Incidente) refers to the deliberate and
intentional evasion of the normal fulfilment of obligation.
c. Negligence - Fault – Culpa is the failure to observe for the protection of the interests
of another person, that degree of care, precaution and vigilance which the circumstances
justly demand, whereby such person suffers injury. It means the absence of diligence
required by law or by contract or by the circumstances of the case.
d. Contravention of the tenor of obligation refers to illicit act which impairs the strict
and faithful fulfillment of the obligation or every kind of defective performance. It refers
to the violation of the terms and conditions of obligation or defects in the performance of
the obligation.
26. Types of Civil Damages that may be Awarded by Court to the Plaintiff (MENTAL)
I. Mutually Exclusive Damages
a. Liquidated damages are damages agreed upon by the parties to a contract, to

be paid in case of breach thereof. It refers to the type of damages that is not
assessed by the court but merely applied based on the contractual stipulation of
the parties. It refers to the penalty in an obligation with a penal clause.
b. Actual damages or compensatory damages are those pecuniary losses

suffered and duly proved by the plaintiff. The compensatory interest is the legal
interest of 6% per annum starting July 1, 2013 and 12% before July 1, 2013.
c. Temperate damages or moderate damages are damages that may be

recovered when the court finds that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case, be provided with certainty. They
are more than nominal damages but less than compensatory damages.
d. Nominal damages are damages adjudicated in order that a right of the

plaintiff, which has been violated or invaded by the defendant, may be vindicated
or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.
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II. Additional Damages to any of the Mutually Exclusive Damages
a. Moral damages are damages awarded by reason of physical suffering, mental

anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. They are automatically awarded to
the private offended party in the crime of murder or homicide or rape despite the
absence of proof. They are also awarded to the plaintiff in the case of libel or
defamation.
b. Exemplary damages or corrective damages are damages imposed, by way

of example or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages.
27. Waiver of Fraud
a. Future Fraud - Waiver of a civil action for future fraud is void because it is contrary to
law and public policy. Such waiver will encourage the commission of crime.
b. Past fraud - Waiver of a civil action for past fraud may be considered valid on the part
of the plaintiff and defendant provided public interests are not involved. However, if the
past fraud involved a public crime, the waiver of civil damages made by the private
complainant in favor of the defendant will not bar the state from continuing the
prosecution of criminal case.
28. Degree of Diligence to be observed by Contracting Parties in the Performance of

Obligation
1. Diligence Required by Law
a. Contract of common carrier - Extraordinary diligence on the

part of common carrier.
i. Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by
them, according to all the circumstances of each case.
ii. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with
a due regard for all the circumstances.
b. Contract of Necessary Deposit or Things brought in hotel

or motel – Extraordinary diligence on the part of hotel or motel
or inn keeper
i. The hotel business like the common carrier's business is
imbued with public interest. Catering to the public,
hotelkeepers are bound to provide not only lodging for
hotel guests and security to their persons and
belongings. The twin duty constitutes the essence of the
business. The law in turn does not allow such duty to
the public to be negated or diluted by any contrary
stipulation in so-called "undertakings" that ordinarily
appear in prepared forms imposed by hotel keepers on
guests for their signature.
c. Contract of Bank Deposits – Extraordinary diligence on the

part of the bank.
i. The fiduciary nature of banking requires high standards
of integrity and performance.
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2. Diligence Stipulated in the Contract
a. Based on autonomy of contract, the contracting parties may

establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy. The
stipulated degree of diligence must be valid. Waiver of future
fraud or future gross negligence is null and void because that is
contrary to law and public policy.
3. Ordinary Diligence or Diligence of a Good Father of a Family or

Diligence of a Reasonably Prudent Person
a. Diligence of a good father of a family means an ordinary care.

Just like a father of a family, it is a care that an average person
would do in taking care of his property. Diligence of a good
father of a family depends upon the facts and circumstances of
each case.
29. Principles on Issuance of Receipt by Creditor

a. The issuance of receipt for the principal of the loan by the creditor, without reservation
with respect to the interest, shall give rise to rebuttable or disputable presumption that
said interest has been paid.
b. The issuance of receipt by the creditor for a later installment of a debt without
reservation as to prior installments, shall raise rebuttable or disputable presumption that
such prior installments have been paid.
i. Note: The presumption created by the issuance of such receipt by the creditor is
only rebuttable. This means that the creditor may still collect the interest or later
installment of the debt if he can present contrary evidence to prove that such
interest or later installment is not yet really paid.
30. Successive Rights of Unpaid Creditor in order to Satisfy his Claim against the Debtor
after prevailing in the civil action for exact fulfillment or specific performance
a. To levy by attachment and execution upon all the property of the debtor including the
garnishment of bank deposits, except those properties exempted by law from execution
like foreign currency bank deposits
b. Accion Subrogatoria - To exercise all rights and actions of the debtor, except those
rights which are inherently personal to him
i. Requisites of Accion Subrogatoria
1. The debtor’s assets must be insufficient to satisfy claims against him;
2. The creditor must have pursued all properties of the debtor subject to
execution;
3. The right of action must not be purely personal; and
4. The debtor whose right of action is exercised must be indebted to the
creditor.
c. Accion Pauliana - To ask for the rescission or cancellation of the contracts made by the
debtor in fraud of creditor’s rights
i. Requires of Accion Pauliana
1. That the plaintiff asking for rescission has a credit prior to, the
alienation, although demandable later;
2. That the debtor has made a subsequent contract conveying a
patrimonial benefit to a third person;
3. That the creditor has no other legal remedy to satisfy his claim, but
would benefit by rescission of the conveyance to the third person;
4. That the act being impugned is fraudulent; and
5. That the third person who received the property conveyed, if by onerous
title, has been an accomplice in the fraud.
d. To file an action for damages against the third person who acquired the property of
debtor in bad faith.
10 | P a g e RLACO/DSALES/NVALDERRAM A
Mobile : 0927 283 8234
Telephone : (043) 723 8412
31. Principle on transmissibility of rights acquired from an obligation
a. Subject to the provisions of laws, rights acquired from an obligation are generally
transmissible unless there is stipulation to the contrary.
i. Exceptional Rights acquired from an obligation which are

Intransmissible
1. Those rights which are provided by law to be intransmissible.

a. Example: Right to vote in national or local election
2. Those rights which are stipulated in the contract to be intransmissible.
a. Example: Membership in SNR Exclusive Shopping
3. Those rights which are purely personal in nature
a. Examples: (1) Membership in a nonstock nonprofit corporation
or (2) Being a Partner in a Partnership
32. Types of Obligations as to Demandability
a. Pure obligation refers to an obligation which contains neither term nor condition
whatever upon which depends the fulfillment of the obligation contracted by the debtor.
b. Conditional obligation refers to an obligation subject to a condition either suspensive
or resolutory.
c. Obligation with a period refers to an obligation subject to a space of time (term)
which is certain to happen.
33. Obligations Demandable at once or Immediately demandable obligations

a. Pure obligation or Absolute obligation
i. Example: I promise to pay P10,000 to P. Signed M.
b. Obligation in diem or obligation with a resolutory period
i. Example: I allow C to use my calculator until December 31, 2050. Signed M.
c. Obligation with a resolutory condition
i. Example: I allow C to use my condominium until C passes the CPA Board Exam.
Signed M.
34. Nondemandable obligations or Obligations not immediately demandable at once

a. Obligation ex die or obligation with a suspensive period
i. Example: I promise to pay P10,000 to P on December 31, 2050. Signed M.
b. Obligation when the debtor's means permit him to do so
i. Example: I promise to pay my obligation to of P10,000 to P as soon as possible.
Signed M.
c. Obligation with a suspensive condition
i. Example: I oblige myself to give P10,000 to P if he passes the CPA Board Exam.
Signed M.
35. Distinctions between Suspensive Condition and Resolutory Condition

a. As to the effect on the rights and obligation of the parties, if the suspensive condition
happens, the obligation arises while if the resolutory condition happens, the rights
and obligations already existing are extinguished.
b. As to the existence of rights and obligation of the parties, in suspensive condition, the
rights and obligations do not yet exist before the happening of the condition while in
resolutory condition, the rights and obligation are already existing even before the
happening of the condition.
c. As to the demandability of the obligation, obligation subject to a suspensive condition
is not demandable at once while obligation subject to resolutory condition is
demandable at once.
d. As to the nature of the condition, suspensive condition is known as condition
precedent while resolutory condition is condition subsequent.
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36. Types of Conditions
a. Potestative Condition is a condition that is dependent upon the will of one of the
contracting parties.
i. Note: If the suspensive condition is purely potestative upon debtor, the
obligation that depends upon it is void while if the suspensive condition is
purely potestative upon creditor, the obligation that depends upon it is valid.
b. Casual Condition is a condition that is dependent exclusively upon chance or other

factors, and not upon will of the contracting parties.
c. Mixed Condition is a condition that is dependent upon the will of the contracting
parties and other circumstances, including the will of a third person.
37. Suspensive Conditions that Nullify the Obligation which depends upon them for their
existence
a. Impossible conditions
b. Suspensive conditions purely potestive upon the will of the debtor
c. Conditions contrary to morality, good customs, public order or public policy
d. Conditions prohibited by law
38. Effect if the Obligor or Debtor voluntarily prevented the fulfillment of the suspensive
condition of an obligation subject to a suspensive condition
a. The suspensive condition shall be deemed fulfilled and the obligation becomes
immediately demandable.
39. Retroactive effect of fulfillment of suspensive condition in a conditional obligation to

give a determinate thing subject to a suspensive condition
a. The fulfillment of suspensive condition shall retroact to the day of the perfection or
constitution of the obligation once the condition has been fulfilled. However, in case of
unilateral obligation to give, the retroactive effect pertains only to the determinate thing
but not to the fruits that arise during the pendency of suspensive condition.
40. Effects of fulfillment of suspensive condition on the determinate thing's fruits

occurring during the pendency of the condition
a. In conditional reciprocal obligation, the fruits and interests during the pendency of the
suspensive condition shall be deemed to have been mutually compensated.
b. In conditional unilateral obligation to give or unilateral obligation to give subject to a a
period, the fruits shall inure to the sole benefit of the debtor whether the condition is
suspensive or resolutory in the absence of stipulation to the contrary.
c. In conditional obligation to do or not to do, the courts shall determine, in each case, the
retroactive effect to the fruits of the condition that has been complied with taking into
account the agreement of the parties.
41. Available remedy to the creditor during the pendency of suspensive condition in an
obligation to deliver a determinate thing subject to a suspensive condition
a. Before the fulfillment of suspensive condition or during pendency of the suspensive
condition, the creditor may bring appropriate actions for the preservation of his right over
the determinate thing such as filing a petition before a regional trial court for the
issuance of asset preservation order over the determinate thing which is the
subject matter of the obligation to give subject to a suspensive condition.
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Telephone : (043) 723 8412
42. Effects of payment of money by mistake in an obligation subject to a suspensive

condition vs. Effects of payment of money by mistake in an obligation with a
suspensive period
a. If during the pendency of the suspensive condition in an obligation to give a sum of
money subject to a suspensive condition, the debtor has paid by mistake a sum of
money, the debtor can recover the sum of money but there will be additional interests
only if the creditor acted in bad faith.
i. Note: Whoever in bad faith accepts an undue payment, shall pay legal interest if
a sum of money is involved.
b. If during the pendency of the suspensive period in an obligation to give a sum of money
with a suspensive period, the debtor has paid by mistake a sum of money, the debtor
can recover not only the sum of money but also the additional interests regardless of the
good faith or bad faith on the part of creditor.
i. Note: Anything paid or delivered before the arrival of the suspensive period, the
obligor being unaware of the period or believing that the obligation has become
due and demandable, may be recovered, with the fruits and interests.
43. Effects of specific thing by mistake in an obligation subject to a suspensive condition

and in an obligation with a suspensive period
a. If during the pendency of the suspensive condition or suspensive period, the debtor has
delivered a determinate or specific thing by mistake, the debtor may file (1) an accion
reinvidicatoria if the thing is still with the creditor or (2) an action for
indemnification for damages if the thing is no longer with the creditor.
i. Note: Whoever in bad faith accepts an undue payment shall be liable for fruits
received or which should have been received if the thing produces fruits. He shall
furthermore be answerable for any loss or impairment of the thing from any
cause, and for damages to the person who delivered the thing, until it is
recovered.
ii. Note: He who in good faith accepts an undue payment of a thing certain and
determinate shall only be responsible for the impairment or loss of the same or
its accessories and accessions insofar as he has thereby been benefited. If he
has alienated it, he shall return the price or assign the action to collect the sum.
iii. Note: Anything paid or delivered before the arrival of the suspensive period, the
obligor being unaware of the period or believing that the obligation has become
due and demandable, may be recovered, with the fruits and interests.
44. Rules to be observed in case of the improvement, loss or deterioration of the

determinate thing during the pendency of the suspensive condition in an obligation to
give a determinate thing subject to a suspensive condition or during pendency of the
suspensive period in obligation to give a determinate thing with a suspensive period
assuming the suspensive condition is fulfilled or the suspensive period already arrives
a. If the thing is lost without the fault of the debtor, the obligation shall be extinguished.
b. If the thing is lost through the fault of the debtor, he shall be obliged to pay damages.
c. When the thing deteriorates without the fault of the debtor, the impairment is to be
borne by the creditor.
d. If the thing is improved by its nature, or by time, the improvement shall inure to the
benefit of the creditor.
e. If the thing is improved at the expense of the debtor, he shall have no other right than
that granted to the usufructuary which refers to right to use the improved thing for a
reasonable period.
45. Alternative remedies of creditor when the determinate thing deteriorates through the
fault of the debtor during the pendency of the suspensive condition in an obligation
to give a determinate thing subject to a suspensive condition or during the pendency
of suspensive period in an obligation to give a determinate thing with a suspensive
period
a. He may ask for the rescission of the obligation with indemnity for damages; or
b. He may ask for the specific performance or exact fulfillment of the obligation with
indemnity for damages.
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Telephone : (043) 723 8412
46. Instances when the thing is considered lost

a. When it perishes.
b. When it goes out of commerce.
c. When it disappears in such a way that its existence is unknown or it cannot be
recovered.
d. When it is a destroyed specific thing or determinate thing or delimited generic thing.
47. Effects of fulfillment of resolutory condition or arrival of resolutory period to the

obligation of the parties in obligation to give a determinate thing subject to a
resolutory condition or resolutory period
a. In case of unilateral obligation subject to a resolutory condition or resolutory period, the
fruits shall be returned by the person (creditor) who will make the restitution with
deduction for the expenses for the production, gathering and preservation of the fruits.
Therefore, the debtor will be entitled to the fruits that arise during the pendency of
resolutory condition or resolutory period although the creditor may ask for
reimbursement for the expenses for the production, gathering and preservation of those
fruits arising during the pendency of resolutory condition or resolutory period.
i. Note: If the obligation is unilateral, the debtor shall appropriate the fruits and
interests received, unless from the nature and circumstances of the obligation it
should be inferred that the intention of the person constituting the same was
different.
b. When the obligation imposes reciprocal prestations upon the parties, the fruits and
interests during the pendency of the condition shall be deemed to have been mutually
compensated.
48. Reciprocal obligation refers to a type of obligation which arises from the same cause and in
which each party is a debtor and creditor of the other, such that the obligation of one is
dependent upon the obligation of the other.
a. Examples: Sale, barter, lease, common carrier or service.
49. Right to ask for Judicial Rescission of Reciprocal Obligation by the Injured Party
a. The injured party can ask for judicial rescission of the reciprocal obligations in case one
of the debtors should not comply with what is incumbent upon him because the power to
rescind obligations is implied in reciprocal ones.
50. Alternative Remedies of Injured Party in case of Breach of Reciprocal Obligations

a. Action for Exact Fulfillment of Obligation or Specific Performance of Obligation plus
Damages; or
b. Action for Rescission of Obligation or Cancellation of Obligation plus Damages
51. Effects of Selection of any of the Alternative Remedies by the Injured Party in case of
Breach of Reciprocal Obligations
a. As a general rule, if the injured party initially opted to ask for the exact fulfillment
of obligation or specific performance of obligation with damages, he can no
longer ask for rescission or cancellation of obligation. However, if the exact fulfillment or
specific performance of obligation becomes legally impossible after its initial selection,
the injured party may exceptionally ask for the rescission or cancellation of obligation.
b. However, if the injured party initially opted to ask for rescission or cancellation
of the obligation plus damages, he will be absolutely prohibited from asking for exact
fulfillment or specific performance of the obligation because they are considered
inconsistent remedies.
52. Principles concerning Reciprocal Obligations

a. The court shall decree the rescission of reciprocal obligations claimed, unless there is just
cause authorizing the fixing of a period of the reciprocal obligations.
b. In case both parties have committed a breach of the reciprocal obligations, the liability of
the first infractor shall be equitably tempered by the courts.
c. If it cannot be determined which of the parties first violated the contract involving
reciprocal obligations, the contract shall be deemed extinguished, and each shall bear his
own damages.
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Telephone : (043) 723 8412
53. Obligation with a period is an obligation which is subject to a space of time which, exerting an
influence on obligations as a consequence of a juridical act, suspends their demandability or
determines their extinguishment.
54. Distinctions between a condition and a period

a. As to certainty, a condition is a future and uncertain event or a past and unknown
event while a period is a future event that must necessarily come.
b. As to nature of event, a condition may refer to a past event as long as it is unknown to
the parties while a period always refers to the future certain event.
c. As to retroactive effect on the obligation, while a condition gives rise to an obligation or
extinguishes one already existing, a period has no effect upon the existence of
obligation, but only its demandability or performance and thus, a period does not carry
with it any retroactive effect.
d. As to effect on the validity of obligation, a suspensive condition purely potestative
upon the will of the debtor nullifies the obligation that depends upon it while a
suspensive period which depends exclusively upon the will of the debtor does not
nullify the obligation that depends upon it but it merely authorizes the court to fix the
suspensive period of the obligation.
55. Types of Obligation with a period

a. Obligation Ex die or Obligation with a suspensive period is an obligation already
existing but not yet demandable until the arrival of the suspensive period.
i. Example: (1) I promise to deliver a specific car to B on December 31, 2050.
Signed M. (2) I will pay my obligation of P10,000 to you when my means permits
me to do so. Signed M.
b. Obligation In diem or Obligation with a resolutory period is an obligation already
immediately demandable but will be extinguished upon the arrival of the resolutory
period.
i. Example: I allow B to use my bike until December 31, 2050. Signed M.
56. Benefit of the obligation with a period

a. It is disputably presumed that the period of an obligation is for the benefit of both
creditor and debtor in the absence of contrary agreement.
57. As a general rule, the court is not allowed to fix the period of an obligation because it
will be violative of the contracting parties’ constitutional right to liberty. However,
the following are the exceptional instances wherein the court may fix the period of
an obligation with a period on the basis of police power of the state:
a. If the obligation does not fix a period, but from its nature and the circumstances it can
be inferred that a period was intended.
b. If the period depends upon the sole will of the debtor.
i. Example: Obligation payable when debtor’s means permits him to do so or
Obligation payable as soon as possible
c. In case of pure obligation, to prevent unreasonable interpretations of its immediate
demandability.
58. Instances wherein the debtor shall lose every right to make use of the period and
therefore the obligation with a suspensive period becomes due and demandable
which allows the creditor to demand its performance from the debtor (Instances that
will Accelerate the Maturity of a Debt subjective to a suspensive period)
a. When after the obligation has been contracted, the debtor becomes insolvent and he
does not give a guaranty or security for the debt.
b. When the debtor does not furnish to the creditor the guaranties or securities which he
has promised.
c. When by debtor’s own acts he has impaired or destroyed said guaranties or securities
after their establishment, unless he immediately gives new one equally satisfactory.
d. When through a fortuitous event the guaranties or securities after their establishment
disappeared, unless the debtor immediately gives new one equally satisfactory.
e. When the debtor violates any undertaking, in consideration of which the creditor agreed
to the period.
f. When the debtor attempts to abscond.
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59. Alternative Obligation vs. Facultative Obligation vs. Conjunctive Obligation

a. Alternative Obligation is an obligation where the debtor is alternatively bound by
different prestations and it is extinguished by the complete performance of any of them.
b. Facultative Obligation is an obligation wherein only one prestation has been agreed
upon but the obligor may render another in substitution.
c. Conjunctive Obligation is an obligation where the debtor has to perform several
prestations and it is extinguished only by the performance of all of them.
60. Distinctions between alternative obligation and facultative obligation

a. As to the number of due objects, in alternative obligation, several objects being due,
the fulfillment of one is sufficient, determined by the choice of the debtor who generally
has the right of election while in facultative obligation, only one thing is due, but the
debtor has reserved the right to substitute in with another.
b. As to the effect of loss of one of the objects due through the fault of debtor, in
alternative obligation, the loss of one of the things due through the fault of debtor
may affect the obligation if the right of choice is given to creditor while in facultative
obligation, the loss of that which may be given as substitute does not affect the
obligation if the loss occurs before the substitution.
c. As to the right of choice, in alternative obligation, the right of choice may be granted
to the creditor while in facultative obligation, the right of choice can never be granted
to creditor.
d. As to the effect of loss of one of the objects due to fortuitous event, in alternative
obligation, the loss of one of the things due through fortuitous event does not
extinguish the obligation while in facultative obligation, the loss through fortuitous
event of that which is due as the object of the obligation extinguishes the obligation.
61. Joint Obligation vs. Solidary Obligation
a. Joint obligation is one in which each of the debtors is liable only for a proportionate
part of the debt and each creditor is entitled only to a proportionate share of the credit.
b. Solidary obligation is one in which each debtor is liable for the entire obligation and
each creditor is entitled to demand the whole obligation.
62. As a general rule, the obligation is presumed by law to be joint. However, the
following are the exceptional instances when the obligation is considered solidary
a. When the obligation expressly so states that the obligation is solidary.

i. Example of Terms Equivalent to Solidary Obligation
1. I promise to pay.
2. Jointly and severally
3. Jointly and solidarily
4. Jointly and collectively
5. Jointly and individually
6. Jointly and separately
7. Jointly and exclusively
8. In solidum
9. Mancumada solidaria
ii. Example of Terms Equivalent to Joint Obligation
1. We promise to pay
2. Pro rata
3. Joint
4. Proportionately
5. Jointly and proportionately
b. When the law requires the obligation to be solidary.

i. Examples of Legal Solidary Obligation
1. Civil obligations of two or more persons who are guilty of crime
2. Civil obligations of two or more payees in solution indebiti
3. Civil obligations of two or more officious managers in negotiorum gestio
4. Civil obligations of joint tortfeasors or two or more persons liable for
quasi-delict
5. Civil obligations of parents to give support to their children
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c. When the nature of the obligation requires it to be solidary.

i. Example of Solidary Obligation
1. Two or more persons guilty of bad faith or fraud
2. Kabit System in a Certificate of Public Convenience of Common Carrier
63. Principal consequences of the Joint Character of the Obligation
a. The demand by one creditor upon one debtor produces the effects of default only with
respect to the creditor who demanded and the debtor on whom the demand was made,
but not with respect to the others.
b. The interruption of prescription by the judicial demand of one creditor upon a debtor
does not benefit the other creditors nor interrupt the prescription as to other debtors.
c. The vices of each obligation arising from the personal effect of a particular debtor or
creditor do not affect the obligation or rights of the others.
d. The insolvency of a debtor does not increase the responsibility of his co-debtors and it
does not authorize a creditor to demand anything from his co-creditors.
64. Principles concerning solidary obligations
a. The indivisibility of an obligation does not imply solidarity.

b. The solidarity of an obligation does not imply indivisibility.
c. Solidarity may exist although the creditors and the debtors may not be bound in the
same manner and by the same period and conditions.
d. Each one of the solidary creditors may do whatever may be useful to the others, but not
anything which may be prejudicial to the latter.
e. A solidary creditor cannot assign his rights without the consent of the others.
f. The debtor may pay any one of the solidary creditors but if any demand, judicial or
extrajudicial, has been made by any one of the solidary creditors, payment should be
made to him by the debtor to whom demand for payment is made.
65. Acts if made by any of the solidary creditors with any of the solidary debtors
extinguish the solidary obligation but may be subject to possible reimbursement
among the solidary creditors and solidary debtors themselves. However, in case of
remission of entire solidary obligation, reimbursement among the debtors will not be
allowed to prevent unjust enrichment but the renouncing creditor shall reimburse the
other solidary creditors because each one of the solidary creditors may do whatever
may be useful to the others, but not anything which may be prejudicial to the latter.
a. Novation
b. Compensation
c. Confusion
d. Remission
66. Principles concerning the payment of solidary obligation
a. Payment made by one of the solidary debtors extinguishes the obligation and if two or
more solidary debtors offer to pay, the creditor may choose which offer to accept.
b. He who made the payment may claim from his co-debtors only the share which
corresponds to each with the interest for the payment already made.
c. If payment is made before the debt is due, no interest for the intervening period may be
demanded.
d. Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors
if such payment is made after the obligation has prescribed or become illegal
e. When one of the solidary debtors cannot, because of his insolvency, reimburse his share
to the debtor paying the obligation, the share of insolvent co-solidary debtor shall be
borne by the paying debtor and the other solvent co-solidary debtors pro-rata.
f. The remission made by the creditor of the share which affects one of the solidary debtors
does not release the latter from his responsibility towards the co-debtors, in case the
debt had been totally paid by anyone of them before the remission was effected.
g. The remission of the whole obligation, obtained by one the solidary debtors, does not
entitle him to reimbursement from his co-debtors.
h. If the thing has been lost or if the prestation has become impossible without the fault of
the solidary debtors, the obligation shall be extinguished.
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67. Defenses that may be availed by the solidary debtor in actions filed by the creditor
a. Defenses which are inherent from the nature of the solidary obligation
i. Example: (1) illegality of obligation; (2) prescription of obligation; or (3) other
modes of extinguishment of obligation.
b. Defenses personal to a specific solidary defendant-debtor for the whole amount of the
obligation in so far as that specific solidary defendabt-debtor is concern.
i. Example: (1) Minority of the said Debtor or (2) Insanity of the said Debtor
c. Defenses personal to other co-solidary debtors as regards that part of the debt for which
the latter are responsible but not for the whole amount.
i. Example: (1) Minority of the co-solidary debtor or (2) Insanity of co-solidary
debtor
68. Defenses that are not available to the solidary debtor in actions filed by the creditor
a. Insolvency of the other co-solidary debtor

b. Defenses personal to other co-solidary debtor as regards the whole amount of the
obligation
69. Divisible Obligation vs. Indivisible Obligation
a. Divisible Obligation is an obligation that is susceptible of partial performance; that is,

the debtor can legally perform the obligation by parts and the creditor cannot demand a
single performance of the entire obligation.
i. Example: Obligation to deliver 10 kilos of Dinorado Rice
b. Indivisible Obligation is an obligation that is not susceptible of partial performance or

the law provides that the performance of the obligation is indivisible or the contract
provides that the performance of the obligation is indivisible.
i. Instances when the obligation is considered indivisible

1. When the obligation is not susceptible of partial performance
a. Example: Obligation to deliver a specific cellphone
2. When the law provides that the performance of obligation is indivisible
a. Example: Contract of Subscription of Shares of Stocks as
provided by Revised Corporation Code of the Philippines
3. When the contract provides that the performance of the obligation is
indivisible
a. Example: Obligation to construct a house the performance of
which is indivisible based on the long-term construction
agreement
70. Principles pertaining to divisible obligations and indivisible obligations

a. Divisibility or indivisibility of the obligation refers not to the object or thing but to the
performance of the obligation.
b. A divisible obligation, whatever may be the nature of the thing which is the object
thereof, refers to one which can be validly performed in parts. When the obligation has
for its object the execution of a certain number of days of work, the accomplishment of
work by metrical units, or analogous things which by their nature are susceptible of
partial performance, it shall be divisible.
c. Obligations to give definite things and those which are not susceptible of partial
performance shall be deemed indivisible.
d. Even though the object or service may be physically divisible, an obligation is indivisible if
so provided by law or intended by the parties.
e. In obligations to do, divisibility or indivisibility shall be determined by the character of the
prestation in each particular case.
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71. Principles of Joint Indivisible Obligation

i. Example: A, B and C wrote a promissory note which provides “We promise to
delivery a specific car worth P300,000 to D.” Signed A, B and C.
b. To enforce a joint indivisible obligation, there is necessity of collective fulfillment and the
action must be against all the debtors. It means that all joint indivisible debtors are
indispensable parties in the action to enforce joint indivisible obligation.
c. In case of non-performance by all debtors in a joint indivisible obligation, the action for
exact fulfillment must be filed against all the joint indivisible debtors because they are all
indispensable parties in the suit.
d. A joint indivisible obligation cannot be compelled by specific performance if anyone of the
debtors does not or cannot comply with this undertaking while the other debtors are
ready and willing. In case of non-performance by any of the debtors in a joint indivisible
obligation, the obligation is converted into a liability for losses and damages, which is
divisible. The joint indivisible debtors who may have been ready to fulfill their promises
shall not contribute to the indemnity beyond the corresponding portion of the price of the
thing or of the value of the service in which the obligation consists.
72. Obligation with a penal clause is an obligation which has an accessory undertaking to
assume greater liability in case of breach. The penalty in obligation with a penal clause is also
known as liquidated damages which are stipulated or predetermined by the contracting parties.
73. Principles pertaining to obligations with a penal clause

a. The debtor does not have absolute right to just pay the penalty for non-performance of
the obligation instead of fulfilling the prestation if he can really perform the obligation.
Otherwise, he will be liable for actual damages in addition to the penalty for non-
performance for acting in bad faith.
b. The penalty stipulated in obligation with a penal clause must not be contrary to law,
morals, or public order to be enforceable. Otherwise, such penalty will be considered void
but the obligation will remain to be valid.
c. In case of doubt or ambiguity, obligations with a penal clause must be construed strictly
against the awarding of penalty. Courts frown upon the awarding of ambiguous penalty.
d. In case of breach of obligations with a penal clause, the debtor cannot have both action
for enforcement of penalty for non-compliance of obligation and action for specific
performance of obligation because they are inconsistent remedies.
e. Proof of actual damages suffered by the creditor is not necessary in order that the
penalty in obligation with a penal clause may be demanded because they are liquidated
or predetermined damages by the contracting parties.
f. The judge shall equitably reduce the penalty in obligation with a penal clause when the
principal obligation has been partly or irregularly complied with by the debtor and even if
there has been no performance, the penalty may also be reduced by the courts if it is
iniquitous or unconscionable.
g. The nullity of the principal obligation carries with it that of the penal clause.
h. The nullity of the penal clause does not carry with it that of the principal obligation.
74. As a general rule, penalty or liquidated damages for breach of obligation with a penal
clause are awarded in lieu of damages and interest. However, the following are the
exceptional instances when the creditor may demand payment of damages and
interest aside from penalty in obligation with a penal clause:
a. If there is stipulation that damages and interests may be demanded in addition to
penalty in case of breach of obligation with a penal clause.
b. When the debtor is guilty of bad faith or fraud in the breach of the obligation with a
penal clause.
c. When the debtor fails to pay the penalty in case of breach of the obligation with a penal
clause.
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75. Modes of extinguishment of obligations: (No-Co-Me-Re-Pa-Lo-Pre-Re-Ful-An)
a. No – Novation
b. Co – Compensation or Offset
c. Me – Merger or Confusion
d. Re – Remission or Donation or Condonation or Renunciation
e. Pa – Payment or Performance or Fulfillment of Obligation
f. Lo – Loss of the determinate thing or specific thing due to fortuitous event
g. Pre – Prescription of Right to File an Action converting the civil obligation to natural
obligation
h. Re – Rescission of Rescissible Obligation or Rescissible Contract
i. Full – Fulfillment of Resolutory Condition or Arrival of Resolutory Period
j. An – Annulment of Voidable Obligation or Voidable Contract
76. Prescription refers to the mode of extinguishment of right to file an action or obligation by the
mere lapse of time fixed by law. It converts the enforceable civil obligation into an unenforceable
natural obligation.
a. 6 years for quasi contract

b. 6 years for oral contract
c. 10 years for written contract
d. 10 years for court judgment
e. 4 years for quasi-delict
f. 1 year for libel or unlawful detainer or forcible entry
77. Types of Estoppel
a. Estoppel in pais means a person is considered in estoppel if by his conduct,

representations or admissions or silence when he ought to speak out, whether
intentionally or through culpable negligence, causes another to believe certain facts to
exist and such other rightfully relies and acts on such belief, as a consequence of which
he would be prejudiced if the former is permitted to deny the existence of such facts.
b. Estoppel by deed occurs when a party to a deed and his privies are precluded from
denying any material fact stated in the said deed as against the other party and his
privies.
c. Estoppel by laches is considered an equitable estoppel wherein a person who failed or
neglected to assert a right for an unreasonable and unexplained length of time is
presumed to have abandoned or otherwise declined to assert such right and cannot later
on seek to enforce the same, to the prejudice of the other party, who has no notice or
knowledge that the former would assert such rights and whose condition has so changed
that the latter cannot, without injury or prejudice, be restored to his former state.
78. Payment or Performance is a mode of extinguishing obligation which refers to the fulfillment
of the prestation due.
79. Requisites of a valid payment

a. The payment must be in accordance with the obligation.
b. The person paying (debtor) as well as the one receiving payment (creditor) should have
the requisite capacity.
c. The payment should be made by the debtor to the creditor.
d. The payment should be made at the right time and place.
80. Principles applicable to payment or performance
a. Payment means not only delivery of money but also performance, in any other manner,
of an obligation.
b. A debt shall not be understood to have been paid unless the thing or service in which the
obligation consists has been completely delivered or rendered, as the case may be.
c. If the obligation has been substantially performed in good faith, the obligor may recover
as though there had been a strict and complete fulfillment, less damages suffered by the
obligee.
d. When the obligee accepts the performance, knowing its incompleteness or irregularity,
and without expressing any protest or objection, the obligation is deemed fully complied
with.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
e. In obligations to give, payment made by one who does not have the free disposal of the
thing due and capacity to alienate it shall not be valid.
f. Payment to a person who is incapacitated to administer his property shall be valid if he
has kept the thing delivered or insofar as the payment has been beneficial to him.
g. Payment made to the creditor by the debtor after the latter has been judicially ordered to
retain the debt shall not be valid.
h. The debtor of a thing cannot compel the creditor to receive a different one, although the
latter may be of the same value as, or more valuable than that which is due.
i. In obligations to do or not to do, an act or forbearance cannot be substituted by another
act or forbearance against the obligee’s will.
j. When the obligation consists in the delivery of an indeterminate or generic thing, whose
quality and circumstances have not been stated, the creditor cannot demand a thing of
superior quality and the debtor cannot deliver a thing of inferior quality.
81. Rules concerning payment of debts in money
a. The payment of debts in money shall be made in the currency stipulated by the
contracting parties whether it is in Philippine currency or foreign currency.
b. In case the delivery of the foreign currency stipulated by the contracting parties is not
possible, the payment of debts in money shall be made in the currency (Philippine Peso)
which is legal tender in the Philippines.
i. Legal Tender in Philippine Jurisdiction – refers to the currency (Philippine
Peso) which a debtor can compel a creditor to accept in an obligation to pay a
sum of money. Negotiable instruments like promissory note, bill of exchange and
checks are not legal tenders and not good as cash.
1. 1 centavo, 5 centavos, 10 centavos, 25 centavos – Up to P100 legal
tender power only.
2. P1, P5, P10, P20-coin – Up to P1,000 legal tender power only.
3. P20 bill, P50, P100, P200, P500, P1,000 – Unlimited legal tender power.
ii. Note: The legal tender power of Philippine Peso coins is in their combination and
not per denomination.
c. The delivery of promissory notes payable to order or bills of exchange or other
mercantile documents shall produce the effect of payment in any of the following
instances:
i. When they have been encashed;
ii. When through the fault of the creditor they have been impaired; or
iii. When the amount has already been credited to the bank account of the creditor.
d. In case an extraordinary inflation or deflation of the currency stipulated should
supervene, the value of the currency at the time of the establishment of the obligation
shall be the basis of payment, unless there is an agreement to the contrary.
82. Place of payment of obligation
a. Place designated in the obligation.

b. In the absence of agreement, delivery shall be made wherever the determinate thing
might be at the moment the obligation was constituted or perfected in case of obligation
to deliver a determinate thing or a specific thing or a delimited generic thing.
c. In the absence of agreement, delivery shall be made at the domicile of debtor in case of
obligation to deliver an indeterminate thing or a generic thing.
83. Right of a third person who pays the obligation of debtor without the knowledge of
the debtor or against the will of the debtor
a. The third person who voluntarily pays the obligation of the debtor without the knowledge
of the debtor or against the will of the debtor may recover from the debtor but only
insofar as the payment has been beneficial to the debtor without legal subrogation.
84. As a general rule, payment to a third person is not valid. However, the following are
the exceptional instances wherein payment by a debtor to a third person is valid
a. When in good faith, the debtor pays to one in possession of the credit.
b. When, without notice of the assignment of the credit, the debtor pays to the original
creditor.
c. When the payment to a third person redounded to the benefit of the creditor.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
85. Generally, it is the obligation of the debtor to prove that the payment to a third
person redounded to the benefit of the creditor in order for the payment to be valid.
The following are exceptional instances when benefit to creditor need not be proved
by a debtor who pays a third person for such payment to be valid:
a. If after the payment, the third person acquires the creditor’s rights.
b. If the third person is authorized by the creditor.
c. If the creditor ratifies the payment to the third person.
d. If by the creditor’s conduct, the debtor has led to believe that the third person had
authority to receive payment.
86. Special Forms of Payment

a. Dation en Payment or Dacion en Pago
b. Payment by cession or Corporate Liquidation
c. Tender of payment and consignation
d. Application of payment (Not really a special form of payment)
87. Dation in payment or Dacion en Pago (Asset Swap in Financial Accounting) refers to a
special form of payment whereby a property is alienated to the creditor in satisfaction of a debt
in money when the loan in money is already due at the time of change. This special mode of
payment shall be governed by Law on Sales. If the change of prestation occurs before the
maturity day of the obligation to pay a sum of money, the proper mode of extinguishment of
obligation is novation instead of dation in payment.
88. Dacion en pago vs. Pactum Commissorium

a. As to voluntariness, dacion en pago requires subsequent and voluntary agreement of
the debtor and creditor while pactum commissiorium involves automatic transfer of
pledged or mortgaged property the moment the debtor defaulted in the payment of the
secured loan.
b. As to validity, dacion en pago is valid and legal while pactum commissorium is
invalid for being contrary to law and public policy.
89. Cession (Corporate Liquidation in Financial Accounting) refers to a special type of

payment which involves the voluntary abandonment of the universality of the property of the
debtor for the benefit of his creditors, in order that such property may be applied to the payment
of the credits.
90. Distinctions between dation in payment and payment by cession

a. As to transfer of rights, whereas dation in payment transfers the ownership over the
thing alienated to the creditor, while in payment by cession, only the possession and
administration (not ownership) are transferred to the creditors, with an authorization to
convert the property into cash with which the debts shall be paid.
b. As to extent of obligation extinguished, while dation in payment may totally extinguish
the obligation and release the debtor, the payment by cession only extinguishes the
credits to the extent of the amount realized from the properties assigned, unless
otherwise agreed upon.
c. As to properties covered by payment, while dation in payment involves only some
specific thing, payment by cession involves all the property of the debtor.
d. As to recipient of payment, while in dation in payment, the transfer is only in favor of
one creditor to satisfy a debt, in payment by cession, there are various creditors.
e. As to governing law, dation in payment is governed by Law on Sales, payment by
cession is governed by Financial Rehabilitation and Insolvency Act (FRIA) of 2010.
91. Application of payment refers to the designation of the debt which is being paid by a debtor
who has several obligations of the same kind in favor of the creditor to whom payment is made.
The right of application of payment generally belongs to the debtor in the absence of contrary
agreement.
92. Principles on Application of Payment

a. Unless the parties so stipulate, or when the application of payment is made by the party
for whose benefit the term has been constituted, application shall not be made as to
debts which are not yet due.
b. If the debtor accepts from the creditor a receipt in which an application of the payment is
made, the former cannot complain of the same, unless there is a cause for invalidating
the contract.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
93. Limitations to the preferential right of the debtor to choose the debt to which his
payment is to be made in case he exercise his right to application of payment
a. If the debtor owes two debts, one for P50 and another for P200, and he makes a
payment of P50, he cannot choose to apply it to the P200 debt because the creditor
cannot be compelled to accept partial payment.
b. If there is only one obligation bearing stipulated interest, the debtor must apply the
payment to the interest first before the principal or capital of the debt.
c. The debtor cannot apply the payment to a debt that is not yet liquidated.
d. He cannot choose a debt with a period for the benefit of the creditor, when the period
has not yet arrived.
e. When there is an agreement as to the debts which are to be paid first, the debtor cannot
vary the agreement.
94. Rules for application of payments

a. If the debt produces interest, payment shall be applied to the interests first before the
capital or principal. Payment of the interest does not imply that the capital or principal is
also settled.
b. When the payment cannot be applied in accordance with the preceding rules, or if
application cannot be inferred from other circumstances, the debt which is most onerous
to the debtor, among those due, shall be deemed to have been satisfied.
c. If the debts due are of the same nature and burden, the payment shall be applied to all
of them proportionately.
d. If at the time of payment the debtor does not exercise his right to apply it to any of his
debts, the application made by the creditor contrary to rules on application of payment
provided by law shall not be automatically followed if the debtor does not consent to
such application.
95. Tender of Payment and Consignation

a. Tender of payment is the manifestation made by the debtor to the creditor of his
desire to comply with his obligation with the offer of immediate performance.
b. Consignation is the deposit of the object of the obligation in a competent court in
accordance with rules prescribed by law. It refers to the remedy available to the debtor if
the creditor is guilty of delay also known as mora accipiendi.
96. As a general rule, consignation shall be preceded by a valid tender of payment for
consignation to be valid. However, the following are the exceptional instances of
valid consignation releasing the debtor from liability even without prior valid tender
of payment by debtor:
a. When the creditor is absent
b. When the creditor is unknown
c. When the creditor does not appear at the place of payment
d. When the creditor is incapacitated to receive the payment at the time it is due
e. When, without just cause, the creditor refuses to give a receipt
f. When two or more persons claim the same right to collect
i. Special civil action of interpleader refers to a suit pleaded between two
parties to determine a matter of claim or right to property held by a third party.
g. When the title of the obligation has been lost
97. Essential requisites of valid consignation as a special mode of payment:

a. The debt must be due.
b. The consignation was made because of some legal causes provided by law which may
either be: (1) delay on the part of creditor known as mora accipiendi or (2) consignation
is made without prior valid tender of payment by debtor in exceptional cases allowed by
law.
c. Previous notice of the consignation has been given to the persons interested (creditor) in
the performance of the obligation. (1st notice to the creditor of the intent to consign to
the court)
d. The amount or thing was placed at the disposal of the court.
e. After the consignation, the persons interested (creditors) were notified thereof. (2nd
notice to the creditor of actual consignation to the court)
Mobile : 0927 283 8234
Telephone : (043) 723 8412
98. Alternative Actions by the Consigning Debtor after the Deposit of the Subject Matter
of the Obligation to the Court
a. Once the consignation has been duly made, the debtor may ask the judge to order
the cancellation of the obligation; or
b. Before the creditor has accepted the consignation, or before a judicial declaration that
the consignation has been properly made, the debtor may withdraw the thing or the
sum deposited, allowing the obligation to remain in force.
99. Effects once the consignation has been accepted by the creditor or the court has
declared that it has been validly made
a. The debtor is released in the same manner as if he had performed the obligation at the
time of the consignation, because this produces the same effect as a valid payment.
b. The accrual of interest on the obligation is suspended from the moment of consignation.
c. The deterioration or loss of the thing or amount consigned occurring without fault of the
debtor must be borne by the creditor, because the risks of the thing are transferred to
the creditor from the moment of deposit or consignation to the court.
d. Any increment or increase in value of the thing after the consignation inures to the
100. Effects if, after the consignation has been made, the creditor should authorize
the debtor to withdraw the deposited thing
a. The creditor shall lose every preference which he may have over the deposited thing.
b. The other co-solidary debtors shall be released of their solidary obligation but not of their
joint or respective shares in the obligation. It means that the solidary obligation of the
other co-solidary debtors is converted into a joint obligation. However, the obligation of
the consigning debtor will remain to be solidary.
c. The guarantors and sureties of the secured obligation shall be released from their
obligation.
101. Loss of specific thing or determinate thing or delimited generic thing due to
fortuitous event vs. Loss of generic thing or indeterminate thing due to fortuitous
event
a. An obligation which consists in the delivery of a determinate thing or specific thing
or delimited generic thing shall be extinguished if it should be lost or destroyed due
to fortuitous event.
b. In an obligation to deliver a generic thing or indeterminate thing, the loss or
destruction of anything of the same kind due to fortuitous event does not extinguish the
obligation because generic thing never perishes.
102. Requisites of fortuitous events to exempt the obligor or debtor from civil
liability
a. The cause of the unforeseen and unexpected occurrence or the failure of the debtor to
comply with his obligation must be independent of the debtor’s will.
b. It must be impossible to foresee the event which constitutes the caso fortuito or if it can
be foreseen, it must be impossible to avoid.
c. The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner.
d. The debtor must not participate in the aggravation of the injury resulting to the creditor.
103. As a general rule, no one is liable for the loss due to fortuitous event.
However, the following are the exceptional instances when the debtor is liable even
there is fortuitous event at the time of loss
a. When the law expressly provides that the debtor shall be liable even if the loss is due to
fortuitous event.
i. When the debtor has promised to deliver the same thing to two or more different
parties.
ii. When the loss occurs after the debtor has incurred delay.
iii. When the obligation to deliver a determinate object arises from a criminal act.
b. When by express stipulation, the debtor is made liable even if loss occurs through
fortuitous events.
c. When the nature of the obligation requires the assumption of risk such as insurance
contract.
d. When the fault or negligence of the debtor concurs with the fortuitous event in causing
the loss.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
104. Effects of loss of the prestation to the obligation to give determinate thing or
specific thing or delimited generic thing
a. The courts shall determine whether, under the circumstances, the partial loss of the
object of the obligation is so important as to extinguish the obligation.
b. When the debt of a thing certain and determinate proceeds from a criminal offense, the
debtor shall not be exempted from the payment of its price, whatever may be the cause
for the loss, unless the thing having been offered by him to the person who should
receive it, the latter refused without justification to accept it.
c. The obligation having been extinguished by the loss of the thing, the creditor shall have
all the rights of action which the debtor may have against third persons by reason of the
loss meaning there will be legal subrogation. It means that the creditor of the debtor
may directly file an action reindivicatoria or an action for damages against the third
person who caused the loss even without agreement or consent of the debtor.
105. Effects of fortuitous event to obligation to do or not do

a. The debtor in obligations to do shall also be released when the prestation becomes
legally or physically impossible without the fault of the debtor.
b. When the service has become so difficult as to be manifestly beyond the contemplation
of the parties, the obligation may also be released therefrom, in whole or in part.
106. Remission or Donation or Condonation or Renunciation is a mode of extinguishing

obligation which is an act of liberality, by virtue of which, without receiving any equivalent, the
creditor renounces the enforcement of the obligation, which is extinguished in its entirety or in
that part or aspect of the same. It is essentially gratuitous and requires acceptance by the
debtor.
107. Essential Requisites for Validity of Donation of Obligation

a. If the donation of debt involves movable with value of P5,000 or less, there must be
simultaneous delivery and acceptance.
b. If the donation of debt involves movable with value exceeding P5,000, both the donation
and acceptance must be in written instrument either private instrument or public
instrument
c. If the donation of debt involves immovable property, both the donation and acceptance
must be in public instrument or notarized document. The notarized deed of donation and
notarized deed of acceptance may be put in either same document or separate
documents.
108. Requisites of Remission or Condonation or Donation or Renunciation of

Obligation
a. The debt must be existing and demandable at the time the remission or renunciation is
made.
b. The remission or renunciation of the debt must be gratuitous.
c. The debtor must accept the remission or renunciation of debt.
d. The remission or renunciation of debt may be expressed or implied.
109. Principles of Condonation or Remission or Renunciation or Donation of

Obligation
a. Whenever the private document in which the debt appears is found in the possession of
the debtor, it shall be disputably presumed that the creditor delivered it voluntarily,
unless the contrary is proved.
b. The delivery of a private document evidencing a credit, made voluntarily by the creditor
to the debtor, implies the renunciation of the action which the former had against the
latter. If in order to nullify this waiver it should be claimed to be inofficious, the debtor
and his heirs may uphold it by proving that the delivery of the document was made in
virtue of payment of the debt.
c. It is presumed that the accessory obligation of pledge has been remitted when the thing
pledged, after its delivery to the creditor, is found in the possession of the debtor, or of a
third person who owns the thing.
d. The renunciation of the principal debt shall extinguish the accessory obligations while the
renunciation of the accessory obligation shall not extinguish the principal debt because
accessory obligations follow the principal obligation but not the other way around.
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Telephone : (043) 723 8412
110. Confusion or Merger is a mode of extinguishing obligation that occurs where there is
meeting in one person of the qualities of creditor and debtor with respect to the same obligation.
111. Requisites of Merger or Confusion

a. It must take place between the principal creditor and the principal debtor.
b. The very same obligation must be involved, for if the debtor acquires rights from the
creditor, but not the particular obligation in question, there will be no merger.
c. The confusion or merger must be total or as regards the entire obligation. However,
partial merger or confusion is not prohibited by law.
112. Principles concerning Merger or Confusion

a. The effect of merger is to extinguish the obligation.
b. Merger or confusion which takes place in the person of the principal debtor or creditor
benefits the guarantor or mortgagor or pledgor while the merger or confusion which
takes place in the person of the guarantor or mortgagor or pledgor does not extinguish
the principal obligation of the debtor primarily liable.
c. In case of pure joint obligation, confusion or merger does not extinguish a joint
obligation except as regards the share corresponding to the creditor or debtor in whom
the two characters concur.
d. In case of joint-solidary obligation (active or passive), confusion or merger extinguishes
the obligation but only up to the extent of the joint share of confused party.
e. In case of pure solidary obligation, confusion or merger extinguishes the entire
obligation.
113. Compensation or Offset is a mode of extinguishing to the concurrent amount, the

obligations of those persons who in their own right are reciprocally debtors and creditors of each
other.
114. Principles concerning Compensation or Offset

a. Compensation may be total or partial and when the two debts are of the same amount,
there is a total compensation.
b. The parties can agree upon compensation of debts which are not yet due. Conventional
compensation is allowed in case one or more of the essential requisites of legal
compensation are not present.
c. If one of the parties to a suit over an obligation has a claim for damages against the
other, the former may set it off by proving his right to said damages and the amount
thereof. This principle is applicable in case of judicial compensation.
d. When one or both debts are rescissible or voidable, they may be legally compensated
against each other before they are judicially rescinded or avoided because rescissible
obligation is valid and binding until rescinded while voidable obligation is valid and
binding until annulled.
e. The guarantor may set up legal compensation as regards what the creditor may owe the
principal debtor.
115. Types of Compensation

a. Legal compensation is a compensation which takes place by operation of law because
all the requisites provided by law are present for compensation by operation of law to
occur.
b. Facultative compensation is a compensation which can be claimed by one of the
parties who, however, has the right to object to it, such as when one of the obligations
has a period for the benefit of one party alone and who renounces that period so as to
make the obligations due.
c. Conventional compensation is a compensation wherein the parties agree to
compensate their mutual obligations even if one or more of the requisites of legal
compensation are lacking.
d. Judicial compensation is a compensation decreed by the court in a case where there
is a counterclaim.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
116. Requisites of legal compensation or compensation by operation of law

a. Each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other.
b. Both debts consist in a sum of money, or if the things due are consumable, they be of
the same kind, and also of the same quality if the latter has been stated.
c. Both debts must be due.
d. Both debts must be liquidated and demandable.
e. That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.
117. Debts that are allowed to be legally compensated

a. Perfectly valid debts
b. Rescissible debts or valid and binding until cancelled debts
c. Voidable debts or valid and binding until annulled debts
118. Debts that are not allowed to be legally compensated

a. Unenforceable debts or valid but not binding debts unless ratified
b. Void debts or invalid and not binding debts
119. Principles pertaining to legal compensation

a. When all the requisites for legal compensation are present, compensation takes effect by
operation of law even without the consent or awareness of the parties to the obligation.
b. Legal compensation takes place by operation of law even though the debts may be
payable at difference places, but there shall be an indemnity for expenses of exchange or
transportation to the place of payment.
c. If a person should have against him several debts which are susceptible of
compensation, the rules on the application of payments shall apply to the order of the
legal compensation.
120. Instances when legal compensation is prohibited by law but facultative

compensation is allowed (party who can claim facultative compensation)
a. When there is a renunciation of the effect of compensation by a party - the
nonrenouncing party
b. When one of the debts arises from obligation of depositary in depositum (contract of
deposit) - the depositor
c. When one of the debts arises from or of a bailee in commodatum (contract of
commodatum) - the lender
d. When the one of the creditor has a claim for future support due by gratuitous title - the
party entitled to future support
e. When one of the debts consists in civil liability arising from a crime - the victim of
crime
f. When one of the debts pertains to taxes - the state or the government
121. Novation is a mode of extinguishment of an obligation by the substitution or change of

the obligation by a subsequent one which extinguishes or modifies the first.
122. Requisites of Novation of Obligation

a. There must be a previous valid obligation.
b. There must be agreement of all parties to the new contract.
c. There must be extinguishment of the old contract.
d. The new obligation must be valid.
123. Types of Novation of Obligation

a. Changing their object or principal conditions
b. Substituting the persons of the debtor (Delegacion or Expromission)
c. Subrogating a third person in the rights of the creditor (Legal Subrogation or
Conventional Subrogation)
d. Shortening the term of the obligation
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Telephone : (043) 723 8412
124. Types of novation

a. Subjective or personal novation is the modification of the obligation by the change
of the subject; it is passive if there is substitution of the debtor, and it is active when a
third person is subrogated in the rights of the creditor.
b. Objective or real novation is the change of the obligation by substituting the object
with another or changing the principal conditions.
c. There is partial novation when there is only a modification or change in some principal
conditions of the obligation.
d. There is implied novation when there is such an incompatibility between the old and
the new obligations that they cannot stand together.
125. Concepts of novation

a. In order that an obligation may be extinguished by another which substitutes the same,
it is imperative that it be so declared in unequivocal terms.
b. Novation is never presumed.
c. Novation may be expressed or implied.
d. There is implied novation if the old and new obligations are on every point incompatible
with each other.
e. When the principal obligation is extinguished in consequence of a novation, accessory
obligations may subsist only insofar as they may benefit third person who did not give
their consent.
f. If the new obligation is void, the original obligation was not extinguished, unless the
parties intended that the former should not subsist in any event.
g. The novation is void if the original obligation was void, except when annulment may be
claimed only by the debtor, or when ratification validates acts which are voidable.
h. If the original obligation was subject to a suspensive condition or resolutory condition,
the new obligation shall be under the same condition, unless it is otherwise stipulated.
126. Types of Novation by substitution of person of Debtor

a. In Expromission, the initiative for the change does not emanate from the original
debtor and may be made even without his knowledge, since it consists in a third person
assuming the obligation and it logically requires the consent of the third person (new
debtor) and the creditor.
b. In Delegacion, the original debtor (delegante) offers and the creditor (delegatario)
accepts a third person (delegado) (new debtor) who consents to the substitution, so that
the consent of the three parties is necessary.
Note: In novation involving the change of the debtor, the consent of creditor is always
required whether the novation is expromission or delegacion.
127. Effects of Insolvency of New Debtor to liability of Old Debtor
a. In Expromission, the insolvency of new debtor or non-fulfillment of the obligation by

the new debtor shall not generally give rise to any liability on the part of the original
debtor because the original debtor did not have the initiative in making the change,
which might have been made even without his knowledge. However, if the original
debtor gives consent to the substitution, he may become liable to the insolvency of the
new debtor especially if the original debtor acted in bad faith.
b. In Delegacion, the insolvency of new debtor or non-fulfillment of the obligation by the

new debtor does not generally revive the obligation of old debtor unless: (1) when said
insolvency of new debtor was already existing and of public knowledge when the original
debtor delegated his debt or (2) when said insolvency of new debtor is known to the
debtor when he delegated his debt.
i. Note: If the substitution of the debtor is without the knowledge or against the
will of the debtor, the new debtor's insolvency or non-fulfillment of the
obligations shall not give rise to any liability on the part of the original debtor.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
128. Subrogation refers to the transfer of all the rights of the creditor to a third person,
who substitute him in all his rights. Subrogation transfers to the person subrogated the credit
with all the rights thereto appertaining, either against the debtor or against third persons, be
they guarantors or possessors of mortgages, subject to stipulation in a conventional subrogation
129. Types of Subrogation or Substitution of Creditor
a. Conventional subrogation refers to substitution of creditor by agreement of original

parties and the new creditor.
i. Conventional subrogation must be clearly established in order that it may
take effect.
ii. Conventional subrogation of a third person requires the consent of the
original parties and of third person.
iii. Examples of Conventional Subrogation
1. Factoring of Accounts Receivable
2. Discounting of Note Receivable
i. Effect of Partial Subrogation of a third Person
a) A creditor, to whom partial payment has been made, may exercise his right
for the remainder, and he shall be preferred against the person who has
been subrogated in his place in virtue of the partial payment of the same
credit. It means that the original creditor has a better right over the
remaining insufficient assets of the debtor as against the partially subrogated
creditor.
b. Legal subrogation is the substitution of new creditor in exceptional cases provided by

law. Legal subrogation is never presumed and available only in cases provided by law.
i. Instances wherein legal subrogation is presumed or instances of legal
subrogation
1. When a creditor pays another creditor who is preferred, even without the
debtor’s knowledge.
2. When, even without the knowledge of the debtor, a person interested in
the fulfillment of the obligation pays, without prejudice to the effects of
confusion as to the latter’s share.
3. The obligation having been extinguished by the loss of the thing, the
creditor shall have all the rights of action which the debtor may have
against third persons by reason of the loss.
4. In contract of property insurance, when the insurance company pays the
insured.
5. Under Negotiable Instruments Law, when there is a valid payment for
honor supra protest.
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Quizzer on Law on Obligation
1. What is the definition of an obligation under Article 1156 of the New Civil Code of the Philippines?
a. Juridical necessity to do or not to do.
b. Juridical necessity to give or not to give.
c. Juridical necessity to give, to do or not to do.
d. Juridical necessity to give, not to give, to do or not to do.
2. Which of the following statements best describes a negative obligation?

a. It refers to an obligation which consists of giving or doing something.
b. It refers to an obligation which consists to the delivery or giving of personal or real
object.
c. It refers to an obligation which consists of doing a particular prestation but not delivery
of an object.
d. It refers to an obligation which consists of abstaining from some act.
3. Which of the following is a positive and real obligation?

a. Obligation to teach
b. Obligation not to smoke in public place
c. Obligation to deliver the goods
d. None of the above
4. The following are the essential elements of an obligation, except

a. An active subject, who has the power to demand prestation, also known as the obligee
or creditor.
b. A passive subject, who is bound to perform the prestation, also known as the obligor or
debtor.
c. Object or prestation, which is the promise or particular conduct to be performed in the
performance of an obligation, and may consist of giving, doing or not doing a thing.
d. Efficient cause, the tie which binds the parties to the obligation, also known as juridical
tie or vinculum.
e. The form in which the obligation is manifested.
5. Among the essential elements of an obligation, which are considered the personal elements?
a. Obligee and obligor
b. Prestation and vinculum
c. Obligee and vinculum
d. Prestation and obligor
6. The following statements concerning an obligation are correct, except

a. The obligation to give is one in which the prestation consists in the delivery of a movable
or an immovable thing.
b. The obligation to do includes all kinds of work or services.
c. The obligation not to do consists in abstaining from some act.
d. The obligation not to give is a positive obligation.
7. The following are the requisites of a prestation or an object of an obligation, except

a. It must be possible, physically and juridically.
b. It must be determinate, or, at least, determinable according to pre-established elements
or criteria.
c. It must have possible equivalent in money.
d. It must be a positive obligation only.
8. The following are examples of vinculum or efficient cause or juridical tie of an obligation, except
a. Relation established by law
b. Relation established by contract
c. Relation established by quasi-contract
d. Relation established by quasi-delict
e. Relation established by delict or crime
f. Relation established by natural obligation
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9. Which of the following obligations is not enforceable by a court action?

a. Legal obligation
b. Contractual obligation
c. Civil obligation
d. Religious obligation
10. Which of the following statements concerning the distinctions between civil obligation and natural
obligation are true?
I. Civil obligations derive their binding force from positive law, while natural obligations derive their
binding effect from equity and natural justice.
II. Civil obligations can be enforced by court action or the coercive power of public authority, while
the fulfillment of natural obligations cannot be compelled by court action but depends exclusively
upon the good conscience of the debtor. However, voluntarily fulfilment of natural obligation by
the debtor will preclude him from asking for reimbursement from the creditor of the amount he
has voluntarily paid.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
11. The following are examples of natural obligations that cannot be enforced by court action but
depends upon the voluntarily fulfillment of debtor, except
a. The obligation of a debtor to pay a loan evidenced by a written contract of loan but a
period of 10 years had already lapsed from maturity date without demand from creditor.
b. The obligation of a debtor to reimburse a third person who has paid the debtor’s
obligation after it has already lapsed.
c. The obligation of a testate or intestate heir to pay the debt of a decedent beyond the
value of the property which he received by will or by the law of intestacy from the estate
of the deceased.
d. The obligation of the employer of a “Kasambahay” to pay the 13 th month pay of the
latter.
12. The following are the sources of civil obligation demandable in a court of law, except
a. Law
b. Contracts
c. Quasi-contracts
d. Quasi-delicts or Culpa Aquiliana or Torts
e. Delict or Crime or acts/omissions punishable by law
f. Religious doctrines
13. It is a source of an obligation that refers to the principles and regulations established in a
community by some authority and applicable to its people, whether in the form of legislation or
of custom and policies recognized and enforced by judicial decision.
a. Law
b. Contract
c. Quasi-contract
d. Quasi-delict
14. Which of the following statements concerning obligations arising from law is incorrect?
a. Only obligations expressly determined in the Civil Code or in special laws are
demandable.
b. The law cannot exist as a source of obligations, unless the acts to which its principles
may be applied exist.
c. The obligations and correlative rights arising from law shall be governed by the law by
which they are created.
d. The obligations derived from law are presumed.
15. What is the source of obligation of parents to provide support to their children?
a. Law
b. Contracts
c. Quasi-contracts
d. Quasi-delicts
e. Delict
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16. It is a source of an obligation that refers to meeting of minds between two persons whereby one
binds himself, with respect to the other, to give something or to render some service.
a. Law
b. Contract
c. Quasi-contract
d. Quasi-delict
17. Which of the following statements concerning obligations arising from contracts are correct?
I. Obligations arising from contracts have the force of law between contracting parties.
II. Obligations arising from contracts should be complied with in good faith.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
18. It is a source of an obligation that refers to a juridical relation which arises from certain lawful,
voluntary and unilateral act, to the end that no one may be unjustly enriched or benefited at the
expense of another.
a. Delict
b. Quasi-contract
c. Contract
d. Quasi-delict
19. Which of the following statements concerning the kinds of quasi-contract is correct?
I. Negotiorum Gestio refers to the voluntary management of the property or affairs of another
without the knowledge or consent of the latter.
II. Solutio Indebiti refers to the juridical relation which is created when something is received when
there is no right to demand it and it was unduly delivered through mistake.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
20. The following are examples of quasi-contracts, except

a. A person receives something when there is no right to demand it or it was unduly
delivered through mistake.
b. A person takes charge of the agency or management of business or property of another
without authority or without consent of the latter.
c. A stranger gives support to a child of another person without the knowledge of the
person obliged to give support.
d. A person saves the property of another person during fire, flood, storm or other calamity
without the knowledge of the owner.
e. A person caused injury to another person through fault of negligence.
21. What is the nature of the responsibility or liability of two or more officious managers in a
negotiorum gestio?
a. Generally it shall be solidary unless the management was assumed to save the thing or
business from imminent danger which will make their liability to be joint only.
b. Generally it shall be joint unless the management was assumed to save the thing or
business from imminent danger which will make their liability to be solidary.
c. It is always solidary.
d. It is always joint.
22. The officious manager in a negotiorum gestio shall be liable for any fortuitous event in any of the
following instances, except
a. If he undertakes risky operations which the owner was not accustomed to embark upon.
b. If he has preferred his own interest to that of the owner.
c. If he fails to return the property or business after demand by the owner.
d. If he assumed the management in good faith.
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23. In which of the following instances will negotiorum gestio arise?

a. When the property or business is not neglected or abandoned.
b. If in fact the manager has been tacitly authorized by the owner.
c. Neither A nor B.
d. Either A or B.
24. What is the nature of responsibility or liability of two or more payees in solutio indebiti when
there has been payment of what is not due?
a. Solidary
b. Joint
c. Pro-rata
d. Subsidiary
25. When will a person who accepts an undue payment of a sum of money be liable for interest?
a. When he receives the undue payment in bad faith.
b. When he receives the undue payment in good faith.
c. When he receives the undue payment, regardless of being bad or good faith.
d. Under all instances.
26. When will a person who in good faith accepts an undue payment of a thing certain or
determinate be responsible for the impairment or loss of the same or its accessories and
accessions?
a. He is liable only in so far as he has thereby been benefited.
b. When he is not guilty of negligence.
c. He is liable in any instances.
d. When the reason of loss is fortuitous event.
27. It is a source of an obligation that refers any act or omission punishable by law.
a. Crime or Delict
b. Quasi-contract
c. Contract
d. Quasi-delict
28. Is a person criminally liable also liable to pay civil damages to private offended party?
a. Yes, as a general rule, unless the crime committed does not cause civil damages.
b. Yes in all cases.
c. No unless the People of the Philippines ask for damages.
d. No because criminal liability means imprisonment only.
29. What is the nature of civil liability of two or more persons (criminals) who are convicted of crime?
a. Solidary
b. Joint
c. Pro-rata
d. Subsidiary
30. Article 100 of the Revised Penal Code provides that every person criminally liable for a felony is
also civilly liable for damages. Under Article 12 of the Revised Penal Code, the following persons
will not be imprisoned (exempted from criminal liability) but will still be liable for civil damages
(civil liability) for their acts, except
a. An imbecile or insane person.
b. A minor or any person under 18 years of age.
c. Any person who acts under the compulsion of an irresistible force.
d. Any person who acts under the impulse of an uncontrollable fear of an equal or greater
injury.
e. Any person who acts under self-defense or any person who acts in the performance of
his official duty or any wife suffering from battered woman syndrome who killed or
injured his batterer.
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31. The civil liabilities arising from crimes are as follows, except
a. Restitution which refers to restoration of the thing itself even though it be found in the
possession of a third person who has acquired it by lawful means.
b. Reparation of the damage caused which shall be determined by the Court taking into
consideration of the price of the thing and its sentimental value.
c. Indemnification for consequential damages which shall include not only those caused the
injured party but also those suffered by his family or by a third person by reason of the
crime.
d. Compromise of the criminal liability.
32. What degree of evidence must be proved by the prosecution for the conviction of an accused of a
crime?
a. Proof beyond reasonable doubt
b. Clear and convincing evidence
c. Preponderance of evidence
d. Substantial evidence
33. What degree of evidence must be proved by the private offended party to be entitled to civil
damages arising from crime or delict?
34. What degree of evidence must be proved by the plaintiff in order to recover civil damages arising
contract or quasi-delict?
35. In the prosecution for the crime of criminal negligence, the accused is acquitted on the ground of
failure of the prosecution to prove his guilt beyond reasonable doubt. May the private offended
party file another civil case based on quasi-delict?
a. Yes because a single act may result to different sources of obligation and crime and
quasi-delict are separate and distinct sources of civil liability but the private offended
party (plaintiff) cannot recover twice civil damages for a single act since civil damages
are awarded to compensate the victim for the injury caused to him but not to unjustly
enrich him.
b. No because the accused shall not be subject to double jeopardy.
c. Yes only if there is a contract between the contending parties.
d. No because the private offended party is barred by the principle of res judicata.
36. It refers to a source of an obligation wherein a person by act or omission causes damage to
another, there being fault or negligence.
a. Contract
b. Quasi-contract
c. Quasi-delict or culpa aquiliana or torts
d. Delict
37. The following are the requisites in order that civil liability for quasi-delict or torts may exist,
except
a. There is pre-existing relation between the offender and offended parties.
b. There exists a wrongful act or omission imputable to the defendant by reason of his fault
or negligence.
c. There exists a damage or injury which must be proved by the person claiming recovery.
d. There must be a direct causal connection or a relation of cause and effect between the
fault or negligence and the damage or injury, or that the fault or negligence be the cause
of the damage or injury.
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38. Negligence or culpa which results to civil liability arising from quasi-delict or torts is also known
as
a. Culpa criminal
b. Culpa aquiliana
c. Culpa contractual
d. Culpa liberal
39. The following are the distinctions between quasi-delict and crime or delict, except
a. The right violated by a quasi-delict is a private right while the right violated by a crime is
a public right.
b. Every quasi-delict gives rise to liability for damages to the injured party but there are
crimes from which no civil liability arises.
c. Criminal liability can never be compromised except in criminal negligence but liability
from quasi-delict can be compromised.
d. In quasi-delict, criminal intent is not necessary, while in crime, criminal intent is
necessary except in criminal negligence.
e. In order to convict a person of crime, only preponderance of evidence is required but in
order to prove negligence in quasi-delict, proof beyond reasonable doubt is required.
40. In case of tort, when will the plaintiff or injured party be barred or precluded from recovering
damages?
a. When plaintiff's own negligence was the immediate, proximate and sole cause of his
injury.
b. When the reason of the injury is a fortuitous event but with contributory negligence of
tortfeasor.
c. When plaintiff’s negligence was only contributory, the immediate and proximate cause of
the injury being the defendant's lack of due care.
d. When the immediate and proximate cause of his injury is the negligence of the
tortfeasor.
41. The obligation arising from torts or quasi-delicts is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible. The following are the
persons who are liable for the torts or quasi-delict committed by persons under their
responsibility, except
a. The father and, in case of his death or incapacity, the mother, are responsible for the
damages caused by the minor children who live in their company.
b. Guardians are liable for damages caused by the minors or incapacitated persons who are
under their authority and live in their company.
c. The owners and managers of an establishment or enterprise are likewise responsible for
damages caused by their employees in the service of the branches in which the latter are
employed or on the occasion of their functions.
d. Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry.
e. Teachers or heads of establishments of arts and trades shall be liable for damages
caused by their pupils and students or apprentices who are within their custody.
f. Boyfriend or girlfriend is liable for the quasi-delict committed by their partner during their
relationship.
42. How shall persons enumerated under preceding number exempt themselves from responsibilities
arising from torts committed by persons under their responsibility?
a. By proving they exercise extraordinary diligence to prevent damage.
b. By proving that they observed all the diligence of a good father of a family to prevent
damage.
c. By proving that there is no contract between the plaintiff and defendant.
d. By proving that the guilt is not proven beyond reasonable doubt.
43. What is the nature of liability of two or more persons who are liable for quasi-delict or tort a.k.a.
joint tortfeasors?
a. Solidary
b. Joint
c. Pro-rata
d. Proportionate
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44. While trying to pass each other on a narrow bridge, a passenger bus and a private automobile
collided, and two persons, A and B, were injured. A was a passenger of the bus while B was a
pedestrian. The bus company was made a defendant although its employee driver was the one
driving the bus and the owner-driver of the private car was also made a defendant. What can be
the source of obligation of the bus company as regards to A, the passenger?
a. Contract of carriage for failure to exercise extra-ordinary diligence
b. Culpa aquiliana or quasi-delict if he exercised diligence of a good father of a family in
selecting his employees.
c. Culpa criminal or crime and considered a principal liability
d. Quasi-contract
45. Using the same data in preceding number, what can be the source of obligation of the driver of
passenger bus as regards to A, the passenger?
a. Contract of carriage
b. Quasi-contract
c. Law
d. Quasi-delict or crime at the option of A
46. Using the same data in preceding number, what can be the source of obligation of the bus
company as regards to B, the pedestrian?
b. Culpa aquiliana if he fails to exercise the diligence of a good father of a family in
selecting his employees
c. Culpa criminal or crime and considered a principal liability
d. Quasi-contract
47. Using the same data in preceding number, what can be the source of obligation of the bus driver
as regards to B, the pedestrian?
b. Quasi-contract
c. Law
d. Quasi-delict or crime at the option of B
48. Using the same data in preceding number, what can be the source of obligation of the owner-
driver of private car as regards to A, the passenger?
b. Quasi-contract
c. Law
d. Quasi-delict or crime at the option of A
49. Using the same data in preceding number, what can be the source of obligation of the owner-
driver of private car as regards to B, the pedestrian?
b. Quasi-contract
c. Law
d. Quasi-delict or crime at the option of B
50. Which of the following statements concerning the obligation to deliver a thing is correct?
I. A generic or indeterminate thing is only indicated by its kind, without being designated and
distinguished from others of the same kind.
II. A determinate or specific thing or delimited generic thing is one that is individualized and can
be identified or distinguished from others of its kind.
a. Neither I nor II
b. Both I and II
c. I only
d. II only
51. Which of the following refers to a determinate thing or specific thing or delimited generic thing?
a. White horse
b. Pilot ballpen
c. Car with engine number 143-245
d. House and lot in Villa Lourdes Subdivision
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52. Which of the following refers to an indeterminate thing or generic thing?

a. Black Honda Civic Car with Plate Number CPA-123
b. White Machinery with Serial Number 123-456
c. Red motor cycle with engine number 143-245
d. Studio Type Condominium unit in Avida Taft Tower 1
53. The following are the incidental or accessory obligations in an obligation to deliver a determinate
thing or specific thing or delimited generic thing, except
a. Obligation to preserve the thing with due care.
b. Obligation to deliver the fruits if the fruits occur after the obligation to deliver the
determinate thing arises.
c. Obligation to deliver the accessions and accessories.
d. Obligation to pay for the freight and insurance in transit.
54. In an obligation to deliver a determinate thing, what degree of diligence shall be exercised by the
obligor or debtor in the preservation of the determinate or specific or delimited generic thing?
a. Extraordinary diligence unless the law or the stipulation of the parties requires another
standard of care.
b. Diligence of a father of a good family unless the law or the stipulation of the parties
requires another standard of care.
c. Diligence of a good father of a family or ordinary diligence or diligence of a reasonably
prudent person unless the law or the stipulation of the parties requires another standard
of care.
d. No diligence unless the law or the stipulation of the parties requires another standard of
care.
55. In an obligation to deliver a determinate or specific or delimited generic thing, when is the
creditor or obligee entitled to the fruits of the determinate thing or when does the creditor obtain
personal rights over the fruits of the determinate or specific or delimited generic thing?
a. From the time of the perfection of the contract.
b. From the time the obligation to deliver the determinate thing arises.
c. From the time it is delivered physically or constructively.
d. From the fulfillment of resolutory condition.
56. In an obligation to deliver a determinate thing, when does the creditor or obligee obtain real
rights over the fruits of the determinate thing?
a. From the time of the perfection of the contract.
b. From the time the obligation to deliver it arises.
c. From the time the fruits are delivered physically or constructively.
57. In a contract of sale, when is the buyer or vendee entitled to the fruits of the determinate thing
or when does the buyer or vendee obtain personal rights over the fruits of the determinate thing?
a. From the time of the perfection of the contract of sale of determinate thing.
b. From the time the obligation to deliver arises.
c. From the time the determinate thing is delivered.
58. Which of the following statements concerning real right and personal right is correct?
I. A real right is the power belonging to a person over a specific thing, without a passive
subject individually determined, against whom such right may be personally exercised. It can
be exercised against any person or against the whole world.
II. A personal right is the power belonging to one person to demand of another, as a definite
passive subject, the fulfillment of a prestation to give, to do or not to do. It can be exercised
against a particular person.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
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59. As a general rule, when a debtor or obligor fails to comply with his obligation, the creditor or
obligee may avail himself of what remedies?
a. Action for specific performance or action to rescind or resolve the obligation.
b. Action for specific performance with damages only.
c. Action to rescind or resolve the obligation with damages only.
d. Action for specific performance or action to rescind the obligation or action for damages,
exclusively or in addition to either of the first two actions.
60. What is the proper remedy of the creditor in the case the debtor or obligor fails to comply with
his obligation to deliver a determinate or specific or delimited generic thing?
a. Action for specific performance in addition to damages under Article 1170.
b. He may ask the obligation to be complied with at the expense of the debtor with
damages.
c. Action for rescission of the obligation.
d. Action for annulment of the contract.
61. What is the remedy of the creditor in the case the debtor or obligor fails to comply with his
obligation to deliver an indeterminate or generic thing?
a. Action for rescission of the obligation.
b. He may file an action for specific performance with damages only.
c. He may ask the obligation to be complied with at the expense of the debtor with
damages only.
d. Either B or C.
62. Is the debtor or obligor liable for damages by reason of the loss of the determinate thing due to
fortuitous event?
a. No, as a general rule, except in those cases provided by law.
b. Yes, as a general rule, unless he is exempted by creditor or obligee.
c. Yes in all cases.
d. No in all cases.
63. In an obligation to deliver a determinate thing, when is the debtor or obligor liable even if the
loss of the determinate thing is due to fortuitous event?
I. When the debtor or obligor delays in the delivery of the thing.
II. When the debtor or obligor promised the same thing to two or more persons.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
64. In an obligation to give a determinate thing, which of the following statements is true?
a. The obligation to give a determinate thing includes that of delivering all of its accessions
and accessories only if there is stipulation to that effect.
b. The obligation to give a determinate thing includes that of delivering all of its accessions
and accessories even though they may not have been mentioned.
c. The obligation to give a determinate thing includes that of delivering all of its accessions
and accessories even if there stipulation to the contrary.
d. The obligation to give a determinate thing does not include that of delivering all of its
accessions and accessories.
65. Which of the following statements is correct?

I. Accessories refer to those which destined for the embellishment, use or their preservation of
another thing or more importance, have for their object the completion of the latter for which
they are indispensable or convenient.
II. Accessions include everything which is produced by a thing, or which is incorporated or
attached thereto, either naturally or artificially.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
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66. The following are the kinds of fruits under the Civil Code, except
a. Natural fruits are the spontaneous products of the soil, and the young and other products
of animals.
b. Industrial fruits are those produced by lands of any kind through cultivation or labor.
c. Civil fruits are fruits as a result of civilization or fruit arising out of a juridical relation or
contracts such as are the rents of buildings, the price of leases of lands and other
property and the amount of perpetual or life annuities or other similar income.
d. Commercial fruits are fruits arising from commercial transaction.
67. As a general rule, in an obligation to do, what is the remedy of the creditor if the debtor fails to
do the prestation?
a. Action for specific performance with damages.
b. Action for annulment of obligation with damages.
c. The creditor or third person may do it in a proper manner at the expense of the debtor.
d. Action for damages only to be awarded by the Court.
68. In an obligation to do whereby only the debtor can do the thing, what is the remedy of the
creditor if the debtor fails to do the prestation?
c. The creditor or third person may do it in a proper manner at the expense of the debtor.
d. Action for indemnification for damages.
69. In case a public official who has the ministerial duty to perform a particular obligation or public
duty under the law fails to do such obligation, what is the remedy of the offended party?
a. Civil action for specific performance
b. Special civil action for mandamus
c. Special civil action for certiorari
d. Special civil action of prohibition
70. In an obligation to do, what is the remedy of the creditor in case the debtor did it in
contravention of the tenor of the obligation or did it poorly?
c. The creditor or third person may do it in a proper manner or it may be decreed that what
had been poorly done be undone at the expense of the debtor.
d. Action for damages only to be awarded by the Court.
71. In an obligation consisting in not doing, what is the remedy of the creditor in case the debtor
does what has been forbidden him?
a. It shall be undone at the expense of debtor with no damages.
b. It shall be undone at the expense of debtor with indemnification for damages.
c. Action for specific performance with damages.
d. Action for rescission.
72. When does the debtor or obligor incur delay in an obligation to do something?
a. From the time the obligee demands judicially or extrajudicially the fulfillment of
obligation.
b. From the time the obligee demands judicially the fulfillment of obligation.
c. From the time of the perfection of the contract.
73. Delay can exist in the following obligations, except

a. Obligation to do
b. Obligation to give
c. Obligation not to do
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74. As a general rule, demand by the creditor is necessary in order for debtor’s delay to exist.
However, the following are the exceptional cases when demand by the creditor shall not be
necessary in order for debtor’s delay to exist, except
a. When the obligation expressly so declares that demand is not necessary for delay to exist
or that demand is waived.
b. When the law expressly so declares that demand is not necessary for delay to exist.
c. When from the nature and the circumstances of the obligation it appears that the
designation of the time when the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the contract.
d. When there is unilateral obligation.
e. When demand would be useless, as when the obligor has rendered it beyond his power
to perform.
75. In a reciprocal obligation, when does the other party incur delay?
a. From the moment one of the parties makes a demand.
b. From the moment one of the parties fulfils his obligation.
c. When both parties do not comply with what is incumbent upon them.
d. When both parties are not ready to comply in proper manner their obligations.
76. Delay or Default (Mora) on the part of the debtor or obligor is called
a. Mora solvendi
b. Mora accipiendi
c. Compensatio morae
d. Mora obligor
77. The following are the requisites in order that the debtor or obligor may be in default, except
a. There must be a complaint filed in court against the debtor.
b. The obligation must be demandable and already liquidated.
c. The debtor delays performance of the obligation.
d. The creditor demands the performance judicially or extrajudicially.
78. Which of the following is the effect of delay on the part of the debtor a.k.a mora solvendi?
I. The debtor becomes liable for damages for the delay.
II. When it has for its object a determinate thing, the delay places the risk of the thing on the
debtor.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
79. The following are the effects of the delay on the part of the creditor a.k.a mora accipiendi,
except
a. The creditor becomes liable for damages.
b. The debtor may relieve himself of the obligation by the consignation of the thing.
c. The debtor bears the risk of the loss of the thing.
d. The responsibility of the debtor for the thing is reduced and limited to fraud and gross
negligence.
e. All expenses for the preservation of the thing after the mora shall be chargeable to the
creditor.
80. What is the effect of delays on both debtor and creditor a.k.a. compensatio morae?
a. The delays on the part of both debtor and creditor are compensated or offsetted,
therefore, no one is liable for damages.
b. The debtor remains to be liable for damages.
c. The creditor remains to be liable for damages.
d. The obligations becomes void.
81. When will the benefits arising from default or delay stop?
a. By delay of the other party.
b. By rescission of the contract.
c. By payment of damages.
d. By renunciation by other party of effects of delay or by prescription.
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82. Article 1170 of the Civil Code provides that “The debtor or obligor shall be liable for damages if in
the fulfillment of obligation, he is guilty of the following, except
a. Fraud or dolo
b. Negligence or fault or culpa
c. Delay or default or mora
d. Contravention of the tenor of obligation
e. Good faith
83. Which of the following statements pertains to “fraud”?

a. It is the failure to observe for the protection of the interests of another person, that
degree of care, precaution and vigilance which the circumstances justly demand,
whereby such person suffers injury.
b. It refers to the non-fulfillment of the obligation with respect to time.
c. It refers to the deliberate and intentional evasion of the normal fulfillment of obligations.
d. It refers to illicit act which impairs the strict and faithful fulfillment of the obligation or
every kind of defective performance.
84. When is the debtor not liable for damages in cases of contravention of tenor or delay in the
performance of obligation?
a. It is malicious or intentional.
b. There is gross negligence.
c. It is due to fortuitous events.
d. It is due to force majeure and there is stipulation making the debtor liable even in such
case.
85. The following are the types of damages that may be awarded to the aggrieved party by the
court, except
a. Moral damages are damages awarded by reason of physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury.
b. Exemplary or corrective damages are damages which are imposed, by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.
c. Nominal damages are damages adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by him.
d. Temperate or moderate damages are damages which are more than nominal but less
than compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount can not, from the nature of the case, be
provided with certainty.
e. Actual or compensatory damages are damages awarded for pecuniary loss suffered and
duly proved by the plaintiff
f. Liquidated damages or penalty are damages agreed upon by the parties to a contract, to
be paid in case of breach thereof and may not be assessed by the court.
g. Superficial damages are those damages that are unconscionable, iniquitous, excessive,
exorbitant and contra bonus mores.
86. As a general rule, what is the legal interest rate for ordinary obligation to pay a sum of money or
forbearance of money?
a. Always 12%
b. Always 6%
c. Always 10%
d. 12% before July 1, 2013 but 6% on or after July 1, 2013
87. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for
what type of fraud is void?
a. Future fraud
b. Past fraud or fraud already committed
c. Both future and past fraud
d. Neither future nor past fraud
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88. Responsibility arising from negligence in the performance of every kind of obligation is also
demandable, but such liability may be regulated by the courts, according to the circumstances.
What type of culpa is referred to by this provision of the Civil Code?
a. Culpa criminal
b. Culpa contractual
c. Culpa aquiliana
d. Culpa capa
89. In what type of culpa or negligence will the defense of the exercise of good father of the family
in the selection of his employees by the employer be a tenable defense?
a. Culpa criminal
c. Culpa aquiliana
d. Culpa capa
90. A stipulation exempting future liability for damages shall be valid for which of the following?
a. Gross negligence
b. Bad faith
c. Fraud
d. Simple negligence
91. It refers to the omission of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and the place.
a. Fraud or dolo
b. Delay or default or Mora
c. Negligence or fault or culpa
d. Contravention of the tenor
92. If the law or contract does not state the diligence to be observed in the performance of the
obligation, what degree of diligence shall be observed?
a. Extraordinary diligence
b. Diligence of a father of a good family
c. Diligence of a good father of a family or ordinary diligence or diligence of a reasonably
prudent person
d. Diligence of a good mother of a family
93. As a general rule, no person shall be responsible for those events which could not be foreseen,
though foreseen, were inevitable or also known as fortuitous events or force majeure. The
following are the instances when a party is liable for the loss even it is due to fortuitous event,
except
a. In cases expressly specified by law such as when the debtor incurs delay.
b. When there is stipulation that the obligor or debtor is still liable even in cases of
fortuitous events.
c. When the nature of the obligation requires the assumption of risks.
d. When the fortuitous event is the immediate, proximate and sole cause of the damage or
injury.
94. The following are the requisites of fortuitous events to exempt the obligor or debtor from liability,
except
a. The cause of the unforeseen and unexpected occurrence or the failure of the debtor to
comply with his obligation must be independent of the debtor’s will.
b. It must be impossible to foresee the event which constitutes the case fortuito or if it can
be foreseen, it must be impossible to avoid.
c. The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner.
d. The obligor must participate in the aggravation of the injury resulting to the creditor.
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95. Which of the following presumptions are correct?

I. The receipt of the principal by the creditor, without reservation with respect to the interest,
shall give rise to rebuttable presumption that said interest has been paid.
II. The receipt of a later installment of a debt without reservation as to prior installments, shall
raise the rebuttable presumption that such prior installments have been paid.
a. I and II
b. I only
c. II only
d. Neither I nor II
96. In order to satisfy his claims against the debtor, the unpaid creditor has the following successive
rights, except
a. To levy by attachment and execution upon all the property of the debtor, except such as
exempt by law from execution.
b. To exercise all rights and actions of the debtor, except such as are inherently personal to
him.
c. To ask for the rescission of the contracts made by the debtor in fraud of his rights.
d. To file an action for damages against a third person who acquires the property in bad
faith the property subject of the litigation.
e. To file a criminal complaint against the debtor.
97. This action may be exercised by the creditor in the place of his negligent debtor in order to
preserve or recover for the patrimony of the debtor the product of such actions, and then obtain
therefrom the satisfaction of his own credit. It refers to the right of unpaid creditor to exercise
the right of his debtor.
a. Accion reindivicatoria
b. Accion subrogatoria
c. Accion pauliana
d. Accion publiciana
98. It refers to the creditor’s right to set side or revoke or rescind the acts or contracts which the
debtor may have done to defraud him.
a. Accion pauliana
b. Accion reindivicatoria
c. Accion publiciana
d. Accion subrogatoria
99. Which of the following statements concerning rights acquired by virtue of an obligation is
correct?
a. As a general rule, they are not transmissible.
b. They are transmissible only if there is stipulation to that effect.
c. Subject to the provisions of laws, they are transmissible unless there is stipulation to the
contrary.
d. They are always transmissible.
100. It refers to an obligation which contains no term or condition whatever upon which
depends the fulfillment of the obligation contracted by the debtor.
a. Conditional obligation
b. Pure obligation
c. Natural obligation
d. Civil obligation
101. The following obligations are demandable at once or immediately demandable, except
a. Every obligation whose performance does not depend upon a future or uncertain event,
or upon a past event unknown to the parties.
b. Pure obligation
c. Every obligation which contains a resolutory condition without prejudice to the effects of
the happening of the event or obligation with a resolutory period (in diem)
d. Suspensive conditional obligation or obligation with a suspensive period (ex die).
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102. It is an obligation which is subject to a condition.

b. Pure obligation
d. Civil obligation
103. It refers to every future and uncertain event upon which an obligation or provision is
made to depend. It may also pertain to a past event which is unknown to the parties.
a. Period
b. Condition
c. Provision
d. Term
104. The following are considered conditions, except

a. If Golden State Warriors will become 2050-2051 NBA Champion.
b. If Ted Fay will pass the bar exam.
c. Upon the death of Clay Kerry.
d. If John Reyes will graduate in law school.
105. When the debtor binds himself to pay when his “ means permit him to do so” or “as soon
as possible” or “as soon as he has the money”, the obligation shall be deemed to be
a. Obligation with a suspensive condition
b. Pure obligation
c. Obligation in diem or with a resolutary period
d. Obligation ex die or with a suspensive period which period may be fixed by court
106. The following are the distinctions between suspensive condition and resolutory condition,
except
a. If the suspensive condition happens, the obligation arises while if the resolutory condition
happens, the rights and obligations already existing are extinguished.
b. In suspensive condition, the rights and obligations do not exist before the happening of
the condition while in resolutory condition, the rights and obligations already exist even
before the happening of the condition.
c. Obligation subject to a suspensive condition is not demandable at once while obligation
subject to resolutory condition is demandable at once.
d. Suspensive condition is known as condition subsequent while resolutory condition is
condition precedent.
107. The following obligations are subject to suspensive conditions, except

a. I will give you P1,000 if you pass the CPA board exam.
b. You can use the book until you graduate in law school.
c. He will dance if he wins in lotto.
d. She will work if KFC becomes number 1.
108. The following obligations are subject to resolutory conditions, except

a. You will be entitled to a cellphone if you pass the bar exam.
b. You can use the car until Regina graduates.
c. You can possess the farm lot until you become a lawyer.
d. You can rent the building until you finish your MBA.
109. Which of the following statements pertains to a potestative condition?

a. It is one which depends upon the sole will of one of the contracting parties.
b. It is one which depends exclusively upon chance or other factors, and not upon will of
the contracting parties.
c. It is one which depends upon the will of the contracting parties and other circumstances,
including the will of a third person.
d. It is one which depends upon the arrival of a particular period.
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110. Which of the following conditional obligations is void?

a. When the fulfillment of the suspensive condition depends upon the sole will of the
debtor.
b. When the fulfillment of the suspensive condition depends upon the sole will of the
creditor.
c. When the fulfillment of the suspensive condition depends upon the sole will of the third
person.
d. When the fulfillment of the suspensive condition depends upon chance or other factors.
111. The following conditions shall annul the obligation which depends upon them, except
a. Impossible conditions
b. Suspensive conditions which depend upon chance and will of the debtor
c. Conditions contrary to good customs or public policy
d. Conditions prohibited by law
112. What is the effect of the condition not to do an impossible thing?

a. It shall be considered as having agreed upon.
b. The obligation will become null and void.
c. The obligation is subject to a condition.
d. The obligation is pure and demandable.
113. Which of the following obligations subject to a suspensive condition is valid?

a. Obligation to give P1M subject to a suspensive condition that if the creditor will have
sexual intercourse with the debtor.
b. Obligation to give P1M in exchange for shabu and cocaine.
c. Obligation to give P1M subject to a suspensive condition that if the debtor will not be
able to walk in air.
d. Obligation to give P1M subject to a suspensive condition if the debtor will go to
Singapore.
114. An obligation to pay a sum of money is subject to the condition that a certain person
shall arrive at a designated place in one year. This obligation will be extinguished if
I. One year passes and he does not arrive at the place.
II. Such person dies before the lapse of one year and before arriving at such a place.
a. I only
b. II only
c. Either I or II
d. Neither I nor II
115. An obligation to deliver a piece of land to X is subject to the condition that he shall not
bear a child within two years. This obligation shall become effective and the land should be
delivered to X if
I. Two years expire without X having bearing a child.
II. X becomes barren before the two years expire.
a. I only
b. II only
c. Neither I nor II
d. Either I or II
116. What is the effect if the obligor or debtor voluntarily prevented the fulfillment of the
suspensive condition of an obligation subject to a suspensive condition?
a. The obligation is extinguished.
b. The obligation remains to be subject to the condition.
c. The suspensive condition shall be deemed fulfilled and the obligation becomes
demandable.
d. The obligation becomes with a period.
117. When shall the effects of a conditional obligation to give produce effect?
a. They shall be given prospective effect once the condition has been fulfilled.
b. They shall retroact to the day of the constitution or perfection of the obligation once the
condition has been fulfilled.
c. They shall not be given retroactive effect once the condition has been fulfilled.
d. They shall be given retroactive effect even if the condition is not fulfilled.
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118. X sells a piece of land to A on January 1,2020 subject to a suspensive condition. Then,
on October 4, 2020, X sells the land unconditionally to B. The suspensive condition on contract of
sale of land to A happens on December 25,2020. Who shall have the better right assuming there
is neither registration of the sale nor delivery of possession to either A or B?
a. B because the sale to him is unconditional.
b. B because his title is older being dated October 4,2020.
c. A because his title retroacts on January 1,2020 upon fulfillment of the suspensive
condition on December 25,2020.
d. A because he is the first buyer.
119. In conditional reciprocal obligations to give, what is the treatment of the fruits and
interests during the pendency of the condition?
a. They shall inure to the sole benefit of the creditor.
b. They shall inure to the sole benefit of the debtor.
c. They shall be deemed to have been mutually compensated.
d. They shall be forfeited in favor of the government.
120. In conditional unilateral obligation to give or unilateral obligation to give subject to a

period, what is the treatment of the fruits and interests during the pendency of the condition or
during the pendency of the period?
a. They shall inure to the sole benefit of the creditor in the absence of stipulation to the
contrary.
b. They shall inure to the sole benefit of the debtor, whether the condition or period is
suspensive or resolutory, in the absence of stipulation to the contrary.
c. They shall be divided equally between the creditor and debtor.
d. They shall be forfeited in favor of the government.
121. In conditional obligation to do or not to do, what is the effect of the fulfillment of the
condition?
a. There shall be retroactive effect to the day of the constitution of the obligation.
b. There shall be prospective effect from the moment the condition is fulfilled.
c. The stipulation of the parties shall not be considered.
d. The courts shall determine, in each case, the retroactive effect of the condition that has
been complied with taking into account the agreement of the parties.
122. Before the fulfillment of suspensive condition or during pendency of the suspensive
condition, what may the creditor do in an obligation subject to a suspensive condition?
a. Demand the specific performance of the obligation.
b. Charge damages and interests.
c. Demand the fruits and interests of the thing.
d. Bring appropriate actions for the preservation of his right such as filing a petition for
issuance of asset preservation order.
123. During the pendency of the suspensive condition, the debtor has paid by mistake a sum
of money. What is the remedy of the debtor before the fulfillment of suspensive condition?
a. The debtor can recover the sum of money and interests even if the creditor acted in
good faith.
b. The debtor can recover the sum of money but with interests only if the creditor acted in
bad faith.
c. The debtor can only recover the sum of money without interests even if the creditor
acted in bad faith.
d. The debtor can only recover the sum of money without interests under any
circumstances.
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124. During the pendency of the suspensive period in an obligation with a suspensive period,
the debtor has paid by mistake a sum of money. What is the remedy of the debtor before the
arrival of the suspensive period?
a. The debtor can recover the sum of money plus interests whether the creditor acted in
good faith or bad faith.
b. The debtor can recover the sum of money with interests only if the creditor acted in bad
faith.
c. The debtor can only recover the sum of money without interests even if the creditor
acted in bad faith.
d. The debtor can only recover the sum of money without interest if the creditor acted in
good faith.
125. During the pendency of the suspensive condition, the debtor has delivered a determinate
or specific thing by mistake. What is the remedy of the debtor?
a. Accion of indemnification if the thing is still with the creditor.
b. Accion reinvidicatoria if the thing is still with the creditor.
c. Accion publiciana if the thing is still with the creditor.
d. Accion possessoria if the thing is still with the creditor.
126. The following are the rules to be observed in case of improvement, loss or deterioration
of the determinate thing during the pendency of the suspensive condition in an obligation to give
a determinate thing or pendency of the suspensive period in obligation to give a determinate
thing, except
a. If the thing is lost without the fault of the debtor, the obligation shall be extinguished.
b. If the thing is lost through the fault of the debtor, he shall be obliged to pay damages.
c. When the thing deteriorates without the fault of the debtor, the impairment is to be
borne by the creditor.
d. If the thing is improved by its nature, or by time, the improvement shall inure to the
e. If it is improved at the expense of the debtor, he shall have no other right than that
granted to the usufructuary which means that he shall only have the right to use the
improved thing for a reasonable period.
f. Deterioration of the thing, regardless of reason, shall be borne by the creditor.
127. When the thing deteriorates through the fault of the debtor during the pendency of the
condition in an obligation to give, what are the alternative remedies of the creditor?
a. He may only ask for the rescission of the obligation with indemnity for damages.
b. He may only ask for the performance of the obligation with indemnity for damages.
c. The debtor may choose between rescission of the obligation or its fulfillment with
indemnity for damages in either case.
d. The creditor may choose between rescission of the obligation with damages or exact
fulfillment with damages.
128. The determinate thing is considered lost in any of the following instances, except
a. When it perishes.
b. When it goes out of commerce.
c. When it disappears in such a way that its existence is unknown or it cannot be
recovered.
d. When it is a destroyed generic thing.
129. When the obligation is subject to resolutory condition or when the condition has for its
purpose the extinguishment of the obligation to give, what shall be the obligation of the parties
upon the fulfillment of said condition?
a. They shall retain what they have received.
b. They shall file an action for damages.
c. They shall return to each other what they have received.
d. They shall rescind the obligation.
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130. When the obligation is subject to resolutory condition or subject to a resolutory period or
when the condition or period has for its purpose the extinguishment of the obligation to give,
what shall be the rule as regards to the fruits and interest of the thing to be returned?
a. The fruits shall be returned by the person who will make the restitution without
deducting the expenses for the production, gathering and preservation of the fruits.
b. The fruits shall be retained by the person who received the thing.
c. The fruits shall be returned by the person who will make the restitution with deduction
for the expenses for the production, gathering and preservation of the fruits.
d. The fruits shall be retained by the person who received the thing and shall be reimbursed
for the expenses for the production, gathering and preservation of the fruits.
131. It refers to a type of obligation which arises from the same cause and in which each
party is a debtor and creditor of the other, such than the obligation of one is dependent upon the
obligation of the other.
a. Bilaterial obligations
b. Reciprocal obligations
c. Unilateral obligations
d. Multilateral obligations
132. In case of reciprocal obligations, may the injured party ask for judicial rescission of the
obligations in case one of the obligors or debtors should not comply with what is incumbent upon
him?
a. Yes if there is stipulation of the power to rescind.
b. No even if there is stipulation of the power to rescind.
c. Yes because the power to rescind obligations is implied in reciprocal ones.
d. No because the power to rescind obligations cannot be implied in reciprocal ones.
133. When one of the obligors committed breach of obligation in a reciprocal obligation, what
shall be the alternative remedies of the injured party?
a. The injured party may choose between the exact fulfillment of the obligation with
damages or the rescission of the obligation with damages.
b. The injured party may choose between the excact fulfillment of the obligation without
damages or the rescission of the obligation without damages.
c. The injured party may only rescind the obligation with damages.
d. The injured party may only ask for the exact fulfillment of obligation with damages.
134. When the injured party in a reciprocal obligation elected the exact fulfillment of the
obligation with damages, may he still ask for the rescission of the obligation?
a. No under any circumstances because these remedies are alternative.
b. Yes because there remedies are successive remedies available to the injured party.
c. No, as a general rule because these remedies are alternative except when exact
fulfillment has become legally impossible or there are insuperable and legal obstacle
thereto, then he may not ask for rescission of the obligation.
d. Yes because the injured party can have them both.
135. When the injured party in a reciprocal obligation elected the rescission of the obligation
with damages, may he still ask for the fulfillment of the obligation?
a. Yes because there remedies are successive remedies available to the injured party.
b. No but there are certain exceptions to the rule.
c. No because these are alternative and inconsistent remedies and the injured party cannot
have both remedies.
d. Yes because the injured party is protected by law.
136. Which of the following statements concerning reciprocal obligations is correct?

I. The court shall decree the rescission claimed, unless there is just cause authorizing the fixing
of a period.
II. In case both parties have committed a breach of the reciprocal obligation, the liability of the
first infractor shall be equitably tempered by the courts.
III. If it cannot be determined which of the parties first violated the reciprocal contract, the same
shall be deemed extinguished, and each shall bear his own damages.
a. I, II and III
b. I and II
c. II and III
d. I and III
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137. It is an obligation which is subject to a space of time which, exerting an influence on

obligations as a consequence of a juridical act, suspends their demandability or determines their
extinguishment.
b. Obligation with a period
c. Pure obligation
d. Demandable obligation
138. The following statements concerning obligation with a period is correct, except
a. Obligations for whose fulfillment a day certain has been fixed, shall be demandable when
that day comes.
b. Obligation with a resolutory period takes effect at once, but terminates upon arrival of
the day certain.
c. A day certain is understood to be that which must necessarily come, although it may not
be known when.
d. If the uncertainty consists in whether the day will come or not, the obligation is with a
period.
139. The following are the distinctions between a condition and a period, except
a. A condition is an uncertain event while a period is an event that must necessarily come.
b. While a condition gives rise to an obligation or extinguishes one already existing, a period
has no effect upon the existence of obligation, but only its demandability or performance
and thus, a period does not carry with it any retroactive effect.
c. A condition may refer to a past event and unknown to parties while a period always
refers to the future.
d. A suspensive condition which depends exclusively on the will of the debtors does not
annul the obligation but merely authorizes the court to fix the period but a suspensive
period left to the debtor’s will shall annul the obligation.
140. The following are the requisites of a period, except

a. It must be future.
b. It must be certain.
c. It must be possible.
d. It must be past.
141. Suspensive period and resolutory period are also known as

a. Both ex die
b. Both in diem
c. Ex die and in diem, respectively
d. In diem and ex die, respectively
142. Whenever in an obligation a period is designated, to whose benefit the period is

presumed to have been established?
a. Creditor only
b. Debtor only
c. Both creditor and debtor
d. Neither creditor and debtor
143. If there is no stipulation as to whose benefit the period is established, which of the
following statements is incorrect?
a. The creditor cannot demand payment before the period stipulated.
b. The debtor cannot make an effective tender and consignation of payment before the
period stipulated.
c. The term is for the benefit of both debtor and creditor.
d. The term is for the benefit of the debtor.
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144. In case there is stipulation as to whose benefit the period is established, which of the
following statements is incorrect?
a. If it is for the benefit of the creditor only, he may demand performance at any time.
b. If it is for the benefit of the debtor only, he may oppose a premature demand for
payment.
c. If it is for the benefit of the creditor only, the debtor cannot compel him to accept
payment before the period expires.
d. If it is for the benefit of the debtor only, he cannot pay validly at any time before the
period expires.
145. As a general rule, the court is not allowed to fix the period of an obligation. The following
are the exceptional instances wherein the court may fix the period of an obligation with a period,
except
a. If the obligation does not fix a period, but from its nature and the circumstances it can
be inferred that a period was intended.
b. If the period depends upon the sole will of the debtor.
c. In case of pure obligation, to prevent unreasonable interpretations of its immediate
demandability.
d. If the obligation is pure, simple, unconditional and payable on demand.
146. The following are the instances wherein the debtor shall lose every right to make use of
the period and therefore the obligation with a period becomes due and demandable, except
a. When after the obligation has been contracted, the debtor becomes insolvent and he
does not give a guaranty or security for the debt.
b. When the debtor does not furnish to the creditor the guaranties or securities which he
has promised.
after their establishment, unless he immediately gives new one equally satisfactory.
were destroyed, unless the debtor immediately gives new one equally satisfactory.
e. When the debtor violates any undertaking, in consideration of which the creditor agreed
to the period.
f. When the debtor attempts to abscond.
g. When the creditor granted grace period or extension of payment to debtor.
147. It is an obligation where the debtor is alternatively bound by different prestations and it
is extinguished by the performance of any of them.
a. Alternative obligations
b. Conjunctive obligations
c. Facultative obligations
d. Composite obligations
148. The following statements pertain to alternative obligations. Which is correct?

I. A person alternatively bound by different prestations shall completely perform one of them.
II. The creditor cannot be compelled to receive part of one and part of the other undertaking.
a. I only
b. II only
c. Neither I nor II
d. Both I and II
149. Who has the right of choice in case of alternative obligations?

a. Creditor, unless it has been expressly granted to the debtor.
b. Debtor, unless it has been expressly granted to the creditor.
c. Always with the debtor.
d. Always with the creditor.
150. The following are the limitations on the right of choice in alternative obligations, except
a. The debtor cannot choose unlawful undertakings.
b. The debtor cannot choose part of one prestation and part of another.
c. The debtor cannot choose impossible undertakings or those which could not have been
the object of the obligation.
d. The right to choose is divisible.
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151. In alternative obligations, when shall the choice of prestation produce effect?
a. From the moment it is exercised by the debtor.
b. From the moment it is communicated to the creditor.
c. From the moment the creditor consented to the choice.
d. From the constitution of the obligation.
152. In alternative obligations, what is the effect of notice of choice of prestation to the
creditor?
a. The obligations remain to be alternative.
b. The selection or choice is still revocable.
c. The obligation is converted into a simple obligation.
d. The obligation becomes a facultative obligation.
153. In alternative obligations, when shall the debtor lose the right of choice and thus, the
obligation becomes simple?
a. When he becomes insolvent.
b. When he attempts to abscond.
c. When among the prestations whereby he is alternatively bound, only one is practicable.
d. When he was prevented by the creditor.
154. What is the remedy of the debtor if through the creditor’s act the debtor cannot make a
choice according to the terms of alternative obligations?
a. The debtor may file an action for indemnification.
b. The debtor may rescind the contract with damages.
c. The debtor may ask for fulfillment of obligation with damages.
d. The debtor may compel the creditor to perform the prestation.
155. In case the debtor has the right of choice in alternative obligations and through the fault
of the debtor one of the things which is alternatively the object of the obligation has been lost,
what shall be the right of creditor?
a. He may demand the performance of the remaining prestation with damages.
b. He may demand the performance of the remaining prestation without damages.
c. He has the right to indemnity for damages.
d. He has the right to demand the value of the thing lost plus damages.
of the debtor all the things which are alternatively the object of the obligation have been lost or
the compliance of the obligation has become impossible, what shall be the right of creditor?
a. He shall have the right to indemnity for the value of the lost object with the largest value
plus damages.
b. He shall have the right to indemnity for the value of the lost object with the smallest
value plus damages.
c. He shall have the right to indemnity for the value of the last object plus damages.
d. He shall have the right to indemnity for the value of the any object plus damages.
of the debtor only one object remains of the things which are the objects of alternative obligation
and before its performance, it has been lost due to fortuitous event, what shall be the right of
the creditor?
a. He may demand the value of any object lost due to debtor’s fault.
b. He may demand indemnification for damages.
c. He may demand the value of the last object lost due to fortuitous event.
d. He has no right to demand anything.
158. In case the debtor has the right of choice in alternative obligations and through
fortuitous event only one object remains of the things which are the objects of alternative
obligation and before its performance, it has been lost due to the fault of the debtor, what shall
be the right of the creditor?
a. He shall have the right to indemnity for the value of the lost object with the largest value
plus damages.
b. He shall have the right to indemnity for the value of the lost object with the smallest
value plus damages.
c. He shall have the right to indemnity for the value of the last object plus damages.
d. He shall have the right to indemnity for the value of the any object plus damages.
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159. In case the debtor has the right of choice in alternative obligations and through
fortuitous event all the objects of alternative obligation have been lost, what shall be the right of
the creditor?
a. He shall have no right.
b. He shall have the right to indemnity for the value of the lost object with the largest value
plus damages.
c. He shall have the right to indemnity for the value of the lost object with the smallest
value plus damages.
d. He shall have the right to indemnity for the value of the last object plus damages.
160. When the choice has been expressly given to the creditor, the obligation shall cease to
be alternative from the day when the selection has been communicated to the debtor. Until then,
the responsibility of the debtor when the right of choice has been granted to the creditor shall be
governed by the following rules, except
a. If one of the things is lost through a fortuitous event, he shall perform the obligation by
delivering that which the creditor should choose from among the remainder, or that
which remains if only one subsists.
b. If the loss of one of the things occurs through the fault of the debtor, the creditor may
claim any of those subsisting without right to damages, or the price of that which,
through the fault of the former, has disappeared, with a right to damages.
c. If all the things are lost through the fault of the debtor, the choice by the creditor shall
fall upon price of any one of them, also with indemnity for damages.
d. If all the things are lost through fortuitous event, the debtor shall be liable for damages.
161. It is an obligation wherein only one prestation has been agreed upon but the obligor may
render another in substitution.
c. Facultative obligations
162. In a facultative obligation, to whom shall the right of choice belong?

a. Always creditor
b. Always debtor
c. Debtor unless granted to the creditor
d. Creditor unless granted to the debtor
163. What is the effect of the loss or deterioration of the thing intended as a substitute in a
facultative obligation before the substitution?
a. The debtor becomes liable for damages.
b. The creditor may rescind the obligation with damages
c. The debtor shall indemnify the creditor.
d. The debtor shall not be liable on account of the loss.
164. What is the effect of the loss of the thing intended as a substitute in a facultative
obligation after the substitution?
a. The debtor shall not be liable for the loss.
b. The obligation is extinguished even if the loss is not due to fortuitous event.
c. The debtor shall be liable for the loss on account of his delay, negligence or fraud.
d. The creditor has no right against the debtor.
165. What is the effect of the loss of the principal object in a facultative obligation before the
substitution?
a. The debtor is liable if the loss is due to fortuitous event.
b. The obligation is extinguished if it is due to fortuitous event.
c. The debtor is not liable even if the lost is due to his fault.
d. The obligation is not extinguished even if the loss is due to fortuitous event.
166. What is the effect of the loss of the principal object in a facultative obligation after the
substitution?
a. The debtor is liable if the loss is due to fortuitous event.
b. The debtor is liable for damages if the loss is due to his fault.
c. The obligation is extinguished because of the lost of the object.
d. The obligation remains to exist.
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167. The following are the distinctions between alternative obligation and facultative
obligation, except
a. In alternative obligation, several objects being due, the fulfillment of one is sufficient,
determined by the choice of the debtor who generally has the right of election while in
facultative obligation, only one thing is due, but the debtor has reserved the right to
substitute in with another.
b. In alternative obligation, the loss of one of the things due by reason of debtor’s fault may
affect the obligation in case the right to choose is given to creditor while in facultative
obligation the loss before substitution of that which may be given as substitute even due
to the fault of debtor does not affect the obligation.
c. In alternative obligation, the loss of one of the things due by reason of fortuitous event
does not extinguish the obligation while in facultative obligation, the loss of that which is
due as the object of the obligation by reason of fortuitous event will extinguish such
obligation.
d. In alternative obligation, the right of choice can never be granted to the creditor while in
facultative obligation, the right of choice may be granted to creditor.
168. It is an obligation where the debtor has to perform several prestations and it is
extinguished only by the performance of all of them.
c. Facultative obligation
169. In a conjunctive obligation, to whom shall the right of choice belong?

a. Debtor unless granted to the creditor
b. Creditor unless granted to the debtor
c. Either debtor or creditor
d. Neither debtor nor creditor

I. Joint obligation is one in which each of the debtors is liable only for a proportionate part of
the debt and each creditor is entitled only to a proportionate share of the credit.
II. Solidary obligation is one in which each debtor is liable for the entire obligation and each
creditor is entitled to demand the whole obligation.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
171. What is the disputable presumption of law as to the type of obligation when there is
concurrence of two or more creditors or of two or more debtors in one and the same obligation?
a. Joint
b. Solidary
c. Divisible
d. Indivisible
172. The following are the exceptional instances when the obligation is considered solidary,
except
a. When the obligation expressly so states that it is solidary.
b. When the law requires the obligation to be solidary.
c. When the nature of the obligation requires the obligation to be solidary.
d. When the obligation is indivisible.
173. The following terms refer to solidary obligation, except

a. Mancomunada solidaria
b. Joint and several
c. In solidum
d. Pro rata or proportionately
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174. A, B and C have obligation amounting to P6,000,000 to D and E. How much may D
collect from A if the obligation is mixed joint?
a. P6,000,000
b. P3,000,000
c. P2,000,000
d. P1,000,000
175. Using the same data in preceding number, how much may D collect from A if the
obligation is passive solidary?
a. P6,000,000
b. P3,000,000
c. P2,000,000
d. P1,000,000
obligation is active solidary?
a. P6,000,000
b. P3,000,000
c. P2,000,000
d. P1,000,000
obligation is mixed solidary?
a. P6,000,000
b. P3,000,000
c. P2,000,000
d. P1,000,000
178. It is a solidarity that exists among the creditors.

a. Mixed solidarity
b. Active solidarity
c. Passive solidarity
d. Simple solidarity
179. The following are the principal consequences of the joint character of the obligation,
except
a. The demand by one creditor upon one debtor produces the effects of default only with
respect to the creditor who demanded and the debtor on whom the demand was made,
but not with respect to the others.
b. The interruption of prescription by the judicial demand of one creditor upon a debtor,
does not benefit the other creditors nor interrupt the prescription as to other debtors.
c. The vices of each obligation arising from the personal effect of a particular debtor or
creditor do not affect the obligation or rights of the others.
d. The insolvency of a debtor increases the responsibility of his co-debtors and it authorizes
a creditor to demand anything from his co-creditors in case of insolvency of a debtor.
180. The following statements concerning solidary obligations are correct, except
a. Solidarity may exist although the creditors and the debtors may not be bound in the
same manner and by the same period and conditions.
b. The indivisibility of an obligation does not give rise to solidarity.
c. The solidarity of an obligation does not imply indivisibility.
d. The solidarity nature of an obligation is presumed by law.
181. The following statements pertaining to solidary obligation are correct, except
a. Each one of the solidary creditors may do whatever may be useful to the others, but not
anything which may be prejudicial to the latter.
b. A solidary creditor cannot assign his rights without the consent of the other co-solidary
debtors.
c. The debtor may pay any one of the solidary creditors.
d. If any demand, judicial or extrajudicial, has been made by any one of the solidary
creditors, payment should be made to him.
e. A solidary creditor cannot remit the entire solidary obligation without the consent of
other other co-solidary debtors.
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182. The following statements concerning the payment of solidary obligation are correct,
except
a. Payment made by one of the solidary debtors extinguishes the obligation and if two or
more solidary debtors offer to pay, the creditor may choose which offer to accept.
b. He who made the payment may claim from his co-debtors only the share which
corresponds to each with the interest for the payment already made.
c. If payment is made before the debt is due, no interest for the intervening period may be
demanded.
d. When one of the solidary debtors cannot, because of his insolvency, reimburse his share
to the co-solidary debtor paying the obligation, such insolvency shall be borne by the
paying co-solidary debtor alone but the other co-solidary debtors shall not share in the
loss due to insolvency.
183. Which of the following statements is incorrect about solidary obligation?

a. Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors
if such payment is made after the obligation has prescribed or become illegal.
b. The remission made by the creditor of the share which affects one of the solidary debtors
does not release the latter from his responsibility towards the co-debtors, in case the
debt had been totally paid by anyone of them before the remission was effected.
c. The remission of the whole obligation, obtained by one the solidary debtors, entitles him
to reimbursement from his co-debtors.
d. If the thing has been lost or if the prestation has become impossible without the fault of
the solidary debtors, the obligation shall be extinguished.
184. Which of the following statements is correct about solidary obligation?

I. If the thing has been lost or if the prestation has become impossible and there was fault on
the part of any of solidary debtors, all shall be responsible to the creditor, for the price and
the payment of damages and interest, without prejudice to their action against the guilty or
negligent debtor.
II. If through a fortuitous event, the thing is lost or the performance has become impossible
after one of the solidary debtors has incurred in delay through judicial or extrajudicial
demand upon him by the creditor, any of the solidary debtors shall be responsible to the
creditor for the price and the payment of damages and interests, without prejudice to their
action against the debtor guilty of delay.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
185. The following acts made by any of the solidary creditors with any of the solidary debtors
shall extinguish the obligation, except
a. Novation
b. Compensation
c. Confusion
d. Remission
e. Extension of term for payment
186. The following are the effects of novation, compensation, confusion or remission made by
any of the solidary creditors or with any of the solidary debtors, except
a. As between creditors and debtors, any of these acts will extinguish the obligation, so that
no creditor may thereafter sue any debtor, except in case of novation, where there may
be no change or only a partial change of parties, but in this last case, it is no longer the
original obligation, but the new one, which would be sued upon.
b. As among co-creditors, the act of any of them in extinguishing the obligation with
respect to the debtor or debtors, does not prejudice the rights of the other creditors to
recover their respective share in the obligation from the creditor who effected the
novation, compensation, confusion or remission.
c. As among co-debtors, the co-debtor as to whom the obligation was extinguished cannot
recover from his other co-debtors more than their respective shares in whatever he may
have given up or lost as the consideration for the extinguishment of the obligation.
d. In case of remission, the co-debtor can recover anything from the other debtors.
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187. The following are the defenses that may be availed of by the solidary debtor in actions
filed by the creditor, except
a. Defenses which are inherent from the nature of the obligation such as illegality or
prescription
b. Defenses personal to defendant-debtor such as minority or insanity or incapacity
c. Defenses personal to other co-solidary debtors such as minority or insanity or incapacity
but only as regards to that part of the debt for which incapacitated co-solidary debtors
are responsible
d. Defense of insolvency of one of solidary debtors up to the extent of share of such
insolvent debtor
188. It refers to an obligation that is susceptible of partial performance whereby the debtor
can legally perform the obligation by parts and the creditor cannot demand a single performance
of the entire obligation.
a. Divisible obligation
b. Indivisible obligation
c. Joint obligation
d. Solidary obligation
189. The following statements pertaining to divisible and indivisible obligations are correct,
except
a. A divisible obligation is one which is susceptible of partial performance; that is, the
debtor can legally perform the obligation by parts and the creditor cannot demand a
single performance of the entire obligation.
b. A divisible obligation, whatever may be the nature of the thing which is the object
thereof, refers to one which can be validly performed in parts.
c. The thing or object may be divisible, yet the obligation may be indivisible.
d. Divisibility or indivisibility of the obligation refers to the object or thing and not to the
performance of the obligation.
190. The following are the rules concerning the divisibility or indivisibility of an obligation,
except
a. When the obligation has for its object the execution of a certain number of days of work,
the accomplishment of work by metrical units, or analogous things which by their nature
are susceptible of partial performance, it shall be divisible.
b. Even though the object or service may be physically divisible, an obligation is indivisible if
so provided by law or intended by the parties.
c. In obligations to do, divisibility or indivisibility shall be determined by the character of the
prestation in each particular case.
d. Obligations to give definite things and those which are not susceptible of partial
performance shall be deemed divisible.
191. The following are indivisible obligations, except

a. Obligation provided by law to be indivisible such as contract of subscription of shares of
stocks
b. Obligation agreed by the contracting parties to be indivisible
c. Obligation which by nature is indivisible
d. Obligation that is solidary
192. The following statements pertaining to joint indivisible obligation are correct, except
a. To enforce a joint indivisible obligation, there is necessity of collective fulfillment and the
action must be against all the debtors.
b. In case of non-performance by any of the debtors, the obligation is converted into a
liability for losses and damages, which is divisible.
c. The debtors who may have been ready to fulfill their promises shall not contribute to the
indemnity beyond the corresponding portion of the price of the thing or of the value of
the service in which the obligation consists.
d. A joint indivisible obligation can be compelled by specific performance if anyone of the
debtors does not or cannot comply with his undertaking while the other debtors are
willing.
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193. What is the remedy of the creditor in case one of the debtors does not comply with his
undertaking in a joint indivisible obligation but the other debtors are willing and ready?
a. Action for specific performance
b. Ask third person to fulfill the obligation at the expense of all the debtors
c. Ask for indemnity for losses and damages or convert the action to monetary amount
d. Ask the other co-debtors to fulfill the entire obligation
194. It is an obligation which has an accessory undertaking to assume greater liability in case
of breach.
a. Obligation with a condition
b. Obligation with a penal clause
c. Obligation with a period
d. Obligation with a substitute
195. The following statements concerning obligations with a penal clause are correct, except
a. The penalty stipulated must not be contrary to law, morals, or public order to be
enforceable.
b. Obligations with a penal clause must be construed strictly against the awarding of
penalty.
c. In case of nonperformance of obligations with a penal clause, the debtor cannot have
both action for enforcement of penalty for noncompliance of obligation and action for
specific performance of obligation.
d. The debtor has the absolute right to just pay the penalty instead of fulfilling the
obligation.
196. The following are the rules to be observed in applying obligations with a penal clause,
except
a. Proof of actual damages suffered by the creditor is not necessary in order that the
penalty may be demanded.
b. The judge shall equitably reduce the penalty when the principal obligation has been
partly or irregularly complied with by the debtor and even if there has been no
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable.
c. The nullity of the principal obligation carries with it that of the penal clause.
d. The nullity of the penal clause carries with it that of the principal obligation.
197. In obligation with a penal clause, the penalty shall substitute the indemnity for damages
and the payment of interests in case of non-compliance. In obligation with a penal clause, when
may the creditor exceptionally demand payment of damages and interest despite the presence of
penalty or liquidated damages in the agreement?
a. If there is stipulation that damages and interests may be demanded in addition to
penalty in case of breach of obligation with a penal clause.
b. When the debtor is guilty of bad faith or fraud in the breach of the obligation.
c. When the debtor fails to pay the penalty in case of breach.
d. Any of the choices.
198. The following are the modes of extinguishment of obligations, except: (No-Co-Me-Re-
Pa-Lo-Pre-Re-Ful-An)
a. No – Novation
b. Co – Compensation or Offset
c. Me – Merger or Confusion
d. Re – Remission or Donation or Condonation or Renunciation
e. Pa – Payment or Performance
f. Lo – Loss of the determinate thing due by reason of fortuitous event
g. Pre – Prescription of right to file an action converting the civil obligation to natural
obligation
h. Re – Rescission of Rescissible Contract
i. Full – Fulfillment of Resolutory Condition or Arrival of Resolutory Period
j. An – Annulment of Voidable Contract
k. Attainment of suspensive condition or arrival of suspensive period
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199. It refers to the mode of extinguishment of right to file an action or obligation by the
mere lapse of time fixed by law. It converts a civil obligation into a natural obligation.
a. Novation
b. Prescription
c. Compensation
d. Remission
200. What is the prescriptive period for civil action based on oral contract?
a. 6 years
b. 10 years
c. 4 years
d. 8 years
201. What is the prescriptive period for civil action based on written contract?
a. 6 years
b. 10 years
c. 4 years
d. 8 years
202. What is the prescriptive period for civil action based on quasi-delict or tort?
a. 6 years
b. 10 years
c. 4 years
d. 8 years
203. What is the prescriptive period for civil action based on quasi-contract?
a. 6 years
b. 10 years
c. 4 years
d. 8 years
204. What is the prescriptive period for civil action based on obligation created by law or
judgment of court?
a. 6 years
b. 10 years
c. 4 years
d. 8 years
205. What is the prescriptive period for civil action of forcible entry or unlawful detainer or
based on oral defamation?
a. 1 year
b. 10 years
c. 4 years
d. 8 years
206. What is the prescriptive period to file an action to recover movable property or personal
property?
a. 6 years
b. 10 years
c. 4 years
d. 8 years
207. What is the prescriptive period to file a real action over immovable property or real
property
a. 30 years
b. 10 years
c. 4 years
d. 8 years
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208. For all other actions not provided by Civil Code or Special law, what is the prescriptive
period for filing such action?
a. 6 years
b. 10 years
c. 4 years
d. 5 years
209. What will stop the running of the prescriptive period for filing a civil action?
a. When the action is filed before the court.
b. When there is a written extrajudicial demand by the creditors.
c. When there is any written acknowledgement of the debt by the debtor.
d. Any of the above.
210. This is a mode of extinguishing obligation by which a person is barred from filing an
action because of failure or neglect for an unreasonable and unexplained length of time to do
that which, by exercising due diligence, could or should have been done earlier, thus, giving rise
to a presumption that the party entitled to assert it either has abandoned or declined to assert it.
This is an equitable doctrine but not based on substantive law.
a. Laches
b. Prescription
c. Novation
d. Confusion
211. This equitable doctrine is based on the principle that a person shall be precluded from
denying an admission or representation against the person who has relied on such admission or
representation.
a. Estoppel
b. Laches
c. Prescription
d. Novation
212. Which of the following types of estoppel refers to estoppel in pais?

a. It means a person is considered in estoppel if by his conduct, representations or
admissions or silence when he ought to speak out, whether intentionally or through
culpable negligence, causes another to believe certain facts to exist and such other
rightfully relies and acts on such belief, as a consequence of which he would be
prejudiced if the former is permitted to deny the existence of such facts.
b. It occurs when a party to a deed and his privies are precluded from denying any material
fact stated in the said deed as against the other party and his privies.
c. It is considered an equitable estoppel wherein a person who failed or neglected to assert
a right for an unreasonable and unexplained length of time is presumed to have
abandoned or otherwise declined to assert such right and cannot later on seek to enforce
the same, to the prejudice of the other party, who has no notice or knowledge that the
former would assert such rights and whose condition has so changed that the latter
cannot, without injury or prejudice, be restored to his former state.
213. It is a mode of extinguishing obligation which refers to the fulfillment of the prestation
due.
a. Novation
b. Payment or Performance
c. Compensation
d. Merger
214. The following are the requisites of a valid payment, except

a. The payment must be in accordance with the terms and conditions of the obligation.
b. The person paying (debtor) as well as the one receiving (creditor) payment should have
the required capacity.
c. It should be made by the debtor to the creditor.
d. It should be made at the right time and place.
e. It should be made through delivery of legal tender only.
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215. The following statements concerning payment are correct, except

a. Payment means only delivery of money but not performance, in any other manner, of an
obligation.
b. A debt shall not be understood to have been paid unless the thing or service in which the
obligation consists has been completely delivered or rendered, as the case may be.
c. If the obligation has been substantially performed in good faith, the obligor or debtor
may recover as though there had been a strict and complete fulfillment, less damages
suffered by the obligee or creditor.
d. When the obligee or creditor accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or objection, the obligation is deemed
fully complied with.
216. Is the creditor required to accept payment or performance by a third person who has no
interest in the fulfillment of the obligation?
a. Yes because it is provided by law.
b. Yes because it is for the benefit of the creditor.
c. No, unless there is stipulation to the contrary.
d. No, under any circumstances.
217. What is the right of a third person who pays for the debtor without the knowledge or
against the will of the debtor?
a. The third person may demand the whole amount paid from the debtor.
b. The third person cannot recover any amount.
c. The third person may compel the creditor to subrogate him in his rights, such as those
arising from a mortgage, guaranty or penalty.
d. The third person may recover only insofar as the payment has been beneficial to the
debtor but there will be no legal subrogation.
218. The following statements concerning payment made by a third person who does not
intend to be reimbursed by the debtor are correct, except
a. It is deemed to be a donation.
b. It requires the debtor’s consent.
c. The payment is in any case valid as to the creditor who has accepted it.
d. The payment will subrogate the third person with creditor’s rights.

I. In obligations to give, payment made by one who does not have the free disposal of the
thing due and capacity to alienate it shall not be valid.
II. Payment to a person who is incapacitated to administer his property shall be valid if he has
kept the thing delivered or insofar as the payment has been beneficial to him.
a. Neither I nor II
b. Both I and II
c. I only
d. II only
220. The following are the persons to whom payment shall be made, except
a. Person in whose favor the obligation has been constituted or creditor
b. Any third person
c. Successor of interest of creditor such as heirs or assignees of creditor
d. Any person authorized by the creditor to receive payment such as agent or
representative of creditor
221. As a general rule, payment to a third person is not valid. The following are the
exceptional instances wherein payment made to a third person is valid, except
a. When in good faith, the debtor pays to one in possession of the credit.
b. When, without notice of the assignment of the credit, the debtor pays to the original
creditor.
c. When the payment to a third person redounded to the benefit of the creditor.
d. When the debtor was judicially ordered to retain the debt.
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222. Payment made to a third person shall also be valid insofar as it has redounded to the
benefit of the creditor. As a general rule, the debtor must prove that the payment to a third
person redounded to the benefit of the creditor. The following are the exceptional cases wherein
the debtor need not prove that the payment to third person redounded to the benefit of creditor
for such payment to be valid, except
a. If after the payment, the third person acquires the creditor’s rights.
b. If the creditor ratifies the payment to the third person.
c. If by the creditor’s conduct, the debtor has led to believe that the third person had
authority to receive payment.
d. If the third person is not authorized by the creditor.
223. The following statements concerning payment are correct, except

a. Payment made to the creditor by the debtor after the latter has been judicially ordered to
retain the debt shall not be valid.
b. The debtor of a thing cannot compel the creditor to receive a different one, although the
latter may be of the same value as, or more valuable than that which is due.
c. In obligations to do or not to do, an act or forbearance cannot be substituted by another
act or forbearance against the obligee’s or creditor’s will.
d. When the obligation consists in the delivery of an indeterminate or generic thing, whose
quality and circumstances have not been stated, the creditor can demand a thing of
superior quality and the debtor can deliver a thing of inferior quality.
224. Who shall shoulder the extra-judicial expenses required by the payment of an obligation?
a. Debtor
b. Creditor
c. Government
225. The following statements concerning partial payment are correct, except
a. The creditor cannot be compelled partially to receive the prestations in which the
obligation consists except when there is stipulation to the contrary.
b. The debtor may be required by the creditor to make partial payments.
c. When the debt is in part liquidated and in part unliquidated, the creditor may demand
the payment of the former without waiting for the liquidation of the latter.
d. When the debt is in part liquidated and in part unliquidated, the debtor may effect the
payment of the former without waiting for the liquidation of the latter.
226. It refers to such currency which in a given jurisdiction can be used for the payment of
debts, public or private, and which cannot be refused by the creditor.
a. Legal tender
b. Foreign currency
c. Local currency
d. International currency
227. Which of the following statements concerning the legal tender based on the rules issued
by Bangko Sentral ng Pilipinas is incorrect?
a. Manager’s check is as good as cash and considered legal tender.
b. 1 centavo coin, 5 centavos coin, 10 centavos coin, and 25 centavos coin are limited only
up to P100 as legal tender.
c. P1 coin, P5 coin and P10 coin are limited only up to P1,000 as legal tender.
d. P20 bill, P50 bill, P100 bill, P200 bill, P500 bill and P1,000 bill have no limitation as legal
tender.
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228. The following are the rules concerning the payment of debts in money, except.
a. The payment of debts in money shall be made in the currency stipulated even it is
foreign currency.
b. In case the delivery of the currency stipulated is not possible, the payment of debts in
money shall be made in the currency which is legal tender in the Philippines.
c. The delivery of promissory notes payable to order or bills of exchange or other
mercantile documents shall produce the effect of payment only when they have been
cashed or when through the fault of the creditor they have been impaired or when the
amount has already been credited to the bank account of creditor.
d. In case an extraordinary inflation or deflation of the currency stipulated should
supervene, the value of the currency at the time of the payment of the obligation shall
be the basis of payment, unless there is an agreement to the contrary.
229. Where shall payment of an obligation be made?

a. Wherever the thing might be at the moment the obligation was constituted or perfected.
b. Place designated in the obligation.
c. Domicile of the debtor.
d. Domicile of the creditor.
230. In the absence of express stipulation as to the place of payment, where shall payment of
an obligation to deliver a determinate or specific or delimited thing be made?
b. Place designated by third party.
231. In the absence of express stipulation as to the place of payment, where shall payment of
an obligation to deliver an indeterminate or generic thing be made?
b. Place designated by third party.
232. The following are the special forms of payment, except

a. Dation in payment
b. Application of payments
c. Payment by cession
d. Tender of payment and consignation
233. It refers to a special form of payment whereby a property is alienated to the creditor in
satisfaction of a debt in money when the loan in money is already due at the time of change.
Generally, the obligation is fully extinguished by this special form of payment in the absence of
contrary agreement.
a. Application of payment
b. Payment by cession
c. Dation in payment or dacion en pago or asset swap
234. If the obligation to pay a sum of money is changed to obligation to deliver a determinate
thing before the maturity date of the loan, the obligation is considered to be extinguished by
a. Payment by cession
b. Novation
c. Dation en payment or dacion en pago or asset swap
d. Compensation
235. It is a stipulation in a contract of pledge or mortgage whereby the thing pledged or

mortgaged shall automatically become the property of the creditor in the event of non-payment
of the debt within the period fixed by contract.
a. Novation
b. Daction in payment or dacion en pago or asset swapt
c. Pactum commissorium
d. Payment by cession
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236. What law shall be govern dation in payment or dacion en pago as a mode of
extinguishing obligation?
a. Law on Barter
b. Law on Obligation
c. Law on Sales
d. Law on Credit Transactions
237. It refers to a special type of payment which involves the voluntary abandonment of the
universality of the property of the debtor for the benefit of his creditors, in order that such
property may be applied to the payment of the credits. Generally, the debtor will be released
from his obligations but only up to the extent of the proceeds from the sale of his properties by
the creditors.
c. Payment by cession or Assignment
238. The following are the distinctions between dation in payment and payment by cession,
except
a. Whereas dation en pago transfers the ownership over the thing alienated to the creditor
while in payment by cession only the possession and administration (not ownership) are
transferred to the creditors, with an authorization to convert the property into cash with
which the debts shall be paid.
b. While dation in payment may totally extinguish the obligation and release the debtor, the
assignment only extinguishes the credits to the extent of the amount realized from the
properties assigned, unless otherwise agreed upon.
c. While dation in payment involves only some specific thing, payment by cession involves
all the property of the debtor.
d. While in dation in payment, the transfer is only in favor of one creditor to satisfy a debt,
in payment by cession, there are various creditors.
e. Dation in payment is governed by Law on Obligation while Payment by Cession is
governed by FRIA of 2010.
239. It refers to the designation of the debt which is being paid by a debtor who has several
obligations of the same kind in favor of the creditor to whom payment is made.
c. Payment by cession
240. Who has the right to application of payments?

a. Debtor
b. Creditor
c. Both debtor and creditor
d. Neither debtor nor creditor

I. Unless the parties so stipulate, or when the application of payment is made by the party for
whose benefit the term has been constituted, application shall not be made as to debts which
are not yet due.
II. If the debtor accepts from the creditor a receipt of payment in which an application of the
payment is made, the debtor cannot complain of the same, unless there is a just cause for
invalidating the contract.
a. Both I and II
b. Neither I nor II
c. I only
d. II only
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242. The following are limitations to the preferential right of the debtor to choose the debt to
which his payment is to be made, except
a. If the debtor owes two debts, one for P50 and another for P200, and he makes a
payment of P50, he cannot choose to apply it to the P200 debt because the creditor
cannot be compelled to accept partial payment.
b. If there is only one obligation bearing stipulated interest, the debtor cannot apply the
payment to the interest before the principal.
c. The debtor cannot apply the payment to a debt that is not yet liquidated.
d. He cannot choose a debt with a period for the benefit of the creditor, when the period
has not yet arrived.
e. When there is an agreement as to the debts which are to be paid first, the debtor cannot
vary the agreement.
243. The following are the rules for application of payments in case the debtor does not
exercise his right to application of payment, except
a. If the debt produces interest, payment shall be made on the interest first before the
principal amount of the loan.
b. When the payment cannot be applied in accordance with the preceding rules, or if
application cannot be inferred from other circumstances, the debt which is most onerous
or burdensome to the debtor, among those due, shall be deemed to have been satisfied.
c. If the debts due are of the same nature and burden, the payment shall be applied to all
of them proportionately.
d. If at the time of payment the debtor does not exercise his right to apply it to any of his
debts, the application made by the creditor shall be followed even if the debtor does not
consent to such application.

I. Tender of payment is the manifestation made by the debtor to the creditor of his desire to
comply with his obligation with the offer of immediate performance.
II. Consignation is the deposit of the object of the obligation in a competent court in accordance
with rules prescribed by law.
a. I only
b. II only
c. Neither I nor II
d. Both I and II
245. What is the remedy of the debtor if the creditor to whom tender of payment has been
validly made refuses without just cause to accept it?
a. Consign or deposit the thing or sum due to the court
b. Payment by cession
c. Dation in payment
d. Application of payments
246. If the creditor to whom tender of payment has been made refuses without just cause to
accept it, the debtor shall be released from his obligation by the consignation of the thing or sum
due. Consignation without tender of payment shall release the debtor from responsibility in the
following exceptional instances, except
a. When the creditor is absent or unknown
b. When the creditor does not appear at the place of payment
c. When the creditor is incapacitated to receive the payment at the time it is due
d. When, without just cause, the creditor refuses to give a receipt
e. When two or more persons claim the same right to collect
f. When the title of the obligation has been lost
g. When the debtor makes an invalid tender of payment
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247. In order that consignation may be effective the debtor must comply first with the
following requisites or formalities, except
a. The debt must be due.
b. The consignation was made by debtor because of some legal cause provided by law
which is mora accipiendi or delay on the part of creditor.
c. Previous notice of the consignation has been given to the creditor or persons interested
in the performance of the obligation. (1st notice to creditor of intent to consign)
d. The amount or thing was placed at the disposal of the court.
e. After the consignation, the creditor or persons interested in the performance of obligation
were notified thereof. (2nd notice to creditor of actual consignation)
f. The debtor must personally deposit the thing to the court and not through his counsel.
248. Who shall shoulder the expenses of a valid consignation?

a. Debtor
b. Creditor
c. Government

I. Once the consignation has been duly made, the debtor may ask the judge to order the
cancellation of the obligation to extinguish the obligation.
II. Before the creditor has accepted the consignation, or before a judicial declaration that the
consignation has been properly made, the debtor may withdraw the thing or the sum
deposited, allowing the obligation to remain in force.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
250. The following are effects once the consignation has been accepted by the creditor or the
court has declared that it has been validly made, except
a. The debtor is released in the same manner as if he had performed the obligation at the
time of the consignation, because this produces the same effect as a valid payment.
b. The accrual of interest on the obligation is suspended from the moment of consignation.
c. The deterioration or loss of the thing or amount consigned occurring without fault of the
debtor must be borne by the creditor, because the risks of the thing are transferred to
the creditor from the moment of deposit.
d. Any increment or increase in value of the thing after the consignation inures to the
benefit of the debtor.
251. The following are the effects if, after the consignation has been made, the creditor
should authorize the consigning debtor to withdraw the same, except
a. The creditor shall lose every preference which he may have over the thing.
b. The consigning and withdrawing debtor shall remain to be solidarily liable to the
obligation.
c. The other co-debtors’ liability to the obligation will be converted from solidary to joint.
d. The guarantors and sureties shall be released.
e. The obligation shall be extinguished.
252. As a general rule, the loss of the specific thing on account of fortuitous event shall
extinguish the obligation. The following are the exceptions to the general rule wherein the debtor
shall still be liable even there is fortuitous event, except
a. When the law expressly provides that the debtor shall be liable even if the loss is due to
fortuitous event.
b. When by express stipulation, the obligor is made liable even if loss occurs through
fortuitous events.
c. When the nature of the obligation requires the assumption of risk.
d. When the fault or negligence of the debtor concurs with the fortuitous event in causing
the loss.
e. When the loss occurs after the debtor has incurred in delay.
f. When the debtor has promised to deliver the same thing to two or more different parties.
g. When the obligation to deliver a determinate object arises from a criminal act.
h. When the fortuitous event is the immediate, exclusive and proximate cause of loss.
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I. An obligation which consists in the delivery of a determinate or specific or delimited generic
thing shall be extinguished if it should be lost or destroyed due to fortuitous event.
II. In an obligation to deliver a generic or indeterminate thing, the loss or destruction of
anything of the same kind does not extinguish the obligation.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
254. The following statements concerning the loss of the object of the obligation due to
fortuitous event are correct, except
a. The courts shall determine whether, under the circumstances, the partial loss of the
object of the obligation is so important as to extinguish the obligation.
b. When the debt of a thing certain and determinate proceeds from a criminal offense, the
debtor shall not be exempted from the payment of its price, whatever may be the cause
for the loss, unless the thing having been offered by him to the person who should
receive it, the latter refused without justification to accept it.
c. The obligation having been extinguished by the loss of the thing, the creditor shall have
loss.
d. Loss due to fortuitous event as a mode of extinguishment of obligation is applicable to
obligation to deliver a generic thing.
255. Which of the following statements is correct about the effects of fortuitios event in
obligation to do?
a. The debtor in obligations to do shall also be released when the prestation becomes
legally or physically impossible without the fault of the obligor.
b. When the service has become so difficult as to be manifestly beyond the contemplation
of the parties, the obligation may also be released therefrom, in whole or in part.
c. Both A and B
d. Neither A nor B
256. What is the presumption whenever the thing is lost in the possession of the debtor in the
absence of earthquake, flood, storm or other natural calamity?
a. The loss was due to force majeure.
b. The loss was due to fortuitous event.
c. The loss was due to the debtor’s fault.
d. The loss was due to the creditor’s fault.
257. It is a mode of extinguishing obligation which is an act of liberality, by virtue of which,

without receiving any equivalent, the creditor renounces the enforcement of the obligation, which
is extinguished in its entirety or in that part or aspect of the same. It is essentially gratuitous and
always requires the acceptance by the debtor.
a. Compensation
b. Confusion
c. Remission or Donation or Condonation or Renunciation
d. Novation
258. What is the nature of condonation or remission?

a. It is generally gratuitous and requires the acceptance by the obligor.
b. It is essentially gratuitous and requires the acceptance by the obligor.
c. It is generally onerous and requires the acceptance by the obligor.
d. It is essentially onerous and requires the acceptance by the obligor.
259. The following formality or solemnity are required by law for validity of donation, except
a. If the donation involves movable property worth P5,000 or less, there must be
simultaneous delivery and acceptance.
b. If the donation involves movable property worth more than P5,000, the donation and
acceptance must be both in writing.
c. If the donation involves immovable property, the donation and acceptance must be both
in public instrument.
d. If the donation involves movable, the donation and acceptance must be both in notarized
document.
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260. The following are the requisites of remission or condonation, except

a. The debt must be existing and demandable at the time the remission is made.
b. The renunciation of the debt must be gratuitous.
c. The debtor must accept the remission.
d. The remission or condonation can only be expressly made but not impliedly.
261. What is the implication of the delivery of a private document evidencing a credit, made
voluntarily by the creditor to the debtor?
a. It implies that the voluntary return of the private document is presumed to be by reason
of payment of the debt.
b. It implies that the voluntary return of the private document is presumed to be by reason
of condonation or remission of the debt.
c. It implies that the voluntary return of the private document is presumed to be by reason
of novation of the debt.
d. It implies that the voluntary return of the private document is presumed to be by reason
of confusion of the debt.
262. If the heirs of the deceased creditor questioned the officiousness of the donation of
credit evidenced by the voluntary return of the private document to the debtor, what is the legal
remedy of debtor?
a. The debtor may prove by evidence that the obligation is actually extinguished by
payment and not by donation.
b. The debtor is now mandatorily required to pay the obligation.
c. The debtor may ask the deceased creditor to testify.
d. The debtor may interpose the defense that the obligation is extinguished by the debt of
the creditor.
263. The following statements concerning condonation or remission are correct, except
a. Whenever the private document in which the debt appears is found in the possession of
the debtor, it shall be presumed that the creditor delivered it voluntarily, unless the
contrary is proved.
b. The renunciation of the principal debt shall extinguish the accessory obligations.
c. The renunciation of the accessory obligation shall extinguish the principal debt.
d. It is presumed that the accessory obligation of pledge has been remitted when the thing
pledged, after its delivery to the creditor, is found in the possession of the debtor, or of a
third person who owns the thing.
264. It is a mode of extinguishing obligation that refers to the meeting in one person of the
qualities of creditor and debtor with respect to the same obligation.
a. Compensation
b. Condonation
c. Confusion or merger
d. Novation
265. The following are the requisites of merger or confusion, except

a. It must be gratuitous and requires acceptance by the obligor.
b. It must take place between the creditor and the principal debtor.
c. The very same obligation must be involved, for if the debtor acquires rights from the
creditor, but not the particular obligation in question, there will be no merger.
d. The confusion or merger must be total or as regards the entire obligation.
266. The following statements concerning merger or confusion are correct, except
a. The effect of merger is to extinguish the obligation.
b. Merger which takes place in the person of the principal debtor or creditor benefits the
guarantor.
c. Merger which takes place in the person of the guarantor extinguishes the principal
obligation.
d. Confusion does not extinguish a joint obligation except as regards the share
corresponding to the creditor or debtor in whom the two characters concur.
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267. It is a mode of extinguishing to the concurrent amount, the obligations of those persons
who in their own right are reciprocally debtors and creditors of each other.
a. Novation
b. Compensation or Offset
c. Merger
d. Remission
268. Which of the following statements pertains to facultative compensation?

a. It is a compensation which takes place by operation of law because the requisites of law
are present.
b. It is a compensation which can be claimed by one of the parties who, however, has the
right to object to it, such as when one of the obligations has a period for the benefit of
one party alone and who renounces that period so as to make the obligations due.
c. It is a compensation wherein the parties agree to compensate their mutual obligations
even if some requisites of legal compensation are lacking.
d. It is a compensation decreed by the court in a case where there is a counterclaim.
269. The following statements concerning compensation are correct, except

a. The guarantor may set up compensation as regards what the creditor may owe the
principal debtor.
b. Compensation may be total or partial and when the two debts are of the same amount,
there is a total compensation.
c. If one of the parties to a suit over an obligation has a claim for damages against the
other, the former may set it off by proving his right to said damages and the amount
thereof.
d. When one or both debts are rescissible or voidable, they may be compensated against
each other before they are judicially rescinded or avoided.
e. The parties cannot agree upon compensation of debts which are not yet due.
270. The following are the requisites of legal compensation or compensation by operation of
law, except
a. Each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other.
b. Both debts consist in a sum of money, or if the things due are consumable, they be of
the same kind, and also of the same quality if the latter has been stated.
c. Both debts must be due.
d. Both debts must be liquidated and demandable.
e. That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.
f. There must be consent and awareness on the part of the contracting parties for legal
compensation to take effect.
271. Which of the following debts can be the subject of legal compensation?
a. Perfectly Valid debts only
b. Perfectly Valid, rescissible, voidable and unenforceable debts only
c. Perfectly Valid, rescissible and voidable debts only
d. Perfectly Valid and rescissible debts only
272. The following are the exceptional instances wherein legal compensation may not take
place even if all the requisites for legal compensation concur but facultative compensation may
take place, except
a. When there is a renunciation of the effect of compensation by a party.
b. When one of the debts arises from the obligations of a depositary in depositum
c. When one of the debts arises from the obligations of a bailee in commodatum.
d. When the one of the creditor has a claim for support due by gratuitous title.
e. When one of the debts consists in civil liability arising from a crime.
f. When one of the debts pertains to taxes.
g. When the debts are payable in different places.
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273. The following statements pertaining to legal compensation are correct, except
a. Legal compensation takes place by operation of law even though the debts may be
payable at different places, but there shall be an indemnity for expenses of exchange or
transportation to the place of payment.
b. If a person should have against him several debts which are susceptible of
compensation, the rules on the application of payments shall apply to the order of the
legal compensation.
c. When all the requisites for legal compensation are present, compensation takes effect by
operation of law.
d. When all the requisites for legal compensation are present, both debts to the concurrent
amount are extinguished only if the creditors and debtors are aware of the
compensation.
274. It is a mode of extinguishment of an obligation by the substitution or change of the

obligation by a subsequent one which extinguishes or modifies the first.
a. Compensation
b. Novation
c. Condonation
d. Merger
275. The following are the requisites of novation, except

a. There must be a previous valid obligation.
b. There must be agreement of all parties to the new contract.
c. There must be extinguishment of the old contract.
d. The new obligation must be void.
276. Novation of obligation may take place by the following, except

a. Changing their object or principal conditions (Real novation)
b. Substituting the persons of the debtor (Expromission or Delegacion)
c. Subrogating a third person in the rights of the creditor (Subrogation whether legal or
conventional)
d. Changing their term or period (Both extension and shortening of term for payment)
277. Which of the following statements concerning the type of novation is incorrect?
a. Subjective or personal novation is the modification of the obligation by the change of the
subject; it is passive if there is substitution of the debtor, and it is active when a third
person is subrogated in the rights of the creditor.
b. Objective or real novation is the change of the obligation by substituting the object with
another or changing the principal conditions.
c. There is implied novation when there is such an incompatibility between the old and the
new obligations that they cannot stand together.
d. There is total novation when there is only a modification or change in some principal
conditions of the obligation.
278. Which of the following statements concerning novation is incorrect?

a. In order that an obligation may be extinguished by another which substitutes the same,
it is imperative that it be so declared in unequivocal terms.
b. Novation is never presumed.
c. There is implied novation if the old and new obligations are on every point incompatible
with each other.
d. Novation must only be expressed but it cannot be implied.
279. The following statements concerning novation are correct, except

a. When the principal obligation is extinguished in consequence of a novation, accessory
obligations may subsist only insofar as they may benefit third person who did not give
their consent.
b. If the new obligation is void, the original obligation was extinguished, unless the parties
intended that the former should subsist in any event.
c. The novation is void if the original obligation was void, except when annulment may be
claimed only by the debtor, or when ratification validates acts which are voidable.
d. If the original obligation was subject to a suspensive or resolutory condition, the new
obligation shall be under the same condition, unless it is otherwise stipulated.
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280. May the shortening of the term of contract result to implied novation?
a. Yes in all cases.
b. No in all cases.
c. As a general rule, yes, especially if there is significant shortening of term of contract,
which is the principal condition of the contract, such in the old case of Kabalkalan vs
Pacheco wherein the term of right of way is significantly reduced from 20 years to 7
years.
d. Yes even if the shortening does not result to incompatibility between the first and second
contract.
281. May the extension of the term of the contract result to implied novation?
a. Yes in all cases
b. No in all cases
c. As a general rule, no, unless the change will show that the new contract is clearly
incompatible with the old contract so that both contracts cannot exist together.
d. Yes because implied novation can be presumed even in the absence of supporting
circumstances.
282. Which of the following statements concerning novation involving substituting a new
debtor in the place of the original debtor is correct?
a. It may be made even without the knowledge or against the will of original debtor, but
not without the consent of the creditor.
b. It may be made without the consent of creditor.
c. It cannot be made against the will of original debtor.
d. It must be made with the knowledge of original debtor.
283. It is one of the two types of novation involving the change of original debtor wherein the
initiative does not emanate from the original debtor and may be made even without his
knowledge since it consists in a third person assuming the obligation and it logically requires the
consent of third person and the creditor.
a. Expromission
b. Delegacion
c. Legal subrogation
d. Conventional subrogation
284. In expromission, will the insolvency of new debtor or non-fulfillment of the obligation by
the new debtor give rise to any liability on the part of the original debtor?
a. No as a general rule because the original debtor did not have the initiative in making the
change, which might have been made even without his knowledge. However, if there is
consent of original debtor to the substitution or the original debtor acted in bad faith, he
may become liable for the insolvency of new debtor.
b. No in all cases.
c. Yes in all cases.
d. Yes as a general rule unless there is agreement to the contrary.
285. It is one of the two types of novation involving the change of original debtor wherein ,
the original debtor (delegante) offers and the creditor (delegatario) accepts a third person
(delegado) who consents to the substitution, so that the consent of these three parties is
necessary.
a. Expromission
b. Delegacion
286. In delegacion, may the insolvency of the new debtor, who has been proposed by the
original debtor and accepted by the creditor, revive the action of the latter against the original
debtor?
a. Yes, under any circumstances because the obligation is already extinguished.
b. No as a general rule except in two cases: 1) when said insolvency was already existing
and of public knowledge when he delegated his debt, or 2) when said insolvency was
known to the original debtor when he delegated his debt.
c. Yes even of the creditor has knowledge that the new debtor was insolvent at the time of
delegation.
d. No because the debtor has not given his consent to the delegation.
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287. It is a type of novation which refers to the transfer of all the rights of the creditor to a
third person, who substitute him in all his rights. It transfers to the person subrogated the credit
with all the rights thereto appertaining, either against the debtor or against third persons, be
they guarantors or possessors of mortgages, subject to stipulation in a conventional subrogation.
a. Novation
b. Compensation
c. Confusion
d. Subrogation
288. It is one of the two types of subrogation wherein the debtor, original creditor and third
person agree to the substitution of creditor.
a. Expromission
b. Delegacion
289. If conventional partial subrogation has occurred, how shall the insufficient assets of
debtor be applied to the remaining claim of original creditor and claim of subrogated creditor
arising from the partial subrogation?
a. The insufficient assets shall be applied equally to the original creditor and subrogated
creditor.
b. The insufficient assets shall be applied proportionately to the original creditor and
subrogated creditor.
c. The insufficient assets shall be applied first to the claim of original creditor and the
remaining assets will be given to subrogated creditor.
d. The insufficient assets shall be applied first to the claim of subrogated creditor and the
remaining assets will be given to original creditor.
290. It is one of the two types of subrogation which is not presumed but despite the absence
of agreement of the original parties the third person is legally subrogated to the place of creditor
by operation of law in exceptional cases mentioned in Civil Code or Special Law.
a. Expromission
b. Delegacion
291. The following are the exceptional instances wherein legal subrogation is presumed,
except
a. When a creditor pays another creditor who is preferred, even without the debtor’s
knowledge.
b. When, even without the knowledge of the debtor, a person interested in the fulfillment of
the obligation pays, without prejudice to the effects of confusion as to the latter’s share.
c. In negotiable instruments, when there is valid payment for honor in accordance with the
formality required by Negotiable Instruments Law.
d. In property insurance, when the insurance company pays the insured even without the
consent of defendant who caused the injury to the property.
e. The obligation having been extinguished by the loss of the thing, the creditor shall have
loss
f. When a stranger pays a creditor without the knowledge of the debtor.
292. It refers to the juridical tie or efficient cause the binds the parties to the obligation.
a. Obligee
b. Obligor
c. Prestation
d. Vinculum
293. In what type of obligation of obligation to deliver a thing is loss due to fortuitous event
as a mode of extinguishing the obligation applicable?
a. Obligation to deliver a generic thing
b. Obligation to deliver a specific thing
c. Obligation to deliver an indeterminate thing
d. Obligation to deliver a common thing
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294. A, B, C wrote a promissory note which states "We promise to pay P60,000 to D and E." D
indorsed back the promissory note to A. How much obligation is extinguished by confusion or
merger?
a. P10,000
b. P20,000
c. P30,000
d. P60,000
295. A, a minor, B and C wrote a promissory note which states "I promise to pay P30,000 to
D." How much may D validly collect from C if B becomes insolvent?
a. P30,000
b. P20,000
c. P10,000
d. None
296. A, B and C obliged themselves to deliver a specific car worth P300,000 to D. A and B are
willing to deliver the car but C refused to perform the obligation despite repeated demands from
D. What is the proper legal remedy available to D?
a. File an action for exact fulfilment with damages against C.
b. File an action for exact fulfilment with damages against A, B and C.
c. File an action for monetary amount against A and B for P100,000 without damages each
and against C for P100,000 plus damages.
d. File an action for rescission of obligation plus damages against A, B and C.
297. In which of the following civil obligations is the right to file an action prescribe in four
years?
a. Written contract
b. Quasi-delict
c. Oral contract
d. Quasi-contract
298. A has checking account in BDO Unibank with positive balance of P1,000,000. A borrowed
P1,000,000 from the same bank. At the maturity date of the loan payable of A, what mode of
extinguishing obligation is present?
a. Condonation
b. Merger
c. Compensation
d. Delegacion
299. Which obligation may become the subject matter of legal compensation or offset?
a. Obligation of borrower in a contract of loan or mutuum
b. Obligation of bailee in a contract of commodatum
c. Obligation of depositary in a contract of deposit
d. Obligation of convicted person arising from his crime
300. Which of the following is the efficient cause in an obligation?

a. Obligor
b. Obligee
c. Vinculum
d. Prestation
301. While traversing a narrow bridge, a public utility bus driven by Don Cruz collided with a private
vehicle driven and owned by Jose Reyes. Don Cruz was an employed bus driver by JAC Liner Bus
Incorporated which owned and operated the above mentioned public utility bus. Patricia, a
passenger of the public utility bus, and Trina, a pedestrian crossing the bridge, were injured. What is
the proper source of obligation if Trina will file a civil action against JAC Liner Bus Incorporated?
a) Solutio Indebiti
b) Negotiorum Gestio
c) Contract
d) Culpa Acquiliana
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302. Angel Locsin saw an abandoned child in the market. Since the child is hungry, Angel Locsin
purchased a lunch for the child who ate the food. Afterwards, the parents of the child arrived. If
Angel Locsin will ask for reimbursement from the parents of the abandoned child for the said lunch,
what is the proper source of civil obligation?
a) Solutio Indebiti
b) Negotiorum Gestio
c) Delicto
d) Culpa Acquiliana
303. It refers to the juridical tie that binds the parties to the obligation.
a) Prestation
b) Obligor
c) Vinculum
d) Obligee
304. In which type of obligation is delay not applicable?

a) Negative obligation
b) Positive obligation
c) Real obligation
d) Personal obligation

a) Civil obligation
b) Legal obligation
c) Natural obligation
d) None of the above
306. Which of the following is not considered civil liability arising from crime?
a) Restitution
b) Reparation
c) Indemnification
d) Rescission
307. Which of the following is not a requisite before a civil action based on quasi-delict to prosper?
a) There must be a negligence on the part of respondent.
b) There must be a contract between the plaintiff and respondent.
c) There must be a causal connection between the plantiff’s injury and respondent’s negligence.
d) There must be injury or damage to the plaintiff.
308. What minimum quantum of evidence is necessary in order to recover civil damages arising from
crime?
a) At least substantial evidence
b) At least preponderance of evidence
c) At least clear and convincing evidence
d) At least proof beyond reasonable doubt
309. In the absence of specific level of diligence required by law or valid agreed level of diligence
between the parties in the obligation, what degree of diligence shall be observed by the debtor in
the performance of an obligation?
a) High standards of integrity and performance
b) Extraordinary diligence
c) Diligence of a reasonably prudent person
d) Utmost diligence of very cautious persons
310. These fruits refer to the spontaneous products of the soil, and the young and other products of
animals.
a) Natural fruits
b) Industrial fruits
c) Civil fruits
d) Commercial fruits
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311. On August 1, 2020, D unilaterally promised to deliver a specific dog named “Husky” to C if the latter
will pass the October 2020 CPA Board Exam. On September 1, 2020, “Husky” gave birth to a puppy
named “Huskar.” On October 15, 2020, C passed the CPA Board Exam. On November 1, 2020,
“Husky” gave birth to another puppy named “Huskita.” On December 1, 2020, D only delivered
“Husky” to C. Which of the following statements is correct?
a) D is entitled to the improvement of “Husky” by nature or time during the pendency of
suspensive condition.
b) C is entitled not only to “Husky” but also “Huskar” and “Huskita”.
c) C obtained personaly right over “Husky” on October 15, 2020.
d) D is entitled to “Huskar.”
312. In which type of obligation is an action for exact fulfillment or an action for specific performance
appropriate in case the debtor failed to comply with his obligation?
a) Obligation to deliver a specific thing
b) Obligation to do whereby only the debtor can do the service
c) Obligation to do that can be done by persons other than the debtor
d) Obligation not to do
313. In which of the following obligations is demand, whether extrajudicial or judicial, necessary in order
for delay to exist?
a) When the debtor has rendered it beyond his power to perform the prestation.
b) When the obligation is unilateral.
c) When the designation of the time for the performance of prestation is the controlling motive for
the establishment of the contract.
d) When the partner fails to make his capital contribution on the date agreed upon.
314. In which type of delay is consignation the proper remedy of the injured party after a prior valid
tender of payment?
a) Mora solvendi
b) Mora accipendi
c) Compensatio morae
315. What is the legal interest rate for the year ended December 31, 2013?
a) 6%
b) 9%
c) 12%
d) 24%
316. It refers to failure to observe for the protection of the interests of another person, that degree of
care, precaution and vigilance which the circumstances justly demand, whereby such person suffers
injury.
a) Culpa
b) Dolo
c) Mora
d) Contravention of tenor
317. Which among the following mutually exclusive damages must be duly proved by the plaintiff before
it can be awarded by the court?
a) Liquidated damages
b) Actual damages
c) Temperate damages
d) Nominal damages
318. Which of the following damages are imposed by way of correction for public good.
a) Temperate damages
b) Nominal damages
c) Moral damages
d) Exemplary damages
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319. Which type of waiver may be considered valid?

a) Waiver of future fraud
b) Waiver of future simple negligence
c) Waiver of of future gross negligence
d) Waiver of past fraud involving public crime
320. After prevailing from a civil action against the judgment debtor, which of the following rights shall be
exercised first by the winning creditor?
a) To levy by attachment and execution all the property of the judgment debtor, including
garnishment of bank deposits, except those property exempted from attachment under Rules of
Court or Law
b) To exercise all rights and actions of the debtor, except those rights which are inherently
personal to him
c) To ask for the rescission or cancellation of the contracts made by the debtor in fraud of
creditor’s rights
d) To file an action for damages against the third person who acquired the property of debtor in
bad faith
321. Which of the following rights acquired from an obligation is transmissible from the predecessors to
their successor-heirs?
a) Shares of stocks of close corporation
b) Membership in nonstock corporation
c) Partnership in a law firm or an auditing firm
d) Right of usufractuary
322. Which of the following obligations is immediately due and demandable?

a) Obligation when debtor’s means permits him to do so
b) Obligation in diem
c) Obligation ex die
d) Obligation subject to a suspensive condition
323. Which of the following obligations is not immediately due and demandable?
a) Obligation in diem
b) Obligation ex die
c) Obligation with a resolutory condition
d) Pure obligation
324. Which of the following suspensive conditions will not nullify the obligation dependent upon it?
a) Impossible condition
b) Condition purely potestative upon the will of the creditor
c) Immoral condition
d) Illegal condition
325. On June 1, 2020, D unilaterally obliged to deliver a specific cat named “Kitty” to C if the latter will
pass the 2020 Bar Examination. On December 1, 2020, C passed the bar examination. Which of the
following statements is correct?
a) If “Kitty” died due to fortuitous event on October 1,2020, D is liable for damages to C.
b) If “Kitty” deteriorates on October 1, 2020 due to its age, such impairment shall be borne by D.
c) If “Kitty” is improved by nature or by time on October 1, 2020, D shall be entitled to such
improvement.
d) If “Kitty” is improved at the expense of D on October 1, 2020, D shall have no other right than
that granted to the usufructuary which refers to right to use the improved thing for a
reasonable period.
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326. Which of the following statements about a reciprocal obligation is incorrect?

a) The injured party can ask for judicial rescission of the reciprocal obligations in case one of the
debtors should not comply with what is incumbent upon him because the power to rescind
obligations is implied in reciprocal ones.
b) In case both parties have committed a breach of the reciprocal obligations, the liability of the
first infractor shall be equitably tempered by the courts.
c) If it cannot be determined by the court which of the parties first violated the contract involving
reciprocal obligations, the contract shall be deemed extinguished, and each shall bear his own
damages.
d) In case of breach of reciprocal obligations, if the injured party elected rescission plus damages
instead of exact fulfillment plus damages, he is already barred from availing of exact fulfillment
plus damages.
e) In case of breach of reciprocal obligations, if the injured party elected exact fulfillment plus
damages instead of rescission plus damages, he is already barred from availing of rescission
plus damages.
327. In the absence of agreement to the contrary, when a period is established in an obligation, to whose
benefit is it presumed to be created?
a) For the benefit of debtor
b) For the benefit of creditor
c) For the benefit of both debtor and creditor
328. Which of the following instances will not make obligation with a suspensive period immediately due
and demandable?
a) When the debtor attempts to abscond
b) When after the obligation has been contracted, the debtor becomes insolvent and he does not
give a guaranty or security for the debt
c) When the debtor violates any undertaking, in consideration of which the creditor agreed to the
period
d) When through a fortuitous event the guaranties or securities after their establishment were
impaired
329. D promised to deliver a specific car to C but a specific bike may be given as a substitute. What type
of obligation is present in the case?
a) Alternative obligation
b) Facultative obligation
c) Conjunctive obligation
d) Simple obligation
330. D has obligation to C to deliver a specific cellphone or a specific laptop or a specific tablet. Who has
the right of choice in this obligation?
a) Always C
b) Always D
c) Generally C unless expressly granted to D
d) Generally D unless expressly granted to C
331. Which of the following obligation is disputably presumed by law to be joint?

a) When the nature of the obligation requires it to be solidary
b) When the obligation arises from quasi-delict, solutio indebiti, negotiorum gestio or delict
c) When the obligation is indivisible
d) When the obligation of two or more persons states “I promise to pay P P30,000”
332. A, B and C wrote a promissory note which states “We promise to pay P6,000 to D and E.” How much
may D legally collect from A?
a) P1,000
b) P2,000
c) P3,000
d) P6,000
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333. A and B wrote a promissory note which states “I promise to pay P6,000 to C, D and E.” How much
may D legally collect from A?
a) P1,000
b) P2,000
c) P3,000
d) P6,000
334. A, B and C wrote a promissory note which states “We promise to pay P12,000 to D or E, solidary
creditors.” How much may D legally collect from A?
a) P2,000
b) P4,000
c) P6,000
d) P12,000
335. A and B wrote a promissory note which states “I promise to pay P6,000 to C, D or E solidary
creditors.” How much may D legally collect from A?
a) P1,000
b) P2,000
c) P3,000
d) P6,000
336. A, a minor, B and C wrote a promissory note which states “We promise to pay P3,000 to D.” How
much may D legally collect from C in B becomes insolvent?
a) P1,000
b) P2,000
c) P3,000
d) None
337. A, a minor, B and C wrote a promissory note which states “I promise to pay P3,000 to D.” How
much may D legally collect from C in B becomes insolvent?
a) P1,000
b) P2,000
c) P3,000
d) None
338. A, B and C wrote a promissory note which states “We promise to pay P3,000 to D.” At the maturity
date, A paid P3,000 to D in full satisfaction of the loan. After such payment, B becomes insolvent.
How much may A validly ask for reimbursement from C?
a) P1,000
b) P1,500
c) P2,000
d) P3,000
339. A, B and C wrote a promissory note which states “I promise to pay P3,000 to D.” At the maturity
date, A paid P3,000 to D in full satisfaction of the loan. After such payment, B becomes insolvent.
How much may A validly ask for reimbursement from C?
a) P1,000
b) P1,500
c) P2,000
d) P3,000
340. A, B and C wrote a promissory note which states “We promise to pay P3,000 to D.” The share of A
on the obligation will mature on August 7, 2020 while the share of B will mature on August 15, 2020.
The share of C is subject to a suspensive condition that if D will pass the bar exam. As of August 7,
2020, D has not yet passed the bar exam. If today is August 7, 2020, how much may D validly
collect from A, B and C?
a) P1,000 and P0 and P0
b) P1,000 or P1,000 or P1,000
c) P3,000 or P3,000 or P3,000
d) P1,000 and P1,000 and P1,000
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341. A, B and C wrote a promissory note which states “I promise to pay P3,000 to D.” The share of A on
the obligation will mature on August 7, 2020 while the share of B will mature on August 15, 2020.
The share of C is subject to a suspensive condition that if D will pass the bar exam. As of August 7,
2020, D has not yet passed the bar exam. If today is August 7, 2020, how much may D validly
collect from A, B and C?
a) P1,000; P0; P0
b) P1,000 or P1,000 or P1,000
c) P3,000 or P3,000 or P3,000
d) P1,000 and P1,000 and P1,000
342. In which of the following modes of extinguishment of pure solidary obligation is the co-solidary
debtor not allowed to ask for reimbursement from the other co-solidary debtors?
a) Novation
b) Compensation
c) Remission
d) Merger
343. Which of the following obligations is not necessarily indivisible obligation?

a) Solidary obligation
b) Subscription contract of shares of stocks
c) Obligation not susceptible of partial performance
d) Obligation to deliver a definite thing
344. A, B and C obliged to deliver a specific laptop worth P30,000 to D. At the date of maturity, A and B
are willing to perform the prestation but C refused to do so despite demand from D. If you are the
lawyer of D, what civil action will you file?
a) Action for specific performance against C plus damages by reason of delay.
b) Action for exact fulfillment against A, B and C plus damages by reason of delay.
c) Action for indemnification for damages amounting to P10,000 from A; P10,000 from B and
P10,000 plus damages by reason of delay from C.
d) Action for indemnification for damages amounting to P30,000 plus damages against either A or
B or C.
345. It is an obligation which has an accessory undertaking to assume greater liability in case of breach.
a) Obligation with a period
b) Obligation with a penal clause
c) Obligation with a suspensive condition
d) Obligation with a resolutory condition
346. Which of the following statements about obligation with a penal clause is incorrect?
a) The penalty stipulated must be oppressive, exorbitant, excessive, unconscionable, iniquitous
and contra bonus mores.
b) Proof of actual damages suffered by the creditor is not necessary in order that the penalty in
obligation with a penal clause may be demanded because they are liquidated or predetermined
damages by the contracting parties.
c) The nullity of the principal obligation carries with it that of the penal clause.
d) The nullity of the penal clause does not necessarily carry with it that of the principal obligation.
347. When may the creditor recover damages and interest in addition to the penalty in obligation with a
penal clause?
a) If there is a valid stipulation or valid agreement that damages and interests may be demanded
in addition to penalty in case of breach of obligation with a penal clause.
b) When the debtor is guilty of bad faith or fraud in the breach of the obligation with a penal
clause.
c) Either a or b
d) Neither a nor b
348. Which of the following is not a mode of extinguishing obligation?

a) Rescission of obligation
b) Annulment of obligation
c) Fulfillment of suspensive condition
d) Prescription
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349. In which of the following sources of civil obligation is the right to file a civil action prescribe in 4
years?
a) Quasi-delict
b) Quasi-contract
c) Oral contract
d) Written contract
350. This type of estoppel occurs when a party to a deed or document and his privies are precluded from
denying any material fact stated in the said deed or document as against the other party and his
privies.
a) Estoppel in pais
b) Estoppel by deed
c) Estoppel by laches
351. Which of the following statements about payment or performance is incorrect?

a) Payment to a person who is incapacitated to administer his property shall be valid if he has kept
the thing delivered or insofar as the payment has been beneficial to him.
b) The debtor of a thing can compel the creditor to receive a different one, if the latter is of the
same value as, or more valuable than that which is due.
c) In obligations to do or not to do, an act or forbearance cannot be substituted by another act or
forbearance against the obligee’s will.
d) When the obligation consists in the delivery of an indeterminate or generic thing, whose quality
and circumstances have not been stated, the creditor cannot demand a thing of superior quality
and the debtor cannot deliver a thing of inferior quality.
352. Which of the following commercial documents is considered legal tender?

a) Bill of exchange
b) Promissory note
c) Manager’s check
353. Debtor, residing in Lipa City, has the obligation to deliver a 2020 Limited Edition Black Explorer to
Creditor, residing in Batangas City. At the time of perfection of obligation, a 2020 Limited Edition
Black Explorer is located in Tanauan City. On the date of delivery, another 2020 Limited Edition Black
Explorer is located in Sto. Tomas City. Where shall the said car be delivered by Debtor to Creditor?
a) Lipa City
b) Batangas City
c) Tanauan City
d) Sto. Tomas City
354. D is indebted in the amount of P10,000 to C. Such loan of D is guaranteed in writing by G. On the
maturity date of the loan, T paid P12,000 to C for D’s loan without the knowledge of D. Which of the
a) T may legally go after G if D will become insolvent but only up to P10,000.
b) T may legally ask P10,000 reimbursement from D.
c) T may legally recover P12,000 from C if D will become insolvent.
d) T may legally go after G if D will become insolvent up to P12,000.
355. D borrowed P5,000 cash from C. On the maturity date of the loan, C accepted D’s cellphone with
cost of P4,000 and accumulated depreciation of P1,000 for the satisfaction of the loan. At the date of
delivery, the fair market value of the cellphone is P3,500. How much of D’s obligation to C is
extinguished by the transfer of ownership of such cellphone from D to C thru delivery?
a) P5,000
b) P4,000
c) P3,500
d) P3,000
356. What law shall govern cession as a special mode of payment?

a) Law on Obligation
b) Law on Sales
c) Financial Rehabilitation and Insolvency Act of 2010
d) Revised Corporation Code of the Philippines
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357. D has several matured obligations to C consisting of the following: (1) Accounts Payable of
P4,000,000; (2) Notes Payable of P1,000,000; Loans Payable of P2,000,000 with accrued Interest
Payable of P200,000; and Mortgage Payable of P3,000,000 secured by real estate mortgage on D’s
house and lot. D paid P5,700,000 cash to C who accepted such payment without any objection. How
much of D’s cash payment will be applied to Accounts Payable?
a) P4,000,000
b) P400,000
c) P560,000
d) None
358. In which of the following instances is prior valid tender of payment still necessary before the valid
consignation?
a) When the title of the obligation has been lost
b) When two or more persons claim the same right to collect
c) When the creditor is capacitated to receive the payment at the time it is due
d) When the creditor is unknown or absent at the time of payment
359. How many notices must be given by the consigning debtor to the creditor in order for the deposit to
the court to be valid?
a) At least one notice
b) At least two notices
c) At least three notices
d) None
360. Which real obligation will be extinguished by the loss of object due to fortuitous event?
a) Obligation to deliver a specific thing
b) Obligation to deliver a generic thing
c) Either a or b
d) Neither a nor b
361. Which of the following is not a requirement of fortuitous event that will exempt a debtor from
liability?
a) The cause of the unforeseen and unexpected occurrence or the failure of the debtor to comply
with his obligation must be independent of the debtor’s will.
b) It must be impossible to foresee the event which constitutes the caso fortuito or if it can be
foreseen, it must be impossible to avoid.
c) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner.
d) The debtor must participate in the aggravation of the injury resulting to the creditor.
362. In which of the following cases is the debtor exempted from liability because of the occurrence of
fortuitous event?
a) When the loss occurs before the debtor has incurred delay
b) When the fault or negligence of the debtor concurs with the fortuitous event in causing the loss
c) When the debtor has promised to deliver the same thing to two or more different parties
d) When the obligation to deliver a determinate object arises from a criminal act
363. This mode of extinguishing obligation is essentially gratuitous and required acceptance by the
debtor.
a) Compensation
b) Remission
c) Merger
d) Novation
364. D borrowed P3,000 from C evidenced by a promissory note issued by D. In order to secure the said
loan, D delivered and pledged his specific watch to C. At the maturity date of the loan, C voluntarily
delivered the promissory note to D. Which contract is extinguished by remission?
a) Contract of loan
b) Contract of pledge
c) Both a and b
d) Neither a nor b
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365. M borrowed P5,000 from P and issued a promissory note payable to the order of P. Afterwards, P
indorsed and delivered the note to A. Subsequently, A assigned the note to M. What mode of
extinguishing the obligation discharges the promissory note?
a) Merger
b) Compensation
c) Novation
d) Remission
366. A, B, C and E are liable in the amount of P12,000 to E, F and G as evidenced by a promissory note.
G assigned the promissory note to A. If the obligation is classified as pure joint, how much obligation
is extinguished by confusion?
a) P12,000
b) P4,000
c) P3,000
d) P1,000
367. Using the same data in number 366 but assuming the obligation is pure solidary, how much
obligation is extinguished by confusion?
a) P12,000
b) P4,000
c) P3,000
d) P1,000
368. Using the same data in number 366 but assuming the obligation is active joint and passive solidary,
how much obligation is extinguished by confusion?
a) P12,000
b) P4,000
c) P3,000
d) P1,000
369. Using the same data in number 366 but assuming the obligation is passive joint and active solidary,
how much obligation is extinguished by confusion?
a) P12,000
b) P4,000
c) P3,000
d) P1,000
370. D is indebted in the amount of P10,000 to C as evidenced by a promissory note. Such loan is
secured by a pledge on P’s laptop and by written contract of guaranty made by G. At the maturity
date of the loan, C assigned the promissory note to G. Which contract is extinguished by merger?
a) Contract of guaranty only
b) Contract of guaranty and contract of pledge only
c) Contract of guaranty and contract of loan only
d) Contract of guaranty, contract of pledge and contract of loan
371. On August 1, 2020, John Reyes opened a savings deposit to BDO Unibank and deposited P100,000
cash. BDO Unibank issued passbook and ATM Card for such savings deposit. Afterwards, on
September 1, 2020, BDO Unibank offered a credit card to John Reyes who activated the said credit
card with credit limit of P100,000. On October 1, 2020, John Reyes used the BDO Unibank credit
card in purchasing grocery items at a cost of P80,000. The said credited amount will mature on
November 1, 2020 with 1% interest per month. Assuming John Reyes will not voluntarily pay his
obligation to BDO Unibank regarding his credit card, how much will be the balance of his savings
deposit on November 1, 2020 in the absence of other relevant facts?
a) P100,000
b) P20,000
c) P19,200
d) P12,000
372. Which of the following obligations may become the subject matter of legal compensation?
a) Obligation of bailee in contract of commodatum
b) Obligation of depositary in a contract of deposit
c) Obligation of borrower in contract of mutuum
d) Obligation of convicted criminal to pay civil damages to the private offended party
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373. H and W are legally married. On March 31, 2020, W borrowed P20,000 cash from H. Since W is a full
time mom and wife, she is entitled to monthly support of P10,000. H has not given W’s monthly
support for the months of March 2020 and April 2020 which must be released every 1 st day of the
month. On April 1, 2020, which of the following statements is incorrect?
a) H may legally set up compensation but up to the P10,000 support for the month of March 2020
on April 1, 2020.
b) W may legally set up compensation up to P20,000 on April 1, 2020.
c) H can legally collect P10,000 from W on April 1, 2020.
d) W can legally collect P10,000 from H on April 1, 2020.
374. It is a mode of extinguishment of an obligation by the substitution or change of the obligation by a

subsequent one which extinguishes or modifies the first.
a) Compensation
b) Novation
c) Remission
d) Merger
375. Which of the following is not considered a novation?

a) Subrogation whether conventional or legal
b) Delegacion or Expromission
c) Shortening the term of loan
d) Extending the term of loan
376. In which type novation involving the change of debtor is the consent of creditor mandatory?
a) Delegacion
b) Expromission
c) Both a and b
d) Neither a nor b
377. In which type of novation involving the change of debtor is the original debtor not liable for the
insolvency of the new debtor?
a) In case of delegacion
b) In case of expromission
c) If the substitution is without the knowledge or against the will of the original debtor
d) When the insolvency of new debtor was already existing and of public knowledge, or known to
the original debtor, when he delegated his debt
378. It refers to a type of novation that involves the transfer of all the rights of the creditor to a third
person, who substitute him in all his rights.
a) Delegacion
b) Expromission
c) Subrogation
d) Implied Novation
379. D is indebted in the amount of P10,000 to C. T, a third person, D and C agreed that D will pay T’s
obligation to C. At the maturity date of the debt, D only paid P7,000 to C who voluntarily accepted
such partial payment. After the payment, D became insolvent and his remaining assets for his two
obligation are worth P4,000. How much of such remaining assets of P4,000 be applied to the
remaining claim of C?
a) P3,000
b) P1,000
c) P1,200
d) None
380. D borrowed P4,000 cash from C. The said loan is secured by written contract of guaranty made by
G. Aside from that, the loan is secured by a pledge on P’s laptop which is now possessed by C. D is
legally married to H. D’s younger brother T is a lawyer. In which of the following cases is legal
subrogation not presumed by law?
a) If G pays D’s loan of P4,000 to C on maturity date.
b) If P pays D’s loan of P4,000 to C on maturity date.
c) If T pays D’s loan of P4,000 to C on maturity date.
d) If H pays D’s loan of P4,000 to C on maturity date.
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381. In which of the following obligations is delay not applicable?

a) Positive obligation
b) Real obligation
c) Personal obligation
d) Negative obligation
382. It refers to the efficient cause that binds the parties in an obligation.
a) Prestation
b) Vinculum
c) Obligor
d) Obligee
383. Which of the following obligations is enforceable in a court of law?

a) Religious obligation
b) Natural obligation
c) Legal obligation
384. Which of the following sources of obligation is based on the principle that no one shall be unjustly
enriched at the expense of another person?
a) Quasi-contract
b) Quasi-delict
c) Contract
d) Crime
385. Peter is the father of Monica, a minor. Nomer, the neigbor of Peter, paid the fare of Monica who
rode a public utility vehicle without any money on her pocket. What is the source of obligation of
Monica to the driver of public utility vehicle as to the payment of fare?
a) Contract
b) Law
c) Quasi-contract
d) Quasi-delict
386. Using the same data in number 385, what is the source of obligation of Peter to Monica for legal
support?
a) Contract
b) Law
c) Quasi-contract
d) Quasi-delict
387. Using the same data in number 385, what is the source of obligation of Peter to reimburse Nomer?
a) Delicto
b) Culpa Acquiliana
c) Solutio Indebiti
d) Negotiorum Gestio
388. Due to oversight, University of San Pedro, a nonstock non-profit educational institution, paid income
tax to BIR on its revenues actually, directly and exclusively used for educational purposes. What is
the source of obligation of BIR to University of San Pedro?
a) Delicto
b) Culpa Acquiliana
c) Solutio Indebiti
389. While traversing a narrow bridge, a public utility bus, operated by JAC Liner Incorporated and driven
by Dante, an employee of JAC, collided with a private car owned and driven by Oscar. Patricia, a
passenger of the public utility bus, and Tricia, a pedestrian crossing the bridge, were injured. What
is the source of obligation of JAC Liner Incorporated to Patricia?
a) Contract
b) Quasi-contract
c) Quasi-delict
d) Law
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390. Using the same data in number 389, what is the source of obligation of JAC Liner Incorporated to
Tricia?
a) Delicto
b) Culpa Aquiliana
c) Solutio Indebiti
391. As a general rule, who among the following co-debtors are jointly liable?
a) Joint tortfeasors
b) Officious managers
c) Payees in solutio indebiti
d) Criminals
e) Borrowers in mutuum
392. Which of the following is not a requisite of civil action based on quasi-delict or culpa aquiliana?
a. There is pre-existing relation or contract between the offender (respondent-dependant)
and offended parties (complainant-plaintiff).
b. There exists a wrongful act or omission imputable on the defendant by reason of his fault
or negligence.
c. There exists a damage or injury which must be proved by the person claiming recovery
(plaintiff-complainant).
d. There must be a direct causal connection or a relation of cause and effect between the
fault or negligence and the damage or injury, or that the fault or negligence be the cause
of the damage or injury.
393. Which of the following is not a civil liability arising from crime?
a) Restitution
b) Reparation
c) Indemnification
d) Inhibition
394. Amado was acquitted on the criminal case of reckless imprudence resulting to homicide for failure of
the prosecution to prove his guilt beyond reasonable doubt. The private offended party filed a civil
action against Amado based on quasi-delict. May the action prosper?
a) No because such action is in violation of Amado’s constitutional right against double jeopardy.
b) No because the dismissal of the criminal action is tantamount to res judicata.
c) Yes because a single act by the defendant-respondent may result to two or more different
sources of civil obligation.
d) Yes provided the civil action based on quasi-delict was reserved by the private offended party
prior to the filing of criminal action.
395. What quantum of evidence must be proven by the private claimant in civil action based on crime of
rape to recover civil damages?
a) At least substantial evidence
b) At least preponderance of evidence
c) At least clear and convincing evidence
d) At least proof beyond reasonable doubt
396. D is liable to deliver a 2021 Black Fortuner Limited Edition and to give P1,000,000 cash to C. On his
way to C, D was robbed by armed men of the 2021 Black Fortuner Limited Edition and P1,000,000
cash. Which of D’s obligations to C is extinguished by fortuitous event?
a) Obligation to deliver a 2021 Black Fortuner Limited Edition
b) Obligation to give P1,000,000 cash
c) Both a and b
d) Neither a nor b
397. Which of the following is not an incidental obligation in obligation to deliver a determinate or a
specific thing?
a) Obligation to preserve the determinate thing with due care before its delivery
b) Obligation to deliver the fruits of the determinate thing if the fruits occur after the obligation to
deliver the determinate thing arises
c) Obligation to deliver the accessions and accessories of the determinate thing
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398. Under the New Civil Code of the Philippines, which of the following is not a kind of fruits of
determinate thing?
a) Natural fruits
b) Commercial fruits
c) Industrial fruits
d) Civil fruits
399. On January 1, 2021, D obliged to deliver a specific dog named “Husky” to C if the latter will pass the
CPA Board exam. On February 14, 2021, “Husky” gave birth to a puppy named “Huskar”. On May
20, 2021, C passed the CPA Board Exam. On June 1, 2021, “Husky” gave birth to another puppy
named “Huskita.” On July 1, 2021, D sold and delivered Husky, Huskar and Huskita to B, a third
person purchaser in good faith and for value. Which of the following statements is correct?
a) C obtained personal right over Husky on May 20, 2021.
b) C obtained real right over Huskita on June 1, 2021.
c) B has better right against C over the dogs.
d) C can file an action reindivicatoria against B for Husky and Huskita.
400. Using the same data in preceding number, what is the proper action to be filed by C?
a) Personal action against D
b) Real action against B
c) Personal action against B
d) Real action against D
401. D obliged to deliver his car with plate number ABC-123 to C. On the agreed date of delivery, D
refused to deliver the said car despite repeated demands from C. What is the appropriate legal
action on the part of C?
a) Action for indemnification for damages
b) Action for annulment of obligation
c) Action for exact fulfilment plus damages
d) Action to ask a third person to deliver the said car at the expense of D plus damages
402. C is an avid fan of BTS K-Pop Group. C hired BTS K-Pop Group to perform a mini-concert on his 18th
birthday. On the agreed date of performance, BTS K-Pop Group refused to perform the prestation
despite repeated demands from C. What is the appropriate legal action on the part of C?
a) Action for indemnification for damages
b) Action for annulment of obligation
c) Action for specific performance plus damages.
d) Action to ask EXO K-Pop Group to perform the prestation at the expense of BTS K-Pop Group
plus damages.
403. What is the term for the delay on the part of the debtor?
a) Mora accipiendi
b) Mora solvendi
c) Compensatio morae
d) Mora abutendi
404. In case of mora accipiendi, what is the proper remedy available to the injured party?
a) Consignation
b) Application of payment
c) Dacion en pago
d) Cession
405. When is demand by the creditor necessary in order for delay on the part of the debtor to exist?
a) When the obligor or debtor has rendered it beyond his power to perform
b) When from the nature and the circumstances of the obligation it appears that the designation of
the time when the thing is to be delivered or the service is to be rendered was a controlling
motive for the establishment of the contract
c) When the obligation of the debtor arises from contract of mutuum
d) When the obligation expressly so declares that demand is excused or waived
e) When the law expressly so declares that demand is excused or waived
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406. Which of the following grounds for damages for breach of obligation pertains to fraud or dolo?
a) It refers to the non-fulfilment of the obligation with respect to time.
b) It refers to the deliberate and intentional evasion of the normal fulfilment of obligation.
c) It refers to the failure to observe for the protection of the interests of another person, that
degree of care, precaution and vigilance which the circumstances justly demand, whereby such
person suffers injury. It means the absence of diligence required by contract or by law or by the
circumstances of the case.
d) It refers to illicit act which impairs the strict and faithful fulfilment of the obligation or every kind
of defective performance.
407. Which of the following mutually exclusive damages (alternative damages) pertains to nominal
damages?
a) They are damages agreed upon by the parties to a contract, to be paid in case of breach
thereof.
b) They are those pecuniary losses suffered and duly proved by the plaintiff.
c) They are damages that may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be provided with certainty.
d) They are damages adjudicated in order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
408. They pertain to damages awarded by reason of physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
a) Moral damages
b) Exemplary damages
c) Temperate damages
d) Nominal damages
409. What is the legal interest rate for compensatory damages for the year ended December 31, 2013?
a) 6%
b) 9%
c) 12%
d) 24%
410. Which type of waiver of action for fraud is always void?

a) Waiver of an action for future fraud
b) Waiver of an action for past fraud
c) Waiver of an action for future simple negligence
d) Waiver of an action for past gross negligence
411. Which of the following contracting parties is not required to observe extraordinary diligence in the
rendition of their obligation?
a) Obligation of common carrier to transport cargos and passengers
b) Obligation of hotel or motel operator for things brought by guest inside its premises
c) Obligation of banks on contract of bank deposit
412. In the absence of diligence required by law and diligence validly agreed by the contracting parties,
what is the default diligence to be observed by the contracting parties in the performance of their
obligation?
a) Utmost diligence of very cautious person
b) Diligence of a father of good family
c) Diligence of a reasonably prudent person
d) Extraordinary diligence
413. D borrowed P10,000 cash from C with maturity value of P15,000 including interest evidenced by a
promissory note. On the maturity date of the loan, D paid P10,000 cash to C who issued his receipt
for the principal amount of the loan. Which of the following is correct?
a) C can no longer collect the unpaid interest of P5,000.
b) C may still collect the unpaid interest of P5,000.
c) The issuance of receipt for the principal creates a conclusive presumption that the contract of
loan is fully paid.
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d) The issuance of receipt for the principal creates an undisputed presumption that the interest of
the loan is already paid.
414. It refers to the right of unpaid creditor to exercise all the rights and actions belonging to debtor in
order to recover his claim except those rights which are intransmissible.
a) Accion subrogatoria
b) Accion pauliana
c) Accion directa
d) Accion possessoria
415. It refers to the right of unpaid creditor to ask for the cancellation of the contracts entered by the
debtor in order to defraud his unpaid creditor.
a) Accion subrogatoria
b) Accion pauliana
c) Accion directa
d) Accion possessoria
416. Which of the following obligations is immediately demandable?

a) Obligation ex die
c) Obligation subject to a suspensive condition
d) Obligation with a suspensive period
417. Which of the following obligations is not demandable at once?

a) Pure obligation
b) Obligation with a resolutory period
c) Obligation when debtor’s means permits him to do so
d) Obligation subject to a resolutory condition
418. Which of the following suspensive conditions will not nullify the obligation dependent upon them?
a) Impossible suspensive condition
b) Immoral suspensive condition
c) Suspensive condition purely potestative upon the will of creditor
d) Illegal suspensive condition
419. D orally borrowed P100,000 cash from C. After several months, C demanded payment from D who
replied that he will pay his obligation if he (D) will pass the CPA Board Exam. Which of the following
statements is correct?
a) The obligation is void because the suspensive condition is purely potestative upon the will of
debtor.
b) The obligation is valid because the suspensive condition is mixed.
c) The obligation is valid because it is based on a valid consideration.
d) The obligation is void because it is not in writing.
420. In conditional unilateral obligation to give or unilateral obligation to give with a period, when shall
the fruits during the pendency of condition or period belong to the debtor?
a) When the period or condition is suspensive
b) When the period of condition is resolutory
c) Both a and b
d) Neither a nor b

a) In conditional reciprocal obligation, the fruits and interests during the pendency of the
suspensive condition shall be deemed to have been mutually compensated.
b) In conditional obligation to do or not to do, the courts shall determine, in each case, the
retroactive effect to the fruits of the condition that has been complied with taking into account
the agreement of the parties.
c) The suspensive condition shall be deemed fulfilled and the obligation becomes immediately
demandable if the obligor or debtor voluntarily prevented the fulfillment of the suspensive
condition of an obligation subject to a suspensive condition.
d) The fulfilment of suspensive condition shall retroact to the day of the perfection or constitution
of the obligation once the condition has been fulfilled.
e) During pendency of the suspensive condition, the creditor may bring an action for civil damages
against the debtor.
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422. Which of the following rules regarding improvement, loss or deterioration of the determinate thing
during the pendency of suspensive condition or during the suspensive period is incorrect?
a) If the determinate thing is lost without the fault of the debtor, the obligation shall be
extinguished.
b) If the determinate thing is lost through the fault of the debtor, he shall be obliged to pay
damages.
c) When the determinate thing deteriorates without the fault of the debtor, the impairment is to
be borne by the creditor.
d) If the determinate thing produces fruit, the fruit shall belong to the creditor.
e) If the determinate thing is improved by its nature, or by time, the improvement shall inure to
the benefit of the creditor.
f) If it is improved at the expense of the debtor, he shall have no other right than that granted to
the usufructuary which refers to right to use the improved thing for a reasonable period.
423. It refers to a type of obligation which arises from the same cause and in which each party is a
debtor and creditor of the other, such that the obligation of one is dependent upon the obligation of
the other.
a) Bilateral obligation
b) Reciprocal obligation
c) Unilateral obligation
d) Multilateral obligation
424. What is the effect of fulfilment of resolutory condition or arrival of resolutory period in case of
reciprocal obligation?
a) Annulment of obligation
b) Rescission of obligation
c) Mutual restitutions
d) Nullification of obligation
425. In case one of the debtors in a reciprocal obligation should not comply with what is incumbent upon
him, may the injured party ask for judicial rescission of the reciprocal obligation?
a) No despite the presence of stipulation for rescission
b) Yes despite the absence of stipulation for rescission
c) No unless there is a stipulation for rescission
d) Yes provided there is a stipulation for rescission
426. In case of breach of reciprocal obligations, which of the following statements is true?
a) If the injured party initially opted for exact fulfilment of obligation plus damages, he will later be
absolutely prohibited from asking for rescission of the reciprocal obligations.
b) If the injured party initially opted for rescission of obligation plus damages, he will later be
absolutely prohibited from asking for exact fulfilment of the reciprocal obligations.
c) Both a and b
d) Neither a nor b
427. Which of the following obligations is subject to a resolutory period?

a) Obligation in diem
b) Obligation ex die
c) Obligation when debtor’s means permits him to do so
d) Obligation if debtor’s means permits him to do so
428. In the absence of contrary agreement, the period designated in the obligation is disputably
presumed by law for the benefit of
a) Debtor
b) Creditor
c) Both a and b
d) Neither a nor b
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429. Which of the following instances will not make obligation ex die or obligation with a suspensive
period due and demandable?
a) When after the obligation has been contracted, the debtor becomes insolvent and he does not
give a guaranty or security for the debt.
b) When the debtor does not furnish to the creditor the guaranties or securities which he has
promised.
c) When by debtor’s own acts he has impaired or destroyed said guaranties or securities after their
establishment, unless he immediately gives new one equally satisfactory.
d) When through a fortuitous event the guaranties or securities after their establishment were
impaired, unless the debtor immediately gives new one equally satisfactory.
e) When the debtor violates any undertaking, in consideration of which the creditor agreed to the
period.
f) When the debtor attempts to abscond.
430. In alternative obligation, who has the right of choice?

a) Generally debtor unless expressly granted to creditor
b) Generally creditor unless expressly granted to debtor
c) Always debtor
d) Always creditor
431. In facultative obligation, who has the right of choice?

a) Generally debtor unless expressly granted to creditor
b) Generally creditor unless expressly granted to debtor
c) Always debtor
d) Always creditor
432. D obliged himself to deliver a specific cellphone and a specific laptop and a specific tablet to C. What
is the type of obligation?
a) Alternative obligation
b) Facultative obligation
c) Conjunctive obligation
d) Reciprocal obligation
433. When there are two or more debtors or two or more creditors, what is the general presumption of
law as to the type of obligation?
a) Generally joint unless exceptionally classified as solidary
b) Generally solidary unless exceptionally classified as joint
c) Always joint
d) Always solidary
434. In which of the following instances is the obligation presumed to be joint?

a) When the promissory note states “I promise to pay P30,000 to D.” signed by A, B and C.
b) When the promissory note states “We promise to pay P30,000 to D.” signed by A, B and C.
c) Obligation of husband and wife to give support to their children
d) Civil obligation of two or more criminals in crime of plunder
435. A, B and C wrote a promissory note which states “We promise to pay P60,000 to D and E.” How
much may E collect from A?
a) P10,000
b) P20,000
c) P30,000
d) P60,000
436. A and B wrote a promissory note which states “I promise to pay P60,000 to C, D and E.” How much
may E collect from A?
a) P10,000
b) P20,000
c) P30,000
d) P60,000
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437. A, B, C, D wrote a promissory note which states “We promise to pay P120,000 to E, F and G,
solidary creditors.” How much may G collect from A?
a) P20,000
b) P30,000
c) P40,000
d) P120,000
438. A, B and C wrote a promissory note which states “I promise to pay P120,000 to D, E, F and G,
solidary creditors.” How much may G collect from A?
a) P20,000
b) P30,000
c) P40,000
d) P120,000
439. A, B and C wrote a promissory note which states “We promise to pay P30,000 to D.” A voluntarily
paid P30,000 to D without the knowledge of B and C. Afterwards, B became insolvent, how much
may A ask for reimbursement from C?
a) P10,000
b) P20,000
c) P30,000
d) None
440. A, B and C, a minor, wrote a promissory note which states “I promise to pay P30,000 to D.” On the
maturity date of the loan, B became insolvent. How much may D collect from A?
a) P10,000
b) P20,000
c) P30,000
d) None
441. Which of the following is a not a valid defense in a solidary obligation?

a) Insolvency of co-solidary debtor
b) Incapacity to give consent of co-solidary debtor
c) Prescription
d) Illegality of consideration
442. Which of the following is a divisible obligation?

a) Obligation which is not susceptible of partial performance
b) Obligation to issue certificate of stocks in contract of subscription
c) Obligation arising from promissory note which states “I promise to pay P30,000 to D. Signed A,
B and C.
443. A, B and C wrote a promissory note which states “We promise to deliver a specific car worth
P300,000 to D.” At the maturity date of the obligation, A and B are willing to deliver the said car
while C refuses to comply with his obligation despite repeated demand from D. What is the
appropriate legal remedy available to D?
a) Action of exact fulfilment against A and B and C for the delivery of specific car plus damages by
reason of delay.
b) Action for exact fulfilment against C for the delivery of specific car plus damages by reason of
delay.
c) Action to collect a sum of money against A, B and C for P100,000, P100,000 and P100,000 plus
damages, respectively.
d) Action to collect a sum of money against A or B or C for P300,000 plus damages.
a) Obligation with a penal clause
b) Obligation with a condition
c) Obligation with a period
d) Principal obligation with accessory obligation
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445. Which of the following statements about obligation with a penal clause is incorrect?
a) The penalty in stipulated in obligation with a penal clause must not be contrary to law, morals,
or public order to be enforceable.
b) Proof of actual damages suffered by the creditor is not necessary in order that the penalty in
obligation with a penal clause may be demanded because they are liquidated or predetermined
damages by the contracting parties.
c) The nullity of the principal obligation carries with it that of the penal clause.
d) The nullity of the penal clause will make the obligation with a penal clause invalid.
446. When may the creditor demand payment of damages and interest aside from penalty in obligation
with a penal clause?
a) If there is no agreement to that effect.
b) If the damages, interest and penalty are unconscionable.
c) If the debtor is guilty of bad faith.
d) None of the above.
447. It refers to the mode of extinguishment of right to file an action or obligation by the mere lapse of
time fixed by law, thus, converting an enforceable civil obligation into an unenforceable natural
obligation.
a) Prescription
b) Laches
c) Estoppel
448. What is the prescriptive period of civil action based on culpa aquiliana?
a) 4 years
b) 5 years
c) 6 years
d) 10 years
449. What is the prescriptive period of civil action based on solutio indebiti or negotiorum gestio?
a) 4 years
b) 5 years
c) 6 years
d) 10 years
450. This is considered an equitable estoppel wherein a person who failed or neglected to assert a right
for an unreasonable and unexplained length of time is presumed to have abandoned or otherwise
declined to assert such right and cannot later on seek to enforce the same, to the prejudice of the
other party, who has no notice or knowledge that the former would assert such rights and whose
condition has so changed that the latter cannot, without injury or prejudice, be restored to his
former state.
a) Estoppel in pais
b) Estoppel by deed
c) Estoppel by laches
451. Which of the following statements about payment or performance of obligation is incorrect?
a) In obligations to give, payment made by one who does not have the free disposal of the thing
due and capacity to alienate it shall not be valid.
b) Payment to a person who is incapacitated to administer his property shall be valid if he has kept
the thing delivered or insofar as the payment has been beneficial to him.
c) The debtor of a thing can compel the creditor to receive a different one, if the latter is of the
same value as, or more valuable than that which is due.
d) In obligations to do or not to do, an act or forbearance cannot be substituted by another act or
forbearance against the obligee’s will.
e) When the obligation consists in the delivery of an indeterminate or generic thing, whose quality
and circumstances have not been stated, the creditor cannot demand a thing of superior quality
and the debtor cannot deliver a thing of inferior quality.
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452. It refers to the currency which a debtor can compel a creditor to accept in an obligation to pay a
sum of money.
a) Negotiable instrument
b) Document of title
c) Legal tender
d) Functional currency
453. When will check produce payment?

a) When it is impaired through the fault of the debtor
b) When it is encashed
c) When it becomes stale
d) Any of the above
454. In case an extraordinary inflation or deflation of the currency stipulated should supervene, what
value of the currency shall be the basis of payment in the absence of contrary agreement?
a) Value of the currency at the time of payment of obligation
b) Value of the currency at the end of reporting period
c) Value of the currency at the time of establishment of obligation
d) Average value of the currency at the term of the obligation
455. In the absence agreed place of delivery, what is the place of payment of obligation to deliver a
specific thing or a determinate thing?
a) Domicile of debtor
b) Domicile of creditor
c) Place where the specific thing is located at the time of constitution of obligation
d) Place where the specific thing is located at the time of it is to be delivered
456. In the absence agreed place of delivery, what is the place of payment of obligation to deliver a
generic thing or an indeterminate thing?
a) Domicile of debtor
b) Domicile of creditor
c) Place where the specific thing is located at the time of constitution of obligation
d) Place where the specific thing is located at the time of it is to be delivered
457. D borrowed P10,000 cash from C. The loan is secured by mortgage on M’s land and by written
contract of guaranty of G. At the maturity date of the loan, T paid P12,000 to settle D’s obligation to
C without the knowledge of D. Which is correct?
a) T may foreclose the mortgage on M’s land if D will not reimburse him.
b) T may go after G if D will not reimburse him.
c) T may legally collect P10,000 from D.
d) T may legally collect P12,000 from D.
458. Which of the following is not a special form of payment?

a) Dacion en pago
b) Cession
c) Tender of payment and consignation
d) Application of payment
459. What law shall govern dacion en pago as a special mode of payment?
a) Law on obligation
b) Law on sales
c) Law on contract
d) Law on pledge
460. D borrowed P15,000 from C. At the maturity date of the loan, D and C agreed that the ownership of
D’s specific laptop will be transferred to C in satisfaction of the loan. The historical cost of the laptop
is P12,000 with accumulated depreciation of P3,000. The fair market value at the time of subsequent
agreement is P10,000. How much obligation is extinguished by this special mode of payment?
a) P15,000
b) P12,000
c) P10,000
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d) P9,000
461. It refers to a special type of payment which involves the voluntary abandonment of the universality
of the property of the debtor for the benefit of his creditors, in order that such property may be
applied to the payment of the credits.
a) Dacion en pago
b) Cession
c) Tender of payment and consignation
d) Application of payment
462. Who has the right of choice in application of payment?

a) Generally debtor unless granted to creditor
b) Generally creditor unless grated to debtor
c) Always debtor
d) Always creditor
463. D is indebted to C with the following matured obligations: (1) Mortgage payable – P100,000 secured
by D’s land; (2) (10%) Loan payable – P55,000 inclusive of P5,000 interest; (3) Note payable –
P30,000; and (4) Accounts payable – P20,000. D paid P160,000 cash to C in satisfaction of the
obligations but failed to exercise his right to application of payment. How much shall be applied to
the accounts payable?
a) P20,000
b) P5,000
c) P2,000
d) None
464. When is prior tender of payment mandatory in order for the consignation to be considered valid?
a) When the creditor is absent
b) When the creditor is unknown
c) When the creditor does not appear at the place of payment
d) When the creditor is capacitated to receive the payment at the time it is due
e) When, without just cause, the creditor refuses to give a receipt
f) When two or more persons claim the same right to collect
g) When the title of the obligation has been lost
465. How many notices must be given by the debtor to the defaulting creditor in order for the
consignation to be considered valid?
a) At least one notice
b) At least two notices
c) At least three notices
d) At least four notices
466. In what type of obligation to give is loss due to fortuitous event applicable?
a) Obligation to deliver a common thing
b) Obligation to deliver a generic thing
c) Obligation to deliver a specific thing
d) Obligation to deliver an indeterminate thing
467. Which of the following is not a requisite of a fortuitous event to exempt a debtor from loss of
prestation?
a) The cause of the unforeseen and unexpected occurrence or the failure of the debtor to comply
with his obligation must be dependent of the debtor’s will.
b) It must be impossible to foresee the event which constitutes the caso fortuito or if it can be
foreseen, it must be impossible to avoid.
c) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner.
d) The debtor must not participate in the aggravation of the injury resulting to the creditor.
468. When is the debtor no longer liable for the loss of the prestation in an obligation?
a) When the fault or negligence of the debtor concurs with the fortuitous event in causing the loss.
b) When the loss occurs after the debtor has incurred delay.
c) When the debtor has promised to deliver the same thing to two or more different parties.
d) When the fortuitous event is the immediate, proximate and sole cause of the loss of prestation
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469. This mode of extinguishment of obligation is essentially gratuitous and requires acceptance by the
debtor.
a) Novation
b) Compensation
c) Remission
d) Merger
470. D is indebted in the amount of P10,000 to C evidenced by a promissory note. In order to secure the
loan, D pledged and delivered his laptop to C. At the maturity date of the loan, C voluntarily
returned the promissory note to D without any valuable consideration. Which contract is
extinguished by such voluntary return?
a) Contract of loan
b) Contract of pledge
c) Both a and b
d) Neither a nor b
471. It a mode of extinguishing obligation that occurs where there is meeting in one person of the
qualities of creditor and debtor with respect to the same obligation.
a) Merger
b) Compensation
c) Remission
d) Novation
472. A, B and C wrote a promissory note which states “We promise to pay P60,000 to D and E.” E
indorsed back the promissory note to A. How much obligation is extinguished by confusion?
a) P60,000
b) P30,000
c) P20,000
d) P10,000
473. A, B, C and D wrote a promissory note which states “I promise to pay P120,000 to E, F and G.” G
indorsed back the promissory note to A. How much obligation is extinguished by confusion?
a) P120,000
b) P40,000
c) P30,000
d) P10,000
474. M issued a promissory note which states “I promise to pay P10,000 to the order of P.” P generally
indorsed and delivered the note to A who subsequently indorsed and delivered it to B. Afterwards, B
indorsed and delivered the note back to A. Which contract is extinguished?
a) Contract of loan between M and P
b) Contract of guaranty by P
c) Contract of guaranty by A
d) All contracts
475. It is a mode of extinguishing to the concurrent amount, the obligations of those persons who in their
own right are reciprocally debtors and creditors of each other.
a) Merger
b) Compensation
c) Novation
d) Remission
476. Which of the following types of compensation pertains to conventional compensation?

a) It is a compensation which takes place by operation of law because all the requisites provided
by law are present for compensation by operation of law to occur.
b) It is a compensation which can be claimed by one of the parties who, however, has the right to
object to it, such as when one of the obligations has a period for the benefit of one party alone
and who renounces that period so as to make the obligations due.
c) It is a compensation wherein the parties agree to compensate their mutual obligations even if
one or more of the requisites of legal compensation are lacking.
d) It is a compensation decreed by the court in a case where there is a counterclaim.
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477. On January 1, 2021, Mr. A deposited P1,000,000 cash to BDO Bank under savings deposit. On
January 16, 2021, Mr. A borrowed P100,000 cash from BDO Bank with monthly interest of 2% and
due date on February 15, 2021. On February 15, 2021, how is the contract of loan with maturity
value of P102,000 extinguished?
a) Legal compensation
b) Facultative compensation
c) Conventional compensation
d) Judicial compensation
478. Which of the following debts may be legally compensated?

a) Void debts
b) Unenforceable debts
c) Voidable debts
479. Which of the following obligations may become the subject matter of legal compensation?
a) Obligation of depositary in a contract of deposit
b) Obligation of bailee in a contract of commodatum
c) Obligation of borrower in a contract of mutuum
d) Obligation of parent or spouse for future support
e) Obligation arising from crime
f) Obligation to pay taxes

a) Novation
b) Compensation
c) Merger
d) Remission
481. It refers to a type of novation that occurs when there is such an incompatibility between the old and
the new obligations that they cannot stand together.
a) Subjective novation
b) Objective novation
c) Partial novation
d) Implied novation
482. Which of the following amounts to implied novation?

a) Shortening of term of loan
b) Extending the term of loan
c) Both a and b
d) Neither a nor b
483. Which of the following statements about novation is incorrect?

a) In order that an obligation may be extinguished by another which substitutes the same, it is
imperative that it be so declared in unequivocal terms.
b) Novation may be presumed.
c) When the principal obligation is extinguished in consequence of a novation, accessory
obligations may subsist only insofar as they may benefit third person who did not give their
consent.
d) If the original obligation was subject to a suspensive condition or resolutory condition, the new
obligation shall be under the same condition, unless it is otherwise stipulated.
484. In novation involving the change of debtor, whose consent is always required?
a) Debtor
b) Creditor
c) Both debtor and creditor
d) Neither debtor and creditor
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485. It refers to a type of novation involving the change of debtor whereby the the initiative for the
change does not emanate from the original debtor and may be made even without his knowledge,
since it consists in a third person assuming the obligation and it logically requires the consent of the
third person (new debtor) and the creditor.
a) Expromission
b) Delegacion
c) Subrogation
d) Confusion
486. It refers to a type of novation involving the change of debtor whereby the original debtor
(delegante) offers and the creditor (delegatario) accepts a third person (delegado) (new debtor)
who consents to the substitution, so that the consent of the three parties is necessary.
a) Expromission
b) Delegacion
c) Subrogation
d) Confusion
487. In which type of novation involving the change of debtor may the insolvency of new debtor result to
liability of the original debtor?
a) Expromission
b) Delegacion
c) Both a and b
d) Neither a nor b
488. It refers to the transfer of all the rights of the creditor to a third person, who substitute him in all his
rights.
a) Expromission
b) Delegacion
c) Subrogation
d) Confusion
489. It refers to a type of subrogation whereby the substitution of creditor happened by virtue of
agreement or debtor, original creditor and new creditor (third party).
a) Expromission
b) Delegacion
c) Conventional subrogation
d) Legal subrogation
490. D is indebted in the amount of P10,000 to C. With the consent of D and C, T paid P7,000 to C as
partial payment of D’s obligation to C. Afterwards, the remaining assets of D became P4,000. Out of
the said remaining assets, how much will be applied to the obligation of D to C and T, respectively?
a) P3,000 and P1,000
b) P1,200 and P2,800
c) P1,500 and P1,500
d) P0 and P4,000
491. It refers to a type of subrogation whereby the substitution of creditor happened by operation of law
despite the absence of agreement among the parties.
a) Expromission
b) Delegacion
c) Conventional subrogation
d) Legal subrogation
492. In which of the following instances is legal subrogation not presumed?

a) When a creditor pays another creditor who is preferred, even without the debtor’s knowledge.
b) When, even without the knowledge of the debtor, a person interested in the fulfilment of the
obligation pays, without prejudice to the effects of confusion as to the latter’s share.
c) When the debtor benefited to the payment by the third person of debtor’s obligation to creditor
without debtor’s knowledge.
d) The obligation having been extinguished by the loss of the thing, the creditor shall have all the
rights of action which the debtor may have against third persons by reason of the loss.
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e) In contract of property insurance, when the insurance company pays the insured.
493. While traversing a narrow bridge, a public utility bus driven by A and operated and owned by JAC
Liner Bus Co. accidentally bumped a private vehicle driven an owned by B. During the accident, P, a
passenger of the bus and T, a pedestrian were injured. In a civil action for damages filed by T
against JAC Liner Bus Co., what is the appropriate source of obligation?
a) Contract of common carrier
b) Quasi-delict
c) Crime of reckless imprudence resulting to physical injury
d) Quasi-contract
494. It refers to juridical relation which is created when something is received when there is no right to
demand it and it was unduly delivered through mistake.
a) Negotiorum gestio
b) Vinculum
c) Solutio indebiti
d) Prestation
495. In unilateral obligation subject to a resolutory condition, who shall be entitled to the fruits of the
determinate thing during the pendency of the resolutory condition?
a) Creditor minus the expenses incurred for the preservation and gathering of the fruits
b) Debtor minus the expenses incurred for the preservation and gathering of the fruits
c) State
d) Third person
496. M issued a promissory note payable to P in the amount of P10,000. P generally indorsed and
delivered the note to A. A assigned and delivered the note to M. What mode of extinguishing
obligation is present in this case?
a) Compensation
b) Novation
c) Remission
d) Merger
497. What is the prescriptive period of an action based on culpa aquiliana?

a) 4 years
b) 5 years
c) 6 years
d) 10 years
498. Which of the following obligations is immediately due and demandable?

a) Obligation when debtor's means permit him to do so
c) Obligation ex die
d) Obligation with a suspensive condition
499. It refers to the delay on the part of the creditor.

a) Compensatio morae
b) Mora accipiendi
c) Mora solvendi
d) Mora obligori
500. This type of damages is awarded by the court in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
a) Nominal damages
b) Moral damages
c) Exemplary damages
d) Temperate damages
501. A, a minor, B and C wrote a promissory note which states "We promise to pay D and E P60,000." If
B becomes insolvent at the maturity date of the note, how much may D validly collect from C?
a) P20,000
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b) P60,000
c) P30,000
d) P10,000
502. Which of the following instances will make an obligation with a suspensive period immediately due
and demandable?
a) When after the obligation has been contracted, the debtor becomes insolvent but he gives a
guaranty or security for the debt.
b) When through a fortuitous event the guaranties of securities after their establishment were
impaired, unless the debtor immediately gives new one equally satisfactory.
c) When the debtor attempts to abscond.
d) Any of the above.
503. Which of the following obligations may not become the subject matter of legal compensation?
a) Voidable obligation
b) Unenforceable obligation
c) Rescissible obligation
504. D is alternatively liable to deliver a specific cellphone or a specific laptop or a specific tablet to C.
Who has the right of choice?
a) Always D
b) Always C
c) Generally C in the absence of stipulation to the contrary
d) Generally D in the absence of stipulation to the contrary
505. D, a resident of Makati, has the obligation to deliver a car with plate number CPA-123 to C, a
resident of Taguig. At the time of constitution of the obligation, such car is located in Pasay but at
the time of supposed delivery, the car can be found in Caloocan. Where shall the car be delivered by
D?
a) Makati
b) Taguig
c) Pasay
d) Caloocan
506. D has three matured obligations to C consisting of (1) accounts payable amounting to P500,000; (2)
10% notes payable amounting to P500,000 inclusive of P100,000 accrued interest; and (3) P500,000
mortgage payable secured by a real estate mortgage on D’s land. D paid P500,000 to C as payment
for the obligations. D instructed C to apply the payment to the accounts payable. To which
obligation shall the P500,000 payment by D be applied?
a) Mortgage payable
b) Note payable and interest payable
c) Accounts payable
d) Proportionately to all debts
507. Christian Ronaldo and SM Event Center entered into a contract wherein Christiano Ronaldo will
conduct a personal and customized football clinic to SM’s shoppers. At the date of the scheduled
event, Christiano Ronaldo failed to event. What legal remedy is available to SM Event Center?
a) File an action for damages against Christian Ronaldo for breach of contract
b) File an action for specific performance with damages against Christiano Ronaldo
c) Ask a Filipino football player to conduct the football clinic at the expense of Christiano Ronaldo
d) Any of the above
508. In is a type of novation involving substitution of original debtor by a third person when the initiative
comes from the original debtor but such offer was accepted by the creditor and the third person.
a) Delegacion
b) Expromision
c) Legal subrogation
d) Conventional subrogation
509. In is an obligation where the debtor has to perform several prestations and it is extinguished only by
the performance of all of them.
a) Indivisible obligation
b) Conjunctive obligation
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c) Alternative obligation
d) Facultative obligation
510. A has P10,000 written obligation to B which becomes due and demandable on December 31, 2001.
It is already 2012 but A has not yet fulfilled his obligation. On January 1, 2013, C paid the P10,000
obligation of A to B. Which of the following statements is correct?
a) C can judicially compel A to reimburse but only in so far as the payment is beneficial.
b) C can judicially recover the amount he has paid from B on the basis of the concept of unjust
enrichment.
c) If A voluntarily reimburses C, the former can no longer recover it from the latter.
d) It is the civil obligation of A to reimburse C on the ground of equity and natural justice.
511. Which of the following obligations is not allowed to be legally compensated?

a) Obligation arising from civil penalty in obligation with a penal clause
b) Obligation arising from contract of savings deposit with a bank
c) Obligation arising from contract of mutuum
d) Obligation arising from contract of commodatum
512. On January 1, 2001, A obliged to deliver a specific dog to B if the latter will pass the CPA board
exam. The specific gave birth to a puppy on March 1, 2001. B passed the CPA board exam on
October 1, 2001. Meanwhile, A sold and delivered the same dog to C on July 1, 2001. Which of the
a) B obtains real right over the specific dog on October 1, 2001.
b) B obtains personal right over the puppy on January 1, 2001.
c) C shall be entitled to the puppy.
d) C has better right against B over the specific dog.
513. A borrowed P10,000 from B with C pledging his cellphone and D serving as guarantor to secure the
fulfillment of the obligation. Without knowledge of A, C pays the obligation of A to B at the maturity
date. Which is true?
a) C may ask for reimbursement from A only in so far as the payment is beneficial.
b) C can directly go after D even without demanding payment from A.
c) A may refuse to reimburse C on the ground that the payment is without his knowledge.
d) C may go after D in case A becomes insolvent.
514. A is indebted in the amount of P5,000 to B. At the maturity date of the loan, A pays P5,000 to C.
After such payment, B assigned the promissory note to C. Which is true?
a) The payment is not valid because it is made to a third person.
b) The payment is valid only if A can prove that such payment redounded to the benefit of B.
c) The payment is valid even if without proving that such payment redounded to the benefit of B.
d) The payment is valid only if such payment is with the consent of B.
515. When shall the debtor not be liable for the loss of the object of the obligation?
a) When the loss occurs after the debtor incurs delay.
b) When the sole, immediate and proximate cause of the loss is a fortuitous event.
c) When the debtor committed contributory negligence.
d) When the debtor promises that same object to two or more persons.
516. A, B and C promise to deliver a specific car to D with a value of P300,000. At the maturity date of
the obligation, A and B are willing to deliver the car to D but C refused to perform the prestation.
What is the remedy available to D?
a) File an action for specific performance against C
b) File an action for exact fulfillment against A, B and C
c) File an action for indemnification for losses and damages against A, B and C
d) File an action for declaration of nullity of contract
517. A is alternatively liable to deliver a specific cellphone, a specific laptop, or a specific tablet to B. The
maturity date of the obligation is December 1, 2000. On October 1, 2000, A destroyed the tablet
while on November 1, 2000, the rebels forcibly stolen the cellphone. On December 10, 2000, a
lightning destroyed the laptop. Which is correct?
a) A is not liable for damages.
b) A is liable for damages by reason of his act of destroying the tablet.
c) A is liable for damages by reason of delay.
d) A is liable equivalent to the value of the tablet.
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518. A has an outstanding loans payable of P10,000,000 with a term of 15 years. The loan is secured by
a real estate mortgage on the land of A. After 1 year, A and the bank agreed to reduce the principal
amount of the loan to P5M and the term is shortened to 5 years. Which of the following statements
is correct?
a) No obligation remains to exist because of novation.
b) The contract of real estate mortgage is extinguished.
c) There is no novation because novation can never be presumed.
d) The novation is void because there is no delivery of sum of money.
519. A has an outstanding debt of P1,000,000 to B. At maturity date, A tenders payment in the form
manager’s check with the amount of P1,000,000 payable to the order of B. Which of the following
a) If B will refuse the payment, A may consign the manager’s check to the court.
b) A may compel B to accept the manager’s check because it is good as cash.
c) The obligation is not yet extinguished.
d) Upon acceptance by B of manager’s check, the obligation is extinguished.
520. As a general rule, which of the following is not a requisite of an action for damages on the basis of
quasi-delict?
a) There is pre-existing relation between the offender and offended parties.
b) There exists a wrongful act or omission imputable to the defendant by reason of his fault or
negligence.
c) There exists a damage or injury which must be proved by the person claiming recovery.
d) There must be a direct causal connection or a relation of cause and effect between the fault or
negligence and the damage or injury, or that the fault or negligence be the cause of the
damage or injury.
521. Which of the following statements concerning obligation is correct?

a) Obligations arising from law are presumed.
b) In an obligation to deliver an indeterminate thing, the obligor shall exercise diligence of a good
father of a family in the preservation of the thing.
c) In an obligation to deliver a determinate thing, the obligee is entitled to the fruits of the
determinate thing from the time of constitution of the obligation.
d) Obligations arising from contracts have the force of law between contracting parties.
522. D is indebted in the amount of P100,000 to C as evidenced by a written contract of loan. The
contract provides for 6% interest per annum and 10% penalty in case of breach of contract. At the
date of maturity of the loan, D defaulted. Which of the following statements is correct?
a) C may only demand payment of the 6% interest in addition to the principal because the law
presumes that the interest already covers the penalty.
b) C may only demand payment of the 10% penalty in addition to the principal because in
obligation with penal clause, the penalty substitutes for the interest and damages.
c) C may demand payment of both 6% interest and 10% penalty in addition to the principal only if
he can prove that D acted fraudulently.
d) C may validly demand payment of both 6% interest and 10% penalty in addition to the
principal.
523. On January 1, 2000, D borrowed P10,000 cash from C with maturity date on June 30, 2000. On July
1, 2000, C accepted D’s cellphone with a book value of P6,000 and fair market value of P7,000 as
payment for the obligation. Afterwards, C sold the cellphone for P9,000. Which of the following
a) The obligation is extinguished by novation.
b) The obligation is extinguished but only up to the net proceeds of P9,000 only.
c) This special mode of payment is governed by Law on Sales.
d) C may still collect the deficiency of P3,000 from D.
524. Which of the following statements concerning an obligation is correct?

a) Indivisibility of an obligation implies solidarity.
b) When all the requisites of legal compensation are present, both debts to the concurrent amount
are extinguished from the moment the parties obtain knowledge of the compensation.
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c) The debtor of a thing may compel the creditor to receive a different prestation if the latter is of
the same value or more valuable than that which is due.
d) Whenever a period is designated in an obligation, the law prima facie presumes that the period
is for the benefit of both debtor and creditor.
525. It refers to a juridical necessity to give, to do or not to do.

a. Obligation
b. Contract
c. Law
d. Delict
526. It refers to the conduct to be rendered in the performance of obligation.

a. Obligee
b. Obligor
c. Prestation
d. Vinculum

a. Civil obligation
b. Legal obligation
d. Contractual obligation
528. Which of the following is not a source of civil obligation demandable in a court of law?
a. Quasi-delict
b. Delict
c. Religious doctrine
d. Quasi-contract
529. It is a source of a civil obligation that refers to a juridical relation which arises from certain lawful,
voluntary and unilateral act, to the end that no one may be unjustly enriched or benefited at the
expense of another.
a. Quasi-delict
b. Quasi-contract
c. Contract
d. Delict
530. It refers to the negligence or fault that is a source of civil obligation wherein a person by act or
omission cause damage to another.
a. Culpa criminal
c. Culpa aquiliana
d. Culpa legal
531. While trying to pass each other on a narrow bridge, a passenger bus, owned and operated by JAC
Liner Inc. and a private automobile, owned and driven Oscar collided, and two persons, Pia and
Trina, were injured. Pia was a passenger of the bus while Trina was a pedestrian. What is the best
source of obligation if Pia will file a case against JAC Liner Inc.?
a. Contract
b. Quasi-delict
c. Quasi-contract
d. Delict
532. In an obligation to deliver a determinate thing, what degree of diligence shall be exercised by the
obligor or debtor in the preservation of the determinate thing in the absence of applicable legal
provision and valid agreement of the paries?
a. Extraordinary diligence
b. Diligence of a good father of a family
c. Absolute diligence
d. Utmost diligence and care
533. In what type of obligation of obligation to deliver a thing is loss due to fortuitous event as a mode of
extinguishing the obligation applicable?
a. Obligation to deliver a generic thing
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b. Obligation to deliver a specific thing

c. Obligation to deliver an indeterminate thing
d. Obligation to deliver a common thing
534. In an obligation to deliver a determinate thing, when is the creditor entitled to the fruits of the
determinate thing or when does the creditor obtain personal rights over the fruits of the determinate
thing?
a. From the time of the perfection or constitution of the obligation.
b. From the time the obligation to deliver the determinate thing arises.
c. From the time fruits are delivered either physically or constructively.
d. From the time of fulfillment of resolutory condition.
535. What is the proper remedy of the creditor or obligee in the case the debtor or obligor fails to comply
with his obligation to deliver a determinate or specific thing?
a. File an action for specific performance or exact fulfillment of obligation and ask for
damages under Article 1170 for possible breach of obligation.
b. File an action and ask that the obligation be complied with by a third person.
c. File an action for rescission of the obligation plus damages.
d. File Action for annulment of the obligation with damages.
536. In an obligation to do whereby only the debtor or obligor can do the thing, what is the remedy of
the creditor or obligee if the debtor or obligor fails to do the prestation?
a. File an action for specific performance or exact fulfilment with damages.
b. File an action for annulment of obligation with damages.
c. File an action and ask that a third person do the obligation in a proper manner at the
expense of debtor with damages.
d. File an action for indemnification for damages.
537. What is the term for the delay on the part of the debtor?
a. Mora solvendi
b. Mora accipiendi
c. Compensatio morae
d. Mora obligori
538. It refers to a ground for breach of obligation under Article 1170 that refers to to the deliberate and
intentional evasion of the normal fulfillment of obligation.
a. Mora or delay
b. Dolo or fraud
c. Culpa or negligence
d. Contravention of the tenor of the obligation
539. They are damages awarded by the court by reason of physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury.
a. Nominal damages
b. Exemplary damages
c. Temperate damages
d. Moral damages
540. It refers to one of the successive rights of unpaid creditor by exercising the rights of his negligent
debtor in order to preserve or recover for the patrimony of the debtor the product of such actions,
and then obtain therefrom the satisfaction of his own credit.
a. Levy by attachment and execution the property of the debtor
b. Accion subrogatoria
c. Accion pauliana
d. Action for damages against third persons who acquired the debtor's property in bad faith
541. When the debtor binds himself to pay when his “means permit him to do so” or “as soon as
possible” or “as soon as he has the money”, what is the proper classification of the obligation?
b. Due and demandable obligation
c. Obligation in diem or obligation with a resolutory period
d. Obligation ex die or obligation with a suspensive period
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542. Which of the following obligations is immediately demandable?

b. Obligation when the debtor's means permit him to do so
c. Obligation in diem or obligation with a resolutory period
d. Obligation ex die or obligation with a suspensive period
543. Which of the following statements about reciprocal obligation is incorrect?

a. The power to ask for judicial rescission on the part of injured party in a reciprocal
obligation is implied in case one of the obligors or debtors should not comply with what
is incumbent upon him.
b. When one of the obligors committed breach in a reciprocal obligation, the injured party
may choose between alternative remedies of fulfilment of obligation with damages or
rescission of obligation with damages.
c. When the injured party initially opted for the remedy of rescission of obligation with
damages, he is absolutely prohibited from asking for exact fulfilment of obligation with
damages.
d. When the injured party initially opted for the remedy of exact fulfilment of obligation with
damages, he is absolutely prohibited from asking for rescission of obligation with
damages.
544. Whenever an obligation contains a period, to whose benefit is the period presumed to have been
established?
a. Creditor only
b. Debtor only
c. Both creditor and debtor
d. Neither creditor nor debtor
545. The following are the instances wherein the debtor shall lose every right to make use of the period
of an obligation with a period and therefore the obligation with a period becomes due and
demandable, except
a. When the debtor attempts to abscond.
b. When after the obligation has been contracted, the debtor becomes insolvent and he
does not give a guaranty or security for the debt
after their establishment, unless he immediately gives new one equally satisfactory
were impaired.
546. It is an obligation where the debtor is alternatively bound by different prestations and it is
extinguished by the performance of any of them.
a. Alternative obligation
b. Facultative obligation
c. Conjunctive obligation
d. Indivisible obligation
547. Who has the right of choice in a facultative obligation?

a. Generally creditor, unless it has expressly granted to the debtor
b. Generally debtor, unless it has expressly granted to the creditor
c. Always debtor
d. Always creditor
548. A, B, C wrote a promissory note which states "We promise to pay P60,000 to D and E, solidary
creditors." D indorsed back the promissory note to A. How much obligation is extinguished by
confusion or merger?
a. P10,000
b. P20,000
c. P30,000
d. P60,000
549. A, a minor, B and C wrote a promissory note which states "I promise to pay P30,000 to D." How
much may D validly collect from A if B becomes insolvent?
a. P30,000
b. P20,000
c. P10,000
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Telephone : (043) 723 8412
d. In so far as A was benefited by the loan
550. A, B and C obliged themselves to deliver a specific car worth P300,000 to D. A and B are willing to
deliver the car but C refused to perform the obligation despite repeated demands from D. What is
the proper legal remedy available to D?
a. File an action for exact fulfilment with damages against C.
b. File an action for exact fulfilment with damages against A, B and C.
c. File an action for monetary amount against A and B for P100,000 each and against C for
P100,000 plus damages.
d. File an action for rescission of obligation plus damages against A, B and C.
a. Obligation with a condition
b. Obligation with a penal clause
c. Obligation with a period
d. Obligation with a substitute
552. In which of the following civil obligations is the right to file an action prescribe in 10 years?
a. Written contract
b. Quasi-delict
c. Oral contract
d. Quasi-contract
553. In the absence of agreement as to the place of payment, where shall payment of an obligation to
deliver a determinate or specific thing be made?
a. Wherever the determinate or specific thing might be at the moment the obligation was
constituted or perfected.
b. Wherever the determinate or specific thing might be at the time it is supposed to be
delivered.
c. Domicile of the debtor or obligor
d. Domicile of the creditor or obligee
554. In the absence of agreement as to the place of payment, where shall payment of an obligation to
deliver an indeterminate or generic thing be made?
a. Wherever the indeterminate or generic thing might be at the moment the obligation was
constituted or perfected.
b. Wherever the indeterminate or generic thing might be at the time it is supposed to be
delivered.
c. Domicile of the debtor or obligor
d. Domicile of the creditor or obligee
555. What law shall govern the special form of payment of dacion en pago?
a. Financial Rehabilitation and Insolvency Act of 2010
b. Law on Sales
c. Law on Obligation
d. Law on Contract
556. What is the legal remedy available to the debtor or obligor in case the creditor or obligee is guilty of
mora accipiendi?
a. Application of payment
b. Dacion en pago
c. Consignation
d. Cession
557. In which of the following loss of specific or determinate thing will the obligation of the debtor to
deliver a specific or determinate thing be extinguished?
a. When the debtor is guilty of contributory negligence to the loss.
b. When fortuitous event is the sole, immediate and proximate cause of the loss.
c. When the loss occurs after the debtor has incurred delay.
d. When the obligation to deliver the determinate thing arises from criminal act.
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Telephone : (043) 723 8412
558. What mode of extinguishing obligation is essentially gratuitous and requires the acceptance by the
debtor or obligor?
a. Remission
b. Merger
c. Compensation
d. Novation
559. It is a mode of extinguishing obligation that refers to the meeting in one person of the qualities of
creditor and debtor with respect to the same obligation.
a. Offset
b. Confusion
c. Donation
d. Subrogation
560. A has checking account in BDO Unibank with positive balance of P1,000,000. A borrowed P1,000,000
from the same bank. At the maturity date of the loan payable of A, what mode of extinguishing
obligation is present?
a. Condonation
b. Merger
c. Compensation
d. Delegacion
561. Which obligation may become the subject matter of legal compensation or offset?
a. Obligation of borrower in a contract of loan or mutuum
b. Obligation of bailee in a contract of commodatum
c. Obligation of depositary in a contract of deposit
d. Obligation of convicted person arising from his crime

a. Novation
b. Merger
c. Compensation
d. Remission
563. It is a type of novation involving a change of original debtor wherein the initiative does not emanate
from the original debtor and may be made even without his knowledge since it consists in a third
person assuming the obligation and it logically requires the consent of third person and the creditor.
a. Expromission
b. Delegaction
564. The following are the instances of legal subrogation, except

a. When a creditor pays another creditor who is preferred, even without the debtor’s
knowledge
b. When, even without the knowledge of the debtor, a person interested in the fulfillment of
the obligation pays, without prejudice to the effects of confusion as to the latter’s share
c. When a property insurance pays the insured in case of loss of the thing insured due to
the occurrence of the peril insured
d. When a third person pays the obligation of the debtor and the latter benefited from such
payment
565. What is the prescriptive period of civil obligation based on oral contract?
a) 4 years
b) 5 years
c) 6 years
d) 10 years
566. What is the legal interest rate starting July 1, 2013?

a) 6%
b) 9%
c) 12%
d) 15%
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Telephone : (043) 723 8412
567. It refers to negligence in the performance of contract.

a) Culpa criminal
b) Culpa contractual
c) Culpa aquiliana
d) Culpa delicta
-End-
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No. 125 Brgy.

Regulatory Framework for Business Transactions

2. Essential Elements or Requisites of an Obligation (Civil Obligation)

c. Object or prestation refers to the promise or particular conduct to be performed in the

i. Requisites of an Object or Prestation of an Obligation

i. Examples of juridical tie or vinculum or efficient cause

a. Positive obligation refers to an obligation which consists of giving or doing something.

i. Types of Positive Obligation

1. Real obligation (Civil Obligation to Give) refers to a positive obligation

2. Personal obligation (Civil Obligation to Do) refers to a positive

b. Negative obligation (Civil Obligation Not to Do or Not to Give) refers to an obligation

i. Note: Delay or Default or Mora is not applicable in negative obligation.

4. Distinctions between Civil Obligation and Natural Obligation

5. Sources of civil obligation demandable in a court of law

a. Law refers to the principles and regulations established in a community by some

i. Principles applicable to legal obligation

1. The obligations derived from law are never presumed.

i. Principles application to contractual obligation

1. Obligations arising from contracts have the force of law between

i. Two Types of Quasi-Contracts

1. Negotiorum Gestio refers to the voluntary management of the

ii. Examples of Negotiorum Gestio

2. Solutio Indebiti refers to the juridical relation that is created when

d. Quasi-delict or culpa aquiliana or torts refers to a source of a civil obligation

Requisites of Civil Action based on Quasi-Delict or Culpa-Aquiliana or Tort

e. Crime or delict refers to any act or omission which is punishable by law.

i. Nature of Liability of Criminals – The nature of liability of two or

i. Persons who are exempted from criminal liability (imprisonment and

1. An imbecile or an insane person

1. Any person who acts in defense of one-self, in defense of relatives or in

iii. Components of Civil Liability arising from Crime or Delicto

1. Restitution refers to the restoration of the thing itself even though it be

6. Distinctions between quasi-delict (tort or culpa aquiliana) and crime (delict)

7. Principles on Sources of Civil Obligations and Awarding of Damages

8. Kinds of Thing or Object in Obligation to Deliver a Thing

b. A determinate thing or specific thing or delimited generic thing is one that is

9. Incidental or Accessory obligations in an Obligation to Deliver a Determinate Thing or

a. Obligation to Preserve the Determinate Thing or Specific Thing or Delimited

i. Degree of Diligence to be Exercised by the Obligor or Debtor in the

2. Diligence Validly Stipulated by the Contracting Parties

3. Ordinary Diligence or Diligence of a Good Father of a Family or

i. Kinds of Fruits under the Civil Code

c. Obligation to Deliver the Accessions and Accessories of the Determinate Thing

16. Constitutional Right Against Involuntary Servitude

20. Definition of Delay or Default or Mora

a. The obligation must be demandable and already liquidated.

23. Moment of Delay in Reciprocal Obligation

24. Types of Delay or Default or Mora

i. Effects of delay on the part of the debtor or obligor

i. Effects of the delay on the part of the creditor

1. The creditor becomes liable for damages.

i. Effect of compensatio morae

1. The delays of both debtor and creditor are compensated or offsetted.

I. Mutually Exclusive Damages

a. Liquidated damages are damages agreed upon by the parties to a contract, to

b. Actual damages or compensatory damages are those pecuniary losses

c. Temperate damages or moderate damages are damages that may be

d. Nominal damages are damages adjudicated in order that a right of the

II. Additional Damages to any of the Mutually Exclusive Damages

a. Moral damages are damages awarded by reason of physical suffering, mental

b. Exemplary damages or corrective damages are damages imposed, by way

27. Waiver of Fraud