Multiple Choice Questions (Business Law - Chapter 2)

1. X was the disbursing officer of the Ternate Beach Project of the Philippine Tourism in Cavite. In the
morning of July 1, 2018, a Friday, he went to Manila to encash a check covering the wages of the
employees. However, the processing of the check was delayed and was completed at about 3 p.m.
Nevertheless, he decided to encash the check because the employees would be waiting for their pay the
following day; otherwise, the workers would have to wait until July 5, the earliest time, when the main
office would open. At that time, he had two choices: (1) return to Ternate, Cavite that same afternoon and
arrive early evening; or (2) take the money with him to his house in Marilao, Bulacan, spend the night
there, and leave for Ternate the following day. He chose the second option, thinking it was the safer one.
Thus, at past 3 p.m., he took a passenger jeep bound for Bulacan. While the jeep was on EDSA, the jeep
was held up and the money kept by X was taken. X chased the robbers and caught up with one robber
who was subsequently charged with robbery and pleaded guilty. The other robber who held the stolen
money escaped. The Commission on Audit found X negligent because he had not brought the cash
proceeds of the check to his office in Ternate, Cavite for safekeeping, which is the normal procedure in the
handling of funds. Is X liable?

a. Yes, because he should not have allowed the delayed encashment of the check.
b. No, because X chased the robbers and caught up with one robber who was subsequently convicted of
robbery.
c. Yes, because he decided to encash the check despite knowledge of the fact that it was already late.
d. No, because the robbers attacked X in broad daylight in the jeep while it was on a busy highway
and in the presence of other passengers; hence, could not be said to be a result of his negligence

2. In the following instances, demand is not necessary, except:

a. In unilateral obligation.
b. When the obligation or the law expressly so declares.
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 the demand would be useless, as when the obligor has rendered it beyond his power to perform.

3. Delay in the fulfillment of an obligation, by reason of a cause imputable to the debtor.

a. Mora solvendi
b. Mora accipiendi
c. Compensatio morae
d. Creditor's default

4. Delay of the creditor to accept the delivery of the thing which is the object of the obligation.

a. Mora solvendi
b. Mora accipiendi
c. Compensatio morae
d. Debtor's default

5. Default on the part of both parties because neither has completed their part in their reciprocal
obligation.

a. Mora solvendi
b. Mora accipiendi
c. Compensatio morae
d. Debtor's default
6. When the amount is known or is determinable by inspection of the terms and conditions of the relevant
promissory notes and related documentation.

a. Debt is due
b. Debt is demandable
C. Debt is liquidated
d. Debt is unliquidated

7. Is the legal invasion of a legal right.

a. Injury
b. Grievance
c. Damage
d. Damages

8. Is the hurt, loss or harm which results from the injury.

a. Loss
b. Grievance
c. Damage
d. Damages

9. Is the recompense or compensation awarded for the damage suffered.

a. Loss
b. Grievance
c. Damage
d. Damages

10. Which is not a mode of voluntary breach of the obligation?

a. Fraud
b. Delict
c. Negligence
d. Delay

11. It refers to all kinds of deception that would lead an ordinarily prudent person into error after taking the
circumstances into account.

a. Contravention of the tenor of the obligation.

b. Mora
c. Culpa
d. Dolo

12. Is basically a deception used by one party prior to or simultaneous with the contract, in order to secure
the consent of the other.

a. Incidental fraud
b. Subsidiary fraud
c. Causal fraud
d. Contributory fraud
13. That which is not serious in character and without which the other party would have entered into the
contract anyway.

a. Incidental fraud
b. Subsidiary fraud
C. Causal fraud
d. Contributory fraud

14. The omission to do something which a reasonable man, guided by those considerations which
ordinarily regulate the conduct of human affairs, would do; or the doing of something which a prudent and
reasonable man would not do.

a. Breach of contract
b. Fraud
c. Negligence
d. Delay

15. It is want of care required by the circumstances.

a. Breach of contract
b. Negligence
C. Delay
d. Fraud

16. Is that conduct that naturally or reasonably creates undue risk or harm to others.

a. Negligence
b. Breach of contract
C. Fraud
d. Delay

17. Fault or negligence of obligor by virtue of which he is unable to perform his obligation arising from a
pre-existing contract.

a. Culpa contractual
c. Culpa criminal
b. Culpa civil
d. Culpa aquiliana

18. Fault or negligence of a person, whose failure to observe the required diligence to the obligation
causes damage to another.

a. Culpa civil
b. Culpa contractual
C. Culpa aquiliana
d. Culpa criminal
19. Which statement describes culpa contractual?

a. The proof of the contract and of its breach is sufficient prima facie to warrant recovery.
b. The negligence of the defendant is substantive and independent.
c. The source of the liability is the defendant's negligent act or omission itself.
d. Proof of due diligence in the selection and supervision of employees is available as a defense.
20. Negligence is merely incidental to the performance of an obligation already existing because of a
contract. This pertains to:

a. Culpa civil
b. Culpa contractual
c. Culpa aquiliana
d. Culpa criminal

21. Negligence is direct, substantive, and independent. This pertains to:

a. Culpa civil
b. Culpa contractual
c. Culpa aquiliana
d. Contractual negligence

22. This requires proof beyond reasonable doubt.

a. Culpa civil
b. Culpa contractual
c. Culpa aquiliana
d. Culpa criminal

23. Defense of a good father of a family in the selection and supervision of employees is a proper or
complete defense.

a. Culpa civil
b. Culpa contractual
c. Culpa aquiliana
d. Culpa criminal

24. Which one of the following is not a requisite of mora solvendi?

a. The obligation is demandable and liquidated.

b. The debtor delays performance.
c. The obligation is not necessary demandable.
d. The creditor judicially or extrajudicially requires the debtor's performance.

25. In commodatum, the bailee is liable for the loss of the thing, even if it should be through a fortuitous
event, except:

a. If, being able to save either the thing borrowed or his own thing, he chose to save the former.
b. If he devotes the thing to any purpose different from that for which it has been loaned.
c. If he keeps it longer than the period stipulated, or after the accomplishment of the use for which the
commodatum has been constituted.
d. If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting
the bailee from responsibility in case of a fortuitous event.

26. The depositary is liable for the loss of the thing through a fortuitous event, except:
a. If it is so stipulated.
b. If he delays its return.
C. If he uses the thing with the depositor's permission.
d. If he allows others to use it, even though he himself may have been authorized to use the same.
27. The officious manager shall be liable for any fortuitous event, except:

a. If he assumed the management in good faith.

b. If he undertakes risky operations which the owner was not accustomed to embark upon.
c. If he has preferred his own interest to that of the owner.
d. If he fails to return the property or business after demand by the owner.

28. A presumption which may be contradicted or overcome by other evidence.

a. Conclusive presumption
b. Disputable presumption
C. Definite presumption
d. Questionable presumption

29. The following are instances of disputable presumptions, except:

a. That there was a sufficient consideration for a contract.

b. Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led to
another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising
out of such declaration, act or omission, be permitted to falsify it.
c. That persons acting as copartners have entered into a contract
d. That an obligation delivered up to the debtor has been paid.

30. Is the power of definite to subject, the fulfillment of a prestation to give, to do, or not to do

a. Real right
b. Personal right
c. Actual right
d. Private right

31. 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.

a. Real right
b. Personal right
c. Actual right
d. Private right

32. The object thereof is designated merely by its class or genus wh any particular designation or physical
segregation from all others same class.

a. Generic thing
a. Determinate thing
b. Specific thing
b. Movable thing

33. Spouses H and W obtained from A and B a loan amount P6,000,000 at 3% interest per month. The
loan was secured mortgage on a parcel of land. Thereafter, the parties execu Contract of Sale conveying
the mortgaged property in favor of B. Subsequently, A and B gave H and W an exclusive optr repurchase
the land for P10,000,000. This was embodied document denominated as an Option to Buy. On this same
documen and B acknowledged receipt of a total sum of P10,000,001 consideration for the purchase of the
land. The Option to Buy pro that if the option is exercised after December 5, 1998, the purch price shall
increase at the rate of P300,000 or 3% of the purchase pe every month until September 5, 1999 and
thereafter at the re P381,000 or 3.81% of the purchase price every month, with the lift every month as the
cut-off date for said increases.
Are the 3% and 3.81% stipulated monthly interest valid?

a. Yes, because the Usury Law has been suspended by a certainCentral Bank Circular.
b. No, because the Court will temper interest rates if they are unconscionable.
c. Yes, because the parties are free to stipulate on the interest imposed on monetary obligations.
d. No, because what is only required is that the interest due should be that stipulated in writing, and in the
absence thereof, the rate shall be 12% per annum.

34. One of the following is a determinate thing

a A car with plate no. AR123

b. A red hook
c. A black cellphone
d. A 10 inch. laptop

35. Is the power of one person to demand of another, as a definite passive subject, the fulfillment of a
prestation to give, to do, or not to do.

a. Personal right
b. Real right
c. Definite right
d. Indefinite right

36 . X, an official of TESDA, boarded the LRT to be able to arrive in Caloocan in time for her 3pm meeting
when her handbag was slashed and the contents were stolen by an unidentified person. Among those
stolen were her wallet and the government-issued cellular phone. She then reported the incident to the
police authorities; however, the thief was not located, and the cellphone was not recovered. She also
reported the loss to her immediate superior, and she requested that she be freed from accountability for
the cellphone. The COA Auditor denied her request on the ground that she lacked the diligence required
in the custody of government property and was ordered to pay the purchase value. Is X liable?

a. No, X is not liable because riding the LRT is not a negligent act more so because X's mode of transit
was influenced by time considerations.
b. Yes, X is liable because putting her cellphone in her bag is not sufficient care of a cellphone
while traveling on board the LRT.
c. Yes, X is liable as she should have rode a jeep or bus.
d. No, X is not liable as she boarded the LRT to be able to arrive in Caloocan in time for her 3 pm meeting.

37. 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.

a. Personal right
b. Real right
c. Definite right
d. Indefinite right

38. These are the spontaneous products of the soil, and the young and other products of animals.

a. Real fruits
b. Natural fruits
c. Industrial fruits
d. Civil fruits
39. These are the produced by lands of any kind through cultivation or labor.

a. Real fruits
b. Natural fruits
C. Industrial fruits
d. Civil fruits

40. These 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.

a. Real fruits
b. Natural fruits
C. Industrial fruits
d. Civil fruits

41. Are those which arise from the same cause, and which each party is a debtor and a creditor of the
other, such that the obligation of one is dependent upon the obligation of the other?

a. Reciprocal obligation
b. Unilateral obligation
c. Natural obligation
d. Specific obligation

42. It signifies all of those things which are produced by the thing which is the object of the obligation as
well as all of those which are naturally or artificially attached thereto.

a. Determinate thing
b. Generic thing
c. Accessions
d. Accessories

43. It signifies all of those things which have for their object the embellishment, use or preservation of
another thing which is more important and to which they are not incorporated or attached.

a. Determinate thing
b. Generic
c. Accessions
d. Accessories

44. D borrowed P50,000 from C. C dies before he has collected the debt leaving S, his son as heir. Which
of the following statements is correct?

a. S cannot collect because the credit right is personal to C.

b. S can collect from D although D and C did not agree that the right to the debt will pass on to the
heirs of C.
c. S can collect only if D and C agreed that the right to the debt will pass on the heirs of C.
d. S cannot collect because the law prohibits the transmission of the credit right.

45. Which one of the following is not a requisite of mora accipiendi?

a. An offer of performance by the debtor who has the required capacity.

b. The offer must be to comply with the prestation as it should be performed.
C. The creditor refuses the performance without just cause.
d. An offer of performance by the creditor who has the required capacity.
46. One is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has
duly proved. Such compensation is referred to as:

a. Moral damages
b. Actual damages
c. Nominal damages
d. Temperate damages

47. This damages includes physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury.

a. Moral damages
b. Actual damages
C Nominal damages
d. Temperate damages

48. 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?

a. Moral damages
b. Actual damages
C. Nominal damages
d. Temperate damages

49. Damages which 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.

a. Moral damages
b. Actual damages
C. Nominal damages
d. Temperate damages
50. Are those agreed upon by the parties to a contract, to be paid in case of breach thereof.

a. Moral damages
b. Actual damages
c. Liquidated damages
d. Nominal damages

51. Damages are imposed, by way of example for the public good, in addition to the moral, temperate,
liquidated or compensatory damages.

a. Actual damages
b. Exemplary damages
c. Liquidated damages
d. Nominal damages

52. The voluntary relinquishment or abandonment, express or implied, of a legal right or advantage.

a. Waiver
b. Condonation
c. Compensation
d. Force majeure
53. Imports a dishonest purpose or some moral obliquity or conscious doing of a wrong.

a. Fraud
b. Bad faith
c. Damage
d. Injury

54. Is any event which cannot be foreseen, or which, though foreseen, is Inevitable.

a. Accident
b. Injury
C. Fortuitous event
d. Calamity

55. Which is not an element of a fortuitous event?

a. The event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable,
impossible to avoid.
b. The occurrence must have been such as to render it impossible for the debtors to fulfill their obligation
in a normal manner.
c. The obligor must have been free from any participation in the aggravation of the resulting injury
to the creditor.
d. The cause of the unforeseen and unexpected occurrence, must have been dependent of human will

56. Which is not an element of a fortuitous event?

a. The cause of the breach of the obligation must be independent of the will of the debtor.
b. The event must be such as to render it impossible for the debtor to fulfill his obligation in a normal
manner.
C. The event must be neither unforeseeable or unavoidable.
d. The debtor must be free from any participation in, or aggravation of the injury to the creditor.

57. A thing is determinate when it is particularly designated or physical segregated from all other of the
same class.

a. Indeterminate thing
b. Generic thing
c. Specific thing
d. Immovable thing

58. When does delay begins?

a. Delay begins from the time the obligor actually defaulted from his obligation.
b. Delay begins from the time the obligee demands from the obligor the performance of the obligation.
c. Delay begins from the time the obligor defaulted from his obligation within a reasonable time from the
maturity of his obligation.
d. Delay begins from the time the obligor defaulted from his obligation within 5 days from the maturity of
his obligation.

59. Which of the following is not a requisite of default?

a. That the obligation be demandable and already liquidated.
b. That the debtor delays performance.
c. That the debtor defaulted on maturity date of the obligation.
d. That the creditor requires the performance judicially and extrajudicially.
60. W received from X a pendant with diamonds to be sold on commission basis, but which W failed to
subsequently return because of a robbery committed upon her in the evening of January 16, 2018 while
walking alone in a dark alley carrying the said pendant. X filed an action against W for recovery of the
pendant or its value, but W set up the defense that the robbery extinguished her obligation. Is W liable?

a. No, because the robbery, took place without any concurrent fault on W's part.
b. No, because the incident was unforeseen.
c. Yes, because the conduct of W in returning alone to her house in the evening carrying jewelry of
considerable value would have been negligence per se.
d. Yes, because W committed delay.

61. The following statement describes culpa contractual. Which is not?

a. There is a pre-existing contractual relation.

b. The proof of the contract and of its breach is sufficient prima facie to warrant recovery.
C. The negligence of the defendant is substantive and independent.
d. The source of the liability of the defendant is the breach of contract.

62. Which statement describes culpa aquiliana?

a. Proof of due diligence in the selection and supervision of employees is not available as a defense.
b. The liability of the employers is based upon the principle that the negligence of the employee is
conclusively presumed to be the negligence of the employer.
c. There is no pre-existing contractual relation.
d. The source of the liability of the defendant is the breach of contract.

63. The following statement describes culpa aquiliana. Which is not?

a. The liability of the employers is based upon the principle that the negligence of the employee is prima
facie presumed to be the negligence of the employer.
b. Proof of due diligence in the selection and supervision of employees is not available as a defense.
C. The source of the liability is the defendant's negligent act or omission itself.
d. There is no pre-existing contractual relation.

64. A presumption which is irrebuttable upon the presentation of the evidence and any evidence tending to
rebut the presumption is not admissible.

a. Uncertain presumption
b. Disputable presumption
c. Questionable presumption
d. Conclusive presumption

65. The following are instances of disputable presumptions, except:

a. That money paid by one to another was due to the latter.

b. That a thing delivered by one to another belonged to the latter.
c. That prior rents or installments had been paid when a receipt for the later one is produced.
d. The tenant is not permitted to deny the title of his landlord.

66. Which of the following is not an obligation of the debtor in specific real obligation?

a. To deliver the specific or determinate thing which he has obligated himself to give.
b. To deliver the accessions and accessories.
c. To pay damages in case of breach of the obligation.
d. To take care of the thing with extraordinary diligence.

67. Which of the following is not a right of the debtor in generic real obligation?

a. To ask for performance of the obligation.

b. To compel specific performance.
c. To ask that the obligation be complied with at the expense of the debtor.
d. To recover damages in case of breach of the obligation.

68. Extreme care that a person of unusual prudence exercises to secure rights or property.

a. Ordinary diligence
b. Due diligence
c. Diligence of a good father of a family
d. Extraordinary diligence

69. B, Inc. contracted C, Inc., a stevedoring company, to load and stow a shipment of 146,288 cartons of
fresh green bananas and 15,202 cartons of fresh pineapples into the cargo hold of a vessel. The vessel
was docked at the port of Davao City and the goods were to be transported by it to the port of Inchon,
Korea. B, Inc. insured the shipment with J Co.
C, Inc. loaded and stowed the cargoes aboard the vessel. The vessel set sail from the port of
Davao City and arrived at the port of Inchon, Korea. It was then discovered upon discharge that some of
the cargo was in bad condition. In a survey report, it was stated that 16,069 cartons of the banana
shipment and 2,185 cartons of the pineapple shipment were so damaged that they no longer had
commercial value.
B, Inc. filed a claim for the damages. J Co. evaluated the claim and thereafter sent a check in the
amountof $210,266.43 to B Inc., the latter then issued a subrogation receipt to J Co. Thereafter J Co.
instituted an action for damages against C, Inc. Is C, Inc., under obligation to observe the extraordinary
degree of diligence in the conduct of its business.?

a. Yes, because its participation was to load the cargoes on board the vessel which requires
utmost care.
b. No, because its participation was to load the cargoes on board the vessel which requires ordinary care.
c. No, because if there is no law or contract stating the degree of diligence which is to be observed in the
performance of an obligation then that which is expected of a good father of a family shall be required.
d. None of the above.

70. The following statements explains negligence, except:

a. It it is commonly understood, is conduct that creates an undue risk of harm to others.

b. It is the failure to observe that degree of care, precaution and vigilance that the circumstances justly
demand.
C. It is expected from, and ordinarily exercised by, a person who seeks to satisfy a legal
requirement or to discharge an obligation.
d. It is the omission to do something which a reasonable man, guided by considerations that ordinarily
regulate the conduct of human affairs, would do, or doing something that a prudent and reasonable man
would not do.