Regulatory Framework in Business Transactions
LAW ON OBLIGATION
1. 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
2. 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
3. It refers to the juridical tie that binds the parties to the obligation.
a) Prestation
b) Obligor
c) Vinculum
d) Obligee
4. In which type of obligation is delay not applicable?
a) Negative obligation
b) Positive obligation
c) Real obligation
d) Personal obligation
5. Which of the following obligations is not enforceable by a court action?
a) Civil obligation
b) Legal obligation
c) Natural obligation
d) None of the above
6. Which of the following is not considered civil liability arising from crime?
a) Restitution
b) Reparation
c) Indemnification
d) Rescission
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7. 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.
8. 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
9. 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
10. 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
11. 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.”
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12. 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
13. 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.
14. 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
d) None of the above
15. What is the legal interest rate for the year ended December 31, 2013?
a) 6%
b) 9%
c) 12%
d) 24%
16. 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
17. 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
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18. 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
19. 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
20. 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
21. 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
22. 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
23. 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
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24. 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
25. 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.
26. 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.
27. 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
d) None of the above
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28. 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
29. 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
30. 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
31. 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”
32. 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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33. 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
34. 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
35. 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
36. 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
37. 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
38. 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
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39. 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
40. 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
41. 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
42. 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
43. 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
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44. 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.
45. 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
46. Which of the following statements about obligation with a penal clause is incorrect?
a) The penalty stipulated must be oppressive,
unconscionable, iniquitous and contra bonus mores.
exorbitant,
excessive,
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.
47. 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
48. 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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49. 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
50. 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
d) None of the above
51. 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.
52. Which of the following commercial documents is considered legal tender?
a) Bill of exchange
b) Promissory note
c) Manager’s check
d) None of the above
53. 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
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54. 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 following statements is correct?
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.
55. 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
56. 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
57. 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
58. 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
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59. 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
60. 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
61. 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.
62. 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
63. This mode of extinguishing obligation is essentially gratuitous and required
acceptance by the debtor.
a) Compensation
b) Remission
c) Merger
d) Novation
64. 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
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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
65. 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
66. 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
67. Using the same data in number 66 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
68. Using the same data in number 66 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
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69. Using the same data in number 66 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
70. 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
71. 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
72. 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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73. 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 1st 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.
74. 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
75. 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
76. 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
77. 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
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78. 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
79. 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
80. 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.
-END-
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