Practice Test 1 – RFBT

Obligation

1. It is a rule of conduct, just, obligatory, promulgated by legitimate

authority, and of common observance and benefit.

a. Law

b. Obligation

c. Contract

d. Memorandum of Agreement

A. Some of the examples of obligation arising from law are the duty to
par taxes under the National Internal Revenue Code or the Local
Government Code. The obligation to support one’s family under the
Family Code of the Philippines.

2. A system of norms or rules of a character general and common

which regulate the relations of persons, individual or collective, and
which protects the person in his personality as well as his interests
both moral and patrimonial.

a. Business law

b. Civil law

c. Criminal law

d. Taxation law
B. The Law on Obligations, Contracts, Sales, Agency, Mutuum,
Commodatum, Pledge, Mortgage, Guaranty, Deposit, and Partnership
are under Civil Law)

3. I. The object of civil law is the redress of wrongs by compelling

compensation or restitution.

II. In the case of crimes, the main object of the law is to punish the
wrongdoer.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

C.

4. It is a juridical necessity to give, to do or not to do.

a. Law

b. Obligation

c. Contract

d. Memorandum of Agreement

B. Art. 1156, New Civil Code.

5. Which of the following is not considered as quasi- contract?

a. Solutio indebiti

b. When in fact the manager has been tacitly authorized by the owner
c. Negotiorum gestio

d. Reimbursement due to the person who saved from destruction the

property during fire or storm without the knowledge of the owner.

B.

6. I. An obligation “to do” includes all kinds of work or service.

II. An obligation “to give” is a prestation which consists in the delivery

of a movable or an immovable thing.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

C. An obligation “to do” includes all kinds of work or service; while an

obligation “to give” is a prestation which consists in the delivery of a
movable or an immovable thing to create a real fight, or for the use of
the recipient, or for its simple possession, or in order to return it to its
owner (Asian Construction and Development Corporation vs.
Philippine Commercial International Bank, G.R. No. 153827, April 26,
2006).

7. It is a claim or title to an interest in anything whatsoever that is

enforceable by law.

a. Receivable

b. Warranty

c. Right
d. Property

C. If a person has a right, the other person has resulting obligation.

8. I. An obligation is a power, privilege, or immunity guaranteed under

a constitution, statute, or decisional law, or recognized as a result of
long usage, constitutive of a legally enforceable claim of one person
against the other.

II. For every right enjoyed by any person, there is a corresponding

obligation on the part of another person to respect such right.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

B. The first paragraph refers to “right” and not “obligation.”

9. It is a juridical relation whereby a person may demand from another

the observance of a determinative conduct, and in case of breach, may
demand satisfaction from the assets of latter.

a. Law

b. Action

c. Contract

d. Obligation

D. An obligation is a juridical relation whereby a person (called the

creditor) may demand from another (called the debtor) the
observance of a determinative conduct (the giving, doing or not
doing), and in case of breach, may demand satisfaction from the
assets of the latter (Makati Stock Exchange, Inc. et. al. vs. Miguel V.
Campos substituted by Julia Ortigas Vda. De Campos, G.R. No. 138814,
April 16, 2009).

10. X has been missing for some time leaving no one to manage his
properties. A and B jointly took charge of the management thereof.
However, due to the negligence of A, the properties of X were
damaged. The liability thereof to X for damages shall be:

a. Only A shall be liable

b. Both shall be jointly liable

c. Both shall be solidarily liable

d. A and B are not liable

C. The responsibility of two or more officious managers shall

be solidary, unless the management was assumed to save the thing
or business from imminent danger (Art. 2146, NCC).

11. It is one by which a party sues another for the enforcement or

protection of a right, or the prevention or redress of a wrong.

a. Civil action

b. Special Proceeding

c. Administrative action

d. Criminal action

A.
12. It is the act or omission by which a party violates a right of another.

a. Reason of action

b. Motive of action

c. Cause of action

d. Source of action

C.

13. The three essential elements of a cause of action are the following,
except:

a. The legal right of the plaintiff.

b. The correlative obligation of the defendant.

c. The act or omission of the plaintiff in violation of said legal right.

d. The act or omission of the defendant in violation of said legal right.

C.

14. Obligation of the debtor to deliver a thing, movable or immovable,

to the creditor.

a. Obligation to give

b. Obligation not to give

c. Obligation to do

d. Obligation not to do

A.
15. When a thing is particularly designated or physically segregated
from all other of the same class.

a. Specific thing

b. Generic thing

c. Indeterminate thing

d. All of the above

A. (Art. 1460, NCC.)

16. Where X voluntarily takes charge of the neglected business of Y

without the latter’s authority where reimbursement must be made for
necessary and useful expenses, there is a:

a. Quasi delict

b. Quasi contract

c. Negotiorum gestio

d. Solutio indebiti

C.

17. When a thing is designated merely by its class or genus without

any particular designation or physical segregation from all others of
the same class.

a. Specific thing

b. Determinate thing

c. Indeterminate thing
d. All of the above

C. (Gaisano Cagayan, Inc. vs. Insurance Company of North America,

G.R. No. 147839, June 8, 2006.)

18. I. Obligation to do is also known as negative personal obligation.

II. Obligation not to do is otherwise known as positive personal

obligation.

a. Only I is true

b. Only II is true

c. Both are true

d. Both are false

D. Obligation to do is also known as positive personal obligation,

while obligation not to do is otherwise known as negative personal
obligation.

19. The following are the essential elements of an obligation, except:

a. Debtor

b. Creditor

c. Presentation

d. Juridical tie

C. One of the essential elements of an obligation is prestation or

subject matter or object and not presentation. It is the particular
conduct of the debtor or obligor which may consist in giving, doing, or
not doing something.
The debtor is the person who has the obligation to give, to do or not
to do.

The creditor is the person who has the right to demand compliance of
the obligation to give, to do or not to do.

The juridical tie creates the create the relation between the passive
subject or obligor and the active subject or obligee.

An obligation is a juridical necessity to give, to do, or not to do. The

obligation is constituted upon the occurrence of the essential
elements thereof, viz: (a) The vinculum juris or juridical tie which is
the efficient cause established by the various sources of obligations
(law, contracts, quasi-contracts, delicts and quasi-delicts); (b)
the object which is the prestation or conduct; required to be observed
(to give, to do or not to do); and (c) the subject-persons who, viewed
from the demandability of the obligation, are the active (obligee) and
the passive (obligor) subjects (Ang Yu Asuncion, et. al. vs. CA and Buen
Realty Development Corporation, G.R. No. 109125, December 2, 1994).

20. The following are the sources of an obligation, except:

a. Contract

b. Law

c. Prestation

d. Quasi-delict

C. Prestation is an essential element of an obligation not a source of

obligation.

The sources of obligation are following:

a. Law;

b. Contracts;

c. Quasi-contracts;

d. Acts or omissions punished by law; and

e. Quasi-delicts (Art. 1157, NCC).

The source of obligation under Article 1157, NCC are exclusive.

21. It is a meeting of minds between two persons whereby one binds

himself, with respect to the other, to give something or to do render
some service.
 
A. Contract
B. Quasi-contract
C. Law
D. Quasi-delict

A. (Art. 1305, NCC)

A contract undergoes various stages that include its negotiation or
preparation its perfection and, finally, its consummation.
Negotiation covers the period from the time the prospective
contracting parties indicate interest in the contract to the time the
contract is concluded (perfected).
The perfection of the contract takes place upon the concurrent of the
essential elements thereof.
The stage of consummation begins when the parties perform their
respective undertakings under the contract culminating in the
extinguishment thereof (Ang Yu Asuncion, et.al. vs. CA and Buen
Realty Development Corporation, G.R. No. 109125, December 2,
1994.).
 
It is fundamental that a contract is the law between the parties.
Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. Unless
the stipulations in a contract are contrary to law, morals, good
customs, public order or public policy, the same are binding between
the parties. It is a general principle of law that no one may be
permitted to change his mind or disavow and go bank upon his own
acts, or to proceed contrary thereto, to the prejudice of the party.
Likewise, it is settled that if the terms of the contract clearly express
the intention of the contracting parties, the literal meaning of
stipulations would be controlling (Edsel Liga vs. Allegro Resources
Corp., G.R. No. 175554, December 23, 2008.).

22. It refers to certain lawful, voluntary, and unilateral acts to the end
that no one shall be unjustly enriched or benefited at the expense of
another.
 
A. Contract
B. Quasi-contract
C. Law
D. Quasi-delict

B. Quasi is a latin term which means “as of”.

Following Article 22 of the New Civil Code, two conditions must
concur to declare that a person has unjustly enriched himself or
herself, namely:
A. A person is unjustly benefited; and
B. Such benefit is derived at the expense of or to the damage of
another   (Victoria Moreno-Lentfer, et.al. vs. Hans Jurgen Wolff, G.R.
No.   152317, November 10, 2004).
Under the law, there are three kinds of quasi-contracts, namely:
A. Negotiorum Gestio
B. Solutio Indebiti
C. Other Quasi-Contracts

23. Whoever voluntarily takes charge of the agency or management of

the business or property of another, without any power from the
latter, is obliged to continue the same until the termination of the
affair and its incidents, or to require the person concerned to
substitute him, if the owner is in a position to do so.
 
A. Quasi-contract
B. Quasi-delict
C. Negotiorum gestio
D. Solution indebiti

C. There is no Negotiorum Gestio in either of these instances:

A. When the property or business is not   neglected or abandoned;
B. If in fact the manager has been tacitly   authorized by the owner
(Art. 2144, NCC).

24. There is no negotiorum gestio in one of these instances:

I. When the property or business is not neglected or abandoned.
II. If in fact the manager has been tacitly authorized by the owner.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C
25. If something is received when there is no right to demand it, and it
was unduly delivered through mistake, the obligation to return it
arises.
 
A. Quasi-contract
B. Quasi-delict
C. Negotiorum gestio
D. Solutio indebiti

D. For the extra-contractual obligation of solution indebiti to arise,

the following requisites must be proven:

A. The absence of a right to collect the excess sums and

B. The payment was made by mistake (Titan-Ikeda   Construction and
Development Corporation vs.   Primetown Property Group, Inc. G.R.
No. 158768,   February 12, 2008).

26. It refers to an act or omission which causes damage to another,

there being fault or negligence. The parties have no pre-existing
contractual relation.
 
A. Quasi-contract
B. Quasi-delict
C. Negotiorum gestio
D. Solution indebiti

27. X by mistake delivered to A and B a sum of money which should

have been delivered to C and D. X now demand the return of the same
from A and B. The liability of the latter for the sum of money to which
they are not entitled shall be:
 
A. A and B shall be liable solidarily
B. A and B shall be liable jointly
C. They are not liable
D. X has no right to recover

A. The responsibility of two or more payees, when there has been

payment of what is not due, is solidary (Art. 2157, NCC).

28. In delict or acts or omissions punished by law, what is not included

in civil liability?

A. Restitution
B. Reparation of the damaged caused
C. Indemnification for consequential damages
D. Interest

D. Every person criminally liable for a felony is also civilly liable (Art.
100, Revised Penal Code).
The restitution of the thing itself must be made whenever possible,
with allowance for any deterioration, or diminution of value as
determined by the court.

29. The following are requisites of quasi-delict, except:

 
A. Damage suffered by defendant.
B. Damage suffered by plaintiff.
C. Fault or negligence of the defendant.
D. Connection of cause and effect between the fault or   negligence of
defendant and the damage incurred by   plaintiff.

A. A plaintiff is the party who brings a civil suit in a court of law.

A defendant is a person sued in a civil proceeding or accused in a
criminal proceeding.
30. I. Negligence is the failure to observe that degree of care,
precaution,   and vigilance that the circumstances justly demand.
II. Negligence 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 other
person suffers   injury.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

31.   I. There is exact mathematical formula to determine proximate

cause.
  II. Proximate cause is based upon mixed considerations of logic,
common sense, policy and precedent.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. Proximate cause is defined as that cause, which, in natural and

continuance sequence, unbroken by any efficient intervening cause,
produces the injury, and without which the result would not have
occurred. More comprehensively, proximate cause  is that cause
acting first and producing the injury, either immediately or by setting
other events in motion, all constituting a natural and continuous chain
of events, each having a close causal connection with its immediate
predecessor, the final event in the chain immediately affecting the
injury as natural and probable result of the cause which first acted,
under such circumstances that the person responsible for the first
event should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that
an injury to some person might probably result therefrom.
There is no exact mathematical formula to determine proximate cause.
It is based upon mixed considerations of logic, common sense, policy
and precedent (Dy Teban Trading, Inc. vs. Jose Ching and/or Liberty
Forest, Inc. and Cresilito M. Limbaga, G.R. No. 161803, February 4,
2008.).

32. A thing is determinate when it is particularly designated or

physically segregated from all other of the same class.
 
A. Indeterminate thing
B. Generic thing
C. Specific thing
D. Immovable thing

C. Examples are: “The car of X with plate number ABC 123.” “The only
laptop of Y.” “This particular book in my table.” The house of X and Y
located at No.456 Walter Road, Barangay Stone Hill, La Trinidad,
Benguet.”

33. The object thereof is designated merely by its class or genus

without any particular designation or physical segregation from all
others of the same class.
 
A. Generic thing
B. Determinate thing
C. Specific thing
D. Movable thing

A. The object of a generic thing is designated merely by its class or

genus without any particular designation or physical segregation from
all others of the same class, the loss or destruction of anything of the
same kind even without the debtor’s fault and before he has incurred
in delay will not have the effect of extinguishing the obligation. This
rule is based on the principle that the genus of a thing can never
perish. Genus nunquan perit. An obligation to pay money is generic;
therefore, it is not excused by fortuitous loss of any specific property
of the debtor (Gaisano Cagayan, Inc. vs. Insurance Company of North
America, G.R. No. 147839, June 8, 2006).

34. I. If the object of obligation is a generic thing, the loss or  

destruction of anything of the same kind even without the   debtor’s
fault and before he has incurred in delay will not   have the effect of
extinguishing the obligation.
II. An obligation to pay money is generic.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

35. 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 take care of the thing with extraordinary diligence.
C. To deliver the accessions and accessories.
D. To pay damages in case of breach of the obligation.

B. The debtor is obliged to take care of the thing with the proper
diligence of a good father of a family or ordinary diligence unless the
law or the stipulation of the parties requires another standard of care,
i.e. extraordinary diligence (Art. 1163, NCC).

36. 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 ask that the obligation be complied with at the expense of the
debtor.
C. To recover damages in case of breach of the obligation.
D. To compel specific performance.

D. The remedy of specific performance is applicable only in specific

real obligation.
In addition, the creditor can claim for damages if the debtor in the
performance of his obligation is guilty of fraud, negligence, delay, or
contravention of the tenor of his obligation.

37. Extreme care that a person of unusual prudence exercise to secure

rights or property.

A. Extraordinary diligence
B. Ordinary diligence
C. Due diligence
D. Diligence of a good father of a family.

A. (Black’s Law Dictionary, p. 489, Eight Edition)

38. I. The highest degree of diligence is expected, and high   standards
of integrity and performance are required of the   banking business.
II. The degree of diligence required of banks is more than that of   a
good father of a family.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. The fiduciary nature of banking, previously imposed by case law, is

now enshrined in Republic Act No. 8791 or the General Banking Law of
2000. Section 2 of the law specifically says that the State recognizes
the “fiduciary nature of banking that requires high standards of
integrity and performance (Associated Bank vs. Vicente Henry Tan, G.R.
No. 156940, December 14, 2004).”

39. The following statements explain negligence, except:

 
a. Is the conduct that creates an undue risk of harm to others.
b. It is expected from, and ordinarily exercised by, a person who seeks
to   satisfy a legal requirement or to discharge and obligation.
c. It is the failure to observe that degree of care, precaution and
vigilance   that the circumstances justly demand.
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.

B
40.  I. It is presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap, he was violating any traffic
regulation.
  II. The Civil Code characterizes negligence as the omission of that
diligence required by the nature of the obligation and corresponds
with the circumstances of the persons, of the time and of the place.

A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. (Art. 2185 & 1173, NCC)

41. I. When the plaintiff’s own negligence was not the immediate and  
proximate cause of his injury, he cannot recover damages.
II. If the plaintiff’s negligence was only contributory, the immediate
and   proximate cause of the injury being the defendant’s lack of due
care,   the plaintiff may recover damages, but the courts shall mitigate
the   damages to be awarded.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

D. (Art. 2179, NCC)

42. I. When an employee cause damage due to his own negligence

while   performing his own duties, there arises the presumption that
his   employer is negligent, rebuttable only by proof of observance of
the   extraordinary diligence.
II. In the selection of prospective employees, employers are required
to   examine their employees as to their qualifications, experience, and
service records.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. For example, in one case decided by the Supreme Court, it held that
the fact that the employee was driving a motorcycle alone with only a
student permit is proof enough that the employer was negligent—
either the employer did not know that the employee only had a
student permit, or he allowed him to drive alone knowing this
deficiency. The Court held: “Whichever way we look at it, we arrive at
the same conclusion: that the employer failed to exercise the due
diligence required of him as an employer in supervising her employee
(Stephen Cang and George Nardo y Josol vs. Herminia Cullen, G.R. No.
163078, November 25, 2009).”

43. It 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

A. A personal right 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 do (Salvador Adorable and Ligaya Adorable vs. CA, et. al.,
G.R. No. 119466, November 25, 1999).
44. It 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

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 (Salvador Adorable and Ligaya
Adorable vs. CA, et.al., G.R. No. 119466, November 25, 1999).
For example, on February 1, 2018, X agreed with Y to deliver and
transfer ownership to the latter his only parcel of land on February 14,
2018. Hence, between February 1 and February 14, 2018, Y had
only personal right against X (the definite passive subject). Upon
delivery on February 14, 2018, Y had a real right that is enforceable
against the whole world.

45. 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

B. Examples of natural fruits are: “Grass and plants produced by lands

without cultivation or labor”, Eggs and chicks of chicken.”

46. These are produced by lands of any kind through cultivation or

labor.
 
A. Real fruits
B. Natural fruits
C. Industrial fruits
D. Civil fruits

C. Examples of industrial fruits are: “Rice, and vegetables, (like

cabbage, potatoes, tomatoes, and others) produced by lands through
cultivation or labor.”

47. 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

C. Civil fruits 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 (Art. 442, NCC).

48. 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
A. Reciprocal obligations, like in contract of sale, are those which
arise from the same cause, and which each party is a debtor and a
creditor and debtor of the other, such that the obligation of one is
dependent upon the obligation of the other. They are to be performed
simultaneously, so that the performance of one is conditioned upon
the simultaneous fulfillment of the other (Antonio R. Cortes vs. CA and
Villa Esperanza Development Corporation, G.R. No. 126083, July 12,
2006).

49. I. When what is to be delivered is a generic thing, the creditor  

may compel the debtor to make the delivery.
II. If the thing to be delivered is a determinate thing, the creditor   may
ask that the obligation be complied with at the expense   of the
debtor.

A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

D. Specific performance is the right of the creditor or obligee to

compel the debtor to make delivery of the determinate thing if the
debtor or obligor will not perform his obligation.
The creditor may ask that the obligation to deliver the generic or
indeterminate thing be complied with at the expense of the debtor
and that the creditor cannot demand a generic thing of superior
quality, nor the debtor deliver a generic thing of inferior quality.

50. 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. Indeterminate thing
C. Accessions
D. Accessories.

C. Accessions 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 (Art. 440, NCC).

51. Is 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. Indeterminate thing
C. Accessions
D. Accessories

D. 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. In other
words, it includes all of those things which are necessary or convenient
for the perfection of another thing, such as the equipment of a factory,
the spare parts and tools of a machine, the key of a house, and others
of a similar nature (8 Manresa, 5th Ed., Bk. 1, pp. 109-110).

52. I. If a person obliged to do something fails to do it, the   same shall

be executed at his cost.
II. The same rule shall be observed if he does it in   contravention of
the tenor of the obligation.

A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

53. When does delay begins?

 
A. Delay begins from the time the obligor actually defaulted from his  
obligation.
B. Delay begins from the time the obligor defaulted from his
obligation   with a reasonable time from the maturity of his obligation.
C. Delay begins from the time the obligor defaulted from his
obligation   within 5 days from the maturity of his obligation.
D. Delay begins from the time the oblige judicially or extrajudicially  
demands from the obligor the performance of the obligation.

D. Mora or delay is the failure to perform the obligation in due time

because of dolo (malice) or culpha (negligence) (Titan-Ikeda
Construction & Development Corporations vs. Primetown Property
Group, Inc. G.R. No. 158768, February 12, 2008).
For example, X bound himself to deliver his only car to Y on February
14, 2018. On said date, X failed to deliver the car. Is X in legal delay?
No, X is not yet in legal delay because oblige, Y, did not make a
judicial or extrajudicial demand. Accordingly, if Y made an extrajudicial
demand on February 14, 2018, and despite such demand X failed to
deliver, he is already in legal delay. Therefore, if X is in delay, he will be
liable for damages because delay is a ground for asking damages.

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

 
A. That the obligation be demandable and already   liquidated.
B. That the debtor defaulted on maturity date of the   obligation.
C. That the debtor delays performance
D. That the creditor requires the performance judicially   and
extrajudicially.

B. Where the demand is established with reasonable certainty, the

interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot
be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages may be
deem to have been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the amount
finally adjudged (Benny Y. Hung vs BPI Card Finance Corp., G.R. No.
182398, July 20, 2010).

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

 
A. When the obligation or the law expressly so declares.
B. When from the nature and the circumstances of the obligation it  
appears that the designation of the time when the thins is to be  
delivered or the service is to be rendered was a controlling motive for  
the establishment of the contract.
C. In unilateral obligation.
D. When the demand would be useless, as when the obligor has
rendered   it beyond his power to perform.

56. I. Mere delinquency in payment does not necessarily   mean delay

in the legal concept.
II. Default generally begins from the moment the creditor   demands
the performance of the obligation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

57. Delay in the fulfillment of an obligation by reason of cause

imputable to the debtor.
 
A. Moral solvendi
B. Mora accipiendi
C. Compensatio morae
D. Creditor’s default

A. The two kinds of mora solvendi are:

A. Mora Solvendi ex re
  It is when the obligation is an obligation   to give.
B. Mora Solvendi ex persona
  It is when the obligation is an obligation   to do (8 Manresa, 5th Ed.,
Bk. 1, p. 125).

58. Delay of the oblige or 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
A. Mora accipiendi or the delay of the obligee or creditor to accept
the delivery of the thing which is the object of the obligation (8
Manresa, 5th Ed., Bk. 1, p. 125).

59. 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

C. Compensatio morae is the default on the part of both parties

because neither has completed their reciprocal obligation. This mutual
delay of the parties cancels out the effects of default, such that it is as
no one is guilty of delay (Antonio R. Cortes vs. CA and Villa Esperanza
Development Corporation, G.R. No. 126083, July 12, 2006).

60. I. In compensation morae, the parties cancel out the effects of  

default, such that it is as if no one is guilty of delay.
II. In reciprocal obligations, as in a contract of sale, the general   rule is
that the fulfillment of the parties’ respective   obligations should be
simultaneous.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Bot h are false

C. In reciprocal obligations, as in a contract of sale, the general rule is

that the fulfillment of the parties’ respective obligations should be
simultaneous. Hence, no demand is generally necessary because once
a party fulfills his obligation and the other party does not fulfill his, the
latter automatically incurs in delay. But when different dates for
performance of the obligations are fixed, the other party would incur
in delay only from the moment the other party demands fulfillment of
the former’s obligation. Thus, even in reciprocal obligations, if the
period for the fulfillment of the obligation is fixed, demand upon the
oblige is still necessary before the obligor can be considered in default
and before a cause of action for rescission will accrue (Solar Harvest,
Inc. vs. Davao Corruption Carton Corporation, G.R. No. 176868).

61. 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

C. A debt is liquidated when the amount is known or is determinable

by inspection of the terms and conditions of the relevant promissory
notes and related documentation (Selegna Management Corporation
and Spouses Edgardo and Zenaida Angeles vs. United Coconut
Planters Bank, G.R. No. 165662, May 3, 2006).

62. Is the legal invasion of a legal right?

 
A. Injury
B. Grievance
C. Damage
D. Damages

A. INJURY VS. DAMAGE VS. DAMAGES

Injury Damage Damages
Is the legal Is the hurt, loss or Damages are the
invasion of a legal harm which results recompense or
right (Jose V. from the injury compensation awarded
Lagon vs. CA and (Jose V. Lagon vs. for the damage
Menandro V. CA and Menandro suffered (So Ping Bun
Lapuz, G.R. No. V. Lapuz, G.R. No. vs. CA, et.al., G.R. No.
119107, March 119107, March 18, 120554, September 21,
18, 2005). 2005). 1999).

63. In the hurt, loss or harm which results from the injury?
 
A. Loss
B. Grievance
C. Damage
D. Damages

64. Are the recompense or compensation awarded for the damage

suffered?
 
A. Loss
B. Grievance
C. Damage
D. Damages

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

 
A. Fraud
B. Acts or omissions punished by law
C. Negligence
D. Delay

B. The two kinds of breach of the obligation are the following:

1. Voluntary breach of the obligation
  This arises either by fraud, negligence, delay and in any   manner
contravene the tenor of the obligation. The debtor   or obligor may be
held liable for damages if these will result   in the breach of the
obligation.
2. Involuntary breach of the obligation
  This arises due to fortuitous events. The debtor or obligor   will be
exempted from liability.

66. Which is a mode of involuntary breach of the obligation?

 
A. Fraud
B. Fortuitous event
C. Negligence
D. Delay

67. It refers to all kinds of deception, whether through insidious

machination, manipulation, concealment, or misrepresentation, 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. Fraud
D. Fraud refers to all kinds of deception, whether through insidious
machination, manipulation, concealment, or misrepresentation, that
would lead an ordinarily prudent person into error after taking the
circumstances into account (Solidbank Corporation/Metropolitan Bank
and Trust Company, G.R. No. 167346, April 2, 2007).

68. 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

C. In contracts, a fraud known as dolo causante or causal fraud  is

basically a deception used by one party prior to or simultaneous with
the contract, in order to secure the consent of the other. Needless to
say, the deceit employed must be serious (Solidbank
Corporation/Metropolitan Bank and Trust Company, G.R. No. 167346,
April 2, 2007).

X enticed Y to buy his cell phone which he claims to be genuine and

that he bought it overseas. Further he claims that the market value of
said cell phone at present is P20,000 but he is selling it to Y for only
P10,000. Consequently, Y bought the said cell phone because of the
representations of X. If the representations of X were all false, then the
fraud employed by X is causal fraud. The purpose of which is to induce
Y to buy his cell phone. The remedy of the aggrieved party Y is to file a
case of annulment of contract because the contract is defective. Such
defective contract us called voidable contract. Voidable contract will
be explained in the law on contracts.
69. 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 fraud69. 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

A. In contradistinction, only some particular or accident of the

obligation is referred to by incidental fraud or dolo incidente, or that
which is not serious in character and without which the other party
would have entered into the contract anyway (Solidbank
Corporation/Metropolitan Bank and Trust Company, G.R. No. 167346,
April 2, 2007).

70. I. Dolo incidente is a fraud which induces a party to   enter into a

contract.
II. Dolo causante is not the reason that induced the party   to enter
into a contract.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

D. Dolo Causante vs. Dolo Incidente

Dolo Causante Dolo Incidente

A fraud which induces a It is not the reason that

party to enter into a induced the party to enter
contract. into a contract.

It is a fraud which renders It is a fraud which renders a

the contract voidable (see party to be liable for
Art. 1390, NCC). damages.

71. I. Dolo incidente is a fraud which renders the contract   voidable.

II. Dolo causante is a fraud which renders a party to be   liable for
damages.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

72. I. Fraud must be established by clear and convincing evidence;  

mere preponderance of evidence is not adequate.
II. Bad faith is not synonymous with fraud, in that it involves a   design
to mislead or deceive another.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. Fraud must be established by clear and convincing evidence; mere

preponderance of evidence is not adequate. Bad faith, on the other
hand, imports a dishonest purpose of some moral obliquity and
conscious doing of a wrong, not simply bad judgment or negligence.
It is synonymous with fraud, in that it involves a design to mislead or
deceive another (Solidbank Corporation/Metropolitan Bank and Trust,
G.R. No. 167346, April 2, 2007).

73. I. Negligence signifies willfulness or deliberate intent to   cause

damage or injury to another.
II. Negligence signifies mere want of care or diligence and   not the
voluntariness of act or omission.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. FRAUD (DOLO) VS. NEGLIGENCE (CULPA)

Fraud (dolo) Negligence (culpa)

Willfulness or deliberate Mere want of care or diligence

intent to cause damage or and not the voluntariness of
injury to another. act or omission.

Liability cannot be Liability may be mitigated by

mitigated by courts. courts.

Waiver for future fraud is Waiver for future negligence

void. may be valid.

74. I. In fraud, liability cannot be mitigated by courts.

II. In negligence, liability may be mitigated by   courts.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C

75. I. In fraud, waiver for future fraud is void.

II. In negligence, waiver for future fraud   negligence may be valid.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Kinds of Civil Negligence

Culpa Contractual
Fault or negligence of obligor by virtue of which he is unable to
perform his obligation arising from a pre-existing contract.
 
Culpa Aquiliana/Quasi-delict
Fault or negligence of a person whose failure to observe the required
diligence to the obligation causes damage to another.

Culpa Contractual vs. Culpa Aquiliana

Culpa Contractual Culpa Aquiliana

There is a pre-existing There is no pre-existing

contractual relation. contractual relation.

The negligence of the

The negligence of the
defendant is merely an
defendant is substantive and
incident in the performance
independent.
of an obligation.

The source of the liability of The source of the liability is

the defendant is the breach the defendant’s negligent act
of contract. or omission itself.

The proof of the contract The negligence of the

and of its breach is sufficient
prima facie to warrant
defendant must be proved.
recovery.

The liability of the employer The liability of the employer

is based upon the principle
that the negligence of the
employee is conclusively
presumed to be the
negligence of the employer.
is based upon the principle
that the negligence of the
employee is prima facie
presumed to be the
negligence of the employer.

Proof of due diligence in the Proof of due diligence in the

selection and supervision of selection and supervision of
employees is not available employees is available as a
as a defense. defense.

76. 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

C. The Supreme Court held that negligence is 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. It is want of care required by the circumstances (Roberto C.
Sicam and Agencia de R.C. Sicam, Inc. vs Lulu V. Jorge and Cesar Jorge,
G.R. No. 159617, August 8, 2007).

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

 
A. Breach of contract
B. Negligence
C. Delay
D. Fraud

78. Is that conduct that naturally or reasonably creates undue risk or

harm to others?
 
A. Negligence
B. Breach of contract
C. Fraud
D. Delay

A. Negligence, as commonly understood, is that conduct that

naturally or reasonably creates undue risk or harm to others. It may be
a failure to observe that degree of care, precaution or vigilance that
the circumstances justly demand; or to do any other act that would be
done by a prudent  and reasonable person, who is guided by
considerations that ordinarily regulate the conduct of human affairs
(Mindex Resources Development vs. Ephraim Morillo, G.R. No. 138123,
March 12, 2002).

79. Negligence is direct, substantive, and independent. This pertains

to:
 
A. Culpa civil
B. Culpa contractual
C. Culpa aquiliana
D. Contractual negligence

C.

Culpa Contractual Culpa Aquiliana Culpa Criminal

Negligence is merely
incidental to the
Negligence is direct, Negligence is direct,
performance of an
substantive, and substantive and
obligation already
independent. independent.
existing because of a
contract.

There is always a pre- There is no pre-

No pre-existing
existing contractual existing contractual
contractual relation.
relation. relation.

Source of obligation: Source of obligation:

Source of obligation:
breach or nonfulfillment defendant’s negligent
defendant’s criminal act.
of contract. act or omission.

Requires proof by Requires proof by

Requires proof beyond
preponderance of preponderance of
reasonable doubt.
evidence. evidence.

Defense of a good father

Defense of a good father
Defense of a good of a family in the selection
of a family in the
father of a family in and supervision of
selection and supervision
the selection and employees is not a proper
of employees is not a
supervision of defense. The employee’s
proper or complete
employees is a proper guilt is automatically the
defense, though it may
or complete defense. employer’s guilt if the
mitigate damages.
former is insolvent.

Proof of existence of a
Plaintiff has to prove Accused is presumed
contract and breach
negligence of the innocent until the
thereof gives rise to a
defendant. contrary is proved.
presumption of fault.

80. This requires proof beyond reasonable doubt.

 
A. Culpa civil
B. Culpa contractual
C. Culpa aquiliana
D. Culpa criminal
D

81. 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

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

 
A. The obligation is demandable and liquidated.
B. The obligation is not necessarily demandable.
C. The debtor delays performance.
D. The creditor judicially or extrajudicially requires   the debtor’s
performance.

B. The following are the requisites of mora solvendi:

  A. The obligation is demandable and liquidated;
  B. The debtor delays performance; and
  C. The creditor judicially or extrajudicially requires the debtor’s
performance (Polo S. Pantaleon vs. American Express International,
Inc., G.R. No. 174269, May 8, 2009).

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

 
A. An offer of performance by the creditor who has the required  
capacity.
B. An offer of performance by the debtor who has the required  
capacity.
C. The offer must be to comply with the prestation as it should   be
performed.
D. The creditor refuses the performance without just cause.

A. The requisites of mora accipiendi are:

  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; and
  C. The creditor refuses the performance without just cause (Polo S.
Pantaleon vs.  American Express International, Inc. G.R. No. 174269,
May 8, 2009).

84. 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

B. The kinds of damages under the civil code are the following:

1. Actual or compensatory;
2. Moral;
3. Nominal;
4. Temperate or moderate;
5. Liquidated; or
6. Exemplary or corrective.

It is a hornbook principle that damages may be awarded only if

proven.
Except as provided by law or by stipulation, one is entitled to an
adequate compensation only for such pecuniary loss suffered by his as
he has duly proved. Such compensation is referred to as actual or
compensatory damages (Art. 2199, NCC).

85. It 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

A. Moral damages include physical suffering, mental anguish, fright,

serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are
the proximate result of the defendant’s wrongful act or omission (Art.
2217, NCC).

86. I. Moral damages are in the category of an award designed to  

compensate the claimant for actual injury suffered and to impose a  
penalty on the wrongdoer.
II. The award of moral damages is not meant to enrich the
complainant at   the expense of the defendant, but to enable the
injured party to   obtain means, diversion, or amusements that will
serve to obviate the   moral suffering he has undergone.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. Moral damages avail in cases of breach of contract where the

defendant acted fraudulently or in bad faith, and the court should find
that under the circumstances, such damages are due (Polo S.
Pantaleon vs. American Express International, Inc., G.R. No. 174269,
May 8, 2009). However, moral damages are in the category of an
award designed to compensate the claimant for actual injury suffered
and not to impose a penalty on the wrongdoer. The award is not
meant to enrich the complainant at the expense of the defendant, but
to enable the injured party to obtain means, diversion, or amusements
that will serve to obviate the moral suffering he has undergone. It is
aimed at the restoration, within the limits of the possible, of the
spiritual status quo ante, and should be proportionate to the suffering
inflicted (Joseph Saludaga vs Far Eastern University and Edilberto C. de
Jesus, G.R. No. 179337, April 30, 2008).
Moral damages avail in cases of breach of breach of contract of
contract where the defendant acted fraudulently or in bad faith, and
the court should find that under the circumstances, such damages are
due (Polo S. Pantaleon vs. American Express International, Inc., G.R.
No. 174269, May 8, 2009).
There is no hard-and-fast-rule in determining what would be fair and
reasonable amount of moral damages, since each case must be
governed by its own peculiar facts, however, it must be commensurate
to the loss or injury suffered (Polo S. Pantaleon vs. American Express
International, Inc., G.R. No. 174269, May 8, 2009).
In the absence of bad faith, ill will, malice or wanton conduct,
respondent cannot be held liable for moral damages (Victorina
Savellano, et.al. vs. Northwest Airlines, G.R. No. 151783, July 8, 2003).
In a long line of cases, the Supreme Court has consistently ruled that
in the absence pf a wrongful act or omission or of fraud or bad
faith, moral damages cannot be awarded (Spouses Erlinda Batal and
Frank Batal vs. Spouses Luz San Pedro and Kenichiro Tominaga, G.R.
No. 164601, September 27, 2006).B. Moral damages avail in cases of
breach of contract where the defendant acted fraudulently or in bad
faith, and the court should find that under the circumstances, such
damages are due (Polo S. Pantaleon vs. American Express
International, Inc., G.R. No. 174269, May 8, 2009). However, moral
damages are in the category of an award designed to compensate the
claimant for actual injury suffered and not to impose a penalty on the
wrongdoer. The award is not meant to enrich the complainant at the
expense of the defendant, but to enable the injured party to obtain
means, diversion, or amusements that will serve to obviate the moral
suffering he has undergone. It is aimed at the restoration, within the
limits of the possible, of the spiritual status quo ante, and should be
proportionate to the suffering inflicted (Joseph Saludaga vs Far
Eastern University and Edilberto C. de Jesus, G.R. No. 179337, April 30,
2008).
Moral damages avail in cases of breach of breach of contract of
contract where the defendant acted fraudulently or in bad faith, and
the court should find that under the circumstances, such damages are
due (Polo S. Pantaleon vs. American Express International, Inc., G.R.
No. 174269, May 8, 2009).
There is no hard-and-fast-rule in determining what would be fair and
reasonable amount of moral damages, since each case must be
governed by its own peculiar facts, however, it must be commensurate
to the loss or injury suffered (Polo S. Pantaleon vs. American Express
International, Inc., G.R. No. 174269, May 8, 2009).
In the absence of bad faith, ill will, malice or wanton conduct,
respondent cannot be held liable for moral damages (Victorina
Savellano, et.al. vs. Northwest Airlines, G.R. No. 151783, July 8, 2003).
In a long line of cases, the Supreme Court has consistently ruled that
in the absence pf a wrongful act or omission or of fraud or bad
faith, moral damages cannot be awarded (Spouses Erlinda Batal and
Frank Batal vs. Spouses Luz San Pedro and Kenichiro Tominaga, G.R.
No. 164601, September 27, 2006).

87. 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

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

plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and for the purpose of indemnifying the
plaintiff for any loss suffered by him (Art. 2221, NCC).
Nominal damages are recoverable if no actual, substantial or specific
damages were shown to have resulted from the breach. The amount
of such damages is addressed to the sound discretion of the court,
taking into account the relevant circumstances (Virtoria Savellano,
et.al. vs. Northwest airlines, G.R. No. 151783, July 8, 2003).

88. 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
D. Temperate or moderate 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
cannot, from the nature of the case, be provided with certainty (Art.
2224, NCC).

89. 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

C. Liquidated damages are those agreed upon by the parties to a

contract to be paid in case of breach thereof (Art. 2226, NCC).

90. Damages are imposed, by way of example or correction 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

Exemplary or corrective damages are imposed, by way of example

or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages (Art. 2229, NCC).
Also, attorney’s fees are allowed when exemplary damages are
awarded and when the party to a suit is compelled to incur expenses
to protect his interest (Spouses Gerry and Annalyn Fernandez vs
Mercury Drug Corporation, et.al., G.R. CV No. 83632, August 8, 2006).
As to the award of exemplary damages, the law allows in by way of
example for the public good. The business of banking is impressed
with public interest and great reliance is made on the bank’s sworn
profession of diligence and meticulous in giving irreproachable
service. For petitioner’s failure to carry out its responsibility and to
account for respondents’ lost check, we hold that the lower courts did
not err in awarding exemplary damages to the latter (Solidbank
Corporation/ Metropolitan Bank and Trust Company vs. Spouses Peter
and Susan Tan, G.R. No. 167346, April 2, 2007).

91. The voluntary relinquishment or abandonment, express or implied,

of a legal right or advantage.
 
A. Waiver
B. Condonation
C. Compensation
D. Force majeure

92. It imports a dishonest purpose or some moral obliquity or

conscious doing of a wrong.
 
A. Fraud
B. Bad faith
C. Damage
D. Injury

93. Is any event which cannot be foreseen, or which, though foreseen,

is inevitable?
 
A. Accident
B. Injury
C. Fortuitous event
D. Calamity

94. I. Fortuitous events by definition are extraordinary   events not

foreseeable or avoidable.
II. In fortuitous event, the mere difficulty to foresee the   happening is
not impossibility to foresee the same.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Fortuitous events by definition are extraordinary events not

foreseeable or avoidable. It is therefore, not enough that the event
should not have been foreseen or anticipated, as is commonly
believed but it must be one impossible to foresee or to avoid. The
mere difficulty to foresee the happening is not impossible to foresee
the same (Roberto C. Sicam and Agencia de R.C. Sicam, Inc. vs. Lulu V.
Jorge and Cesar Jorge, G.R. No. 159617, August 8, 2007).
A fortuitous event may either be an act of God, or natural
occurrences such as floods or typhoons, or an act of man such as riots,
strikes or wars. However, when the loss is found to be partly the result
of a person’s participation-whether by active intervention, neglect or
failure to act—the participation-whether by active intervention,
neglect or failure to act—the whole occurrence is humanized and
removed from the rules applicable to a fortuitous event (Asset
Privatization Trust vs. T.J. Enterprises, G.R. No. 167195, May 8, 2009).

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

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

A. The elements of a fortuitous event are:

1. The cause of the unforeseen and unexpected occurrence must have

been   independent of human will;
2. The event that constituted the caso fortuito must have been
impossible to   foresee or, if foreseeable, impossible to avoid;
3. The occurrence must have been such as to render it impossible for
the   debtors to fulfill their obligation in a normal manner, and;
4. The obligor must have been free from any participation in the
aggravation   of the resulting injury to the creditor (Asset Privatization
Trust vs. T.J.   Enterprises, G.R. No. 167195, May 8, 2009).

96. I. In order for a fortuitous event to exempt one from liability, it is  

necessary that one has committed no negligence or misconduct that  
may have occasioned the loss.
II. An act of God can be invoked to protect a person who has failed to
take   steps to forestall the possible adverse consequences of such a
loss.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. In order for a fortuitous event to exempt one from liability, it is

necessary that one has committed no negligence or misconduct that
may have occasioned the loss. An act of God cannot be invoked to
protect a person who has failed to take steps to forestall the possible
adverse consequences of such a loss. One’s negligence may have
concurred with an act of God in producing damage and injury to
another; nonetheless, showing that the immediate or proximate cause
of the damage or injury was a fortuitous event would not exempt one
from liability. When the effect is found to be partly the result of a
person’s participation — whether by active intervention, neglect or
failure to act – the occurrence is humanized and removed from the
rules applicable to acts of God (Mindex Resources Development vs.
Ephraim Morillo, G.R. No. 138123, March 12, 2002).

97. 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 neither unforeseeable nor unavoidable.
C. The event must be such as to render it impossible for the   debtor
to fulfill his obligation in a normal manner.
D. The debtor must be free from any participation in, or   aggravation
of the injury to the creditor.

B. To exempt the obligor from liability for a breach of an obligation by

reason of a fortuitous event, the following requisites must concur: (a)
the cause of the breach of the obligation must be independent of the
will of the debtor; (b) the event must be either unforeseeable or
unavoidable; (c) the event must be such as to render it impossible for
the debtor to fulfill his obligation a normal manner; and (d) the debtor
must be free from any participation in, or aggravation of the injury to
the creditor (Mondragon Leisure and Resorts Corporation vs. CA, et.al.
G.R. No. 154188, June 15, 2005).

98. I. In an obligation to deliver a generic thing, the loss or destruction

of   anything of the same kind does not extinguish   the obligation.
II. An obligation to pay money is generic; therefore, it is not   excused
by fortuitous loss of any specific property for the debtor.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Under Article 1263 of the Civil Code, “in an obligation to deliver a

generic thing, the loss or destruction of anything of the same kind
does not extinguish the obligation.” If the obligation is generic in the
sense that the object thereof is designated merely by its class or genus
without any particular designation or physical segregation from all
others of the same class, the loss or destruction of anything of the
same kind even without the debtor’s fault and before he has incurred
in delay will not have the effect of extinguishing the obligation. This
rule is based on the principle that the genus of a thing can never
perish. Genus nunquan perit. An obligation to pay money is generic:
therefore, it is not excused by fortuitous loss of any specific property
of the debtor (Gaisano Cagayan, Inc. vs. Insurance Company of North
America, G.R. No. 147839, June 8, 2006).
Where the obligation consists in the payment of money, the failure of
the debtor to make payment even by reason of a fortuitous event shall
not relieve him of his liability. The rationale for this is that the rule than
an obligor should be held exempt from liability when the loss occurs
thru a fortuitous event only holds true when the obligation consists in
the delivery of a determinate thing and there is no stipulation holding
him liable even in case of fortuitous event. It does not apply when the
obligation is pecuniary in nature (Gaisano Cagayan, Inc. vs. Insurance
Company of North America, G.R. No. 147839, June 8, 2006).

99. I. Carnapping per se can be considered as a fortuitous event.

II. The burden of proving that the loss was due to fortuitous event
rests on him who invokes it.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. On the merits. It is not a defense for a repair shop of motor vehicles
to escape liability simply because the damage or loss of a thing
lawfully placed in its possession was due to carnapping. Carnapping
per se cannot be considered as a fortuitous event. The fact that a thing
was unlawfully and forcefully taken from another’s rightful possession,
as in cases of carnapping, does not automatically give rise to a
fortuitous event. To be considered as such, carnapping entails more
than the mere forceful taking of another’s property. It must be proved
and established that the event was an act of God or was done solely
by third parties and that neither the claimant nor the person alleged
to be negligent has any participation. In accordance with the Rules of
evidence, the burden of proving that the loss was due to a fortuitous
event rest on him who invokes it (Jimmy Co vs. CA and Broadway
Motor Sales, Corporation, G.R. No. 124922, June 22, 1998).
Robbery per se, just like carnapping, is not a fortuitous event (Roberto
C. Sicam and Agencia de R.C. Sicam, Inc. vs. Lulu V. Jorge and Cesar
Jorge, G.R. No. 159617, August 8, 2007).
100. I. A possessor in bad faith shall not be liable for deterioration or
loss in   every case, even if caused by a fortuitous event.
II. If the obligor delays, or has promised to deliver the same thing to
two   or more persons who do not have the same interest he shall not
be   responsible for any fortuitous event until he has effected the
delivery.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

D. A possessor in bad faith shall be liable for deterioration or loss in

every case, even if caused by a fortuitous event (Art. 552, NCC).
If the obligor delays, or has promised to deliver the same thing to two
or more persons who do not have the same interest, he shall be
responsible for any fortuitous event until he has effected the delivery
(Art. 1165, NCC).

101. In commodatum, the bailee is liable for the loss of the thing, even
if it should be through a fortuitous event, except:
 
A. If he devotes the thing to any purpose different from that for which
it has been   loaned.
B. If he keeps it longer than the period stipulated, or after the
accomplishment of the   use for which the commodatum has been
constituted.
C. 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.
D. If, being able to save either the thing borrowed or his own thing, he
chose to save   the former.
D. The bailee is liable for the loss of the thing, even if it should be
through a fortuitous event:
1. If he devotes the thing to any purpose different from that for which
it has been loaned;
2. If he keeps it longer than the period stipulated, or after the
accomplishment of the use for which the commodatum has been
constituted.
3. 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;
4. If he lends or leases the thing to a third person, who is not a
member of his household;
5. If, being able to save either the thing borrowed or his own thing, he
chose to save the latter (Art. 1942, NCC).

102. The depositary is liable for the loss of the thing through a
fortuitous event, except:
 
A. If it is so stipulated.
B. If he uses the thing with the depositor’s permission.
C. If he delays its return.
D. If he allows others to use it, even though he himself   may have
been authorize to use the same.

B. The depositary is liable for the loss of the thing through a fortuitous
event:

1. If it is stipulated;
2. If he uses the thing without the depositor’s permission;
3. If he delays its return;
4. If he allows others to use it, even though he himself may   have
been authorized to use the same (Art. 1979, NCC).
103. The officious manager shall be liable for any fortuitous event,
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.

D. The official manager shall be liable for any fortuitous event:

1. If he undertakes risky operations which the owner was   not
accustomed to embark upon;
2. If he has preferred his own interest to that of the owner;
3. If he fails to return the property or business after   demand by the
owner;
4. If he assumed the management in bad faith (Art. 2147,   NCC).

104. I. The receipt of the principal by the creditor without reservation

with   respect to the interest, shall give rise to the presumption that
said   interest has been paid.
II. The receipt of a later installment of a debt without reservation as to
prior installments, shall likewise raise the presumption that such  
installments have been paid.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Example of paragraph 1: In a promissory note, X borrowed from Y

the amount of P100,000 with an interest of 12% per annum or 1% per
month. Thereafter, X paid P100,000 and Y issued a receipt for the
principal. It is presumed that the interest had been paid. This is
because Article 1254 of the Civil Code provides that if the debt
produces interest, payment of the principal shall not be deemed to
have been made until the interests have been covered.
Example of paragraph 2: In a promissory note, X borrowed from Y the
amount of P100,000 payable in ten (10) equal monthly installments
(P10,000 per month). Thereafter, X paid P10,000 and Y issued a receipt
for the 7th installment. It is presumed that the first six (6) installments
were paid.

105. A presumption which may be contradicted or overcome by other

evidence.
 
A. Conclusive presumption
B. Definite presumption
C. Disputable presumption
D. Questionable presumption

C. A presumption is disputable or rebuttable if it may contradicted or

overcome by other evidence.

 
 
106. A presumption which is irrebuttable upon the presentation of the
evidence and any evidence tending to rebut the presumption is not
admissible.
 
A. Conclusive presumption
B. Uncertain presumption
C. Disputable presumption
D. Questionable presumption
A. A presumption is conclusive when the presumption becomes
irrebuttable upon the presentation of the evidence and any evidence
tending to rebut the presumption is not admissible (29 Am Jur 2d,
Evidence, sec.183).

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

 
A. That money paid by one to another was due to the latter.
B. The tenant is not permitted to deny the title of his landlord at the
time   commencement of the relation of landlord and tenant between
them.
C. That a thing delivered by one to another belonged to the latter.
D. That prior rents or installments had been paid when a receipt for
the   later one is produced.

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

 
A. That there was a sufficient consideration for a contract.
B. That person acting as co-partners have entered into a contract of
co-  partnership.
C. Whenever a party has, by his own declaration, act, or omission,  
intentionally and deliberately led 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.
D. That an obligation delivered up to the debtor has been paid.

109. Spouses H and W obtained from A and B a loan amounting to

P6,000,000 at 3% interest per month. The loan was secured by a
mortgage on a parcel of land. Thereafter, the parties executed a
Contract of Sale conveying the mortgaged property in favor of H and
W. Subsequently, A and B gave H and W an exclusive option to
repurchase the land for P10,000,000. This was embodied in a
document denominated as an Option to Buy. On this same
documents, A and B acknowledged receipt of a total sum of
P10,000,000 as consideration for the purchase of the land. The Option
to Buy provided that if the option is exercised after December 5, 1998,
the purchase price shall increase at the rate of P300,000 or 3% of the
purchase price every month until September 5, 1999 and thereafter at
the rate P381,000 or 3.81% of the purchase price every month, with
the fifth of 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 certain
Central Bank Circular.
B. Yes, because the parties are free to stipulate on the interest to be
imposed on monetary obligations.
C. No, because the Court will temper interest rates if they are
unconscionable.
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.

110. One of the following is a determinate thing

 
A. A car with plate no. AB123
B. A red book
C. A black cellphone
D. A 10 inches laptop
A

111. 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 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 amount of $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. 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 or ordinary
diligence shall be required.
B. Yes, because its participation was to load the cargoes no board the
vessel which requires utmost care.
C. No, because its participation was to load the cargoes on board the
vessel which requires ordinary care.
D. None of the above.
A

112. X, an official of TESDA, boarded the LRT to be able to arrive in

Caloocan in time for her 3 p.m. meeting when her handbag was
slashed and the contents were stolen by an unidentified person.
Among those stolen were her wallet and 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 from 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. Yes, X is liable because putting her cellphone in her bag is not
sufficient care of a cellphone while   travelling on board the LRT.
B. Yes, X is liable as she should have rode a jeep or bus.
C. 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.
D. No, X is not liable as she boarded the LRT to be able to arrive in
Caloocan in time for her 3 p.m.   meeting.

113. 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 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.
B. S cannot collect because the credit right is personal to 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.

114. 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 the 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 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 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. 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.
B. Yes, because he should not have allowed the delayed encashment
of the check.
C. No, because X chased the robbers and caught up with one robber
who was subsequently convicted robbery.
D. Yes, because he decided to encash the check despite knowledge of
the fact that it was already late.

115. 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 files an
action against W for recovery of the pendant or is value, but W set up
the defense that the robbery extinguished her obligations. Is W liable?
 
A. No, because the robbery took place without any concurrent fault on
W’s part.
B. 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.
C. No, because the incident was unforeseen.
D. Yes, because W committed delay.

116. J is a usufructuary of a fishpond. J entered into a contract leasing

the fishpond to Y for a period of 5 years. Paragraph of the lease
contract states that the lessee “cannot sublease” the fishpond.
X is a businessman engaged in the operation of fishponds. Y
persuaded X to take over the operation of said fishpond. X acceded to
the proposal. X and Y executed a written agreement whereby X would
take possession of the fishpond in consideration of the amount of
P100,000.
X incurred expenses for the improvement of the fishpond. However,
sometime in June 2018, J, went to the fishpond and presented X with a
letter showing that Y has surrendered possession of the fishpond to
him. Is Y liable for subleasing the fishpond?

A. No, because as a lessee he can transfer his rights over the subject
matter of the contract of lease.
B. Yes, because as a lessee he cannot transfer his rights over the
subject matter of the contract of lease.
C. No, because subleasing is not prohibited by law.
D. Yes, because when an obligation consists in not doing and the
obligor does what has been forbidden   him, it shall also be undone at
his expense. In this case, Y led X to incur expenses to improve the  
operation of the fishpond.

117. It is an obligation which is demandable at once.

 
A. Pure obligation
B. Conditional obligation
C. Alternative obligation
D. Divisible obligation

A. (Art. 1179, NCC)

An obligation whose performance does not depend upon a future or
uncertain event upon a past event unknown to the parties and which
is demandable at once. There is nothing to exempt the obligor from
compliance therewith (Air Philippines Corp. vs. International Business
Aviation Services Phils., Inc., G.R. No. 151963, September 9, 2004).
118. It is an obligation whose fulfillment or extinguishment depends
upon a future and uncertain event.
 
A. Pure obligation
B. Conditional obligation
C. Alternative obligation
D. Obligation with a period

B. (Art. 1179, NCC)

An obligation where the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon
the happening of the event which constitutes the condition (Art. 1181,
NCC).

119. A promissory note signed by X and dated March 31, 2018 is

worded as follows. “I promise to pay Y the sum of P75,000 provided
that if she should fail in the May 2018 CPA board examination, he shall
return to me said amount.” The above note gives rise to an obligation
with:
 
A. Suspensive condition
B. Casual condition
C. Resolutory condition
D. Answer not given

120. An obligation whose fulfillment or extinguishment depends upon

a future and certain event.
 
A. Divisible obligation
B. Facultative obligation
C. Alternative obligation
D. Obligation with a period

D. (Art. 1193, NCC)

121. Whenever in an obligation a period is designated, it is presumed

to have been established for the benefit of:
 
A. Both the creditor and the debtor
B. The creditor
C. The debtor
D. The third party

122. An obligation which involves multiple prestation and a substitute

prestation.
 
A. Divisible obligation
B. Facultative obligation
C. Alternative obligation
D. Obligation with a period

C. (Art. 1199, NCC)

123. An obligation which involves a principal prestation and a

substitute prestation.
 
A. Joint obligation
B. Facultative obligation
C. Solidary obligation
D. Obligation with a period
B. (Art. 1206)

 
124. An obligation where each debtor can be made to pay only his
share in the obligation.
 
A. Joint obligation
B. Facultative obligation
C. Solidary obligation
D. Obligation with a period

A. (Art. 1207, NCC)

125. An obligation where one debtor can be made to pay for the
whole obligation subject to reimbursement.
 
A. Joint obligation
B. Facultative obligation
C. Solidary obligation
D. Obligation with a period

C. (Art. 1207, NCC)

126. X, Y, and Z are solidarily liable to A for P90,000 which matures on

July 1, 2018. On May 1, 2018, X paid A for the whole amount of the
debt. If on December 1, 2018, X will be reimbursed by Y, the latter will
be liable for:
 
A. P30,000 with interest from July 1, 2018 to December 1, 2018.
B. P30,000 without interest.
C. P30,000 with interest from May 1, 2018 to July 1, 2018.
D. P30,000 with interest from May 1, 2018 to December 1, 2018.

A. The law states that: “He who made the payment the payment may
claim from his co-debtors only the share which corresponds to each,
with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period
may be demanded (Art. 1217, NCC).

127. This is a promissory note: “We promise to pay A, B, and C the sum
of P18,000” (signed) X, Y and Z.
 
A. Z is obliged to pay C P6,000
B. Z is obliged to pay C P2,000
C. Z is obliged to pay C P12,000
D. Z is obliged to pay A, B and C, P18,000

B. Where an instrument containing the word “we promise to pay” is

signed by two or more persons, they are deemed to be jointly liable
thereon. Thus X, Y, and Z are jointly liable. The payees A, B, and C are
also presumed to be join.

128. A, B, and C solidary debtors owe solidary creditors X and Y

P30,000. X remitted the entire obligation in favor of A. The effect is:
 
A. The obligation is not extinguished until A collects from B and C.
B. The obligation is not yet extinguished until Y is paid by X his share
of   the credit.
C. A cannot recover from B and C because remission in his favor
extend to   the benefit of B and C.
D. A can recover from B and C their respective share of the debt.
C. The principle is “one for all, all for one.” Hence, the remission for
one is the remission for all.”

129. X Corp. operates a credit card system. One of the requirements

for the issuance of the card is that an applicant should have a surety. K
applied for a Regular Card with X Corp. He got as his surety his own
sister-in-law, L. Thus, K signed the printed application form and L
signed the Surety Undertaking.
Thereafter, X Corp. issued to K Card No. 0123. He used this card and
incurred credit charged plus appropriate interest and service charges
in the aggregate amount of P166,408. He defaulted in the payment of
this obligation. X Corp. demanded of L to pay said obligation.
 
A. X Corp. was certainly within its rights to proceed singly against L, as
surety and solidary debtor,   without prejudice to any action it may
later file against K, until the obligation is fully satisfied.
B. X Corp. cannot proceed against L because the liability of L is under
the contract of a surety which is in   essence secondary only to a valid
principal obligation.
C. X Corp. was certainty within its rights to proceed singly against L., as
surety and solidary debtor, but   the latter cannot proceed against K.
D. X Corp. cannot proceed against L because the liability of L is
solidary.

130. An obligation whose performance of the prestation can be

fulfilled is parts.
 
A. Divisible obligation
B. Obligation with a penal clause
C. Alternative obligation
D. Indivisible obligation

A. (Art. 1223, NCC)

131. An obligation whose performance of the prestation cannot be

fulfilled in parts.
 
A. Divisible obligation
B. Obligation with a penal clause
C. Alternative obligation
D. Indivisible obligation

D. (Art. 1233, NCC)

132. An obligation which contains an undertaking to assume greater

liability in case of breach of said obligation.
 
A. Divisible obligation
B. Obligation with a penal clause
C. Alternative obligation
D. Indivisible obligation

B. (Art. 1226, NCC)

133. Every future event and uncertain event upon which an obligation
is made to depend.

A. Penalty
B. Period
C. Condition
D. Force majeure
C. Condition has been defined as “every future event and uncertain
event upon which an obligation is made to depend. It is a future and
uncertain event upon which the acquisition or resolution of rights is
made to depend by those who execute the juridical act.”
The Supreme Court has held that “when the obligation assumed by a
party to a contract is expressly subjected to a condition, the obligation
cannot be enforced against him unless the condition is complied with.
“Furthermore, “the obligatory force of a conditional obligation is
subordinated to the happening of a future and uncertain event, so
that if that event does not take place, the parties would stand as if the
conditional obligation had never existed (Felix I. Gonzales vs. The Heirs
of Thomas and Paula Cruz, G.R. No. 131784, September 16, 1999).”

134. I. When the obligation assumed by a party to a contract is

expressly   subjected to a condition, the obligation cannot be enforced
against   him unless the condition is complied with.
II. The obligatory force of a conditional obligation is subordinated to
the   happening of a future and uncertain event, so that if that event
does   not take place, the parties would stand as if the conditional
obligation   had never existed.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

135. I. If the suspensive condition is fulfilled, the obligation   arises or

becomes effective.
II. If the resolutory condition is fulfilled, the obligation is  
extinguished.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Example of suspensive condition: X bound himself to deliver his

only car to his son Y if the latter will pass all his enrolled subjects this
semester. Thus, if the latter will pass all his subjects, X is obligated to
deliver his only car to him.
Example of resolutory condition: X gave his only car to his son Y
with the agreement that the latter will return said car if he will fail the
Certified Public Accountant board examinations. Thus, the obligation is
immediately demandable. However, if Y fails said examination, he
must return the car because the happening of the condition will
extinguish the obligation of X.
Suspensive vs. Resolutory obligation

Suspensive condition Resolutory condition

If the suspensive condition is

If the resolutory condition
fulfilled, the
is fulfilled, the obligation
obligation arises or becomes
is extinguished.
effective.

If the resolutory condition

If the suspensive condition is
is not fulfilled, the
not fulfilled, no juridical
juridical relation is
relation is created.
consolidated.

In resolutory condition,
In suspensive condition, rights rights are already
are not yet acquired, but there acquired, but subject to
is a hope or expectancy that the threat of extinction (8
they will soon be acquired. Manresa, 5th Ed., Bk. 1,
p.311).
136. I. If the resolutory condition is not fulfilled, no juridical   relation is
created.
II. If the suspensive condition is not fulfilled, the juridical   relation is
consolidated.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

137. A, B, and C (co-owners for brevity) executed a document in favor

of F where the latter paid a down payment of P50,000 and the balance
will be P1,240,000. It was stipulated that the co-owners bind
themselves to effect the transfer in their names from their deceased
father, X, the Transfer Certificate of Title (TCT) immediately upon
receipt of the down payment. Moreover, they agreed that if the titles
were already in the names of the co-owners they will execute the deed
of absolute sale of said property and F shall immediately pay the
balance. On the same date, F, paid the down payment of P50,000.
On February 6, 2018, the property originally registered in the name of
the co-owners’ father was transferred in their names under TCT No.
002. On February 18, 2018, the co-owners sold the property covered
by TCT No. 002 to G for P1,580,000.
For this reason, the co-owners canceled and rescinded the contract
with F by depositing the down payment paid in the bank in trust for F.
Subsequently, F, filed a complaint for specific performance against the
co-owners. What is the legal effect of the issuance of new title in the
name of the co-owners?
 
A. The rights and obligations of the parties did not yet become
mutually due and demandable as the co-owners   sold the property to
a third person.
B. The rights and obligations of the parties with respect to the
perfected contract of sale became mutually due and   demandable as
of the time of fulfillment or occurrence of the suspensive condition on
February 6, 2018.
C. There is fraud; hence, the co-owners are liable for damages.
D. Specific performance is not the proper remedy.

138. H and W spouses and E entered into a contract to sell wherein

the latter agreed to sell to the former, for P3,170,220, five parcels of
land. The spouses shall make a down payment of P500,000 upon
signing of the contract. The balance shall be paid in three installments.
The spouses failed to pay the last installment. Thereafter, the spouses
offered to pay the unpaid balance, which had already been delayed by
one and a half year, which E refused to accept. On September 23,
2018, E sold the same parcels of land to X.
The spouses filed a complaint to compel E to accept the spouses’
payment.
 
A. E is not within her rights to sell the subject land to X. E and X are in
bad faith. Payment of the price is   a positive suspensive condition,
failure of which is a breach that prevents the obligation of the   vendor
to convey title from becoming effective.
B. The agreement of the parties that a violation of the terms of the
contract would cause its   cancellation even without court intervention
is not valid.
C. The stipulation in the contract providing for automatic rescission
upon non-payment is defective.
D. E is within her rights to sell the subject lands to X. There can be no
rescission of an obligation that is   still non-existent due to the non-
happening of the suspensive condition.

D. The contract entered into by the parties is a contract to sell and no

a contract of sale.

139. I. In resolutory condition, rights are not yet acquired, but   there is
a hope or expectancy that they will soon be   acquired.
II. In resolutory condition, rights are already acquired, but   subject to
the threat of extinction.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

140. It is a classification of a condition where the fulfillment of the

condition depends upon the will of one of the contracting parties.
 
A. Potestative condition
B. Impossible condition
C. Casual condition
D. Mixed condition

A. For example, “I will you my only watch if I will go the shopping mall
today.”

141. The fulfillment of the condition depends upon chance and/or

upon the will of a third person.
 
A. Potestative condition
B. Impossible condition
C. Casual condition
D. Mixed condition

C. For example, “I will give you my only bicycle if it rains today.”

142. The fulfillment of the condition depends partly upon the will of a
party to the obligation and partly upon chance and/or the will of a
third person.
 
A. Potestative condition
B. Impossible condition
C. Casual condition
D. Mixed condition

D. “I will give you my only car if I will go to the shopping mall today
and if it rains today.”

143. Y and spouses H and W entered into a contract to sell involving a

parcel of land. At the time, the land was untitled although H and W
were paying taxes thereon. Under the contract, Y undertook to secure
title to the property in H and W’s names. Of the P312,840 purchase
price, Y was to pay a downpayment of P50,000 upon signing of the
contract, and the balance was to be paid within ten days from the
issuance of a court order directing issuance of a decree of registration
for the property.
On December 27, 2017, the court ordered the issuance of a decree of
registration in the name of H and W. H and W then demanded
payment of the balance of the purchase price. On February 28, 2018, Y
made a payment of P100,000 to H and W, still insufficient to cover the
full purchase price. Shortly thereafter, H and W offered to sell to Y
one-half of the property for all the payments the latter had made,
instead of rescinding the contract. Y did not accept H and W’s
proposal. Instead, Y offered to pay the balance in full for the entire
property. H and W refused the offer. Can H and W rescind the
contract?
 
A. Yes, because H and W have the right to rescind such contract.
B. No, because the obligation of H and W thereunder did not arise.
There can be no rescission of an obligation that   is non-existent,
considering that the suspensive condition therefor has not yet
happened.
C. No because H and W have no right to rescind such contract.
D. Yes, because Y failed to comply with his obligation to pay the full
purchase price of February 28, 2018.

144. The condition is capable of realization according to nature, law,

public policy, or good customs.
 
A. Positive condition
B. Negative condition
C. Possible condition
D. Impossible condition

145. The condition is not capable of realization according to nature,

law, morals, good customs, public order or public policy.
 
A. Positive condition
B. Negative condition
C. Possible condition
D. Impossible condition
D. Impossible condition may either be:

A. Physical, that is contrary to law of   nature, or

B. Legal, that is contrary to law, morals,   good customs or public
policy

146. The condition involves the performance of an act.

 
A. Positive condition
B. Negative condition
C. Possible condition
D. Impossible condition

A. In positive condition, obligation is extinguished as soon as the

time expires or if it becomes indubitable that the event will not take
place.

147. The condition involves the non-performance of an act.

 
A. Positive condition
B. Negative condition
C. Possible condition
D. Impossible condition

B. In negative condition, the obligation is effective from the moment

the time indicated has lapsed, or if it has become evident that the
event cannot occur, although the time indicated has not yet lapsed.
For example, “X promised to give his only car to Y if the latter will not
marry Z this year 2018.”

148. The condition is susceptible of partial realization.

 
A. Conjunctive condition
B. Alternative condition
C. Indivisible condition
D. Divisible condition

149. The condition is not susceptible of partial realization.

 
A. Conjunctive condition
B. Alternative conjunction
C. Indivisible condition
D. Divisible condition

 
150. There are several conditions, all of which must be realized.
 
A. Conjunctive condition
B. Alternative condition
C. Indivisible condition
D. Divisible condition 

151. There are several conditions, one which must be realized.

 
A. Conjunctive condition
B. Alternative condition
C. Indivisible condition
D. Divisible condition
B

152. It is also known as condition precedent.

 
A. Suspensive condition
B. Resolutory condition
C. Casual condition
D. Mixed condition

153. I. If the fulfillment of a potestative condition depends exclusively

upon   the will of the creditor, the conditional obligation shall be void.
II. If the fulfillment of a potestative condition depends exclusively upon
the will of the debtor, the conditional obligation shall be valid.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

 
154. These are conditions which are contrary to the law of nature.
 
A. Positive impossible condition.
B. Physical impossible condition
C. Legal impossible obligation
D. Negative impossible obligation
B

155. These are conditions which are contrary to law, morals, good
customs, public order, or public policy.
 
A. Positive impossible condition.
B. Physical impossible condition
C. Legal impossible condition
D. Negative impossible condition

156. Which of the following statements is not correct?

 
A. In divisible obligation that part thereof, which is not affected by the
impossible obligation or unlawful condition shall be valid.
B. If the condition is negative, not to do an impossible thing, it shall be
considered as not having been agreed upon.
C. If the obligation is pre-existing and not depending on the
fulfillment of   the impossible condition for its existence, only the
condition is void.
D. In divisible obligation that part thereof, which is not affected by the
impossible or unlawful condition shall be void.

157. X, offered a parcel of land to V. V visited the property and, except

for the presence of squatters in the area, he liked the place. Later, X
called on V with a proposal that should he advance the amount of
P50,000 which could be used in taking up an ejectment case against
the squatters, X would agree to sell the property for a low price. V
expressed his concurrence. Thereafter, a contract, denominated “Deed
of Conditional Sale,” was executed between them.
A few months later, judgment was rendered ordering the squatters to
vacate the premises. The decision was handed down beyond the 60-
day period stipulated in the contract. A few days later, X, prompted by
V’s continued refusal to accept the return of P50,000 advance
payment, filed for rescission of the deed of “conditional” sale. Is X’s
action for rescission justified?
 
A. No, because it is X who has failed in her obligation under the
contract. V did not breach the   agreement.
B. Yes, because V refused the return of the P50,000 advance payment.
C. No, because the contract is conditional sale and not absolute sale.
Moreover, X’s failure “to remove   the squatters from the property”
within the stipulated period gives V the right to either refuse to  
proceed with the agreement.
D. Yes, because V failed to pay the balance of the contract.

158. The remedy of requiring exact performance of a contract in the

specific form in which it was made, or according to the precise terms
agreed upon.
 
A. Resolution
B. Specific performance
C. Rescission
D. Fulfillment

B. Black’s Law Dictionary defined specific performance as “the

remedy of requiring exact performance of a contract in the specific
form in which it was made, or according to the precise terms agreed
upon. The actual accomplishment of a contract by a party bound to
fulfill it.”
Evidently, before the remedy of specific performance may be availed
of, there must be a breach of the contract.
Under a contract to sell, the title of the thing to be sold is retained by
the seller until the purchases makes full payment of the agreed
purchase price. Such payment is a positive suspensive condition, the
non-fulfillment of which is not a breach of but merely an event that
prevents the seller conveying title to the purchaser. The non-payment
of the purchase price renders the contract to sell ineffective and
without force and effect. Thus, a cause of action for specific
performance does not arise (Ayala Life Assurance, Inc. vs. Ray Burton
Development Corporation, G.R. No. 163075, January 23, 2006).

159. The condition shall be deemed fulfilled when the obligor

voluntarily prevent its fulfillment.
 
A. Doctrine of constructive fulfillment of suspensive   condition.
B. Doctrine of implied performance
C. Doctrine of express performance
D. Doctrine of constructive extinguishment of obligation

A. “The condition shall be deemed fulfilled when the obligor

voluntarily prevent its fulfillment.”
The following are the requisites of the doctrine of constructive
fulfillment of suspensive condition:
The condition is suspensive;
The debtor actually prevents the fulfillment of the condition; and
The debtor acts voluntarily or willfully.

160. The following are requisite of the doctrine of constructive

fulfillment of suspensive condition, except:
 
A. The condition is suspensive.
B. The condition is resolutory.
C. The debtor actually prevents the fulfillment of the   condition.
D. The debtor acts voluntarily or willfully.

161. A thing is lost when it, except:

 
A. Perishes.
B. Goes out of commerce.
C. Disappears in such a way that its existence is   unknown or it cannot
be recovered.
D. Deteriorates.

D. (Art. 1189, NCC)

162. It gives a right to enjoy the property of another with the

obligation of preserving its form and substance, unless the title
constituting it or the law otherwise provides.
 
A. Lease
B. Antichresis
C. Usufruct
D. Commodatum

C. Usufruct gives a right to enjoy the property of another with the

obligation of preserving its form and substance, unless the title
constituting it or the law otherwise provides (Art. 562, NCC).

163. A person who has the right to the benefits of another’s property.
 
A. Lessor
B. Antichretic creditor
C. Usufructuary
D. Bailor

C. Usufructuary, is one having the right to a usufruct; specifically, a

person who has the right to the benefits of another’s property (Black’s
Law Dictionary, p. 1580, Eight Edition).
The rights of the usufructuary are:
  1. The usufructuary may make on the property held in usufruct
such useful improvements or expenses for mere pleasure as he may
deem proper, provided he does not after its form or substance; but he
shall have no right to be indemnified therefor. He may,
however, remove such improvements, should it be possible to do so
without damage to the property (Art. 579, NCC).
  2. The usufructuary may set off the improvements he may have
made on the property against any damage to the same (Art. 580,
NCC).

 
164. I. When the conditions have for their purpose the extinguishment
of an   obligation to give, the parties, upon the fulfillment of said
conditions,   shall return to each other what they have received.
II. The power to rescind obligations is implied in reciprocal ones, in
case one   of the obligors should not comply with what is incumbent
upon him.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C

165. It has the effect of “unmaking a contract, or its undoing from the
beginning, and not merely its termination.”
 
A. Rescission
B. Specific performance
C. Annulment
D. Void

A. Rescission has the effect of “unmaking a contract, or its undoing

from the beginning, and merely its termination.” Hence, rescission
creates the obligation to return the object of the contract. It can be
carried out only when the one who demands rescission can return
whatever he may be obliged to restore. To rescind is to declare a
contract void at its inception and to put an end to it though in never
was. It is not merely to terminate it and release the parties from further
obligations to each other, but to abrogate it from the beginning and
restore the parties to their relative positions as if no contract has been
made (Unlad Resources Development Corporation, et.al. vs. Renato P.
Dragon, et.al., G.R. No. 149338, July 28, 2008).
Extrajudicial rescission of a contract is not possible without an
express stipulation to that effect (Spouses Reynaldo Alcaraz and
Esmeralda Alcaraz vs. Pedro M. Tangga-an, et.al., G.R. No. 128568,
April 9, 2003).
The Supreme Court, however, has held in Tan v. Court of Appeals, that:
The power to rescind obligation is implied in reciprocal ones in case
one of the obligors should not comply with what is incumbent upon
him x x x. However, it is equally settled that, in the absence of a
stipulation to the contrary, this power must be invoked judicially; it
cannot exercised solely on a party’s own judgment that the other has
committed a breach of the obligation. Where there is nothing in the
contract empowering a party to rescind it without resort to the courts,
such party’s action in unilaterally terminating the contract x x x is
unjustified (Victoria Ong, vs. Ernesto Bognalbal and CA, G.R. No.
149140, September 12, 2006).

166. Are those which arise from the same cause, wherein each party is
a debtor and a creditor of the other, such that the performance of one
is conditioned upon the simultaneous fulfillment of the other?
 
A. Unilateral obligation
B. Reciprocal obligation
C. Real obligation
D. Personal obligation

B. Reciprocal obligations are those which arise from the same cause,

wherein each party is a debtor and a creditor of the other, such that
the performance of one is conditioned upon the simultaneous
fulfillment of the other. From the moment one of the parties fulfills his
obligation, delay by the other party begins (ASJ Corporation and
Antonio San Juan vs. Sps. Efren & Maura Evangelista, G.R. No. 158086,
February 14, 2008).

167. I. Rescission is allowed only where the breach is   substantial and

fundamental to the fulfillment of   the obligation.
II. The right to rescind may be waived expressly only.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. The right of resolution of a party to an obligation under Article

1191 of the Civil Code is predicated on a breach of faith by the other
party that violates the reciprocity between them (Virgilio R. Romero vs.
CA and Enriqueta Chua Vda. De Ongsiong, G.R. No. 107207, November
23, 1995). Rescission, however, is allowed only where the breach is
substantial and fundamental to the fulfillment of the obligation (Fidela
del Castillo Vda. De Mistica vs. Spouses Bernardino Naguiat and Maria
Paulina Gerona-Naguiat, G.R. No. 137909, December 11, 2003).
Article 1191 of the Civil Code provides that the power to rescind
obligation is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him. The rescission
referred to in this article, more appropriately referred to as resolution,
is not predicated on injury to economic interests on the part of the
party plaintiff, but of breach of faith by the defendant which is
violative of the reciprocity between the parties. The right to rescind
may be waived, expressly or impliedly (Sps. Lino Francisco and Guia
Francisco vs. DEAC Construction, Inc., and Geomar A. Dadula, G.R. No.
171312, February 4, 2008).

168. It means bringing the parties back to their original status prior to
the inception of the contract.
 
A. Mutual rescission
B. Mutual annulment
C. Mutual restitution
D. Mutual ratification

C. Mutual restitution is required in cases involving rescission under

Article 1191. This means bringing the parties to their original status
prior to the inception of the contract. Article 1385 of the Civil Code
provides the effects of rescission, to wit:
 
ART. 1385. Rescission creates the obligation to return the things which
were the object of the contract, together with their fruits, and the price
with its interest; consequently, it can be carried out only when he who
demands rescission can return whatever he may be obliged to restore.
Neither shall rescission take place when the things which are the
object of the contract are legally in the possession of third persons
who did not act in bad faith.

169. I. The rescission has the effect of abrogating the contract in some
parts.
II. When a decree for rescission is handed down, it is the duty of the
court   to require both parties to surrender that which they have
respectively   received and to place each other as far as practicable in
his original   situation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

170. I. The power to rescind obligations is implied in reciprocal   ones

in case of one of the obligors should not comply   with what is
incumbent upon him.
II. It is settled that, in the absence of a stipulation to the contrary,  
power to rescind obligations must be invoked judicially.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. The right to rescind a contract arises once the other party defaults

in the performance of his obligation.
171. Is an interval of time, exerting an influence on an obligation as a
consequence of a juridical act, either suspends its demandability or
produces its extinguishment?
 
A. Period
B. Condition
C. Demand
D. Delay

A. Period is a time of definite length. Definite, having distinct or

certain limits; determinate in extent of character; limited; fixed – as
definite period (Capiral vs. Manila Electric Company, L-15721,
December 27, 1963).
When the debtor binds himself to pay when his means permit him to
do so, the obligation shall be deemed to be one with a period.

Examples of phrases similar to “when his means permit him to do

so”
1. “When I have money”
2. “As soon as I have money”
3. “When I can afford to pay”

In connection with the above, the following provision is material, to

wit:
Art. 1179. If the obligation does not fix a period, but from its nature
and the circumstances it can be inferred that a period was intended,
the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends
upon the will of the debtor.
In every case, the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once
fixed by the courts, the period cannot be changed by them.
The period is presumed to have been established for the benefit of
both the creditor and debtor.
The extension of a lease contract must be made before the term of the
agreement expires, not after. Upon the lapse of the stipulated period,
courts cannot belatedly extend or make a new lease for the parties,
even on the basis of equity.
Thus, the period of the lease contract is deemed to have been set for
the benefit of both parties. Its renewal may be authorized only upon
their mutual agreement or at their joint will. Its continuance, effectivity
or fulfillment cannot be made to depend exclusively upon the free and
uncontrolled choice of just one party. While the lessee has the option
to continue or to stop paying the rentals, the lessor cannot be
completely deprived of any say on the matter. Absent any contrary
stipulation in a reciprocal contract, the period of lease is deemed to be
for the benefit of both parties (LL and Company Development and
Agro-Industrial Corporation vs. Huang Chao Chun and Yang Tung Fa,
G.R. No. 142378, March 7, 2002)

172. I. A condition has for its requisites futurity and   certainty.

II. A term or period has for its requisites futurity and   uncertainty.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

D. Obligation with a period is an obligation for whose fulfillment a

day certain has been fixed, shall be demandable only when the day
comes.
 
A day certain is understood to be that which must necessarily come,
although it may not be known when (Art. 1193, NCC). Moreover, when
the debtor binds himself to pay when his means permit him to do so,
the obligation shall be deemed to be one with a period (Art. 1180,
NCC).
For example, X promised to give his particular laptop to Y on
December 30, 2018.

 
173. I. A condition may or may not happen.
II. A term or period will surely come to pass,   although it may not be
known when.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. CONDITION vs. TERM/PERIOD

Condition Term or Period

A condition refers to A term or period refers to an

an event interval of time

A condition has for its

A term or period has for its
requisites futurity
requisites futurity and certainty
and uncertainty

A term or period will surely

A condition may or may
come to pass although it may
not happen
not be known when

A term or period does not have

A condition has
retroactive effects unless there
retroactive effects
is an agreement to the contrary

 
174. Obligations for whose fulfillment a day certain has been fixed,
shall be demandable only when that day comes.
 
A. Resolutory period
B. In diem
C. Ex die
D. Suspensive condition 

C. An obligation with a suspensive period (ex die) is an obligation for

whose fulfillment a day certain has been fixed, it shall be demandable
only when that day comes (Art. 1193, NCC).
For example, X promised to give P10,000 to Y on February 14, 2018.
Take note that X will be liable upon demand by Y on February 14,
2018.

175. Obligations which take effect at once, but terminate upon arrival
of the day certain.
 
A. Suspensive period
B. In diem
C. Ex die
D. Resolutory condition

B. Obligation with a resolutory period (in diem) take effect at once,

but terminate upon arrival of the day certain (Art. 1193, NCC).
For example, X promised to give P100 a day to Y until May 30, 2018.
Let it be noted that the obligation of X is immediately demandable.
However, X’s liability to Y will be extinguished on May 30, 2018.

176. The court is not authorized to fix a period. The following are the
exceptions, except:
 
A. If the obligation does not fix a period, but from its nature and  
circumstances it can be inferred that a period was intended.
B. If the period depends upon the will of the creditor.
C. In under the circumstances the parties have contemplated a  
period.
D. When the debtor binds himself to pay when his means permit   him
to do so.

B. General Rule:
The court is not authorized to fix a period.
Exceptions:
  1. If the obligation does not fix a period, but from its nature and
circumstances it can be inferred that a period was intended (Art. 1197,
NCC).
  2. If the period depends upon the will of the debtor (Art. 1197, NCC).
  3. If under the circumstances the parties have contemplated a period
(Art. 1197, NCC).
  4. When the debtor binds himself to pay when his means permit him
to do so (Art. 1180, NCC).

177. The debtor loses the right to make use of period in the following
instances, except:
 
A. When after the obligation has been contracted, he become  
insolvent, unless hi gives a guaranty or security for the debt.
B. When the debtor furnished the creditor the guaranties or  
securities.
C. When the debtor violates any undertaking in consideration of  
which the creditor agreed to the period.
D. When the debtor attempts to abscond.

B. The debtor loses right to make use of period in the following

instances:
  1. When after the obligation has been contracted, he becomes
insolvent, unless he gives a guaranty or security for the debt;
Example:
In a contract of loan agreed upon on JULY  1, 2018, X, the debtor, and
Y, the creditor, agreed that X will pay his obligation in the amount of
P100,000 on December 31, 2018. Further they agreed that Y cannot
demand payment either that December 31, 2018. Subsequently, on
September 1, 2018, X turned insolvent. In this case, Y need not wait for
December 31, 2018, he can immediately demand the obligation, as an
exception. However, if X gives a guarantor or pledge or mortgage as
security, the Y only demand the obligation on December 31, 2018.
  2. When he does not furnish to the creditor the guaranties or
securities which he has promised;
Example:
In a contract of loan agreed upon on July 1, 2018, X, the debtor, and Y,
the creditor, agreed that X will pay his obligation in the amount of
P100,000 on December 31, 2018. X, likewise, promised to deliver his
only car, as pledge or security, on August 1, 2018. Further they agreed
that Y cannot demand payment earlier that December 31, 2018.
On August 1, 2018, X failed to deliver his only car; hence his obligation
becomes immediately demandable. This means that Y need not wait
for December 31, 2018 before he can make a demand.
  3. When by his own acts he has impaired said guaranties or securities
after their establishment, and when through a fortuitous event they
disappear, unless he immediately gives new ones equally satisfactory:
Example:
In a contract of loan agreed upon on July 1, 2018, X, the debtor, and Y,
the creditor, agreed that X will pay his obligation in the amount of
P100,000 on December 31, 2018. In order for Y to grant the said loan
of X, the latter mortgaged his only house as a security. However, on
October 1, 2018, said house was totally destroyed by an earthquake.
Consequently, the obligation of X becomes immediately demandable
and Y need not wait for December 31, 2018 unless X will give a new
security which is satisfactory to Y. For instance, a land to be
constituted as a real estate mortgage in favor of Y.
  4. When debtor violates any undertaking, in consideration of which
the creditor agreed to the period;
Example:
On October 1, 2018, X asked Y for the latter to lend P10,000 to the
former to be paid on December 31, 2018. Y told X that he can lend the
said amount provided that X will no longer smoke cigarette until
December 31, 2018; otherwise, the obligation becomes immediately
demandable. X agreed to the said undertaking. If on November 1,
2018, X was caught smoking cigarette, then his obligation become
immediately demandable.
  5. When the debtor attempts to abscond.
Attempt to abscond means attempt to escape. This is a sign of bad
faith because the debtor intends to evade his obligation.

178. A owes B P150,000 due on June 30, 2018. A executed a

mortgaged in favor of B on A’s building. On June 10, 2018, the
mortgaged building was totally lost due to an earthquake. On June 12,
2018, B demanded payment from A. Is B’s demand valid?
 
A. No. The obligation is one with a definite period, thus the creditor
cannot demand   fulfillment of the obligation before it due.
B. No. the mortgage was extinguished because the object of the
contract was lost   through a fortuitous event.
C. Yes. The debt becomes due at once because the object of mortgage
was lost.
D. Yes. The debt becomes due at once because the period’s benefits is
given solely to   the creditor thereby giving the creditor the right to
demand performance even   before the due date.

C. The debtor loses right to make use of period when, by his own acts,
he has impaired said guaranties or securities after their establishment,
and when through a fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory.
179. An obligation where there is only one object.
 
A. Simple obligation
B. Conjunctive obligation
C. Compound obligation
D. Distributive obligation

A. Examples: “X bound himself to deliver his only dog to Y.” “D owes C

P5,000.”

180. An obligation where there are two or more objects.

 
A. Simple obligation
B. Compound obligation
C. Conjunctive obligation
D. Distributive obligation

B. There are two kinds of compound obligation, that is, conjunctive

obligation and distributive obligation.

181. An obligation where there are two or more objects and all of
them are due.
 
A. Simple obligation
B. Conjunctive objective
C. Compound obligation
D. Distributive obligation

B. Conjunctive obligation is an obligation where there are two or

more objects and all of them are due. All of the objects must be
performed to extinguish the obligation.
For example, X obliged himself to give his only cell phone, only laptop,
and only TV to Y on August 1, 2018. On said date, X must deliver all
the three objects together with their accessions and accessories
(based on the principle of accessory follows the principal) for his
obligation to be extinguished. Otherwise, if X delivers only the cell
phone or only the cell phone and the laptop, then his obligation is not
extinguished. The rule also is “complete payment/performance.”

182. An obligation where all of the objects must be performed to

extinguished the obligation.
 
A. Simple obligation
B. Conjunctive obligation
C. Compound obligation
D. Distributive obligation

183. An obligation where one, two or more of the objects are due. One
of the objects must be performed to extinguish the obligation.
 
A. Alternative obligation
B. Facultative obligation
C. Compound obligation
D. Distributive obligation

D. There are two kinds of distributive obligation, that is, alternative

obligation and facultative obligation.
ALTERNATIVE vs. FACULTATIVE OBLIGATION

Alternative Facultative

In alternative obligations several In facultative obligations

objects are due only one object is due.

Alternative obligations may be Facultative obligations

 may be complied with by
complied with by the delivery
the delivery of another
of one of the objects or by the
object or the
performance of one of the
performance of another
prestations which are
prestation in substitution
alternatively due.
of that which is due.

In alternative obligations, the In facultative obligations,

right of choice may pertain even the right of choice
to the creditor or to a third pertains only to the
person. debtor.

In facultative obligations,
In alternative obligations, the
loss or impossibility of
loss or impossibility of all of the
the object or prestation
objects or prestations which are
which is due without any
due without any fault of the
fault of the debtor is
debtor is necessary to extinguish
sufficient to extinguish
the obligation.
the obligation.

The nullity of one of the objects The nullity of the

does not invalidate the principal object
obligation which is still in force invalidates the
with respect to those which obligation, even if the
have no defect. substitute object is valid.

The impossibility of the

The impossibility of all the
objects due without the fault of
the debtor extinguishes the
obligation.
principal object is
sufficient to extinguish
the obligation even if the
substitute object is
possible.

184. An obligation where two or more objects are due but the
performance of one sufficient
 
A. Alternative obligation
B. Facultative obligation
C. Compound obligation
D. Distributive obligation
A. (Art. 1199, NCC).
X obliged himself to give his only cell phone, or his only laptop, or his
only TV to Y on December 31, 2018. The delivery of either of these
objects will extinguish the obligation of X.

185. An obligation where only one object is due but the debtor may
substitute another object.
 
A. Alternative obligation
B. Facultative obligation
C. Compound obligation
D. Distributive obligation

B. (Art. 1206, NCC).

X promised to give his only parcel of land to Y.  However, as a
substitute, he will deliver his only car. Take note that the parcel of land
is the principal object and the car is the substitute object.

186. D is obliged to give C a specific ring. The parties agreed that D

may give a specific bracelet as a substitute. Which of the following is
true?
 
A. If the ring is lost through a fortuitous event before substitution, the
obligation is extinguished.
B. If the bracelet is lost through a fortuitous event before the
substitution,   the obligation is extinguished.
C. If the ring is lost through a fortuitous event after substitution, the  
obligation is extinguished.
D. If the ring is lost through the debtor’s fault after substitution, the  
debtor shall pay damages.

A
187. I. A person alternatively bound by different prestations   shall
completely perform both of them.
II. The creditor cannot be compelled to receive part of   one and part
of the other undertaking.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. (Art. 1199, NCC)

188. I. In alternative obligation, the right of choice belongs to the  

creditor, unless it has been expressly granted to the debtor.
II. The debtor shall have no right to choose those prestations which
are   impossible, unlawful or which could not have been the object of  
the obligation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. RULE:
In an alternative obligation, the right of choice belongs to the debtor.
Example:
X obliges himself to give his only cell phone, or his only laptop, or his
only TV to Y. A problem will arise if X wants to deliver the cell phone
while Y wants to receive the laptop. Thus, if the parties did not
stipulate on who will choose, then the right to choose belongs to X,
the debtor.
EXCEPTION:
The exception is when the choice has been expressly given to the
creditor (Art. 1205, NCC).
Example:
In the immediately preceding example, if X communicated to Y that it
will be the latter who will choose and Y agreed then Y can choose the
laptop.
LIMITATION:
The debtor shall have no right to choose those prestations which are
impossible, unlawful or which could not have been the object of the
obligation.

Note:
Once the selection has been communicated, it becomes irrevocable.
The law does not require the other party to consent to the choice
made by the party entitled to choose.
The law does not also require a form to be use by a party entitled to
choose in communicating his choice to the other party. Hence, it may
be in any form provided that it is sufficient to make the other party
know that the election has been made. It may be made orally or in
writing.
Note:
The law provides that the debtor shall lose the right of choice when
among the prestations whereby he is alternatively bound, only one
practicable.
The obligation, in this case, becomes a simple obligation and also pure
obligation because the debtor objects may have been lost or become
impossible.
For example, X is bound to give his only cell phone, or his only laptop,
or his only TV to Y on December 31, 21018. If the cell phone and the
TV were both lost, then it becomes a simple obligation. Consequently,
X will just deliver the laptop.
189. I. In alternative obligations, 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.
II. The debtor shall lose the right of choice when among the
prestations   whereby he is alternatively bound, only one is practicable.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. 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.

190. D obliged to give C a specific watch, a specific ring, or a specific

bracelet. The parties agreed that C will have the right to choose the
thing which will be given to him. Before C could make his choice, the
watch and the ring are lost through D’s fault, successively. What is the
right of C?
 
A. C may choose the delivery to him of the bracelet, or the price of the
watch, or the   price of the ring plus damages.
B. C cannot choose the price of the watch or the price of the ring
because the said   objects have already been lost.
C. C can only choose to have the bracelet because anyway, D can still
perform his   obligation.
D. C can only choose to have delivery of the bracelet or the price of
the ring which was   the last item that was lost plus damages.

A
191. An obligation where only one prestation has been agreed upon,
but the obligor may render another in substitution.
 
A. Alternative obligation
B. Facultative obligation
C. Compound obligation
D. Distributive obligation

192. I. Alternative obligations may be complied with by the delivery of

one   of the objects or by the performance of one of the prestations  
which are alternatively due.
II. Facultative obligations may be complied with the delivery of
another   object or the performance of another prestation in
substitution   of that which is due.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

193. I. In alternative obligations, the right of choice may   pertain even

to the creditor.
II. In facultative obligations, the right of choice pertains   only to the
creditor.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

 
194. I. In alternative obligations, the loss or impossibility of all of the
objects   or prestations which are due without any fault of the debtor
is   necessary to extinguish the obligation.
II. In facultative obligations, loss or impossibility of the object or
prestation   which is due without the fault of the debtor is sufficient to
extinguish   the obligation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Effects of loss of objects of alternative obligation when choice

belongs to debtor
  1. Loss due to fortuitous event
A. All od the objects are lost
The obligation of the debtor is extinguished.
Example:
X obliged himself to give his only cell phone, or his only laptop, or his
only TV to Y. If all of these were lost through a typhoon, then the
obligation of X is extinguished.
B. Only one of the objects remains
The debtor must deliver to the creditor the remaining object.
Consequently, the obligation ceases to be alternative and it becomes a
simple obligation.
Example:
X is obliged to give his only cell phone, or his only laptop, or his only
TV to Y. If only the cell phone was lost through a typhoon, then X is
liable to deliver either the laptop or the TV at his option. The
obligation is still alternative because there are two remaining objects.
  2. Loss due to debtor’s fault
A. All of the objects are lost
The creditor shall have a right to indemnity for damages based on the
value of the last thing which disappeared or service which become
impossible. Damages other than the value of the last thing or service
may also be awarded (Art. 1204, NCC).
Example:
X obliged himself to give his only cell phone, or his only laptop, or his
only TV to Y.  When through X’s fault, all of these objects were lost
successively, meaning the first object that was lost was the cell phone
followed by laptop and finally the TV, then X will be liable for damages
taking as a basis the value of the TV. Also, damages other than the
value of TV may be awarded like moral damages.
B.  Only one of the objects remains
The debtor must deliver to the creditor the remaining object.
Consequently, the obligation ceases to be alternative as it became a
simple obligation.
Example:
X obliged himself to give his only cell phone, or his only laptop, or his
only TV to Y. If the cell phone and laptop were both lost through the
negligence of X then he is liable to deliver the TV. It becomes a simple
obligation because there is only one object. Take note that there is
negligence in the present case which is a ground for asking damages;
however, X is not liable for damages because of the nature of the
obligation which is alternative meaning there are two or more objects.
Moreover, there remains an object so that all the essential elements of
the obligation are still intact.
C. Two or more of the objects remain
The debtor must deliver that which he shall choose from among the
remainder. Consequently, the obligation still subsists retaining its
alternative character.
Example:
X obliged himself to give his only cell phone, or his only laptop, or his
only TV to Y. If only the cell phone was lost through the negligence of
X then he is liable to deliver the laptop or the TV at his option. The
obligation is still alternative because there are two remaining objects.
Again, take note that there is negligence in the present case which is a
ground for asking damages; however, X is not liable for damages
because of the nature of the obligation which is alternative meaning
there are two or more objects.
  Effects of loss of objects of alternative obligation when choice
belongs to creditor
  1. Loss due to fortuitous event
A. All of the objects are lost
The obligation of the debtor is extinguished.
Example:
X is obliged to give his only cell phone, or his only laptop, or his only
TV to Y. If all of these were lost through a typhoon, then the obligation
of X is extinguished.
B. Only one of the objects remains
The debtor must deliver to the creditor the remaining object.
Consequently, the obligation ceases to be alternative and it has
become simple obligation.
Example:
X obliged himself to give his only cell phone, or his only laptop, or his
only TV to Y. If the cell phone and laptop were both lost through a
typhoon, then X is liable to deliver the TV. It becomes a simple
obligation because there is only object.
C. Two or more of the objects remain
The debtor must deliver that which the creditor shall choose from
among the remainder. Consequently, the obligations still subsist
retaining its alternative character.
Example:
X obliged himself to give his only cell phone, or his laptop, or his only
TV to Y. If only the cell phone was lost through a typhoon, then X is
liable to deliver either laptop or the TV, this time, at the option of
creditor Y. The obligation is still alternative because there are two
objects.
Loss due to debtor’s fault
All of the objects are lost
The creditor shall choose the price on any of the objects with
indemnity for damages (Art. 1205, NCC).
Example:
X is obliged to give his only cell phone, or his only laptop, or his only
TV to Y. When through X’s fault, all of these objects were lost
successively, meaning the first object that was lost was the cell phone
followed by laptop and finally the TV, then Y will have three options,
that is, Y can choose the value of the cell phone plus damages or the
value of the laptop plus damages, or the value of the TV plus
damages. Take note that the ground for asking damages here is
negligence.
Only one of the objects remains
The creditor may choose the object which remains and debtor cannot
be held liable for damages. However, the creditor may also choose the
value of any one of the objects which were lost, plus damages.
Consequently, the obligation ceases to be alternative and it became a
simple obligation (Art. 1205, NCC).
X obliged himself to give his only cell phone, or his only laptop, or his
only TV to Y. If only the cell phone and the laptop were both lost
through the negligence of X, then Y, as creditor, may choose the value
of the cell phone plus damages or the value of the laptop plus
damages. Y may also choose delivery to him of the TV, the remaining
object, however, there is no damages because there is no ground for
asking damages. Negligence, as a ground for asking damages,
attached only to the loss of the cell phone and the laptop.
Two or more of the objects remain
The debtor must deliver that which the creditor shall choose from
among the remainder and the debtor cannot be held liable for
damages. However, the creditor may also choose any of the objects
which were lost and the debtor is liable for the value of the object plus
damages. Consequently, the obligation still subsists retaining its
alternative character (Art. 1205, NCC).
Example:
X obliged himself to give his only cell phone, or his only laptop, or his
only TV to Y. If only the cell phone was lost through the negligence of
X then Y may opt for the delivery to him of either the laptop or the TV
with no damages because there is no ground for asking damages or
negligence did not attach to the obligation. However, Y may opt to
choose the value of the cell phone plus damages because negligence
attached to the said obligation.
The foregoing rules are applicable to personal obligations, obligations
do or not to do, in case one, some, or all of the prestations should
become impossible.

195. I. In alternative obligations, the impossibility of all the objects due

without the fault of the debtor extinguishes the obligation.
II. In facultative obligations, the culpable loss of the object which the  
debtor may deliver in substitution before the substitution is effected  
does not give rise to any liability on the part of such debtor.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. The creditor is entitled to indemnity for damages when through the
fault of the debtor:
  A. All the things which are alternatively the object of the obligation
have been lost; or
  B. The compliance of the obligation has become impossible.
The indemnity shall be fixed taking as a basis of the value of the last
thing which disappeared, or that of the service which last became
impossible.
Damages other than the value of the last thing or service may also be
awarded.

196. I. In alternative obligations, the nullity of one of the objects   does

not invalidate the obligation which is still in force   with respect to
those which have no defect.
II. In facultative obligations, the nullity of the principal object  
invalidates the obligation, even if the substitute object is valid.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Effect of Loss or deterioration of substitute in facultative

obligation

1. Before substitution
The loss or deterioration of the thing intended as a substitute, though
the negligence of the obligor does not render him liable.

Example:
X promised to give his only laptop to Y. Moreover, he obliged also to
deliver his cell phone as a substitute in case he cannot deliver the
laptop. Subsequently, the cell phone was lost through the negligence
of X. What is the legal effect of this loss? X is still liable to deliver the
laptop. This is because what is due is still the laptop, the principal
obligation as there was no substitution made.
What if the cause of the loss of the cell phone is through fortuitous
event? Is the obligation extinguish? X is still liable to deliver the laptop
for the same reason that what is due is the laptop.
What if what was lost is the laptop? If the cause of loss is through
fortuitous event, then the obligation is extinguished but if the cause of
loss is through the negligence of X, then he is liable for damages. Take
note there was no substitution yet. When is there substitution? There
is substitution if the debtor communicated to the creditor that he will
deliver the cell phone (substitute thing) on maturity date.

2. After substitution
The obligor is liable for damages for the loss or deterioration of the
substitute on account of his delay, negligence or fraud because once
the substitution is made the obligation is converted into a simple
obligation with the substitute thing as the object of the obligation.

Example:
X promised to give his only laptop to Y. Moreover, he obliged also to
deliver his cell phone as a substitute in case he cannot deliver the
laptop. A few days before the due date, X informed Y that he will not
deliver the laptop and that he will deliver the cell phone on due date.
Take note that after such communication, the obligation became
simple obligation and no longer facultative obligation. Thus, if the cell
phone was lost through the negligence of X then he will be liable for
damages. Conversely, if the cell phone was lost through fortuitous
event, the obligation is extinguished.

197. The credit or debt is divided into as many shares as there are
creditors or debtors, the credits or debts being considered distinct
from one another.
 
A. Alternative obligation
B. Facultative obligation
C. Joint obligation
D. Solidary obligation

C. Joint obligation is when the credit or debt is divided into as many

shares as there are creditors or debtors, the credits or debts being
considered distinct from one another. Consequently, it is an obligation
where the whole debt is to be paid or fulfilled proportionately by the
different debtors and/or to be demanded proportionately by the
different creditors (Art. 1208, NCC).

198. It is an obligation where the whole debt is to be paid or fulfilled

proportionately by the different debtors and/or to be demanded
proportionately by the different creditors.
 
A. Joint obligation
B. Solidary obligation
C. Alternative obligation
D. Facultative obligation

199. I. In case of concurrence of two or more creditors or of two or

more   debtors in one and the same obligation, and in the absence of
express   and indubitable terms characterizing the obligation as
solidary, the   presumption is that the obligation is only joint.
II. It is incumbent upon the party alleging that the obligation is indeed
joint in character to prove such fact with a preponderance of  
evidence.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. The Civil Code provisions establish that in case of concurrence of

two or more creditors or of two or more debtors in one and the same
obligation, and in the absence of express and indubitable terms
characterizing the obligations as solidary, the presumption is that the
obligation is only joint. It does become incumbent upon the party
alleging that the obligation is indeed solidary in character to prove
such fact with a preponderance of evidence (Salvador P. Escano and
Mario Silos vs. Rafael Ortigas, Jr., G.R. No. 151953, June 29, 2007).
A joint obligation, which is defined as an obligation where there is
concurrence of several creditors, or of several debtors, or of several
creditors and debtors, by virtue of which each of the creditors has a
right to demand, and each of the debtors is bound to render,
compliance with his proportionate part of the prestation which
constitutes the object of the obligation. Article 1208 of the Civil Code
mandates the equal sharing of creditors in the payment of debt in the
absence of any law or stipulation to the contrary (Philippine
Commercial International Bank vs. CA & Atlas Consolidated Mining &
Development Corporation, G.R. No. 121989, January 31, 2006).

 
200. The following are other terms interchangeably used with joint
obligations, except:
 
A. Conjoint
B. Mancomunada
C. Mancomunada solidaria
D. Mancomunada simple
C. Other terms interchangeably used with joint obligations
1. “Joint” or “jointly”; or
2. “Conjoint” means mancum or mancomunada; or
3. “Mancomunada simple”
4. “Pro rate obligation”; or (Lafarge Cement Philippines, Inc., et.al., vs.
Continental Cement
5. “Proportionate.”

201. The following are the effects of joint obligation, except:

 
A. The defect of each obligation arising from the personal defect of a  
particular joint debtor or joint creditor does not affect the obligation  
or right of the other joint parties.
B. Insolvency of one joint debtor makes the other joint debtor or
debtors   responsible for his proportionate share.
C. The demand by the creditor or creditors on one joint debtor puts
him in   delay in case of non-payment while the other joint debtor or
debtors   are not liable.
D. The defenses of one joint debtor are not necessarily available to the
other joint debtor or debtors.

B. Effects of joint obligation

  1. The defect of each obligation arising from the personal defect of a

particular joint debtor or joint creditor does not affect the obligation
or right of the other joint parties.
   2. Insolvency of one joint debtor does not make the other joint
debtor or debtors responsible for his proportionate share.
  3. The demand by the creditor or creditors on the joint debtor puts
him in delay in case of non-payment while the other joint debtor or
debtors are not liable.
  4. The defenses of one joint debtor are not necessarily available to
the other joint debtor or debtors.
For example, B and C owes X and Y the amount of P100,000. In the
present case, since there is no agreement, it is disputably presumed
that the obligation of B and C are joint and that the credit of X and Y
are also joint. It means that B’s share in the obligation P50,000 so that
he will only pay X P25,000 and another P25,000 to Y. This is the same
with C. As to X, his credit is P50,000 so that he can only demand from
B the amount of P25,000 and from C the other P25,000. This is the
same with Y.

202. An obligation where each one of the debtors is bound to render

and/or each of the creditors has a right to demand entire compliance
with the prestation.
 
A. Alternative obligation
B. Facultative obligation
C. Joint obligation
D. Solidary obligation

D. Other terms interchangeably used with solidary obligations

  1. “Solidary obligations” may be used interchangeably with “joint and
several” or “several”.” Thus, use of the term “joint and solidary” is
confusing and ambiguous; or (Lafarge Cement Philippines, Inc., et.al.,
vs. Continental Cement Corporation, et.al., G.R. No. 155173, November
23, 2004)
  2. “In solidum”; or
  3. “Mancomunada solidaria”; or
  4. “Juntos o separadamente”; or
  5. “Individually and collectively.”
For example, B and C owes X and Y the amount of P100,000. Their
agreement is solidary. Thus, B and C can pay the entire amount of
P100,000 subject to reimbursement so that if it is B who paid the
P100,000 to X, B can ask reimbursement of P50,000 from C. On the
other hand, if X received the amount of P100,0000, it is his obligation
to give the P50,000 to Y, his share of the obligation.

 
203. The following are other terms interchangeably used with joint
obligations, except:
 
A. Pro rata
B. In solidum
C. Mancomunada
D. Proportionale

204. A, B, C and D, solidary debtors, are obliged to give V, W, X, Y and

Z, solidary creditors, P39,000.
 
A. V may collect from D P39,000.
B. V may collect from D P9,750.
C. V may collect from D P7,800.
D. V may collect from D P29,000.

205. The following are other terms interchangeably used with joint
obligations, except:
 
A. Juntos o separadamente
B. Jointly
C. Mancum
D. Proportionate
A

206. The following are other terms interchangeably used with solidary
obligations, except:
 
A. Joint and several
B. Several
C. Proportionate
D. Juntos o separadamente

207. The following are other terms interchangeably used with solidary
obligations, except:
 
A. Joint and several
B. Several
C. Juntos o separadamente
D. Mancum

208. The following are other terms interchangeably used with solidary
obligations, except:
 
A. Joint and several
B. Conjoint
C. Individually and collectively
D. Juntos o separadamente

B
209. This is a promissory note:
“I promise to pay A, B and C the sum of P18,000” (sgd) D, E, and F.
 
 A. F is obliged to pay P6,000.
B. F is obliged to pay P2,000.
C. F is obliged to pay P12,000
D. F is obliged to pay P18,000

A. D, E, and F are solidarily liable the payees are joint creditors.

 210. I. In a “joint” obligation, each obligor answers only for a part of

the   whole liability.
II. In a “solidary” or “joint and several” obligation, the relationship  
between the active and the passive subjects is so close that   each of
them must comply with or demand the fulfillment of   the whole
obligation.
 
a. Only I is true
b. Only II is true
C. Both are true
d. Both are false

C. In a “joint” obligation, each obligor answers only for a part of the
whole liability; in a “solidary” or “joint and several” obligation, the
relationship between the active and the passive subjects is so close
that each of them must comply with or demand the fulfillment of the
whole obligation (Lafarge Cement Philippines, Inc., et al., vs.
Continental Cement Corporation, et.al., G.R. No. 155173, November 23,
2004).

 211. I. The well-entrenched rule is that solidary obligations cannot be  

inferred lightly. They must be positively and clearly expressed.
II. A liability is solidary “only when the obligation expressly so states,  
when the law so provides or when the nature of the obligation   so
requires.”
 
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

C. A solidary obligation is one in which each of the debtors is liable for
the entire obligation, and each of the creditors is entitled to demand
the satisfaction of the whole obligation from any or all of the debtors.
On the other hand, a joint obligation is one in which each debtor is
liable only for a proportionate part of the debt, and the creditor is
entitled to demand only a proportionate part of the credit from each
debtor. The well-entrenched rule is that solidary obligations cannot be
inferred lightly. They must be positively and clearly expressed. A
liability is solidary “only when the obligation expressly so states, when
the law so provides or when the nature of the obligation so requires
(PH Credit Corporation vs. CA & Carlos M. Farrales, G.R. No. 109648,
November 22, 2001).”

 212. A, B, C, and D are joint creditors of X and Y, solidary debtors, in

the amount that solidary obligations cannot be inferred lightly. They
must be positively and clearly expressed. A liability is solidary “only
when the obligation expressly, states when the law so provides or
when the nature of the obligation
of P40,000. How much can A, B, and C collect from X?
 
a. A, B and C could collect P20,000 from X.
b. A, B and C could collect P30,000 from X.
c. A, B and C could collect all the P40,000 from X.
d. A, B and C could collect P20,000 from X and P10,000 from Y.
B. The creditors are joint parties while the debtors are solidarily liable,
Hence, each one of the debtors can pay the entire obligation;
however, each of the creditors can only demand their respective
obligation. Observe that the problem is asking for the share of three
(3) creditors.

 213. I. In case of breach of a joint indivisible obligation, it is  

converted into an indemnity for damages.
II. The obligation is deemed to be divisible when it is to give   definite
things and those which are not susceptible of   partial performance.
 
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

A. The obligation is deemed to be indivisible when it is to give definite

things and those which are not susceptible of partial performance (Art.
1225, NCC).
 
For example, A and B promised to deliver a specific car to X and Y.
Take note that their agreement is silent as to whether it is joint or
solidary; hence, it is presumed to be joint. It is worthy to note also that
the object is a car meaning it is an indivisible thing that is why all the
creditors should collectively make a demand and that the debtor
should collectively perform their respective obligations. Otherwise,
there is no complete payment or performance.
Assuming that both X and Y made a demand on maturity date against
A and B and that A is willing to deliver the particular car but B is not
willing to deliver. By way of analysis, A owes 50% of the obligation and
the other 50% is owed by B. Hence, even if A is willing to deliver the
specific car, the 50% of the car cannot be determined because it is
indivisible. Consequently, the obligation of A and B will be converted
into an indemnity for damages. If the car has a market value of
P1,000,000 then A will pay P500,000 with no additional damages
because he is willing to deliver. However, B will be paying P500,000
plus damages because he is not willing to deliver that may result to
delay, a ground for asking damages.
Assuming that both A and B are willing to deliver; however, B turned
insolvent, what would be the legal effect? The answer is that A will just
have to wait for B to become solvent and thereafter to collect his share
in the obligation.
In case of breach of a joint indivisible obligation, Art. 1224, NCC,
provides:
Art. 1224. A joint indivisible obligation gives rise to indemnity for
damages from the time anyone of the debtors does not comply with
his undertaking. 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.
Hence, in case of breach of a joint indivisible obligation, it is converted
into an indemnity for damages. The joint debtors who failed or refused
to comply with his obligation shall bear the burden of paying all of the
damages to the creditor or joint creditors.
For those joint debtors who may have been ready to comply with their
obligation shall not contribute to the indemnity beyond the
corresponding portion of the price of the thing or the value of the
service in which the obligation consists.

 214. I. Indivisibility refers to the juridical tie or legal tie or   vinculum

juris that is not capable of partial   performance.
II. Solidarity refers to the prestation.
 
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

D. In case, there is a concurrence of two or more creditors or more

debtors in one and the same obligation, Article 1207 of the Civil Code
states that among them, “there is a solidary liability only when the
obligation expressly so states, or when the law or the nature of the
obligation requires solidarity.” Article 1210 supplies further caution
against the broad interpretation of solidarity by providing:  “The
indivisibility of an obligation does not necessarily give rise to
solidarity. Nor does solidarity of itself imply indivisibility.”
These Civil Code provisions establish that in case of concurrence of
two or more creditors or of two or more debtors in one and the same
obligation, and in the absence of express and indubitable terms
characterizing the obligation as solidary, the presumption is that the
obligation is only joint. It thus becomes incumbent upon the party
alleging that the obligation is indeed solidary in character to prove
such fact with a preponderance of evidence (Salvador P. Escaño and
Mario M. Silos vs. Rafael Ortigas, Jr., G.R. No. 151953, June 29, 2007).

 
215. I. Indivisibility exists even if there is only one debtor and one
creditor.
II. Solidarity exists only if there are two or more debtors or two or
more creditors.
 
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

C. INDIVISIBILITY vs. SOLIDARITY

Indivisibility Solidarity

Indivisibility refers to
Solidarity refers to the
the prestation that is not
juridical tie or legal tie or
capable of partial
vinculum juris.
performance.

Solidarity exists only if

Indivisibility exists even if
there are two or more
there is only one debtor and
debtors or two or more
one creditor.
creditors.

In indivisibility, each debtor is In solidarity, each debtor is

not bound to fulfill the
obligation more than his
share and each creditor
cannot demand fulfillment of
the obligation more than his
share.
bound to the fulfillment or
compliance of the entire
obligation and each
creditor may demand the
fulfillment or compliance of
the entire obligation.

In case of breach of the

obligation, the indivisible
obligation is converted into
indemnity for damages; thus,
the indivisible character of
the obligation is terminated.
In case of breach of the
obligation, the solidary
character of the obligation
remains.

In indivisibility, only the In solitary, all the debtors

debtors guilty of breach of are liable for damages even
the obligation is liable for if only one of them is guilty
damages. of breach of the obligation.

In solidarity, if one debtor is

In indivisibility, if one debtor insolvent, all the other
is insolvent, the other debtors debtors who are solvent
are not liable for his share. are proportionately liable
for the share of the former.

 216. I. In case of breach of the obligation, the indivisible obligation is  

converted into indemnity for damages; thus, the indivisible   character
of the obligation is terminated.
II. In case of breach of the obligation, the solidary character of the  
obligation becomes joint.
 
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
 

217. It may be defined as a tie or vinculum among several creditors of

one and the same obligation.
 
a. Passive solidarity
b. Active solidarity
c. Mixed solidarity
d. None of the above

B. For example, X owes A, B, and C the amount of P300,000. Their

agreement is that the creditors are solidary. In this case, either of A, B,
may collect the entire credit of P300,000 subject to the giving of the
share of the other co-solidary creditors. For instance, if B demanded
from I the debt and the latter paid P300,000, X is obligated to give the
share of A and C in the amount of P100,000 each.

 218. It may be defined as a tie or vinculum among several debtors of

one and the same obligation.
 
a. Passive solidarity
b. Active solidarity
c. Mixed solidarity
d. None of the above
A. For example, X and Y, solidary debtors, are obligated to B in the
amount of P100,000. Since this is passive solidarity, if B demanded
from Y, Y will pay the entire amount of P100,000 and thereafter he has
a right to ask for reimbursement of P50,000 from X, the latter’s share.

219. This is solidarity among the debtors and creditors.

 
a. Passive solidarity
b. Active solidarity
c. Mixed solidarity
d. None of the above

 
C. X and Y are indebted to B and C the amount of P500,000. They
stipulated that the nature of the obligation will be solidary on the part
of both debtors and creditors. Thus, either of X or Y may pay the entire
obligation subject to reimbursement of the other’s share. On the other
hand, either of B or C may demand the P500,000 subject to the giving
of the share of the other party.

 220. I. Each one of the solidary creditors may do whatever may be  

useful or beneficial to the others but not anything   which may be
prejudicial to the latter.
II. As a general rule, a solidary creditor can assign his rights   based on
the principle of transmissibility of rights.
 
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
A. The law provides that each one of the solidary creditors may do
whatever may be useful or beneficial to the others but not anything
which may be prejudicial to the latter.
For example, B and C, solidary debtors, are indebted to X and Y,
solidary creditors, in the amount of P1,000,000 which will mature on
December 31, 2018. On said date, either X or Y must make a demand.
This demand is beneficial to the other co-solidary creditor; otherwise,
the debt might be extinguished because of prescription (a mode of
extinguishing an obligation through the lapse of time). Additionally, if
the debtors paid the obligation because of the demand then the said
act of making a demand is beneficial again to the other co-solidary
creditor. Contrariwise, if X or Y will not make a demand, said negative
act is prejudicial to the other co-solidary creditor.
A solidary creditor cannot assign his rights without the consent of the
others.

 221. Is a mode of extinguishing an obligation by changing the object

or principal conditions, or by substituting the person of the debtor, or
by subrogating a third person in the rights of the creditor?
 
a. Novation
b. Compensation
c. Merger of rights
d. Remission

A. The law declares that novation, compensation, confusion or

remission of the debt, made by any of the solidary creditors with any
of the solidary debtors, shall extinguish the obligation.
The creditor who may have executed any of these acts, as well as he
who collects the debt, shall be liable to the others for the share in the
obligation corresponding to them.
For example, B and C solidarily owes X and Y the amount of P100,000.
Band C agreed with X only that instead of paying the amount of
P100,000, B and C will just deliver a specific car. Upon delivery by B
and C of the specific car to X, their obligation is extinguished.
Nonetheless, X is liable for the share of Y
in the amount of P50,000.

 222. It is a mode of extinguishing an obligation that take place when

two persons, in their own right, are creditors and debtors of each
other.
 
a. Merger of rights
b. Novation
C. Remission
d. Compensation

D. The law declares that novation, compensation, confusion or

remission of the debt, made by any of the solidary creditors with any
of the solidary debtors, shall extinguish the obligation.
The creditor who may have executed any of these acts, as well as he
who collects the debt, shall be liable to the others for the share in the
obligation corresponding to them.
For example, B and C solidarily owes X and Y the amount of P100,000.
Prior to this agreement X was already indebted to B for P100,000
because of a separate contract. If X and B agreed to a compensation
or set-off, then the obligation is extinguished; however, X is liable to Y
in the amount of P50,000 as this is his share in the obligation. Also, C
must pay B’s share in the amount of P50,000.

 223. The obligation is extinguished from the time the characters of

creditor and debtor are merged in the same person.
 
a. Confusion
b. Novation
c. Remission
d. Compensation

A. The law declares that novation, compensation, confusion or of the

debt, made by any of the solidary creditors with any of the debtors,
shall extinguish the obligation.
The creditor who may have executed any of these acts, as well as he
who collects the debt, shall be liable to the others for the share in the
obligation corresponding to them.
For example, B and C solidary debtors owe solidary creditors X and Y
the amount of P100,000 as evidenced by a negotiable promissory
note. X and Y negotiated this promissory note to H then the latter
negotiated it to I then to J then to K then to L then back to B only. In
this case, obligation is extinguished.
Nevertheless, C is liable to B for his share in the amount of P50,000.
This is because when B and C issued the promissory note to X and Y,
they are both debtors in the amount of P100,000 (B’s share of P50,000
plus C’s share of P50,000) and thereafter when L negotiated the same
promissory note to B only (L is the debtor for P100,000 and B only is
the creditor for P100,000), the latter is the only creditor in the amount
of P100,000 which was extinguished due to merger of rights.
Therefore, it is just but right that C should pay B his share P50,000.

224. It is an act of liberality by virtue of which the obligee, without

receiving any price or equivalent, renounces the enforcement of the
obligation.
 
a. confusion
b. Novation
c. Condonation
d. Compensation
C. The law declares that novation, compensation, confusion, or
remission of the debt, made by any of the solidary creditors with any
of the solidary debtors, shall extinguish the obligation.
 The creditor who may have executed any of these acts, as well as he
who collects the debt, shall be liable to the others for the share in the
obligation corresponding to them.
For example, B and C solidary debtors owe X and Y the amount of
P100,000. Before the date matures, X condoned or remitted the
obligation in favor of B. In this case, the obligation of B and C are
extinguished because of the condonation or remission. If the
remission is without the knowledge or consent of Y, X is liable to Y in
the amount of P50,000. Moreover, C is not liable to B for his share
because of the principle “all for one, one for all” thus; “the remission of
one, is the remission of all.”
The law provides that the remission of the whole obligation, obtained
by one of the solidary debtors, does not entitle him to reimburse from
his co-debtors.
For example, X and Y solidarily obliged themselves to pay B the
amount of P300,000 on December 31, 2018. Because of their present
financial condition, X pleaded with B for the latter to extinguish the
obligation. Consequently, B condoned the obligation. Now, X is
demanding from Y the amount of P150,000 because he alleged that it
was through his efforts that B condoned the obligation. Is X correct?
No, because the remission of the obligation obtained by him does not
entitle him to reimbursement. Take note that the principle of solidary
obligation is “all for one and one for all”; hence, the “remission or
condonation of one is the remission or condonation of all.”
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 has been totally paid by
anyone of them before the remission was effected.
For example, X and Y solidarily obliged themselves to pay B and C the
amount of P150,000. Later, B remitted or condoned only the share of X
(P75,000). Unknown to X, the whole obligation was already paid by Y
to C before the remission took place. In this case, X is still liable to Y
because the obligation was extinguished first by payment before the
condonation set in. Take note that both payment and condonation are
modes of extinguishing an obligation, its only that payment in this
case precedes the condonation.

 25. I. Solidarity makes a solidary obligor an indispensable party in a

suit filed by the creditor.
II. When the law expressly provides for solidarity of the obligation,
each obligor may be compelled to pay the entire obligation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. Indeed, Article 1216 of the Civil Code provides that a creditor may
sue any of the solidary debtors.
Thus, the Supreme Court has ruled in Operators Incorporated vs.
American Biscuit Co. Inc. stated thus:
“x x x solidarity does not make a solidary obligor an indispensable
party in a suit filed by the creditor. Article 1216 of the Civil Code says
that the creditor may proceed against anyone of the solidary debtors
or some or all of them simultaneously (Constante Amor de Castro and
Corazon vs. CA and Francisco Artigo, G.R. No. 115838, July 18, 2002).”
When the law expressly provides for solidarity of the obligation, as in
the liability of co-principals in a contract of agency, each obligor may
be compelled to pay the entire obligation. The agent may recover the
whole compensation from any one of the co-principals (Constante
Amor de Castro and Corazon Amor de Castro vs. CA and Francisco
Artigo, G.R. No. 115838, July 18, 2002).
 
 226. I. Suretyship is merely an accessory or a collateral to a   principal
obligation.
II. A surety is considered in law to be on the same footing as the  
principal debtor in relation to whatever is adjudged   against the latter.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Suretyship is merely an accessory or a collateral to a principal

obligation. Although a surety contract is secondary to the principal
obligation, the liability of the surety is direct, primary, and absolute; or
equivalent to that of a regular party to the undertaking. A surety
becomes liable to the debt and duty of the principal obligor even
without possessing a direct or personal interest in the obligations
constituted by the latter (International Finance Corporation vs.
Imperial Textile Mills, Inc., G.R. No. 160324, November 15, 2005).
A surety is considered in law to be on the same footing as the
principal debtor in relation to whatever is adjusted against the latter
(International Finance Corporation vs. Imperial Textile Mills, Inc., G.R.
No. 160324, November 15, 2005).

 227. I. A solidary debtor will not be able to recover from the co-
debtors the full amount   already paid to the creditor, because the
right to recovery extends only to the   proportional share of the other
co-debtors, and not as to the particular   proportional share of the
solidary debtor who already paid.
II. A surety who pays the creditor has the right to recover the full
amount paid, and not   just any proportional share, from the principal
debtor or debtors.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. In the case of joint and several debtors, Article 1217 makes plain
that the solidary debtor who effected the payment to the creditor may
claim from his co-debtors only the share which corresponds to each,
with the interest for the payment already made. Such solidary debtor
will not be able to recover from the co-debtors the full amount already
paid to the creditor, because the right to recovery extends only to the
proportional share of the other co-debtors, and not as to the
particular proportional share of the solidary debtor who already paid.
In contrast, even as the surety is solidarily bound with the principal
debtor to the creditor, the surety who does pay the creditor has the
right to recover the full amount paid, and not just any proportional
share, from the principal debtor or debtors. Such right to full
reimbursement falls within the other rights, actions, and benefits which
pertain to the surety by reason of the subsidiary obligation assumed
by the surety.

228. The following actions must be commenced within six years:

 
A. Upon the quasi-contract
B. Upon a quasi-delict
C. Upon an obligation created by law
D. Upon a written contract

A. By prescription, one acquires ownership and other real rights

through the lapse of time in the manner and under the conditions laid
down by law. In the same way, rights and conditions are lost by
prescription (Art. 1106, NCC). Also, actions prescribe by the mere lapse
of time fixed by law (Art. 1139, NCC).
The following articles are the pertinent rules on prescription of
actions, to wit:
  1. Actions to recover movables shall prescribe eight years from the
time the possession thereof is lost, unless the possessor has acquired
the ownership by prescription for a less period, according to Articles
1132, and without prejudice to the provisions of Article 559, 1505, and
1133 (Art. 1140, NCC).
  2. Real actions over immovables prescribe after thirty years.
This provision is without prejudice to what is established for the
acquisition of ownership and other real rights by prescription (Art.
1141, NCC).
  3. A mortgage action prescribes after ten years (Art. 1142,   NCC).
  4. The following rights, among others specified elsewhere in the Civil
Code, are not extinguished by prescription:
A. To demand a right of way (Art. 649, NCC); and
B. To bring an action to abate a public or private nuisance (Art. 1143,
NCC).
  5.The following actions must be brought within ten years from the
time the right of action accrues:
A. Upon a written contract;
B. Upon an obligation created by law; and
C. Upon a judgment (Art. 1144, NCC).
  6. The following actions must be commenced within six years:
A. Upon an oral contract; and
B. Upon a quasi-contract (Art. 1145, NCC).
  7. The following actions must be instituted within four years:
A. Upon an injury to the rights of the plaintiff; and
B. Upon a quasi-delict (Art. 1146, NCC);
  8. The following actions must be filed within one year:
A. For forcible entry and detainer; and
B. For defamation (Art. 1147, NCC);
  9. The limitations of action mentioned in Articles 1140 to 1142, and
1144 to 1147 are without prejudice to those specified in other parts of
the Civil Code, in the Code of Commerce, and in special laws (Art.
1148, NCC).
  10. All other actions whose periods are not fixed in this Code or other
laws must be brought within five years from the time the right of
action accrues (Art. 1149, NCC).
X and Y solidarily obliged themselves to pay B the amount of
P150,000. Subsequently, the obligation was extinguished through
prescription as B did not make a demand. However, X still paid the
obligation and thereafter he is demanding from Y his share of P75,000.
In this case, Y is not obliged to reimburse X because the obligation
was already extinguished through the lapse of time. Take note of the
principle that a solidary party may do anything which is beneficial but
not prejudicial. In here, X made a prejudicial act because he still paid
despite the fact that the obligation was extinguished.

229. The following actions must be brought within ten years from the
time the right of action accrues:
 
A. Upon a quasi-contract
B. Upon a quasi-delict
C. Upon an obligation created by law
D. Upon an oral contract

230. The following actions must be instituted within four years:

 
A. Upon a quasi-contract
B. Upon a quasi-delict
C. Upon an obligation created by law
D. Upon an oral contract
B

 231. Are those which have as their object a prestation which is

susceptible of partial performance without the essence of the
obligation being changed?
 
A. Joint obligation
B. Solidary obligation
C. Divisible obligation
D. Indivisible obligation

C. A thing is divisible when, if separated into parts, its essence is not

changed or its value is not decreased disproportionately, because each
of the parts into which it is divided are homogenous and analogous to
each other as well as to the thing itself (4 Sanchez Roman 93-94).
An example is the obligation to deliver 10 sacks of rice.

 232. Are those which have as their object a prestation which is not
susceptible of partial performance, because otherwise the essence of
the obligation will be changed?
 
A. Joint obligation
B. Indivisible obligation
C. Solidary obligation
D. Divisible obligation

B. A thing is indivisible when, if separated into parts, its essence is

changed or its value is decreased disproportionately (4 Sanchez
Roman 93-94).
An example is the obligation to deliver a specific car.

 
 233. Is an obligation with an accessory undertaking by virtue of which
the obligor assumes a greater liability in case of breach of the
obligation?
 
A. Divisible obligation
B. Quantitative obligation
C. Qualitative obligation
D. Obligation with a penal clause

D. The purposes of penal clause are the following:

  1. It is attached to an obligation in order to insure performance
(Filinvest Land, Inc., vs. CA, et.al., G.R. No. 138980, September 20,
2005).
  2. The penalty shall substitute the indemnity for damages and
payment of interests in case of noncompliance (Art. 1226, NCC).

The functions of penal clause are the following:

  1. To provide for liquidated damages.
  2. To strengthen the coercive force of the obligation by the threat of
greater responsibility in the event of breach (Filinvest Land, Inc., vs. CA
et.al., G.R. No. 138980, September 20, 2005).

 
 234. It is a kind of division in a divisible obligation where the thing
can be materially divided into parts and such parts are homogenous
to each other, such as when the parts are separated from each other
as in the case of movables, or when the limits of the parts are fixed by
metes and bound as in the case of immovables.
 
A. Quantitative division
B. Qualitative division
C. Ideal division
D. None of the above
A. The division is quantitative when the thing can be materially
divided into parts and such parts are homogenous to each other, such
as when the parts are separated from each other as in the case of
movables, or when the limits of the parts are fixed by metes and
bounds as in the case of immovable (4 Sanchez Roman 93-94).
An example is the obligation of X to deliver 10 obligations and
Contracts book to B and C.

235. It is a kind of division in a divisible obligation where the thing can

be materially divided, but the parts are not homogenous to each
other, such as in the partition of an inheritance.
 
A. Quantitative division
B. Qualitative division
C. Ideal division
D. None of the above

B. The division is qualitative when the thing can be materially

divided, but the parts are not homogenous to each other, such as in
the partition of an inheritance (4 Sanchez Roman 93-94).
An example is when X inherits a particular car while Y inherits a
specific parcel of land.

 
 236. It is a kind of division in a divisible obligation where the thing
can only be separated into undivided parts, not material parts, as in
the case of co-ownership.
 
 A. Quantitative division
B. Qualitative division
C. Ideal division
D. None of the above
C. The division is ideal or intellectual when the thing can only be
separated into ideal or undivided parts, not material parts, as in the
case of co-ownership (4 Sanchez Roman 93-94).
An example is when X, Y, and Z inherits from their deceased father one
parcel of land. They own 1/3 each of the said parcel of land.

 237. I. In obligation with a penal clause, the penalty shall substitute

the   indemnity for damages and the payment of interests in case of
non-  compliance.
II. It functions to strengthen the coercive force of the obligation and to
provide, in effect, for what could be the liquidated damages resulting  
from such a breach.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. The function of the obligation with a penal clause is to strengthen

the coercive force of the obligation and to provide, in effect, for what
could be the liquidated damages resulting from such a breach
(Tolomeo Ligutan & Leonidas De La Lanna vs. CA & Security Bank &
Trust Company, G.R. No. 138677, February 12, 2002).

238. The obligation attached to a principal obligation in order to

complete the same or take its place in the case of breach.
 
A. Principal obligation
B. Accessory obligation
C. Obligation with a penal clause
D. Indivisible obligation
B. An accessory obligation is dependent for its existence on the
existence of a principal obligation. A principal obligation may exist
without an accessory obligation but an accessory cannot exist without
a principal obligation. For example, the contract of mortgage is an
accessory obligation to enforce the performance of the main
obligation of indebtedness. An indebtedness can exist without the
mortgage but a mortgage cannot exist without the indebtedness,
which is the principal obligation. Another example is that a loan
between the parties is a principal obligation. A penal clause in a loan is
an accessory obligation. The accessory obligation of penal clause is to
enforce the main obligation of payment of the loan. If therefore the
principal obligation does not exist, the penalty being accessory cannot
exist.

 239. I. A principal obligation may exist without an accessory

obligation and an accessory obligation can exist without a principal
obligation.
II. An accessory obligation is dependent for its existence on the
existence of a principal obligation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. A penal clause is an accessory undertaking to assume greater

liability in case of breach and is attached to an obligation in order to
secure its performance. The penalty shall substitute the indemnity for
damages and the payment of interests in case of non-compliance. But
if such stipulation is found contrary to law for being usurious, it can be
nullified by the courts without affecting the principal obligation (Banco
Filipino Savings and Mortgage vs. Juanita B. Ybanez, et.al., G.R. No.
148163, December 6, 2004).
 
For example, X promised to deliver a particular TV to Y on December
31, 2018. As an additional stipulation, they agreed that X will be liable
to pay P5,000 penalty in case of failure to deliver said obligation on
maturity date. The principal obligation here is the delivery of the TV
and the accessory obligation is the penalty of P5,000 in case of default.

 240. The penalty shall substitute the indemnity for damages and the
payment of interests in case of noncompliance. The following are the
exceptions to the aforesaid rule, except:
 
A. When there is a stipulation to the contrary.
B. When the obligor refuses to pay the penalty.
C. When the obligor is guilty of fraud in the fulfillment of the  
obligation.
D. When the obligor is in default.

D. In obligation with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interests in case of
noncompliance, except:
When there is a stipulation to the contrary.
When the obligor refuses to pay the penalty.
When the obligor is guilty of fraud in the fulfillment of the obligation.

 241. I. In obligations with a penal clause, the penalty shall substitute

the   indemnity for damages and the payment of interests in case of  
noncompliance; therefore, proof of actual damages suffered by the  
creditor is necessary in order that the penalty may be demanded.
II. A stipulated penalty may be equitably reduced by the courts if it is  
iniquitous or unconscionable or if the principal obligation has been  
partly or irregularly complied with.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. In obligations with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interests in case of
noncompliance (Art. 1226, NCC); therefore, proof of actual damages
suffered by the creditor is not necessary in order that the penalty may
be demanded.
 
A penalty clause, expressly recognized by law, is an accessory
undertaking to assume greater liability on the part of an obligor in
case of breach of an obligation. It functions to strengthen the coercive
force of the obligation and to provide, in effect, for what could be the
liquidated damages resulting from such a breach. The obligor would
then be bound to pay the stipulated indemnity without the necessity
of proof on the existence and on the measure of damages caused by
the breach. Although a court may not at liberty to ignore the freedom
of the parties to agree on such terms and conditions as they see fit
that contravene neither law nor morals, good customs, public order, or
public policy, a stipulated penalty, nevertheless, may be equitably
reduced by the courts if it is iniquitous or unconscionable or if the
principal obligation has been partly or irregularly complied with
(Tolomeo Ligutan & Leonidas De La Lanna vs. CA & Security Bank &
Trust Company, G.R. No. 138677, February 12, 2002).
As a general rule, courts are not at liberty to ignore the freedom of the
parties to agree on such terms and conditions as they see fit as long
as they are not contrary to law, morals, good customs, public order, or
public policy. Nevertheless, courts may equitably reduce a stipulated
penalty in the contract in two instances: (1) if the principal obligation
has been partly or irregularly complied; and (2) even if there has been
no compliance if the penalty is iniquitous or unconscionable (Filinvest
Land, Inc., CA, et.al., G.R. No. 138,980, September 20, 2005).

242. In the following instances, the penalty may be reduced by the

courts, except:
 
A. When the principal obligation has been partly complied with by the
debtor.
B. When the principal obligation has been irregularly complied with by
the debtor.
C. If the penalty is iniquitous or unconscionable.
D. If the penalty has been remitted.

D. The question of whether a penalty is reasonable or iniquitous can

be partly subjective and partly objective. Its resolution would depend
on such factors as, but not necessarily confined to, the type, extent,
and purpose of the penalty, the nature of the obligation, the mode of
breach and its consequences, the supervening realities, the standing
and relationship of the parties, and the like, the application of which,
by and large, is addressed to the sound discretion of the court. In Rizal
Commercial Banking Corp. vs. Court of Appeals, the Supreme Court
has tempered the penalty charges after taking into account the
debtor’s pitiful situation and its offer to settle the entire obligation
with the creditor bank. The stipulated penalty might likewise be
reduced when a partial or irregular performance is made by the
debtor. The stipulated penalty might even be deleted such as when
there has been substantial performance in good faith by the obligor,
when the penalty clause itself suffers from fatal infirmity, or when
exceptional circumstances so exist as to warrant it (Tolentino Ligutan
and Leonidas De La Llana vs. CA & Security Bank & Trust Company,
G.R. No. 138677, February 12, 2002).
243.  I. The nullity of the penal clause does not carry with it that of the
principal obligation.
II. The nullity of the principal obligation carries with it that of the penal
clause.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. The law provides that the nullity of the penal clause does not carry
with it that of the principal obligation. Moreover, the nullity of the
principal obligation carries with it that of the penal clause.
X promised to pay P50,000 to Y on December 31, 2018. As an
additional stipulation, they agreed that X will be liable to deliver 1
kilogram of illegal drugs as penalty in case of failure to deliver his
obligation on maturity date. The obligation to pay P50,000 is valid;
however, the penalty is void meaning as if it did not exist from the
very beginning. Thus, only the penalty is disregarded.
What if X promised to deliver one kilogram of illegal drugs to Y on
December 31, 2018. As an additional stipulation, they agreed that X
will be liable to pay P50,000 as penalty in case of failure to deliver his
obligation on maturity date. The entire obligation is void. Accessory
follows the principal.

 
244. R was an approved cardholder of Y bank. R made some purchases
through the use of the said credit card and defaulted inn paying for
said purchases. She subsequently received a letter dated January 5,
2018 from Y bank, demanding payment of the amount of P100,000.
Under the Terms and Conditions Governing the Issuance and Use of
the card, the charges or balance thereof remaining unpaid after the
due date indicated on the monthly Statement of Accounts shall bear
interest at the rate of 3% per month and an additional penalty fee
equivalent to another 3% per month. Is the penalty reasonable or
iniquitous?
 
A. The stipulated penalty charge of 3% per month or 36% per annum,
in addition to regular interest, is   indeed iniquitous and
unconscionable.
B. The stipulated penalty charge of 3% per month or 36% per annum
is not iniquitous and unconscionable   as the parties freely stipulated
on such agreement.
C. The stipulated penalty charge of 3% per month or 36% per annum
is iniquitous and unconscionable   hence it should be reduced to the
legal interest of 2.5% per month.
D. The stipulated penalty charge of 3% per month or 36% per annum
is not iniquitous and unconscionable;   thus, the court need not reduce
it.

245. P acquired two parcels of land in an auction sale from the Land
Bank of the Philippines. NOG, an agriculture cooperative, was the
occupant of the disputed parcels of land under a subsisting contract of
lease with Land Bank. The monthly rent is P30,000.
Upon the expiration of the lease contract, P demanded that NOG
vacate the leased premises and surrender its possession to P. NOG
refused on the ground that it was, at the time, contesting P’s
acquisition of the parcels of land in question.
Subsequently, P files an action for ejectment. He asked, inter alia, for
the imposition of the contractually stipulated penalty of P5,000 per
day of delay in surrendering the possession of the property to him.
 
A. The penalty is reasonable because the parties agreed on it hence, it
is presumed that they can afford   such penalty.
B. NOG was an agricultural cooperative, ordering it to pay a penalty of
P5,000 per day on top of the   monthly rent of P30,000 would seriously
deplete its income and drive it to bankruptcy. Hence, the   penalty
should be reduced.
C. The penalty is not reasonable because it is P150,000 per month
(P5,000 x 30).
D. The penalty is not reasonable because P5,000 per day is
burdensome.

246. X, Inc., awarded to Y Corp. the development of its residential

subdivisions consisting of 2 parcels of land. Liquidated damages were
fixed by the parties to serve as penalty in case Y Corp. fails to fulfill its
obligation on time.
Notwithstanding three extensions granted by X Corp. to Y Corp., the
latter failed to finish the contracted works. It is 94.53% complete. X
Corp. wrote Y Corp. advising the latter of its intention to hold Y Corp.
liable for liquidated damages (penalty) which it had incurred. Y Corp.
claims that its failure to finish the contracted work was due to
inclement weather.
 
A. The liquidated damages agreed upon by the parties should not be
reduced because the penalty is   not iniquitous.
B. As it is settled that the project was already 94.53% complete and
that X Corp. did agree to extend the   period for completion of the
project, which extensions X Corp. included in computing the amount  
of the penalty, the reduction thereof is clearly warranted.
C. The liquidated damages should not be reduced at it is clear
manifestation of the parties’ meeting of   the minds.
D. The liquidated damages should be reduced because there is no
substantial difference between a   penalty and liquidated damages.

247. Are contracts, whereby the parties undertake reciprocal

obligations to resolve their differences thus avoiding litigation, or put
an end to one already commenced?
 
A. Mutual desistance
B. Compromise agreement
C. Waiver
D. Memorandum of Agreement 

B. Compromise agreements are contracts, whereby the parties

undertake reciprocal obligations to resolve their differences thus
avoiding litigation, or put an end to one already commenced.
Reciprocal concessions are the very heart and life of every
compromise agreement. By the nature of a compromise agreement, it
brings the parties to agree to something which neither of them may
actually want, but for the peace it will bring them without a protracted
litigation. Essentially, the parties to it have to bend a little or else break
in the process. In Raneses v. Teves, it was stated “it is the trial court’s
duty to examine and study the compromise agreement should be
eschewed.” A watchful fidelity to this doctrinal yardstick has always
been enjoined to arrive at a peaceful settlement of a mired justiciable
issue.
Once approved judicially, the Compromise Agreement cannot and
must not be disturbed except for vices of consent or forgery.
In Abinujar v. Court of Appeals, the Supreme Court even went further
and declared that the nonfulfillment of the terms and conditions of a
Compromise Agreement approved by the court justifies execution
thereof and the issuance of the writ for the said purpose is the court’s
ministerial duty enforceable by Mandamus (Aurelio P. Alonzo and
Teresita A. Sison vs. Jaime and Perlita San Juan, G.R. No. 137549,
February 11, 2005).

248. It means not only the delivery of money but also the
performance, in any other manner, of an obligation.
 
A. Payment
B. Condonation
C. Merger of rights
D. Compensation

A. In Jimenez v. NLRC, the Supreme Court held that were one, sued for
a debt, admits that the debt was originally owed, and pleads payment
in whole or in part, it is incumbent upon him to prove such payment.
Indeed, though the plaintiff may admit that some payments have been
made, this admission does not change the burden of proof. The
defendant still has the burden of establishing payment beyond those
admitted by the plaintiff.

249. I. The general rule is that the burden rests on the defendant   to
prove payment, rather than on the plaintiff to prove   nonpayment.
II. The rule so well-settled is that a receipt of payment is the   evidence
of the fact of payment.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Apropos is the rule so well-settled that a receipt of payment is the

best evidence of the fact of payment. In Monfort v. Aguinaldo, the
Supreme Court held that the receipts of payment, although not
exclusive, were deemed to be the best evidence.

250. I. The law provides that the delivery of mercantile documents

including   checks “ shall produce the effect of payment only when
they   have been deposited .”
II. 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.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. A receipt is a written and signed acknowledgment that money has

or goods have been delivered, while a voucher is a documentary
record of a business transaction. The references to alleged check
payments in the vouchers presented do not vest them with the
character of receipts.
It should be noted that a voucher is not necessarily evidence of
payment. It is merely a way or method of recording or keeping track of
payments made. It must be supported by an actual payment of cash
duly receipted for as is customary among businessmen or the
issuance of a check subsequently encashed. The law provides that the
delivery of mercantile documents including checks “shall produce the
effect of payment only when they have been cashed (Aurelio P. Alonzo
and Teresita A. Sison vs. Jaime and Perlita San Juan, G.R. No. 137549,
February 11, 2005).”

251. 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.
 
A. Principle of integrity
B. Principle of honesty
C. Principle of loyalty
D. Principle of delivery

A.  For example, X promised to pay Y P5,000. X also bound himself to

repair the bicycle of Z. If X paid his obligation of P5,000 to Y, then
there is payment. However, if there is advance payment of P3,000
leaving a balance of P2,000 then there is no payment. I likewise, if X
repaired the bicycle of Z, then there is performance. But if X partially
required only the bicycle, then there is no performance. Payment or
performance must be completely delivered or rendered.

252. If the buyer failed to pay the down payment on time. But then,
the seller accepted, without any objections, the delayed payments of
the buyer. The legal effect is:
 
A. The obligation of that buyer is that he is liable for his delay.
B. The obligation of that buyer is not extinguished.
C. The obligation of that buyer is deemed fully complied with.
D. The obligation of that buyer is that he is liable for his   negligence.

C. In one case, the buyer failed to pay the down payment on time. But
then, the seller accepted, without any objections, the delayed
payments of the buyer; hence, the Supreme Court held that as
provided in Article 1235 of the New Civil Code, the obligation of that
buyer is deemed complied with:

Art. 1235. When the oblige accepts the performance, knowing its
incompleteness or irregularity, and without expressing any protest or
objection, the obligation is deemed fully complied with (Arra Realty
Corporation and Spouses Carlos Arguelles and Remedios De la Roma
Arguelles vs. Guarantee Development Corporation and Insurance
Agency and Engr. Erlinda Enaloza, G.R. No. 142310, September 20,
2004).

This is the import of Article 1235 which was explained in this wise:

“The word accept, as used in Article 1235 of the Civil Code, means to

take as satisfactory or sufficient, or agree to an incomplete or irregular
performance. Hence, the mere receipt of a partial payment is not
equivalent to the required acceptance of performance as would
extinguish the whole obligation.” (Arturo M. Tolentino, Commentaries
and Jurisprudence on the Civil Code of the Philippines Vo. 4, p. 279.,
1992 ed.)

There is thus a clear distinction between acceptance and mere receipt

(Constante Amor de Castro and Corazon Amor de Castro vs. CA and
Francisco Artigo, G.R. No. 115838, July 18, 2002).

When creditors receive partial payment, they are not ipso facto
deemed to have abandoned their prior demand for full payment.
Article 1235 of the Civil Code provides:

“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.”
Thus, to imply that creditors accept partial payment as complete
performance of their obligation their acceptance must be made under
circumstances that indicate their intention to consider the
performance complete and to renounce their claim arising from the
defect (Selena Management Corporation and Spouses Edgardo and
Zenaida Angeles vs. United Coconut Planters Bank, G.R. No. 165662,
May 3, 2006).
253. I. The creditor is not bound to accept payment or performance by
a   third person who has no interest in the fulfillment of the obligation,
unless there is a stipulation to the contrary.
II. Whoever pays for another may demand from the debtor what he
has   paid, except that if he paid without the knowledge or against the
will   of the debtor, he can recover only in so far as the payment has
been   beneficial to the debtor.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. (Art. 1236, NCC)

254. I. Payment by an incapacitated person is valid.

II. When a minor who has entered into a contract without the consent
of   the guardian voluntarily pays a sum of money or delivers a
fungible   thing in fulfillment of the obligation, there shall be no right
to recover   the same from the oblige who has spent or consumed it in
good faith.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

255. Payment shall be made to the following, except:

 
A. Creditor
B. Creditor’s successor in interest
C. Any person authorized to receive it
D. Any person

D. To whom payment must be made?

  1. Person in whose favor the obligation has been constituted

(creditor or obligee);
  2. His successor in interest; or
  3.Any person authorized to receive it.

256. I. Payment made by the debtor to a wrong party does not

extinguish   the obligation as to the creditor, if there is no fault or
negligence   which can be imputed to the latter.
II. Even when the debtor acted in utmost good faith and by mistake as
to   the person of his creditor, or through error induced by the fraud of
a   third person, the payment to one who is not in fact his creditor, or  
authorized to receive such payment, is voidable.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. Payment made by the debtor to a wrong party does not extinguish

the obligation as to the creditor, if there is no fault or negligence
which can be imputed to the latter. Even when the debtor acted in
utmost good faith by mistake as to the person of his creditor, or
through error induced by the fraud of a third person, the payment to
one who is not in fact his creditor, or authorized to receive such
payment, is void, except as provided in Article 1241. Such payment
does not prejudice the creditor, and accrual of interest is not
suspended by it (Cited in Allied Banking Corporation vs.  Lim Sio Wan,
et.al., G.R. No. 133179, March 27, 2008).

257. I. Generally, payment to an incapacitated person is 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. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. (Art. 1241, NCC)

258. Payment made to a third person shall also be valid insofar as it

has redounded to the benefit of the creditor. Such benefit to the
creditor need not be provided in the following cases, except:
 
A. Subrogation
B. Ratification
C. Waiver
D. Estoppel

C. (Art. 1241, NCC)

259. I. It is a general rule that payment to an unauthorized   person is

not valid.
II. Payment made in good faith to any person in   possession of the
credit shall release the debtor.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. (Art. 1241, NCC)

260. It is when a property is alienated to the creditor in satisfaction of

a debt in money.
 
A. Dation in payment
B. Cession in payment
C. Barter
D. Option contract

A. In dacion en pago, as a special mode of payment, the debtor offers

another thing to the creditor who accepts it as equivalent of payment
of an outstanding debt. The undertaking really partakes in one sense
of the nature of sale, that is, the creditor is really buying the thing or
property of the debtor, payment for which is to be charged against the
debtor’s debt. As such the elements of a contract of sale, namely,
consent, object certain, and cause or consideration must be present. In
its modern concept, who actually takes place in dacion en pago is an
objective novation of the obligation where the thing offered as an
accepted equivalent of the performance of an obligation is considered
as the object of the contract of sale, while the debt is considered the
purchase price. In any case, common consent is an essential
prerequisite be it sale or novation, to have the effect of totally
extinguishing the debt or obligation.”

261. I. In dacion en pago, the debtor offers another thing to the

creditor   who accepts it as equivalent of payment of an outstanding
debt.
II. It is an objective novation of the obligation; hence, common
consent of   the parties is required in order to extinguish the
obligation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

262. The requisites for dacion en pago are, except:

 
A. There must be performance of the prestation in lieu of payment
which   may consist in the delivery of a corporeal thing or a real right
or a   credit against the third person.
B. There must be delivery, actual or constructive, as it is a real contract.
C. There must be some difference between the prestation due and that
which is given in substitution.
D. There must be an agreement between the creditor and debtor that
the   obligation is immediately extinguished by reason of the
performance   of the a prestation different from that due.

B. The requisites for dacion en pago are:

  1. There must be a performance of the prestation in lieu of
payment (animo solvendi) which may consist in the delivery of a
corporeal thing or a real right or a credit against the third person;
  2. There must be some difference between the prestation due and
that which is given in substitution (aliud pro alio); and
  3. There must be an agreement between the creditor and debtor that
the obligation is immediately extinguished by reason of the
performance of a prestation different from that due (Agrifina Aquintey
vs. Spouses Felicidad and Rico Tibong, G.R. No. 166704, December 20,
2006).
  In a true dacion en pago, the assignment of the property
extinguishes the monetary debt (Spouses Wilfredo N. Ong and Edna
Shiela Paguio-Ong vs. Roban Lending Corporation, G.R. No. 172592,
July 9, 2008).
  Dacion en pago is the delivery and transmission of ownership of a
thing by the debtor to the creditor as an accepted equivalent of the
performance of an existing obligation. It is a special mode of payment
where the debtor offers another thing to the creditor who accepts it as
equivalent to the payment of an outstanding debt. For dacion en pago
to exist, the following elements must concur:
  A. Existence of a money obligation;
  B. The alienation to the creditor of a property by the debtor with the
consent of the former; and
  C. Satisfaction of the money obligation of the debtor (Rockville Excel
International Exim Corporation vs. Spouses Oligario Culla and
Bernadita Miranda, G.R. No. 155716, October 2, 2009).

263. For dacion en pago to exist, the following elements must concur,
except:
 
A. Existence of a money obligation.
B. The alienation to the creditor of a property by the   debtor with the
consent of the former.
C. The agreement must be in a document, private or   public.
D. Satisfaction of money obligation of the debtor.

264. I. Dacion en pago is a special mode of payment whereby the

debtor   offers another thing to the creditor who accepts it as
equivalent of   payment of an outstanding obligation.
II. The undertaking is really one of sale, that is, the creditor is really
buying   the thing or property of the debtor, payment for which is to
be   charged against the debtor’s debt.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

265. I. Dacion en pago is a special mode of payment whereby the

debtor   offers another thing to the creditor who accepts it as
equivalent of   payment of an outstanding obligation.
II. It is only when the thing offered as an equivalent is accepted by the
creditor that novation takes place, thereby, totally extinguishing the  
debt.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

266. I. Dacion en pago is the delivery and transmission of ownership of

another thing by the debtor to the creditor as an accepted equivalent  
of performance of an obligation.
II. Dacion en pago partakes of the nature of a contract of sale, where
the   thing offered by the debtor is the object of the contract, while
the   debt is the consideration or purchase price.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

267. I. 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.
II. The extrajudicial expenses required by the payment shall be   for the
account of the creditor.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. (Art. 1247)

268. Partial payments are allowed in the following cases:

I. When there is an express stipulation to that effect.
II. When the debt is in part liquidated and in part   unliquidated.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C
269. When the amount is known or determinable by inspection of the
terms and conditions of the relevant promissory notes and related
documentation.
 
A. Debt is due
B. Debt is liquidated
C. Debt is unliquidated
D. Debt is demandable

B. A debt is liquidated when the amount is known or is determinable

by inspection of the terms and conditions of the relevant promissory
notes and related documentation (Selegna Management and Spouses
Edgardo and Zenaida Angeles vs. United Coconut Planters Bank, G.R.
No. 165662, May 3, 2006).
For example, X and Y are partners in XY Partnership. In their
agreement, X promised to pay Y P100,000 due on February 14, 2018 of
the current year plus 10% of X’s share in this year’s net income from
XY Partnership. On February 14, 2018, Y can demand the P100,000
from X because it was already determined. The 10% of the 2018 net
income of XY Partnership is still unliquidated; thus, payment cannot be
effected yet.

270. The delivery of promissory notes payable to order, or bills of

exchange or other mercantile document shall not produce the effect
of payment, except:
When they have been cashed.
When through the fault of the creditor they have been impaired.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. The rules in payment of debts in money are the following:

  1. The payment of debts in money shall be made in the currency

stipulated, and if it is not possible to deliver such currency, then in the
currency which is legal tender in the Philippines.

  2. The delivery of promissory notes payable to order, or bills of

exchange or other mercantile documents shall not produce the effect
of payment, except:

  A. When they have been cashed.

  B. When through the fault of the creditor they have been impaired.

271. I. As a general rule, a check constitutes legal tender,   but a

creditor may validly refuse it.
II. A check does not constitute legal tender but it does not   prevent a
creditor from accepting a check as payment.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. True, jurisprudence holds that, in general a check does not

constitute a legal tender, and that a creditor may validly refuse it. It
must be emphasized, however, that this dictum does not prevent a
creditor from accepting a check as payment. In other words, the
creditor has the option and discretion of refusing or accepting it (Far
East Bank & Trust Company vs. Diaz Realty, Inc. G.R. No. 138588,
August 23, 2001).

272. The sharp increase of money or credit, or both, without a

corresponding increase in business transaction.
 
A. Deflation
B. Extraordinary deflation
C. Extraordinary inflation
D. Inflation

D. Inflation has been defined as the sharp increase of money or

credit, or both, without a corresponding increase in business
transaction. There is inflation when there is an increase in the volume
of money and credit relative to available goods, resulting is substantial
and continuing rise in the general price level (Equitable PCI Bank, et.al.
vs. Ng Sheung Ngor, et.al. G.R. No. 171545, December 19, 2007).

273. For extraordinary inflation (or deflation) to affect an obligation,

the following requisites must be proven, except:

A. That there was an official declaration of extraordinary   inflation or

deflation from the Bangko Sentral ng Pilipinas   (BSP).
B. That the obligation was contractual in nature.
C. That the parties expressly agreed to consider the effects of   the
extraordinary inflation or deflation.
D. That the obligation was not contractual in nature.

D. For extraordinary inflation (or deflation) to affect an obligation, the

following requisites must be proven:

  1. That there was an official declaration of extraordinary inflation or

deflation from the Bangko Sentral ng Pilipinas (BSP);
  2. That the obligation was contractual in nature; and
  3. That the parties expressly agreed to consider the effects of the
extraordinary inflation or deflation (Equitable PCI Bank, et.al. vs.
Sheung Ngor, et.al., G.R. No. 171545, December 19, 2007).
274. I. In case of extraordinary inflation or deflation, the value of the  
currency at the time of the establishment of the obligation shall   be
the basis for the payment when no agreement to the   contrary is
stipulated, has strict application only to contractual   obligations.
II. A contractual agreement is not needed for the effects of
extraordinary   inflation to be taken into account to alter the value of
the currency.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. The Supreme Court held that Article 1250 of the Civil Code,
providing that, in case of extraordinary inflation or deflation, the value
of the currency at the time of the establishment of the obligation shall
be the basis for the payment when no agreement to the contrary is
stipulated, has strict application only to contractual obligations. In
other words, a contractual agreement is needed for the effects of
extraordinary inflation to be taken into account to alter the value of
the currency (Maria Paz V. Nepomuceno and Fermin A. Nepomuceno
vs. City of Surigao and Salvador Sering, G.R. No. 146091, July 28, 2008).

275. I. As a general rule, payment shall be made in the place of

business of   the debtor.
II. There being no express stipulation and if the undertaking is to
deliver a   determinate thing, the payment shall be made wherever the
thing   might be at the moment the obligation was constituted.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both false
B. The rules on the place of payment of the obligation are the
following:

  1. Payment shall be made in the place stipulated by the parties.

  2. If there is no stipulation and the obligation is to deliver a

determinate thing, payment shall be made wherever the thing might
be at the moment the obligation was constituted.

  3. In any other case the place of payment shall be the domicile of the
debtor. If the debtor changes his domicile in bad faith or after he has
incurred in delay, the additional expenses shall be born by him.

276. These are the rules on the place of payment of the obligation,
except:
 
A. Payment shall be made in the place stipulated by the parties.
B. If there is not stipulation and obligation is to deliver a determinate  
thing, payment shall be made wherever the thing might be at the  
moment the obligation was constituted.
C. In any other case the place of payment shall be the domicile of the  
debtor.
D. In any other case the place of payment shall be at the municipal
trial   court where the obligation was perfected.

277. The designation of the debt to which the payment must be

applied when the debtor has several obligations of the same kind in
favor of the same creditor.
 
A. Application of payment
B. Dacion en pago
C. Cession in payment
D. Tender of payment and consignation

A. The special forms of payment are the following:

  1. Application of payment (Art. 1252-Art. 1254, NCC)
  2. Dation in payment (Art. 1254, NCC)
  3. Payment by cession (Art. 1255, NCC)
  4. Tender of payment and consignation (Art. 1256-1261, NCC
Application of payment may be defined as the designation of the
debt to which the payment must be applied when the debtor has
several obligations of the same kind in favor of the same creditor (8
Manresa, 5th Ed., Bk. 1, p.598).
The requisites of application of payment are the following:
  1. There must be only one debtor and only one creditor.
  2. There must be two or more debts of the same kind;
  3. All of the debts must be due; and
  4. The amount paid by the debtor must bot be sufficient to cover the
total amount of all the debts.
Example:
X owes Y the following obligation:
  1. P5,000 with due date of January 15, 2018;
  2. P10,000 with due date of February 14, 2018;
  3. P20,000 with due date of April 1, 2018;
  4. 2 sacks of bordagol rice due on April 15, 2018;
  5. P50,000 due on July 1, 2018.
Today is May 1, 2018 and X has P5,000 which he intends to pay his
obligation. There is no application of payment on the 4th obligation
because it will only be extinguished later on by delivering a rice of the
same kind, quality and quantity. There is also no application of
payment on the 5th obligation as it is not yet due.
What if X wants to apply the P5,000 to the obligation which matured
on January 15, 2018 but Y wants that it will be deducted on the
P20,000 obligation. This is the kind of situation which will be resolved
by the rules on application of payment.
Applying the rules on application of payment, X has a preferential
right to apply. Thus, the P5,000 will be deducted from the first
obligation so as to totally extinguished the said obligation.
If X does not want to make use of the application of payment, then the
3rd rule maybe used and that is it will be applied to the debt which is
most onerous to the debtor. In this case, there is no debt that is most
onerous to the debtor because there is no factual circumstances to
indicate that the obligation is burdensome like guaranty, surety,
pledge, real estate mortgage, chattel mortgage, or interest. Hence, if
the 1st obligation is secured by a pledge involving a cell phone, the
2nd obligation is secured by a guaranty and the 3rd obligation contains a
stipulation as to interest then it should be mentioned in the facts of
the case on what is most onerous obligation to the debtor. Like if the
debtor wants to have cell phone, then he might extinguish the first
obligation so that he can acquire the cell phone which is in the
possession of Y being a real contract (perfected by delivery of the
object to the pledgee). If he wants to lessen his interest, then he might
apply his apply his payment to the third obligation.
If there is no debt which is most onerous to the debtor, then last rule
may apply, that is, the payment of P5,000 shall be applied to all of the
debts proportionately.

278. The following are special forms of payment, except:

 
A. Application of payment
B. Dation in payment
C. Check encashment
D. Payment by cession
C

 
279. The following are requisites of application of payment, except:
 
A. There must be only one debtor and only one creditor.
B. There must be one or more debts of the same kind.
C. All of the debts must be due.
D. The amount paid by the debtor must not be sufficient to   cover the
total amount of all the debts.

280. The rules on application of payment are the following, except:

 
A. The right to designate the debt to which the payment shall be
applied   belongs primarily to the debtor.
B. If the debtor does not apply payment, the creditor may designate  
which debt is paid by specifying in the receipt.
C. If the creditor did not apply or if applicable is void, the debt which is
most onerous to the creditor, among those due, shall be deemed to  
have been satisfied.
D. If the debts due are of the same nature and burden, the payment
shall   be applied to all of them proportionately.

C. The rules on application of payments are the following:

  1. The right to designate the debt to which the payment shall be

applied belongs primarily to the debtor. He may declare at the time of
making the payment, to which of them the same must be applied.
  2. If the debtor does not apply payment, the creditor may designate
which debt is paid by specifying in the receipt.
  3. If the creditor did not apply or if application is void, the debt which
is most onerous to the debtor, among those due, shall be deemed to
have been satisfied.
  4. If the debts due are of the same nature and burden, the payment
shall be applied to all of them proportionately.

281. I. The debtor’s right to apply payment is mandatory.

II. The debtor’s right to apply payment cannot be waived.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

D. The debtor’s right to apply payment is not mandatory. This is clear

from the use of the word “may” rather than the word “shall” in the
provision which reads: “He who has various debts of the same kind in
favor of one and the same creditor, may declare at the time of making
the payment, to which of the same must be applied.”
Indeed, the debtor’s right to apply payment has been considered
merely directory, and not mandatory, following the Supreme Court’s
earlier pronouncement that “the ordinary acceptation of the terms
‘may’ and ‘shall’ may be resorted to as guides in ascertaining the
mandatory or directory character of statutory provisions.”
Article 1252 gives the right to the debtor to choose to which of several
obligations to apply a particular payment that he tenders to the
creditor. But like likewise granted in the same provision is the right of
the creditor to apply such payment in case the debtor fails to direct its
application. This is obvious in Art. 1252, par. 2, viz.: “If the debtor
accepts from the creditor a receipt in which an application of payment
is made, the former cannot complain of the same.” It is the directory
nature of this right and the subsidiary right of the creditor to apply
payments when the debtor does not elect to do so that makes this
right, like any other right, waivable.
A debtor, in making a voluntary payment, may at the time of payment
direct an application of it to whatever account he chooses, unless he
has assigned or waived that right. If the debtor does not do so, the
right passes to the creditor, who may make such application as he
chooses. But if neither party has exercised its option, the court will
apply the payment according to the justice and equity of the case,
taking into consideration all its circumstances (Premier Development
Bank vs. Central Surety and Insurance Company, Inc., G.R. No. 176246,
February 13, 2009).

282. I. In case the debtor does not make the application of payment
nor the   creditor does not also state in which application of payment
is made,   then application is made by operation of law.
II. If the debts due of the same nature and burden, meaning there is
no   debt which is most onerous, the payment shall be applied to all of
them proportionately.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Example of Proportionate Application of Payment

X owes Y following three debts:
  1. P25,000 with due date of January 15, 2018;
  2. P50,000 with due date of February 14, 2018;
  3. P25,000 with due date of April 1, 2018;
  P100,000 Total

X paid P20,000 on May 1, 2018. Assuming the X and Y did not make an
application of payment and that the three obligations are of the same
nature and burden. How should the P20,000 be applied? The answer
will be:
  1. P25,000-P5,000 (P25,000/P100,000 x P20,000) = P20,000
  2. P50,000-P10,000 (P50,000/P100,000 x P20,000) = P40,000
  3. P25,000-P5,000 (P25,000/P100,000 x P20,000) = P20,000
  Balance  P80,000

 
283. A special form of payment whereby the debtor abandons all of
his property for whereby the debtor abandons all of his property for
the benefit of his creditors in order that from the proceeds thereof the
latter may obtain payment of their credits.
 
A. Application of payment
B. Payment by cession
C. Dation in payment
D. Tender of payment and consignation

B. Cession or assignment may be defined as a special form of payment

whereby the debtor abandons all of his property for the benefit of his
creditors in order that from the proceeds thereof the latter may obtain
payment of their credits (8 Manresa, 5th Ed., Bk. 1, p. 606).

284. The following are requisites of payment by cession, except:

 
A. There must be two or more creditors.
B. The debtor must be partially or relatively insolvent.
C. The solvency of the debtor is immaterial.
D. There must be an acceptance of the cession by the   creditors.

C. The requisites of payment by cession are the following:

  1. There must be two or more creditors;
Article 1255 contemplates the existence of two or more creditors and
involves the assignment of all the debtor’s property (Development
Bank of the Philippines vs. CA and Lydia Cuba, G.R. No. 118342,
January 5, 1998).
  2. The debtor must be partially or relatively insolvent, and
  3. There must be an acceptance of the cession by the creditors.
Example:
X owes P1,000,000 to Y1, P2,000,000 to Y2, P3,000,000 to Y3 and
P4,000,000 to Y4 for a total debt of P10,000,000. The non-cash assets
of X has a book value of P7,000,000. The concept of payment by
cession is that X will deliver his non-cash assets to Y1, Y2, Y3 and Y4
who will sell it and deduct the proceeds from X’s obligation. Hence, if
they were able to sell X’s assets for a total amount of P6,500,000, the
remaining obligation of X to Y1, Y2, Y3 and Y4 will be P3,500,000.

285. I. In payment by cession the debtor is not necessarily   in a state

of financial difficulty.
II. In dacion en pago the debtor is in a state of partial or   relative
insolvency.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

D. DATION EN PAYMENT vs. PAYMENT BY CESSION

Dation in payment Payment by cession

In payment by cession,
In dacion en pago, there may be
plurality of creditors is
only one creditor.
essential.

In payment by cession,
In dacion en pago, the debtor is
the debtor is in a state
not necessarily in a state of
of partial or relative
financial difficulty.
insolvency.
In dacion en pago, what is
delivered by the debtor is
merely a thing to be considered
as the equivalent of the
performance of the obligation.
In payment by cession,
what is ceded by the
debtor is the
universality of all his
property.

In payment by cession,
In dacion en pago, the payment
the effect is merely to
extinguishes the obligation to the
release the debtor for
extent of the value of the thing
the net proceeds of the
delivered either as agreed upon
things ceded or
or as may be proved, unless the
assigned, unless there is
silence of the parties signifies
a contrary intention (8
that they consider the delivery of
Manresa, 5th Ed., BK. 1,
the thing as the equivalent of the
pp. 611-612; 3 Castan,
performance of the obligation.
7th., p. 257).

286. I. In dacion en pago, what is delivered by the debtor is merely   a

thing to be considered as the equivalent of the   performance of the
obligation.
II. In payment by cession, what is ceded by the debtor is the  
universality of all his property.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

 
287. It is the definitive act of offering the creditor what is due him or
her together with the demand that the creditor accepts the same.
 
A. Consignation
B. Payment by cession
C. Dation in payment
D. Tender of payment

D. Tender of payment is the definitive act of offering the creditor

what is due him or her, together with the demand that the creditor
accept the same. When a creditor refuses the debtor’s tender of
payment, the law allows the consignation of the thing or the sum due.
Tender and consignation have the effect of payment, as by
consignation, the thing due is deposited and placed at the disposal of
the judicial authorities for the creditor to collect (Manuel Go Cinco and
Araceli S. Go Cinco vs. CA, et.al., G.R. No. 151903, October 9, 2009).
More important, there must be a fusion of intent, ability and capability
to make such offer, which must be absolute and cover the amount due
(Far East Bank & Trust Company vs. Diaz Realty, Inc., G.R. No. 138588,
August 23, 2001).
Well-settled is the rule that tender of payment must be accompanied
by consignation in order that the effects of payment may be produced
(Subhash C. Pasricha and Josephine A. Pasricha vs. Don Luis Dison
Realty, Inc., G.R. No. 136409, March 14, 2008).

288. The thing due is deposited and placed at the disposal of the
judicial authorities for the creditor to collect.
 
A. Consignation
B. Payment by cession
C. Dation in payment
D. Tender of payment

289. Is the act of depositing the thing due with the court or judicial
authorities whenever the creditor cannot accept or refuses to accept
payment, and it generally requires a prior tender of payment?
 
A. Payment by cession
B. Dation in payment
C. Consignation
D. Tender of payment

C. It must be borne in mind however that a mere tender of payment is

not enough to extinguish an obligation. The Supreme Court
distinguished consignation from tender of payment and reiterated the
rule that both must be validly done in order to effect the
extinguishment of the obligation, thus:
Consignation is the act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot accept or refuses to
accept payment, and it generally requires a prior tender of payment. It
should be distinguished from tender of payment. Tender is the
antecedent of consignation, that is, an act preparatory to the
consignation, which is the principal, and from which are derived the
immediate consequences which the debtor desires or seeks to
obtain. Tender of payment may be extrajudicial,
while consignation is necessarily judicial, and the priority of the first is
the attempt to make a private settlement before proceeding to the
solemnities of consignation. Tender and consignation, where validly
made, produces the effect of payment and extinguishes the obligation
(Cited in B.E. San Diego, Inc. vs. Rosario T. Alzul, G.R. No. 169501, June
8, 2007).

 
290. I. Tender is the antecedent of consignation, that is, an act
preparatory to the   consignation, which is the principal, and from
which are derived the   immediate consequences which the debtor
desires or seeks to obtain.
II. Tender of payment may be judicial, while consignation is necessarily
extrajudicial,   and the priority of the first is the attempt to make a
private settlement before   proceeding to the solemnities of
consignation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. X owes Y P100,000 with 12% interest per annum. At maturity date, X
offered to pay, however, Y refused to receive the payment. What is the
remedy of X because to him, payment of interest is already
burdensome? X’s remedy is to deposit the sum of money with the
court so as to extinguish his obligation.

291. One of the following is not a requisite of consignation.

 
A. There was a debt due.
B. Previous notice of the consignation had been given to the   person
interested in the performance of the obligation.
C. The amount due was placed at the disposal of the court.
D. After the consignation had been made, the person interested   may
not be notified of the action.

D. The requisites of consignation are the following:

In order that consignation may be effective, the debtor must show
that:
  1. There was a debt due;
  2. The consignation of the obligation had been made because the
creditor to whom tender of payment was refused to accept it, or
because s/he was absent or incapacitated, or because several persons
claimed to be entitled to receive the amount due or because the title
to the obligation has been lost;
  3. Previous notice of the consignation had been given to the person
interested in the performance of the obligation;
  4. The amount due was placed at the disposal of the court; and
  5.After the consignation had been made, the person interested was
notified of the action (E. San Diego, Inc. vs. Rosario T. Alzul, G.R. No.
169501, June 8, 2007).
  Failure in any of these requirements is enough ground to render a
consignation ineffective (Teddy G. Pabugais vs. Dave P. Sahijwani, G.R.
No. 156846, February 23, 2004).

292. I. The codal provision of the Civil Code dealing with  

consignation should be accorded a mandatory   construction.
II. There should be notice to the creditor prior and after   consignation
as required by the Civil Code.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. It must be stated that in the case of Soco v. Militante (123 SCRA
160, 166-167 [1983]), the Supreme Court ruled that the codal
provision of the Civil Code dealing with consignation (Articles 1252-
1261) should be accorded a mandatory construction.
The Supreme Court held that the essential requisites of a valid
consignation must be complied with fully and strictly in accordance
with the law. Articles 1256 to 1261, New Civil Code. That these Articles
must be accorded a mandatory construction is clearly evident and
plain from the very language of the codal provisions themselves which
require absolute compliance with the essential requisites therein
provided. Substantial compliance is not enough for that would render
only directory construction to the law. The use of the words ‘shall’ and
‘must’ which are imperative, operating to impose a duty which may be
enforced, positively indicated that all the essential requisites of a valid
consignation must be complied with. The Civil Code Articles expressly
and explicitly direct what must be essentially done inn order that a
consignation shall be valid and effectual.
Likewise, the Supreme Court enumerated the requirements prescribed
by law for a valid consignation. One of the given requirements is that
after consignation had been made, the person interested was notified
thereof (Art. 1178, Civil Code). The reason for such a requirement was
given by the Supreme Court. It stated-
The reason for the notification to the persons interested in the
fulfillment of the obligation after consignation had been made, which
is separate and distinct from the notification which is made prior to
the consignation, is stated in Cabanas v. Calo, G.R. No. L-10927,
October 30, 1958, 104 Phil. 1058, thus: ‘There should be notice to the
creditor and after consignation as required by the Civil Code. The
reason for this is obvious, namely, to enable the creditor to withdraw
the goods or money deposited. Indeed, it would be unjust to make
him suffer the risk for any deterioration, depreciation, or loss of such
goods or money by reason of lack of knowledge of the consignation
(Leonila J. Licuanan vs. Hon. Ricardo D. Diaz, Judge Branch XXVII, Court
of First Instance of Manila and Aida Pineda).

293. I. The rationale for consignation is to avoid the performance of an

obligation becoming more onerous to the debtor by reason of causes
not imputable to him.
II. Tender is the antecedent of consignation, that is, an act preparatory
to   the consignation, which is the principal, and from which are
derived   the immediate consequences which the debtor desires or
seeks to   obtain.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

294. I. Without the notice first announced to the persons interested in

the   fulfillment of the obligation, the consignation as payment is
voidable.
II. The fact that in previous years’ payment in check was accepted does
not place its creditor in estoppel from requiring the debtor to pay his  
obligation in cash.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false.

B. In order that consignation may be effective, the debtor must first
comply with certain requirements prescribed by law. The debtor must
show (1) that there was a debt due; (2) that the consignation of the
obligation has been made because the creditor to whom tender of
payment was made refused to accept it, or because he was absent or
incapacitated, or because several persons claimed to be entitled to
receive the amount due (Art. 1176, Civil Code); (3) that previous notice
of the consignation had been given to the person interested in the
performance of the obligation (Art. 1177, Civil Code); (4) that the
amount due was placed at the disposal of the court (Art. 1178, Civil
Code); and (5)  that after the consignation had made the person
interested was notified thereof (Art. 1178, Civil Code). Failure in any of
these requirements is enough ground to render a consignation
ineffective. (Jose Ponce de Leon vs. Santiago Syjuco, Inc., 90 Phil. 311).
Without the notice first announced to the person interested in the
fulfillment of the obligation, the consignation as a payment is void.
(Limkako vs. Teodoro, 74 Phil. 313).
In order to be valid, the tender of payment must be made in lawful
currency. While payment in check by the debtor ay be acceptable as
valid, if no prompt objection to said payment is made (Desbarats vs.
Vda. de Mortera, L-4915, May 25,1956) the fact that in previous years’
payment in check was accepted does not place its creditor in estoppel
from requiring the debtor to pay his obligation in cash (Sy vs. Eufemio,
L-10572, Sept. 30, 1958). Thus, the tender of a check to pay for an
obligation is not a valid tender of payment thereof (Desbarats vs. Vda.
de Mortera, supra). (Soledad Soco vs. Hon. Militante and Regino
Francisco, Jr., G.R. No. L-58961, June 28, 1983).

 
295. I. Payment in check by the debtor may be acceptable as valid,   if
no prompt objection to said payment is made.
II. If, the consignation having been made, the creditor should  
authorize the debtor to withdraw the same, he shall   lose every
preference which he may have over the   thing.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. (Art. 1261, NCC)

True jurisprudence holds that, in general, a check does not constitute a
legal tender, and that a creditor may validly refuse it. It must be
emphasized, however, that this dictum does not prevent a creditor
from accepting a check as payment. In other words, the creditor has
the option and the discretion of refusing or accepting it (Far East Bank
& Trust Company vs. Diaz Realty, Inc., G.R. No. 138588, August 23,
2001).
While it is true that in general, a manager’s check is not a legal tender,
the creditor has the option of refusing or accepting it. Payment in
check by the debtor may be acceptable as valid, if no prompt
objection to said payment is made (Teddy G. Pabugais vs. Dave P.
Sahijwani, G.R. No. 156846, February 23, 2004).

296. The following are the effects if the debtor withdraws after proper
consignation, except:
 
A. The obligation remains.
B. The obligation is extinguished.
C. The creditor shall lose every preference which he may   have over
the thing.
D. The co-debtors, guarantors and sureties shall be   released.

B. The following are the effects if after proper consignation the debtor
withdraws with the authority of the creditor:

  1. The obligation remains.

  2. The creditor shall lose every preference which he may have over
the thing.
  3. The co-debtors, guarantors and sureties shall be released.
 
For example, X owes Y P50,000 due on December 31, 2018.  G is the
guarantor. On said date, Y refused the payment of X without any valid
reason. Subsequently, X consign the P50,000 in court. Thereafter, X
pleased with Y to withdraw P50,000 as he needed the said amount to
pay hospital bills. Y agreed. What are the legal effects of this
withdrawal with the consent of Y? The obligation of X remains. Y shall
lose his preference over the P50,000 and G will be released from the
obligation to pay P50,000.
297. The following are the requisites in order that an obligation to give
a determinate thing will be extinguished, except:
 
A. The obligation is to deliver a determinate thing.
B. The obligation is to deliver an indeterminate thing.
C. The thing is lost without the fault of the debtor.
D. The thing is lost before the debtor has incurred in   delay.

298. I. An obligation to pay money is generic; therefore, it is not  

excuse by fortuitous loss of any specific property of the debtor.
II. Where the obligation consists in the payment of money, the failure
of   the debtor to make he payment even by reason of a fortuitous  
event shall not relieve him of his liability.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. If the obligation is generic in the sense that the object thereof is

designated merely by its class or genus without any particular
designation or physical segregation from all others of the same class,
the loss or destruction of anything of the same kind even without the
debtor’s fault and before he has incurred in delay will not have the
effect of extinguishing the obligation. This rule is based on the
principal that the genus of a thing can never perish. Genis nunquan
perit. An obligation to pay money is generic; therefore, it is not
excused by fortuitous loss of any specific property of the debtor
(Gaisano Cagayan, Inc. vs. Insurance Company of North America, G.R.
No. 147839, June 8, 2006).
 
299. I. The general rule is that if the thing is lost while in the  
possession of the debtor, is shall be presumed that the loss   was due
to his fault. Unless there is proof to the contrary.
II. The general rule also applied in case of earthquake, flood,   storm,
or other natural calamity.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. If the thing is lost while in the possession of the debtor, shall be
presumed that the loss was due to his fault, unless there is proof to
the contrary.
However, if the obligor delays, or has promised to deliver the same
thing to two or more persons who do not have the same interest, he
shall be responsible for any fortuitous event until he has effected the
delivery (Art. 1165, NCC) regardless of the presence of the fault or
negligence.
The general rule does not apply in case of earthquake, flood, storm, or
other natural calamity.
For example, X promised to deliver a specific cell phone to Y on
December 31, 2018. Before the said date, the cell phone was lost. The
disputable presumption is that the cell phone was lost through the
fault of X. However, such presumption will not stand if the cause of the
loss was proven that it was due to earthquake, flood, storm, or other
natural calamity.

300. When the service has become so difficult as to be manifestly

beyond the contemplation of the parties, the obligor may also be
released therefrom, in whole or in part.
 
A. Doctrine of force majeure
B. Doctrine of fortuitous events
C. Doctrine of unforeseen events
D. Doctrine of foreseen events

C. (Art. 1267, NCC)

301. I. Bad faith imports a dishonest purpose or some moral   obliquity

and conscious doing of wrong.
II. Bad faith means a breach of a known duty through some    motive
or interest or ill will that partakes of the nature of   fraud.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

302. I. Good faith is presumed.

II. The burden of proving good faith rests on   the one alleging it.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. Good faith is presumed, the burden of proving bad faith rests on

the one alleging it (Victorino Magat, Jr., vs. CA and Santiago A.
Guerrero G.R. No. 124221, August 4, 2000).
303. 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 to which the remission refers.
 
A. Condonation
B. Confusion
C. Compensation
D. Novation

A. Condonation or remission of debt 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 to which the remission refers. It is an
essential characteristic of remission that it be gratuitous, that there is
no equivalent received for the benefit given; once such equivalent
exists, the nature of the act changes. It may become dation in payment
when the creditor receives a thing different from that stipulated; or
novation, when the object or principal conditions of the obligation
should be changed; or compromise, when the matter renounced is in
litigation or dispute and in exchange of some concession which the
creditor receives (Rafael Arsenio S. Dizon, in his capacity as the judicial
administer of the estate of the deceased Jose P. Fernandez vs. CTA and
CIR, G.R. No. 140944, April 30, 2008).

304. The following are requisites of condonation, except:

 
A. It must be gratuitous.
B. It must be accepted by the creditor.
C. The obligation must be demandable.
D. The parties must have capacity.
B. The following are the requisites of condonation or remission:
1. It must be gratuitous;
2. It must be accepted by the debtor;
3. The obligation must be demandable;
4. The parties must have capacity;
5. The condonation must not be inofficious; and
6. The condonation must comply with the forms of donation, if it is an
express condonation.

305. The following are requisites of condonation, except:

 
A. It must be onerous.
B. The parties must have capacity.
C. The condonation must not be inofficious.
D. The condonation must comply with the forms of   donation, if it is
an express condonation.

A. The following provisions explain the principle on inofficious

donation;
Art. 750. The donations may comprehend all the present property of
the donor, or part thereof, provided he reserves, in full ownership or in
usufruct, sufficient means for the support of himself, and of all
relatives who, at the time of the acceptance of the donation, are by
law entitled to be supported by the donor. Without such reservation,
the donation shall be reduced in petition of any person affected.

Art. 752. The provisions of Article 750 notwithstanding, nor person

may give or receive, by way of donation, more than he may give or
receive by will.
The donation shall be inofficious in all that may exceed this limitation.

306.   I. The donation and acceptance of a movable, the value of which

exceeds P5,000.00 must be made in writing, otherwise the same shall
be voidable.
  II. 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.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. The forms of donation are provided in Arts. 748 and 749, NCC to

wit:
Art. 748. The donation of a movable may be made orally or in writing.
An oral donation requires the simultaneous delivery of the thing or of
the document representing the right donated.
If the value of the personal property donated exceeds five thousand
pesos, the donation and the acceptance shall be made in writing,
otherwise, the donation shall be void.
Art. 749. In order that the donation of an immovable may be valid, it
must be made in a public document, specifying therein the property
donated and the value of the changes which the done must satisfy.
The acceptance may be made in the same deed of donation or in a
separate public document, but it shall not take effect unless it is done
during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be
notified thereof in an authentic form, and this step shall be noted in
both instruments.

307.  I. The rationale for allowing the presumption of renunciation in

the delivery of a private instrument is that, unlike that of a public
instrument, there could be just one copy of the evidence of credit.
  II. The renunciation of the principal debt shall not extinguish the
accessory obligations.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. Article 1271 of the New Civil Code provides that 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.
For example, X owed Y the amount of P30,000 evidenced by a
promissory note which was not notarized; thus, a private document.
Subsequently, Y delivered this promissory note to X. The disputable
presumption is that Y condoned the obligation of X.
It may not be amiss to add that Article 1271 of the Civil Code raises a
presumption, not of payment, but of the renunciation of the credit
where more convincing evidence would be required what normally
would be called for to prove payment. The rationale for allowing the
presumption of renunciation in the delivery of a private instrument is
that, unlike that of a public instrument, there could be just one copy of
the evidence of credit. Where several originals are made out of a
private document, the intendment of the law would thus be to refer to
the delivery only of the original rather than to the original duplicate of
which the debtor would normally retain a copy. It would thus be
absurd if Article 1271 were to be applied differently (Trans-Pacific
Industrial Supplies, Inc. vs. CA and Associated Bank, G.R. No. 109172,
August 19, 1994).

308. Is the meeting in the same person of the qualities of creditor and
debtor with respect to one and the same obligation?
 
A. Condonation
B. Confusion
C. Compensation
D. Novation

B. Confusion or merger is the meeting in the same person of the

qualities of creditor and debtor with respect to one and the same
obligation (4 Sanchez Roman 421). The obligation is extinguished. If a
debtor is his own creditor, enforcement of the obligation becomes
absurd, since one cannot claim against himself (8 Manresa 349).
The following are the requisites of confusion or merger:
  1. The merger of the characters of the creditor and debtor must be in
the same person (Art. 1275, NCC);
  2. The merger must take place in the person of either the principal
creditor or the principal debtor (Art. 1267, NCC); and
  3. The merger must be complete and definite.
For example, X(debtor) made a negotiable promissory note in favor of
Y (creditor) as he obtained a loan from the latter in the same amount
of P50,000. Subsequently, Y negotiated this to A. Thus, Y becomes the
debtor and B becomes the creditor. Later, B negotiated this to C.
Accordingly, B becomes the debtor and C becomes the creditor.
Afterwards, C negotiated this promissory note back to X. Therefore, C
becomes the debtor and X becomes the creditor. Take note that at the
start, X was the debtor who becomes now the creditor of himself so
that there is confusion or merger of rights that will extinguish the
obligation.

309.   I. The obligation is extinguished if the merger or confusion takes

place in the person of the principal debtor or creditor.
  II. If the confusion takes place in the person of any of the guarantors,
there is extinguishment of the principal obligation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

 The obligation is extinguished if the merger or confusion takes place

in the person of the principal debtor or creditor. However, if the
confusion takes place in the person of any of the guarantors, there is
no extinguishment of the principal obligation.
For example, X made a negotiable promissory note in favor of Y as he
obtained a loan from the latter in the amount of P50,000. G is the
guarantor. Y negotiated the promissory note to A. A negotiated this to
B. B further negotiated this to X. In this case the obligation is
extinguished and G, the guarantor, is also released from his subsidiary
obligation.
What if B instead of negotiating it to X negotiated it to G? In this case,
X is liable to pay G? Take note that the contract of guaranty is
extinguished because the guarantor is now the new creditor.

 
310.   I. In a joint obligation, if the confusion takes place in one of the
joint debtors, the principal obligation is partially extinguished up to
the share which corresponds to him.
  II. In a solidary obligation, if the confusion takes place in one of the
solidary debtors, the entire obligation is extinguished.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. In a joint obligation, if the confusion takes place in one of the joint
debtors, the principal obligation is partially extinguished up to the
share which corresponds to him. This is because of the nature of a
joint obligation wherein the joint debtors are liable pro rata equally or
that the debts being considered distinct from one another.
For example, B and C jointly made a negotiable promissory note in
favor of X as they obtained a loan from the latter in the amount of
P50,000. Subsequently, X negotiated this promissory note to B. Is the
obligation of B and C extinguished? Merger took place only with
regard to the obligation of B. Therefore, B’s obligation is extinguished
but C’s obligation remains. C’s creditor now will be B to the amount of
P25,000.
In a solidary obligation, if the confusion takes place on one of the
solidary debtors, the entire obligation is extinguished. This is because
of the nature of a solidary obligation wherein the solidary debtors are
bound to render, entire compliance with the prestation. The remedy of
the debtor in whom confusion took place may claim reimbursement
from co-debtors for the shares which corresponds to them.

311.   I. In compensation, there must be two persons, who, in their own

right, are creditors and debtors of each other.
  II. In confusion, there in only one person in whom is merged the
qualities of creditor and debtor.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Compensation vs. Confusion

Compensation Confusion

In compensation, there must In confusion, there is only

be two persons, who in their one person in whom is
own right, are creditors and merged the qualities of
debtors of each other creditor are debtor

In compensation, there must In confusion, there is only

be at least two obligations one obligation

312. I. In compensation, there must be at least   two obligations.

II. In confusion, there is only one obligation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. In Roman Law, compensation was the reciprocal extinction of

claims between mutual debtors (Selwyn F. Lao and Edgar Manansala
vs. Special Plans, Inc., G.R. No. 164791, June 29, 2010).
For example, in a contract, X owed Y P20,000 due on December 31,
2018. In another contract Y owed X the amount of P20,000 due also on
December 31, 2018. In this case, there is total compensation.
KINDS OF COMPENSATION
  1. AS TO CAUSE
  A. Legal
When it takes effect by operation of law from the moment all the
requisites prescribed by law are present (Arts. 1278, 1279, NCC). Legal
compensation takes place ipso jure when all the requisites of law are
present (Mavest (U.S.A.) Inc., and Mavest Manila Liaison Office vs.
Sampaguita Garment Corporation, G.R. No. 127454, September 21,
2005).
The relationship between banks and depositors has been held to be
that of creditor and debtor. Thus, legal compensation under Article
1278 of the Civil Code may take place “when all the requisites
mentioned in Article 1279 are present, “as follows:
“(1) That each one of the obligors be bound principally, and that he be
at same time a principal creditor of the other;
(2) That 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;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the
debtor (Associated Bank (Now Westmont Bank) vs. Vicente Henry Tan,
G.R. No. 156940, December 14, 2004).”
  b. Voluntary or Conventional
When it takes place by agreement of the parties (Art. 1282, NCC).
Conventional or voluntary compensation which occurs when the
parties agree to the mutual extinguishment of their creditors or to
compensate their mutual obligation even in the absence of some of
the legal requisites (Mavest (U.S.A) Inc., and Mavest Manila Liaison
Office vs. Sampaguita Garment Corporation, G.R. No. 127454,
September 21, 2005).
Requisites of conventional compensation
1. That each of the parties can dispose of the credit he seeks to
compensate, and
2. That they agree to the mutual extinguishment of their credits
(United Planters Sugar Milling Co., Inc., vs. CA, et.al., G.R. No. 126890,
April 2, 2009).
  c. Judicial
When it takes effect by judicial decree (Art. 1283, NCC).
  D. Facultative
When the compensation can be set up only by one of the parties (Arts.
1287 and 1288, NCC).
Example:
When one of the debts arises from a contract of deposit,
commodatum, and civil liability arising from a crime (see Art. 1287 and
1288, NCC).

  2. AS TO EFFECT
  A. Total
When two debts are of the same amount (Art. 1281, NCC).
  B. Partial
When the two debts are not of the same amount (Art. 1281, NCC).
Concededly, the Civil Code lists compensation as one of the modes of
extinguishing the obligations of persons who, in their own right, are
creditors and debtors of each other. Compensation may be legal or
conventional. Legal compensation takes place ipso jure when all the
requisites of law are present, as opposed to conventional or voluntary
compensation which occurs when the parties agree to the mutual
extinguishment of the credits or to compensate their mutual
obligations even in the absence of some of the legal requisites.
For compensation to validly take place, the governing Civil Code
provisions require the concurrence of well-defined conditions. At its
minimum, compensation presupposes two persons who, in their own
right and as principals, are mutually indebted to each other respecting
equally demandable and liquidated obligations over any of which no
retention or controversy commenced and communicated in due time
to the debtor exists. But while compensation, be it legal or
conventional, requires the confluence in the parties of the characters
of mutual debtors and creditors, their rights as such creditors, or their
obligations as such debtors, need not spring from one and the same
contract or transaction (Mavest (U.S.A.) Inc., and Mavest Manila Liaison
Office vs. Sampaguita Garment Corporation, G.R. No. 127454,
September 21, 2005).

313. The following are the requisites of legal compensation, except:

 
A. That each one of the obligors be bound subsidiarily, and that   he
be at the same time a principal creditor of the other.
B. That 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. That the two debts are due
D. That they be liquidated and demandable. 

314. The following are the requisites of conventional compensation:

I. That each of the parties can dispose of the credit he seeks to  
compensate.
II. That they agree to the mutual extinguishment of their credits.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

315.   I. Legal compensation takes place ipso jure when all the
requisites of law are present.
  II. Conventional compensation occurs when the parties agree to the
mutual extinguishment of their credits or to compensate their mutual
obligations even in the absence of some of the legal requisites.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C

 
316. Is a claim which has been formally passed upon by the highest
authority?
 
A. Debt
B. Payable
C. Liability
D. Claim

A. The Supreme Court held that:

Compensation or offset takes place by operation of law when two
persons, in their own right, are creditor and debtor of each other. For
compensation to take place, a distinction must be made between a
debt and a mere claim. A debt is a claim which has been formally
passed upon the highest authority to which it can in law be submitted
and has been declared to be a debt. A claim, on the other hand, is a
debt in embryo. It is mere evidence of a debt and must pass thru the
process prescribed by law before it develops into what is properly
called a debt (E.G.V. Realty Development Corporation and Cristina
Condominium vs. CA Unisphere International, Inc., G.R. No. 120236,
July 20, 1999).

317. It is mere evidence of a debt and must pass thru the process
prescribed by law before it develops into what is properly called a
debt.
 
A. Debt
B. Payable
C. Liability
D. Claim
D

318.   I. Compensation requires confluence in the parties of the

characters of mutual debtors and creditors, although their rights as
such creditors or their obligations as such debtors need not spring
from one and the same contract or transaction.
  II. The relationship of the depositors and the Bank or similar
institution is that of creditor-debtor. Such deposit may be set-off
against the obligation of the depositor with the bank or similar
institution.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. Article 1980 of the New Civil Code provides that fixed, savings and
current deposits of money in banks and similar institutions shall be
governed by the provisions concerning simple loans. Under Article
1953, of the same Code, a person who secures a loan of money or any
other fungible thing acquires the ownership thereof, and is bound to
pay the creditor an equal amount of the same kind and quality. The
relationship of the depositors and the Bank or similar institution is that
of creditor-debtor. Such deposit may be setoff against the obligation
of the depositor with the bank or similar institution (Spouses Ramon
M. Nisce and A. Natividad Paras-Nisce vs. Equitable PCI Bank, Inc., G.R.
No. 167434, February 19, 2007).

 
319.   I. Compensation can take place where one claim is still subject of
litigation.
  II. A claim is liquidated when the amount and time of payment is
fixed.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. Compensation cannot take place where one claim is still the subject
of litigation, as the same cannot be deemed liquidated (Spouses
Alejandro Mirasol and Lilia E. Mirasol vs. CA, et.al., G.R. No. 128448,
February 1, 2001).

A claim is liquidated when the amount and time of payment is fixed.

If acknowledged by the debtor, although not in writing, the claim must
be treated as liquidated (Selwyn F. Lao and Edgar Manansala vs.
Special Plans, Inc., G.R. No. 164791, June 29, 2010).

To liquidate means “to make the amount of indebtedness or an

obligation clear and settled in the form of money (Spouses Onesiforo
and Rosario Alinas vs. Spouses Victor and Elena Alinas, G.R. No.
158040, April, 2008).”

320.  I. A debt is an amount actually ascertained. It is a claim which has

been formally passed upon by the courts to which it can in law be
submitted and has been declared to be a debt.
  II. A claim, on the other hand, is a debt in embryo. It is mere evidence
of a debt and must pass thru the process prescribed by law before it
develops into what is properly called a debt.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Debt vs. Claim

Debt Claim

A claim, on the other hand, is a

A debt is an amount debt in embryo. It is mere
actually ascertained. It evidence of a debt and must pass
is a claim which has thru the process prescribed by
been formally passed law before it develops into what
upon by the courts or is properly called a debt.
quasi-judicial bodies to (Premiere Development Bank vs.
which it can in law be Alfredo C. Flores, in his capacity
submitted and has been as presiding judge of RTC of Pasig
declared to be a debt. City, Branck 167, et.a., G.R. No.
175339, December 16, 2008).

321.   I. The guarantor may set up compensation as regards what the

creditor may owe the principal debtor.
  II. Compensation may be total or partial. When the two debts are the
same amount, there is partial compensation.
 
A. Only I Is true
B. Only II is true
C. Both are true
D. Both are false

A. (Art. 1281, NCC)

322. It occurs when the parties agree to the mutual extinguishment of

their credits or to compensate their mutual obligations even in the
absence of some of the legal requisites.
 
A. Conventional compensation
B. Involuntary compensation
C. Legal compensation
D. Illegal compensation

A. Conventional or voluntary compensation occurs when the

parties agree to the mutual extinguishment of their credits or to
compensate their mutual obligations even in the absence of some of
the legal requisites (Mavest (U.S.A.) Inc., and Mavest Manila Liaison
Office vs. Sampaguita Corporation, G.R. No. 127454, September 21,
2005).
Legal compensation vs. Conventional compensation

Conventional
Legal compensation
compensation

Legal compensation takes

place by operation of law
when all the requisites are
present, as opposed to
conventional compensation We recognize the concept of
which takes place when the conventional compensation,
parties agree to compensate defined as occurring “when
their mutual obligation even the parties agree to
in the absence of some compensate their mutual
requisites. The only obligations even if some
requisites of conventional requisite is lacking such as
compensation are (1) that that provided in Article
each of the parties can 1282.” It is intended to
dispose of the credit he seeks eliminate or overcome
to compensate, and (2) that obstacles which prevent
they agree to the mutual ipso jure extinguishment of
extinguishment of their their obligations.
credits (United Planters
Sugar Milling Co. Inc.
(UPSUMPCO) vs. et.al., G.R.
No. 126890, April 2, 2009).

323. The requisites of conventional compensation are:

  I. That each of the partners can dispose of the credit he seeks to
compensate.
  II. That they agree to the mutual extinguishment of their credits.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

324. 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.
 
A. Extrajudicial compensation
B. Judicial compensation
C. Conventional compensation
D. Voluntary compensation

B. (Art. 1283, NCC)

325. The transfer of rights, especially contractual rights, from one party
to another.
 
A. Contract of sale
B. Contract of barter
C. Assignment of rights
D. Cession in payment

326. The effects of assignment of rights are the following, except:

 
  A. If the debtor consented to the assignment of rights made by a
creditor in favor of a third person, he cannot set up against the
assignee the compensation which pertain to him against the assignor.
  B. If the debtor consented to the assignment of rights made by a
creditor in favor of a third person and he reserved his right to the
compensation, then he can set up against the assignee the
compensation which pertain to him against the assignor.
  C. If the assignment is made without the knowledge of the debtor, he
may set up the compensation of all credits prior to the same and also
later ones until he had of the assignment.
  D. If the assignment is made without the knowledge of the debtor, he
cannot set up the compensation of all credits prior to the same and
also later ones until he had knowledge of the assignment.

D. Effects of assignment of rights

  1. If the debtor consented to the assignment of rights made by a
creditor in favor of a third persons, he cannot set up against the
compensation which pertain to him against the assignor.
  2. If the debtor consented to the assignment of rights made by a
creditor in favor of a third person and he reserved his right to the
compensation, then he can set up against the assignee the
compensation which pertain to him against the assignor.
Example:
X owes Y P20,000 due on December 31, 2018 while in another contract
Y owes X the amount of P5,000 due on December 20, 2018. (Take note
that both debts should have been extinguished by operation of law up
to the amount of P5,000 because of partial compensation) On
December 31, 2018, Y assigned his credit (P20,000) to Z with the
consent of X. In this case, Z can collect the entire amount of P20,000
from X. Of course, X can still collect the P5,000 from Y.
However, if X reserved his right to compensation, he would only pay Z
the amount of P15,000 (P20,000-P5,000).
  3. If the assignment is made without the knowledge of the debtor, he
may set up the compensation of all credits prior to the same and also
later ones until he had knowledge of the assignment.
Example.
X owes Y P40,000 due on October 1, 2018 while in another contract Y
owes X the amount of P5,000 due also on October 1, 2018. On
November 15, 2018, Y assigned his credit (P40,000) to Z without the
knowledge of X. Another 30, 2018. Still another obligation of Y in favor
of X in the amount of P15,000 will mature on December 25, 2018.
X only had knowledge of the assignment on December 5, 2018. How
much can Z collect from X? Z can collect from X the amount P25,000
(P40,000-P5,000-P10,000). The P5,000 and P10,000 are the debts that
matured prior to X’s knowledge of the assignment; hence, X can set up
the defense of partial compensation.

327.   I. Compensation shall be proper when one of the debts arises

from a depositum or from the obligations of a depositary or of a
bailee in commodatum.
  II. Compensation cannot be set up against a creditor who has a claim
for support due by gratuitous title.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. (Art. 1287, NCC)

328. The following debts cannot be compensated, except:

 
A. Contract arising from contract of depositum.
B. Contract arising from contract of   commodatum.
C. Contract arising from contract of support.
D. Contract arising from contract of mutuum.

D. (Art. 1287 & 1288, NCC)

DEBTS WHICH CANNOT BE COMPENSATED
  1. Debts arising from contract of depositum.
Compensation shall not be proper when one of the debts arising from
a depositum or from the obligations of a depositary.
Contract of Deposit
A deposit is constituted from the moment a person receives a thing
belonging to another, with the obligation of safety keeping at and of
returning the same. If the safekeeping of the thing delivered is not the
principal purpose of the contract, there is no deposit but some other
contract. (Art. 1962, NCC)
Example:
X owes Y P50,000. Y kept the cell phone of X having a value of P50,000
by way of deposit. Can there be compensation? The general rule is
that the depositary (Y) cannot claim compensation to prevent the
breach of trust and confidence because a contract of deposit is
governed by trust and confidence. The exception is that the depositor
(X) can claim compensation.

  2. Debts arising from a contract of commodatum.

Compensation shall not be proper when one of the debts arises from
commodatum or of a bailee in commodatum.
Contract of Commodatum
By the contract of loan, one of the parties delivers to another, either
something not consumable so that the latter may use the same for a
certain time and return it, in which case the contract is called a
commodatum; or money or other consumable thing, upon the
condition that the same amount of the same kind and quality shall be
paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum the bailor retains the ownership of the thing loaned,
while in simple loan, ownership passes to the borrower (Art. 1933,
NCC).
Example:
X owes Y P100,000. Y borrowed the laptop of X having a value of
P100,000. Can there be compensation? The general rule is that the
borrower (Y) cannot claim compensation to prevent the breach of trust
and confidence because a contract of commodatum is governed by
trust and confidence. The exception is that the lender (X) can claim
compensation.

  3. Claims for support due by gratuitous title.

Compensation cannot be set up against a creditor who has a claim for
support due by gratuitous title.
What is support?
For, support is, amongst others, everything that is indispensable for
sustenance. The right to support cannot be: (1) renounced; (2)
transmitted to third persons; nor (3) compensated with what the
recipient owes the obligor. Compensation may not even be set up
against a creditor who has a claim for support due by gratuitous title
(Margaret Ann Wainright Versoza, et.al. vs. Jose Ma. Versoza, G.R. No.
L-25609, November 27, 1968).
Art. 194. Support comprises everything indispensable for sustenance,
dwelling, clothing, medical attendance, education and transportation,
in keeping with the financial capacity of the family.
The education of the person entitles to be supported referred to in the
preceding paragraph shall include his schooling or training for some
profession, trade or vocation, even beyond the age of majority.
Transportation shall include expenses in going to and from school, or
to and from place of work (Art. 194, Family Code of the Philippines).
  4. One of the debts consists in civil liability arising from a penal
offense.
Debts cannot be compensated if one of the debts consist in civil
liability arising from a penal offense.
Rationale:
The raison d’etre for this is that, “if one of the debts consists in civil
liability arising from a penal offense, compensation would be improper
and inadvisable because the satisfaction of such obligation is
imperative (Metropolitan Bank and Trust Company vs. Joaquin Tonda
and Ma. Cristina Tonda).”

329. Is constituted from the moment a person receives a thing

belonging to another, with the obligation of safely keeping ai and of
returning the same?
 
A. Contract of deposit
B. Contract of guaranty
C. Contract of surety
D. Contract of loan

330. One of the parties delivers to another, either something not

consumable so that the latter may use the same for a certain time and
return it.
 
A. Contract of deposit
B. Contract of guaranty
C. Contract of commodatum
D. Contract of loan
C

331. It comprises everything indispensable for sustenance, dwelling,

clothing, medical attendance, education and transportation, in keeping
with the financial capacity of the family.
 
A. Deposit
B. Support
C. Guaranty
D. Surety

332. I. Debts can be compensated if one of the debts consists in   civil

liability arising from a penal offense.
II. 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 compensation.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. (Art. 1289, NCC)

333. Obligation may be modified, except:

 
A. By changing their object or principal   conditions.
B. By substituting the person of the debtor.
C. By subrogating a third person in the rights of   the creditor.
D. None of the above.

D. (Under Article 1231(6) of the New Civil Code, novation is

enumerated as one of the ways by which obligations are extinguished.
Obligations may be modified by changing their object or principal
creditor or by substituting the person of the debtor. The burden to
prove the defense that an obligation has been extinguished by
novation falls on the debtor (Agrifina Aquintey vs. Spouses Felicidad
and Rico Tibong, G.R. No. 166704, December 20, 2006).

334. Is the extinguishment of an obligation by the substitution or

change of the obligation by a subsequent one which extinguishes or
modifies the first, either by changing the object or principal
conditions, or by substituting another in place of the debtor, or by
subrogating a third person in the rights of the creditor?
 
A. Condonation
B. Novation
C. Merger of rights
D. Compensation

B. In the civil law setting, novation is literally construed as to make

new. So, it is deeply rooted in the Roman Law jurisprudence, the
principle novation non praesumitur – that novation is never presumed.
At bottom, for novation to be a jural reality, its animus must be ever
present, debitum pro debito – basically extinguishing the old
obligation for the new one (Elsa B. Reyes vs. CA, et.al., G.R. No. 120817,
November 4, 1996).

Novation is the extinguishment of an obligation by the substitution or

change of the obligation by a subsequent one which extinguished s or
modifies the first, either by changing the object or principal
conditions, or by substituting another in place of the debtor, or by
subrogating a third person in the rights of the creditor. In order that a
novation can take place, the concurrence of the
following requisites are indispensable:

  1. There must be a previous valid obligation;

  2. There must be an agreement of the parties concerned to a new
contract;
  3. There must be the extinguishment of the old contract (Agro
Conglomerate, Inc. and Mario Soriano vs. CA and Regent Savings and
Loan Bank, Inc., G.R. No. 117660, December 18, 2000).

335. I. As a general rule, no form of words or writing is necessary to

give the effect to a novation.
Novation is presumed.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

A. For the consequent creation of a new contractual obligation,

consent of both parties is, thus, required. As a general rule, no form of
words or writing is necessary to give effect to a novation (Violeta
Tudtud Banate, et.al. vs. Philippine Countryside Rural Bank, Inc.  and
Teofilo Soon, Jr., G.R. No. 163825, July 13, 2010).

Novation is never presumed, and the animus novandi, whether totally

or partially, must appear by express agreement of the parties, or by
their acts that are too clear and unmistakable. The extinguishment of
the old obligation by the new one is a necessary element of novation,
which may be affected either expressly or impliedly. The contracting
parties must incontrovertibly disclose that their object in executing the
new contract is to extinguish the old one. Upon the other hand, no
specific form is required for an implied novation, and all that is
prescribed by law would be an incompatibility between the two
contracts (Transpacific Battery Corporation and Michael G. Say vs.
Security Bank & Trust Co., G.R. No. 173565, May 8, 2009).

336. In order that a novation can take place, the concurrence of the
following requisites are indispensable, except:
 
A. There must be a previous void obligation.
B. There must be an agreement of the parties concerned   to a new
contract.
C. There must be the extinguishment of the old contract.
D. There must be the validity of the new contract.

337. Is made either by changing the object or the principal conditions?

 
A. Personal novation
B. Subjective novation
C. Real novation
D. Mixed novation

C. KINDS OF NOVATION

  1. As to the subject

  A. Real or objective
Novation is made either by changing the object or the principal
conditions (Romeo C. Garcia vs. Dionisio V. Llamas, G.R. No. 154127,
December 8, 2003).
In its modern concept, what actually takes place in dacion en pago is
an objective novation of the obligation where the thing offered as an
accepted equivalent of the performance of an obligation is considered
as the object of the contract of sale, while the debt is considered as
the purchase price. In any case, common consent is an essential
prerequisite, be it sale or novation, to have the effect of totally
extinguishing the debt or obligation (Agrifina Aquintey vs. Spouses
Felicidad and Rico Tibong, G.R. No. 166704, December 20, 2006).
Examples:
X obliged himself to deliver a particular laptop to Y. Subsequently,
they agreed that X will no longer deliver the laptop but he will change
it to delivery of two specific cell phones. In this case, the old obligation
of X to deliver the laptop is extinguished because of the creation of a
new obligation, that is, to deliver two cell phones.

  B. Personal or subjective
Novation by substituting the person of the debtor or subrogating a
third person to the rights of the creditor (Romeo C. Garcia vs. Dionisio
V. Llamas, G.R. No. 154127, December 8, 2003).
Under this mode, novation would have dual functions: one to
extinguish an existing obligation, the other to substitute a new one in
its place requiring conflux of four essential requisites, (1) a previous
valid obligation; (2) an agreement of all parties concerned to a new
contract; (3) the extinguishment of the obligation; and (4) the birth of
a valid obligation (Chester Babst vs. CA, et.al., G.R. No. 99398, January
26, 2001).
Example:
X obliged himself to deliver a particular laptop to Y. Subsequently, X
and Y agreed Z will substitute X. In this case, the obligation where X is
the debtor is extinguished because of the creation of a new obligation,
that is, the new debtor will now be Z.
It can also be agreed by X and Y that W will be subrogated in the
rights of Y.  In this case, the old obligation where Y is the creditor will
be extinguished because of the creation of a new obligation, that is, W
becomes the new creditor. Take note that if what is being changed is
the debtor the proper term is “substitution” while if what is being
changed is the creditor the proper term is “subrogation.”

  C. Mixed
Novation is made either by changing the object or the principal
conditions and by substituting the person of the debtor or
subrogating a third person to the rights of the creditor.
Example:
X obliged himself to deliver a particular laptop Y. Subsequently, X and
Y agreed that instead of delivering the laptop, X will deliver two
particular cell phones to W. Note that there is a change in the person
of the creditor and object of the obligation.

  2. As to Constitution

  A. Express (Explicit declaration)

It is when the new obligation declares in unequivocal terms that the
old obligation is extinguished (Romeo C. Garcia vs. Dionisio V. Llamas,
G.R. No. 154127, December 8, 2003).
The term “expressly” means that the contracting parties
incontrovertibly disclose that their object in executing the new
contract is to extinguished the old one (Leonida C. Quinto vs. People
of the Philippines, G.R. No. 126712, April 14, 1999).

  B. Implied (Material incompatibility)

It is implied when the new obligation is incompatible with the old one
on every point (Romeo C. Garcia vs. Dionisio V. Lllamas, G.R. No.
154127, December 8, 2003).
Upon the other hand, no specific form is required for an implied
novation, and all that is prescribed by law would be an incompatibility
between the two contracts (Leonida C. Quinto vs. People of the
Philippines, G.R. No. 126712, April 14, 1999).
Test of Incompatibility
The test of incompatibility is whether the two obligations can stand
together, each one with its own independent existence (Romeo C.
Garcia vs. Dionisio V. Llamas, G.R. No. 154127, December 8, 2003). If
they cannot, they are incompatible and the latter obligation novates
the first. Corollarity, changes that breed incompatibility must be
essential in nature and not merely accidental. The accidental must take
place in any of the essential elements of the obligation, such as its
object, cause or principal conditions thereof; otherwise, the change
would be merely modificatory in nature and insufficient to extinguish
the original obligation (Transpacific Battery Corporation and Michael
G. Say vs. Security Bank & Trust Co., G.R. No. 173565, May 8, 2009).
Novation, as a mode of extinguishing obligations, may be done in two
ways: by explicit declaration, or by material incompatibility
(implied novation). As we stated in Fortune Motors vs. Court of
Appeals, supra:
X x x The test of incompatibility is whether the two obligations can
stand together, each one having its independent existence. If they
cannot, they are incompatible and the latter obligation novates the
first. Novation must be established either by the express terms of the
new agreement or by the facts of the parties clearly demonstrating the
intent to dissolve the obligation as a consideration for the emergence
of the new one. The will to novate, whether totally or partially, must
appear by express agreement of the parties, or by their acts which are
too clear or unequivocal to be mistaken (Jeanette D. Molino vs.
Security Diners International Corporation, G.R. No. 136780, August 16,
2001).

  3. As to extent or effect

  A. Total or extinctive
It is extinctive when an old obligation is terminated by the creation of
a new one that takes place of the former (Romeo C. Garcia vs. Dionisio
V. Llamas, G.R. No. 154127, December 8, 2003).
Dual function of Extinctive Novation
1. One to extinguish an existing obligation; and
2. To substitute a new one in its place (Violeta Tudtud Banate, et.al. vs.
Philippine Countryside Rural Bank, Inc. and Teofilo Soon, Jr., G.R. No.
163825, July 13, 2010).
  B. Partial or modificatory
It is merely modificatory when the old obligation subsists to the extent
that it remains compatible with the amendatory agreement.
Whether extinctive or modificatory, novation is made either by
changing the object or the principal conditions, referred to as
objective or real novation; or by substituting the person of the debtor
or subrogating a third person to the rights of the creditor, an act
known as subjective or personal novation (Romeo C. Garcia vs.
Dionision V. Llamas, G.R. No. 154127, December 8, 2003).
Total Novation vs. Partial Novation.
The Supreme Court expounded on the nature of the novation, to wit:
Novation may either be extinctive or modificatory, much being
dependent on extinguishing an existence obligation and, second,
creating a new one in its stead. This kind of novation presupposes a
confluence of four essential requisites: (1) a previous valid obligation;
(2) an agreement of all parties concerned to a new contract; (3) the
extinguishment of the new old obligation; and (4) the birth of a new
valid obligation. Novation is merely modificatory where the change
brought about by any subsequent agreement is merely incidental to
the main obligation (e.g., a change in interest rates or an extension of
time to pay); in this instance, the new agreement will not have the
effect of extinguishing the first but would merely supplement it or
supplant some but not all of its provisions.
In Ong v. Bognalbal, the Court also stated, thus:
Xxx the effect of novation may be partial or total. There is partial
novation when there is only a modification or change is some
principal conditions of the obligation. It is total, when the obligation is
completely extinguished. Also, the term principal conditions in Article
1291 should be construed to include a change in the period to comply
with the obligation. Such a change in the period would only be
a partial novation since the period merely affects the performance,
not the creation of the obligation.
As can be gleaned from the foregoing, the aforementioned four
essential elements and the requirement that there be total
incompatibility between the old and new obligation, apply only to
extinctive novation. In partial novation, only the terms and conditions
of the obligation are altered, thus, the main obligation is not changed
and it remains in force (Maria Soledad Tomimbang vs. Atty. Jose
Talimbang, G.R. No. 165116 citing Iloilo Traders Finance, Inc. vs. Heirs
of Sps. Soriano).
Example:
There was therefore a novation of the terms of the three promissory
notes in that the interest was waived and the principal was payable in
monthly installments of US$750. Alterations of the terms and
conditions of the obligation would generally result only in
modificatory novation unless such terms and conditions are
considered to be the essence of the obligation itself. The resulting
novation in this case was, therefore, of the modificatory type, not the
extinctive type, since the obligation to pay a sum of money remains in
force (Swagman Hotels and Travel, Inc. vs. CA and Neal B. Christian,
G.R. No. 161135, April 8, 2005).
 
  4. As to Origin
  A. Legal
Novation which takes place by operation of law (Art. 1300 and 1302,
NCC).
  B. Conventional
Novation which takes place by stipulation of the parties (Art. 1300 and
1301, NCC).

338. I. In its modern concept, what actually takes place in dacion en

pago is an objective novation of the obligation.
Novation in never presumed, and the animus novandi, must appear by
express agreement of the parties, or by their acts that are too clear
and unmistakable.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

339. Novation by substituting the person of the debtor or subrogating

a third person to the rights of the creditor.
 
A. Objective novation
B. Subjective novation
C. Real novation
D. Mixed novation

 
340. Novation is made either by changing the object or the principal
conditions and by substituting the person of the debtor or
subrogating a third person to the rights if the creditor.
 
A. Objective novation
B. Subjective novation
C. Real novation
D. Mixed novation

341.   I. Novation must be established either by the express terms of

the new agreement or by the acts of the parties clearly demonstrating
the intent to dissolve the old obligation as a consideration for the
emergence of the new one.
  II. The will to novate, whether totally or partially, must appear by the
express agreement of the parties, or by their acts which are too clear
or unequivocal to be mistaken.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

342. When an old obligation is terminated by the creation of a new

one that takes the place of the former.
 
A. Total novation
B. Partial novation
C. Modificatory novation
D. None of the above
A

343. When the old obligation subsists to the extent that it remains
compatible with the amendatory agreement.
 
A. Total novation
B. Extinctive novation
C. Modificatory novation
D. None of the above

 
344. The initiative for the change does not come from and may even
be made without the knowledge of the debtor, since it consists of a
third person’s assumption of the obligation.
 
A. Delegation
B. Expromission
C. Subrogation
D. None of the above

B. In Expromision, the initiative for the change does not come from
the debtor and may even be made without his knowledge. Since a
third person would substitute for the original debtor and assume the
obligation, his consent and that of the creditor would be required
(Leonida C. Quinto vs. People of the Philippines, G.R. No. 126712, April
14, 1999).
For example, X owes Y P10,000. Subsequently, Z asked Y if the latter
would agree that he will pay the P10,000 obligation of X so that Z will
become the new debtor and that X will be released from his
obligation. Y agreed. Also, X agreed. In this case, there is expromision,
meaning the obligation of X is extinguished so that if Z later will not
pay the obligation, X is no longer liable. Take note that the initiative of
paying the obligation came from Z, a third person.

345. The debtor offers, and the creditor accepts, a third person who
consents to the substitution and assumes the obligation
 
A. Delegacion
B. Expromision
C. Subrogation
D. None of the above

A. Substitution of the person of the debtor may be effected

by delegacion, meaning, the debtor offers, and the creditor
(delegatario), accepts a this person who consents to the substitution
and assumes the obligation, (Agrifina Aguintey vs. Spouses Felicidad
and Rico Tibong, G.R. No. 166704, December 20, 2006) thereby
releasing the original debtor from the obligation; here, the
intervention and the consent of all parties thereto would perforce be
necessary.

For example, X owes Y P10,000. Subsequently, X asked Y if the latter

would agree that his brother Z will pay the P10,000 obligation of X so
that Z will become the new debtor and that X will be released from his
obligation. Y agreed. Also, Z consented. In this case, the obligation is
extinguished because of delegacion so that if Z later on will not pay, X
is no longer liable. Take note that the initiative of paying comes from
the old debtor (X) himself.

In the two modes of substitution, the consent of the creditor is an

indispensable requirement (Leonida C. Quinto vs. People of the
Philippines, G.R. No. 126712, April 14, 1999).
 
346. It means the debtor.
 
A. Delegado
B. Delegante
C. Delegatario
D. None of the above

A. Delegado
Means the new debtor
Delegante
Means the original debtor
Delegatario
Means the creditor

347. It means the original debtor

 
A. Delegado
B. Delegante
C. Delegatario
D. None of the above

348. It means the creditor

 
A. Delegado
B. Delegante
C. Delegatario
D. None of the above

C. Novation which consists in substituting a new debtor (delegado) in

the place of the original one (delegante) may be made even without
the knowledge or against the will of the latter but not without the
consent of the creditor. Substitution of the person of the debtor may
be effected by delegacion, meaning, the debtor offers, and the
creditor (delegatario), accepts a third person who consents to the
substitution and assumes the obligation. Thus, the consent of those
three persons is necessary. In this kind of novation, it is not enough to
extend the juridical relation to a third person; it is necessary that the
old debtor be released from the obligation, and the third person or
new debtor take his place in the relation. Without such release, there is
no novation; the third person who has assumed the obligation of the
debtor merely becomes a co-debtor or a surety. If there is no
agreement as to solidarity, the first and the new debtor are considered
obligated jointly (Agrifina Aquintey vs. Spouses Felicidad and Rico
Tibong, G.R. No. 166704, December 20, 2006).

349. In delegacion, the insolvency of the new debtor shall not revive
the action of the creditor against the original obligor, except:
  I. When said insolvency was already existing when he delegated his
debt.
  II. When said insolvency was of public knowledge, known to the
debtor, when he delegated his debt.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

350.   I. When the principal obligation is extinguished in consequence

of a novation, the accessory obligations are not extinguished.
  II. If the new obligation is void, the original one shall subsist.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

B. (Art. 1296&1297)

351.   I. If the original obligation was subject to a suspensive or

resolutory condition, the new obligation shall be under the same
condition.
  II. Conventional subrogation must be clearly established in order that
it may take effect.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false 

C. X obliged himself to give Y a particular cell phone if Y passes the

CPA board examination. Subsequently, X and Y agreed that instead of
giving a cell phone, X will give a specific laptop. Is the giving of the
laptop subject to the same suspensive condition? Yes, X will deliver the
laptop only if Y passes the CPA board examination.
There must be an express intention to novate – animus novandi.
Novation is never presumed. Article 1300 of the Civil Code provides
inter alia that conventional subrogation must be clearly established
inn order that it may take effect (Elsa B. Reyes vs. CA, et.al., G.R.
No.120817, November 4, 1996).

352. Is the transfer of all the rights of the creditor to a third person,
who substitutes him in all his rights?
 
A. Substitution
B. Subrogation
C. Annulment
D. Ratification

B. Subrogation is the transfer of all the rights of the creditor to a third

person who substitute him in all his rights (Edgar Ledonio vs. Capitol
Development Corporation, G.R. No. 149040, July 4, 2007).
  KINDS OF SUBROGATION
  1. Conventional Subrogation
That which takes place by agreement of parties.
  2. Legal Subrogation
That which takes place without agreement but by operation of law
because of certain acts (Edgar Ledonio vs. Capitol Development
Corporation, G.R. No. 149040, July 4, 2007).

353. I. Assignment of rights extinguishes an obligation and   gives rise

to a new one.
II. Subrogation refers to the same right which passes from   one
person to another.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both ae false

D. Conventional subrogation vs. Assignment of rights

Conventional
Assignment of rights
subrogation

Is the transfer of all An agreement by virtue of which the

 owner of a credit (known as the
assignor), by a legal cause – such as
the rights of the sale, dation in payment or exchange
creditor to a third or donation and without need of the
person, who debtor’s consent, transfer that credit
substitute him in all and its accessory rights to another
his rights which takes (known as the assignee), who
place by agreement acquires the power to enforce it, to
of parties. the same extent as the assignor
could have enforced it against the
debtor.

The debtor’s consent The debtor’s consent is not

is necessary. required.

Subrogation
Assignment refers to the same right
extinguishes an
which passes from one person to
obligation and gives
another.
rise to a new one.

The nullity of an obligation is not

The nullity of an old remedied by the assignment of the
obligation may be creditor’s right to another (Edgar
cured by Ledonio vs. Capitol Development
subrogation, such Corporation, G.R. No. 149040, July 4,
that the new 2007 citing Arturo N. Tolentino,
obligation will be Commentaries and Jurisprudence on
perfectly valid. the Civil Code of the Philippines, Vol.
IV, 1996 ed., p. 402).

The Supreme Court has consistently adhered to the foregoing

distinction between an assignment of credit and a conventional
subrogation. Such distinction is crucial because it would determine
the necessity of the debtor’s consent. In an assignment of credit, the
consent of the debtor is not necessary in order that the assignment
may fully produce the legal effects. What the law requires in
an assignment of credit is not the consent of the debtor, but merely
notice to him as the assignment takes effect only from the time, he
has knowledge thereof. A creditor may, therefore, validly assign his
credit and its accessories without the debtor’s consent. On the other
hand, conventional subrogation requires an agreement among the
parties concerned – the original creditor, the debtor, and the new
creditor. It is a new contractual relation based on the mutual
agreement among all the necessary parties (Edgar Ledonio vs. Capitol
Development Corporation, G.R. No. 149040, July 4, 2007).
In a more recent case, the Supreme Court stated: “The law does not
require any formal notice to bind the debtor to the assignee, all that
the law requires is knowledge of the assignment. Even if the debtor
had not been notified, but came to know of the assignment by
whatever means, the debtor is bound by it. (Cited in Edgar Ledonio vs.
Capitol Development Corporation, G.R. No. 149040, July 4, 2007)”

354.   I. Novation by substitution of creditor requires an agreement

among the three parties concerned – the original creditor, the debtor
and the new creditor.
  II. Conventional subrogation of a third person requires the consent of
the original parties and of the third person.
 
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false

C. (Art. 1301, NCC)

Well settled is the rule that novation by substitution of creditor
requires an agreement among the three parties concerned – the
original creditor, the debtor and the new creditor. It is a new
contractual relation based on the mutual agreement among all the
necessary parties. Hence, there is no novation if no new contract was
executed by the parties (Elsa B. Reyes vs. CA, et.al. G.R. No. 120817,
November 4, 1996).
355. It is presumed that there is legal subrogation, except:
 
  A. When a creditor pays another creditor who is preferred, even
without the debtor’s knowledge.
  B. When a third person, not interested in the obligation, pays with
the express or tacit approval of the debtor.
  C. 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.
  D. When, even without the knowledge of the debtor, a person not
interested in the fulfillment of the obligation pays.

D. (Art. 1302, NCC)

Legal subrogation is that which takes place without agreement but
by operation of law because of certain acts; this is the subrogation
referred to in article 1302 (Chemphil Export and Import Corporation
vs. CA, et.al., G.R. No. 112438-39, December 12, 1995).
Example No. 1:
X owes Y P500,000 secured by a real estate mortgage. X also owes Z
P200,000. The obligation of X to Z has no guaranty or security. Later, Z
(ordinary creditor) pays Y the P500,0000 debt of X. In this case Z will
be subrogated in the rights of Y which means that Z can foreclose the
mortgage in case of default by B.
Example No. 2:
X owes Y P500,000 secured by a real estate mortgage. Z paid Y the
amount of P500,000 with the consent of X. In this case, Z is
subrogated in the rights of Y.
Example No. 3:
X owes Y P500,000 secured by a real estate mortgage. It is also
secured by G, as guarantor. If G, pays Y the amount of P500,000, G will
be subrogated in the rights of Y. Moreover, the contract of guaranty is
extinguished. Take note that G, being the guarantor, is a person
interested in the fulfillment of the obligation.

356. X obliged himself to give Y a specific car if Y places among the

top ten in the CPA board exam. Subsequently, they agreed that X will
give Y the car if Y merely passes the CPA board exam. This is an
example of:
 
A. Mixed novation
B. Real novation
C. Implied novation
D. Personal novation

357. D owes C P10,000 payable on December 25, 2018. Later, D

employed violence to C for the latter to sign a promissory note for
P10,000 payable on December 25, 2018. If all other requisites of
compensation are present, are both debts extinguished?
 
A. Yes, under the legal compensation
B. No, B’s consent was obtained by force
C. Yes, with the approval of the court
D. Answer not given

358. The following shall produce the effect of payment of debts:

 
A. Delivery of check
B. Tender of central bank notes
C. Delivery of promissory note
D. Answer not given

359. X executed a promissory note in favor of Y and the promissory

note is negotiated by Y and subsequently is indorsed in favor of X. The
obligation to pay the promissory note is thereby extinguished because
there is:
 
A. Confusion or merger
B. Novation
C. Remission
D. Answer not given

360. A certain C requested X to sell a specific car for P580,000. Y

borrowed said car from X for two days but instead of returning the car
as promised.  Y told X to buy the car from C for P500,000 and that Y
would pay X after Y returns from Davao. Subsequently, C executed a
deed of sale covering the car in X’s favor for P500,000 for which X is
issued three checks in favor of C. X thereafter executed a deed of sale
in favor of Y. When Y returned from Davao, he refused to pay X the
amount of P500,000 saying that said amount would just be deducted
from P566,000 obligation X had with Y. X in her cross-examination
categorically admitted that she is indebted to Y.
In his Answer, Y contented that; 1) as early as September 28, 2017, C
has already sold the car to X for P500,000; 2) as the time X executed
the deed of sale in his favor on March 4, 2018, X was already in
possession of the  deed of sale from C; 3) the amount of P500,000 was
fully paid by way of dation in payment to partially  extinguished X’s
obligation with Y; 4) the contract entered into was a true sale of a
motor vehicle and the mode of payment was that of dation in
payment agreed upon at the time of the sale. Decide.
 
A. There is no legal compensation as one of the obligations consists of
delivery of a car and not a sum of money.
B. Legal compensation has not taken place because X and Y are not
personally both creditor and debtor of each   other.
C. There is no legal compensation as both monetary obligations had
not become due and demandable.
D. By operation of law, the P500,0000 which Y owed X is off-set
against the P566,000 owed by X to Y, leaving a   balance of P66,000,
which X should pay.

361. A, B and C owed in solidum P15,000 to X as evidenced by a

promissory note. The note prescribed on June 15, 2018. On August 1,
2018, A paid X. In this case, A is:
 
A. Entitled to collect P5,000.00 each from B and C.
B. Not titled to reimbursement from his co-debtors for   the shares of
the latter.
C. Entitled to recover from X.
D. Answer not given.

362. A executes a promissory note in favor of B who subsequently

indorsed it in favor of A. The obligation to pay the promissory note is
thereby extinguished because there is?
 
A. Confusion or merger
B. Novation
C. Remission
D. Compensation

363. Payment shall be made to the following, except:

 
A. Creditor
B. The heirs of the creditor
C. Any person authorized to receive it
D. Any person

364. G and H worked for X, Inc. as assistant sales manager and

salesman, respectively. Sometime in August 2015 X, Inc. “sponsored” H
to attend a training course in Austria conducted by Z Corp., X, Inc.’s
principal company. When H returned nine months thereafter, X, Inc.
directed him to sign a memorandum providing that Z Corp. requires
trainees to continue working with X, Inc. for a period of 3 years after
the training. Otherwise, each trainee shall refund to Z Corp. $6,000 by
way of compensation. On January 16, 2018 or 2 years and 4 months
after attending the training, H resigned from X, Inc.
Immediately, X, Inc. ordered G and H to render an accounting of its
various holiday giveaways they received. In protest, G and H
demanded from X, Inc. payment of their separation benefits,
commissions, vacation and sick leave benefits, and proportionate
13th month pay. But   X, Inc. refused and instead, withheld their
13th month pay and other benefits. On April 16, 2018, G and H filed a
complaint. Can there be legal compensation between X, Inc. and H?
 
A. Legal compensation can take place between X, Inc. and H because
they are mutual creditor and debtor of each   other.
B. Legal compensation cannot take place between X, Inc. and H
because they are not mutually creditor and debtor   of each other.
C. Legal compensation can take place because in essence the two
obligations can be compensated.
D. Legal compensation cannot take place because it involves benefits.

365. It presupposes not only that obligor is able, ready and willing but
so more so the act of performing his obligation.
 
A. Promissory note
B. Tender of payment
C. Bill of exchange
D. Check

366. Which of the following is not a special form of payment?

 
A. Cession in payment
B. Application of payment
C. Consignation
D. Dacion in payment

367. X Inc. entered into a Contract of Lease with Y over a commercial

space for the year 2015-2018 on which X Inc. intended to operate a
branch. While X Inc. was able to secure the necessary licenses and
permits for the year 2015, it failed to commence business operations.
For the year 2016, X Inc.’s application for renewal of barangay business
clearance was “held in abeyance until further study of its kitchen
facilities.”
Hence, X Inc. was unable to operate. Fearing further business losses, X
Inc., communicated its intent to terminate the lease contract to Y who,
however, did not accede. In August 2016, X Inc., for the second time,
purportedly informed Y of its intent to terminate the lease, and it in
fact stopped paying rent. By letter of March 26, 2017, Y again
demanded payment of rentals from X Inc. X Inc. denied any liability.
Decide.
 
A. X Inc. is not liable to pay rentals as the service has become so
difficult as to be manifestly beyond the   contemplation of the parties,
the obligor may also be released therefrom, in whole or in part.
B. X Inc. is not liable because the doctrine of unforeseen events is
applicable in the present case.
C. X Inc. is liable. Its failure to renew these permits, licenses, and
authority for the succeeding year, is   not to be construed as an
unforeseen event.
D. X Inc. is liable being a lessee.

368. X, Inc. entered into a Contract of Lease over a building owned by

Y Co. from April 16, 2013 to April 15, 2017. Upon expiration of the
lease, X refused to vacate the property despite repeated demands.
Thus, on January 28, 2018, Y filled a Complaint against X, Inc.
On July 3, 2018, court rendered a Decision, in favor of Y Co. The court
orders X Inc. to pay reasonable compensation in the amount of
P585,640 a month as of April 15, 2017 until possession of the subject
premises is surrendered to Y Co. Then, X Inc. filed with the court a
Motion to Consignate P1,171,280 in favor of Y Co. and to submit the
case for decision. The amount of P1,171,280 represented the
reasonable compensation for the months of July 3, 2018, when the
Decision was promulgated. Is the consignation proper?
 
A. Yes, because there was unjust refusal to accept.
B. Yes, because there was a notice of the consignation given to all
persons interested in the   performance of the obligation.
C. Yes, because the amount due was place at the disposal of the court.
D. No, because X failed to prove that any of the requirements for
proper consignation was present.

369. In tender and consignation, if after consignation is made, the

creditor allows the debtor to withdraw the thing deposited in court,
which of the following is incorrect?
 
A. Co-debtors, guarantors and securities are released from the  
obligation unless they consented.
B. The obligation remains to subsist.
C. The obligation is extinguished.
D. None of the above.

370. D Co. got a loan from the former P Bank in the amount of
P720,000. The loan was secured by a real estate mortgage. In 1981, AB
Corp. rented an office space in the building constructed on the
properties covered by the mortgage contract, with the conformity of
mortgagee P Bank, whereby the parties agreed that the monthly
rentals shall be paid directly to the mortgagee for D Co.’s account. On
July 5, 2014, the Central Bank closed P Bank. Sometime in December
2015, F Bank purchased the credit of D Co. in favor of P Bank.
Subsequently, on December 14, 2016, D Co. tendered to F Bank the
amount of P1,450,000 through a check with the specific notation that
it was for full payment of its P Bank account that had been purchased
by F Bank. F Bank accepted it as payment. Is the tender of payment
effective?
 
A. Yes, because a check is equivalent of money.
B. No, a check does not constitute legal tender, and that a creditor
may validly refuse it.
C. Yes, because F accepted D Co.’s check.
D. No, because a check prevents a creditor from accepting it as
payment.

371. Q Co. alleged that X and Y violated their amended lease contract
over a lot it owns, when they did not pay the monthly rentals thereon.
X and Y justify their nonpayment of rentals on the ground that Q Co.
refused to accept their payments.
Can X and Y can justify their nonpayment of rentals on the ground
that Q Co. refused to accept their payments?
 
A. Yes, because it is beyond the control of X and Y if Q Co. refused to
accept their payment.
B. No, because they should have insisted on giving their payment
based on the principle of obligatory   force of contract and compliance
in good faith.
C. X and Y cannot justify their nonpayment of rentals because they
should have delivered the sum of   money to Q Co. by mail.
D. X and Y cannot justify their nonpayment of rentals on the ground
that Q Co. refused to accept their   payments because if the creditor to
whom tender of payment has been made refuses without just   cause
to accept it, the debtor shall be released from responsibility by the
consignation of the sum.

372. M, N, and O filed an action for annulment of contracts against X

Bank. They claimed that X Bank induced them to avail of its credit
facilities by offering low interest rates so they accepted X Bank’s
proposal and signed the Bank’s pre-printed promissory notes on
various dates. They, however, were unaware that the documents
contained identical escalation clauses granting X Bank authority to
increase interest rates without their consent.
X Bank, asserted that M, N, and O knowingly accepted all the terms
and conditions contained in the promissory notes. In fact, they
continuously availed of and benefited from X Bank’s credit facilities for
five years. After trial, the Regional Trial Court (RTC) upheld the validity
if the promissory notes. The trial court, took judicial notice of the steep
depreciation of the peso during the intervening period and declared
the existence of extraordinary deflation. Decide.
 
A. There is no extraordinary deflation because the obligation is not
contractual in nature.
B. There is extraordinary deflation because the increase in the
purchasing power of currency is manifestly beyond   the
contemplation of the parties.
C. There is extraordinary deflation because there is unusual increase in
the purchasing power of currency.
D. There is no extraordinary deflation because despite the devaluation
of the peso, the BSP never declared a   situation of extraordinary
inflation. Moreover, the parties did not agree to recognize the effects
of   extraordinary or deflation.
 

373. D owes C P1,000,000. G is the guarantor. A stranger, X, paid the

debt of D without the knowledge of the latter. In this case:
 
A. If D fails to pay X, the latter can compel G to pay him.
B. If G pays X, the former can demand reimbursement from D.
C. X cannot compel G to pay him.
D. D has no obligation to reimburse X because he paid without   the
consent of D.

374. X and Y alleged that they are the registered owners of a parcel of
land. Thereafter, X and Y discovered that a portion on the left side of
the said parcel of land was occupied by M and N for more than a year,
without their prior knowledge or consent. A demand letter was sent to
M and N requiring them to vacate the property but they refused to
comply; hence, the filling of the Compliant. During the pendency of
the case, the parties agreed to enter into a Compromise Agreement
which the court approved.
The Compromise Agreement provides that M and N, showed several
checks payable to X, issued by a certain C. However, alleging that they
failed to pay the amounts due on the Compromise. Agreement, X and
Y sent a letter demanding that M and N vacate the premises. Decide.
 
A. The obligation of M and N is extinguished because check is
equivalent to money; thus, it is extinguished by   payment.
B. The obligation of M and N is not extinguished because the delivery
of mercantile documents including checks   “shall produce the effect
of payment only when they have been cashed.” In this case, it was
shown that the   checks were encashed by X and Y.
C. M and N discharge their burden of proving payment because of the
several checks issued by a certain C.
D. Receipts of checks by X is the best evidence of the fact of payment;
hence, the obligation is extinguished.

375. Compensation cannot take place, except

 
A. When one debt arises from the obligations of a   depositary
B. When one debt arises from the obligation of a bailee in  
commodatum
C. When one debt arises because of a claim for support   due to
gratuitous title
D. When one debt arises from a bank deposit

376. A owes B P1,000,000. A proposed to B that C will pay A’s debt and
that he will be released from all liabilities to him. B and C agreed to
the proposal. Later, when B tried to collect from C, he found out that
he was insolvent.
 
A. A is no longer liable to B because of the substitution of C in his
place if he had no   knowledge of the insolvency despite it being
public knowledge.
B. A is no longer liable to B even if he had knowledge of C’s insolvency
provided it is   not of public knowledge.
C. A is still liable to B because even if he was the one who proposed to
B that C shall   substitute him as debtor.
D. A is no longer liable to B despite the insolvency of C unless said
insolvency was of   public knowledge or known to him when he
delegated the debt.

377. P Inc., appointed B Corp. as one of its dealers of electrical wires

and cables. During the period covering December 2017 to August 17,
2018, B Corp. purchased, on credit, from P, Inc. various electrical wires
and cables in the total amount of P4,102,438.30. On September 7,
2018, B Corp. paid P, Inc. the amount of P300,000, thereby leaving an
unpaid account on the aforesaid deliveries of P3,802,438.20. On
several occasions, P, Inc. wrote B Corp. demanding payment of its
outstanding obligations. In response, B Corp. wrote P, Inc. on October
5, 2018 requesting the latter if it could pay its outstanding account in
monthly installments of P500,000 plus 1% interest per month
commencing on October 15, 2018 until fully payment. P, Inc., however,
rejected B Corp.’s offer and accordingly reiterated its demand for the
full payment of Corp.’s account. Decide.
 
A. B Corp. can compel P, Inc. to accept payment in installments. B
Corp. is not bound to fulfill what has been   expressly stipulated
therein.
B. B Corp. can be allowed to perform its obligation under such
contract in parts because their contract has the   force of law between
them.
C. P Inc.’s right to reject B Corp.’s offer to pay in installments is correct
because the creditor cannot be compelled   partially to receive the
prestations in which the obligation consists.
D. P Inc.’s right to reject B Corp.’s offer to pay in installments is
incorrect because the object of the obligation can be   performed in
parts.

378. C is the creditor of D in the amount of P50,000. G is the guarantor

D. D paid C, partially with P20,000. A, not knowing the partial payment
of D and against the will of D, paid C the amount of P50,000. What is
the effect of this payment in the obligation?
 
  A. The obligation is extinguished. A cannot recover any amount from
D, but A can demand reimbursement from G in the amount of
P50,000.
  B. The obligation is extinguished. A can demand P30,000 from D
because this amount benefited D, or, A having been subrogated into
the rights of C, can proceed against G.
  C. The obligation is not extinguished. A’s payment being against the
will of D does not extinguish the obligation.
  D. The obligation is extinguished. A can demand P30,000 from D, but
if D cannot pay, A cannot ordinarily proceed against the guarantor G
because A is not entitled to subrogation.

379. Whenever in an obligation a period is designate, it is presumed to

have been established for the benefit of:
 
A. Both the creditor and the debtor
B. The creditor
C. The debtor
D. The third party
A

 
380. An act of liberality whereby a creditor condones the obligation of
the debtor
 
A. Confusion
B. Compensation
C. Remission
D. Novation

381. When the thing deteriorates pending the fulfillment of the

suspensive condition without the fault of the debtor, the impairment
is:
 
A. To be borne by the party who caused the deterioration
B. To be borne partly by the debtor and partly by the   creditor
C. To be borne by the debtor
D. To be borne by the creditor

382. A owes P10,000. With the consent of both, C pays B P5,000. Now
B and C are the creditors of A to the amount of P5,000 each. Suppose
A has only P5,000. Which is correct?
 
A. B and C should divide the P5,000 equally
B. C should be preferred
C. A may chose who to pay
D. B should be preferred

383. An obligation where only the presentation has been agreed upon
but the debtor may render another in substitution is:
 
A. Conjoint obligation
B. Facultative obligation
C. Simple obligation
D. Alternative obligation

384. X, Y, and Z are solidarily liable to A for P30,000 which matures on

July 1, 2018. On May 1, 2018, X paid A for the whole amount of the
debt. If on December 1, 2018, X will be reimbursed by Y, the latter will
be liable for:
 
A. P10,000 with interest from July 1, 2018 to December 1, 2018
B. P10,000 without interest
C. P10,000 with interest from May 1, 2018 to July 1, 2018
D. P10,000 with interest from May 1, 2018 to December 1, 2018

385. A thing is not deemed lost when it:

 
A. Perishes
B. Disappears in such a way its existence is   unknown or it cannot be
recovered
C. Goes out of commerce
D. Deteriorates

386. A mango tree in the land of O is reclining towards the road. All of
a sudden, without a storm or an earthquake or even a strong wind, the
tree falls hitting a car belonging to Y causing a P20,000 damages. The
liability of O to X arises from:
 
A. Law
B. Quasi-contracts
C. Contracts
D. Quasi-delict

387. A, B, and C solidary debtors owe solidary creditors X and Y

P30,000. X remitted the entire obligation in favor of A. The effect is:
 
A. The obligation is not extinguished until A collects from B and C.
B. The obligation is not yet extinguished until Y is paid by X and his
share   of the credit.
C. A cannot recover from B and C because remission in his favor
extend to   the benefit of B and C.
D. A can recover from B and C their respective share of the debt.

 
388. A sign a promissory note and binds himself to pay X P100,000
plus 15% per annum interest on June 30, 2018.
 
A. Before June 30, 2018, X can demand payment
B. If on June 30, 2018 A is paying X, the latter can refuse the   payment
C. A can compel creditor X to accept payment before June 30, 2018
D. Because the period is for the benefit of the debtor and creditor,   X
can refuse any tendered payment before June 30, 2018.

389. The following are the requisites of an obligation, except:

 
A. Passive subject, debtor or obligor
B. Active subject, creditor, or oblige
C. Efficient cause
D. Presentation

390. The debtor shall lose the right to make use of the period in the
following cases, except:
 
A. When he becomes insolvent
B. When he violates any undertaking in consideration of   which the
creditor agreed to the period.
C. When the debtor attempts to abscond
D. When he does not furnish any guaranty or security to   the creditor

391. An obligation ceases to be alternative and becomes a simple

obligation in the following cases, except:
 
a. When the debtor has communicated his choice to the creditor.
b. When the right of choice has been expressly granted to the  
creditor and his choice has been communicated to the debtor.
c. When among the several prestations that are due only one is  
practicable.
d. When several prestations are due but the performance of one is  
enough to extinguish the obligation.

392. D is obliged to give C a specific watch, a specific ring, or a specific

bracelet. The parties agreed that C will have the right to choose the
watch and the ring are lost through D’s fault, successively. What is the
thing which will be given to him. Before C could make his choice, the
right of C?
 
a. C may choose the delivery to him of the bracelet, or the price of the
watch or the price of the ring plus damages.
b. C cannot choose the price of the watch or the price of the ring
because the said objects have already been lost.
c. C can only choose to have the bracelet because anyway, D can still
perform his obligation.
d. C can only choose to have delivery of the bracelet or the price of
the ring which was the last item that was lost   plus damages.

393. D obliged to give C a specific ring. The parties agreed that D may
give a specific bracelet as a substitute. Which of the following is true?
 
 A. If the ring is lost through a fortuitous event before substitution, the
obligation is extinguished.
B. If the bracelet is lost through a fortuitous event before the
substitution, the obligation is extinguished.
C. If the ring is lost through a fortuitous event after substitution, the
obligation is extinguished.
D. If the ring is lost through the debtor’s fault after substitution, the
debtor shall pay damages.

394. It refers to a joint obligation:

 
  a. One in which each debtor is liable for the entire obligation and
each creditor is entitled to demand the whole obligation.
  b. One in which either one of the parties is indispensable and the
other is not necessary.
  c. One in which the obligation of one is a resolutory condition of the
other, the non-fulfillment of which entitles the other party to rescind
the contract.
  d. One in which each of the debtors is liable only for a proportionate
part of the debt and each creditor is entitled only for a proportionate
part of the credit.

395. D borrowed P50,000.00 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 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.
  b. S cannot collect because the credit right is personal to 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.

396. A, B, C and D, solidary debtors, are obliged to give V, W, X, Y and

Z, solidary creditors, P20,000.
 
a. V may collect from D P20,000.
b. V may collect from D P4,000.
C. V may collect from D P5,000.
d. V may collect from D P1,000. 

397. When the period is “on or before a date”, the debtor has the
benefit of the period. This benefit is lost and the obligation becomes
demandable when:
 
  a. The debtor attempts to abscond.
  b. After contracting the obligation, the creditor suspects the debtor
badoo of becoming insolvent.
  c. The guarantee given by the debtor is not acceptable to the
creditor.
  d. Demand by creditor could be useless.

A
398. Unless the law or the stipulation of the parties requires another
standard of care, the obligation to give a thing carries with it the
obligation to take care of it with:
 
A. Extra-ordinary diligence
B. Degree of care agreed upon by the parties
C. Diligence of a good father of a family
D. Diligence of a good family of a father

399. One of the following shall produce the effect of debts:

 
A. Delivery of check
B. Tender of Central Bank notes
C. Delivery of promissory note
D. Decion en pago

400. If the creditor to whom tender of payment has been made refuses
without just cause to accept it, the debtor shall be released from
responsibility by:
 
A. Assignment of property
B. Consignation of the thing or sum due
C. Adjudication or pacion en pago
D. Condonation

B
401. A executes a promissory note in favor of B who subsequently
indorsed it in favor of A. The obligation to pay the promissory note is
thereby extinguished because there is?
 
A. Confusion or merger
B. Novation
C. Remission
D. Compensation

402. This is a promissory note:

“I promise to pay A, B and C the sum of P18,000” (sgd) D, E, and F.
 
A. F is obliged to pay P6,000
B. F is obliged to pay P2,000
C. F is obliged to pay P12,000
D. F is obliged to pay P18,000

403. If the obligor binds himself to perform his obligation as soon as

“he shall have obtained a loan” from a certain bank, this obligation is:
 
A. With a term
B. Conditional
C. Suspensive
D. Resolutory

B
404. It presupposes not only that the obligor is able, ready and willing
but more so, in the act of performing his obligation.
 
A. Promissory note
B. Tender of payment
C. Bill of exchange
D. Obligation to sell

405. Which of the following is not considered as quasi-contract?

 
A. Solution indebiti
B. When the third person without the knowledge of the debtor,   pays
the debt
C. Negotiorum gestio
D. Reimbursement due the person who saved the property   during
fire or storm without the knowledge of the owner

406. In tender and consignation, if after consignation is made, the

creditor allows the debtor to withdraw the thing deposited in court,
which of the following is incorrect?
 
A. Co-debtors, guarantors and securities are released from the  
obligations unless they consented.
B. The obligation remains to subsist.
C. The obligation is extinguished.
D. None of the above.
C

407. D owes C P10,000 payable on December 25, 2018. Later D forced

C to sign a promissory note for P10,000 payable on December 25,
2018. If all other requisites of compensation are present, are both
debts extinguished?
 
A. Yes, under the legal compensation
B. No, B’s consent was obtained by force
C. Yes, with the approval of the court
D. Answer not given

408. X has been missing for something leaving no one to manage his
properties. A and B jointly took charge of the management thereof.
However, due to the fault of A, the properties of X were damaged. The
liability therefore to X for damages shall be:
 
A. Only A shall be liable
B. Both shall be jointly liable
C. Both shall be solidarily liable
D. Both shall be solidarily liable

409. X by mistake delivered to A and B a sum of money which should

have been delivered to C and D. X now demand the return of the same
from A and B. The liability of the latter for the sum of money to which
they are not entitled shall be:
 
A. A and B shall be liable solidarily.
B. A and B shall be liable jointly.
C. They are not liable for having received the money in good faith.
D. X has no right to recover as he was negligent in the delivery of the  
money.

401. The obligation of mutual support for each other of husband and
wife arises from:
 
A. Law
B. Contract
C. Quasi-delict
D. Quasi-contract

411. In three of the following instances, the officious manager may still
be held liable for fortuitous events. Which is the exception?
 
A. If he assumed the management in bad faith
B. If he undertakes risky operations like the owner was   accustomed to
do
C. If he is manifestly unfit to carry on the management
D. If he has preferred his own interest to that of the owner

412. Marilou, who was entrusted by her principal with a diamond

pendant for sale, was robbed one evening and lost the pendant. Is
Marilou excused from civil liability attendant to the loss of the pendant
even if the robber is not yet apprehended?
 
A. No, because the agent acted as agent and had possession of the  
pendant
B. No, because the agent failed to exercise due diligence in the  
safekeeping of the diamond pendant
C. Yes, due to fortuitous event
D. Answer not given

413. One is not a requisite needed in order that obligation shall be

extinguished by loss or destruction of the thing due:
 
A. When the thing is lost without the fault of the debtor
B. When the thing lost is generic
C. When the thing lost before the debtor has incurred in   delay
D. When the thing lost is specific

414. Every obligation whose performance does not depend upon

future or uncertain event, or upon a past unknown to the parties is
demandable at once. This refers to:
 
A. Divisible and Indivisible Obligation
B. Joint and Solidary Obligations
C. Obligation with a Period
D. Pure and Conditional Obligation

D
415. To have the effect of payment debts in payment in money should
be paid:
 
A. In currency which is legal tender in the Philippines.
B. By the delivery of promissory notes payable to order.
C. By delivery of checks or bills of exchange.
D. By all of the above.

416. Which of the following is an element of legal compensation?

 
A. Debts to be compensated are due and demandable.
B. There is a controversy or adverse claim over any debts   to be
compensated.
C. There are 2 or more debts of the same kind.
D. There are 2 persons who are creditors and debtors of   each other.

417. Recission of contract can take place in this case:

 
  A. When the thing which are the object of the contract are legally in
the possession of third person who acted in bad faith.
  B. When he who demands rescission can return whatever he may be
obliged to restore.
  C. When the party seeking rescission can perform only as to part and
rescind the remainder.
  D. When the seller cannot return the installments paid to him by the
buyer.
B

 
418. One is not a requisite in order that obligation shall be
extinguished by loss or destruction of the thing due:
 
A. When the thing is lost without the fault of the debtor
B. When the thing lost is generic
C. When the thing lost before the debtor has incurred in   delay
D. When the thing lost is specific

419. Change of persons or objectives:

 
A. Confusion
B. Novation
C. Solution indebiti
D. Negotiorum gestio

420. A solidary obligation is one in which each of the debtors is liable

for the entire obligation or debt, and each of the creditor is entitled to
the entire credit. Obligations shall also be considered solidary under
the following three exceptions. Which does not belong to the
exception?
 
A. When solidary is expressly stipulated in the obligation
B. When the prestation is indivisible and there are two or more
debtors   and creditors
C. When the law expressly provides solidarity
D. When the nature of the obligation requires solidarity

421. Payment of the obligation by a solidary debtor shall not entitle

him to reimbursement from his co-debtors.
 
A. If such payment was made before the obligation is due.
B. If such payment was made after the obligation has prescribed   or  
become illegal.
C. If such payment was made in compliance with the demand to   him
by all the creditors.
D. If such payment was made after the obligation has become due  
and demandable and notice of payment was made to him.

422. A, B and C secured a loan from X. The promissory note which

evidences the obligation states: “I promise to pay” and signed by A, B
and C. The obligation is:
 
A. Joint
B. Solidary
C. Divisible
D. Indivisible

423. Consignation is a mode of payment which extinguishes an

obligation. Which of the following is not a requisite for consignation?
 
A. Actual consignation with the proper judicial authorities
B. Existence of a valid debt
C. There must be prior notice of consignation to persons   interested in
the fulfillment of the obligation
D. The notice must be published in a newspaper of general  
circulation for three consecutive weeks.

424. The creditor shall have a right to indemnity for damages when
through the fault of the debtor, all things which are alternatively the
object of the obligation have been lost or compliance of the
obligation has become impossible. The indemnity shall be fixed on the
basis of:
 
A. The value of the least expensive things.
B. The value of the most expensive things
C. The value of the last thing which disappeared
D. The value of the first thing which disappeared.

425. A is indebted to B for P20,000. X is the guarantor if A. B is also

indebted to A for P8,000. How much will X be liable as a guarantor if B
sues A and A cannot pay?
 
A. P12,000
B. P20,000
C. P8,000
D. X has no liability
A

426. On October 4, 2018 A is indebted to B for P50,000 for a 20-day

period. A proposed to B that X will pay A’s debt and that A will be free
from all liabilities. At the time of delegation, X was already insolvent
but this was known to A. The insolvency is not of public knowledge. So
B sues A on the ground that it was A who made the proposal that A
guaranteed X’s solvency. Decide.
 
A. A is liable because he is presumed to have guaranteed X’s solvency.
B. A is not liable because A does not know the insolvency of X at the
time of   delegation and neither was the insolvency of public
knowledge.
C. A is liable because he did not exercise due diligence in determining
the insolvency   of X.
D. A is liable X agree to the proposal to make himself solidarily liable
for the obligation.

427. X and Y are solidary debtors of A, B, C and D, joint creditors to the

amount of P8,000. How much can A collect from X?
 
A. A could recover P 4,000 from X. A, in return, has to give B, C   and D
P 1,000 each.
B. A could recover P 2,000 only from X.
C. A could recover P 1,000 only from X.
D. A could recover P 8,000 from X, in turn has to give to B, C, and   D.

B
428. Mr. AB owes Mr. CD P150,000 due on August 31, 2018. Mr. AB
executed a mortgage in favor of Mr. CD on Mr. AB’s building to
guaranty the obligation. On August 10, 2018, the mortgaged building
was totally lost due to a strong typhoon. On August 12, 2018, Mr. CD
demanded payment from Mr. AB. Is Mr. CD’s demand valid?
 
  A. No, the obligation is with a definite period, thus the creditor
cannot demand fulfillment of the obligation as such would be
prejudicial to the rights of the debtor.
  B. No, the obligation is extinguished because the obligation is lost
due to a fortuitous event.
  C. Yes, the debt becomes due at once because the guaranty was lost
even though a fortuitous event unless the debtor can mortgage
another property that is equally satisfactory.
  D. Yes, the debt becomes due at once because the tenor benefit is
given solely to the creditor thereby giving the creditor the right to
demand performance even before the due date.

429. Mr. ABC is obliged to give Mr. XYZ his only car on July 15, 2018.
Mr. ABC did not deliver on July 15, 2018. On Jul 20, 2018, an
earthquake destroyed the building where the car was garaged and the
car was destroyed. Is Mr. ABC still liable?
 
  A. No, considering that no demand to deliver was made by Mr. XYZ
and the specific thing was lost due to fortuitous event, the obligation
is extinguished.
  B. No, the obligation is extinguished even if the debtor is already in
default, because the debtor cab plead impossibility of performance.
  C. Yes, Mr. ABC is already in legal delay, thus the obligation to deliver
the lost specific thing is converted into monetary claim for damages.
  D. Yes, the creditor can instead demand for a substitute equivalent in
value from the debtor.

430. A and B are solidary debtors of X, Y and Z, joint creditors to the

amount of P 15, 000. How much can Z collect from B?
 
A. Z could recover P7,500 from B.
B. Z could recover P5,000 from B.
C. Z could recover P15,000 from B. Z in turn has to give X and Y  
P5,000 each.
D. Z could recover P15,000 from B. B in turn can collect from A   the
amount of P7,500.

431. Mr. S executed a first mortgage of his house in favor of Mr. D on

May 15, 2017 to guaranty a mortgage loan of P200,000 due for
payment on May 15, 2018. On September 16, 2017 the house was
completely destroyed by a typhoon. On September 18, 2017, Mr. D
demanded payment of the loan from Mr. S. Is Mr. D’s demand for
payment valid?
 
  A. No, the obligation is one with a definite period, so the creditor
cannot demand payment until the definite due date arrives.
  B. No, the obligation is extinguished because the object of the
obligation is lost due a fortuitous event.
  C. Yes, the obligation becomes due at once because the tenor benefit
is given solely to the creditor thereby giving the creditor the right to
demand performance even before the due date stipulated.
  D. Yes, the Obligation becomes due at once because the guaranty
was lost even though a fortuitous event unless the debtor can
mortgage another property that is equally satisfactory.

432. A, B and C borrowed P 24,000 from Y and Z and signed a

promissory note dated January 15, 2018 and due within six months.
How much can Y collect from A?
 
A. P12,000
B. P4,000
C. P8,000
D. P24,000

433. A, B, and C borrowed P36,000 from X and Y. The three debtors

signed a promissory note dated January 10, 2018 promising to pay the
creditors on or before July 10, 2018. How much can X collect from C?
 
A. P18,000
B. P6,000
C. P12,000
D. P36,000

434. When two persons are reciprocally debtors and creditors, there is:
 
A. Consignation
B. Merger
C. Compensation
D. Confusion

435. This is the promissory note: “We promise to pay A, B and C the
sum of one hundred eighty thousand (P180,000) pesos within 60 days.
Signed by X, Y and Z.”
 
A. X is obliged to pay A P20,000
B. X is obliged to pay A P60,000
C. X is obliged to pay A P180,000
D. X is obliged to pay A, B and C P180,000

436. E is obliged to give R a 2069 specific car with plate number

BAUTIN123 on September 30, 2018. On October 10, 2018, E did not
deliver the car which was totally destroyed by an earthquake on such
date. Is E still liable?
 
A. No. The obligation is extinguished. The specific thing was lost due
to   fortuitous event and no demand to deliver was made by R.
B. Yes. E is in legal delay. R can claim damages.
C. No. Even if E is already in default, he can plead impossibility of  
performance.
D. Yes. R can instead demand for another car of equivalent value from
E.

A
437. C is the creditor of D in the amount of P50,000. G is the guarantor
of D. D paid C partially with P20,000. A, not knowing the partial
payment and against the will of D paid C the amount of P50,000. What
is the effect of this payment in the obligation?
 
  A. The obligation is extinguished. A cannot recover any amount from
D but can demand reimbursement from C in the amount of P50,000.
  B. The obligation is extinguished. A can demand P30,000 from D
because this amount benefited D, or A, having subrogated into the
rights of C can proceed against guarantor G.
  C. The obligation is not extinguished. A’s payment against the will of
D does not extinguish the obligation.
  D. The obligation is extinguished. A can demand P30,000 from D if D
cannot pay, A cannot ordinarily proceed against guarantor G because
A is not entitled to subrogation.

438. In this case, advance payment by the debtor is recoverable

 
A. If the advance payment is only for interest due.
B. If the creditor demanded for the advance payment and   the debtor
knew it was not yet due.
C. If the advance payment is in reciprocity to the advance   payment of
the other party.
D. If the debtor was unaware of the period.

439. When the debtor abandons and assigns all of his properties in
favor of his creditor for the latter to sell to satisfy his credits, this is:
 
A. Remission
B. Payment by cession
C. Dation in payment
D. Expromission

440. Mr. AB offered in writing to sell his home and lot for P7,500,000
to Mr. CD on July 1, 2018. Mr. CD requested Mr. AB to give him 60
days within which to raise the P750,000.00. On August 15, 2018 Mr. AB
informed Mr. CD that the price is raised and now at P1,000,000.00. Can
Mr.CD compel Mr. AB to sell house and lot at P750,000 which was
offered in writing by Mr. AB?
 
A. Yes, because Mr. AB is already in estoppel by his written offer.
B. Yes, because the 60 days offer has not yet expired.
C. No, because Mr. CD has not accepted the offer of Mr. AB.
D. Yes, because there was already meeting of minds.

441. A, B, C and D are jointly creditors of E and F, solidary debtors in

the amount of P40,000.00. How much can A, B and C collect from E?
 
A. A, B, C and D could collect P20,000.00 from E.
B. A, B, and C could collect P30,000.00 from E.
C. A, B, C and D could collect all the P40,000 from E.
D. A, B, C and D could collect P20,000.00 from E and   P10,000.00 from
F.

C
442. This mode of extinguishment of obligation is when two persons,
in their own rights are creditors and debtors of each other.
 
A. Merger or confusion
B. Condonation or Remission
C. Compensation
D. Novation

443. A obliges himself to pay X P100,000 in 30 days plus a penalty of

P20,000. If A fails to pay the obligation in due time. A failed to pay the
obligation in 30 days. X can demand from A.
 
A. The principal of P100,000 plus P20,000 penalty
B. The principal of P100,000 plus P20,000 penalty, plus legal   interest.
C. The principal of P100,000 plus legal interest.
D. The principal of P100,000 plus P20,000 penalty plus legal   interest
plus damages.

444. A owes X P50,000 payable on or before June 30, 2018.  S who is

not a party to the contract and without the consent and against the
will of A paid X the P50,000 on April 2018 when the prevailing rate of
interest was 12% per annum.
 
  A. S can ask reimbursement from A in the amount of P50,000 plus
12% interest from April to June 30, 2005.
  B. S can ask reimbursement from A in the amount of P50,000
  C. S cannot ask reimbursement from A because the payment by S is
without the consent and against the will of A.
  D. S can ask refund from X because the payment by S was against the
will of A.

445. When an obligation is extinguished because of the passage of

time, this is:
 
A. Fulfillment of resolutory condition
B. Arrival of a resolutory period
C. Prescription
D. Rescission

446. When the debtor abandons or transfers all his properties to the
creditors so that the creditors may sell the properties and out of the
net proceeds the creditors recover their claims, this is called:
 
A. Dacion en pago
B. Tender of payment and consignation
C. Payment by cession
D. Remission

447. When the period is “on or before a date”, the debtor has the
benefit of the period. This benefit is lost and the obligation becomes
demandable when:
 
A. The debtor attempts to abscond
B. After contracting the obligation, the creditor suspects the   debtor
to becoming insolvent.
C. The guarantee given by the debtor is not acceptable to the  
creditor.
D. Demand by the creditor could be useless.

448. It takes place when two persons in their own right, are creditor
and debtor of each other.
 
A. Remission
B. Confusion
C. Novation
D. Compensation

449. X borrowed P5,000 from Y on February 1, 2018. On March 1,

2018, X tendered to Y a cashier’s check in the amount of P5,100. Y
accepted the check, but forgot to deposit it until September 30, 2018.
His bank refused to accept the check as it had become stale. Y now
wants X to pay him in cash the amount of P5,100 claiming that the
previous payment was not in legal tender. X refused to pay him
claiming that Y is estopped from raising the issue a legal tender as it
was his negligence in not depositing the check immediately. Decide.
 
A. Y is correct, payment in check is not legal tender.
B. X is correct, Y is now estopped from raising the issue that a check is
not legal tender.
C. Y is correct, payment in cashier’s check like manager’s check is not
legal tender.
D. Y is correct because the check was not encashed.
B

450. The following are obligations without an agreement except:

 
A. Delicts
B. Quasi-delicts
C. Contracts
D. All other obligations arising from law

 
451. X had a savings deposit with Y Bank in the amount of P5,000,000.
Subsequently, X obtained a car loan from the same bank in the
amount of P1,200,000, payable in 12 equal monthly installments. X
issued in favor of Y bank post-dated checks, each in the amount of
P100,000, to cover the 12 monthly installment payments. On the third,
fourth, and fifth months, the corresponding checks bounced. Is
compensation applicable?
 
A. No, compensation is not applicable as X and Y Bank are not
mutually debtor and   creditor of each other.
B. Yes, compensation is applicable because a bank deposit is a
contract of loan, where   the depositor is the creditor and the bank is
the debtor.
C. No, compensation is not applicable because what is applicable is
confusion.
D. Yes, compensation is applicable because a bank deposit is a
contract of deposit.

B
452. X had a savings deposit with Y Bank in the amount of P5,000,000.
Subsequently, X obtained a car loan from the same bank in the
amount of P1,200,000, payable in 12 equal monthly installments. X
issued in favor of Y bank post-dated checks, each in the amount of
P100,000, to cover the 12 monthly installment payments. On the third,
fourth, and fifth months, the corresponding checks bounced. Y Bank
then declared the whole obligation due, and proceeded to deduct the
amount of P1,000,000 from X’s deposit. Is the bank correct?
 
A. Yes, the bank is correct because the P1,000,000 balance is subject to
compensation.
B. No, the bank is not correct because what is due, demandable, and
liquidated is only   up to the amount of P300,000. This is the amount
that is subject to compensation.
C. Yes, the bank is correct because it is presumed that there is
acceleration clause in the   contract.
D. Yes, the bank is correct. However, it can deduct the amount of
P1,200,000.

453. X obtained a loan of P1,000 from Y, payable within one year. Ten
days after maturity date, X tendered a manager’s check to Y. The latter
refused to accept payment on the ground that he wanted payment in
cash. Is Y’s refusal justified?
 
A. No, because a manager’s check is legal tender.
B. No, because an offer of a manager’s check in payment of a debt is a
valid   tender of payment and may not be refused receipt by the
creditor.
C. No, because the delivery of a check discharges an obligation.
D. Yes, because a check, whether a manager’s check or an ordinary
check is   not legal tender, and an offer of a check in payment of a
debt is not a   valid tender of payment.