LAW ON OBLIGATION

REVIEWER

TOPICS:

LATIN TERMS
LECTURE AIDS
REVIEW EXERCISES
 LATIN TERMS
ab initio From the very beginning
right to rescind contracts entered into to defraud
accion pauliana the creditor
the right of the creditor to exercise all the rights
of his
accion subrogatoria debtor to satisfy his claim, except rights which
are inherent and personal on the part of the
debtor.
agente del credere guaranty commission agent
alter ego Another “I”
bona fide In good faith
caso fortuito fortuitous event
caveat emptor buyer beware
caveat venditor vendor is liable for hidden defects
cestui que trust beneficiary of a trust agreement
compensatio morae delay on the part of both parties
constitutum
possessorium the seller will continue in possession even after
the sale
cuentas en participacion joint account
culpa negligence
tort or quasi-delict, which is the wrong
committed against a person independent of
contract and without criminal intent. It is the
culpa aquiliana
negligence as a source of an
obligation
culpa criminal criminal negligence
the negligence in the performance of an
culpa contractual obligation arising from a contract
property is alienated to the creditor in satisfaction
dacion en pago of a debt in money.
de facto in fact
de jure in law
delectus personam/
personarum based on mutual trust and confidence
when the creditor accepts a third person to take
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the place of the debtor with the consent of the
delegacion debtor, the
creditor and the third person.
Dolo fraud
causal fraud, fraud employed was the reason why
the
dolo causante deceived party entered into the contract.
Committed before or at the time of perfection of
the contract.
incidental fraud, committed in the performance of
dolo incidente the obligation
du ut des I give that you may give – BARTER
du ut facias I give that you may do
emptio rei
sperati/speratae sale of future things
emptio spei sale of hope or expectancy
when a third person without the knowledge or
against the will of the original debtor assumes
expromission the obligation with
the consent of the creditor
facio ut des I do that you may give
facio ut facias I do that you may do
exists in cases where a person, without
negligence, has signed a negotiable instrument,
fraud in factum/esse but was deceived as to
contractus the character of the instrument and without
knowledge of it.
genus nunquam peruit generic thing never perishes
in pari delicto both parties are in bad faith
in transitu in transit
in solidum solidarily liable
Intra vires within the powers
mancomunada;
mancomunadamente joint obligation
Mora delay
mora accipiendi delay on the part of the creditor
mora solvendi delay on the part of the debtor
mutuum simple loan of money or consumable goods
voluntary management if the property or affairs
negotiorum gestio of another without knowledge or consent of the
latter
emo dat qui non habet you cannot give what you do not have
contract of sale whereby the right of the seller to
pacto de retro sale repurchase the thing sold is reserved
pactum commissorium stipulation in a contract of pledge or mortgage
whereby
 the thing pledged or mortgaged shall become
the property of the creditor in the event that the
debt is not
paid on maturity
reservation of ownership by the seller
pactum reservati dominii conditioned upon the payment of the buyer of
the purchase price
per diem per day
Per se by itself
Pro rata for the rate /proportionately
Pro tanto for so much
quasi as if
quantum meruit as much as he deserves
quantum valebant as much as what is reasonably worth
Quorum of whom
the thing perishes with its owner / the owner
res perit domino bears the risk of loss
negligence of the servant is the negligence of
respondeat superior the master
sans recourse without recourse
juridical relation which is created when something
is received when there is no right to demand it
solutio indebiti and it was
unduly delivered through mistake.
stipulation pour autrui stipulation in favor of a third person
traditio brevi manu buyer is already in possession prior to the sale
traditio longa manu delivery of things by mere pointing at the object
delivery through the use of token or symbol to
traditio simbolica represent the thing delivered
Ultra vires beyond powers
vinculum juris juridical tie
waiver conciente waiver without assumption of the risk of eviction
waiver with knowledge of the risks of eviction
waiver intencionada coupled with an assumption of its consequences

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 LECTURE AID – LAW ON OBLIGATIONS

OBLIGATION - a juridical necessity to give, to do or not to do.

SOURCES:
1. Law (obligation ex lege)
2. Contracts (obligation ex contractu)
3. Quasi-contracts - lawful, voluntary and unilateral acts give rise to the
juridical relation of quasi-contract to the end that no one shall be
unjustly enriched or benefited at the expense of another.
Common Kinds:
a. Negotiorum gestio – voluntary management of the property or
affairs of another without the knowledge or consent of the
latter
b. Solutio indebiti - juridical relationship which is created when
something is received when there is no right to demand for
it and it was delivered through mistake.
4. Delicts (crimes) -acts or omissions punishable by law
5. Quasi-delicts/culpa aquiliana/torts – acts or omissions causing
damage or injury to another person due to the fault or
negligence of another person but there is no pre-existing
contract between them.

REQUISITES of a valid obligation:

1. Parties: a. Passive subject known as the obligor or debtor
b. Active subject known as the obligee or creditor
2. Object: The prestation, act or service constituting the object of the
obligation (to give, to do or not to do)
3. Juridical or legal tie/vinculum juris

RELATED TERMS:
1. Specific or determinate thing – a thing which is particularly
designated or physically segregated from all of the same
class.
2. Generic or indeterminate thing – a thing which refers only to a
class or genus to which it pertains and cannot be pointed
out with particularity.
3. Accessories - things joined to the principal thing for its Better use,
Embellishment or Completion

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 4. Accessions – fruits of a thing or anything produced by it,
attached or incorporated thereto as an addition or
improvement.
Kinds: Natural, Industrial and Civil

IMPORTANT: The creditor shall be entitled to the fruits of the thing at

the time the obligation to deliver the principal thing arises.
The creditor however, will acquire real right or ownership over
the fruit only after the same has been delivered to him.

OBLIGATIONS OF THE DEBTOR:

In obligations to give determinate things:
1. specific performance;
2. take care of the thing with the proper diligence of a good
father of a family; (unless another degree of diligence will be
required by law or stipulation of the parties)
3. deliver all accessions and accessories of the thing even though
they may not have been mentioned;
4. pay damages in case of breach of the obligation by reason of
delay, fraud, negligence or contravention of the tenor thereof.
In generic obligations:
1. deliver the thing which is neither of superior nor inferior quality.
2. to pay damages in case of breach of the obligation by reason of
delay, fraud, negligence or contravention of the tenor thereof.

CIRCUMSTANCES AFFECTING OBLIGATIONS:

RULE: A person in the performance of his obligation will be liable to pay
DAMAGES in case he will be guilty of: Delay, Fraud, Negligence or
Contravention of the tenor of the obligation (breach of obligation)

Kinds of Damages: (MENTAL)

1. Moral – includes physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury
2. Exemplary – corrective damages are imposed, by way of example
or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages.
3. Nominal – adjudicated in order that a right of a person, which has
been violated or invaded by another, may be vindicated or
recognized
4. Temperate – 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

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 5. Actual – adequate compensation only for such pecuniary loss
suffered by a person as duly proved
6. Liquidated – agreed upon by the parties to a contract, to be paid in
case of breach thereof

DELAY (Mora)
Kinds:
a. Mora solvendi – delay on the part of the debtor
b. Mora accipiendi – delay on the part of the creditor
c. Compensatio morae – delay on the part of both parties in
reciprocal obligations

GENERAL RULE: Demand (judicial/extra-judicial) is necessary before

one incurs in delay.
EXCEPTIONS:
1. the law expressly so declares;
2. the obligation itself so stipulates;
3. time is of the essence;
4. demand is useless as when obligor has rendered it beyond his
power to perform;
5. when there is performance by a party in reciprocal obligations

FRAUD (Dolo)
- Must be present during the performance of the obligation and
not fraud at the time of the birth of the obligation.
Kinds of Dolo:
1. Dolo causante –causal fraud, vitiating consent
2. Dolo incidente – incidental fraud, giving rise to the
right to demand damages

NEGLIGENCE (Culpa)
- Consists in the omission of that diligence which is required by the
nature of the obligation corresponding to the circumstances of the
person, of the time and of the place.
TEST: Diligence of a good father of a family.
Kinds of Negligence:
1. Culpa contractual
2. Culpa criminal
3. Culpa aquiliana
 FRAUD NEGLIGENCE
1. deliberate intention to no such intention exists
cause damage or injury
2. waiver of the liability for 2. waiver of future negligence may
future fraud – void be allowed in certain cases
must be clearly proven 3. can be presumed from the
violation of a contractual
obligation
4. liability cannot be 4. liability may be reduced
mitigated or reduced by according to the circumstances
courts

BREACH OF OBLIGATIONS:
Kinds:
1. Voluntary – debtor is liable for damages if in the
performance of his obligation debtor is guilty of:
a. default (mora)
b. fraud (dolo)
c. negligence (culpa)
d. in any manner contravene the nature thereof
RIGHTS OF THE CREDITOR:
In determinate obligations:
1. ask for specific performance;
2. damages, exclusive or in addition to specific performance.

In generic obligations:
1. ask for specific performance;
2. ask that the obligation be complied with at the
debtor’s expense;
3. damages.

2. Involuntary – debtor is not liable for damages.

FORTUITOUS EVENT – events that cannot be foreseen or although

foreseeable are inevitable

Essential characteristics:
1. cause is independent of the will of the debtor;
2. the event must be unforeseeable or unavoidable;
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3. occurrence must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner;
 4. the debtor must be free from any participation in the
aggravation of the injury resulting to the creditor.

GENERAL RULE: No liability in case of fortuitous event

EXCEPTIONS:
1. when expressly declared by stipulation
2. when the nature of the obligation requires the assumption of risk
3. when expressly declared by
law Examples:
a. when the debtor has incurred in delay or is guilty
of fraud negligence or contravention of the tenor of
the obligation
b. when the debtor has promised to deliver the same
thing to 2 or more different persons who do not have
the same interest
c. when the thing to be delivered is indeterminate/generic
d. when the obligation to deliver a specific thing arises
from a crime
e. when the bailee in commodatum allowed a third
person to use the thing borrowed

RELATED RULES:
1. All rights acquired by virtue of an obligation are
transmissible Exceptions:
a. When the law prohibits the transfer of rights
b. When the stipulation of the parties prohibits the transfer of rights
2. The creditor has the following remedies to satisfy his claims
against his debtor:
a. exact fulfillment/specific performance
b. pursue the leviable properties of the debtor
c. accion subrogatoria – exercise all rights and actions of the
debtor except those which are inherent in his person
d. accion pauliana - rescind contracts entered into by the
debtor to defraud the creditor

PRESUMPTIONS:
1. When the creditor received the principal amount of an
obligation without reserving his right with respect to the
interest, it is presumed that said interest has been paid.
2. When the creditor received a later installment of a debt without
reserving his right as to the prior installments, it is presumed
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that such prior installments have been paid.
 PRIMARY CLASSIFICATION
Pure obligation - An obligation which is not subject to any condition;
no specific date is mentioned for its fulfillment;
demandable at once.
RULE: An obligation is demandable at once –
a. when it is pure
b. when it is subject to a resolutory condition
c. when it is subject to a resolutory period

Conditional obligation
An obligation which is subject to the fulfillment of a condition.
Characteristics of a condition:
a. future and uncertain
b. past but unknown
c. must not be impossible

Two principal kinds of condition:

1. Suspensive condition (condition precedent or condition
antecedent) or one the fulfillment of which will give rise to
an obligation.
2. Resolutory condition (condition subsequent) or one the
fulfillment of which will extinguish an obligation.

Suspensive Condition Resolutory Condition

1. if fulfilled, obligation arises 1. if fulfilled, obligation
or becomes effective is extinguished
2. if NOT fulfilled, NO juridical 2. if NOT fulfilled, juridical
relation is created relation is consolidated
3. rights are not yet acquired, but 3. rights are already acquired,
there but
is hope or expectancy that they will subject to the threat or danger of
soon be acquired extinction

Other Kinds of Conditions:

a. Possible - capable of fulfillment, legally or physically
b. Impossible – if the condition is not capable of fulfillment, legally or
physically
c. Positive – an act is supposed to be performed
d. Negative – an act is supposed to be omitted
e. Potestative – the condition depends upon the will of one of the
contracting parties
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f. Casual – the condition depends upon chance or upon the will
of a third person
 g. Mixed – the condition depends partly upon chance and partly upon
the will of a third person

Rules in case of imposition of impossible condition

Suspensive positive impossible condition – shall annul the obligation
Exceptions:
a. pre-existing obligations;
b. if obligation is divisible;
c. in simple and remuneratory donation;
d. in testamentary disposition ;
e. in case of conditions not to do an impossible thing.

Retroactive effect of the fulfillment of a condition:

1. In an obligation to give: retroacts to the day of the
constitution of the obligation.
2. In an obligation to do or not to do: the courts shall
determine whether or not there will be a retroactive effect
or when retroactivity will take effect

Rules during the pendency of the fulfillment of a suspensive condition:

1. LOSS
a. without debtor’s fault – obligation is extinguished
b. with debtor’s fault – debtor pays damages
There is loss when the thing:
a. perishes;
b. goes out of commerce;
c. disappears in such a way that its existence is
unknown or it cannot be recovered
2. DETERIORATION
a. without debtor’s fault – impairment to be borne by the creditor
b. with debtor’s fault - creditor may choose between the
rescission of the obligation and its fulfillment with
indemnity for damages in either case

3. IMPROVEMENT
a. by the thing’s nature or by time – improvement shall inure
to the benefit of the creditor
b. at the debtor’s expense - debtor shall have no other right
than that granted to a usufructuary

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 Obligation with a period
- An obligation with a period is one whose consequences are
subjected in one way or another to the expiration of said
period or term.
- A period is a future and certain event upon the arrival of which
the obligation subject to it either arises or is terminated.
- In an obligation with a period, it is presumed that the period
have been established for the benefit of both the debtor and
the creditor, unless from the tenor or other circumstances of the
obligation, it should appear that the period was established in
favor of either the debtor or the creditor.

PERIOD CONDITION
certain event 1. uncertain event (it may or may
not happen)
refers to the future 2. refers to a future event and
an unknown past event
3. merely fixes the time for causes an obligation to arise or cease
the efficaciousness of an
obligation
4. arrival of a period does not 4. the happening of a condition has a
have any retroactive retroactive effect
effect, absent
any
agreement to the contrary
5. if the period depends upon the 5. if the fulfillment of the
will of the debtor, the court suspensive condition depends
will fix the upon the sole will
duration of the obligation the debtor, the obligation is void

WHEN THE DEBTOR LOSES THE RIGHT TO MAKE USE OF THE PERIOD
1. debtor becomes Insolvent unless he gives a guaranty or a surety
for the debt;
2. debtor fails to furnish creditor the Guaranties promised
3. debtor’s own acts has Impaired said guaranties, or when through a
fortuitous event they disappear, unless he immediately gives new
ones equally satisfactory
4. debtor Violates any undertaking, in consideration of which the
creditor agreed to the period
5. debtor attempts to Abscond
Alternative obligation
- An obligation where several prestations are due but the performance of
one is sufficient.

General rule: the right to choose the prestation belongs to the debtor

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 Exceptions:
1. it may be exercised by the creditor but only when it was expressly
granted to him;
2. by a third person when the right is given to him by common

agreement of the parties.

Limitations:
1. The debtor cannot choose those prestations which are:
a. impossible
b. unlawful;
c. which could not have been the object of the obligation
2. The debtor has no more right to choose when,
among the prestations whereby alternatively bound,
only one is practicable.
3. The debtor cannot choose part of one prestation and
part of another prestation.

Facultative obligation
- An obligation where only one prestation has been upon but the
obligor may render another in substitution.

Effect of loss in facultative obligations:

1. Before substitution – if the principal thing is lost through a
fortuitous event, the obligation is extinguished; otherwise,
the debtor is liable for damages. The loss of the thing
intended as a substitute with or without the fault of the
debtor does not render him liable.
2. After substitution – If the principal thing is lost, the debtor is not
liable whatever may be the cause of the loss, because it is
no longer due. If the substitute is lost, the liability of the
debtor depends upon whether or not the loss is due to his
fault.

Facultative Obligations Alternative Obligations

1. Only one object is due 1. Several objects are due
2. May be complied with by substitution 2. May be complied with by fulfilling
of one that was due any of those alternately due
3. Choice pertains only to the debtor 3. Choice pertain even to the creditor
or a
3rd person
[Link] loss of prestation 4. Fortuitous loss of all prestations
extinguishes the obligation will extinguish the obligation
5. After substitution, culpable loss of the 5. Culpable loss of any object due will
original obliges the debtor to deliver give rise to liability to the creditor
substitute prestation without liability
to the
creditor

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Joint obligation
- An obligation where the whole obligation is to be paid or fulfilled
proportionately by the different debtors and/or is to be demanded
proportionately by the different creditors.

Words used to indicate joint liability:

Mancomunada; mancomunadamente; pro rata; proportionately; separately;
“we promise to pay” signed by two or more persons
RULES:
1. Insolvency of one debtor does not make the others liable
for his share
2. Vitiated consent on the part of one debtor does not affect
consent of the others

Solidary obligation
- An obligation where each one of the debtors is bound to render,
and/or each one of the creditors has a right to demand from
any of the debtors, entire compliance with the prestation.
Words used to indicate solidary liability:
Solidaria; in solidum; mancomunada solidaria; together and/or separately;
individually and/or collectively; jointly and severally; “I promise
to pay” signed by two or more persons

General rule: Obligation is presumed to be joint if there is concurrence

of two or more debtors and/or two or more creditors in the same
obligation.
Exceptions: There is solidarity only when:
1. the stipulation of the parties expressly so states;
2. the law requires solidarity;
3. the nature of the obligation requires solidarity
Kinds of Solidarity:
1. Active- creditors
2. Passive – debtors
3. Mixed – creditors and debtors

RELATED RULES:
1. The insolvency of one of the debtors will obligate the others to
shoulder his share in proportion to their respective obligations
2. A solidary debtor paying the entire obligation shall be
entitled to reimbursement plus interest computed as follows:
a. if paid at or after maturity, interest shall run from the
date of payment until reimbursement is made.

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 b. if paid before maturity, interest shall run from the
date of maturity until reimbursement is made
3. Remission or condonation of the share of one of the creditors will
not affect his liability as a solidary debtor
4. Remission of the entire obligation in favor of one of the creditors
shall NOT give rise to the right to demand reimbursement
from the other debtors
5. Remission that will take place after payment was made by one of
the debtors will not bar the debtor who made the payment
from demanding reimbursement
6. Payment made by one of the debtors after the prescription of the
obligation shall NOT give rise to the right to demand
reimbursement

Divisible obligation
- An obligation where the object in its delivery or performance, is
capable of partial fulfillment.

Indivisible obligation
- An obligation where the object in its delivery or performance, is not
capable of partial fulfillment.
TEST: The purpose of the obligation or the intention of the parties.
Joint indivisible obligation – where the parties are merely
proportionately liable but the object or subject matter
thereof is not physically divisible in different parts.

INDIVISIBILITY SOLIDARITY
1. it refers to the prestation or it refers to the vinculum or tie
object of the contract existing
between the subjects or parties to the
obligation
2. it does not require plurality it requires plurality of subjects or parties
of subjects or parties
3. it is converted into one of indemnity
3. when there is breach of the obligation,
for damages. As a result, the liability of the solidary debtors
indivisibility of the obligation is although converted into one of
terminated and so each debtor is indemnity for damages shall remain
liable only for his part of solidary
the indemnity
the heirs of the debtor remain bound4. the debt of the solidary debtor
to perform the same prestation terminates the solidary tie or
vinculum being
intransmissible to the heirs

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Obligation with a penal clause
- An obligation which contains an accessory undertaking to pay a
previously stipulated indemnity in case of breach.

GENERAL RULE: The penalty fixed by the parties is a

compensation or substitute for damages in case of
breach of obligation.
EXCEPTIONS: (obligee can recover penalty plus damages)
1. stipulation to the contrary;
2. obligor is sued for refusal to pay the agreed penalty;
3. obligor is guilty of fraud.
When penalty may be reduced:
a. if the principal obligation has been partly complied with;
b. if the principal obligation has been irregularly complied with;
c. if the penalty is iniquitous or unconscionable even if there has
been no performance.

SECONDARY CLASSIFICATION OF OBLIGATIONS

1. unilateral and bilateral
2. real and personal (positive and negative)
3. determinate and generic
4. civil and natural

5. legal and conventional

MODES OF EXTINGUISHING AN OBLIGATION:

1. payment or performance;
2. loss of the thing due;
3. condonation or remission of the debt;
4. confusion or merger of rights of the debtor and the creditor;
5. compensation;
6. novation;
7. annulment;
8. rescission;
9. fulfillment of a resolutory condition;
10. prescription
11. Death – in personal obligations;
12. Mutual desistance/ withdrawal;
13. Arrival of resolutory period;
14. Compromise;
15. Impossibility of fulfillment;

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 16. Happening of fortuitous event

PAYMENT OR PERFORMANCE – the delivery of the sum or thing due or the

performance of the obligation in any
other manner.
General rule: Creditor is not bound to accept payment or performance
by a third person.
Exceptions:
1. when made by a third person who has an interest in the
fulfillment of the obligation;
2. contrary stipulation

Rights of the third party who paid the obligation of another:

1. payment with the knowledge and consent of the debtor-
a. can recover entire amount paid;
b. can be subrogated to all of the rights of the creditor

2. payment without the knowledge or against the will of the

debtor – can recover only insofar as payment has been
beneficial to the debtor.

Rules in Monetary obligations:

1. payment in cash – must be made in the currency stipulated, if
not possible, then in the legal tender in the Philippines
2. payment in check or other negotiable instrument – not
considered payment, they are not considered legal tender and
may be refused by the creditor
Exceptions:
a. when the document has been cashed;
b. when it had been impaired through the fault of the creditor

APPLICATION OF PAYMENT
- 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.
Requisites:
1. one debtor and one creditor;
2. two or more debts of the same kind;
3. all debts must be due;

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 4. amount paid by the debtor must not be sufficient to cover all debts.

DATION IN PAYMENT (dacion en pago)

- Property alienated by the debtor to the creditor in satisfaction of
the debt in money; the transmission of the ownership of a thing
by the debtor to the creditor as an accepted equivalent of the
performance of the obligation.
- governed by the law on Sales.

PAYMENT BY CESSION (cession en pago)

- Debtor abandons all of his properties for the benefit of his
creditors in order that from the proceeds thereof, the latter may
obtain payment of their credits.

Dation in Payment Payment in Cession

One creditor Plurality of creditors
Not necessarily in state of financial Debtor must be partially
difficulty or relatively insolvent
Thing delivered which is considered3. Universality of property of debtor is
as equivalent of performance what is ceded
Payment extinguishes obligation to the
4. Merely releases debtor for net
extent of the value of the thing proceeds of things ceded or
delivered assigned, unless there is contrary
as agreed upon, proved or implied from intention
the conduct of the creditor

CONSIGNATION
- Deposit of the object of the obligation in a competent court in
accordance with the rules prescribed by law after refusal or
inability of the creditor to accept the tender of payment.

Rule: Consignation shall produce effects of payment only if there

is a valid tender of payment

Exceptions:
1. creditor is absent or unknown, or does not appear at the
place of payment;
2. creditor is incapacitated to receive payment at the time it is due;
3. when two or more persons claim the right to collect;

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 CRC-ACE The Professional CPA Review School
4. when the title of the obligation has
5. when
been lost;without just cause the creditor refuses to give a receipt.

LOSS OF THE THING DUE

A thing is considered loss when:
1. it perishes;
2. goes out of commerce;
3. disappears in such a way that its existence is unknown or it
cannot be recovered

EFFECT OF LOSS
1. In Obligations to Give Determinate/Specific things: will
extinguish the obligation if the thing is lost.
Except:
a. when by law, obligor is liable even for fortuitous event;
b. when by stipulation, obligor is liable even for fortuitous event;
c. when the nature of the obligation requires the assumption of risk;
d. when the loss of the thing is due partly to the fault of the debtor;
e. when the loss of the thing occurs after the debtor incurred in delay;
f. when the debtor promised to deliver the same thing to two
or more person who do not have the same interests;
g. when the debt of a certain and determinate thing proceeds
from a criminal offense

2. In Obligations to Give Generic things : obligation is not

extinguished; the genus of a thing cannot perish.
Exception: in case of a generic obligation whose object is a
particular class or group with specific or determinate qualities
(limited generic obligations)

3. In Obligations to Do: obligation is extinguished when the

prestation becomes legally or physically impossible

REMISSION OR CONDONATION
- The gratuitous abandonment by the creditor of his right
against the debtor. It is thus a form of donation.
Requisites:
1. There must be an agreement;
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 CRC-ACE The Professional CPA Review School
2. The parties must be capacitated;
3. There must be a subject matter;
4. The cause or consideration is generosity/gratuitous;
5. Obligation is demandable at the time of remission;
6. Remission must not be inofficious;
7. Must be accepted by the obligor;
8. If made expressly, it must comply with the forms of donation.

CONFUSION OR MERGER OF RIGHTS

- merger of the characteristics of the creditor and the
debtor in one and the same person by virtue of which
the obligation is extinguished
COMPENSATION
- extinguishment in the concurrent amount of the obligation
of those persons who are reciprocally debtors and creditors
of each other

Requisites of compensation:
1. That each one of the obligors be bound principally, and that he
be at the 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 sated;
3. That the 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.

Compensation Payment
Takes effect by operation of law 1. Takes effect by action of
the parties
2. Capacity to give and to acquire 2. Capacity to give and to
not necessary acquire essential
Compensation Confusion
1. Two persons who are 1. One person where qualities
mutual creditors of each of debtor and creditor are
other merged
2. There must be at least Only one obligation
two obligations

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Debts
4. Not Susceptible
when of the
the title of Compensation:
obligation has
1. been
debts arising from contract of deposit;
lost;

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2. debts arising from contracts of
3. claims for support due by gratuitous title;
commodatum;
4. obligations arising from criminal offense;
5. certain obligations in favor of government.

NOVATION
- substitution or change of an obligation by another, resulting
in the extinguishment or modification either by:
a. changing the object or principal conditions (objective)
b. substituting another in place of debtor (passive subjective)
c. by subrogating a third person in the rights of the creditor
(active subjective)

Requisites:
1. A previous valid obligation;
2. Capacity and intention of the parties to modify or
extinguish the obligation;
3. The modification or extinguishment of the obligation;
4. The creation of a new and valid obligation.

Kinds of Novation:
a. Legal or conventional
b. Real, personal or mixed

Two forms of Subrogating a Third Person in the Rights of the Creditor:

3. Expromission – substitution of the old debtor by a third person

without the knowledge or against the will of the old debtor but the
third person acts on his own initiative to assume the debtor’s
obligation with the consent of the creditor. It is essential that the
old debtor be released from his obligation.

4. Delegacion – substitution of the old debtor, when the creditor

accepts a third person to take the place of the debtor at the
instance of the latter. The creditor may withhold approval. All
parties, the old debtor, the new debtor and the creditor must
agree.

General Rule: Subrogation cannot be presumed

Except:
1. Creditor pays another creditor who is preferred, without
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debtor’s knowledge;

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2. Aarising
2. debts third from
person not interested
contracts of in the obligation, pays with the
express or tacit approval of the debtor;
commodatum;
3. When even without the debtor’s knowledge, a person
interested in the fulfillment of the obligation pays, without
prejudice to the effects of confusion as to the latter’s share.

REVIEW EXERCISES – OBLIGATIONS

1. Which of the following is true?

a. If the obligation consists of giving a specific thing, the
debtor must exercise extra-ordinary diligence.
b. There is solidary liability only when the obligation expressly so states
c. If person obligated to give a specific thing fails to do it, the same
shall be executed at his cost
d. Mora accipiendi is one which is the delay on the part of the
creditor to accept the performance of the obligation

2. Jodie is obliged to deliver 20 bottles of King’s Castle whisky to

Alexandra. The parties agreed that should Jodie commit fraud in one
way or another in the performance of her obligation, Alexandra
would not sue her for damages. On due date, Jodie intentionally
delivered to Alexandra 20 bottles of adulterated whisky. Upon
learning of the fraud, Alexandra threatened to sue Jodie for
damages.
a. Alexandra cannot sue Jodie for damages on account of
the fraud because he waived his right thereto.
b. Alexandra can still sue Jodie for damages because the waiver
made by Alexandra is void.
c. Alexandra can file an action for the declaration of the nullity
of the contract.

Items 3 and 4 are based on the following statements:

I. There is deliberate intention to cause damage to another.
II. There is no deliberate intention to cause damage to another.
III. Liability for damages may be mitigated by the court according
to the circumstances.
IV. Liability for damages cannot be mitigated by the court.

3. The statements applicable to fraud are:

a. I and III.
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b. II and IV.

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c. I and
d. [Link] III.
II

4. The statements that are applicable to negligence are:

a. I and III.
b. II and IV.
c. I and IV.
d. II and III.

5. These statements are presented to you:

I. The receipt of the principal without reservation with respect to
the interest shall not give rise to the presumption that the
interest has been paid.
II. The receipt of a later installment without reservation with
respect to prior installment shall give rise to the
presumption that such prior installments have been paid.

In your evaluation of the foregoing statements:

a. Both statements are true.
b. Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true

6. Aside from exacting payment of the obligation, the creditor is

entitled to which of the following remedies?
a. Pursue the properties in the possession of the debtor
except those exempt from execution.
b. Exercise all rights and bring all the action of the debtor,
except those that are inherent in his person.
c. Impugn all the acts which the debtor may have done to
defraud his creditors.
d. All of the foregoing.

7. Samira borrowed P100,000.00 from Lauren. the debt, which bears

interest at 10% per annum and is payable at the end of one year, is
evidenced by a promissory note which Samira executed and
delivered to Lauren. Two months before the due date, Lauren died.
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and heir to whom the executor of Samira’s estate delivered the
He was survived by William, his only son
promissory

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c. I and
note. IV.
a. The credit right is transmitted to William; William can
collect from Samira.
b. The credit right is not transmitted to William since it is purely
personal; hence, William cannot collect from Samira.
c. The law prohibits the transmission of the credit right;
hence, William cannot collect from Samira.
d. The credit right is not transmitted to William because there
was no stipulation to that effect; hence, William cannot collect
from Samira.

8. Mr. Soul died recently. His executor presented to you for

evaluation the following documents left by Mr. Soul:
I. A stock certificate indicating that Mr. Soul was the owner
of 10,000 shares of stock of Rainbow Corporation.
II. Articles of partnership of Colors Company showing Mr. Soul
as a general partner.
III. Agreement engaging the services of Mr. Soul as
consultant of Spectrum Mining Corporation.

The rights that will not be transmitted to the heirs of Ned are those that
arise from:
a. Documents I and II.
b. Documents II and III.
c. Documents I and III.
d. None of the foregoing.

9. The following statements concerning reciprocal obligations are

presented to you:
I. The power to rescind is implied in the case one of the obligors
does not comply with what is incumbent upon him.
II. The injured party may choose fulfillment with a right to
damages, instead of rescinding the obligation.
In your evaluation of the foregoing statements:
a. Both statements are true.
b. Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true.

10. In which of the following is non-performance of an obligation excuse

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and heir to whom the executor of Samira’s estate delivered the
due to a fortuitous event?
promissory

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a. When stipulated by the
b. When the law so provides.
parties.
c. When the obligation involves the assumption of risk.
d. When the object is specific

11. Where demand by the creditor shall be necessary in order that delay may exist:
a. when demand would be useless
b. when the debtor requested for an extension of the period
c. when demand is excused by a provision of law
d. when time is of the essence

12. Anything paid or delivered before the arrival of a period can be

recovered by the debtor who paid by mistake:
a. with interest
b. with interest and other fruits
c. without interest
d. may not be recovered

13. The prestation is also known as:

a. Subject matter.
b. Debtor.
c. Creditor.
d. Efficient cause.

14. The efficient cause of an obligation is also known as:

a. Active subject.
b. Passive subject.
c. Subject matter.
d. Legal tie.

15. Off and Gun are the parents of Chimon, a government employee who
is married to Pluem. Off is an employee of a private firm, while Gun is
a housewife. While Chimon was on out-of-town assignment, Pluem
was brought to the hospital for medical treatment by Off and Gun, her
parents-in-law. The hospital wants to collect either from Off and Gun
for the medical expenses. In this case:
a. Only Off is liable because he is the one employed.
b. Both Off and Gun are liable because it was they who brought
Pluem to the hospital.

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c. Only Chimon, the husband of Pluem, is liable as he is the one
obliged
law to byhis wife.
support
d. The three of them is liable because they belong to the same
family and are obligated by law to support
Pluem.

16. A juridical relation arising from certain lawful, voluntary and unilateral
acts, and which has for its purpose the payment of indemnity to the
end that no one shall be unjustly enriched at the expense of another.
a. Quasi-delict
b. Quasi-contract
c. Qausi-tradition
d. Quasi-relation

17. The return of what has been paid by mistake is known as:
a. Negotiorum gestio.
b. Solution indebiti.
c. Quai-delict.
d. Culpa aquiliana.

18. Ellen and Portia are the owners of neighboring stalls in Baclaran. Ellen
got sick and had no one tend to her store which contained some
perishable items, when Portia noticed that Ellen had not been around
already for almost a week, Portia had that perishable items owned by
Ellen placed in a cold storage to preserve them. Portia incurred
P1,000.00 for the purpose.
a. Ellen must reimburse P1,000.00 to Portia since he was benefited
by the act of Portia.
b. Ellen has no obligation to reimburse Portia since he did not
authorize Portia to place the perishable items in a cold storage.
c. Ellen must reimburse P1,000.00 to Portia because Portia had an
authority to do so they being neighbors.
d. Ellen need not reimburse P1,000.00 to Portia because no one
should intrude into the affairs or business of another.

19. Angel, 30 years old, asked Toni, a 10-year old boy, to climb a santol
tree with a promise to give him P5.00 for every coconut picked. Toni

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a. When stipulated by the
climbed
parties. the tree but he fell and died. Angel is obliged to pay
damages to the heirs of Toni on the basis of:

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a. Quasi-
b. delict.
Quasi-contract.
c. Acts and omissions punished by law.
d. Yara is not liable because it was not through his negligence that
Theon fell to his death.

20. It is a thing that is particularly designated or physically

segregated from all others of the same class.
a. Generic thing.
b. Indeterminate thing.
c. Determinate thing.
d. Special thing.

21. A person obliged to give a determinate thing is also obliged to take

care of the thing with:
a. The good diligence of a father of a family.
b. The diligence of a father of a good family.
c. The diligence of a good father of a family.
d. Extraordinary diligence.

22. The rice, corn and other products of land that come into
existence through human labor are examples of:
a. Natural fruits
b. Civil fruits
c. Legal fruits
d. Industrial fruits

23. They refer to the products of a juridical relation such as the rents of
buildings, the rice of leases of lands and other property, and the
amount of perpetual or life annuities or other similar income.
a. Civil fruits
b. Natural fruits
c. Legal fruits
d. Industrial fruits

24. The right of Vice Ganda to demand the delivery of the agricultural lot
and the crops from the time the obligation to deliver the lot arose is
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a. Real
known as:
right.

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a. Quasi-
delict.
b. Personal right.
c. Civil right.
d. Natural right.

25. Which of the following is true?

a. The creditor has a right to the fruits of the thing subject matter
of the obligation from the perfection of the contract
b. The creditor has a right to the fruits of the thing subject matter
of the obligation . from the time the fruits are physically
delivered to him
c. The creditor has a right to the fruits of the thing subject matter
of the obligation from the time the obligation to deliver the
principal thing arises
d. The creditor has a right to the fruits of the thing subject matter
of the obligation The creditor has a right to the fruits of the thing
subject matter of the obligation from the moment of the meeting
of the minds

26. Which of the following is true?

a. Industrial fruits are those produced by lands of any kind through
cultivation.
b. Quasi-delicts are certain lawful, voluntary and unilateral acts
which give rise to a juridical relation to the end that no person
may unjustly enrich himself at the expense of another
c. The fulfillment of a resolutory condition shall as a general rule
give rise to an obligation
d. A period depending upon the sole will of the debtor will
invalidate the obligation

27. An obligation the subject matter of which is a thing which the

obligor must deliver to the obligee
a. obligation to do
b. moral obligation
c. personal obligation
d. real obligation

28. The person who is bound to the fulfillment of an obligation

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a. Real
a. obligor
right.
b. obligee
c. prestation

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d. active
subject
29. Through some mistake on the part of the bank personnel, Colin Adam
was given Php1,200 instead of Php1,000. This situation will be
governed by the provisions of the law on:
a. Contracts
b. Obligations
c. Quasi-delicts

d. Quasi-contracts

30. Sunshine agreed to finish the term paper of Gerald Santos. This is an
example of:
a. Real obligation
b. Positive personal obligation
c. Negative personal obligation
d. Unilateral obligation

31. Ron promised to give his car if Hermione will pass the CPA board
exams on October 2020. The car was destroyed by typhoon Rolly
even before the results of the exam. Eventually Hermione passed the
exams. In this case
a. Ron is excused as his obligation was extinguished by a fortuitous event
b. Ron should give another car to Hermione
c. Ron will deliver the value of the car plus damages
d. Hermione can ask for any other object of the same value

32. Clarence sold his cow to Lovely for P35,000. No date was stipulated
for the delivery of the cow. While still in the possession of Clarence,
the cow gave birth to a calf. In this case:
Answer No. 1 – Clarence can claim the calf as the ownership of the
cow is not yet transferred to Lovely
Answer No. 2 – Lovely has preference to claim the calf if she will pay for it
a. Wrong, wrong
b. Correct, correct
c. Correct, wrong
d. Wrong, Correct

33. Lee promised to give his cow to Jesusa. Before the date
stipulated for the delivery of the cow it gave birth to a calf. In this
case:

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a. Wrong,
Answer No. 1 wrong
– Jesusa is entitled to the calf as the principal is a specific
thing Answer No. 2 – Jesusa has a real right over the calf upon
perfection of the
contract.

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d. active
[Link]
Correct, correct
c. Correct, wrong
d. Wrong, Correct

34. Harry, Louis, Niall and Liam are solidary debtors of Zayn in the
amount of P60,000. Zayn remitted Harry’s share. Louis paid Zayn
P60,000. How much can Louis demand from Niall if Louis will ask for
reimbursement?
a. P 12,500
b. P 15, 000
c. P 20,000
d. P 30,000

35. These statements are presented to you:

I. Accessions include everything which is produced by a thing
or which is incorporated or attached thereto, either
naturally or artificially.
II. Accessories are those that are attached to or included in
another thing of more importance to the add to the utility,
ornamentation, preservation or completion of the latter.
a. Both statements are true.
b. Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true.

36. Which of the following is not an accessory?

a. The bracelet of a wristwatch.
b. The keys to a house.
c. The building constructed on a lot.
d. The wheels of a car.

37. These statements concerning the accessions and accessories of a

determinate thing are presented to you:
I. The debtor has to deliver the accessions and accessories
even if they have not been mentioned.
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II. The debtor must deliver the accessions and accessories
haveonly
beenif mentioned.
they
III. The debtor and the creditor may validly stipulate that the
accessions and accessories will be excluded from the
obligation to deliver the thing.
In your evaluation of the foregoing statements:
a. Statements I and II are true.
b. Statements II and III are true.

c. Statements I and III are true.

d. All statements are true.

38. These statements concerning delay are presented to you:

I. There is no delay in obligations not to do.
II. As a rule, the debtor will be in default if he does not
perform his obligation on due date.
In your evaluation of the foregoing statements:
a. Both statements are true.
b. Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true.

39. They include physical suffering, mental anguish, fright, serious

anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation and similar injury.
a. Compensatory damages
b. Corrective damages
c. Exemplary damages
d. Moral damages

40. Cara is obliged to deliver 5 sacks of “Jasmine” rice to Ashley after two
weeks. On due date, Cara intentionally delivered 5 sacks of rice of a
lower class. The obligation of Cara is:
a. Void.
b. Rescissible.
c. Voidable.
d. Still valid and is not affected by the fraud in performance.

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41. Drew obliged himself to allow the use of his car by Tay until Tay
course
finishesinhis
law. The condition imposed upon the obligation is:
a. Suspensive condition.
b. Condition precedent.
c. Condition antecedent.
d. Resolutory condition.

42. Which of the following combinations of conditions will render an

obligation void?
a. Resolutory – potestative (debtor)
b. Suspensive – potestative (creditor)
c. Suspensive – potestative (debtor)
d. Relsolutory – potestative (creditor)

43. One of the following obligations is void. Which is it?

a. Bright to give Win P10,000.00 if Win goes to Baguio.
b. Bright to give Win P10,000.00 if Bright goes to Baguio.
c. Bright to give Win P10,000.00 if Win does not fly to the moon.
d. Bright to give Win P1,000.00 a month until Win returns from Baguio.

44. Which of the following is not an obligation with a period?

a. “I will pay you little by little.”
b. “I will pay you when I have the means.”
c. “I will pay you as soon as possible.”
d. “I will pay when my loan is approved by the bank.”

45. Non is obliged to give Kao a house and lot if Kao will not marry Pete
within one year. Which of the following statements is incorrect?
a. Non’s obligation is extinguished if Kao marries Pete within the
one-year period.
b. Non’s obligation is demandable if Kao marries Pete within the
one-year period.
c. Non’s obligation becomes demandable if the one-year period
expires without Kao having married Pete.
d. Non’s obligation becomes demandable if Pete dies before the
one-year period expires without Kao having married Pete.

46. These statements are presented to you:

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I. The condition shall be deemed fulfilled if the debtor
voluntarily
prevents its fulfillment.
II. The condition not to do an impossible thing shall be
deemed as not having been agreed upon.

In your evaluation of the foregoing statements:

a. Both statements are true.
b. Only Statement I is true.
c. Only Statement II is true.
d. Both statements are false.

47. These statements are presented to you:

I. A solidary creditor may assign his rights to a third person
without the consent of the other creditors.
II. A solidary debtor, on the ground of equity, is entitled to
reimbursement from his fellow debtors if he paid the
obligation after it has prescribed.
In your evaluation of the foregoing statements:
a. Both statements are true.
b. Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true.

48. A promissory note reads as follows:

“I promise to pay River Phoenix or order the sum of
P9,000.00. (Sgd.) Heath Ledger (Sgd.) James Dean (Sgd.) Elvis
Presley”
Note: Elvis Presley is insolvent.

How much may River Phoenix collect from Heath Ledger?

a. P9,000.00
b. P6,000.00
c. P3,000.00
d. Nothing, because the note is void, since it says “I promise to
pay” yet it is signed by three persons.

49. The following obligations are divisible, except:

a. When the obligation has for its object the execution of certain
number of days of work.
b. When the obligation has for its object the accomplishment of
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c. Analogous things which by their nature are susceptible
of partial
work by metrical units.

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I. The condition shall be deemed fulfilled if the debtor
voluntarily
performance.
d. Obligation to give definite things.

50. These obligations are presented to you:

I. Obligation to paint a house in 5 days.
II. Obligation to deliver a specific car.
III. Obligation to give a vocal solo rendition of the Philippine
National Anthem.

IV. Obligation to construct a fence which is 10 meters long

and 2 meters high.
Which of the foregoing obligations are divisible?
a. I and II.
b. III and IV.
c. I and IV.
d. II and III.

51. Aside from the penalty, damages and interest may be demanded in
which of the following cases?
a. When the debtor refuses to pay the stipulated penalty.
b. When the debtor is guilty of fraud in the performance of the obligation.
c. When there was a stipulation the aside from the penalty,
damages and interests may also be recovered.
d. All of the above

52. Rose is obliged to paint the car of Jack in three days. The parties
stipulated that in case Rose failed to paint the car within the
period, Rose would give 5 grams of “shabu” as penalty for every
day of delay.
Principal Obligation Penalty
a. valid Valid
b. Void Void
c. Void Valid
d. Valid Void

53. An obligation where only one prestation has been agreed upon but
the obligor may deliver another as a substitute
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c. Analogous things which by their nature are susceptible
[Link] obligation
partial

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b. simple
c. alternative obligation
obligation
d. facultative obligation

54. An obligation where several prestations are due but the performance
of one is sufficient
a. pure obligation
b. simple obligation
c. facultative obligation
d. alternative obligation

55. Louis obliged himself to pay Harry P100,000 as soon as his means will
permit him. 60 days later Harry demanded payment but Louis
refused on the ground that the obligation is not yet due and
demandable. What can Harry do?
a. Go to court to ask for damages
b. The obligation is extinguished
c. Go to court to fix the period of maturity of the obligation
d. Go to court and sue Louis for specific performance

56. Angela and Pauline are liable to deliver a car with plate no. AMB 121
valued at P1 M to Judiel. In this case:
a. On due date, Judiel can demand performance of the obligation
from Angela and Pauline.
b. On due date, Judiel can demand performance of the obligation
from either Angela or Pauline.
c. Angela is liable for a proportionate part of the obligation but
not for damages if Pauline will refuse to deliver.
d. The liability of is Angela and Pauline is solidary.

57. Mr. Kim obliged himself to give to JC his mobile phone if the latter will
fly like a bird.
a. The obligation is void.
b. The obligation void but the condition is valid.
c. The obligation is valid because only the impossible condition is void.
d. The obligation is valid because the impossible condition
cannot be performed.

58. Harry, Louis, Niall and Liam are solidary debtors of Zayn in the
amount of P60,000. Zayn remitted Harry’s share. Louis paid Zayn
P60,000. How much can Louis demand from Niall if Louis will ask for
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b. P15,
reimbursement?
000
a. P 12,500

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 CRC-ACE The Professional CPA Review School
b. simple
obligation
c. P 20,000
d. P 30,000

59. Mae, Kyla, and Riza are solidary debtors of Megan in the amount of
P15,000. Megan remitted Mae’s share. Kyla paid Megan P10,000.
How much can Kyla demand from Mae if Kyla will ask for
reimbursement and Riza is insolvent?
a. P 10,000
b. P 2,500
c. P 5, 000
d. P 0

60. Zeus, Poseidon, Hades and Ares are debtors of Percy, Herc and Hera,
in the amount of P180,000. Zeus’s obligation is:
a. Pay Percy P45,000
b. Pay Percy P15,000
c. Pay Percy P 20,000
d. Pay Percy, Herc and Hera P180,000

61. Beau, Freya and Bella are solidarily liable to Baste for P300,000 which
will mature on June 30, 2020. On February 1, 2020, Beau paid Baste
for the whole amount of the debt. If on July 10, 2020 Beau will be
reimbursed by Freya, the latter will be liable for:
a. P100,000 without interest
b. P100,000 with interest from to June 30, 2020 to July 10, 2020
c. P100,000 with interest from February 1, 2020 to July 10, 2020
d. P100,000 with interest from February 1, 2020 to June 30, 2020

62. Helsinki owes Arturo Php2M due on April 30, 2019. Helsinki
mortgaged his house as guaranty for the debt. On September 6,
2018 the mortgaged house was completely destroyed by typhoon
“Paeng”. A week after Arturo demanded payment. Is the demand
valid?
a. Yes, the debt becomes demandable because the collateral was
lost thru a fortuitous event.
b. No, the obligation is extinguished because the object of the
obligation is lost thru a fortuitous event.

c. Yes, the debt becomes demandable because the security

established is for the benefit of the creditor.
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b. P15,
d.
000No, because the obligation is one with a definite period and the
demand would be prejudicial to the rights of the debtor.

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63. 1st Statement – In an obligation to deliver a specific car with a

motorcycle as a substitute, the choice may be given either to the
creditor or the debtor.
2nd Statement – Earth borrowed P60,000 from Kao. It was agreed that
Earth will give Kao P100,000 or her car, or her new motorcycle. Earth
can compel Kao to receive part of one and part of the other
undertaking.
a. False, false
b. True, true
c. True, false
d. False, true

64. 1st Statement – If the penalty clause is void, the principal obligation
can still subsist provided it is not contrary to law, morals, public
policy or good customs. 2nd Statement – In solidary obligation, there is
only one debt and one credit regardless of the number of debtors
and creditors
a. Wrong, wrong
b. Correct, correct
c. Correct, wrong
d. Wrong, Correct

65. A kind of obligation where each one of the debtors is proportionately

liable and the object is not physically divisible into different parts
a. joint obligation
b. solidary obligation
c. joint divisible obligation
d. joint indivisible obligation

66. An obligation performance of which does not depend upon a future or

uncertain event, or upon a past event unknown to the parties
a. real obligation
b. pure obligation
c. joint obligation
d. simple obligation

67. The debtor losses the benefit of the period, and his obligation
becomes demandable when:
a. the debtor attempts to abscond.
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b. demand
d. afterby the creditor
contracting would
the be useless.
obligation, the creditor suspects that the
c. the debtor
guarantees
is as promised and delivered by the debtor
are not acceptable to the creditor.

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becoming insolvent.

68. When the thing deteriorates pending the fulfillment of the suspensive
condition without the fault of the debtor, the impairment is to be
borne:
a. by the debtor
b. by the creditor
c. by the party who caused the deterioration
d. partly by the debtor and partly by the creditor

69. Elio agreed to give Oliver a specific tractor if Oliver would complete
his course in Agriculture. Oliver completed his course in Agriculture
but Elio earlier had the tractor overhauled thereby improving its
efficiency.
a. Elio and Oliver must equally share in the cost of improvement.
b. Oliver should reimburse Elio for the cost of the improvement.
c. Elio may withhold delivery of the tractor until he and Oliver
arrive at an agreement on how the cost of improvement shall be
divided between them.
d. The improvement in the tractor shall inure to the benefit of
Oliver without any right on the part of Elio to demand
reimbursement.

70. The passage of time which extinguishes the obligation

a. payment
b. confusion
c. consignation
d. prescription

71. An obligation where only one prestation has been agreed upon
a. real obligation
b. joint obligation
c. simple obligation
d. facultative obligation

72. Obligation which is susceptible of partial performance based on the

purpose of the obligation
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d. after contracting the obligation, the creditor suspects that the
a. debtor
personal
is obligation
b. divisible obligation
c. indivisible obligation

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d. joint obligation

73. Which of the following is true?

a. The condition not to do an impossible thing does not render the
obligation void.
b. A condition always refers to the future
c. In alternative obligations the right to select which of the
prestation shall be delivered belongs to the creditor, unless
expressly given to the debtor.
d. The debtor losses the right to the period if he does not give any
security to the creditor

74. Which of the following is true?

a. The condition that some event will not happen at a determinate
time shall extinguish the obligation from the moment the time
indicated has lapsed or it has become evident that the event
cannot occur.
b. The condition that some event happens at a determinate time
shall give rise to the obligation as soon as the time expires or it
has become indubitable that the event will not take place.
c. Whoever pays for another may demand reimbursement from the
debtor what he has paid
d. The debtor who is obligation to deliver a specific thing cannot
compel the creditor to receive an object of the same kind.

75. Which of the following is true?

a. Solidarity cannot exist if the creditors and the debtors are not
bound in the same manner and by the same periods and
conditions.
b. A solidary debtor is at all times entitled to reimbursement
from his co- debtors if he pays for their respective shares in the
obligation
c. A condition is considered fulfilled if the debtor voluntarily
prevents its fulfillment.
d. A solidary obligation is one where the whole obligation is to be
paid or fulfilled proportionately by the different debtors and is to
be demanded proportionately by the different creditors.

76. Which of the following illustrates suspensive period?

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a. d.A will support
after B until December
contracting 31, 2019
the obligation, the creditor suspects that the
b. A will support
debtor is B if C will marry B
c. A will support B after the death of C
d. A will support B until B pass the CPA board exam

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77. The following statements concerning reciprocal obligations are

presented to you:
III. The power to rescind is implied in the case one of the obligors
does not comply with what is incumbent upon him.
IV. The injured party may choose fulfillment with a right to
damages, instead of rescinding the obligation.
In your evaluation of the foregoing statements:
a. Both statements are true.
b. Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true.

78. The period established in an obligation is presumed to be for the benefit

of:
a. The debtor.
b. The creditor.
c. Both the debtor and the creditor.
d. Neither, because it must be clearly established by stipulation.

79. A facultative obligation differs from an alternative obligation in

that in a facultative obligation:
a. Only one prestation is due.
b. The right of choice belongs to the debtor unless it is expressly
granted to the creditor.
c. If there are void prestations, the obligation remains if there are
others that are valid.
d. If all perstations are impossible except one, that which is
possible must still be given.

80. Christian, Kim and Lor are jointly indebted to Tyler in the amount of
P30,000.00. Before due date, Christian becomes insolvent. On due
date, Tyler can collect:
a. P15,000.00 from Kim, and P15,000.00 from Lor.
b. P10,000.00 from Kim, and P10,000.00 from Lor.
c. P20,000.00 from Kim, or P20,000.00 from Lor.
d. P30,000.00 from Kim, or P30,000.00 from Lor.

81. Sarah, Leni and Loren are solidary debtors of Vice in the
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amount ofLater,
condonation. P6,000.00. Vice Vice
Leni pays condones the share
P4,000.00. When of
LeniSarah.
Sarah accepts the
demanded

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reimbursement from Loren, Loren could not pay because she was
already insolvent. In this case, Leni may collect from Sarah:
a. Nothing because the share of Sarah had already been
extinguished by condonation.
b. P4,000.00
c. P2,000.00
d. P1,000.00

82. On May 1, 2020, Mickey borrowed P100,000.00 from Minnie. the

loan is payable on or before April 30, 2021 and bears interest at
12% per annum. Which of the following statements is incorrect?
a. Mickey may pay on April 30, 2021.
b. Mickey may pay before April 30, 2021.
c. Minnie may demand payment before April 30, 2021.
d. Minnie may demand payment on April 30, 2021

83. In an alternative obligation, the right of choice as a rule belongs to the:

a. Debtor.
b. Creditor.
c. Both the debtor and the creditor whoever exercises it first.
d. Neither the debtor not the creditor because the parties must
stipulate on who has the right of choice.

84. In a facultative obligation, the choice as to whether the

substitute will be delivered or not belongs to:
a. The debtor only.
b. The creditor only.
c. Both parties.
d. Neither of the parties

85. Bongbong, Alex, Francisco, and Manny are indebted to Calvin,

Rodrigo and Sol, in the amount of P12,000.00.

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If the debtors are
condonation. jointLeni
Later, debtors
paysand the P4,000.00.
Vice creditors areWhen
joint creditors,
Leni
Calvin may collect from Bongbong:
demanded
a. P12,000.00
b. P 4,000.00
c. P 3,000.00
d. P 1,000.00

86. Bongbong, Alex, Francisco, and Manny are indebted to Calvin,

Rodrigo and Sol, in the amount of P12,000.00.

If the debtors are joint debtors and the creditors are solidary
creditors, Calvin may collect from Bongbong:
a. P12,000.00
b. P 4,000.00

c. P 3,000.00
d. P 1,000.00

87. Bongbong, Alex, Francisco, and Manny are indebted to Calvin,

Rodrigo and Sol, in the amount of P12,000.00.

If the debtors are solidary debtors and the creditors are joint
creditors, Calvin may collect from Bongbong:
a. P 12,000.00
b. P 4,000.00
c. P 3,000.00
d. P 1,000.00

88. Bongbong, Alex, Francisco, and Manny are indebted to Calvin,

Rodrigo and Sol, in the amount of P12,000.00.

If there is mixed solidarity, Calvin may collect from Bongbong:

a. P 12,000.00
b. P 4,000.00
c. P 3,000.00
d. P 1,000.00

89. Three of the requisites of cession in payment. Which is the exception?

a. more than one debt
b. one debtor and one creditor
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c. complete or partial
d. abandonment
insolvency of all debtor’s property not exempt from execution

90. Compensation cannot take place except:

a. When one debt arises from bank deposit
b. When one debt arises from an obligation of a depositary
c. When one debt arises from support by reason of a gratuitous title
d. When one debt arises from the obligation of the bailee in a
contract of commodatum

91. It is the meeting of one person of the qualities of creditor and

debtor with respect to the same obligation:
a. Novation
b. Confusion
c. Remission

d. Compensation

92. The passage of time which extinguishes the obligation

a. Novation.
b. Prescription
c. Consignation
d. Tender of payment

93. Strictly considered not an alternative mode of payment

a. Consignation
b. Dacion en pago
c. Cession en pago
d. Application of payment

94. An alternative mode of extinguishing an obligation which is governed

by the law on sales
a. Dacion en pago
b. Cession en pago
c. Consignation
d. Application of payment

95. Extinguishes the obligation when the creditor will gratuitously

abandon all his rights against the debtor
a. Novation
b. Confusion
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c.
d. Compensation

96. Assignment or abandonment of all the properties of the debtor for

the benefit of his creditors in order that the latter may sell the same
and apply the proceeds thereof to the satisfaction of his credits
a. Consignation
b. Dacion en pago
c. Cession en pago
d. Application of payment

97. The act of offering the creditor what is due him together with a
demand that the creditor accept the same
a. Novation
b. Prescription
c. Consignation
d. Tender of payment

98. This is the deposit of the thing due made by the debtor in lawful
form, whenever the creditor refuses or cannot accept payment
a. Novation
b. Consignation
c. Prescription
d. Tender of payment

99. Statements:
I. Tender of payment validly made, if refused, produces payment
II. Payment made by third persons not interested in the
obligation may be refused by the creditor
The statement is true with respect to:
a. I only c. Both I and II
b. II only d. Neither I nor II

100. Consignation may be made even without previous tender of

payment in the following cases, except:
a. When two or more persons claim the same right to collect.
b. When the creditor refuses to give a receipt without just cause.
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c. When the creditor is absent or unknown or does not appear at
the place
of payment.
d. When the creditor is incapacitated but the debtor knows that
the creditor has a legal representative to receive payment.

101. The compensation referred to in the preceding number is known as:

a. Legal compensation
b. Facultative compensation
c. Voluntary compensation
d. Compensation is not allowed in such situation

102. A is the maker of a promissory note payable to the order of B,

payee, C signed the note as guarantor of the debt. B indorses the
note to D, D to E, and E to F. On the date of maturity, F indorsed
the note back to A. the indorsement of the note to A extinguished:
a. Only the guaranty.
b. Only the principal debt.
c. Both the principal debt and the guaranty.
d. Neither the principal debt nor the guaranty.

103. Refer to the above question. If the note was instead indorsed by F
to C on the date of maturity, such indorsement extinguished:
a. Only the guaranty.
b. Only the principal debt.
c. Both the principal debt and the guaranty.
d. Neither the principal debt nor the guaranty.

104. Malou owes Vanessa P20,000.00 payable on or before March

31, 2019. Vanessa owes Malou P20,000.00 due on March 1, 2019.
On March 1, 2019;
a. Only Malou may claim compensation.
b. Only Vanessa may claim the compensation.
c. Either Malou or Vanessa may claim the compensation.
d. Only Vanessa may oppose any compensation being
claimed by Beyoncé.

105. Red borrowed P100,000 from Blue secured by a mortgage contract.

Without the knowledge of Red, Yellow paid Blue to release the debt
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a. Yellow can recover what he paid from
of Red. As a result:
Red.

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c. When the creditor is absent or unknown or does not appear at
the
b. place
Yellow can foreclose the mortgaged property of Red
c. Yellow can recover what he paid Blue in case Red is insolvent
d. Yellow cannot recover what he paid from Blue because the
payment was made without Red’s consent

106. Nairobi owes Berlin Php1M. With the consent of both, Rio pays
Berlin Php500,000. Now Berlin and Rio are the creditors of Nairobi.
Supposed Nairobi has only Php500,000. Which statement is
correct?
a. Rio should be preferred
b. Berlin should be preferred
c. Nairobi’s intent will prevail
d. Berlin and Rio should divide the Php500,000 equally

107. Which of the following is false?

a. The voluntary acceptance by the creditor of a certified
cashier’s check produces payment.
b. If the suspensive condition depends upon chance or upon the
will of a third person, the obligation subject to it is valid.
c. The creditor, as a rule, is not bound to accept payment or
performance by a third person, unless such person has an
interest in the fulfillment of the obligation.
d. In the absence of express statement in application of payment,
the payment shall be applied to the obligation most onerous to
the debtor

108. Which of the following is false?

a. Condonation is generally gratuitous
b. There is no delay in a negative personal obligation
c. I will pay you P100,000 “soonest” is an example of a void obligation
d. Payment made in good faith to a person in possession of
the credit shall extinguish the debtor’s obligation

109. Which of the following is not an element of legal compensation:

a. There are two or more debts of the same kind.
b. Debts to be compensated are due and demandable.
c. There are two persons who are creditors and debtors of each other.
d. There is controversy or adverse claim over any debts
to be compensated.

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110. It transfers to the person who assumes the credit right with all
the rights appertaining, either against the debtor or against third
thereto
persons, be they guarantors or possessors of mortgages.
a. Novation
b. Substitution
c. Subrogation
d. Negotiation

111. One peso (P1.00) coins and other coins of higher denomination
are legal tender up to:
a. P 20.00
b. P 100.00
c. P 500.00
d. P 1,000.00

112. These statements are presented to you:

I. Monetary obligations, as a rule, shall be settled in the
currency which is legal tender in the Philippines.
II. The parties are prohibited by law from stipulating that the
obligation or transaction shall be settled in any other currency
at the time of payment.
In your evaluation of the foregoing statements:
a. Both are true.
b. Both are false.
c. Only Statement I is true.
d. Only Statement Ii is true.

113. It refers to the designation of the debt to which a payment shall apply.
a. Assignment
b. Consignation
c. Tender of payment
d. Application of payment

114. One of the stipulations contained in the contracts between a

company and its employees is that the company shall pay a bonus
to any employee of the company who shall continue their
employment for at least two consecutive years unless he quits or is
discharged before the expiration of the period of two years. ADA,
an employee of the company was discharged one week before the
completion of the two year period.
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1) If ADA is discharge with just cause, she is nevertheless
the bonustobecause when the company voluntarily impedes the
entitled
performance of the condition, it will be deemed performed.
2) If ADA is discharged without just cause, she is entitled to
the bonus because when the debtor voluntarily prevents
the performance of the condition, it is deemed fulfilled
a. True. True
b. True, false
c. False, true
d. False, false

115. CYRENE was indebted to BEA bank. Later JAMES, employee of

CYRENE, offered to settle the obligation according to the terms
specified by him. The bank accepted the offer. The acceptance by
the bank of the offer of JAMES under the term specified by him
constitutes
a. A compensation c. Condition
b. A confusion d. Novation

116. One in not a requisite needed in order that obligation shall be

extinguished by loss or destruction of the thing due:
a. When the thing lost is generic
b. When the thing is lost without the fault of the debtor.
c. When the thing lost is specific
d. When the thing is lost before the debtor has incurred in delay.

117. HENRY insured his residential house for P18,000,000 on January 1,

2018. On June 30, 2018 RAMSEY burned the insured property.
Which is not correct?
a. A can proceed against the insurer and collect the P5,000,000 policy
b. The insurer shall be subrogated to the rights of HENRY after
payment to HENRY
c. After payment the insurer shall have the right to proceed
against RAMSEY
d. HENRY should proceed against RAMSEY, the guilty party and not
against the insurer

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110. It transfers to the person who assumes the credit right with all
the 118.
rights If a third person pays for the debtor with the consent of the debtor, he

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a. Can recover only in so far as the payment has been
beneficial to the
debtor
b. Can recover the amount he has paid but he shall not acquire the
rights of the creditor
c. Can recover the amount he has paid or the payment that has
benefited the debtor whichever lower.
d. Can recover the amount he has paid and he shall acquire the
rights of the creditor such as those arising from a mortgage,
guaranty or penalty

119. Severus is indebted to Albus with Harry as guarantor. Albus

assigns the credit to Lily, who in turn assigns the credit to Harry.
Which is correct?
a. Harry becomes the new creditor of Severus
b. The assignment by Albus to Lily extinguished the guaranty
c. The obligation of Severus is extinguished
d. The assignment to Harry did not affect the obligations of
Harry as guarantor

120. Boni obtained from Marceline a loan for P1,500 with interest at 10%
per annum, the payment of which loan was secured by a guaranty
secured by Simon. After the maturity of the loan, Gunther a friend
of Boni, went to Marceline and paid the latter, without the
knowledge of Boni, P1,400 for said loan and thereupon Marceline
signed and delivered to Gunther a receipt of this tenor “Received
from Gunther P1,400 in full payment of Boni’s obligation in my
favor. Sgd. Marceline”.
Which is correct?
a. Gunther may recover from Boni P1,500 plus interest
b. Gunther may recover from Boni P1,400 plus interest
c. Gunther may recover from Boni P1,400 without interest
d. Gunther may cover from Boni the amount of obligation, that is
P1,500, because Boni was benefited up to P1,500.

121. Using the preceding number in case Boni has nothing with
which to pay. Gunther may exact from the guarantor.
a. P1,500
b. P1,400

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122. If one debt is P12,000 and the other is P6,000 and the debtor
c. Nothing
without making
d. P1,400 plus interest

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a. Can recover only in so far as the payment has been
beneficial
any to the
application payment gives P3,000, how should said payment be applied,
presuming that both debts are of the same nature and burden?
a. The payment will be applied equally
b. The payment will be applied proportionately
c. The payment will be applied to the P12,000 debt
d. The payment will be applied to the P6,000 debt

123. Sometimes referred to as condition precedent

a. Casual condition
b. Suspensive condition
c. Potestative condition
d. Resolutory condition

124. Also known as condition subsequent

a. Casual condition
b. Suspensive condition
c. Potestative condition
d. Resolutory condition

125. CHARLOTTE owes OSCAR P56,800 payable as soon as CHARLOTTE

has the money to pay OSCAR. This is
a. A conditional obligation
b. A potestative condition
c. A suspensive condition
d. An obligation with a period

126. Solidarity on the part of the obligees

a. Active solidarity
b. Passive solidarity
c. Mixed solidarity
d. Casual solidarity

127. The following are obligations will a period, except:

a. As soon as I have money
b. In partial payments
c. As soon as possible
d. Until the defendant shall have obtained a loan from the bank
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128. NAIROBI, HELSINKI and DENVER borrowed P120,000 from ANGEL

and MARITES and signed a promissory note dated JANUARY 7,2018,
and due within SEVEN months. How much can ANGEL collect from
HELSINKI (debtors are solidary while creditors are joint).
a. P20,000
b. P40,000
c. P60,000
d. P120,000

129. RINLEY obliged herself to give JOHN an overseas travel free of

expense if JOHN places among the top ten in the CPA Board Exam.
Subsequently, they agreed that RINLEY will give JOHN an overseas
travel free of expense if JOHN merely passes the CPA Board.

This is example of
a. Mixed novation c. Implied novation
b. Real novation d. Personal novation

130. The obligation is demandable on the date of the obligation and

shall continue to be in force up to the arrival of the day certain:
a. Resolutory period
b. Suspensive period
c. Indefinite period
d. Legal period

131. ALVIN owes CARL P20,000 due on May 27, 2019. ALVIN owes BERNA
P16,000 due on MARCH 26, 2019. ALVIN obliged himself to deliver to
CARL a SACK OF RICE valued at P12,000 on MARCH 30, 2019. On
MARCH 31,
2019, ALVIN paid CARL P20,000. If ALVIN makes an application of payment:
a. The P20,000 should be applied to the first debt only
b. The P20,000 should be applied to the second debt only
c. The P20,000 may be applied either to the first debt or to the second debt
d. The P20,000 may be applied to the first debt, or to the second
debt or to the third debt

132. MIA, RIANNE and HENRY are jointly liable to PAUL in the
amount of P15,000. PAUL assigns the entire credit to MIA. In this
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caseb. The obligation is extinguished because of

confusion
a. RIANNE and HENRY will not be liable to MIA

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c. MIA Share in the obligation is extinguished because of confusion

d. MIA becomes the new creditor and may demand from
RIANNE and HENRY P7,500 each

133. One of the following is not correct in joint obligations

a. There are as many debts as there are debtors
b. There are as many credits as there are creditors
c. The debts and/or credits are considered distinct and separate
from one another
d. The insolvency of one of the debtor shall make the other debtors liable

/cde

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