BUSINESS LAW

Atty. Macmod, CPA

2018 Edition
 OBLIGATIONS - 01

I. Identification (Basic Concept/Principles)

______________ 1. Legal reason why courts can take cognizance of a case and
give legal remedies.
______________ 2. The fitness to be the subject of legal relations.
______________ 3. The power to do acts with legal effects.
______________ 4. Rule of conduct promulgated by legislative power and
obligatory to all.
______________ 5. Incorporated to the principal naturally or artificially.
______________ 6. Added to the principal for its completeness.
______________ 7. Non-compliance of obligation when it falls due.
______________ 8. It is normally an exempting circumstance in obligations
______________ 9. Negligence resulting to an obligation.
______________ 10. Deliberate act of evading the normal compliance of an
obligation.
______________ 11. One in which a debtor may validly pay a monetary obligation.
______________ 12. Means no partial payment or performance is allowed.
______________ 13. Debtor abandons his property to his creditor as full payment of
obligation.
______________ 14. The deposit of a thing in legal form when the creditor refuses to
accept or cannot receive it.
______________ 15. The legal basis of quasi-contracts.
______________ 16. One person becomes the debtor and creditor of himself.
______________ 17. Two persons became debtor and creditor of each other.
______________ 18. Gratuitous abandonment by the creditor of his rights.
______________ 19. Change of debtor without old debtor’s consent.
______________ 20. Extinguishment of obligation by passage of time.
 KINDS OF OBLIGATIONS:

______________ 21. a. Not legally enforceable. / in accordance with natural law.

______________ b.Legally enforceable. / in accordance with positive law.
______________ c.In accordance with both natural and positive law.
______________ 22. a.Obligation governed by the Civil Code.
b.Obligation governed by the Code of Commerce and other special laws.
______________ 23. a. An obligation without a condition or terms.
______________ b.An obligation whose efficacy depends of the fulfillment, or non- fulfillment of
a future and uncertain event.
______________ c.An obligation subject to a term.
______________ 24. a.In either case, the obligation is demandable at once.
______________ 25. a.Obligation wherein only one party is liable.
______________ b.Obligation wherein obligation is pro-rated among the parties.
______________ c. Obligation wherein each party is entitled to or liable for the entire obligation.
______________ 26. a. Where only one prestation is involved.
______________ b. Where all prestation are due and demandable.
______________ c. Where only one of the several prestations due had to be preformed.
______________ d. Where one prestation is due but may be substituted by the debtor
with another
______________ 27. a. An obligation to give.
______________ b. An obligation to do or not to do.
______________ 28. a.An obligation capable of partial performance.
______________ b.An obligation incapable of partial performance.
______________ 29. a.An obligation based on law.
______________ b.An obligation based on the agreement of the parties.
______________ 30. a. Can stand alone.
______________ b. Depends on another obligations.
II. TRUE OR FALSE

31. In Culpa Aquiliana, negligence is presumed in the injury.

32. D obliged himself to give C P1,000,000 if the latter would not kill X, a third person. In this case,
both the condition as well as the obligation are valid.
33. In alternative obligation all things due must be performed.
34. In a solidary obligation the remission of the whole debt is a donation to all the debtors.
35. In facultative obligation the right to choose can be given to the creditor.
36. A person civily liable is also criminally liable.
37. Every person obliged to give something is also obliged to take care of it with due diligence of a
good father of a family always.
38. The creditor has the right to the fruits of the thing from the time the obligation is constituted.
39. An obligation subject to resolutory condition is demandable regardless of the effects of the
happening of the event.
40. Payment made by the debtor to a third person who is not the creditor will not extinguish the
obligation as a rule.
41. Any waiver of an action for future fraud if done voluntarily by parties is valid.
42. An obligation payable “as soon as possible” is an obligation with a period for the benefit the
creditor only.
43. D obliged himself “to pay C the sum of P50,000 which he owes him when he (D) feels like it”.
This kind of obligation is valid and legally enforceable.
44. Solidarity may be presumed.
45. Condonation is generally gratuitous.
46. Whoever pays on behalf of the debtor with or without his knowledge can compel the creditor to
subrogate him.
47. Dation in payment is governed by Insolvency Law..
48. In expromision, the new debtor’s insolvency may revive the original debtor’s obligation.
49. Negotiorum gestio is a contract based on the principle of unjust enrichment.
50. When a debtor voluntarily pays an obligation that has prescribed already, he may still recover
under solution indebiti.
51. A source of obligation where negligence resulted to crime:
a. culpa contractual
b. quasi-contract
c. culpa delictual
d. culpa aquiliana

52. Which is not a source of obligation?

a. Law
b. Culpa Aquilana
c. Mora Solvendi
d. Quasi Contract
53. Statement No. 1: D oblige himself to give C a Toyota car tomorrow. If D failed
to deliver tomorrow after demand is made C may compel D to do his obligation
and may ask for damages.
Statement No. 2: D oblige himself to deliver his only car to C tomorrow. If D failed
to deliver tomorrow after demand is made C's right is to ask a third person to
deliver a car to him at the expense of D plus damage.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No 2 is true

54. Which of the following is considered as quasi-contract?

a. Solutio indebiti
b. When the third person, without the knowledge of the debtor, pays the debt
c. Reimbursement due the person who saved property during fire or storm
without the knowledge of the owner.
d. All of the above.
55. A judicial relation known as Negotiorum Gestio takes place.
a. When a person voluntarily takes charge of another's abandoned business or
property without the owner's consent.
b. When something is received and there is no right to demand it and it was delivered
through mistake.
c. When a person is appointed by a court to take the property or business of another.
d. None of the above.

56. The wrongful act or tort which causes loss or harm to another is called:
a. Damages
b. Damage
c. Injury
d. Liability
57. Which of the following is not a generic obligation?
a. obligation to pay P5,000
b. obligation to deliver Toyota INNOVA
c. obligation to deliver 50 cavans of rice
d. obligation to give a delimited generic object

58. Statement No. 1: An obligation which has for its object the delivery of a "delimited
generic" object may be lost by reason of fortuitous e3vent.
Statement No. 2: There can be no delay in an obligation not to do.
a. Both statement are true
b. Both statements are false
c. Statement No. 1 is true while statement NO.2 is false
d. Statement No. 1 is false while statement No. 2 is true
59. Also known as punitive damages
a. Moral damages
b. Exemplary damages
c. Actual damages
d. Nominal damages

60. "I'll give you my car one year after your death." The obligation is
a. valid, because the event is sure to come.
b. valid, the obligation is conditional.
c. valid, but disregard the condition.
d. void, not legally possible.
61. Statement No. 1: The concurrence of more than one creditor or more than
one debtor in one and the same obligation implies solidarity.
Statement No. 2: Solidarity covers the juridical tie and the object of
obligation.
a. Both statements are true
b. Both statements are false
c. Statement No, 1 is true while statement NO.2 is false
d. Statement No. 1 is false while statement NO.2 is true

62. Statement NO. 1: "I will give you a NOKIA Phone if you will not marry X this
year. If by the end of this year, both parties are alive and no marriage has taken
place, my obligation is extinguished.
Statement NO. 2: "I will give you P10,000 if I decide to go to Cebu City
tomorrow. This obligation is valid.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; NO.2 is true
63. Statement NO. 1: 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 court may fix the duration thereof. Once it is fixed by the court the parties
cannot change the fixed date for performance.
Statement NO. 2: "I will give you P10,000 if X dies next year." This is an
obligation with a period.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true

64. Which obligation is not valid?

a. "I promise to give you P100,000 on December of the current year"
b. "I promise to give you P100,000 if my mood dictates".
c. "I Promise to give you P100,000 if your patient dies".
d. "I promise to give you P100,000 if you pass the October C.Y. CPA Board
Examination."
65. Which of the following is an obligation with a period for the benefit of both the debtor and the
creditor?
a. Payable if I like
b. Payable when you like
c. Payable on or before December 25, of the current year
d. Payable on December 25 of the current year

66. Which of the following obligations is not subject to a period?

a. payable soonest
b. payable "little by little"
c. payable whenever "I like it"
d. payable "when my means permits me to"
67. A and B signed a promissory note to borrow P6,000 from X, Y and Z,
payable in 6 months time. B gave in pledge a P10,000 diamond ring as security
for the amount borrowed. How much can Y collect from B?
a. P1,000
b. P6,000
c. P2,000
d. P3,000

68. If in the situation given above, the diamond ring is returned by agreement to
B, which of the following statement is correct?
a. Principal obligation is extinguished
b. Only P2,000 of the obligation is extinguished
c. Only P3,000 of the obligation is extinguished
d. Accessory obligation is extinguished.
69. A, Band C executed a promissory note worded as follows:
We promise to pay X, Y and Z the sum of P90,000
(Sgd,) A, B and C
a. A is obliged to pay to X, Y and Z P90,000
b. A is obliged to pay X P30,000
c. A is obliged to pay X P60,000
d. A is obliged to pay X P10,000

70. Statement No. 1: When the fulfillment of the suspensive or resolutory condition
depends upon the sole will of the debtor, the conditional obligation shall be void.
Statement No. 2: If the original obligation is subject to a suspensive or resolutory condition
and the contract is novated the new obligation shall be under the same conditions unless
otherwise stipulated.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No.1 is false; No. 2is true
71. In contracts and quasi-contracts, the liability of the debtor who acted in good
faith:
a. Extends to all natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have reasonably foreseen
at the time the obligation was constituted.
b. Extends only to results intended but excluding exemplary damages.
c. Extends to all damages which may be reasonably attributable to the
nonperformance of the obligation.
d. Extends to all damages which may be renounced in advanced

72. Statement No. 1: In negotiorum gestio the debtor is also known as officious
manager.
Statement No. 2: Force majeure is always an exempting circumstance.
a. Both statements are true
b. Both statements are false
c. Statement No. 1 is false while statement No.2 is true
d. Statement No. 1 is true while statement No.2 is false
73. Debtor obliged himself to deliver to creditor 100 cavans of rice on June 1,
2018. On said date, D failed to make delivery despite repeated demands by C. In
this case:
a. C has no remedy under the law
b. C can compel D to deliver 100 cavans of rice plus damages
c. C may ask a third person to deliver 100 cavans of rice to him, the value
recoverable from D plus damages.
d. Convert obligation to cash.

74. D obliged himself to paint the house of C or to paint the picture of C in his
house (SALA) in an standing position, using 10 by 10 canvass. Later, because of
financial reverses, C sold his house to X. Which of the following statements is
correct.
a. The obligation of D is extinguished because he cannot make a choice
b. D may just paint the picture of C
c. D may cancel the contract and ask for damages
d. Contract is voidable
75. The officious manager or gestor is liable for any fortuitous event in all of the
following, EXCEPT:
a. If he has undertaken risky operations which the owner was 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 bad faith.

76. Statement No. 1: D obliges himself to give C a specific ring, upon failure, to
give C P5,000. This is a case of facultative obligation.
Statement No. 2: D obliges himself to give C a specific ring. However, if he so
desires, D may instead give C P5,000. This is an example of an obligation with a
penal clause.
Given these examples, which statement is correct?
a. Both obligations are valid but both are mislabeled as to their classification as
obligations.
b. Both obligations are not valid.
c. Both obligations are valid and are properly labeled as to their classification as
obligations.
d. Both statements are invalid and improperly labeled as to their classification as
77. A is obliged to give B his only car on September 1 of the current year. On the said
date, A did not deliver. On September 2 of the current year, an earthquake
completely destroyed the car. Is A still liable?

a. No. Considering that no demand to deliver was made by B 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 can plead impossibility of performance.
c. Yes. A 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 of equivalent value from
the debtor.

78. The distinction between period and condition is

a. Period may or may not happen

b. Condition will always happen
c. Period may refer to a past event unknown to the parties
d. Period is certain to happen unlike condition
79. The debtor shall lose every right to make use of the period except:

a. When he does not furnish a guaranty or security to the creditor

b. When after the obligation has been constituted he becomes insolvent, unless he gives a guaranty or security
for the debts
c. When the debtor attempts to abscond
d. When the debtor violates any' undertaking in considerations of which the creditor agreed to the period.

80. A owes B P100,000 due on December 12 of the current year. A mortgaged his house to B as guaranty for the
debt. Shortly, however, the mortgaged house was completely destroyed by typhoon "Nitang". Thereafter, B
demanded payment from A before due date. Is B's demand valid?

a. No. The obligation is one 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 object of the obligation is lost through a fortuitous event.
c. Yes. The debt becomes due at once because the guaranty was lost even through a fortuitous event, unless
the debtor can mortgage another property that is equally satisfactory.
d. Yes. The debt becomes due at once because from the tenor of the obligation, the period established is for
the benefit of the creditor solely thereby giving the creditor the right to demand performance even before the
date stipulated.
81. The creditor is entitled to recover damages and interest in addition to the penalty except:
a. When the parties so agreed
b. When the debtor refuses to pay the penalty
c. When the debtor is guilty of fraud in the fulfillment of the obligation
d. When the debtor is guilty of negligence in the fulfillment of the obligation

82. “Vin Diesel will continue giving Tommy Lee the latter’s meal allowance until he finds a job”, is
an obligation subject to:
a. a resolutory period
b. a suspensive condition
c. a resolutory condition
d. a suspensive period
83. D obliged to give C, either object No. 1 valued P15,000; or object No. 2 valued P10,000;
or object No. 3 valued P5,000. All the objects were lost due to D’s fault in the following
order stated. Remedy of the creditor if choice is given to him is:

a. D’s obligation is extinguished

b. D’s obligation is to pay the value of object No. 1 plus damages
c. C’s right is to demand the value of any of the object plus damages
d. Pay P5,000 plus damages

84. In question No. 83 if object No. 1 is lost due to fortuitous event; No. 2 is lost due to
debtor’s fault; No. 3 is subsisting; Choice belongs to the debtor. Decide.

a. The right of C is to demand the value of object No. 2 plus damages

b. C has no right because he did not communicate what object the debtor will deliver
c. The obligation of D is to deliver object No. 3
d. D’s obligation is totally extinguished.
85. A1, A2 and A3 oblige themselves solidarity to give C a specific car valued P12,000. On the
due date, C demanded delivery but the debtors failed to deliver. The next day, while A1 still
in possession of the car, it got lost due to fortuitous event. The right of C is

a. None, obligation is totally extinguished

b. Proceed against any of the debtors for the value and damages
c. Proceed against A1 only, because he is the one is possession at the time it was lost
d. Proceed against A2 or A3 but only P4,000 each.

86. I will give you a specific car if you will not marry X this year, C.Y. Which of the following
statements is incorrect?

a. If on December 25, X died and no marriage took place, my obligation becomes effective
(not extinguished) because the expected event cannot occur anymore
b. If on December 25 you marry X, my obligation is extinguished because you violated the
condition
c. If the year has ended, and no marriage took place, both parties are still alive, my obligation
becomes effective (not extinguished) because the time indicated has already elapsed
d. If on December 25, X entered the convent, the obligation can be demanded immediately
because it is clear that the marriage will not take place anymore.
51. D obliged himself to give C a specific car if the latter cannot make a circle that is at the same time a
square.
a. The obligation is impossible, therefore void.
b. The obligation is void because the condition is outside the commerce of man.
c. D cannot be obliged to deliver at all.
d. Valid and enforceable

51. Statement No. 1: Obligation with an in diem period is demandable at once.

Statement No. 2: In facultative obligations, there are two objects due but the obligor can deliver one
thing due and the obligation is extinguish.
a. No. 1 is true; No. 2 is false
b. No. 1 is false; No. 2 is true
c. Both are true
d. Both are false
51. A-1 and A-2 are solidary debtors of B-1, B-2 and B-3, joint creditors in the amount of P90,000. How
much can B-3 collect from A-2?
a. B-3 could collect P30,000 from A-2.
b. B-3 could collect P90,000 from A-2 and give P30,000, each to B-1 and B-2.
c. B-3 could collect P45,000 from A-2 and give P13,000, each to B-1 and B-2.
d. B-3 could collect P15,000 from A-2 and P13,000 from A-1.

51. Statement No. 1: A solidary creditor can assign his rights even without the consent of the other
creditors.
Statement No. 2: In an obligation that is impossible of division, the debt can be enforced only by
proceeding against all the debtors. If one of the debtors should be insolvent, the other shall not liable
for his share.
a. Both are true.
b. Both are false.
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
91. Statement No. 1: Legal, compensation takes place by operation of law even if the
parties may not be aware of it.
Statement No. 2: The indivisibility of an obligation necessarily implies solidarity.
a. Both statements are true
b. Both statement are false
c. Statement NO.1 is true while statement NO.2 is false
d. Statement NO.1 is false while statement NO.2 is true

92. Example NO. 1: D owes C P10,000 due on December 25. C owes D P6,000 due on
December 25. D's obligation is guaranteed by G. On the due date D is insolvent. G is liable
to C for P10,000, he (G) cannot set up compensation because he is not a principle debtor.
Example NO. 2: D owes C P10,000 payable on December 25. Later D through intimidation,
was able to make C sign a promissory note stating that C is indebted to D for the same
amount. In here, D cannot be required to pay C P10,000 because he (D) can set up
compensation against C.
a. Both examples are true
b. Both are false
c. Only No. 1 is true; No.2 is false
d. Only No. 1 is false; No. 2 is true
93. Obligation may be modified by:
a. Changing their object or principal conditions.
b. Substituting the person of the debtor.
c. Subrogating a third person in the rights of the creditor.
d. All of the above

94. Which of the following is not a special mode of payment?

a. Dacion en pago
b. Payment by Cession
c. Tender of payment
d. Consignation alone without the need of tender of payment in cases provided for by law
95. A and B are solidary debtors of X and Y, solidary creditors to the amount of P4,000. On the due
date with the consent of Y, X renounced in favor of A the entire obligation. Which of the following is
correct?
a. B shall give A P2,000
b. Y can still collect from A or B P2,000.
c. Y can collect from X P2,000.
d. X has no obligation to reimburse Y any amount

96. The act of abandoning all his properties in favor of his creditors so that the latter may cause their
sale and apply the proceeds thereof to their claims proportionately is called:
a. dacion en pago
b. set off
c. payment by cession
d. tender of payment with consignation
97. A and B are the debtors and .X and Yare the creditors in a solidary obligation to the tune of
P80,000. On due date, X renounced in favor of A the entire obligation which was validly
accepted by A. Which of the following is true?
a. B shall give P40,000 to A
b. Y can collect from X P40,000
c. Y can still collect from A or B the
d. A can collect P4.o,OOO from B.

98. The following, except one, are requisites of payment as a mode of extinguishing an
ordinary obligation. Which is the exception?
a. complete or full payment
b. payment in due course when the obligation is due and demandable
c. payment using negotiable instrument
d. payment using legal tender, except if payable in foreign currency
51.Proof of pecuniary loss is necessary for the award of:
a. Liquidated damages
b. Exemplary damages
c. Actual damages
d. Temperate damages

51.All are secondary modes of extinguishing on obligation except one:

a. Compromise
b. Illegality
c. Impossibility
d. Performance
101. Statement No. 1: Dacion en pago , totally extinguishes the whole obligation.
Statement No. 2: In obligation with penal clauses, it is necessary for the creditor to show
proof of actual damages suffered by him on account of the non-performance of the
obligation by the debtor.
a. Both statements are true
b. Both statements are false
c. Statement No. 1 is true while statement No. 2 is false
d. Statement No. 1 is false while statement No. 2 is true

102. In three of the following cases, facultative compensation shall prosper? Which is
the exception?
a. gratuitous support
b. civil liability arising from crime
c. mutuum
d. depositum
103. Statement No. 1: The creditor may be compelled to accept payment in checks as long
as the check is negotiable.
Statement No. 2: As a rule in payments involving foreign currency, the basis of payment is the
exchange rate at the time of constitution of obligation.
a. Both statements are true
b. Both statements are false
c. Statement No. 1 is true while statement No. 2 is false
d. Statement No. 1 is false while statement No.2 is true

104. Novation changing the creditor without debtor's approval:

a. Subrogation
b. Expromision
c. Delegacion
d. Conventional novation
51.In tender and consignation: if after consignation is made, the creditor allowed the debtor to
withdraw the thing deposited in court, which of the following statements is incorrect.
a. Co-debtors, guarantors, and sureties are released from the obligation unless they
consented
b. The obligation remain to subsist
c. The obligation is extinguished
d. Obligation is not extinguished

51.Statements No.1: "I promise to pay within 2 years" is an obligation with a period, the creditor
having a right to demand payment within 2 years from the date of the instrument.
Statement No. 2: Ten sacks of corn cannot be compensated (conventional compensation)
by ten sacks of rice.
a. Both are true
b. Both are false
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No.2 is true
107. Example 1 - D promised to give C a specific car valued, P1 00,000 after C has killed X. Later,
after the killing the contract was novated instead of giving C a specific car he will just give a specific
land to be delivered on February 28, CY. Meantime, both parties died. In here, the heirs of C may
compel the execution of the second contract, that is, the delivery of the specific land.
Example 2 - S sold to B a specific residential house situated in Bulacan for P1M, unknown to both
parties one (1) hour before the sale the property was totally gutted by fire caused by electrical defect.
In here, B can be required to pay the price of the sale, because the subject is determine S's obligation
to deliver is extinguished, while B's obligation remain to subsist.
a. Both example are true
b. Only No.2 is true, while No. 1 is false
c. Only NO.2 is false, while No. 1 is true
d. Both examples are false
51.Mr. Debtor owes Mr. Creditor who has two (2) legitimate children, P50,000 payable on
December 31 of the current year. Which of the following is correct?
a. If Mr. Debtor dies before December 31 of the current year, Mr. Creditor cannot
collect from the heirs of Mr. Debtor.
b. If Mr. Debtor dies before December 31 of the current year, Mr. Creditor can collect
from the heirs of Mr. Debtor.
c. If Mr. Creditor dies, his two (2) legitimate emancipated children cannot recover
from Mr. Debtor his' obligation.
d. If both Mr. Debtor and Mr. Creditor die, the heirs of Mr. Creditor can collect from the
heirs of Mr. Debtor.
51.On October 4, of the current year, 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. B and X
agreed to the proposal. On October 25 of the current year, when B tried to collect from X,
he finds that X is insolvent. AT the time of delegacion, X was already insolvent but this was
not 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 and that A really 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 because X agreed to the proposal to make himself solidary liable for the
obligation.
110. D1 and D2 are joint debtors of C1, C2, C3, and C4, solidary creditors to the amount of
P1 ,000,000. How much can C1 collect from D1?
a. 500,000
b. 1,000,000
c. 250,000
d. 125,000

111.D owes C P10,000 payable on December 25, while C owes D P10,000 payable on
December 30. In here, C can set up compensation (or cum pondere) on December 25, and this
is called:
a. Legal
b. Partial
c. Judicial or “set-off”
d. Facultative
112. An extinguishment of obligation that may result to gift tax is
a. Confusion
b. Compensation
c. Condonation
d. Annulment

113. 1st Statement: The parties may not agree upon the compensation of debts which are
not yet due.
2nd Statement: Anything paid may be recovered with fruits and interests, the obligor NOT
being aware of the period.
a. True, True
b. False, False
c. True, False
d. False, True
114. X, Y and Z solidarily bound themselves to pay to solidary creditors A, B and C the amount of P75,000.00.
The loan was secured by a mortgage on B's land. Out of gratuity, A, in a public instrument, remitted the
obligation in favor of X. In this case, which statement is correct?
a. The principal obligation is extinguished
b. The real estate mortgage is extinguished
c. Both the principal obligation and the mortgage are extinguished by remission
d. Both the principal and the accessory obligations subsist.

115. Statement No. 1: Just before the obligation became due and demandable, the debtor proposed to the
creditor that he would give him a specific car instead of paying P150,000.00, and which proposal was accepted
by the creditor. Here, there is extinguishment of an obligation by way of dacion en pago.
Statement No. 2: After substitution in facultative obligations, the loss of the principal through the fault or
negligence of the debtor shall render him liable for damages in favor of the creditor.
a. Both are true
b. Both are false
c. No. 1 is true, No.2 is false
d. No. 1is ,false, No.2 is true
116. 1st Statement: Partial loss of the thing in an obligation or extreme difficulty to perform is a ground to
modify an obligation.
2nd Statement: Remission even without debtor's ACCEPTANCE is valid if made before due date.
a. True, True
b. False, False
c. True, False
d. False, True

117. Statement No. 1: “I will give you P10,000 if you pass the May 2019 CPA examination”. On the first
day of the examination, I poisoned you and you failed to take the examination. The next day my obligation
is extinguished because you cannot pass the examinations anymore.
Statement No. 2: “Novation may be presumed.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
118. Legal subrogation is presumed in the following cases except:
a. When the creditor pays another creditor who is preferred
b. When a stranger pays the obligation with debtor’s consent
c. When a guarantor pays the obligation
d. When the mortgagor pays the mortgagee

119. Amazed by the skill of X who can paint portraits using paint brushes inserted in his right armpit, Y entered
unto a contract with the former to have his own portrait done and gave X P50,000 as full payment therefore. After
he has started painting the portrait but before its completion, thru the fault of X, drunk and under the influence of
drugs, X was hit by a speeding car causing the doctors to have his right arm amputated, In this case what is the
remedy of Y?
a. Nothing, as the service became impossible by reason of an act independent of the will of the debtor.
b. Equivalent performance in terms of damages
c. Specific performance by compelling X to go on painting Y's portrait.
d. Substituted performance by allowing a third person to do his portrait with expenses therefore charged to X.
 120. In novation which of the following is incorrect?
a. If the new obligation is void, original obligation shall subsist
b. In expromission, the insolvency of the new debtor shall not revive the action of the
creditor-against the original debtor .
c. If the original obligation is subject to a suspensive condition, the new obligation is not
subject to the same condition unless stated
d. Delegacion if done in good faith shall not revive the old obligation

“Most people don’t reach their goal not because of lack of talent or intelligence …but due to …insufficient PASSION. (Quoted)