Final Examination

in
AE 204 – Regulatory Framework and Legal Issues in Business

I. MULTIPLE CHOICE
Direction: Write the corresponding letter of the correct answer.
1. Which of the following is not correct?
a. The effect of the conditional obligation to give, once the condition has been fulfilled, shall retroact to the day
of the fulfillment of the condition
b. When the obligation imposes reciprocal prestations upon the parties, the fruits and interests during the
pendency of the condition shall be deemed to have been mutually compensated
c. If the obligation is unilateral, the debtor shall appropriate the fruits and interest received, unless the nature
and circumstances of the obligation it should be inferred that the intention of the persons constituting the
same was different
d. In obligation to do and not to do, the courts shall determine in each case, the retroactive effect of the
condition that has been complied with
2. Which of the following is correct?
a. A solidary creditor can assign his right even without the consent of the others
b. The remission of the whole obligation, obtained by one of the solidary debtors shall entitle him to
reimbursement from his co-debtors
c. The condition not to do an impossible thing shall be considered as not having been agreed upon
d. Obligations for whose fulfilment a day certain has been fixed shall be demandable at once.
3. Upon the proposal of a third person, a new debtor substituted the original debtor without the latter's consent.
The creditor accepted the substitution. Later, however, the new debtor became insolvent and defaulted in his
obligation. What is the effect of the new debtor's default upon the original debtor?
a. The original debtor is freed of liability since novation took place and this relieved him of his obligation
b. The original debtor shall pay or perform the obligation with recourse to the new debtor
c. The original debtor remains liable since he gave no consent to the substitution
d. The original debtor shall pay or perform 50% of the obligation to avoid unjust enrichment on his part
4. A borrowed P1M from B and C who acted as solidary creditors. When the loan, matured, B wrote a letter to A
demanding payment of the loan directly to him. Before A could comply, C went to see him personally to collect
and he paid him. Did A make a valid payment.
a. No, since A should have split the payment between B and C
b. No, since B, the other solidary creditor, already made a prior demand for payment from A
c. Yes, since the payment covers the whole obligation
d. Yes, since C was a solidary creditor, payment to him extinguished the obligation
5. A natural obligation under the New Civil Code of the Philippines is one which
a. The obligor has a moral obligation to do, otherwise entitling the obligee to damages
b. Refers to an obligation in writing to do or not to do
c. The oblige may enforce through the court if violated by the obligor
d. Cannot be judicially enforced but authorizes the obligee to retain the obligor's payment or performance
6. Anne owed Bessy P1M due on October 1, 2022 but failed to pay her on due date. Bessy sent a demand letter to
Anne giving her 5 days from receipt within which to pay. Two days after receipt of the letter, Anne personally
offered to pay Bessy in manager's check but the latter refused to accept the same. The 5 days lapsed. May Anne's
obligation be considered extinguished?
a. Yes, since Bessy's refusal of the manager's check, which is presumed funded amounts to a satisfaction of the
obligation
b. No, since tender of payment even in cash, if refused, will not discharge the obligation without proper
consignation in court
c. Yes, since Anne tendered payment of the full amount due
d. No, since a manager's check is not considered legal tender in the Philippines
7. Which of the following is not a requisite of fraud?
a. There must be a misrepresentation or concealment
b. The fraud must be serious
c. A party is induced by fraud to enter into contract
d. The fraud is employed by both parties upon each other
8. A, B, and C solidarily owe D and E P30,000. D remitted the entire obligation in favor of A without the consent of E.
The effect is
a. A cannot recover from B and C because remission in her favor extends to the benefit of B and C
b. A can recover from B and C their respective share of the debt
c. The obligation is not extinguished until A collects from B and C
d. The obligation is not yet extinguished until E is paid by D of her share of the credit
9. In quasi-delict, the liability of a person who is held liable for the fault or negligence of another person who is
under his care or responsibility shall cease if.
a. There was contributory negligence on the part of the person injured.
b. He was not present at the time of the act, hence it was not possible to him to prevent the damage.
c. He observed ordinary diligence to prevent the damage.
d. He observed the diligence of a father of a good family.
10. A owes B P 20,000 which became due on December 20, 2022. On that date, A offered P 10,000, the only money he
then had, but B refused to accept the payment. Thereafter A met, C, B's 23 year old daughter, to whom she gave
the P10,000 with the request that she turn the money over to her mother. The money was stolen while in C's
possession. How much may B still recover from A?
a. P 20.000 b. P 10.000 c. P 15.000 d. P 0
11. If the law or contract does not state the diligence which is to be observed in the performance of an obligation, the
obligor is expected to observe.
a. Ordinary diligence c. Diligence of a father of a good family
b. Extraordinary diligence d. Utmost care
12. Within what period must recovery be made if the debtor did not know that payment was not yet due?
a. Before maturity with regard to both what was paid and the interest
b. Even after maturity with regard to both the interest and what was paid
c. Before maturity with regard to what was paid and even after maturity with regard to the interest
d. Before maturity with regard to interest and even after the maturity with regard to what was paid
13. Payment by cession as distinguished from dation in payment
a. The debtor is not necessarily in a state of financial difficulty
b. The effect is to release the debtor for the net proceeds of the things ceded or assigned.
c. The property is alienated by the debtor to the creditor in satisfaction of a debt in money.
d. What is delivered by the debtor is merely a thing to be considered as the equivalent of the performance of the
obligation
14. If a third person pays an obligation. What are the rights, which are available to him if he pays the obligation with
the knowledge and consent of the debtor?
First Answer - He can recover from the debtor the entire amount, which he has paid.
Second Answer - He is subrogated to all of the rights of the creditor.
a. True, True b. True, False c. False, True d. False, False
15. There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be
made
a. At the domicile of the debtor
b. At the domicile of the creditor
c. Wherever the thing might be at the moment the obligation was constituted
d. Wherever the thing might be at the moment the obligation is to be fulfilled
16. The right of the creditor to exercise all the rights of his debtor to satisfy his claim, except rights which are
inherent and personal on the part of the debtor
a. Action subrogatoria c. Accion pauliana
b. Action redhibitoria d. Accion quanti minoris
17. A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y and Z. The note is now due and
demandable. Can the creditors proceed against A alone for the payment of the entire debt?
a. No, each creditor can collect only P3,000 from A.
b. Yes, either X, Y or Z can collect P9,000 from A.
c. No, each creditor can collect only P1,000 from A.
d. Yes, since the promissory note is silent with respect to the rights of the creditors, the obligation is presumed
to be solidary.
18. Using the preceding number, suppose that C is insolvent, can A and B be held liable for C's share in the
obligation?
a. Yes, the debt shall be presumed to be divided into as many equal shares as there are debtors.
b. Yes, but A and B will be liable proportionately.
c. No, the debts are considered distinct from one another.
d. No, only either A and B but not both will be liable.
19. Using No. 17, suppose that the obligation was about to prescribe, but X wrote a letter to A demanding for
payment of the entire debt. Will this have the effect of interrupting the running of the period of prescription?
a. Yes, because the demand made by X covers the entire debt and will therefore inure to the benefit of the other
creditors.
b. Yes, insofar as A is concerned but not with regard to B and C.
c. No, because the demand should have been made to all the debtors.
d. No, all the creditors should have made the demand.
20. Using the preceding number, and prescription sets in, how much can Y collect from A?
a. P9,000 b. P3.000 c. P1.000 d. P0
21. Indivisibility as distinguished from solidarity.
a. Plurality of subject is indivisible.
b. When the obligation is converted into one of indemnity for damages because of breach, the character of the
obligation remains
c. Refers to the legal tie or vinculum
d. Refers to the prestation which constitutes the object of the obligation
22. Culpa aquiliana as distinguished from culpa contractual
a. Proof of due diligence in the selection and supervision of employees is not available as a defense
b. Proof of the contract and of its breach is sufficient prima facie to warrant recovery
c. The negligence of the defendant is merely an incident in the performance of the obligation
d. The source of liability is the defendant's negligent act or omission itself
23. A passenger on a bus was hurt, but in a criminal case against the driver, said driver was acquitted. The victim
now sues the owner of the truck for culpa contractual. May the suit still prosper?
a. No, this will constitute double jeopardy
b. No, the acquittal means that the guilt of the accused was not proven by proof beyond reasonable doubt
c. Yes, it is sufficient for him to prove the existence of the contract of carriage and the injuries suffered.
d. Yes, provided he can prove the negligence of the driver.
24. A was employed as professional driver of B Transit Bus owned by C. In the course of his work, A hit a pedestrian
who was seriously injured and later died in the hospital as a result of the accident. The victim's heirs sued the
driver and the owner of the bus for damages. Which of the following statements is not correct?
a. There is a presumption of negligence on the part of the employer C if a passenger is injured
b. The conviction of A in a criminal case makes C liable for the damages arising from the criminal act
c. The presumption that C is negligent is rebuttable by proof of observance of ordinary diligence
d. The liability of C shall cease when he proves that he observed ordinary diligence to prevent the damage to
passengers and pedestrians
25. A borrowed P10,000 from B on Dec. 25, 2021. The debt is evidenced by a promissory/note executed by A
wherein she promised to pay as soon as she has the money or as soon as possible. B made several demands upon
A for payment, the first, an oral demand was made on May 2, 2022 and the last written demand was dated
September 25, 2022 but up to now, there is no payment of the debt. B sued A, will the case prosper?
a. Yes, A is in default since May 2, 2022
b. Yes, A is in default since September 25, 2022
c. No, the obligation is subject to a suspensive condition
d. No, the obligation is one with a period and the period has not arrived yet
26. Which of the following is not correct?
a. The obligation to give includes that of delivering all its accessions and accessories even though they may not
have been mentioned
b. If a person obliged to do something fails to do it, the same shall be executed at his cost
c. When the obligation consists in not doing, and the obligor does what has been forbidden him, it shall be
undone at his expense
d. In reciprocal obligations, from the moment one of the parties fulfills his obligation, delay by the other begins
27. On January 15, 2019, A obliged himself to give to B his only cow or his only dog or his only cat on December 25,
2019. On July 4, 2019, the cow died after giving birth to a young cow. Two months later, the cat died due to the
fault of A. And on November 1, 2019, the dog died due to a fortuitous event. Which of the following is true?
a. The obligation of A is extinguished
b. B is entitled to the young cow having been born after the perfection of the contract
c. A is liable for the value of the cat plus damages
d. B can require A to replace the cat by another cat which is equally satisfactory
28. Using the above data, but the right of choice belongs to B, which of the following is correct?
a. The obligation of A is extinguished
b. B is entitled to the young cow having been born after the perfection of the contract
c. A is liable for the value of the cat plus damages
d. B can require A to replace the cat by another cat which is equally satisfactory
29. Using the preceding number, except that the dog is still alive, which of the following is not correct?
a. The obligation of A is converted to a simple obligation
b. B can require A to deliver the dog but without damages
c. A is not liable for the death of the cow
d. B can require A to pay the value of the cat plus damages