WAVE 3: BUSINESS LAW
Choose the best answer.
1. D owes C P20, 000.00 due on
March 15. C, on the other hand,
owes D the following debts: P8,
000.00 due on March 1; P3, 000.00
due on March 8; P5, 000.00 due on
March 14. On March 12, C assigned
his right to T with notice to D but
with D not giving his consent to the
assignment. On March 15, T can
collect from D:
a. P20, 000.00
b. P9, 000.00
c. P4, 000.00
d. None, because the assignment
made by C was without the
consent of D.
Items 9, 10 and 11 are based on the
following information:
A and B are indebted to X and Y for
P10, 000.00. A and B share in the
debt in the ratio of 1:3; while X and
Y share in the credit in the ratio
2:3.
2. How much may X collect from A if
the debtors are joint debtors while
the creditors are joint creditors?
a. P10, 000.00.
b. P2, 500.00.
c. P4, 000.00.
d. P1, 000.00.
3. How much may X collect from A if
there is active solidarity?
a. P10, 000.00.
b. P2, 500.00.
c. P4, 000.00.
d. P1, 000.00.
4. How much may X collect from A if
there is passive solidarity?
a. P10, 000.00.
b. P2, 500.00.
c. P4, 000.00.
d. P1, 000.00.
5. D owes C the following debts: P3,
000.00 due on August 10; P3,
000.00 due on August 15; P3,
000.00 due on August 20; and
P3,000.00 due on August 25 which
is secured by a pledge of Ds ring.
If today is August 22, and D pays C
P3,000.00 with neither D nor C
designating the debt to which the
payment shall apply, the payment
shall be applied:
a. To the debt due on August 10,
following the first-due, first-
pay basis.
b. To the debts due on August 10,
August 15, and August 20,
proportionately at P1, 000.00
each.
c. To the debt due on August 25,
since it is the most onerous to
D.
d. To all the debts proportionately
at P750.00 each.
6. On January 1, 2010, D obtained a
loan of P100, 000.00 from C. The
loan is secured by a chattel
mortgage on Ds car and is payable
on December 31, 2010. On
September 26, 2010, the car was
taken at gunpoint from D while he
was starting its engine at the
parking lot of a department store.
a. Ds loan is extinguished.
However, D must give a
property which C may sell to
satisfy his claim.
b. Ds loan is subsists. However, C
may demand its immediate
payment unless D gives
another security.
c. Ds loan obligation subsists.
However, C may not demand
immediate payment since the
loss of the security was without
the fault of D. D, moreover is
not required to give a new
security.
d. Ds loan obligation is
extinguished together with the
mortgage since the loss of the
car was without the fault of D.
7. Salas and Bersamin entered into a
contract whereby Salas would
deliver 5 pieces of genuine Rolex
wristwatches to Bersamin. Salas
proposed to Bersamin that should
Salas deliver 5 units of fake pieces
of Rolex wristwatches by reason of
financial difficulties on his part,
Bersamin would not sue him for
damages on the ground of fraud.
Bersamin accepted the proposal.
On due date, Salas delivered 5
pieces of fake Rolex wristwatches.
Upon discovery of the fraud,
Bersamin sues Salas for damages.
Salas contends that he cannot be
held liable for damages because
Bersamin waived his right to hold
him (Salas) liable on the ground of
fraud if the reason thereof is the
financial difficulties of Salas
a. Bersamin cannot sue Salas for
damages because the reason
for the waiver is valid, i.e.,
financial difficulties of Salas,
which is a valid reason for the
waiver.
b. Bersamin can sue Salas for the
annulment of the contract since
it is voidable.
c. Bersamin can sue Salas for
damages because the waiver
he made is void. Nonetheless,
the contract is valid.
d. Bersamin can sue Salas for the
rescission of the contract since
it is rescissible.
8. The following are obligations with a
term or period, except
a. D to give C P50, 000.00 on
December 1, 2011.
b. D to give C P50, 000.00 on
Christmas day next year.
c. D to give C P50, 000.00 upon
the death of Cs father.
d. D to give C P50, 000.00 if Cs
father dies within 2 years.
9. A, B and C are liable in solidum to X
for P12, 000.00. X renounced the
share of A who accepted it. Later, B
becomes insolvent.
a. X can collect from C P8, 000.00.
b. X can collect from C P4, 000.00.
c. X can collect from C P12,
000.00.
d. X can collect nothing from C.
10. On May 31, 2009, D promised to
give a specific horse and lot to C if
C passes the Bar Examination. On
September 24, 2009, C took the
Bar Examination. The result of the
Bar Examination which C took was
released on March 26, 2010 and C
passed it. C shall be entitled to the
house and lot:
a. on May 31, 2009
b. on September 24, 2009
c. on March 26, 2010
d. when he receives his rating
11. D has a grains in Davao, while C
has a grains warehouse in Cebu. D
borrowed 10 sacks of rice worth
P10, 000.00 from C for Ds
customer in Cebu. Later, C
borrowed 10 sacks of rice which
was also worth P10, 000.00 from D
for Cs customer in Davao. Both the
obligations are already due.
Transport costs to Davao amount to
P1, 000.00, while those for Cebu
amount to P800.00.
a. D and C need not pay each
other since their debts
compensated each other.
b. D and C need not pay each
other since their debts
compensated each other,
except for the delivery charges
which C must pay to D in the
amount of P200.00 (P1, 000.00
less P800.00).
c. Compensation cannot take
place because the debts are
payable at different places.
d. D must pay C P10, 800.00 while
C must pay D P11, 000.00.
12. Ace Realty Company (Ace) ordered
6 units of Borden typewriters from
Central Office Machines (Central) at
the price of P8, 000.00 per unit.
However, Central delivered to Ace
6 units of Remington typewriters,
a superior brand, which was priced
at P8, 500.00 per unit. Central
informed Ace that will bill the latter
for the Remington typewriters at
P8, 000.00 only. Ace refused to
accept the Remington
typewriters.
a. Central can compel Ace to
accept the Remington
typewriters since they are of
superior quality.
b. Central cannot compel Ace to
accept the Remington
typewriters although they are of
superior quality.
c. Central can compel Ace to
accept the Remington
typewriters since Ace is
required to pay only the price of
Borden typewriters.
d. Central can compel Ace to
accept the Remington
typewriters since all that is
required of Central is to deliver
a typewriter that can perform
the same function as the one
ordered.
13. D owes C P20, 000.00 due on
March 25. C, on the other hand,
owes D the following debts: P8,
000.00 due on March 1; P3, 000.00
due on March 8; P5, 000.00 due on
March 14; and P2, 000.00 due on
March 24. On March 18, C assigned
his credit right to T without
informing D who learned of the
assignment on March 20. On March
25, T may collect from D:
a. P20, 000.00
b. P2, 000.00
c. P4, 000.00
d. None, because the assignment
made by C was without the
knowledge of D.
14. D owes C the following debts: P5,
000.00 due on January 1; P7,
000.00 on January 5; P8, 000.00
due on January 10; P10, 000.00
due on January 15; and P5, 000.00
due on January 20. By agreement
of the parties, D was given the
benefit of the period. As of January
17, D has not paid any of the
debts. He has P5, 000.00 which he
wants to remit to C.
a. D may apply the payment to
any of the five debts.
b. D may apply the payment to
any of the four debts that have
become due as of January 17.
c. D may apply the payment
either to the debt due on
January 1 or January 20.
d. D may apply the payment only
to the debt due on January 1.
15. Refer to the preceding number.
Assume that D did not designate
the debt to which the payment
shall apply. In this case:
 a. C may apply the payment to
any of the five debts.
b. C may apply the payment to
any of the four debts that have
become due as of January 17.
c. C may apply the payment
either to the debt due on
January 1 or January 20 only
since the amount of the
payment is the same as the
amount of each debt.
d. C may apply the payment to
the debt due on January 1 only.
16. Refer to No. 16. Assume the
creditor did not also designate the
debt to which the payment shall
apply. In such a case:
a. Payment shall be applied
proportionately to the five
debts.
b. Payments shall be applied
proportionately to the four
debts that have become due as
of January 17.
c. Payment shall be applied only
to the debt due on January 1
since it is the first that has
become due.
d. Payment shall be applied
proportionately to the debt due
on January 1 and January 20
since the amount of each debt
is of the same amount as the
payment.
17. A, B and C are solidary debtors of X
in the amount of P3, 000.00. X
renounces the share of A and A
accepts the renunciation.
Thereafter, B becomes insolvent.
Ultimately:
a. C alone will shoulder the
balance of P2, 000.00.
b. A will shoulder P500.00 while C
will shoulder P1, 500.00.
c. C will shoulder only his share of
P1, 000.00. A will no longer
shoulder any amount since his
share was already renounced
by X.
d. A will shoulder P1, 000.00,
while C will shoulder P1,
000.00, for the remaining
balance of P2, 000.00.
18. A, B and C are obliged to deliver a
specific horse to X, Y, and Z.
a. A demand made by X against A,
B and C is a valid demand
against all the debtors.
b. A demand made by X, Y and Z
against A is a valid demand
against all the debtors.
c. If a valid demand is made
against all the debtors but
debtor C cannot comply with
his part of the obligation, the
obligation is converted into a
monetary obligation to pay the
value of the horse plus
damages.
d. If the debtors default in their
obligation because C is
insolvent, A and B will be liable
for Cs share of the obligation.
19. S, a supplier of fresh fish from
Lucena City, hired T, the owner of a
trucking company, for a fee of P3,
000.00 to bring the fish catch of S
to the Dampa Market in Paraaque
City which ordered the fish for a
price of P20, 000.00. In so far as S
is concerned, his prestation in his
contract with T is:
a. The sale of the fish.
b. The transport of the fish.
c. The payment of P3, 000.00.
d. The payment of P20, 000.00.
20. Refer to the preceding number. In
the contract between S and T:
a. S is the obligor and T is the
obligee.
b. S is the obligee and T is the
obligor.
c. Both S and T are obligors and
obligees of each other.
d. The Dampa Market is the
obligee of both S and T.
21. Which of the following is a
characteristic of expromision but
not of delegacion?
a. It is made with or without
the consent of the debtor.
b. The third person who makes
the payment to the creditor
is always entitled to
subrogation.
c. In case of insolvency of the
new debtor, the creditor
may still be recover from
the original under certain
circumstances.
d. It is initiated by the debtor
himself.
22. D borrowed P50,000 from C. on due
date, D did not have any money to
pay the debt so he proposed to C
that the latter accept a
Technomarine watch to settle the
debt. C accepted the proposal and
received the watch. Immediately
after receiving the watch, C sold it
to B. Ds obligation to give P50,000
to C is extinguished by:
a. Payment by cession.
b. Barter
c. Dacion en pago
d. Sale
23. Evaluate the following statements:
I. One peso, P5 and P10 coins
are legal tender up to P100.
II. One centavo, P.05, P.10 and
P.25 centavo coins are valid
tender up to P1,000.
a. Only statement I is correct.
 b. Only statement II is correct.
c. Both statements are correct.
d. Neither statement is
correct.
24. A, an agent of P, owes B P20,000.
B, on the other hand, owes P,
P20,000. Both debts are due.
a. P may claim legal
compensation.
b. A may claim legal
compensation.
c. B may claim legal
compensation.
d. Neither P, A nor B may
claim legal compensation.
25. I. a stipulation that an obligation
shall be paid in a currency other
than the Philippine legal tender is
void.
II. A cashiers check is as good as
cash, hence, it is legal tender.
a. Only statement I is correct.
b. Only statement II is correct.
c. Both statements are correct.
d. Neither statement is
correct.
26. A, B, and C are solidary debtors of
X in the amount of P30 000. C was
insane at the time the obligation
was constituted.
a. X may possibly collect from A
the amount of P30 000.
b. X may possibly collect from A
the amount of P20 000.
c. X may possibly collect from A
the amount of P10 000.
d. X may not be able to collect
anything from A since the
insanity of C at the time the
obligation was constituted
rendered the whole obligation
voidable.
27. The following statements
concerning payment by cession are
true, except:
a. The creditors become the
owners of the properties of the
debtor that were ceded to
them.
b. Payment by cession
extinguishes the obligations
only to the extent covered by
the proceeds of the sale of the
debtors properties
c. The debtor must be insolvent
d. It affects all the properties of
the debtor except those
exempt from execution
28. D obtained a loan of P50 000 from
C. The same is payable after 60
days. On due date, D, not having
sufficient cash, offered to give
either his ring or his bracelet to C.
C accepted the offer. Based on the
foregoing facts, which of the
following statements is incorrect?
a. The original obligation of D is
an obligation with a period.
b. The original obligation of D is
extinguished by novation.
c. The right to choose the item to
be given belongs to C.
d. The new obligation is an
alternative obligation.
29. D borrowed P50 000 from C. The
debt, which is payable within one
year, is secured by a mortgage that
D constituted on his lot. The
mortgage is recorded in the
Registry of Property. C dies before
the due date of the debt and was
not able to collect any amount of
his loan receivable from D. he was
survived by S, his only son and
heir. D, taking advantage of the
situation, sold the lot to T who was
not aware of the mortgage
constituted thereon.
a. The mortgage is not binding on
T since he was not aware of it
at the time he bought the lot.
b. S, the son of C, has the right to
collect the amount of the note
from D and foreclose the
mortgage if the D cannot pay.
c. The mortgage is not binding on
T since D was in bad faith
when he sold the lot to T.
d. The rights to collect the loan
and foreclose the mortgage
were extinguished upon the
death of C.
30. On January 1, 2010, D and C
agreed that D would deliver to C a
specific agricultural land on July 1,
2010. From January 1 to June 30,
2010, D harvested palay from the
land worth P20 000.00. D actually
delivered the land to C on
September 30, 2010. At the time,
crops valued at P15 000.00 that
grew beginning on July 1, 2010
remained unharvested. C had a
personal right against D for the
delivery of the thing and its fruits
beginning on:
a. January 1, 2010
b. June 30, 2010
c. July 1, 2010
d. September 30, 2010
31. C acquired a real right over the
thing and its fruits on:
a. January 1, 2010
b. June 30, 20120
c. July 1, 2010
d. September 30, 2010
32. D appointed C as his agent to
purchase a parcel of land belonging
to X. D promised to give a
commission of P10 000.00 to C if C
can present to D the deed of
absolute sale signed by X in favor
of D on or before December 31,
 2010. The condition of the
obligation is:
a. Negative
b. Positive
c. Impossible
d. No condition exists
33. Refer to No. 32. Which of the
following statements is incorrect?
a. Ds obligation is extinguished if
it is already January 1, 2011
and c has not yet presented to
D the deed of absolute sale
signed by X.
b. Ds obligation is extinguished
on December 5, 2010 if X dies
on such date without his having
signed the deed of absolute
sale.
c. Ds obligation is demandable if
C presents to D on or before
December 31, 2010 the deed of
absolute sale duly signed by X.
d. Ds obligation is demandable if
it is already January 1, 2011
and C has not yet presented to
D the deed of absolute sale
duly signed by X.
34. A, B, and C are liable to X in the
amount P30, 000.00. The debt is
evidenced by a promissory note
which reads I promise to pay X or
order P30, 000.00. The note is
signed by A, B, and C. X indorsed
the note to Y, Y to Z to A for
merchandise Z bought from A.
a. Obligation under the note is
totally extinguished.
b. Obligation under the note is
extinguished only up to P10, 000.
c. Obligation under the note is
extinguished only up to P20, 000.
d. No part of the obligation is
extinguished.
35. D owes C P6000 which is due on
January 10, and another debt of
P12000 which is due on January 20.
Both debts are unsecured and non-
interest bearing and are already
due. D, however, has only P3000
which he gives to C without
informing C as to which debt the
payment shall apply. C also did not
indicate on the receipt he issued to
D to which of the two debts the
payment shall apply. In this case,
a. The payment of P3000 shall be
applied to the debt due on January
10 because it was the first to
become due.
b. The payment of P3000 shall be
applied to the debt due on January
20 because it is of greater amount.
c. Payment cannot be applied to
either of the two debts because it
is incomplete.
d. The payment of P3000 shall be
applied proportionately in the
amount of P1000 to the debt due
on January 10 and P2000 to the
debt due on January 20.