OBLIGATIONS

1. Which of the following obligation is a pure obligation and is demandable at once?

a. A to allow B to use A’s car until December 2017.
b. A to allow C to use A’s car until C finishes his course in Accounting.
c. A to give C his car. No mention is made when A shall give the car.
d. A to give B a car if A finishes his course in Accounting.

2. D has a savings deposit with XYZ Bank in the amount of P20,000 which D may withdraw
anytime from the bank. He also has a loan obligation to XYZ bank amounting to P20,000
which has become due. D wants to withdraw his savings deposit but XYZ Bank informs D
that it has claimed compensation of D’s deposit and his loan obligation.
a. Both D and XYZ may claim compensation
b. Neither D nor XYZ Bank may claim compensation
c. Only D may claim or oppose compensation
d. Only XYZ Bank may claim or oppose compensation

3. One of the following obligation is void. Which is it?

a. A to give B P20,000 if B does not run 100 miles without stopping.
b. X to give Y P30,000 when X has the means.
c. C to five D P40,000 if C buys a brand-new car
d. Y to give Z P50,000 if Y runs for barangay chairman next year

4. Dacion en pago and payment by cession are special forms of payment. They are similar
in which of the following?
a. On the number of creditors involved
b. On the extend of the properties involved in the payment
c. On the purpose of the payment
d. On whether the debtor is released completely from his obligations.

5. D is indebted to C in the amount of P100,000. The debt is secured by a mortgage of the

lot of D and the guaranty by G. G, without informing D, paid the total amount of the
loan to C.
a. G cannot collect from D. He cannot foreclose the mortgage
b. G can collect from D. However, if D cannot pay, G cannot foreclose the mortgage.
c. G can collect from D, if D cannot pay, G can foreclose the mortgage.
d. G can collect from D. However, G can foreclose the mortgage.

6. When two persons are claiming the same right to collect from you and you are in doubt
as to whom you will give your payment, your remedy so that you will not pay to the
wrong person is:
a. tender of payment
b. application of payment
c. dacion en pago
d. consignation

7. One peso, P5.00 and P10.00 coins are legal tender up to:
a. P100.00
 b. P500.00
c. P1,000.00
d. Any amount

8. 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.

9. D owes C P20,000 due on June 20. C owes D P14,000 due on June 15. On June 12, C
assigned his right to X. D consented to such assignment without any reservation of his
right to the compensation. On June 20, X may collect from D:
a. P20,000
b. P6,000
c. P14,000
d. Nothing

10. D is obliged to give his only car to C on December 1, 2017. On December 1, 2017, D did
not deliver the car. The following day, armed forcibly took the car from D’s garage.
a. D’s obligation to give the car is extinguished.
b. D must give another car of the same kind and quality to C because he was already in
delay when the loss took place.
c. D is obliged to pay damages to C.
d. D must give another car or pay damages at the option of C.

11. Correct/Incorrect Statements.

I. The condonation of a debit in money exceed P5,000 to be valid requires
condonation and the acceptance must be in public instrument.
II. Confusion which takes place in the person of the guarantor extinguishes the
principal obligation.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

12. Correct/Incorrect Statements.

I. Merger which takes place in the person of the principal debtor or creditor
extinguishes the obligation of guaranty.
II. In obligation to do, the debtor’s obligation is extinguished if the prestation becomes
physical impossible due to his fault.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.
13. Correct/Incorrect Statements.
I. The parties may agree upon the compensation of debts that are not yet due.
II. Novation may take place by changing the object or principal conditions of the
obligations
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

14. Correct/Incorrect Statements

I. A condition may refer to a past event unknown to the parties.
II. The period in an obligation refers to the future.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

15. Correct/Incorrect Statements.

I. A solidary creditor may assign his rights in the obligation without the consent of
the other creditors.
II. A solidary debtor who obtains remission of the whole obligation is entitled to
reimbursement from his co-debtors.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

16. Correct/Incorrect Statements.

I. Where an instrument containing the words “I promise to pay,”, is signed by two
or more persons, they are deemed to be jointly and severally liable.
II. In a joint indivisible obligation, a demand made by one of the joint creditors
against all the joint debtors is a valid demand.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

17. Correct/Incorrect Statements.

I. The nullity of the penal clause in an obligation carries with it the nullity of the
principal obligation.
II. In obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests, if there is no stipulation to the contrary.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

18. Correct/Incorrect Statements.

 I. Whenever the thing is lost while in the possession of the debtor, it shall be
presumed to have ben lost through his fault.
II. The debtor shall be released totally from his debts when he assigns his
properties to his creditors.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

19. Correct/Incorrect Statements.

I. An obligation subject to a resolutory condition is demandable at once.
II. An obligation which is subject to a suspensive condition that is potestative on the
part of the debtor at the same time is valid.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

20. Correct/Incorrect Statements.

I. As a general rule, the debtor incurs delay if he does not perform his obligation
on the date it is due.
II. If the obligation to do has been poorly done, the creditor may have the same be
undone at the expense of the debtor.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

21. A,B, C and D are obliged to give V, W, X, Y and Z P20,000.

a. V may collect from A P20,000
b. V may collect from A P5,000
c. V may collect from A P1,000
d. V may collect from A P4,000

22. A,B, C and D, joint debtors, are obliged to give V, W, X, Y and Z, solidary debtors,
P20,000.
a. V may collect from A P20,000
b. V may collect from A P5,000
c. V may collect from A P1,000
d. V may collect from A P4,000

23. A,B, C and D, solidary debtors are obliged to give V, W, X, Y and Z joint creditors
P20,000.
a. V may collect from A P20,000
b. V may collect from A P5,000
c. V may collect from A P1,000
d. V may collect from A P4,000
24. A,B, C and D, solidary debtors are obliged to give V, W, X, Y and Z solidary creditors
P20,000.
a. V may collect from A P20,000
b. V may collect from A P5,000
c. V may collect from A P1,000
d. V may collect from A P4,000

25. A,B, C and D, joint debtors are obliged to give V, W, X, Y and Z joint creditors P20,000.
a. V may collect from A P20,000
b. V may collect from A P5,000
c. V may collect from A P1,000
d. V may collect from A P4,000

26. When the debtor binds himself to pay when his means permit him to do so, the
obligation shall be deemed to be

a. Obligation with condition

b. Pure obligation
c. Indivisible obligation
d. Obligation with a period

27. The following are obligations subject to suspensive conditions, except

a. I will give you P100 if you pass the board exam.
b. You can drive the car until JJ graduates.
c. He will dance if he wins in lotto.
d. She will work if Jollibee becomes number 1.

28. The following are the special forms of payment, except

a. Dation in payment
b. Application of payments
c. Payment by cession
d. Tender of payment in consignation

29. It refers to the designation of the debt, which is being paid by a debtor who has several
obligation of the same kind in favor of the creditor to whom payment is made.
a. Dation in payment
b. Application of payments
c. Payment by cession
d. Tender of payment in consignation

30. Who has the right of application of payments?

a. Debtor
b. Creditor
c. Both debtor and creditor
d. Neither debtor nor creditor
31. Debtor’s default in personal obligation
a. Mora accipiendi
b. Mora solvendi ex persona
c. Mora solvendi ex-re
d. Compensatio morae

32. Default on the part of the creditor

a. Mora accipiendi
b. Mora solvendi ex persona
c. Mora solvendi ex-re
d. Compensatio morae

33. Default on the part of both parties

a. Mora accipiendi
b. Mora solvendi ex persona
c. Mora solvendi ex-re
d. Compensatio morae

34. It is a mode of extinguishing obligation which is an act of liberality, by virtue of which,

without receiving any equivalent, the creditor renounces the enforcement of the
obligation, which is extinguished in its entirely or in that part or aspects of the same
a. Compensation
b. Confusion
c. Remission
d. Novation

35. What is the nature of condonation or remission?

a. It is generally gratuitous and requires the acceptance by the obligor.
b. It is essentially gratuitous and requires the acceptance by the obligor.
c. It is generally onerous and requires the acceptance by the obligor.
d. It is essentially onerous and requires the acceptance by the obligor.

36. A lawful and voluntary act resulting to a benefit except

a. Negotiorum Gestio
b. Solutio Indebiti
c. Quasi-contract
d. Quasi-delict

37. 12.The right of the creditor that is enforceable against any body is, what kind of right?
a. Personal
b. Moral
c. Natural
d. Real

38. The following are the requisites of an obligation, except

 a. Passive and active subjects
b. Prestation
c. Efficient
d. Demand

39. The right of the creditor that is enforceable against a define debtor is
a. Real right
b. Natural right
c. Moral right
d. Personal right

40. Synonymous to obligee.

1. Creditor 2. Active Subject 3. Debtor 4. Passive Subject
a. 1 and 2
b. 1 and 4
c. 2 and 3
d. 3 and 4

NEGOTIABLE INSTRUMENTS

1. An instrument which is not dated will be considered dated as at the time of:
a. acceptance
b. first indorsement
c. last indorsement
d. issuance

2. I promise to pay P or his order the sum of P2,000,000, 30 days after the death of X. This
is an instrument payable:
a. at a determinable future time
b. on demand
c. upon the fulfillment of a condition
d. at an indefinite time, hence, non-negotiable

3. An instrument payable to bearer may be negotiated through any of the following

means, except:
a. special indorsement plus delivery
b. mere delivery
c. blank indorsement plus delivery
d. blank indorsement only

4. The separate paper attached to an instrument on which an indorsement or acceptance

of the instrument is written is called:
a. allonge
b. memorandum
c. attachment
d. annex
5. Assuming all the other requisites of negotiability are present, which of the following
instruments is not payable to bearer?
a. Pay to the order of Cash
b. Pay to the order of Jose Rizal, national hero
c. Pay to Pedro Padernal, bearer
d. Pay to Pedro Padernal or bearer

6. Which of the following is a valid address to a drawee so as to make the instrument

negotiable?
a. To JPP or LAP
b. To JPP, or in his absence, LAP
c. To JPP and LAP
d. To JPP and another drawee named LAP

7. One of the following can set up the defense of forgery in an instrument payable to
order. Who is it?
a. Indorser, if the maker’s signature is forged
b. Acceptor, if the drawer’s signature is forged
c. A person negotiating by mere delivery if a prior party’s signature is forged
d. Maker, if indorser’s signature is forged

8. Which of the following instrument is negotiable?

a. Treasury Warrant
b. Postal Money Oder
c. Letter of Credit
d. Trade acceptance

9. The following are requisites of negotiable instrument, except:

a. It must be in writing and signed by the maker or drawer.
b. It must contain a promise or order to pay a sum certain in money
c. It must be payable on demand, or at a fixed or determinable future time
d. It must be payable to order or bearer

10. Parties to a Bill of Exchange, except:

a. Drawer
b. Maker
c. Payee
d. Drawee

11. The following are personal defense except:

a. Incomplete but Delivered
b. Complete but Delivered
c. Incomplete and Delivered (tricky)
d. Construction where instrument is ambiguous

12. An indorsement where the indorser signs only his name at the back of the instrument is:
a. special indorsement
 b. blank indorsement
c. qualified indorsement
d. restrictive indorsement

13. An indorser which specified the person who or to whose order the instrument to be
payable:
a. special indorsement
b. blank indorsement
c. qualified indorsement
d. restrictive indorsement

14. One of the following is not a restrictive indorsement.

a. An indorsement that prohibits the further negotiation of the instrument
b. An indorsement that constitutes the indorser as a mere assignor of the title to the
instrument
c. An indorsement that constitutes the indorsee as an agent of the indorser
d. An indorsement that vests title in the indorsee in trust for some other person

15. Not a form of negotiable instrument:

a. Letters of Credit
b. Check
c. Bill of Exchange
d. Promissory Note

16. The following are the effects restrictive indorsement, except

a. Prohibits the further negotiation of the instrument
b. Constitutes the indorsee the agent of the indorser
c. Vests the title in the indorsee in trust for or to the use of some other person
d. Waives the benefit provided by law to the indorser.

17. Which of the following indorsement may render the instrument non-negotiable or
prohibit the further negotiation of the instrument?
a. Conditional indorsement
b. Qualified indorsement
c. Restrictive indorsement
d. Facultative indorsement

18. M, issued a PN payable to bearer to A. A negotiated it to B by delivery. B negotiated it to

C by Special Indorsement. C negotiated it to D by Special Indorsement. D negotiated it to
E by mere delivery. To whom shall B be liable?
a. C,D and E
b. C only
c. C and D only
d. C, D and E only

19. M, issued a PN payable to order to A. A negotiated it to B by blank indorsement. B

negotiated it to C by mere delivery. C negotiated it to D by Special Indorsement. D
negotiated it to E by mere delivery. Is the negotiation to E valid?
 a. Yes because of blank indorsement.
b. No because the instrument is payable to order
c. Yes because instrument payable to bearer can be converted to order instrument
d. No because order instrument is always order instrument

20. M issues a PN payable to order to A. A specially indorsed it to B. B specially indorsed it

to C. C specially indorsed it to D. Which indorsement can be striken out by D?
a. A to B
b. B to C
c. C to D
d. None

21. M issues a PN payable to order to A. A specially indorsed it to B. B specially indorsed it

to C. C indorsed in blank to D. D specially indorsed it to E. E specially indorsed it to F.
which indorsement can be striken out by F?
a. A to B
b. E to
c. D to E
d. C to D

22. M issues a PN payable to bearer to A. A specially indorsed it to B. B specially indorsed it

to C. C indorsed in blank to D. D specially indorsed it to E. E specially indorsed it to F.
which indorsement can be striken out by F?
a. A to B only
b. E to F only
c. D to E
d. Any indorsement

23. A holder is the payee or indorsee of a bill or note, who is in possession of it, or the
bearer thereof. Which of the following statements pertain to a holder in due course?
a. He is holder who has given value for an instrument issued or negotiated to him
b. He is a holder against whom personal defenses will not be available but
against whom real defenses will lie.
c. He is a holder against whom both personal and real defenses can be used

24. The following are the requisites of a holder in due course, except
a. He holds an instrument that is complete and regular upon its face
b. He becomes a holder of the instrument before it is overdue, and without notice
that it had been previously dishonored if such was the fact
c. He takes the instrument in bad faith and for value
d. At the time the instrument is negotiated to him, he has no notice of infirmity in
the instrument or defect in the title of the person negotiating it.

25. It is a type of defense of a party in negotiable instrument, which cannot be set up

against a holder in due course but available against a holder not in due course. It grows
out of the agreement or conduct of a particular person in regard to the instrument
which renders it inequitable for him, though holding legal title, to enforce it against the
defendant, but which are not available against a holder in due course.
 a. Movable defense
b. Immovable defense
c. Real, real or absolute defense
d. Personal or equitable defense

26. How is instrument payable to bearer or bearer instrument negotiated

a. It is negotiated by mere indorsement.
b. It is negotiated by indorsement and delivery of the instrument
c. It is negotiated by assignment
d. It is negotiated by mere delivery

27. How is instrument payable to order or order instrument negotiated?

a. It is negotiated by mere indorsement.
b. It is negotiated by indorsement and delivery of the instrument
c. It is negotiated by assignment
d. It is negotiated by mere delivery

28. Where the instrument is so ambiguous that there is doubt on whether it is a bill or a
note, the holder may treat it as either at his option. The following are the instances
when a bill of exchange may be treated as a promissory note, except
a. Where the drawer and drawee are different persons.
b. When the drawee is a fictitious person
c. Where the drawee is a person not having a capacity to contract

29. The following are the effects of a certification of check by the bank on which it is drawn,
except
a. It is equivalent to acceptance
b. If procured by the holder, the drawer and all indorsers are discharged
c. It operates as an assignment of the funds of the drawer in the hands of the
drawee bank.
d. The check is dishonored

30. The following are the purposes of crossing of check, except

a. To have the check deposited only to the account of the payee
b. To have the check paid only with the intervention of a particular banker when
its name is placed between the parallel lines crossing the check
c. To obtain assurance that the check will be paid only to the rightful person.
d. To have the check be encashed

31. Correct/Incorrect Statements:

I. An instrument which contains a promise or order to pay a sum of money which is
subject to a condition as long as the condition happens.
II. An instrument where no time for payment is expressed is payable on demand.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.
32. Correct/Incorrect Statements:
I. A bearer negotiable instrument is converted into an order negotiable instrument if
it is only indorsed
II. An order instrument becomes a bearer instrument if one of the several
indorsements is an indorsement in blank
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

33. Correct/Incorrect Statements:

I. If an indorsement is conditional, the party required to pay the instrument may
disregard the condition and make payment but the indorsee must hold the
proceeds subject to the rights of the person indorsing conditionally.
II. If an instrument is indorsed to two or more persons jointly, all of them must indorse
unless one is authorized to indorse for the others.
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

34. Correct/Incorrect Statements:

I. Indorsers are liable prima facie in the order in which they indorse
II. Joint payees or joint indorsees are deemed to indorse jointly and severally
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct.

35. Correct/Incorrect Statements:

I. When there is a conflict between the written and printed provisions of an
instrument, the printed provisions will prevail.
II. When an indorsement is forged in a promissory note payable to bearer, the party
whose indorsement was forged and all parties prior to him may raise the defense
against any holder
a. Both statements are correct.
b. Both statements are incorrect.
c. Only statement I is correct.
d. Only statement II is correct

36. M execute a promissory note for P10,000 payable to the order of P, a minor. M and P
had a private understanding that M is liable only for the discounted amount of P9,500. P
indorsed the note to A, A to B, B to C, C to H, holder. Which is true?
a. M may refuse to pay H on the ground that P is a minor.
b. If M dishonors the note, A may refuse to pay H on the same ground that P is a
minor.
c. The indorsement made by P passed title to the instrument in favor if A.
 d. Assuming that P was already of the age of majority at the time of the execution
of the note, M is liable to H for P9,500 since that was the amount that agreed
with P that he should pay.

37. M, maker, P, payee of a note payable to the order of P. The back of the note contains
the indorsement of P to A, A to B, B to C, C to D, D to H, holder in due course. Assume
the following independent facts:
I. M is insolvent
II. P is a Minor
III. A’s signature was forged

If C was a qualified indorser, which of the foregoing independent facts will not affect his
liability (i.e. he will still be liable) although he was not aware of any of them?
a. I and II
b. II and III
c. I and III
d. I, II, III

38. Refer to 37. Assuming that C were a general indorser, which of the foregoing facts
enumerated will not affect his liability although he was not aware of any of them?
a. I and II
b. II and III
c. I and III
d. I, II, and III

39. A promise is unconditional for negotiable instruments although coupled with the
following, except
a. An indication of a particular found out of which reimbursement is to be made.
b. An indication of a particular account to be debited with the amount.
c. A statement of a transaction which gives rise to the instrument.
d. An order or promise to pay out of a particular fund.

40. Which of the following instruments is non-negotiable because of conditional promise?

a. Pay to B or order P1,000 and reimburse yourself out of my money on your
hands.
b. Pay to B or bearer P1,000 and debit the amount to my receivable.
c. Pay to B or order P1, 000 out of my salary in the company.
d. Pay to B or order on account of contract between you and ABC Inc.