Business Law 1: PRELIM EXAMINATION

Name: _______________________________ Score:

Section:

MULTIPLE CHOICES. Choose the BEST statement from the given choices. Write
only the letter (in CAPITAL) of your answer on the blanks provided. Erasures
and alterations of any kind are strictly not allowed!

________1. X sold his car to Y for P50, 000. No date was fixed for the
performance of the obligation of the seller and the buyer. The obligation
of X is:
a. To deliver the car immediately because the sale is a perfected contract.
b. To deliver the car only after Y writes to X demanding the delivery of the
car.
c. To deliver the car after Y pays X the P50, 000.
d. To rescind the contract because there is no time fixed for the delivery.

________2. A solidary obligation is one in which each of the debtor is

liable for the entire obligation or debt, and each of the creditor is
entitled to the entire credit. Obligation shall also be considered
solidary under the following three exceptions. Which does not belong to
the exception?
a. When solidarity is expressly stipulated in the obligation.
b. When the prestation is indivisible and there are two or more debtors and
creditors.
c. When the law expressly provides solidarity.
d. When solidarity is required from the nature of obligation.

________3. Payment of obligation by a solidary debtor shall not entitle him

to reimbursement from his co-debtors:
a. If such payment was made before the obligation is due.
b. If such payment was made after the obligation has prescribed or become
illegal.
c. If such payment was made in compliance with the demand to him by all the
creditors.
d. If such payment was made after the obligation has become due and
demandable and notice of payment was made only to him.

________4. A, B and C secured a loan from X. The promissory note which

evidences the obligation states. “I promise to pay” and signed by A, B
and C. The obligation is:
a. Joint c. Solidary
b. Divisible d. Indivisible

________5. The creditors shall have a right to indemnity for damages when,
through the fault of the debtor, all the things which are alternatively
the object of the obligation have been lost or compliance of the
obligation has become impossible. The indemnity shall be fixed on the
basis of:
a. The value of the last least expensive things
b. The value of the most expensive thing
c. The value of the last thing which disappeared
d. The value of the first thing which disappeared

________6. A, B and C are solidary debtors of X in the amount of P12,000. X

then made a demand from A but was able to collect P8,000 only because X
remitted A’s share of P4,000. How much can A collect from B and C.
a. P12,000 c. P8,000
b. P6,000 d. P4,000

________7. A and B are joint creditors mancomunados of X and Y joint

debtors, for a total sum of P9,000. A owns 1/3 of the credit and B owns
2/3 of it. But X owns 2/5 of the debts and Y owns 3/5 of the debts. In
this case:
a. B can only collect from X, P5,400 and from Y, P3,600.
b. A can only collect from X, P4,500 and from Y, P4,500.
c. A can only collect from X, P3,600 and from Y, P5,400.
d. B can only collect from X, P9,000 and from Y, P0.

________8. X and Y are solidary debtors of A, B, C and D, joint creditors,

to the amount of P8, 000. How much can A collect from X?
A. A could recover P4, 000 from X in turn has to give B, C and D P1, 000
each.
B. A could recover P2, 000 only from X.
C. A could recover P1, 00 only from X.
D. A could recover P8, 000 from X. A, in turn, has to give B, C and D.

________9. Mr. AB owes Mr. CD P150, 000 due on August 31, 1987. Mr. AB
executed a mortgage in favor of Mr. CD on Mr. AB’s building to guaranty
the obligation. On August 10, 1987, the mortgage building was totally
lost due to a strong typhoon. On August 12, 1987, Mr. CD demanded payment
from Mr. AB. Is Mr. CD’s demand valid?
A. No. The obligation is 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 obligation is lost due to
a fortuitous event.
C. Yes. The debt becomes due at once because the guaranty was lost even
though a fortuitous event unless the debtor can mortgage another property
that is equally satisfactory.
D. Yes. The debt becomes due at once because the tenor benefit is given
solely to the creditor thereby giving the creditor the right to demand
performance even before the due care.

________10. Mr. ABC is obliged to give Mr. XYZ his only car on July 15,
1987. Mr. ABC did not deliver the on July 15, 1987. On July 20, 1987, an
earthquake destroyed the building where the car was garaged and the car
was destroyed. Is Mr. ABC still liable?
A. No. considering that no demand to deliver was made by Mr. XYZ and the
specific this was lost due to fortuitous event, the obligation is
extinguished.
B. No. the obligation is extinguished even if the debtor is already to
default because the debtor can plead impossibility of performance.
C. Yes. Mr. ABC is already in legal delay, thus, the obligation to deliver
the specific thing is converted into monetary claim for damages.
D. Yes. The creditor can instead demand for a substantive equivalent in
value from the debtor.

________11. A, B, and C borrowed P24,000 from Y and Z and signed a

promissory note dated January 15, 1987 and due within six months. How
much can Y collect from A?
A. P12,000 C. P4,000
B. P8,000 D. P24,000

________12. This is the promissory note: “We promise to pay A, B and C

the sum of one hundred eighty thousand (P180,000) pesos within 60 days.
Signed by X, Y and Z.”
a. X is obligated to pay A P20,000.
b. X is obligated to pay A P60,000.
c. X is obligated to pay A P180,000.
d. X is obligated to pay A, B and C P180,000.

________13. OE is obligated to give OR a 1982 Mitsubishi 4-door sedan

Lancer with a plate number NBA 123 on September 30, 1989. On October 10,
1989, OE did not yet deliver the car which was totally destroyed by an
earthquake on such date. Is OE still liable?
a. No. The obligation is extinguished. The specific thing was lost due to
fortuitous event and no demand was made by OR.
b. Yes. OE is in legal delay. OR can claim damages.
c. No. Even if OE is already in default, he can plead impossibility of
performance.
d. Yes. OR can instead demand for another car of equivalent value from OE.

________14. The buyer of a thing has the right to the fruits of the
thing:
a. From the time the thing bought is delivered.
b. From the time the sale is perfected.
c. From the time the obligation to deliver the thing bought arises.
d. From the time the fruits are delivered.

________15. When the period is “on or before a date”, the debtor has
the benefit of the period. This benefit is lost and the obligation
becomes demandable when:
a. The debtor attempts to abscond.
b. After contracting the obligation, the creditor suspects the debtor to
becoming insolvent.
c. The guarantee given by the debtor is not acceptable to the creditor.
d. Demand by the creditor could be useless.

________16. Whenever in an obligation period is designated, is presumed

to have been established for the benefits of:
a. both the creditor and the debtor c. the creditor
b. the debtor d. the third party

________17. When the thing deteriorates pending the fulfillment of the

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

________18. X is under obligation to deliver his Toyota car to Y.

However, before delivery Z destroys the car. Which one of the following
is not correct?
a. X’s obligation to give his car to Y is extinguished.
b. X is allowed to recover from Z.
c. Y has a right to bring action against Z.
d. X is not obliged to give Y an equivalent value of her car.

________19. Diaz is under obligation to give Cruz, at Diaz’ option, a

car, a pick-up, or a van.

1st Statement: If the car and the pick-up were destroyed by Diaz’s own fault,
and later Diaz communicated to deliver the van. But got lost by a
fortuitous event, Diaz should not be held liable.

2nd Statement: If the car and the pick-up were destroyed by a fortuitous
event and later the van was lost by Diaz’s fault, Diaz should be held
liable.

a. 1st statement correct, 2nd statement wrong

b. 1st statement wrong, 2nd statement correct
c. Both statement are correct
d. Both statements are wrong.

________20. An obligation where only the presentation has been agreed

upon but the debtor may render another in substitution is:
A. Conjoint obligation C. Facultative obligation
B. Simple Obligation D. Alternative Obligation

________21. X, Y, and Z, are solidarily liable to A for P30,000 which

mature on July 1, 1993. On May 1, 1993, X paid A for the whole amount of
the debt. If on December 1, 1993, X will be reimbursed by Y, the latter
will be liable for:
A. P10,000 with interest from July 1, 1993 to December 1, 1993.
B. P10,000 without interest
C. P10,000 with interest from May 1, 1993 to July 1, 1993
D. P10,000 with interest from May 1, 1993 to December 1, 1993

________22. A thing is not deemed lost when it;

A. Perishes
B. Disappears in such a way its existence is unknown or it cannot be recovered
C. Goes out of commerce
D. Deteriorates

________23. A promissory note signed Martiniano and dated March 15,

1991 is worded as follows: “I promise to pay Juanita the sum of fifty
Thousand pesos (P50,000.00) provided that if she should fail in the
October 1991 CPA examination, she shall return to me the said amount.”
The above note gives rise to an obligation with:
a. suspensive condition c. resolutory condition
b. casual condition d. answer not given.

________24. Bertulfo and Claudio promise to deliver a particular car

valued to P100,000.00 to Manuela on or before September 15, 1991. On
September 15, 1991 and upon demand by Manuela for delivery from Bertulfo
and Claudoi, Bertulfo was willing to deliver but Claudio refused to
deliver. In the case at bar:
a. an action for specific performance will lie against both Bertulfo and Claudio.
b. Both Bertulfo and Claudio shall be liable for P50,000.00 each with damages.
c. Bertulfo shall be liable for P50,000.00 without damages and Claudio shall be
liable for P50,000.00 and damages.
d. Answer not given.

________25. The obligation is demandable on the date of the obligation

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

________26. One is not a requisite needed in order that obligation

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

________27. X obligated himself to pay Y the amount of P30,000 30 days

after May 31, 1993 plus a penalty of P3,000 if he fails to pay the
obligation on the due date. After demand for payment by Y, X offered to
pay on July 30, 1993. Y can demand from X:
a. P30,000 plus 3,000 legal interest
b. P30,000 plus legal interest
c. P30,000 plus P3,000
d. P30,000 plus P3,000 plus legal interest plus damages

________28. The stipulation in a contract to the effect that the debtor

should remain as a servant in the house and in the service of her
creditor so long as she had not paid her debt, is void because it is:
a. Contrary to good customers c. Contrary to public policy
b. Contrary to law and morality d. Answer not given

________29. Unless the law or the stipulation of the parties requires

another standard of care, the obligation to give a thing carries with it
the obligation to take care of it with:
a. Extra-ordinary diligence c. Ordinary diligence
b. Diligence of a good father of a family d. Answer not given

________30. When the debtor binds himself to pay when his means permit
him to do so, the obligation is considered one:
a. With a condition dependent upon the debtor’s sole will
b. With a period
c. That is void
d. Answer not given