Regulatory Framework for Business Transactions (RFBT) - Law on Obligations Practice Test

A set of flashcards covering the Practice Test on the Law on Obligations from the Regulatory Framework for Business Transactions (RFBT) lecture by Atty. JCM JOSOL.

In a situation where D borrowed $₱200,000$ and offered cash at C’s office on the due date but C refused without reason, what is the most accurate legal consequence if the money is later lost in a bank robbery?

D is not liable if he validly consigns the payment after the unjust refusal; until then, the risk remains with D.

If S finishes a fence for B 10 days late and B accepts the fence without protest but later sues for damages, what is the status of the claim?

Delay requires demand unless time is of the essence; acceptance does not automatically bar damages.

A promised to deliver a specific painting to B on May 1. If the painting is destroyed by a fire of unknown origin on April 20 and A was not in delay or at fault, what is the effect on the obligation?

The obligation is extinguished; A is not liable absent fault, delay, or assumption of risk.

In an alternative obligation where X can choose between a laptop, phone, or tablet, what happens if the laptop is stolen through X’s negligence before a choice is communicated?

X's choice is limited to the remaining prestations, and he is also liable for damages for the loss of the laptop.

In a facultative obligation where D is bound to deliver a car but may substitute it with a motorcycle, what happens if the motorcycle is destroyed by a fortuitous event before substitution?

D remains bound to deliver the car.

What is the legal status of an obligation with a promissory note stating 'Payable when D wants'?

The court may fix the period because the obligation depends upon the will of the debtor.

What is the effect of legal compensation if A owes B $₱80,000$ and B owes A $₱60,000$, and both debts are liquidated and due?

Legal compensation extinguishes both to the concurrent amount, leaving A owing B $₱20,000$.

Why does legal compensation NOT apply to a debt arising from a quasi-delict that is still being litigated?

Because legal compensation requires that both debts be liquidated and determined.

If D's obligation is to deliver 100 sacks of rice (generic) and his warehouse burns down due to lightning, is the obligation extinguished?

No, because a generic obligation is not extinguished by the loss of a particular stock as 'genus never perishes'.

If M and N are jointly liable for $₱120,000$ and M becomes insolvent, how much may the creditor collect from N?

$$₱60,000$$

In a solidary obligation where N pays the full $₱120,000$ and later finds C had condoned M's share before collection, what is N's remedy?

N may recover from C the amount corresponding to the remitted share.

In a solidary obligation, if D2 is sued for the entire amount but D1 has a personal defense of minority, how can D2 use this defense?

D2 may invoke D1’s personal defense only as to D1’s share.

What happens to D's liability if he pays one of two solidary creditors, A, in full and in good faith?

D is released as to the whole obligation; the other creditor B's remedy is against A for his share.

What is the result if the fulfillment of a condition (e.g., B obtaining a bank loan) is wrongfully prevented by the debtor (A) interfering with the bank?

The condition is deemed fulfilled because the debtor voluntarily prevented its fulfillment.

In a reciprocal contract of sale where the seller fails to deliver on time, what choices does the buyer have?

The buyer may choose fulfillment or rescission with damages in either case, subject to judicial action if contested.

What is the effect on a guarantor G if the creditor and debtor novate the obligation by increasing the principal and extending the term without G's consent?

G is released unless he consented to the novation, at least regarding the increase or new terms.

Is a new promissory note changing only the place of payment considered a valid novation?

No, because changes must be incompatible and the intent to novate must be clear.

If a debtor pays $₱30,000$ toward three identical debts (one unsecured, one with 12\% interest, and one secured by pledge) without specifying which, and accepts a receipt for the 12\% interest debt, how is the payment applied?

To the debt designated in the receipt accepted by the debtor.

What legal presumption arises if a creditor accepts a payment for principal but the receipt does not mention the interest already due?

Interest is presumed paid.

Why can a creditor 'C' not recover a specific ring from 'P' if the debtor 'D' pledged it to 'P' in good faith before delivering it to 'C'?

Because real rights over determinate things are acquired only upon delivery, not upon perfection.

What is the remedy for a creditor if a debtor builds a third storey in violation of a negative obligation not to build beyond two storeys?

The creditor may demand removal at the debtor's expense.

In a determinate obligation, when does the loss of the thing due extinguish the obligation?

When the loss is due to a fortuitous event before the debtor is in delay and the debtor has not assumed risk.

What is 'Condonation' or 'Remission'?

The gratuitous abandonment by the creditor of his right.

When does 'Confusion' or 'Merger' occur?

When the characters of debtor and creditor are merged in the same person within the same obligation.

What is the definition of 'Novation'?

The extinguishment of an obligation by substitution or change creating a new one.

At what point does 'Mora' (delay) of the debtor begin?

When the obligation is due and demand is made.

What is the quasi-contract 'Negotiorum gestio'?

A situation where a person manages another's business without authority.

What does 'Solutio indebiti' refer to?

An obligation that arises when payment is made by mistake to one who has no right to demand it.

In obligations to pay money, what is the definition of 'Legal Tender'?

Currency which the law compels a creditor to accept.

What is the standard of diligence required in an obligation to give a determinate thing in the absence of a specific agreement?

The diligence of a good father of a family.