Notes in Obligations by F. Soriano

NOTES -
‘IN
BUSINESS LAW
(For Accountancy Students and CPA Reviewees)

2016 EDITION
FIDELITO R. SORIANO
Certified Public Accountant
Member, Philippine Bar
Presently:
Special Lecturer, University of the East - Manila

Professorial Lecturer, Central Colleges of the Philippines
CPA Reviewer and Refresher Course Lecturer,
. (Other Schools and Centers)
Author:
Notes in Business Law -
(For Accountancy Students and CPA Reviewees)

Obligations and Contracts (Law and Application)
Partnerships and Corporations (Law and Application)
Negotiable Instruments (Law and Application)
‘Sales, Agency and Credit Transactions (Law and Application)
Formerly:
CPA Reviewer —
CPA Review School of the Philippines
Roque Review School of Accountancy
Faculty Member —
Philippine School of Business Administration ~ Manila
Scanned by CamScanner
OBLIGATIONS
OBLIGATIONS
Obligation, concept
An obligation is a juridical necessity to give, to do or not

do. (Art. 1156, Civil Code of the Philippines) Juridical necessity
means that the court may be asked to order the performance of
an obligation if the debtor refuses to perform it. If an obligation
cannot be enforced through the courts, it may be disregarded

with impunity.
(Note: Unless otherwise indicated, articles of law refer to

provisions of the Civil Code of the Philippines.)
Requisites of obligation
1. Active subject (creditor or obligee) - The party who has the

right to demand performance of the obligation.
2. Passive subject (debtor or obligor) - The party who is

obliged to perform the obligation.
3: Prestation - The object or subject matter of the obligation.

It may consist of giving, doing or not doing something.
4.5 Efficient cause — The vinculum or the legal or juridical tie

which binds the parties to an obligation. The efficient —
cause of an obligation may be any.of the five sources of
obligation.
Examples: —
1. D is obliged to give C P50,000.00 with interest at 12% per
‘annum on December 31,.2015 pursuant to a contract of

loan. D is the passive subject; C is the active subject; the
giving of P50,000.00 with 12% interest is the prestation;
and the contract of loan is the efficient cause. The
obligation here is unilateral, i.e., only one party (D) is
required to perform a particular conduct.
2. D is obliged to transport the goods of C from Manila to

Cebu, and C is obliged to pay D P1;000.00 as transport
costs, under a contract of carriage. As regards the
transport of the goods which is the prestation, C is the
active subject and D is the passive subject. Asregardsthe _— |
i Nevin rine ca R stem TMI Rie ibe tt Fe

costs which is the Prestation, Cj
payment of Se iee end D is the active subject, The
the passive su : ig the efficient cause for
e is eae the
rena “oth D and C, The obligations here are
oO
: quired +
bilateral, ie., each party is required to perform ,
particular conduct.
Civil obligation and natural obligation distinguished
A civil obligation (as defined in Art. 1156) is based on

positive law; hence, it is enforceable by court action.
A natural obligation, on the other hand, is based op

natural law; hence, it is not enforceable by court action. The
obligation, however, exists in equity and moral Justice, such that
if the debtor voluntarily performs it, he can no longer recover
what he has given. ‘
Example:
M is the maker of a pron.

P20,000.00, If M does not pay v1 due date, P can enforce
payment by filing a court action, If P does not file a court action
against M within 10 years from due date which is the prescriptive
Period for actions upon a written contract, P loses the right to
enforce payment by court action. However, if M voluntarily
makes the payment to P although the obligation has prescribed,

M will no longer be allowed to recover the payment because in
owed P the amount of
(Note: Prescription ig
. & Tight by the lapse of time. The
1,
ry note with P as payee for’
Examples: The National Internal Revenue Code

which provides for the Payment of taxes; the Anti-
Mendicancy Law which prohibits the giving of alms to

beggars,
Contracts ~ A contract is a meeting of minds between two

persons whereby one binds himself, with. respect to the
service (Art.
1305). '
Obligations arising from contracts have the force of

law between the contracting parties and should be
complied with in good faith. (Art. 1159)
Examples: A contract of lease which provides for

the payment of rental by the lessee; a contract of sale
which requires the seller to deliver the thing sold and the
buyer to pay the price,
Quasi-contracts - They refer to certain lawful, voluntary

and unilateral acts giving rise to a juridical relation to the
end that no one shall be unjustly enriched at the expense
of another. (Art. 2142). There is unjust enrichment “when
a person unjustly retains a benefit to the loss of another,
or when a person retaing money or property of another
against the fundamental Principles of justice, equity and
good conscience.” (Locsin II vs. Mekeni Food Corporation,
G.R. No. 192105, December 9, 2013; Loria vs. Munoz,
G.R. No. 187240, October 15, 2014).
Examples:
a. Negotiorum gestio - This refers to the voluntary

administration of the property, business or affairs
of another without his consent or authority. It
creates the obligation to reimburse the gestor for
necessary and useful expenses. (Art. 2150)
Example: D and C are the owners of

adjacent vegetable farms. One day, D was not
around to tend to his farm. When C noticed that D
had not been around for almost a week, he himself
cultivated the soil and placed fertilizer on it,
watered the plants, removed the .weeds and wilted
ESN
leaves. C incurred necessary and useful expenses

in the process. D must reimburse C for gyop
expenses. Otherwise, he will be unjustly enriching
himself at C’s expense.
Solutio indebiti - This refers to payment by mistake

of an obligation which was not due when paid, tt
creates the obligation to return the payment. (Art.
2154)
Example: D, the payee of check for

P5,000.00, cashes it with the drawee bank, but the
teller gives him P6,000.00 by mistake. D is duty
bound to return the excess of P1,000.00 to the
bank. Otherwise, he will be unjustly enriching
himself at the bank’s expense.
Some cases on tax refund:

(1)
UST Cooperative vs. City of Manila

L-17133, December 31,1965
Facts: ABC Cooperative paid municipal

taxes and license fees to the city government
unaware that under a new law it was exempt “from
all taxes and government fees.” Later, it learned of
its exemption and sought to recover from the city
government the taxes it had paid to the latter. The
city government refused to refund said taxes.
Held: ABC Cooperative can recover such

taxes from the city government which has a duty
return what has been paid by mistake under a“

Principle of solutio indebiti,
(2)
Commissioner of Internal Revenue V8
Fortune Tobacco Corporation
G.R, No.167274-75, July 21, 2008
m
a Held: The Government is not exempt gi
7 @pplication of solutio indebiti, Indeed, at,
ang oot expects fair dealing from the Govern™" oy
nd the latter hag the duty to refund without
Unreasonable usly
delay what it has errone?
OBLIGATIONS
collected.
If the State expects its taxpayers to
observe fairness and honesty in paying taxes, it

must hold itself against the same standard in
refunding excess (or erroneous) payments of such
taxes.
It should not unjustly enrich itself at the
expense of the taxpayers. x x x Under the Tax Code

itself, apparently in recognition of the pervasive
quasi-contract principle, a claim for tax refund
may be based on the following: (a) erroneously or
illegally assessed or collected internal revenue
taxes; (b) penalties imposed without authority; and
(c) any sum alleged to have been excessive or in
any manner wrongfully collected.
Other quasi-contracts
1)
2)
3)
4)
When, without the knowledge of the person

obliged to give support, it is given by a
stranger, the latter shall have the right to
claim the same from the former, unless it
appears that he gave it out of piety and
without intention of being paid. (Art. 2164)
When funeral expenses are borne by a

third person, without knowledge of those
relatives who were obliged to give support
to the deceased, said relatives shall
reimburse the third person, should the
latter claim reimbursement. (Art. 2165)
When the person o
bliged to support an
Orphan, or an
insane or other indigent

Person unjustly refuses to give support to
the latter, any third person may furnish
Support to the needy individual, with right
of reimbursement from the person obliged

ten the oe This provision applies
atner or moth i
eighteen year o er of a child under

age unj
Support him, (Art, 2166) Y Tefuses to
When throu i
gh an accident 0
Person is injured or eon

and he is treated or
mM A Condition to give
ause a
becomes seriously ill,
helped while he is not

consent to a contranée
he shall be liable for the Services of
physician or other person aiding the
unless the service has been reng
pure generosity. (Art, 2167)
5) When during a fire, flood, storm. or Oth

calamity property is saved from destry; rn
by another person without the knowledge of
the owner, the latter is bound to PAY the
former just compensation. (Art. 2168)
-6) When the government, upon failure of any

person to comply with health or safety
regulations concerning Property, under.
takes to do necessary work, even over his
objection, he shall be liable to Pay the
expenses. (Art. 2169)
7) When by accident or other fortuitous ev t,

movables separately pertaining to two o
more persons are commingled or confused,
the rules on co-ownership are applicable.

{Art. 2170)
8) When in a small community, a majority of

the inhabitants of age decide upon a
Measure of protection against lawlessness,
fire, flood, storm or other calamity, any one
who objects to the plan and refuses to
Contribute to the expenses but is benefited
by the project as executed shall be liable to
Pay his share of said expenses. (Art. 2174]
Any person who is constrained to pay the

‘axes of another shall be entitled
reimbursement from the latter, (Art. 2175)
9)
* punishable by law - These are crimes
: * of a crime makes the off il

“) Revised Penal Code.) Such
includes “stitution, reparation of the dames
» and j $.
(Art. 104, RPC) mmication of consequential damas®
“xam le: : i jvil

liability conalste ian Pals the carabao of C, D's ©
it
eturning the carahao, paying for !
OBLIGATIONS 7
value if he cannot return it, and indemnifying the

onsequential damages suffered not only by C but also
those of his family or by a third person by reason of the

ime, This will be in addition to any prison term or other
penalty that may be imposed upon him by the court.
. i own as “tort” or “culpa aquiliana’) -

Quasi delice ae missions that cause damage to another,
ney bein fault or negligence but without any pre-
ie contrectital relation between the parties. (Art.
OTe) iSe Equitable Banking Corporation vs. Special
mae atin Inc., G.R. No. 175350, June 3, 2012.) For
Stee! deck came to prosper, the complainant must
: a ae (a) damages to the complainant; (b) negligence,
te act or omission of the defendant or by some person for
whose act the defendant must respond, was guilty; and ~
the connection of cause and effect between suck
negligence and damages. With respect to e :
element, the negligent act or omission must be the
proximate cause of the injury. (Josefa vs. Meralco, G.R.
No. 182705, July 18, 2014)
Example: Ifa person, while cleaning his window,

causes a flower pot to fall through his negligence thereby
injuring someone passing by, the former is liable for
damages to the latter.
Mlustrative Case
\ National Power Corporation vs,

Heirs of Noble Casionan
G.R. No. 165969, November 27, 2008
Facts; Casionan was traversing the trail

underneath the transmission lines of the National Power
Corporation (NPC) when he was electrocuted. The high
tension wireg Were sagging around 8 to 10 feet in violation
of the required distance of 18 to 20 feet. His heirs brought
A claim for damage 3 ap i 1§ is ¢ In its

as Ba f St NE C for hi d sath,
fe hac 4 NI C Claimed
Casionan was neplipent

. . il ileal aad
oe ie mae carrying a bamboo pole when he was
° “Uted, and that h 08 san
the area © Was not supposed to be around
working as pocke
‘ Envir, lminer since the De parime

Environment and Natural partment of
Resources had not issued
derm| "
Permit to operate n place; hence, any award for
at sue
damages should be mitigated by reason of the vice:
contributory negligence.
Held: NPC is liable for damages arisin
negligence. The sagging high ae wires te
accident waiting to happen. i cre Pp
maintained by NPC, the bamboo pole w ick Casionan er
carrying would not have touched the wires. That the
pocket miners in the area were unlicensed Was not
justification for NPC to leave the transmission lines
dangling. The pocket miners in the area, although they
have no permit to do so, are also human beings who have
to eke out a living in the only way they know how, The
victim should not therefore be faulted for simply doing
what was ordinary routine to other workers in the area,
The trail was also only the viable way that was regularly
used by the residents in the community. In sum, the
victim was not guilty of contributory negligence; hence,
NPC is not entitled to a mitigation of its liability for

damages.
m’s
g from
€re an
Toperly
NATURE AND EFFECT OF OBLIGATIONS
Determinate thing and generic thing
1.
Concept
___A thing is determinate when it is particularly

designated or phy sically segregated from all others of the
same class. (Art. 1460).° Examples: 2015 Toyota Altis
with engine no, 123456, body no. 546611, and plate n°.
FRS 840; my only Wristwatch; the house located at 254
Moret Street, Sampal or, “Black

Stallion.” Paloc, Manila; my horse named
Importance of k
generic
sds
; . or
mowing whether a thing is determinat¢
fortiitows cent: the loss of a determinate thing throug? :

nt extinguishes the obligation. (Art. 1262)
Obligations of one obliged to give a determinate thing
1.
to
To take good care of the thing with the diligence of a good

father of a family unless the law or agreement of the
parties requires another standard of care. (Art. 1163)
Diligence of a good father of a family means the

ordinary care that an average person exercises in taking
care of his property.
To deliver the thing. (Art. 1163)
This involves placing the thing in the possession or

control of the creditor either actually or constructively.
To deliver the fruits of the thing. (Art. 1164)
a. Kinds of fruits
1)
2)
3)
T
thing from the ti
arises, However,
When creditor
determinate thin
Natural fruits - They are the spontaneous

products of the soil and the young and
other products of animals. (Art. 442)
Thus, the trees that grow naturally on the
soil without the intervention of man and the
colt delivered by a mare are natural fruits.
For the young and other products of
animals, they are natural fruits even with
the intervention of human labor.
Industrial fruits — They refer to those
produced by land of any kind through

cultivation or labor. (Art. 442) Examples
are rice, corn and other crops produced
through the intervention of human labor.
Civil fruits - They refer to fruits which are

the result of a juridical relation such as the
rent of a building, price of lease of land and
other Property and the amount of perpetual

or life annuities. (Art. 442) °
has a right to the fruits of a
4
he creditor has the right to the fruits ofa
me the obligation to deliver it

he shall acquire no real right over
eat
ou
4.
it until the thing has been delivered to him, fe

1164) |
When obligation to deliver the thing arises
1) If the obligation is a pure obligation oy

whose performance is not subject toe
suspensive period or suspensive con dition
the obligation to deliver arises frist
perfection. n
One
2) If the obligation is subject to a suspensive

period or suspensive condition, the
obligation to deliver arises upon the arrival
of the term or upon the fulfillment of the
condition.
Thus, if D is obliged to give Ca

specific car on Christmas day next year,
the obligation to deliver arises only on the
arrival of such date. Or if the obligation of
D is to give C such car if C passes the CPA
Examination, then the obligation to deliver
arises only upon the fulfillment of such

condition.
d. Rights of the creditor

1) Personal right - This is a right that may be
enforced by one person on another, such 8
the right of the creditor to demand the
delivery of the thing and its fruits from the
debtor, This is also called jus in personam
or jus ad rem, .
2) Real right - This refers to the right or pows
Over a specific thing, such as possession *
aership, which is a right enforceabl
#gainst the whole world, This is the righ
: d
wcduired by the creditor over the thing
Ke fruits when they have been delivered ©

Im. This is also Called jus in re.
To deliver its
accessj . is ave
Not been mentioned, (Art. Tees eeories even if they
OBLIGATIONS 11
a. Accessions — They include everything that is
produced by a thing or is incorporated or attached
thereto, either naturally or artificially, (Art. 440)
such as alluvium, the soil gradually deposited by
the current of a river on a river bank, or whatever
is built, planted or sown on a parcel of land.
b Accessories — Those joined to or included with the

, principal thing for the latter’s better use, perfection
or enjoyment (such as the keys to a car or a house,
or the bracelet of a wristwatch). ;
_ Remedies of the creditor
1,
If the debtor fails to perform his obligation to deliver a»
determinate thing .
a. To compel the debtor to make the delivery. (Art.

1165) —
b. To demand damages from the debtor. (Art. 1170)
‘Example:
D is obliged to give C a specific car. On due date,

C demands delivery but D does not.deliver. In this case, C
can compel D to deliver the car because there is no other
person in possession or control of it. C can also demand

payment of damages from him.
If the debtor fails to

generic thing
a. To ask that the obligation be complied with at the

expense of the debtor, (Art. 1 165) ©
perform his obligation to deliver a
b. To demand damages from the debtor. (Art. 1170)

Example:
D is obliged. to deliv
does not perform his oblj ation @
demand, C can obtain 10 Ss
at the expense of D, C¢
8€neric and thus can
can also ask for dama
If the deb i
whe tor fails to perform his obligation in obligations
acks of rice to C. If D
gation on due date upon C’s
acks of rice from other sources
an do so because the thing is
be replaced with the same kind. C

ges from D. .
4.
b.
If the debtor fails to perform the Obligation

performs it but contravenes the tenor thereoe _ Or
1) Creditor may have the obligation
Exec
at the expense of the debtor. Uteq
, d dama
2) He may also deman Bes from
debtor. (Art. 1170) the
Example:
D is obliged to construct a hollow block

fence for C. By agreement, the fence Will be 9
meters high and 10 meters long, fine-finished and
painted. If D does not perform his obligation Upon
C’s demand, C can ask another person to, or he
himself may, construct the fence at the expense of
D. C can also ask for damages from D. C cannot
compel D to perform the obligation because
compulsion will violate D's right against
involuntary servitude.
If D constructs the fence but did not follow

the measurements agreed upon (i.e., there was
contravention of the tenor of the obligation), C will

have the same Tights.
If the debtor performs the obligation but does it —
poorly
1) Creditor may have the same be undone at
debtor’s expense. (Art. 1167)
2) Creditor may also demand damages fron

the debtor. (Art. 1170)
Example:
; D
If in the same illustration above
$
but acts the fence following the measurement
but it was not
4 as
Foperly ali ishing
rough, and mane ectly aligned, the fin
C
terial andard,
als used were subst nothe!
c can
femee the fence be demolished by 4

also d or even by himself at D’s expense.
emand damages from D.
If the
. debtor does What has been forbidden him
eee iS
a. The creditor may demand that what has been done

be undone.
(Art. 1168)
Example:
B bought a farm lot from S. However, the only

access from the road to B’s lot is the lot of D. SoB
entered into a contract with D for a right of way over a-
period of 10 years and paid a sum therefor. It was agreed
that for the duration of the contract D would not
construct any fence between B’s lot and hia. Sometime
thereafter, however, D constructed a fence in violation of
the agreement. B may demand that D remove the fence at
D’s expense and pay damages.

Grounds for liability to pay damages
1 Fraud
2 Negligence
3. Delay
4 Contravention of the tenor of the obligation. (Art. 1170.)
Damages _
1. Concept, distinguished from injury
Damages refer to the harm done and the sum of

money that may be recovered in reparation for the harm
done. (Cinco vs. Canonoy, 50 SCRA 377)
Injury refers to the wrongful, unlawful or tortuous

act which causes loss or harm to another. It is the legal
wong to be redressed, (See Zulueta vs. Pan American
orld Airways, Inc., L-28589, January 8, 1973.)

2.
Kinds of damages
a.
oe or Compensatory damages — These refer to
profession) wae (such as loss in business or
value of th eee ney be recovered. It includes the
reatioscneeree RTT
es
12
If the debtor cf
RD
: the obligati
ils to perform ON or
If i gabe Se entrasenes the tenor thereof -—
pe orm
Creditor may have the obligation CXEcUted
jj at the expense of the debtor. (Art. 1167)
2 He may also demand damages from the

debtor. (Art. 1170)
Example:
D is obliged to construct a hollow block

fence for C. By agreement, the fence will be 2
meters high and 10 meters long, fine-finished and
painted. If D does not perform his obligation upon
C’s demand, C can ask another person to, or he
himself may, construct the fence at the expense of
D. Ccan also ask for damages from D. C cannot
compel D to perform the obligation because
compulsion will violate D’s right against |
involuntary servitude.
If D constructs the fence but did not follow

the measurements agreed upon (i.e., there was
contravention of the tenor of the obligation), C will

have the same rights.
If the debtor performs the obligation but does it

poorly
1) Creditor may have the same be undone af

debtor's expense. (Art. 1167)
2) Creditor may also demand damages fo"

the debtor, (Art, 1170)
Example;
D
If in the same illustration above
constructs the {i
ons enee following the mensuremen’s

but it was not Properly aligned, the finishing ¥ C
Tough, and Materials used ners substandard’:
fence be demolished by meee
ven by himself at D's expense: -
d damages from Dp
can Nave the

PETSON OF
alo demear,
GPS whe ‘
hat has teen forbidden him
OBLIGATIONS
a The creditor may demand that what has been done

° be undone.
b He may also demand damages from the debtor.

". (Art. 1168)
Example:
farm lot from S. However, the only
access Be road to B’s lot is the lot of D. So BE
into a contract with D for a right of way over a

cnt 10 years and paid a sum therefor. It was agreed
Tnat for the duration of the contract D would not
construct any fence between B’s lot and his. Sometime
thereafter, however, D constructed a fence in violation 0
the agreement. B may demand that D remove the fence at
D’s expense and pay damages.
Grounds for liability to pay damages
1.
Fraud
Negligence
Delay
Contravention of the tenor of the obligation. (Art. 1170.)
Damages
1,
Concept, distinguished from injury
Damages refer to the harm done and the sum of
money that may be recovered in reparation for the harm

done, (Cinco vs. Canonoy, 50 SCRA 377)
Injury refers to the wrongful, unlawful or tortuous

act which causes loss or harm to another. It is the legal
Wrong to be redressed, (See Zulueta vs. Pan A

(fs , » Pe merican
World Airways, Ine,, L-28589, January 8, 1973,)
Kinds of damagen
a, Actual or ey ;
tue “compensatory damages ~ Thene 1c
the pecuniary losa, \ ieee
(euch as loss in business or

value ef to ee ae recovered, It includes the
(Art, 2199) MMered and profite not realized.
piers
ase
SSR
Frawid
lL.
||
Moral damages = They inelide piyatoe) AN fey,
» mental angtilshy, fright, set iatts Aalt

beambehed repiitation, wounded Feelings, mall
shock, socal humiliation, Hd sitnilar injury, an
9947) j
= ‘They refer to d
t. Nominal dainages ‘he: ntneges

vindicate a right. (Art. 2221) iy
d. Temperate or moderate damages —
They are tote

than nominal but Iess than Compensatory
damages, but may be recovered if the court fiidy

that some pecuniary loss has been suffered by ity
amount cannot, from the nature of the case, be
proved with certainty. (Art. 2224)
e. Liquidated damages - Those agreed upon by the
parties to a contract, to be paid in case of breach,

(Art. 2226)
Exemplary or corrective damages — These are

imposed by way of example or correction for public
good, in addition to the moral, temperate,
liquidated or compensatory damages. (Art. 2229)
Proof of pecuniary loss
a. Actual damages - Proof ig required unless provided

by law or stipulation, (Art. 2199)
Other damages ~ i
moral, nomi, ee, :

exemplary damage
assessment of sy
ones, is left to the
to the circumstan
b.
hot required in order thet

temperate or liquidated
8 may be adjudicated. The
ch damages, except liquidated
discretion of the court, according
ces of each case. (Art. 2216)
Concept
Fraud '
the debtor rie deliberate o
Under ‘Art, pion”
r intentional evasion a
1170, thie
Mpllance of his obligation

Wally refers to the iret
% tithe of the performance
is
ONG ATIONS >
According 1a thee ning

\) Pieuid in obleaiiing conden
1) Causal fretid or dala cauaunte

thie réfers ta fread without whith
nonaent wold not have teen giver
It renders the coritract voidatle,
Example: B bought a ring

from & who told him that the ring
was embellished with diamond.
However, & knew all along thai the
embellishment was not diarnond but
ordinary glass. B here gave his
consent because of the fraud
employed by S; hence, the contract
is voidable.
b) Incidental fraud or dolo incidente —

This refers to fraud without which
consent would have still been given
but the person giving it would have
agreed on different terms. The

contract is valid but the party
employing it shall be liable for
damages.
Example: C hired D to teach

in the school of C. D placed in his
application that he had earned units
‘in MBA. However, D had actually

dropped the subjects for the said
units. If C would have hired D even
if D did not complete the said units
but that he would have given a
lower salary to D, the fraud
cominitted by D was only incidental
but it) would entitle GC to recover

damages,
"y :
Fraud in the performance of the obligation

This in the deli
fulfillment of pe
berate act of evading

Manner, THhig
iN obligation in’ a normal

Presuppores an existing
pies
piste cipeded tt
scales TES <
|
igation; hence, the fraud hag

ate validity of the contract since jf
explayed ater perfection. Howey,
party employing it shall be Hable gf
damages. (Art. 1170)
Example: B ordered 10 bagy

powder soap from S who agreed to deity
the same after 2 days. On due dat, 5
delivered 10 bags of powder soap which },
mixed with chalk. This és fraud in th
performance of an obligation which entitl,
B to recover damages. The fraud, howeve,
does not have any effect on the validity g
the contract.
b. According to time of commission

» 2 Future fraud
A waiver of an action for futur

fraud cannot be made. If there is an
agreement for its waiver, the same is void
(Art. 1171) Thus, the debtor will still te
liable for damages if he commits fraud in
the Performance of his obligation despite
any waiver made by his creditor.
2) Past fraud
A waiver of an action for past fraud

may be made, since the, commission 7
is an ;
sn tte act of liberality on the F
Te a omnis i]
required by the nature of; of that diligence which
‘ nat nds
with the circumstances ° had Obligation and corresp?
173) the person, of the time, the

Protection of the inte, It is the failure to observe; for of
care, precaution fie of another person, that deg “es
Justly demand, y vigilance which the circumst@)
the place. (Art.
OBLIGATIONS
(Nation
supra;
2009)
reasonable man,
if
al Power Corporation vs. Heirs of Noble Casionan,

Guillang vs. Bedania, G.R. No. 162987, May 21,
It is the omission to do something which a
guided by those considerations which
ordinarily regulate the conduct of human affairs, would
do, ofr
reasonable man, would not do.
the doing of something which a prudent and

(Perena vs. Zarate, G.R.
No. 157917, August 29, 2012)
2. Test of negligence
The test of negligence is whether the defendant in
: alleged negligent act used that reasonable care

Se ec which an ordinary person would have used in
the same situation.
(Guillang vs. Bedania, supya)
3. Diligence to be observed
which
If the law or contract does not state the diligence

is to be observed in the performance of the
obligation, the debtor must observe the diligence of a good
father
of a family, as required by the, nature of the
obligation, and which corresponds with the circumstances

of the person, of the time or of the place. .
Examples:
a.
If the obligation is to deliver a specific window —
glass, the debtor must ensure that tho glass,

considering its fragility, is well-protected, say with
cushions, when he transports it as requires by the
nature of the obligation. Otherwise, he will be

negligent.
A baby-sitter, 21 years old,, strong and healthy, will

be negligent if she aleeps while on duty considering.
that the
. circumstances of her
considered PersCH Were
when she was hired for the job.
neue es of a car drives at night without any

t, he will be considered nepligent
conaide eens
require such gat, circumstances of nighttime
ear
Leander ee ee
Kinds
circumstances of the place require that he Shou

drive slowly.
Culpa contractual (contractual negligence} ~ This,

negligence in the performance ofa contract (suc
as the negligence committed by the driver Of a bay
when a passenger is hurt during a trip becaus
there is here a breach of contract of carriage},
Here, the master-servant rule applies, it,

the negligence of the servant is the negligence 4
the master. Accordingly, the defense of a ge
father of a family in the selection and supervisin
of employees is not a defense on the part of th
employer although it may titigate the liability,
Thus, in the example. the negligence of the buy
driver is also the neg!i -ence of the bus owner,
Illustrative Case:
Saludaga vs. Far Eastern University

G.R. No. 179337, April 30, 2008
Facts: S, a student of U University,

shot and wounded by G, a security guard ah
school, while inside the campus. S$ one
University for damages on the ground ae
breached its obligation under the enrollmet
" contract to provide students with a safe and secu
é ive
environment and an atmosphere conducive
* i :
learning. In defense, U University ae
fortuitous event on the ground that it cou
iden!
have reasonably foreseen nor avoided the acc! fied
Since G
I vas not its employee, and that it comP

with its
ae . tf
obligation to ensure a safe environmen
ie
, ee
its students by having exercised due diligent
selecting the security services of the SA 5¢

Agency,
Held:
damages for br
in Providing a
Heltled thet
Hie exdeur
fo
1¢
Respondent school i9 Wn ge
each of contract due to BEB”

48 af learning environment: td
18 culpa contractual, the mere Po igid
hee of the contract and the failure
ie
———_—
c,
oF
compliance justify, prima facie, a corresponding
right of relief. The schoot failed to prove that it ,
undertook steps to ascertain that the security

guards assigned to it actualiy possessed the
required qualifications. A learning institution
should not be allowed to completely relinquish
security matters in its premises to the security
agency it hired. To do so would result in
contracting away its inherent obligation to ensure
a safe learning environment for its students. The
defense of fortuitous event or force ntajeure must
also fail. An act of God cannot be invoked to
protect a person who has failed to take steps to
forestall the possible adverse consequences of the
loss sustained.
Culpa aquiliana {civil negligence or tort or quasi-

delict or culpa extra-contractual — These are acts or
omissions that cause damage to another, there
being no contractual relation between the parties.
(Art. 2176)
The master-servant rule does not apply.

Hence, the defense of a good father of a family in
the selection and supervision of employees is a
defense on the part of the employer to escape
liability. Thus, if a pedestrian is hit by a bus
through the reckless driving of the driver, the
latter’s negligence is not the negligence of the

owner.
Culpa criminal (criminal negligence) — This is

negligence that results in the commission of a
crime,
Defense of a good father of a family i
ly is not
Proper because the , . :
automaticall employee’s guilt, is
y the employer
», oe .
is insolvent, 8 civil guilt if the former
The passenger of
action not only Bi the b
for cul ¢
bu y “UIpa CO
“ ener, but alao one for
e muss driver fo
Physical injuries
us may bring a court

ntractual against the.
culpa criminal against
T reckless imprudence resulting in
: In the same way, the pedestrian
arCar
ceca CN NPI
20
SE MOINAMONG |
a suit for culpa aquiliang

may bring not on the owner, but also one for
against the gainst the bus driver for recklegg
cadence resulting in physical injuries.
Delay of default or mora

1,
Co
eae or default or mora is the non-fulfillment of
an obligation with respect to time,

Kinds
a. Morasolvendi- Delay on the part of the debtor.
1) Exre~ Delay in real obligations (obligations

to give).
2) Ex persona - Delay in personal obligations

(obligations to do).
Mora accipiendi - Delay on the part of the creditor.
This exists when the creditor refuses to

. occept the thing due without justifiable reagon.
' Compensatio morae - Delay in reciprocal obligat-
ins, Le., both ‘ : og f

Tthere ono - are in default. Here, it is 4%
When debtor j
6, reqnuias eure in delay in obligati sito give or to
General rip
time the creditor qo Cebtor incurs in delay from th
Piher faint, femands fulfillment of the obligato
: are the ro demand, no delay, 28 7
bet Be Obtigns “lsites of delay:

i ee OR tet demandable and alread
ne A,
fe. : tg Steg t
; The dian, * bettorn the obli tion
Racially o einen th eo ° ith?
Vij tes.. a St tet i= perfe CL
Gj poe lage idhictaty crmar t gated?
tte ben ”® UCpR (See Gilat pt
tte | “F523, Ceéneral Ingurance
OBLIGATIONS . 21
d.
The debtor fails to comply with such demand,
Example:
D owes C P5,000.00, The obligation is due on May
15. If D docs not pay on May 15, he is not yet in delay.

But if C makes a demand on him to pay on that date or
within a reasonable time thereafter and D does not
comply, then D will be in delay.
Exceptions, i.c., delay will exist even without
demand in the following cases (Art. 1169):
a.
When the law so provides.
Thus, where the law provides for the

payment of penalty if the obligation is not
performed on due date (such as in the case of
taxes), then demand shall not be necessary.
When the obligation expressly so declares.
Hence, no demand is necessary such as

when a lease contract provides that “(Tjhe rental
shall be paid by the lessee within the first five days
of the month in advance without need of demand.”
When time is of the essence of the contract.
_ Thus, where a rent-a-car company is

obliged to provide for the bridal car during a
wedding at a particular date, time and place, the
said company is liable if it fails to perform the said
obligation notwithstanding the absence of demand
since time was a controlling motive for the ~
establishment of the contract.

When demand would be useless, - .
‘where the obligations

and must be fulfilled at
pcos
a *
Lai tntrainacamntagminemce a AT an
22
Notes: 7 |
a In (a) and (b) above, itis not sufficient that the Ie
. or obligation fixes 4 date for performance; it ta

further state expressly that after the period laps
default will commence. (Rivera vs. Sps. Chua, Gr
No, 184458 and 184472, January 14, 2015)
b. There is no delay in an obligation not to do AS On

cannot be in delay for not doing something.
Effects of delay
a. On the part of the debtor
1) The debtor shall be liable for the paymen

of damages. (Art. 1170)
2) If the obligation consists in the delivery oft

determinate thing, he shall be responsibi
for any fortuitous event until he hat
effected the delivery. (Art. 1165)
b. On the part of the creditor
1) He shall bear the risk of loss and shoulder
the expenses for the preservation of th

thing. ‘
2 The debtor may resort to the consignatioa

of the thing due. (Art. 1258)
Fortuitous events
1.
Concept
F ortuitous events 1d not

cou
be foreseen, o are those events that
fee oe it is not enough that the event should ne

impossible roto, 2nticipated, but it must be ®
impossible to for i
ese . ‘ R No.
159617, August 8, 2007) (Sicam vs. Jorge, G
° D
as a a Natura] calamities or acts of God at
(“force ee ©, typhoon and lightning; and acts er
yeure”) such as war and armed robbery:

Elements
OBLIGATIONS a4
a The cause must be independent of the debtor's
will.
hb There must be impossibility of foreseeing the event
4.
or of avoiding it even if it can be foreseen.
¢ The oceurrence of the event must be of such
character as to render it impossible for the debtor

to perform his obligation in a normal manner, (See
Sicam vs. Jorge,’ supra, for similar elements or
characteristics.)
Liability for fortuitous events
General rule: No person shall be liable for

fortuitous events, i.c., his obligation will be extinguished.
Exceptions to the rule (Art. 1174):
a. When the law expressly provides for hability even

in case of fortuitous events {such as that provided
in Art. 1165 where the obligor is liable for
fortuitous events if he delays or has promised to
deliver the same thing to two or more persons who
do not have the same interest).
b. When the parties have declared liability even in

case of fortuitous event.
c. When the nature of the obligation requires the

assumption of risk (such as the obligation of an
msurer who must pay the policy holder even if the
loss is caused by a fortuitous event if the cause

thereof is the risk insured against).
Burden of proving loss due to fortuitous event
cde burden of proving that the loss was due to

ae event rests on him who invokes it. And, in
€r lor a fortuitous event to exempt one from liability, it
necessary that he must have committed no negligence
or misconduct that may i am

y have occasioned the loss. (Sj
vs. Jorge, Supra) a
Case
Roberto C. Sicam, et al., vs. Spouses Jorge

G.R. No. 1596 17, August 8, 2007
24 TNS |
Facts: LJ
Agencia de R. C, Sicam to secure a loan. Armed robber
awnshop and took away the jewelry of Ly

Ste ent of the pawnshop from the vault which wa
left open since it was & Saturday. There was no choi
that a security guard was stationed at the Pawnshop
When LJ demanded the return of the jewelry she tal
pawned, the pawnshop failed to do so because it was log
in the robbery, and raised, among othet defenses, ‘nop,
liability due to fortuitous event. Is the defense tenable?
Held: No. In order for a fortuitous event ty

exempt one from liability, it is necessary that he hay
committed no negligence or misconduct that may hay
occasioned the loss. When the event is found to be partly
the result of a person’s participation - whether by active
intervention, neglect or failure to act — the whole
occurrence is humanized and removed from the. mules
. applicable to acts of God. The pawnshop failed to, show

that it was free from any negligence by which the loss o
the pawned jewelry may have been occasioned. Its failust
to provide a station a security guard at the pawnehop and
its leaving the vault open constitute acts of negligent
which made the loss no longer independent of its will.
Presumptions on receipt of principal or of later installmest

(these are disputable presumptions and evidence may
troduced to the contrary by the creditor} (Art. 1176)
1. The receipt of the princi . : to

: Principal without reservation 2°
interest, shall give 1 t te
: @ve rise to the presumption tha’
2.
pawned several, pieces of jewelry With
Ais Ere one
Remedies of creditor to enforce payment of his claima

against debtor (Art. 1177)
1.
Pursue the property in the possession of the debtor,

except those exempt by law.
This is usually by attachment where the creditor

files a court action to exact fulfillment with.a prayer that
. the court set aside a property belonging to the debtor. If

the court decides in favor of the creditor and the debtor
does not pay, the property attached will be ordered sold
and the proceeds thereof applied to the payment of the
obligation. . ; j
Exercise all the rights and bring all the actions of the
debtor except those personal to him (accion subrogatoria).
Example: A owes D. D owes C. If C files.a court

action against D to collect, he may ask the court to order
A not to pay D so that in the event that the court rules in
favor of C, A will be required to pay C. In effect, C is
exercising the right to collect from A which is a right that
belongs to D.
Impugn the acts which the debtor may have done to

defraud his creditors (accion pautiana).
This remedy must be of last resort. The creditor’
must have taken successively the foregoing measures

(Nos. 1 and'2) before he can bring this action. (Metrobank
vs. International Exchange Bank, G.R. No. 176008,
August 10, 2011)
sli eee D owes C P50,000.00. To defraud-C, D

Pass ot, his only property, to B who knows of the
‘an ent intention of D. C may ask the court to order
ccna of the sale made by D. Once the sale is
ort 7 and the lot is returned to D, C may ask the
a lg rox its attachment and its sale at public
of hig tee the proceeds of the sale applied in payment
third ber can [Note: This remedy is not available if the
Babes : m (B, in this illustration), was not aware of the
§ traudulent intention, i.c., he was in goof faith.]
26
Rule on transmissibility of rights and exceptions theretg (Art,

1178)
OBLIGATION. ‘|
General rule: A!l rights acquired in virtue of an Obiigation

are transmissible. (Thus, a creditor may assign his credit
tog
third person or such right is transmitted to the heirs upon his
Geath.)
oy}
Exceptions:
If the law prohibits the transmission of the right.
Thus, the mghts of @ general partner ip Z

parmersiup art rot tansnutied to his heirs upon hy
Sms, the magi is mot tramsmitted to an essignse we

te the bers Gf there wes 2 stiruletion io the: t
% Th eye
heteen the perties.
frsccrice S wes peoted 2 scholership gent bre

scheel 2or 2 senes of emamineton and interviews. &
Kowerer, ces =tth two pears still remaining before be
Emishes Ein studies The right of S to exjoy the
scholarship grant is not transmitted to his heirs because
i stricth personel
DIFFERENT KINDS OF OBLIGATIONS
Primary classification under the Civil Code
f.
Pure obligation
Conditional obligation
Obligation with a Period
Alternative obligation
Facultative obligation
Joint obligation
Selidary obligation
Divisible obligation
OBLIGATIONS : se
9 Indivisible obligation
10 Obligation with a penal clause
Pure and Conditional Obligations
Pure obligation, concept
4 pure obligation is one without a term or condition and is.

gemandable at once.
~ This is
Example: I promise to give you P5,000.60.
immediately demandabie since there is no tena that musi expire -

a: condition that must happen for the obligation to be :
or z 7 BI
sas
gemandable.
Conditional obligation, concept
A conditional obligation is ome whose dcemandzbility or
caimguishment depends upon the happening of a condition.

Examples: (1) “Iutl gve you my car if you pass the CPA
me zs
Errmnator” The condition here is suspensive. You may not
emenc the delivery of my cer until vou pess the CPA

Examination. (2) “I will let you use my car unit! you pass the CPA
Exammnation” The condition here i: resciutory. You may demand
the delivery of my car now but OU Must return it to me when you
Fess the CPA Examination.
Condition
L. Conc t
pt oe :
lt is an uncertain event which wields an influence
On @ legal relationship. (Manresa}
Classification
a. Suspensive and resolutory
q} Suspensive - This is a condition the
happening of which will give rise_to_the.
This is also called condition
antecedent or condition Precedent. Here, the

demandability
(of the obligation js.
pamcoeeUnt
are At
pain niente
fe ein
2),
we MIGATION,
suspended until the happening of E

condition. —
When an obligation is subject Fe

suspensive condition, its birth takeg : lg
or its effectivity commences only if a
when the event that constitutes th
condition happens or is fulfilled. (Qj dwany
vs. People, G.R. No. 195064, Jan 15
2014) vary
Resolutory - This is a condition the

happening of _ which extinguishes th.
obligation. This is also called conditip,
subsequent. The obligation is demandable
at once but.it shall be extinguished y
the happening of the condition. :
Potestative, casual and mixed
1)
Potestative - A condition that depends

upon the will of one of the contracting
parties. ; ‘
a) Potestative on the part of the debtor
* (t) If suspensive'— The obligat-
ion is void, (Art. 1182) Even
‘ if the condition is fulfilled,
’ the obligation is nd
demandable. (Example: D's
to give C P50,000.00 if D
goes to Baguio.)
(2) ‘If resolutory — The obligate

is valid. (Example: a C
allow the use of his car i"
until D returns from a
b) Potestative on the part of val
creditor - The obligation }S vai
whether the condition is susP© Di
oF resolutory. [(Examples: (1) 3 {0
to give C P50,000,00 if C BP d
Baguio, (2) D is to allow the roo
his car by C until C returns
Baguio. |
OBLIGATIONS
2)
3)
29
Casual — A condition that depends upon

chance or upon the will of a third person.
[((Examples: (1) D is to give C P50,000.00 if
D wins first prize in the lotto on the bet he
placed this morning. (2) D is to give C
P50,000.00 if X goes to Baguio.]
Mixed — A condition that depends partly

upon the will of one of the parties and
partly upon chance or upon the will ofa
third person. (Example: D is to give C
P50,000.00 if C will marry X.)
@. Possible and impossible
1)
2)
3)
Possible - One that is capable of fulfillment

in its nature and by law.
Impossible — One that is not capable of

fulfillment in its nature, such as “if you can
swim across the Pacific Ocean,” or due to
operation of law, such as “if you kill X”. In
this case, the obligation and the condition
are void. (Art. 1183).
Note: If the condition is not to do an

impossible thing, it shall be deemed as not
having been agreed upon. (Art. 1183)
Thus, the obligation is immediately
demandable. (Example: D is to give C
Pacific Ocean.)
Positive and negative
is a condition that some

event happen at a determinate time. Here,
the obligation is extinguished as soon as

the time expires. or it has become
indubitable that the event will not take

Place. (Art, 1184)
Positive — This
Example: D is to give C PS0,000.00

if C will marry
X on or bef
2016. The oblig ore June 30)
ation will be extin uished

on July 1, 2016 ifc has not yet spread Xx
eee
ae
4)
——_— ee MSNA
as of June 30, 2016. If X dies on June 1,

2016 before C has married her, then the
obhgation is extinguished on such date
because there is no more doubt that the
marriage will not take place.
Negative - This is a condition that some

eveni will not happen at a determinate
time. Here, the obligation becomes effective
‘a8 soon as the time indicated has elapsed
or it has become evident that the event will

not occur. (Art. 1185)
Example: D is to give C P50,000.00

if C vall nat marry % an or before June 30,
2016. The obligation becomes effective on
July 1, 2016 if C has not yet married X as
af June 30, 2016, If X dies on June 1,
4O1G hefare C has married her, then the
abligalion hecomes effective on such date
hesauee (here ja nn mare dauht that the
Warage will nal take place,
B; Hiwisihle and indivisible
i)
Hiviaihle - One that ie eapahle of partial

HEP HAH ER
Wider Ad. 11R9, Th the abligation 15,

Aivaile, fHial part thereat whieh ja tet
ateeied by ihe iniypweatble or unlawful
HED ated Loe vealed,
Beninples; (a) Dis to pive € a car

if (finishes tia law course, and
P1,000,000.00 iF CC topa the Bat
Pranination, If 1 firilahes his law courses
he imay detiand the delivery of the cat
Heweved, he iaay net demand the payment
6f F1,.000,000.00 if he does not top the Bar.
1) Dts to give © a car tC finishes his law
aires ail PL O00 000 00 if C can get a
eopy of the test Questiona in the Bar
Examination in advance even if both
corniitions are fulfilled, © can only ask for
Ubu oe
the delivery of a car from D because the
second condition is unlawful.
2} Indivisible - One that ts not capable of

partial performance by its nature or by law
or agreement of the parties
Exampie: Dis to give Cacarifit

finishes his law course and tops the Bar. C
must comply with both conditions before he
can ask for the delivery of a car from D.
Effect of fulfillment of suspensive condition (Art. 1187)
¥ General rule: The effect of the fulfillment of the

suspensive condition retroacts to the day of the constitution of
the obligation.
Exceptions; There shall be no retroactive effect with

respect to the fruits and interests as follows:
l, In reciprocal obligations, the fruits and interests shall be

deemed ta have been mutually compensated, i.e., each
party shall keep the fruits and interest received by him
prior to the fulfillment of the condition, ;
Mtxample: On May 1, 2011, 8 agreed to sell his
land ta 1 and 1 agreed to pay the price of P50,000,00 if X
in befor gee Mah 15, 2015-2
8 was Sh eee degive as stipulated, It was as if
ae Joo fa the price and 1 to the Jand beginning on
He eb a However, 8 shall keep the fruite on the land

condition, ot Me price during the pendency of the
seps the fruits and

of the condition,
Itt Unilateral
oblipati .
interests rece Jedd oer the debtor ik
ved Defore the fulfillment
Faaniple:
his tand if Hf is eg May 1, 2012, 8 promised to give Bs
2015, Sed the Bar Examination in Februa
WAS as ir Swern Examination as stipulated A

“ntitled to the inn A oe
2012, However, 5 will decent = Jand beginning on May 1,

the Pendency
he frites 9 eo ;
of the ennditien. n the land during
|
Rights of the parties pefore the fulfillment of the con iti,
(Art. 1188) .
i ing the appropriate actions f,
: Creditor - He may bring , for th
: preservation of his right, such as registering his Clain
with the Register of Deeds, if appropriate, to notify a
third persons, OT asking the debtor to provide a security j
the debtor is about to become insolvent.. :
2. Debtor — He may recover what he has paid by mistake,
Effect when the debtor voluntarily prevents fulfillment ¢

the condition
The condition is deemed fulfilled if the debtor’ voluntarily

prevents its fulfillment (Art. 1186); hence, the obligation becomes
immediately demandable. Here, there must be an intent on part
of the debtor to prevent compliance with the condition and
actually prevents its fulfillment.
Example:
D promised to give P10,000.00 to C, a marathon athlete,

if C finishes the race during the athletic meet. However, on the
eve of the scheduled race, D put a substance on the drink of €
who experienced weakening after taking the drink, and hen,
was not able to join the race. Here, D must give P10,000.00 to©
since the condition is deemed fulfilled. ,
Rules in case of loss, deterioration or improvement d
determinate thing before the fulfillment of the suspe=si™

condition (Art. 1189)
1. Loss of the thing
a, Without debtor’s fault - Obligation is extinguish
damages, :
Concept of loss
. * : . ob
A thing is considered lost when it perishes, oT oa ‘os
Sommerer or disappears in such a way oe
Stence is unknown or it cannot be recovered.
Example: i : s : {
C passes the Ci D is obliged to give C a specific h
© CPA Examination. If the house is d¢5

of
exi
suse
Fae - _
OBLIGATIONS hie
in a fire without the fault of D before Cc passes the CPA

Examination, D’s obligation is extinguished even if C,
thereafter, passes the CPA Examination. But if the house
is destroyed through the fault of D such as when he
placed inside the house highly flammable chemicals which
caused the fire, then D shall be obliged to pay damages
should C pass the CPA Examination.
Deterioration of the thing
Without debtor’s fault - The impairment shall be

borne by the creditor, i.e., no liability on the part of
the debtor to pay damages.
b. With debtor’s fault - The creditor may choose

between :
1) Rescission, plus damages, and.

2) Fulfillment, plus damages...
a.
Example:
D is obliged to give a specific car to C if. C finishes

his economics degree. The deterioration of the car due to
wear and tear before C finishes his economics degree will
be borne by C if C later finishes the said degree. However,
if the car is damaged in an accident due to D’s fault, C, if
he finishes his economics degree, may rescind the
contract and ask for damages, or ask D to deliver the car
in its deteriorated condition plus damages.
Improvement of the thing
provement shall
inure to the benefit of the creditor. a
ro Example: D is obliged to give his violin to C

aie paar his course in music. If the quality of
ne produced by the violin had im
between the time that D's a es
es tay the completion by C of his course
ic, then such i :
the benefit of C. improvement shall inure to.
the expense of the

he rights granted to
debtor — The debtor will haye

have enjoyment of th
a usufructuary, ie., he can

€ use of the improved thing
obligation - was_
ne
34 SH ONe
and its fruits, He may remove the improy,

no damage is caused to the principal thing, Itt,
improvement cannot be removed without CaUsi
damage to the principal thing, the thing and if
improvement shall be delivered to the :
credj
yithout any right on the part of the debtor ,,
mens 7
indemnity. He may, however,

improvements against any damage to the thing
(Arts, 579 and 580)
Example: D is obliged to give his Only cy

to C if C finishes his economics degree. Before ¢
finished the said degree, D had the car repainted
In this case, LD can continue using the car in {ty
improved condition, Upon the completion by ¢q
his economics degree, D cannot remove the paint
because it will cause damage to the car. However,
if he had caused a dent on the car due to his fault,
he may set off the cost of damage brought by such
dent against the cost of repainting.
Rule in case of fulfillment of resolutory condition (Art. 1190)
1, Upon the fulfillment of the resolutory condition, tht

obligation is extinguished.
2, The parties shall return to each other what they hatt

received.
3, In case of loss, deterioration or improvement of the thing
the provisions in the above rule (Art. 1189), which perl!
to the debtor shall be applied to the party who is bound?

return.
Reciprocal obligation, concept
A reciprocal obligation is one that arises from the som
; : ;
cause and in which each : reditor of
other, such that th party is a debtor and a ¢ a tt
ae € obligation of one is dependent uP®

obligation of the other. (Goldloop Properties ia “S- Goveranng
Service Insurance System, G.R. No. 171076 August 1, oe
Reciprocal obligations are to be pe. formed simultaneously # ois
x€ performance of one iS conditioned upon the simul (
T. WJalandoni vs. Cabalum Co
15, 1980}
fulfillment of the other

School, 61216-R, Suty
OBLIGATIONS 35
Example: S sold his Toyota car to B for P200,006.00.

delivery of the car by S is dependent upon the payment of
the price by B and vice-versa.
Remedies of the injured party in reciprocal obligation

1 Rescission with damages.
2 Fulfillment of the obligation with damages.
. . + availed of by the injured party
e above remedies may hee avai

th crated, He cannot ask for both. (Verceluz vs. Edano,
44 Phil 801} If be has chosen rescission of the obligation, he can
o longer ask for fulfillment. However, he may also seek
resciasion even after he has chosen fulfillment, if the Jatter
becomes impossible.
Obligations with a Period
Obligation with a period, concept
An obligation with a period is one whose demandability or —
extinguishment is subjected to the expiration of the. term which
a day certain
when the obligation will arise or cease. i
Examples: (1) D is obliged to give his car to C on May 1,
2015, On May 1, 2016, the obligation becomes demand=*!e by

Treason of the expiration of the t
one with a suspensive effect i 2

allowed C to wi ntl May 1° bois wT he bbl tio ig
use his car until May 1, 2016. The obligation is
ote a danuery 1, 2016 but on May 1, 2016, D’s

6 3 : : .
expiration or . use his car is extinguished by reason of the
he term. The iod t i i

ef n of , period here is one with a resolutory
fect or in diem. C must therefore return the car. =
Concept of period
¥ Sei R Ey
and day certain -* certatn ond va haray

Period is a 5
‘novi f time which d aie ae

oF extinguish Pace of time which determines the effectivity
between tate san-obligation. Thus, the space of time |
Ty 1, 2015 and Janua
la te
PSE of which will cause an obligation
to arise or cease. ee
erm or period. The period here is .
|
4
b
ft
‘
4
{
i
SS LANIAT
36 “TOiy
. certain is that Y Om
: Senay ist be known when. (Art. 1193) An exampiet
oe dath of a person which will necessarily come. Thus ;
: » if
obligation of D is to give C P10,000.00 when X dies, the obliges
is one with 2 period. 4
Period distinguished from condition

i. As to fulfillment -
_ A condition is an event that may or may py

happen; 2 period is an event that must necessarily com
at a date known beforehand, or at a time that canne}
determined.
2. As to time -
A condition may refer to the future or to a pat

event unknown to the parties; a period always refers
the future.
See
ue
3: ” As to influence on the obligation -
A condition causes an obligation to arise a #

cease; a period merely fixes the time for ti
efficaciousness of an obligation. (8 Manresa 153, 154)
4. As to the will of the debtor
A period that depends upon the will of the i

authorizes the court to fix its duration. (Art. 1197; ye
while a condition that depends upon the will of the de
which is suspensive shall annul the obligation. we

1182),
Kinds of period
5 ores eft
1. Ex die - This is a period with a suspensive effect. ie
the obligation becomes demandable upon the laps ay
Period. (Art. 1193) (Ex die, Latin for “from a certain
2. In diem -This ig Het
a period with a resolutory effec :

demandable at once but is eae
of the period. (Art. 1193) (In @™

ain day.”) ee
Other kinds are:
the obligation is
upon the-lapse
for “until a cert
Pie |
eee
OBLIGATIONS 37
1 Legal-A period that is fixed by law.

Voluntary - This is fixed by the parties.
3 Judicial - One that is fixed by the court.
Problem
hen my means permit me to do
“7 will pay you my debt wne ‘ ie
sa.” Is this an obligation with a period or with a condition?
iS iS gat ith a period. Here, the

er: This is an obligation unt
een ok he creditor is to ask the court to. fix the period. (Art.
7180 1197) Once the court has fixed the period, tt may no longer
change it as it becomes a part of the agreement by the parties.
When the court may fix the period (Art. 1197)
1. If the obligation does not fix a period, but from its nature
and circumstances it can be inferred that a period was
intended
Example:
D is obliged to construct the mansion of C.

However, no period was indicated in the agreement as to
when D must complete the construction of the mansion.
Here, it is clear that a period was intended since the
construction of the mansion will take some time to
complete. C may thus go the court and ask it to fix the

duration of the construction of the mansion.
2. . When the duration of the period depends upon the will of x

the debtor.
Examples: >
a. “when my means permit me to do so” (Art. 1180)
b. “little by little” (Seone vs. Franco, 24 Phil 309)

c. “as soon as I have the money” (Pat
ente vs. Omega,
G.R. No. L-4433, May 29, 1953) -
d. “as ible”
pri as page (Gonzales vs, Jose, 66 Phil
e. “in partial p
ayments” (Le ae
18 Phil 353) yments” (Levy Hermanos vs. Paterno,
OBL |
38 'GATIONg
Presumption as to who has the benefit of the period
Whenever a period is designated in an obligation
creditor and the debtor, unless from the tenor of the obligation 4
other circumstances,
established for the benefit of only one of the parties. (Art. 1196),
Therefore, the debtor cannot be compelled to perform, ang

the creditor cannot be compelled to accept performance, before
the term expires.
Example: D borrowed P10,000.00 from C on January 1,

2015. The loan bears interest at 10% per annum with both
principal and interest being due on December 31, 2015. Before
December 31, 2015, C cannot compel D to pay and deprive him of
the use of the money until the said date. Neither may D compelC
to accept payment before December 31, 2015 and deprive C of the

interest for remaining term.
Period is for the benefit of one of the parties

1. For the benefit of the debtor —- He cannot be compelled to
perform his obligation before the expiration of the term,
but he may choose to perform before such expiration at

his option.
Example: D is obliged to pay C P10,000.00 on or

before December 31, 2015. D cannot be compelled to pay
before December 31, 2015. However, he may pay at any
time before December 31, 2015 or on December 31, 2015

at his option.
For the benefit of the creditor — He cannot be compelled Y
accept performance before the expiration of the term, but

he may choose
expiration at his option
anip oe On November 1, 2015, D borrowed fron :

may demos colectible” on or before June 30, 2016. ¢
before end Payment on June 30, 2016 or at any tim
© the said date. However, D ¢ t compel him t-

accept the payment at 2 ‘anno
any time before June 30, 2016:
a it Sh, :
be presumed to have been established for the benefit of both the
it should appear that it has been

emand performance before such
OBLIGATIONS ”
rt his right to make use of the period if it is

f om ebtor its (art. 1198), ie., the creditor may demand
or
immediate payment
1.
When he becomes insolvent, unless he gives a guaranty

or security for the debt.
ince the debtor does not have sufficient
the security may be provided by a third person
PO a guaranty or by a pledge or mortgage by such

third person.
When he fails to furnish the guaranties or securities that

he has promised.
: D borrowed P20,000.00 from C

oromisine to pledge his ring to C to secure the debt within
one month. C gave D one year to pay the Joan. D,
however, failed to pledge his ring within the period agreed
upon. In this case, C can demand immediate payment
even before the agreed due date thereof.
When he impairs the said guaranties or securities by his

own acts, ‘or when through a fortuitous event they
disappear, unless he gives new ones equally satisfactory.
Example: D obtained a loan from C, the same

being secured by a chattel mortgage on D’s car. The loan
is payable within one year. On the seventh month, the car
was razed by fire without D’s fault. C can demand
immediate payment unless D gives another security that
18 equally satisfactory. This is true even if the cause of the
loss or impairment was not due to the fault of D.
When he violates any undertaking in consideration of

which the creditor agreed to the period.
_. Example:
Biving D one year t
gambling until he
to Play
already
O pay provided D did not en

has paid the debt,
in the slot machine,
demand immediate payment.
gage in any
If D enters a casino
When he attempts to abscond,
C granted a loan of P50,000.00 to D-
say after one month, C can
rE
6mm fT
OBLI
40 CATON
Thus, if the debtor has been disposing ail

property with an attempt to leave his place of busine
residence to escape his creditors, such creditors a
demand immediate payment of his debts although thes
maturity date is not yet due.
hi
SS gy
Alternative Obligations
and Facultative Obligations
Kinds of obligations according to the number of prestations

1. Simple - One where there is only one prestation.
2. Compound - One when there are several prestations. This

may be:
a. Conjunctive - Here, several prestations are due but

all must be performed.
Example: D is to give C a specific ring, a

specific watch and a specific bracelet to C, D must
deliver all the items to C,
Distributive or disjunctive - This may either be

alternative or facultative.
Alternative obligation, concept
An alternative obligation is one where several prestatio ne

are due but the complete performance of one of them is sufficient
to extinguish the obligation, (Art. 1199) ~~
Example: D is obliged ific ring, a specifi

tthitherg tes ged to give a specific ring, a Spe
articles will extinguish the Plestied. ¢ delivery of any
Right to choose Prestation
The right of choice oo. it has |

: belongs to the « t? unless it
been expressly given to the creditor. mat oa
Limitations on debtor’s rj.
1 Th ght to choose
hosed te completely perform the prestatia’
one and part not compel the creditor to receive part :
°f another undertaking. (Art. 1199)

OBLIGATIONS ai
tations which are impossible

. cannot choose those pres .
ie jail or which could not have been the object of the
obligation. (Art. 1 199}
to
wh bligation ceases to be alternative and becomes a

en oO
simple obligation.
When the debtor has communicated his choice to the

1.
creditor. (Art. 1201)
2 When among the prestations whereby the debtor is
alternatively bound, only one is practicable. (Art. 1202)
i icated his choice to the

the creditor has communica S t
* ober if the creditor has been expressly given the right of
choice. (Art. 1205)
Rules in case of loss of things or impossibility of services
which are alternatively the object of the obligation before the
choice is communicated
1. When right of choice is with the debtor (Art. 1204)
a. If only one or some are lost through a fortuitous

event or through the debtor’s fault, the debtor
may deliver any of the remainder, or that which

remains if only one subsists.
_b. If all are lost through a fortuitous event, the

obligation is extinguished (based on the rule that
no person shall be responsible for fortuitous

event).
Ifall are lost through,the debtor's fault, the debtor

shall pay the value of the last thing that was lost
plus damages. = a
If all except one are lost through the debtor’s fault,

and the remaining item is subsequently lost
through a fortuitous event, then the debtor’s

obligation is
If e except one are lost through a fortuitous event,
es age tromaining item is subsequently lost
e debtor’s f y
damaues Ss fault, the debtor shall pay
Examples;
&.
pian
choose the tert
&.
When
speniic wristwach The oi
Dias to ger C2 specific ring.
ve
A
!
8
‘ i
f *
2
fy
tert toe te delivered. Therefore.
ae
if the ring is lost through 2 fortuitous event Dp

daigver the bracelet or the =ristwatch, The
rule appiies if the ring 1s lost through the
D. [nm the case cf the latter, D shan have a,
liability for damages because he can sq Perform,
his obligation by choosing to deliver the bracelet ¢
Ruy
any
fank of
If the ring and the bracelet are lost through g

fortuitous event or through D’s fault, the obligation
is converted into a simple obligation to deliver the
wristwatch, There is no liability for damages on
the part of D even if the loss is due to his fault.
because he can still perform his obligation. It was

as if D chose to deliver the wristwatch.
If all things are lost due to a fortuitous event, D's

If the ring and the bracelet are lost through &

fortuitous event, the obligation becomes a simple
obligation to deliver the wristwatch. If the
wristwatch is thereafter lost due to the fault cfD,
D shall pay damages.
If the ring, the bracelet and the wristwatch are lost

one after the other due to D’s fault, D shall pay
item that was lost

plus d 7 , the last item
Gelver the wristwatch If the | wristwatct
= walter lost through +a fortuitous eves

gation is extinguished.
tase 1305), % Pectin expressly granted to the
aA
E only one of
tome are Jost through a forty

tvent, ¢ <.
© fe debtor shall deliver that which
ry ~—— OSS TARE op
choice Deion to
S ss
BLIGATIONS 3
credwtor showld choose among the remainder. ce
cl ee
that which remains if only ome subsists.
If all are lest th oRTee @ fortumous ever, the

. - ee
obligation shall be extimguzsaec.
lf only ome or some are lost through the debtac’s

fault, the creditor may claim any ot those
subsisting, or the price of any of these which were
lost through the debtor's fault plus damages.
are lost through the debtors fault, the

iia oe claim the price of any of them plus
damages.
Examples:
j i ing, 4 ific bracelet or a
D is to give C a specific ring, a specific
specific wristwatch. The parties agreed that C shall have
the right of choice.
a. If the ring is lost through a fortuitous event, D

shall deliver either the bracelet or the wristwatch
at the choice of C.
b. If all are lost through a fortuitous event, D’s

c. If the ring and the bracelet are lost through a
fortuitous event, D shall deliver the wristwatch
which is the remaining item. The obligation
becomes a simple obligation to deliver the
wristwatch. If the wristwatch is thereafter lost due
to D’s fault, D shall pay damages.
If the ring and the bracelet are lost due to D’s fauit,
the obligation does not become a simple obligation.
to deliver the wristwatch. C can still choose from
the payment of the price of the ring or the bracelet
with damages, or the delivery of the wristwatch.
if all are lost due tc the fault of D, C may claim the

price of any of them plus damages.
Tacsltotieg teeing
An obligation’ where only one
debtor may ony one_prestation is due but the
render another in substitution. M2
i lmaonen ne TA
"Oe F . ae
* OBLIGATIONS 4S
ni ie rive a Specific ring tg
Example: D is obliged to give @ 3} Eto Cyn
agreement ri D may deliver a specific watch as a Substitute alternative obligation
and facultative obligation,
¥ \ d
distinguishe
Rules in case of loss of principal thing and substitute, i Alternative obligation
Facultative obligation
ut . -eoo Snes) Are . Only one prestation, the
1, Before substitution (ic., before the debtor hag info 1, Several prestations are
1 ort ee 7 vobligation, ts
the creditor of the substitution) Teg due, but the perform- iin
| ance of one is sufficient aue.
a. Principal thing to extinguish the debe >. If the principal oblig-
; : or are VO! . Pia :
1) If lost due to fortuitous event, the obligatiy 9. I isons the others ation is
void, the debtor
is extinguished. M Dee still, be valid, is not required to give
oie bligation the substitute.
2) If lost due to the debtor’s fault, debtor shat hence, the obige
pay damages, remains. , 1: 2 ight of choice
3. The right of choice is 3. belonek to. the ‘debtor
b. Substitute "with the debtor, ee only co
, ress iven to the only.
The loss of the substitute whether through writer ° ot Se ?
a fortuitous event or through the debtor’s fault 4. If all prestations are 4. If :
the principal oblig-
imposes no additional obligation on the debtor “impossible except one, ation is
impossible, the
because it is not due. The debtor has still t that which is possible debtor is not
required to
deliver the principal thing. However, the obligation must still be given. give the
substitute.
ceases to be a facultative obligation and becomes?
simple obligation to deliver the principal thing. |
2. After substitution Joint and Solidary Obligations :
a. Principal thing Joint and solidary obligations, concept .
The loss of the principal thing whethet In a joint or solidary obligation, there is
a concurrence of
through a fortuitous event or through the debtors two or more debtors and/or two or
more. creditors in one and the
fault ‘imposes no additional obligation on i | Same obligation,
e : : ¢ 1
sub i because the thing due is already Ge . __In a joint obligation, each debtor is
liable only for a
Substitute. After th ituti has bee <Proportionate part of i i :
communi € substitution ae to aditono ott of the debt, and each creditor is entitled
only
The obi; cated, the thing due is the substi fe © a(proportionate»part of the
credit. ;
obligati ‘gation also ceases to be a facultab™ Examples: (1) A and i :
8ation and becom : et ie t : and B are indebted to X for P10,000.00.
woh es a simple obligati vec able only for P5,000; B is liable only for P5,000.00
(2) A
(B ubstitute owes X and Y P8,060.00.. Xx 000.00:
: collect ’ -00, can collect only P4,000.00; Y can
i) If lost through a fortuitous event at iad a
obligation is extinguish Z "S vai oblj ation a solidary obligation, each debtor is
liable-for-the<whole
2): ° If tost-thr Pe gebtor holon a cach creditor is entitled to demand payment of
the
; shall ay deen the debtor’s fault, the. mere eigation. (Please see succeeding
topics for examples.) +
” ages, . Se ‘
op
46 My
Kinds of solidary obligation =

1 Passive solidarity - This is solidarity on the Part of
"debtors. .
Example: A and B, solidary debtors, are;

to X for P10,000.00. X can demand payment
P10,000.00 from either A or B. If A pays X P10,00q Pi
the obligation is extinguished. A can dem
reimbursement of P5,000.00 from B representing
latter’s share in the debt. the
2. Active solidarity - This is solidarity on the part of the

creditors.
Example: A owes X and Y, solidary Creditors,

P8,000.00. Either X or Y may demand payment 4
P8,000.00 from A. If A pays X P8,000.00, the obligation iy
extinguished. X must give P4,000.00 to Y representin

the latter’s share in the credit.
3. Mixed solidarity or solidarity on the part of both debton

and creditors, Te
Example: A and B, solidary debtors, owe X andy,

solidary creditors, P12,000.00. X or Y may coliect fromA
or B the total sum of P12,000.00. If A pays X P12,000.M,
the obligation is extinguished. B must reimburse 4
6,000.00. On the other hand, X must give P6,000.00%
Other terms for solidary obligation

1
4+ Jointly and severally

Individually and collectively
In solidum
Mancomunada solidaria
Juntos 0 Separadamente
on terms for joint obligation

f Proportionately
Pro rata
3.
Mancomunada
OBLIGATIONS es
4 Mancomu nada simple

Rule t
two or more
Asa general rule,
f there is a concurrence of two or more debtors and/or
creditors in one and the same obligation.
the obligation is presumed to be joint

r more debtors and/or two or
i concurrence of two o ore ¢ x
whee ther ors in one and the same obligation. There is solidary
more cre °
Jiability only in the following cases:

1 “When the obligation expressly so states.
2 When the law requires solidarity.
Examples: ae
.1 two or more persons have appointed an
* went for a common transaction or undertaking,
they shall be solidarily liable for the consequences
of the agency. (Art. 1915)
b. Where the instrument containing the: words “I

promise to pay” is signed by two or more persons,
they are deemed to be jointly and severally liable
thereon. (Sec. 17, Negotiable Instruments Law.)
c. The responsibility of two or more persons who are

liable for a quasi-delict is solidary. (Art. 2194)
Illustrative case:
Ruks Konsult and Construction vs. Adworld

_ Sign and Advertising Corp., et al.
G.R. No. 204866, January 21, 2015
Facts: Transworld contracted the services

of Ruks for the construction of the billboard
structure of the former. Both Transworld and
Ruks knew that the billboard had a weak and poor
foundation, and yet they allowed ‘the construction
to push through. Later, the billboard structure
collapsed causing damage to the adjacent billboard
structure owned by Adworld, Adworld now
demands the payment of damages for the
Impaired billboard and loss of rental income, (a)
fre Transworld and Ruks guilty of negligence? (b)
ay Adworld hold either Transworld or Ruks
48
3.
— OMATY Oky
loss of rental? BES ang
Held: (a) Yes. Transworld ang

guilty of negligence in the constructio
collapsed billboard as they knew that
foundation supporting the same was wea, the
would pose danger to the safety of the mist and
and other adjacent properties, such a ony
Rukg ay
Nn of the
S$
Adworld’s billboard, and yet they dig na of
anything to remedy the situation. Both ap
negligent because of their “failure to observe for

protection of the interest of another person i
degree of care, precaution and vigilance which th:
circumstances justly demand, whereby such othe
person suffers injury.” (b) Yes, since the liability
of two or more persons who are guilty of quas-
delict is solidary.
When the nature of the obligation requires solidarity.

Example:
_ 8G, a security guard of AB Partnership, was kid

by criminal elements in line of duty. The heirs f§
Seated _ compensation under the Workmett
Compensation Law (WCL) for the whole amount from4
Parmer. A claimed that he should be liable only for 0
talf thereof, the other half to be shouldered by B, ©
i «t, since their liability is only joint as the law #2
vias on the nature of liability. The court ruled thet o
obligation Hability is solidary since the nature of a
Solidarity. The evident intention of
give full protection to w This pur

would E to workers.
be defeated if the employers’ liability wer a
joint. :
1959.) (See Liwanag, et al vs. WCC, L-12164, MM
A, B ang :
many distinct donee ed to'give X, Y and Z P27,000.00- -
Answer: Sin are there in the obligation? 2
oie - ce ¢ eo . se ti
eC 9 distinct debts as Fol ation is presumed to be joint <<
‘ z de A owes X P3,009.09
OBLIGATIONS 49
A owes Y P3, 000.00.

A owes Z P3, 000.00.
B owes X P3,000.00.
Bowes Y P3,000.00.
B owes Z P3,000.00.
Cowes X P3,000.00.
C owes Y P3,000.00.
9. C owes Z P3,000.00.
(Computation: P27,000.00/3 creditors = P9,000.0C; P9,000.00/3

debtors = P3,000.00)
eS XNAA AHN
A, B and C, joint debtors, are obliged to give X, Y and Z,

solidary creditors, P18,000.00. How much may X collect and
from whom?
Answer: X, being a solidary creditor, may collect the sum

of P18,000.00. However, since the debtors are joint debtors, he
may coilect only P6,000 from each of them. After collecting the sum
of P18,000.00, X must give Y and Z’s share of P6,000.00 each.
A, B and C, solidary debtors, are obliged to give X, Y and Z,
joint creditors, P18,000.00. How much may A be held

Hable?
aR scene A, being a solidary debtor, may be held fiable for

of ; .00. However, since the creditors are joint creditors, each
hem may collect only P6,000.00 from A. If A pays the whole
amount of P18,000.00 to the creditors

n 000. » A can d
reimbursement of P6,000.00 each from Band C. we
B
a and cctatidary debtors, are obliged to give X, Y and Z,
fom ee rs, P18,000.00. How much may Z collect and
Answer
€ach. A, on he othe ee A, Z must give X and Y P6,000,00

and C at P6,000.00 each. nd, can demand reimbursement from B
aed
een
SALTS
on By
eiriennenet
OB
50 Liga:
Some problems when there is unequal sharing in the

and/or credit
A and B owe X and Y P10,000.00. The g}

the debt is 40%, while that of B is 60%. The share
9.
credit is 70%, while that of Y is 30%.
1. Joint debters and joint creditors
of :
ofx e
A can be held liable for not more than P4099

{4032 of P10,G00.00), while B, not more than P6,0005
(6025 of P10,000.00). X can collect not More «.
P7,000.00 {7035 of P10,000.00), while Y, not moore fl
P3,000.00 {30% of P10,000.00.)
a How much may X collect from A? from B?
From A, X may collect P2,800.00 (40%

P7,000.00.). From B, X may collect P4,200.00 (63)
of P7,000.00.)
{Alternative computation: A, (P4,000.00 x 70%;

P2,800.00); B, (P6,000.00 x 70% = P4,200.00}
b. How much may Y collect from A? fromB? !
From A, Y may collect P1,200.00 (40%!
P3,000.00). From B, Y may collect P1,800.00 (6%

of P3,000.00.)
(Alternative computation: A, (P4,000.00 x 30%"

P1,200.00); B, (P6,009.00 x 30% = P1,800.00)
Joint debtors and solidary creditors (active solidarity]

a. How much may X collect from A? from B?
te
X, being a solidary creditor, may collect
ee
whcle amount of P10,000.00. However, sine
ag are joint debtors, he cannot collect

n
from <A, and not td

P6,000.00 from B, After collecting the amou'y
P10,000.00, he must give 3,000.00 ©

b "Presenting the latter’s share in the credit:
How much may Y collect from A? from B?
a
'f Y is the one collecting, may ©. oi
amo .
debtore aot Of P10,000.00. However 5° at
TT t
TS are joint debtors, he cannot colle”
OBLIGATIONS 51
Aand B are
the amount of P20,000.00.

1,
than P4,000.00 from A, and not more than

P6,000.00 from B. After collecting the amount of
P10,000.00, he must give P7,000.00 to X
representing the latter’s share in the credit.
Solidary debtors and joint creditors (passive solidarity)
; ?
ay! How much may A be held liable and by whom?
A may be held liable for the whole amount

of P10,000.00. However, since the creditors are
jointly bound, X can collect from him not more
tian P7,000.00, and Y, not more than P3,000.00.
After A has paid the debt, he can demand
reimbursement from B in the amount of
P6,000.00,
b. How much may B be held liable and by whom?
B may be held liable for the whole ameunt

of P10,000.00. However, since the creditors are
jointly bound, X can collect from him not more
than P7,000.00, and Y, not more than P3,000.00.
After B has paid the debt, he can demand
reimbursement from A in the amount of P4,000.00.
Mixed solidarity
Here, either X or Y may collect from either A or B

the whole amount of P10,000.00. If A is the one paying,
he can demand reimbursement from B in the amvunt of
P6,000.00. If the B is the one paying, he can demand
reimbursement from A in the amount of P4,000.00. If X is
the one collecting, he must give P3,000.00 to Y. If Y is the
one collecting, he must give P7,000.00 to X.
solidary debtors of X and ¥, solidary creditors, in
If X renounces or rem
consent of Y, will the obligation be extinguished?
Yes, because the remissio
extinguishes the whole

However, X has to give Y
Solidary creditor may not d
n made by any
obligation. (Art,
’s share of P10,000.00
9° anything prejudicial to
since a
its the whole obligation without. the |
his co-solidary creditors. (Art. 1212) A solidary ea
who has caused the extinguishment of the obligation."
remission, novation, compensation or confusion, or yw ho by
collected the debt, shall be liable to the others rn
shares corresponding to them. (Art. 1215). he
2. Suppose the remission of the whole obligation Wag

obtained by A, may A demand reimbursement from B?
Answer: No, because the remission of the whole

obligation obtained by one of the solidary debtors does ng
entitle him to reimbursement from his co-debtors (Art 1220)
remission being the gratuitous abandonment by the
creditors of their rights to the obligation.
3. Suppose that X renounces or remits A’s share amounting

to P10,000.00. However, it turned out that B had already
paid P20,000.00 to Y two days before. May B still collect
P10,000.00 from A representing A’s share?
Answer: Yes, B may still collect from A P10,000.00.

The remission made by the creditor of the share which
affects one of the solidary debtors does not release i
latter from responsibility to his co-debiors, in case the ae
has .been totally paid by anyone of them befor i
remission was effected. (Art. 1219) A’s remedy will be
go after X or Y to collect the sum he paid to B.
stors, {ot
A is indebted to X, Y and Z, solidary crea whos
P24,000.00. Suppose X makes a demand against 4, :
11 A pay? ‘
mama bad ner soliday
Answer: A must pay to X. If A pays to — a rule, ®
valid only with respect to Y’s share of P8,000.00. en pe hel
do not receive their respective shares from Y, A can ©
liable for P16,000.00. (See Art. 1214.) 5 :

0.00 aM
The obligation is evidenced by a promissory

the debtors
1. X demands payment from A. Howev'

- 12,000.00. May X still go after B and/or C?
ofl
er, A “pay? |
Answers.
33
Answer: Yes, X may still go after B or C or both of
m for the balance of P18,000.00. The creditor may
the ed against any one of the solidary debtors or some or
proce ein simultaneously. The demand made against one
all of em shall not be an obstacle to those which may
of ‘ equently be directed against the others, so long as the

“cbt has not been fully collected. (Art. 1216).
If A pays X P30,000.00, what are the rights of A?

2.
Answer: A can demand reimbursement from B and~
Cat P10,000.00 each together with interest from the date of

payment. However, if payment is made by A before due
date, he cannot collect interest during the intervening
period, i.e., from date of payment to due date. (Art. 1217)
3. A pays X P30,000.00. However, C has become insolvent.

How much may A demand from B as reimbursement?
Answer: A may demand P15,000.00 from B. If an

insolvent debtor cannot reimburse his share to the debtor
who paid the obligation, such share shall be borne by all
his co-debtors, in proportion to the debt of each. (Art. 121 7).
Thus, A and B shall bear C’s share at P5,000.00 each.
4, .
ta pavex Fsgi000.00 more than 10 years after the note

me due, can he still i
Band C? still demand or from 3

reitnbinee Swer: No, he can no longer demand
obligation he Payment by a solidary debtor after the
reimbursem, as prescribed does not entitle him to
after the Obie _ The same rule applies if payment is made ~
‘ ; ‘gation has become illegal. (Art. 121 8).
Bc
ie le to X for the delivery of p

TINE is lost. valued at P20,000.00. What is the yale if the
thr,
ough 8 fortuitous event?
throu, 3
8h the fauit of D?
54 OBLIGATION, 2
1, The obligation shall be extinguished. (Art, 122] ) This

accordance with the rule that no person
responsible for fortuitous events.
2, All the solidary debtors shall be liable for the

the price of the ring plus damages and interest, Howe
the solidary debtor making the payment can recover he
he has paid from the guilty debtor. Thus, if x goes after
and A pays the price of the ring, and the damages as
interest, A can demand reimbursement of P20,000.00 plus
damages and interest from D, the guilty or negligent
debtor. (See Art. 1221)
is
shall jy
Existence of solidarity despite different periods an

conditions
Solidarity exists although the creditors and the debtors

may not be bound by the same periods and conditions (Art,
1211)
Example: A, B and C are solidarily liable to X for

P9,000.00. The parties stipulated that the share of A is payable
on demand; the share of B on Christmas day next year; and the
share of C, if X passes the Bar Examination.
X may demand payment of the share of A of P3,000.00

anytime from either A, B or C. On Christmas day neat year, X
may demand payment of the share of B of P3,000.00 from either
A, B or C. When X passes the Bar Examination, he may demand —
payment of the share of C of P3,000.00 from either A, Bor c.
Effect of unauthorized assignment of creditor's right
d
The solidary, creditors are bound by mutual true! 4,
confidence. Hence, a solidary creditor cannot assign his be
a third person without the consent of the other solidary ¢

(Art. 1213) because the assignee may not enjoy the tr
confidence of the non-assigning creditors.
st and
If the assignment is without the consent © rdingy>

creditors, the assignment is not valid as to them. Ace ignind :
they can recover their respective shares from the 1” © ave
creditor in case the assignee who collected the debt fails ‘
them their shares.
a
i
Oo
oBLIGATIONS
fenses available to solidary debtors

pefen
1,
ved from the nature of the obligation (such as
j eri
those d n of the obligation, illegality of cause)
prescriptio
hose personal to the debtor being sued, or those that

5 rtain to his own share (such as incapacity of the debtor
, non-fulfillment of a suspensive condition as to his
share).
Those personal to the other debtors with respect to their

a own share (such as incapacity of another debtor or non-
fulfillment of a suspensive condition with respect to the
other debtors’ shares).
Joint indivisible obligation, concept and characteristics
A joint indivisible obligation is an obligation where the

debtors or creditors are jointly bound but the prestation or object
is indivisible. It has the following characteristics: :
1. The creditors must act collectively, meaning, all of them

must make the demand unless one is specifically
authorized to aet for the others. (Art. 1209) A demand
made by one or some but not all of the creditors will not
be effective.
i
sors a ‘ance is possible only if they act. together. : (Art.
ome! of ue creditors may be prejudiced only by their

creditor aa Ss. Thus, a renunciation made by a joint
however. ic pcan only his own share. The.obligation,
the thing oo ented into an obligation to pay the value of
Obligation ig ae creditors make the renunciation, the
or guished, (Art. 1209) -
One of
the debt ey
Undertaki €Dtors does not comply with his
been Teady Pay damages.
beyond theo comply shall not

t
The debtors who may have
contribute to the indemnity
" rt CO
he Service in wpe n ting Price of the thing or the value

Sa ; ich the obligation consists, (Art. 1224) ©
aL rece
The demand must be made against all the debtors since.
is converted into a monetary
56
5.
Illustration
valued at P900,000.00 to X, Y and Z. Car
1.
3.
4.
Indivisibility and solidarity, concept and distinctions
matter or object not. being susceptible of partial. performan®

Solidarity, on the other hand, refers to tie between the P2
One therefore, does not imply, or give rise, to the other. ""
1210) Thus, there may be the following obligations:
1.
_Solidary divisible obligation
If one of the debtors is insolvent, the others shal
liable for his share. (Art. 1209) NOt be
A, B and C are jointly indebted to deliver a specific
X, Y and Z must make a demand against A, B and Cf

the delivery of the car. _
If A is not ready to comply with his undertaking, t

obligation to deliver the car is converted into an obligation
to pay its value plus damages. B and C shall be obliged tp
pay P300,000.00 each. A, the defaulting debtor, shall be
liable for P300,000.00 plus damages.
If A is insolvent, B and C shall be liable only for their,

respective shares of P300,000.00 each.
If X renounces his right to the obligation without the

consent of Y and Z, then only his proportionate share is
extinguished. The obligation, however, is converted intoa
monetary obligation to pay P600,000.00 which must be
given to Y at P300,000.00 and Z at P300,000,00 by A,B
and C who will give P200,000.00 each. "
‘ ject
The indivisibility of an obligation refers to the subjec
ies.
Joint divisible obligation :

to C8.
Example: A and B are jointly obliged g long: |

construct a pavement 2 meters wide and 10 meters Os a
Joint indivisible obligation 6a
gM
Example:
A and B are jointly obliged

specific horse to C. ;
(such
ATION?
Example: A and B are solidarily liable to pay C
10,000 00 in two equal installments.

P1Y, ‘
ry indivisible obligation.
Solida
A and B are solidarily liable to give a
Example;
specific horse to C.
Divisible and Indivisible Obligations
indivisible obligations, concept
pivisible and
A divisible obligation is one capable of partial performance .
as the obligation to deliver 10 sacks of rice). The following
obligations are deemed divisible (Art. 1225):
1.
Perfor:
The foll
1,
When the obligation has for its object the execution of a

certain number of days of work (such as an obligation to
work for 1 week). ° ‘ ‘
When the obligation has for its object the accomplishment

of work by metrical units (such as the obligation to
construct a pavement which is 10 meters long and 2
meters wide). :
Analogous things which by their nature are susceptible of

partial performance.
An indivisible obligation is one not_capable of. partial
(such as the obligati i i

. en gation to deliver a specific car).
Owing obligations are deemed indivisible (Art. 1225):
mance
Obligations to give definite thin
give a specific horse), gs (such the obligation to
Those n *
Obligation re of partial performance (such as the
Ol a singer to sing one song in a program)
: Those Ww ;
but it is indivisiby
Obligation is to og
that the sum
taxes),
. by provision of law (such as where the

Pay a sum of money but the law provides
tin
here th : Pe , :
indivinny wet OF Service is physically divisible
must be paid in full as in the case of certain -
on
L
4, Those where the object or service Is physically divrsity

but it is indivisible $y the intention of the parties, (such :
> . , ~ yon &
where the obligation 1s to) pay a sum of money but the
- et
parties agreed that the sum must be paid on ful),
Obligations with a Penal Clause
Obligation with a penal clause, concept
An obligation with a penal clause is one which provides for

a greater liability on the paeit of the debtor in case of non.
compliance. The accessory undertaking on the part of the debtor
is called the penal clause The penal clause is generally
undertaken to insure performance and works as either, or both,
punishment and reparation. {Rodrigo Rivera vs. Sps. Salvador
Chua and Violeta Chua, G.R. No. 184472, January 14, 2015,
citing 4+ Tolentino, Civil Code of the Philippines, p. 260)
Example: D 1s obliged to construct a cominercial building

for C within a period of three months. The parties agreed that
should D fail to finish the construction of the building within the
said period, D shali pay C P1,000.00 for every day of delay as
penalty.
Function of penal clause
A penal clause is attached to an obligation in_order_t

insure performance and has a double function:
1. To provide for liquidated damages, and
a, To strengthen the coercive force of the obligation a

threat of greater responsibility in the event. of brea
4,
(Florentino vs. Supervalue, Inc., G. R. No. 17238h,
September 12, 2007}
. , a
Proof not required for actual damages suffered if there i
penalty - to
venr js 10
Proof of actual damages suffered by the creditor * ast

necessary in order that the penalty may be demanded.
: ity
1228) The obligor is bound to pay the stipulated inde?
without the necessity of proof of the existence and the
OBLIGATIONS -
: a3
pBLiGATIONS
used by the breach. (Florentino vs. Supervaiue, Inc,
5 caused
damage
cupta) |
ds of penal clause
“ Legal and conventional
* | Legal - Imposed by law.
Conventional ~ Imposed by the agreement of the
- eee ne
parties.
Subsidiary and joint |

Subsidiary - When only the penalty may be
enforced.
b Joint - When hoth the obligation and the penalty

‘ may be enforced.
a.
Rule in case obligation has 2 penal clause
General rule: The penalty takes the place of the damages

and interest in case of non-corapliance.
Exceptions, i.e., aside from the penalty, damages and
interest may also be demanded:

1. When there is a stipulation to that effect.
A stipulation for the payment of interest and

penalty apart from interest in case of delay is not contrary
to law, morals, good customs or public policy. (Nicolas vs.
ne Corporation , G. R. No. 158026, April 23, 2008)
hot aoe ae the amounts stipulated are not exorbitant,
inconscionable or contrary to morals and public
li : .
eos ae ot will sustain the amounts agreed upon

ations arising fr 5
of law between a. § itomn contracts have the force
good fark. parties and should be complied with in

and Ganins Pr yee Corporation vs. Philippine Amusement
5 ~S OTp., 458 SCRA 164 (2005)]
nen the debtor
oss © debtor refuses to pay the penalty,
When the
> debtor j i
t i
he obligation, (Art. 1296) -
This js
8Ction for futur
vai a
‘ can be no waiver of
€ fraud. (Art, 1171) mer hen gs
inane
fraud in the performance of
ae! |
Those where the object or service . pivsically divisible

but it is indivisible by the intention e the parties, (such fe
where the obligation is to. pay a Sum of ‘money but the
parties agreed that the sum taust be paid on full),
Obligations with a Penal Clause
Obligation with a penal clause, concept
An obligation with a penal clause is one which provides for

a greater_liability on the patt_of the debtor in case of non-
compliance, The accessory undertaking on the part of the debtor
is called the penal clause. The penal clause is generally
undertaken to insure performance and works as either, or both,
punishment and reparation, (Rodrigo Rivera vs. Sps. Salvador
Chua and Violeta Chua, G.R. No. 184472, January 14, 2015,
citing 4 Tolentino, Civil Code of the Philippines, p. 260)
Example: D is obliged to construct a comimercial building

for C within a period of three months, The parties agreed that
should D fail to finish the construction of the building within the
for every day of delay 48

penalty.
Function of penal clause
A penal clause is attached to an obligation in_order 0

sure performance and has a double function: -
——e
ree
1. To provide for liquidat
ed damages, and
2. stren .
oe oe ie the coercive force of the obligation Mt
renting te" Tesponsibility in the event. of brea
(Florentino vs, $ 72384

September 12, 2007) 8 Inc. G. R, No. }
Proof not re uired s?

Penalty See Sr actual damages suffered if ther :
not
Proof of actual .
damages suffered by the creditor ast
necessary j
1228) The oblige t the Penalty may be demanded:
i the necessit foie d to pay the stipulated inder of

~Y OF Broof of the existence and the meas¥
.
!
pity
ag
OBLIGATIONS
dama
supra)
ges caused by the breach. (Florentino vs. Supervalue, tnc.,
Kinds of penal clause
1.
Legal and conventional]
a. Legal — Imposed by law.

b Conventional - Imposed by the agreement cf the
parties.
Subsidiary and joint
a. Subsidiary - When only the penalty may be

enforced.
b, Joint — When hoth the obligation and the penalty
may be enforced.
Rule in case obligation has a penal clause
General rule: The penalty takes the place of the dainages
and interest in case of non-corapliance
Exceptions, i.e., aside from the penalty, damages and
interest may also be demanded:
1,
When there is a Stipulation io that effect.
A stipulation for the paymnent of interest and

penalty apart from inlerest in case of delay is not contrary
to law, morals, good customs or public policy. (Nicolas vs,
Del-Nacia Corporation , G. R, No. 158026, April 23, 2008}
For as long as the amounts stipulated are not exorbitant,
hot unconscionable or contrary to morals and public
800d faith. (Pryce Co i lippi

Tperation vs. Philippine Amusement
and Gaming Corp., 458 SCRA 164 (2005)] a
When the
debtor refuses to pay the penalty.
Ti : a
the obligation, (Art. 1226) of aud the performance of
This is go because there can be
action for future fraud. (Art. 1171) ne Weer ok an
sete terpamerimemenamic i
DTA erie
a:
pay a penalty of PSOUO0-
j 4 ; oe ee iw on due des in
i. Supposing that D failed to celerer os © date, many fey

just pay the penalty of PSGG6.60? 3
Anawer: No, becuse the debtor cannot exemgy
himself from the performance of the obligation by fae

paying the penalty, except when. this right has been
expressly reserved for him. (Art. 1227)
May © demand the delivery of 10 sacks of rice and the

payment of the penalty at the same time upon default of
p?
te
Answer: No. The creditor cannot demand fulfillment

of the obligation and the payment of the penalty at the
same time except when this nght has been clearly granted
to him, or uf after requiring fulfillment of the obligation, the
performance thereof becomes tnpossible unthout his fault,
he may alse enforce the penalty. (Art. 1227)
When the court may reduce the penalty
\, When the obligation has been partly complied with by the

debtor.
2. When the obligation has been irregutarly complied with by

the debtor,
tot
y
When the penalty is iniquitous or unconscionable ever!

there has been ne pertormance. (Art. 1229)
Edfect of aullity ef principal obligation, penal clause
i The nullity ef th Sey Diwation Garr eth
s - or @ re Origen: ais ArT Whee

mullite ef the 2 _ pal obliga —— re rem
Say SE Rae perma cluuse This is so because ef
chase. Kelcg iter . a

clause. SOI INST ant accessory undertakire. *
Stata by inset .
Ty eet Rides. aut
< e at mute ad the permed oh inthe.

OF fe yt ae _ o
a tte TSC, Chiiigacon, Ths P 4 See
Powe aad: oe Fapexgee pase a i
pet terse: aon stand toy tseld,
+ Chmase dees not carry Wt ye |
GBUIGETIONS
EXTINGUISHMENT OF OZLIGATIONS
Canaer of extinguiahment of obligations
f, Payment or performance
2. Loas of the thing due
3. Condonation or rernission of the debt
4, Confusion or merger of rights of creditor and debtor
5. Compensation
6. Novation
7. Annulment
8. Rescission
9. Fulfillment of resolutory condition
10. Prescription
Lk. Other catises
Payment or Performance
Meaning of payment
the Perfo: are Men » ;

1233) tance, in any other manner, of an obiteation. (Art
ce >,
Os, of th ? igh ‘ ‘ .
conaists in tae obiicaton ts to Pent & portrat, peyment
Ti . ~ .
td the periormance of the servine. Or F the abiiigetion ts
Sever 2 ; Se
he & CSItan: Tug, PAyINERt comsiists im the deli
Bow
aumat the payment be made
a. ™
* thd seas contemplated,
Payment means not only the delivery of money but alse
FOMSTE op of # tees at 3
. ite cen tm Geteery of the thing or rendition of che
er
MONG
The debtor of a thing cannot compel the credit
accept a different one although the latter May ie

the same value as, or more valuable than ike
which is due. (Art. 1244) at
Example; D is obliged to give C g Seik

wristwatch. D cannot compel C to accept a Ro} :
wristwatch even if the latter is more valuable thas
a Seiko.
In obligations to do or not to do, an act be

forbearance cannot be substituted by another act
or forbearance against the obligee’s will, (Ax
1244) tes
Examples: (1) D is obliged to paint C’s car,

He cannot substitute it with an obligation to paint
C’s house. (2) D borrowed P10,000.00 from C. ¢
gave D one year to pay provided D must not entera
casino before he has paid the debt. D cannot ask
C that the “obligation not to enter a casino” be
substituted with ‘not to drink and smoke” during
the term of the loan.
In obligations to give a generic thing whose quality

and ; circumstances have not been stated, the
creditor cannot demand a thing of superior quality.
Neither can the debtor deliver a thing of inferior
quality. The purpose of the obligation and other
(Art. 1246) :
Example: D is obliged to give C 50 yards

; ed to give ¥
textile. C cannot compel D to deliver first class
wool textile. Neither can D delivet ion

ue: eliver to C a
that shrinks substantially at first wash. - If
happens to be en i dent
E gaged in the sale of stu
uniforms, then D : ne textile fit
for that puree may give C the kind of
If the obli the
gation is a monetary- obligation,
payment must be in legal tender
nee
OBLIGATIONS
Legal tender, concept
Legal tender is the money or currency

which the debtor may compel his creditor to accept
in payment of his debt (whether public or private).
Medium of payment
Payment of debts in money must be made

in the currency which is legal tender in the
Philippines. However, the parties may stipulate
that the payment may be made in currency other
than Philippine legal tender at the time of
payment. (R. A. 8183)
Under Section 52 of Republic Act No. 7653

(The New Central Bank Act) as adjusted by
Monetary Board Resolution No. 862 dated July 6,
2006, the following are legal tender in the
Philippines:
1)) One thougand pesos (P1,000.00) _ for
Y denominations of 1-Piso, 5-Piso and 10-Piso

coins. -
(2)) One hundred pesos (P100.00) for

~ denominations of 1-sentimo, 5-sentimo, 10-
sentimo, and 25-sentimo coins.
é 3)) All bills are legal tender up to any.amount.
. Inflation and deflation, concept; value to be used
when payment is made
. Inflation is the increase in the currency in

circulation or a marked expansion of credit,
resulting in a fall in currency value, and a sharp
rise in prices. (Webster’s Dictionary and
Thesaurus). It is the opposite of deflation, or the
Sharp sudden decrease of money or credit‘or both
Without a corresponding decrease in business

transactions.
In case an extraordinary inflation, or
deflation of the currency should supervene, — the
Value of “the currency at the time. ofthe
establishment of the obligation shall be the basis of

Bled |
payment, there wa
contrary. (Art. 1250)
Example: D borrowed P1,000,000,

C payable at the end of 10 years.
1) Suppose that before Maturity of the te

an extraordinary — inflation superyen!
causing the value of the debt to fall
P500,000.00 on the date of maturity, how
much must D pay C at maturity?
00 fron
2) Suppose that before maturity of the loan

an extraordinary deflation supervenej
causing the value of the debt to rise to
P4,000,000.00 on the maturity date of the
loan, how much must D pay C at maturity?
The answer for each can be determined by

using the following formula:
A = (B/C)xB
Where:
A = Amount to be paid at matur'ty
s B = Amount of the obligation
C = Value on the date of maturity

Thus:
1) Extraordinary inflation
A = (P1,000,000.00/P500,000.00) x
P1,000,000,00
* 2%P1,000,000.00 d
= P2,000,000,00 (equivalent value
P1,000,000,00 on the dale
maturity)
2) Extraordinary deflation
A = (P1,000,000,00/P4,000,000.00) *
P1,000,000,00
{GATIONS
« P250,000.00 (equivalent value of

P1,000,000.00 on the date af
maturity)
When extraordinary inflation (or deflation) exists
In order that the effects of extraordinary

inflation (or deflation) are to be applied, fig
should an official pronouncement or declaration ”
competent authorities of the existence 0
extraordinary inflation (or deflation) during a given
period. (Almeda vs. Bathala Marketing Industries,
Inc., G.R. No. 150806, January 28, 2008.)
’ Delivery of mercantile documents
The delivery of promissory notes payable to

order, or bills of exchange or other mercantile
documents shall produce the effect of payment
only when they have been cashed or when through
the fault of the creditor they have been impaired. —
(Art. 1249)
Check not legal tender
A check is not legal tender and, therefore,

cannot constitute a valid tender of payment. Since
a negotiable instrument is only a substitute for
money, and not money, the delivery of such an.
instrument does not by itself, operate as payment.
The obligation is not extinguished and remains
Suspended until the payment by conimiercial

document is actually realized. (Bank of the
Philippine Islands vs. Sps. Royeca, G.R. No.
176664, July 21, 2008)
Tesap ment or performance must be complete (Art.
a.
The following are the exceptions:
If the obligation has been substantially performed
in good faith, the obligor may recover’ as though
there had been strict and complete fulfillment, less

damages suffered by the obligee, (Art. 1234)
Example:
extinguishers to B.
extinguishers to B,
S agreed to deliver 20 fire

After S has delivered 18 fire
there are no more fire
extinguishers available. He wants to complete th
delivery but there is no more stock available :
can recover the cost of 20 fire extinguishers a
damages suffered by B. (Note: The damage
suffered by B includes the cost of the two fe
extinguishers not delivered.)
b, © When the obligee accepts the performance know;

its incompleteness or irregularity, and withoy
expressing any protest or objection, the. obligation
is deemed fully complied with. (Art. 1235)
Example: D agreed to repair the car of ¢

and to paint it red. D repaired the car but painted
it maroon. C accepted the car without any

objection. D’s obligation is fully complied with
notwithstanding the irregularity of — the
performance.
When partial payments may be made
The creditor cannot be compelled to receive, and

the debtor cannot be compelled to make, partial
payments, except: ;
a. When there is an agreement to that effect. (Art

1248)
However, the payment must still be made a

full at some future time in accordance with th
agreement, to extinguish the obligation.
b. When the debt is in part liquidated (ie.

amount is fixed) and in part unliquidated, ihe
creditor may demand and the debtor may effect the
payment of the former without waiting £7
liquidation of the latter. (Art. 1248)
. 4 to gnaly
The unliquidated part, once it is ee
determined, must algo be paid, to extingu's
obligation.
Who must make the payment s
posse
Payment must be made b: debtor! who must

the following: ° © by the @ebton w
“1, The free disposal of the thing due.
|
a
‘Payment to p. Th
OBLIGATIONS
‘Free disposal of the thing due means that the

rty delivered should not be subject to any claim by,
erp icumbrances in favor of, third persons.
Thus, if a property mortgaged is used as payment

btor to a creditor other than the mortgagee, the
e de :
by a is not valid. The said property can be made to
rier for the debt secured in case of foreclosure of the
mortgage.
The capacity to alienate the thing:
The debtor must not be- incapable of giving

consent.
Effect on payment in obligations to give if debtor does not

have free disposal and capacity to alienate
The payment shall not be valid except in cases

provided by law (Art. 1239). If the payment is made, the
guardian of the incapacitated person (during the
incapacity), or the incapacitated person himself when he
regains or attains his capacity, may seek the annulment of
the payment. (Art. 1397) In case the debtor does not have
the free disposal of the thing due, the injured party may
seek to recover the payment.
retain debt . .
Payment made to the creditor b

y the debtor after
the debtor has been judicially ordered to retain ihe debt
Shall not be valid Art

: e . . 124 :
known as(garnishr Ob 3) The court order is
/ % . .
deen on ape: _ > owes C P50,000.00. On due date, C
that D has a rece but D cannot pay. C, however, ledrns
vable from X so he files a court action

S the court to order X not to make any
the payment wil a Court issues the order. If X pays D
retentig not be valid because there is an order

iu demen: on court. Should the court favor C in ia
Tequired ¢ © case filed by C against D, X can be
© pay again, this time to.C.,
68
OBLIGATO,
Payment by a third person
1.
2.
Creditor not bound to accept payment by a third Person
The creditor is not bound to accept Payment e

performance by a third person except in the following
cases:
a. When there is a stipulation to that effect.
fulfillment of the obligation such as qa Suarantor oy

aco-debtor. (Art. 1236)
Example: D borrowed P20,000.00 from'¢

with G as guarantor. G, as a person who has an
interest in the fulfillment of the obligation, may
compel C to accept the payment from him.
b. When the third person has an interest jin the
Rights of a third person who makes the payment
a.. Payment with knowledge and consent of the debtor

1) He can recover what he has paid. (Art.
1236)
2) He is entitled to be subrogated in the rights

of the creditor such as those arising from
mortgage, guaranty or penalty. (Art. 1237)
Example:
D owes C P10,000.00. The obligation is

secured by a mortgage of D’s lot. T, a third persom
pays C the amount of P10,000.00 with the consent
of D. T can recover the amount of P10,000.00 ae
D. If D cannot pay, T, having been subrogated
the rights of C, can foreclose the mortgage.
: ill
b. Payment without the knowledge or against the ™
of the debtor
He can recover only insofar as the pay’ wo

has been beneficial to the debtor. He is
entitled to subrogation. (Arts. 1236 and 1237)
Cc
; “xample: D borrowed P20,000.00 en

with G as guarantor. D pays C P2,000.00, D
third person, pays C P20,000,00 believing vthovt
Still owed C P20,000.00. The payment is ;
ment
dq
oBLI
693
GATIONS
nsent of D. In this case, T can only recover

kin 000.00 from D, the amount that was beneficial
to D If D cannot pay, T cannot go after G because
he is not entitled to be subrogated in the rights of
C.
Payment by a t
reimbursed
The payment shall be deemed to be a donation
which requires the debtor’s consent.
b ‘If the debtor does not consent, the payment shall
, nevertheless be valid to the creditor who has
accepted it. (Art. 1238) In such a case, the third
person can only recover insofar as the payment
has been beneficial to the debtor; he is also not

entitled to subrogation. (Arts. 1236 and 1237)
hird person who does not want to be
a.
To whom shall payment be made
1,
To thecreditor »(the person in whose favor the obligation
earn
has been constituted)

Payment to an incapacitated creditor
The creditor must be capacitated to receive the
payment, Payment to an incapacitated creditor is not valid

except in the following cases: "
a. If has kept the thing delivered.
6 Example: D borrowed P10,000.00 from C.

( n due date, D paid the debt to C who had become
Poon bas eee only P4,000.00 and threw away
P4‘000-00" then payment will be valid only up to
Insofar as
(Art, 12a)” payment has been beneficial to him.
Example: In the ab i
Bs : Ove example, if C used
peyinen ate buy his food, and lost the balance

WW be valid onl
amount beneficial to ee HO RB.08, the
To th
© creditor's gue
‘essors in interest, such as his heirs
3 To any person authorized to receive payment
Payment to an unauthorized third person
* As a general rule, payment to an Unauthoriog

third person is not valid, except in the following Cases.
a. If the payment has redounded to the benef,

creditor, which benefit need not be proved
following cases (Art. 1241):
t Of the
in the
1) If after the payment, the third Persog

acquires the creditor’s rights (such as when
the third person becomes the assignee gf
the instrument evidencing the credit).
2) If the creditor ratifies the payment to the

third person.
3) If by the creditor’s conduct, the debtor has

been led to believe that the third persca
had the authority to receive payment (such
as when a water service company gives
collector’s uniform to a third person whois
not its employee and the debtor gives his
payment to such third person believing tht
he is the authorized collector).
b. If the payment is made in good faith to a thir

Person in possession of the credit. (Art. 1242)
. In this case, the third person should &

both in possession of the instrument and th
credit. '
Example: M makes a note payable @

bearer and delivers it to P. The note, howevet
lost by P and is picked up by A. A goes f0 ee
collect on the note. M pays A believing in good ood
that A is the intended bearer. M is released
liability.
Where payment must be made
1.
2.
If there is a stipulation, then in the place designated.

If there is no stipulation —
71
OBLIGATIONS
igati i i determinate thing,

f the obligation is to give a
7 tyherever the thing might be at the time the
obligation was constituted.
igation i i ic thing or an
obligation is to give a generic
Ullpetn to do, then at the domicile of the debtor.
(Art. 1251)
(Special forms of payment
1. Dation in payment
2. Application of payment
3. Payment by cession
4. Tender of payment and consignation
Dation in payment, concept
Dation in payment (dacion en pago, adjudicacion en pago

or datio in solutum), is a special form of payment where the
ownership of property is transferred to his creditor to pay a debt
in money. (Art. 1245) It is governed by the law of sales since it
partakes in a sense the nature of a sale with the creditor in effect
buying the property of the debtor.
noveti What actually takes Place in dacion en pago is an objective

ovation of the obligation where the thing offered as an accepted
ion of the performance of an obligation is considered as
Dtircheme — contract of sale, while the debt is considered the
Prerequisite ed it In any case, common consent is an essential
extinguish it sale or novation, to have the effect of totally
ig the debt or obligation. (Banco De Oro Universal

Tuling was caitier hon 173856, November 20, 2008.) (A similar
Securities and €lid in Bank of the Philippine Islands vs.
20, 2007) anee Commission, G.R. No. 164641
Proposes to Cc a D owes C P10,000.00. On due date, D
- Cc
Moneta .~ 88rees to D’s proposal i
TY Obligation ic’ ce 7 Proposal and accepts the ring. i
ligation is extinguished by dation inv papineart oo
accept a ring in payment of D’s debt. of .
in atemnancecanci
OBL
"9 IGATIONS.
Application of payment
1. Concept at
Applicaton of paymer
It the designation of the debt to which Paymen,
i » debtor owes several

shall be applied when the de debts ;
favor of the same creditor. (Art. 1252) Mn
2. Requisites of application of payment
a, There must be two or more debts.
b. The debts must be of the same kind.
c. The debts are owed by the same debtor to the Same

creditor. ;
d, All debts are due, except:
1) When the parties have stipulated that

payment may be applied to a debt not yet
due, or
2) When the application is made by the party

for whose benefit the term has been
constituted. (Art. 1252)
wo
How application is made
a. The debtor who is given the preferential right t

apply the payment, designates the debt to be paid
b. If the debtor does not make the designation, th

creditor makes it by indicating the debt being paié
in his receipt. If the debtor accepts the rect?
from the creditor, the debtor cannot compla=
unless there is a just cause of invalidating the
contract.
c. If neither the debtor nor creditor makes t

designation, or application cannot be inferred fro™
the circumstances, payment shall be applied
Operation of law as follows: :
1} Payment shall be applied to the ~
among those due, which is the ™

onerous to the debtor.
re and
Hf the debts are of the same natu 1 de

burden, payment shall be applied te os we
debts Proportionately, (Arts. 1252, Mm 3
2)
OBLIGATIONS
In all instances, if the debt produces interest,

f the principal shall not be deemed to have been
the interests have been covered. (Art. 1253)
Note:
ayment 2
rade until
IIlustration 1: ‘
D owes C the following distinct debts: P1,000.00
P1,000.00 due on May 5, P1,000.00 due on
a c J r
due oP 1,000.00 duc on May 15, and P1,000,00 due on
’ ,
May 20.
If today is May 16, and D has only P1,000.00 but

wants to pay C, D may apply the payment to any of
the debts due on May 1, May 5, May 10 or May 15.
He cannot apply the payment to the debt due on
May 20 because it is not yet due unless he is
allowed by stipulation with C or the benefit of the
period was given to him (D).
b. If D does not apply the payment, the right to apply

it is shifted to C. C may apply the payment to any
of the debts due on May 1, May 5, May 10 or May
15. He cannot apply the payment to the debt due
on May 20 because it is not yet due unless he is
allowed by stipulation with D or the benefit of the
period was given to him (C).
a,
ce. If neither D nor C applies the payment, payment

shall be applied proportionately to the debts due
on May 1, May 5, May 10 and May 15 at P250.00
f each. In case the debt due on May 5 is secured by
a pledge, then payment shail be applied to such

debt because it is the most onerous to D.
Illustration 2: .
D owes C P7,000.00 due on .

worth P5 VU. € on May 1, 5 sacks of rice
If none a a aide on May 5; and P5,000.00 due on May 8.
t :
P5,000.00 he debts have been paid as of May 8 and D has
D may,
apply the payment to the debt due on May 8, *
4
|
|
MDL,
74 wOTIONg
Payment by cession
1. Concept
i is the abandonme;
Payment by cession 1s ndonment
assignment by the debtor of all his property in favor of o
creditors so that the latter may sell them and recover thei
claims out of the proceeds. (Art. 1255)
The cession or assignment operates only t

authorize the creditors to sell the debtor’s property, hence
ownership is not transferred to them. Unless agreed
upon, the cession releases the debtor from hi,
responsibility only to the extent of the net proceeds of the
things assigned. (Art. 1255)
2, Kinds of payment by cession
a. Voluntary or conventional - Agreed upon by the

parties.
b, Legal - Cession by operation of law.
3. Requisites of payment by cession

a. There must be two or more creditors.
b. The debtor is insolvent.
e The debtor abandons all his properties excep!

those which are exempt from execution.
d. The creditors accept the abandonment. |

4. Illustration
D owes X, P50,000.00; Y, P20,000.00; and 2

P30,000.00. All the obligations are due but D has ay,
worth P80,000.00 only. D offers to assign his assets ©
Y and Z so that they may sell them and apply the P' if
to their Tespective claims, X, Y and Z accept the offer
the assets are sold for 70,000.00, then D will be Telefe,
from his obligations only up that amount, unless
Creditors agreed to release him completely of his debts.
ee.
oBLIGATIONS
payment by ¢
Pa ent by cession
_ Parmer st be two or 1.
1,
2,
3.
5.
Tender of payment and consignation
1.
ession and dation in payment distinguished
Dation in payment
Plurality of creditors is
‘ not required.
re creditors. 4
Lai is insolvent. 2. The debtor may not. be

The debtor is insolve insolvent. °
btor’s _ 3. Does not affect all the

Affects all the e debtor’s properties.
rties, except those
prope :
a —— ae 4. The creditor becomes
eethortzed to sell only the owner — of the
the debtor’s properties. properties. given as

: payment.
The debtor is not 5. The debtor is released
released as a rule. as a rule.
Concept
Tender of payment is the act of the debtor of

offering to his creditor what is due him.
Consignation, on the other hand, is the act of

depositing the sum or thing due with the judicial
authorities whenever the creditor refuses ‘without just
cause to accept the same, or in the cases when the

creditor cannot accept it. a —
Mlustration of tender of payment and consignation.

D borrowed P50,000.00 from ¢ On due d
ere payment in P20.00 bills totalling P50,000,06 ‘e
bald tn sed to accept the payment demanding that he be
tendered gher denominations, Since the payment
refusin y D was legal tender, C was not justified in
& to accept it. D may thus consign the payment.
Requisites (ste
‘0 extinguish t
a,
Ps).for-tender of : wo,
he obligation payment. and_consignation
There m
1256) ust be a valid tender of payment. (Art.
Thus,
the thing centee payment being tendered must be
templated, in legal tender, complete,
76
b. The credito
SS STIORG
on the day it fails due, among other Tequisites 4,

a valid payment.
r refuses without just cause to
Tecej
the payment. (Art. 1256) ve

i in the fulfillm
The persons interested in t ent of
obligation must be notified by the debtor ot ie
intention to deposit the sum or thing due with the
judicial authorities. (Art. 1256).
The notice will enable the credity

mortgagees, guarantors, sureties, solidary debtors,
among others, to reconsider accepting the payment
and avoid litigation. The notice is also required ty
give the creditor the opportunity to accept the
payment because the expenses of consignation wil
be charged to him for his non-acceptance of the
payment. This notice is mandatory. Without it, the
consignation is void: (Dalton vs. FGR Realty and
Development Corp., G.R. No. 172577, January 18,
2011)
d. The sum or thing due is deposited with judicl

authorities. (Art. 1258) ,
e. The persons interested in the fulfillment of the

obligation must again be notified by the debtor thst
the consignation has been made. (Art. 1258)
_ Without this subsequent notice, a

consignation is void. [Tiaoqui vs. China Insur®
Surety Company, Inc. (CA), 45 OG 2558]
Effect of consignation duly made
: pie
Y ask the judge to order the cancellation o
igation. T of
pele ts The obligation shall be extinguished a es
declared thet mented the consignation or the jude at
{Art. 1260) consignation has been properly

Debtor’s rj . f
‘or’s night to withdraw the sum or thing consign ee
OBLIVe
Before acceptance by the creditor of the
* consignation or the declaration by the judge that
the consignation has beer properly made —
i thing
The debtor may withdraw the sum or t
consigned as a matter of right, ic., the ana
consent is not required. Such withdra
produces the following effects:
1) The obligation shall remain in foree. (Art

1260) -
2) The co-debtors, guarantors, and suretics

are not released. (Art. 1261)
i ignation
. After acceptance by the creditor of the consigna
or the declaration by the judge that the
consignation has been properly made —
The debtor may withdraw. the sum or thing
consigned only with the consent of the. ereditor.:
Such withdrawal produces the following effects:
1) The obligation shall be revived. (Art. 1260)
7) The creditor shall lose every preference

which he may have over the thing.
3) The guarantors, and sureties are released

unless they consented. If there are several
debtors and their obligation is solidary,
such obligation will become a joint
obligation. cl
Thus, the creditor can no longer

proceed against the guarantor or surety if
later on the debtor cannot pay. As regards
the co-debtors, they are not released from
liability they being principal debtors.
Their obligation becomes joint if it was
previously solidary:
5. When consignation, without a previous tender of men

will produce the same effect pey t
a.
When the creditor is absent or unknown or hess

not appear at the place of payment.
; the time it is due. , at
When, without just cause, he refuses to 9. :
c.
receipt.
d. When two or more persons claim the same Tight fy
collect.
e. When the title of the obligation has been lost. ua
1256)
Loss of the Thing Due
— 0
Lose. concept VerateL
, od sserter's ° “
A thing is considered lost when it perishes, or goes out f

commerce, or disappears in such a way that its existence js
unknown or it cannot be recovered. (Art. 1189, par. 2)
. Los includes the physical or legal impossibility of the

service in which the obligation consists.
Loss, effect on the obligation

1, Loss of a determinate thing
As a general rule, the loss of a determinate thing
extinguishes the obligation. (Art. 1262). ‘The following

are the exceptions:
(Art. 1269) the fault o
Loss of the thing while in the possession of

i debtor shall be presumed to be due to his fault
— Proved otherwise, This presumption 40
oth apply in case of earthquake, flood, stor™ a
Whey natural calamity, (Art. 1265) |
ae Whe, the debtor has incurred in delay. (Art 12621
debtor heer vided by law, (Art, 1262) as when a
19 oF more mised to deliver the same thing,

interest. (Art. 16s) who do not have (D° "i
When it is stipulated by the parties, (Art. 1262)
Es
OB
When the nature of the obligation requires the
° assumption of risk. (Art. 1262)

debt proceeds from a criminal offense
Fe When tm : ho should receive it refuses to
unless the person W

ent it without just cause. (Art. 1268)
Loss of a generic thing

i thing of the same
The loss or destruction of anyth:
kind does not extinguish the obligation. (Art. 1263)
because a generic thing does not really perish (“genus
nunquam perit’).
Exception: In the case of a “delimited generic

thing,” such as “100 cavans of rice from my harvest this
year” when such harvest is completely destroyed.
F Loss in personal obligations (obligations to do}
a. When the prestation becomes legally or physically

impossible without the fault of the debtor, the
obligation is extinguished. {Art. 1266)
b. When the service has become so difficult as to be

manifestly beyond the contemplation of the parties,
the obligor may also be released in whole or in part

(Art. 1267).
Effect of partial loss
. The courts shall determine whether under the

Ncumstances, the partial loss of the object of the obligation is so
Portant as to extinguish the obligation. (Art. 1264).
Creditor’s right if the loss is caused by athird person —-
thing, 7 the obligation has been extinguished by the loss of the
debi ne es shall have all the rights of action which the

1269) Y have against third persons by reason of the loss. (Art.
Example: D j : : ;
Steals the poe D is obliged to give.a specific carabao to C. X
extinguis bae and Slaughters it. D's obligation |. is

the right beg has aright to proceed against X. Assignment of
the right. oC is not required since it is the law that gives C
Condonation or Remission
Condonation or remission, concept ;
Candonation or remission is the gratuitous Abandon,

by the creditor of his right (4 Sanchez Roman 422), tn jt
‘ Lai
language, this tefers to the forgiveness of an indebtedness, t
extinguish tho obligation, it requires the debtor's consent, ik s
1370)
~ Example: D ewes C P3,000.00. The debt is evidenced by

a promissory note. C informs D that he will no longer collect thy
debt and delivers the promissory note to D. D accepts cy
generosity. D's obligation is extinguished by condonation o

remission.
Kinds of condonation or remission

L As to amount or extent
a. Total - When the total obligation (both principl

and accessory obligations) is remitted.
b, Partial - When only a part of the obligation, or otll

the accessory obligation is remitted.
2. Asto form
a. Express - One made orally or in writing. It must,
to be valid, comply with the formalities of donation

as follows:
1) When the remission involves an immovable

property, the remission and the acceptin
must be in a public instrument. of
public document must specify the por
remitted and the value of the charges 9) :
the debtor (donee) must satisfy. (Art: m4
a
2) When the remission involve>
movable/personal property —
5 exceet
If the value of the properly q_ the

P5,000.00, the remission a *
aveptance must be it 7
(public or private).
opLiGATIONS
b) If the value of the property is

P5,000.00 or less, the remission and
the acceptance may be in any form,
i.c., oral or in writing (public or
private). The remission, however, if
made orally, requires the
simultaneous delivery of the thing or
the document representing the right
remitted. (Art. 748)
f the
Implied - One inferred from the conduct ©
’ partic®, guéh as when the creditor voluntarily
delivers the private document evidencing the credit
to the debtor. (Art. 1271)
Presumption when private document ovidencing debt is

found in the possession of the debtor : ;
‘When the private document evidencing the debt is found

in the possession of the debtor, the same is presumed to have
been delivered voluntarily by the creditor to the debtor (so as to
remit the obligation) unless the coritrary is proved. (Art. 1272)
Thus, there is no such presumption if the document is a public
document which is easily available being a public record.
Presumption when thing. pledged after its delivery to the
_ Steditor is found in tho possession of tho debtor or of a third
person who owns the thing
___ When the thing pled i i

found { pledged after its delivery to the creditor is
sledge tee reeeosion of the debtor, the accessory obligation of
(Art. 1274) med remitted but not the principal obligation.
Effect o
the
1,
f remission/ren:
unelation of princi z
accessory obligation and vice-ve P pal obligation on
The remission of the
accessory oblirati
Principal ft uation (based on the accessory follows the
The remi
w~ Temission of the phllpatt , carry

with € accessory obligation does
it that of the Principal debt. tet 1273) a
praaniesnehcinal Re PT A
principal debt extinguishes the —
snide
@
BS
MATOS {
Confusion or Merger
Confusion or merger, concept
Confusion or merger is the mecting in one person
: of
qualities or the characters of creditor and debtor. (Art, 1275) the
order. Pindorses the note to A, A to B, B to C. On due
Example: M makes a promissory note payable
to Py
., da
indorsed the note back to M. The obligation here is extin te, ¢
because M is now the creditor of himself.
Buisheg
Effect of merger when there is a guarantor

1.
Merve: in a jotnt obligation
Merger which takes place in the principal debtor «

creditor benefits the guarantors. (Art. 1276) Here, bo
the principal obligation and the guaranty em

extinguished.
Example: M owes P 10,000.00. The debt whichis

evidenced by a promissory note, is guaranteed by G.?
‘assigns the note to A, A to’B, B to C, and C back toll
M’s debt is extinguished. G’s guaranty is likewis
extinguished since the principal obligation it secures ha
been extinguished. The guaranty, being an accesso
contract, cannot stand by itself.
Merger which takes place in the person of the guarailt

does not extinguish the obligation. (Art. 1276) Here,o™
the guaranty is extinguished.
_ Example: If in the immediately preceding exami

C assigns the note to G instead of M, G’s guaranty
. ; itot
extinguished because the qualities of debtor and cred
are merged in his rson, A} obii ation is®
ota However, M's 7
: ; as the new creditor, may still 2° ae

him but with the obligation no longer having 4 security:
-M a
a wag debtor
creditor ne an extinguishes only the share of the joint de
om
7 rege cone
~ -fArt. 1277) 1 the characters of debtor and ereditor ©". *.
SPte
OBLIGATIONS
le; A, B and C are joint debtors of X for P9,

ea note evidencing the debt is assigned by X to ¥, ¥
THe pr Z to A. A's share of P3,00G.00 is extinguished by the
to 2, an ‘the qualities of debtor and creditor in his person. B
merger still liable on the note with A now as the creditor for
p6,000.00.
Merger ina solidary obligation
in one of the solidary debtors or solidary creditors

sntinguishes. the whole obligation. (Art. 1215) The solidary
debtor in whom the characters of debtor and creditor concur can
demand reimbursement from his co-debtors. (Art. 1217) In the
case of the solidary creditor, he shall be liable to his co-creditors
for the share corresponding to each of them (Art. 1215).
Example: A, B and C are solidary debtors of X for

p9,000.00. The promissory note evidencing the debt is assigned
by X to Y, Y to Z, and Zto A. The whole obligation is extinguished
by confusion with all the debtors now being the creditors. A may
demand reimbursement from B and C at P3,000.00. each.
_ Compensation
Compensation, concept -
Compensation shall take place when two persons, in their

own Tight; are créditors and-debtors of each other. (Art. 1278) It-
fo mode of extinguishing : ebligations- whereby two persons ‘in
eir i Srinct ~ : Soe

“each other ‘with: Principals are mutual debtors and creditors of.
with ; * Teak ‘ Ss
obligations to which ne hece eee Hauidated and demandable:
com: ty eeu ~. -" . = =e aes i :

ine fo au communicated by third parties. (Union Bank of °
FENG Bank‘of the Philippines: G.R2No. |

uery'20, 2014} sen ee BRNO.
Both depron “D owes’ C.P5,000.00.. C owes D P5,000.00.

Pay each fa and demandable. The parties do not need to
compensation, °° ‘Heit obligations are extinguished. by
a . compensation
As to amount or extent
i
t
¢
,
t
2g
i
1
|
|
|
tahiti cece Stain attire nti det Ee
84
OBLIGATION,
Total - When the debts are of the same amour,

(Art. 1281)
Partial - When the debts are of different amo,
(Art. 1281) ne
As to cause or origin:
a.
Legal - This takes place by operation of law ang

extinguishes both debts to the concurrent amoupy
(Art. 1279) even though the debts are payable a
different places (Art. 1286) and the creditors and
debtors are not aware of the compensation. (Art,
1290) Legal compensation operates even against
the will of the interested parties and even without
their consent. Such compensation takes effect,
ipso jure (which means “by the law) itself’), its
effects arise on the very day on which all the
requisites concur. (See Nisce vs. Equitable
PCIBank, Inc., G.R.-No. 167434, February 19,
2007.)
It has the following requisites (Art. 1279):
1) That each one of the obligors be bound

principally, and that he be at the same time
a principal creditor of the other. .
Evamples: (a) D owes C P5,000.00.

C owes D P5,000.00. Legal compensation
takes place because D and C are princi D
debtors and creditors of each other. (b) C
owes C P5,000.00 with G as guarantors
owes G P5,000.00. Legal compens, C
may not take place between D a of
because while D is a principal debto eal
C is not even a debtor of Pete
compensation may not take place ™ og
G and C because although Cis a P edt
debtor of G, G is only a subsidiary :
of C. :
Exception to first requisite wp

set Hor
A guarantor = mey | iredit!

compensation as regards what a 1280)
may owe the principal debtor. (Ar 4
opLiGATIONS
2)
3)
4)
_ That both debts
8&5
Example: D owes C P5,000.00 with

G as guarantor. C owes D P4,000.00. On
due date, C demands payment from D but
D no longer has any assets so C goes after
G. G may set up compensation up to
p4,000.00 so C can collect from him
P1,000.00 only.
That both debts consist in a sum of money

or if the things due are consumable, they
be of the same kind, and also of the same
quality if the latter has been stated.
The term “consumable” actually

refers to things that are fungible or capable
of substitution. Thus, there can be legal
compensation if “D is obliged to give Ca
fountain pen and C is obliged to give Da.
fountain pen,” since the objects, being

generic, are fungible although not
consumable. However, there can be no
legal compensation if “Dis. obliged to give C
a specific Parker fountain’ pen and C is
obliged to give D a specific Cross fountain
pen,” because the objects are not capable of
substitution.
That the two debts be due.

The maturity date of both debts
- must have arrived for legal compensation to
take place. Here, it is not Tequired that

both debts have the same due date.
be liqui
demandable. a ee
“Liquidated” means the amount of
the debts has already been determined or is
saa determinable. On the other hand,
€mandable” means both debts must be
Enforceable, so if o
cable, ne of them has

Prescribed, legal compensation cannot take
Place, ;
Ps “That over
retention or contréversy commenced by
neither of them there be any: —
c.
‘thereof.
‘Example: fa.‘ me 4 Ee 8
third persons and communicated in dy.

time to the debtor.
Example: D owes C P10,000.00. ¢

owes D P10,000.00 C also owes x
P10,000.00. X sues C and asks the cour
to order D not to pay C so that in the event
the court renders judgment in favor of X, D
will have to pay X. The court issues the
order to D. There can be no legal
compensation between D and C because
there is an order of retention to D with
respect to his debt to C. (See Art. 1243)
Voluntary or conventional - This takes place by

agreement of the parties, such as when they agree
to the compensation of debts which are not yet
due. (Art. 1282)
Example:
D owes C P5,000.00 due on September 20,

2015, while C owes D P5,000.00 due on September
30, 2015. On September 1, 2015, for instance, D
and C may agree thet their debts be compensated.
Judicial (or set-off) - This is compensation ordered

by the court. In Art. 1283,-if one of the parties to 4
suit over an obligation has'a claim for dameges
against the other, the former: may. set it off PY:

proving his ri SEED IDEN Od
ish -
T, ‘a Weave hyn cAcpie ctaction 2)

P rayel agent, sued” P'for qgllécto
cided goo, TePresenting “thie “balance of "P. fort
answer, P sep Ok whith T atranged. 19 a
amounting (med that T owed him damage
family se uee, © 10.00.00 ‘which He. (P) afd,
tained as a result of the substanda*
hotel ;
was ssl Modations that T booked for the™- 4

the amount ieee his right to said damages oo
the court ; fof. Any compensation declared
is one of jud
ght to said damages and the amount

5 Oe My ; Tee te aot ‘ ‘o A
Op
Facultative — is is compensation that may be

claimed or opposed by one of the parties (such as
when not all the requisites for legal compensation
are present).
Example: D owes C P5,000.00 which is

due and payable on September 1, 2015, while C
owes D P5,000.00 which is due and payable on or
before September 30, 2015. On September 1,
2015, C may claim compensation because he was
given the benefit of the period, i.e., he may choose
* to pay on or before September 30, 2015. Should D
claim compensation on September 1, 2015, C has

the right to oppose it because he cannot be
compelled, although he may opt to pay, before
September 30, 2015.°:
Following are instances of facultative

compensation (because legal compensation cannot
take place)
1) When one of the debts arises from a

deposit. (Art. 1287). A deposit is a contract
where a persori receives a thing belonging
to another for safely keeping it and of
returning the same. (Art. 1962) The -
depositor may claim compensation, or

oppose one that is’ being claimed by’ the
depositary. The deposit referred to here is
different from. a bank deposit which is
actually a contract of loan. In a bank
deposit, the bank and its client have a
debtor-creditor relationship. Either one
therefore may claim compensation. 2
. Example: C is the depositary of D’s

ting. Previously, D made a promise to give
a ring to C. If D demands the return of the
ring he deposited with C, C cannot refuse to |
return it by claiming that D owes him a

Ting. However, if C demands the delivery of
@ Ting from D as D had promised, D may, at
his option, set off the claim of C against his
claim
deposited with C. '
ag
2)
3)
4)
OBLIGATION,
When one of the debts arises from 4,

obligations of a bailee in commodatum
(Art. 1287) Commodatum in a contrac
whereby the bailee acquires the Ube
without compensation of the thing loaned
but not ita fruits. (Art. 1935) Here, the
lender may claim compensation, or oppose
one that is being claimed by the borrower,
Example: C borrowed D'a bicycle,

D has a promise to give a bicycle to C. Ifp
demands the return of the bicycle he lent to
C, C cannot refuse to return it by claiming
that D owes him a bicycle. However, if C
demands the delivery of a bicycle from D as
D had promised, D may, at his option, set
off the claim of C against hie own claim for
the return of the bicycle that he loaned to

Cc.
e
When one of the debts arises from a claim

for support by gratuitous title. (Art. 1287)
The support referred to here is future
support, not support in arrears. (Art. 301)
' The party entitled to receive support may
claim compensation, or oppose one that

being claimed by the party required to #
support.
Example: H, husband, was pote

by the court in a case of legal Ce W;
give a monthly support of P20,000.00 40
his wife. H has not yet given the at i
W for the present month. On a toad
hand, W owes H P20,000.00 by way
W may claim compensation but not HL ni
When one of the debts consists (ast
liability arising from a penal offens¢- cai
1288} Here, the offended party may
compensation but not the offender.
Example: D owes C 50,000.00 .
rammed his jeep on the fence of D, 7

+
5 <n temiti©:
way of loan. One day, C inten sing |
damages thereon amounting to P50,000.00.

C was charged and cormricted of the crime of
malicious mischief. He was ordered to pey
D 759,000.00 for the damages on the fence.
ff D demand, the peyment of wach
damages, C cannot claim compensation. on
the ground that b owes him P50,000.60 by
way of loan. However, if C demands the
payment of the loan from him, D may claim
compensation by offsetting it againet his
clairn for damages against C.
Compensation when ome of both debts are rescissible or

voldable '
When one or both debts are rescissible or voidable, they

may be compensated against each other before they are judicially
rescinded or avoided. (Art. 1284)
Compensation when the debts are payable at different places
Compensation takes place by operation of law, even

though the debts may be payable-at different places, but there
shall be an indemnity for expenses of exchange or transportation

to the place of payment. (Art. 1286)
Rule on application o
Several debt: f payment to apply when there are
* susceptible of compensation
E -
Vations mene _D owes C the following debts on account of
C; 3,000.00, was purchases which he made from the store of
15, 2015; pg 600.00 March 1, 2015; P3,000.00, due on March
= April 15, 3015 an on March 31, 2015; and P3,000.00 due
frat S, 2015. On amine Cther hand, owes D P3,000.00 due
D dow of the debts due’ a 2015, D may claim compensation
the rig et designate the rts arch 1, March 15 and March 31. If
that teh apply is shifte oe e which compensation shall apply,
three dete” compensation shat and if C also fails to avail himself
due at P1009 06 all be applied proportionately to the
Rhee a -VU each.
i Wh eament
N th, .
“Nnot pas — ent was wi
tup against the with the debtor’s consent, he
assignee the compensation that
on compensation of debts
&
&
’ Se
he
w
NG |
would pertain to him against the assignor WF
les
reserved his right to the compensation, 8 he
Example: D owes C P20,000.00 due on Mare}

C owes D P8,000.00 due on March 10. On Mareh os
assigned his credit right to T with the consent of D ie
March 15, T can collect from D P20,000.09, put Den
collect P8,000.00 from C. If D reserved his right to th
compensation that would pertain to him against ¢
amounting to P3,000.00 when he consented ty the
assignment, then T can collect only P12,000.00 from hig
(D).
If the debtor was notified of the assignment but he did ng

give his consent thereto, the debtor may set up
compensation of debts maturing before the assignment
but not of subsequent ones.
Exarapie: 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 Merch 1; P5,000.00 due on March 8
and P5,090.00 on Merch 14. On March 12, C assigned
his credit right to T with notice to D but D did not g-ve bs
consent to the assimment In this case, T may collet
from D P9,000.00 because D can set up compensem
with respect to the debts due on March 1 (P6,000.0% =*
March & (P3,090.00) which had already matured at >
Hime of
PO ak Ste —_ *
he can set up compensation of ali debts manirms
the time he obtcine knowledge of the assignment 3
et
Ezample: D owes C P20,000.00 due cn
‘ os eying oe
C, on the other hand, owes D the followé see
PESOS dae om March 1; P3,000.00 due on MAT
if the assignment was without imowledgs of the —
P5.000.06 dus or March 14. and 72,000.00 due Fees

, s ~ 2 : » =: + tO a
21. On Merch 12, C assigned his credit ight ©
den ER OG 2 AIAN A ETI N OLR AEE TN
the kneveteigc of BD On Merch 16, D learned po

assignment. In this case, T may collect fom D* ©
because BD may set up compensation with oot
Getts due on March 1 (P2,060.00), March 8 (F3. mm
and March 14 (P5,000.00}, which debts have *
2
¥
ah
© ¢
rm
ton in solidary obligation
_ sndebted to xX, Y and Z, solidary creditors, for

A is m on June |, 2015. ® in turn owes A P30,000.06
930,000.00 mag 9015. Both obligations being due, they are

due o7 ood by ‘compensation. However, X has to give Y and Z
ishe@ ©
ive shares at P10,000.00 each because compensation

their respoctye the solidary creditors shall render him liable to
for the share in the obligation corresponding to them.

hers 10 ,
Novation
Novation, concept
Novation is the modification or extinguishment of an

obligation by another, either by changing the object or principal
condition, substituting the person of the debtor, or subrogating a
third person in the rights of the creditor. {Art. 1291} Novation
serves two functions - one is to extinguish 2n existing obkgation,
the other to substitute a new one in its place. (Starbright Sales
Enterprises, Inc. vs. Philippine Realty Corporation, et. al., G.R.
No. 177936, January 18, 2012)
ection gre instead a ring to C, there is novation by

al nee et Or prestation. (2) If the parties acree that T
Whelitmine ee of D as the new debtor, there is novation by
ee re eaten Of the debtor. (3) If the parties later
wel A BRAT) «33 +, - ar ~
*ten by iter Place of C as the new creditor, there is
- S Sipr +. - :
Seditgg “gatng a third person in the rights of the
: of novation
‘a There Rudy be 4 previo t .
2 ~* Previous valid obligation
There mice valet Sc i
Zen ana
Stingnist, the i his berry
- E
Can be
debtor
= ten the parties to modify

Betton, ©xcept in the following:
© Person of the
mad <p
ie © even if it j
debtor is changed which.

S against the will of the
3. There must be the extinguishment of the old obligation
4, There must be validity of the new obligation. (See Sueng
vs. Land Bank of the Philippines, GR. No, 17471,
September 17, 2008; and Transpacific Battery Com a
Secarity Bank and Trust Co., GP No. 173565, May t
Kinds of movation
i. dexosding te object or purpose
a Real or objective - Novation by changing the oiet
oF principal condition. fArt. 1291}
bh Personal or subjective — Novation by chang: f&
WE
the creditor: of
1 When a creditor pays another CTedity
) is preferred, even without the debint
knowledge;
2) When, even without the knowledge of the

debtor, a person interesteg in the
fulfilment of the obligation Pays, Withs
prejudice to the effects of confusion me
the latter’s share. - _-
partes idebter or creditor
ij Substimting the person of the OF

(atways with the creditor's consent
2} Expromision - Here, a third ra
initiates the substitusee senot
assumes the obligation even ae |
the knowledge or against He"
the debtor. :
Rights of the new debtor ifhe™™ |
payment at
"If the substitu’ jst ;
without the knowledge °F ro
the will of the original ver ino
new debtor can only rec? pencil
ob
bj
to the debtor. (Arts. 1236, 1237,

1293)
Effect if new debtor is insolvent or

does not fulfill obligation
The new debtor's insolvency

or non-fulfillment of the obligation
shall not give rise to any liability on
the part of the original debtor. {Art.
1294) The original debtor is
released from liability. This is trie
whether the substitution was
without the knowledge of the debtor
or against his will or it was
consented to by him.
Delegacion — Here, it is the debtor

who initiates the substitution, which
Tequires the consent of ail parties
{original debtor, creditor, new
debtor}.
Rights of the new debtor if he makes

payment
He can recover what he hes

paid and is entitled to subrogation.
fArts. 1236, 1237 and 1293)
Effect if new debtor is insolvent
The creditor’s fight to

Proceed against the original debtor
18 not revived except:
{1) When the insolvency of the

new debtor was already
existing and of public
knowledge when the original
debtor delegated his debt.
When the insolvency of the

new debtor was already
existing and known to the
Original debtor at the time he
delegated his debt.
(2)
of
2)
Subrogating a third person in the 5

the creditor. Subrogation transfers
person subrogated the credit with
rights appertaining thereto, either
TSMGATION.
hits»
to the
all the
. : apa
the debtor or against third persons, bent
guarantors or possessors of mo they
subject to stipulation in convert
subrogation. (Art. 1303) al
Kinds of subrogation
a) Conventional subrogation - Change

of creditor by the agreement of the
parties (the original parties and th
new creditor)
b) Legal subrogation — Subrogation by
operation of law.
It is presumed
that there is legal subrogation in the

following cases:
(1)
(2)
When a
another
creditor pays
creditor who 3s
_ preferred, even without the
debtor’s knowledg:.
Example: D owes ©
P50.000.00. The debt 5
secured by a real mortgage
D also owes x P40,000.00
which is unsecured. If X pat
D’s debt to C amounting ©
P50,000.00, X is subrog# e
- 2 Cc. Hence
in the rights of the debt ©
D cannot pay
P50,000.00, X can fore
the mortgage.
When a third perso

interested in the 07 ™ tact
pays with the express
approval of the debtor.
Example:
P100,000.00. The ost
secured by a ™°
D’s lot. If T pays
oBul
GATIU™~
consent, T 1s subrogated iz
the mghts of C. Thus, T can

collect the amount he had
paid from D, and if D cannot
pay, T can foreclose the
mortgage on the lot.
(3) When, even without the

knowledge of the debtor, a
person interested in the
fulfillment of the obligation
pays, without prejudice to
the effects of confusion as to
the latter’s share. (Art.

1302) ,
Example: D owes C
P10,000.00 with G as
guarantor. If G pays C, Gis
subrogated in the rights of C.
However, G’s guaranty is
extinguished because the
qualities of debtor and

creditor are merged in his
person.
Mixed — Change of object and parties to the
obligation.
Example: D owes C P50,000.00. Later, the
Parties -agree that a mn i i

; g will be used to pay the
debt with X making the payment. —
2. - .
According to form :
a. Race
—— — ~ This is novation declared in unequivocal
‘incontrove ele 1292) Here, the parties
executing the disclose that their object in
one. (Suene nee contract is to extinguish the old
Land Bank, supra)
Whereby Ple: Dandc entered into a contract
D wo
£20 a certain lor, oustUct a 3-stérey building for
° 8 contract yw Later however, D and C entered
whereby they expressly agreed that
D would not be constructing anymore gq 3-sto
building on the lot but a bungalow. Tey
Implied — When the old and the new obli
on every point incompatible with each other. (Art
1292) No specific form is required for an implieg
novation. All that is prescribed by law Would be
an incompatibility between the two contracts
(Sueno vs. Land Bank, supra) i
Zation are
Example: In the same example, if D andc

entered into the second contract whereby D agreed
to construct a bungalow on the lot but without the
parties expressly stipulating that D would no
longer construct a 3-storey building, then the
parties are deemed to have impliedly novated the
first contract because construction of the two
structures on the same lot would not be possible.
According to extent
a.
Total or extinctive - Here the old obligation is

totally extinguished, such as when an obligation to,
pay a sum of.money is replaced with an obligation
to give a diamond ring.
Partial or modificatory - Here, the old obligato"

still remains in force except as it has ee
modified, such as when the place of payment
changed or when there is a variation in the am
of installment payments.
ificatory
The change would be merely modificat
igin
and insufficient to extinguish — 1 plate
obligation if the incompatibility does no ligation
in any of the essential elements of the 7 ations
such as its object, cause or principal e é
(Transpacific Battery Corp. vs. Security,
Trust Co., supra; see also Philippine “"
vs. Soriano, G.R. No. 164051, October ~» effect of
new agreement will not have ru
extinguishing the first but wot
su i ipplant some but NO” 7 ecinb
pplement it or supp thers Ma"
provisions. (Saludo vs. J.V. Bro

Corp., G.R. No. 171998. October 20,
on accessory obligation
ct of novation we . .
gffe the principal obligation is extinguished in
ye of a novation, accessory obligations shall also be
consequent 4, except in the following cases:
extingul :
the accessory obligation was established for the

Pinel of third persons whe did not give their consent.
(Art. 1296)
Example: D borrowed P50,000.00 from C. The

obligation is secured by a chattel mortgage on D’s car‘and
pears interest at 10% per annum which the parties
stipulated would be paid by D to T, a student whom C is
sending to school. Subsequently, D and C agreed that D
would give C a diamond ring instead of money, The
novation here extinguishes the accessory contract of
chattel mortgage. However, the accessory obligation to
pay interest to T will subsist unless T gave his consent to

the novation.
2, When there was a stipulation that the accessory obligation

will subsist notwithstanding the novation
When the novation is one where a third person is

subrogated in the rights of the creditor.
Effect if new obligation is void
If oo, ;
a ese, the er oeligation 1s void, the novation is void. In such
that the former rel ne shall subsist, unless the parties intended
1297) ation will be extinguished in any event. (Art.
Effect .
nea obligation is void
1298) ; “ Novation is vojaq ;
f 80 18 void
Otinguige © ginal
i the Original obligation is void. (Art.

Since jt is non
, is void, there is igati

-existent, ’ no obieation to
if the original
aimed © Novas;
ed on ation
Whig, ORY by i
; ¥ th; Oovided
Miata, Te. Voidable or or wh ‘hat annulment mpey. be
ee depot (Art. ‘ine ae Tatification extinguishes acts

Present in nue 3) ‘The novation here cu
the original obligation ms
obligation is voidable
'S_valid
ebt *
98 OBLIGATION,
Example: D executed a promissory note for PS0,000 9

representing the price of a car which C, by means of vlolenae
forced D to buy. Later, when the violence has ceased, D Propose!
to C that he would give his ring instead of P50,000.00. c accepted
the proposal. The novation here is valid. Whatever defect jn th
consent present in the original one is deemed cured by the we
obligation to give the ring.
Effect if original obligation is subject to a suspensive o,

resolutory condition
The new obligation shall be subject to the same condition

unless otherwise stipulated by the parties, (Art. 1299)
Example: D promised to give C a specitic ring if C

finishes his degree in Accountancy with honors. — Later, the
parties agreed that D would give C a specific bracelet instead ofa
specific ring. Here, the obligation to give a specific bracelet is
subject to the same condition that C must finish his Accountancy
degree with honors, unless they stipulated otherwise.
Preference to creditor in case of partial payment
A creditor, to whom partial payment has been made, may

exercise his right for the remainder, and he shall be preferred to
the person who has been subrogated in his place in virtue of the
partial payment of the same credit. (Art. 1304)
Example: D owes C P100,000.00. With the ae .

both; T, a third person pays C P50,000.00. Thus, C an a 00
now creditors of D at P50,000.00 each. If D has only P50,000."
C will be preferred over T.
Novation in ‘solidary obligation --

"°° Gg imdebted to X, Y and Z, solidary creditor®,
amount of .P30,000.00. Thereafter, X,. without the Soe: 00, 4
Y and Z, agreed. with A that instead of A paying P 300" tigation
would instead give a specific ring to the creditors. +! n té give #
of A to give P30,000.00 is extinguished by the obligate respective
specific ring. However, X has to give Y and Z the!
-shares at P10,000.00 each because novation aomq een for the
the solidary creditors shall render him liable to the ot 15)
. 12
share in the obligation corresponding to then. (See Art
in the
) 99
pita TIOne
IONS - DIAGNOSTIC EXERCISES

oBLIGAT
I MULTIPLE CHOICE. Sclect the best answer by writing
Ti- ;
ii jetter of your choice.
the following are the requisites of an obligation, except:
a passive subject, debtor or obligor.
b active subject, creditor, or obligee.

a efficient cause.
dv demand.
2, Obligations may arise from any of the following, except:

a contracts.
b. quasi-contracts.
c. law.
d. prestation.
1.
w
«
It is the voluntary administration of the property of

another without his consent.
A Negotiorum gestio
b, Solutio indebiti
c Quasi-delict
a, Contract
itis a wron i
8 committed w
between the Parties,
5 Natural obligation
Quasi-delict
Quasi -contract
Crime
ithout any pre-existing relations
me
on
wr
Unless
the law :
Snoth cr standart the stipulations of the parties require
Cthing is also o
of care, every person obli > gi
extraconiye bliged to take ont of it ue a
diligence at diligence,
diligence or @ father of a 800d family
Rood dilige & B0od father of a family.

nce of a father ofa family.
PR oP
100
10.
11.
OBLIGATION,
The creditor has a right that is enforceable ay

definite passive subject. This right is known ag.
a. personal right.
b. real right.
c. natural right.
d. civil right.
sAinat 4
It is a thing that is particularly designated or

segregated from all others of the same class.
a. Generic thing
Physically
b, Indeterminate thing
£. Determinate thing
d. Real thing
One of the following is a determinate thing. Which is ir?

a. a cow.
b. a horse,
Cc: a Toyota car with engine no. 12345, body no

34890 and plate no. ABC 123.
d. a ring with diamond embellishment.
Demand must be made on the due date of the obligation

in order for delay to exist in one of the following cases.
Which is it? } .
a. When it was stipulated by the parties that demarid
need not be made. be
b. When the law provides that demand need not
made. . i. ether
<. When the obligation does not indicate W €
demand must be made or not on due date.
d. When time is of the essence of the contract.
This refers to delay on the part of the creditor.

a. mora solvendi ex re .
b. compensatio morae
¢ ». mora solvendi ex personae
d mora accipiendi
4
There shall be nq liability for loss due to fortuitou

in one of the following cases. Which is it?
a. When the debtor delays.
$ events
14
| ppuicATION .
when the parties so stipulated that there shall be
b. liability even in case of loss due to fortuitous

3. —_ .
Oren the nature of the obligation requires the

° agsumption of risks. .
When the obligation is to deliver a determinate

d. thing and there was no stipulation as to the
liability of the debtor in case of loss due to

fortuitous events.
‘1. following are the remedies of the creditor to pursue
The Jaims against the debtor, except to:
=— pursue the property owned and in possession of
* the debtor. . .
exercise all the rights and bring all the actions of
the debtor (accion subrogatoria).
impugn the acts which the debtor may have done
to defraud his creditors (accion pauliana).
@/ compel the debtor to perform the service in

obligations to do.
12.
b.
c.
13. D borrowed P50,000.00 from C. C dies before he has

collected the debt leaving S, his son, as heir. Which of the
following statements is correct?
2. $$ can collect from D although D and C did not

7 that the credit right will pass on to the heirs
of C.
S cannot collect because the credit right is

Personal to C.
S can collect only if D and C agreed that the credit

dj Tight will pass on the heirs of C.
S cannot collect b
Or ecause the law prohibits the
transmission of the credit right. x
Mop is ,
Licen
sure Examinatios @ specific car if C passes the CPA
n. D’ igation i :
0 Li ati . . :
an obligation with a suspensive condition.
. nN with a r ee
an obligation with a vetoae condition.
aos
me
fi
17.
18.
19.
29.
One of the following obligations is ;

a
demendsble. fy
z. pure cbicston.
cbisse ten with a resohutory
c. obitgation with em m diem pened.
& ehigemon wrth an ex Ge period
acl
2 BD 3s obliged to ewe C PS5.000.00 ic Coes mot Et
C P5,000.00 # D S008 ty
C P5,000.00 if C goes 1
d. D is obliged to give C P5,000.00 if D wins first prize
in the sweepstakes on 2 ticket that he had already

purchased.
D is obliged to give C P10,000.00 if X dies. This is an
. example of:
a. an obligation with a suspensive condition.

d. an obligation with a resolutory condition.
[a an obligation with a period.
d. a pure obligation.
When the debtor binds himself to pay when his meant

permit him to do so, the obligation is:
a. ~ an obligation with a resolutory condition.
b. a pure obligation. ;
c. an obligation with a suspensive condition.
A. an obligation with a suspensive period.
ae, id
Whenever a period is designated in an obligation, pe
period shall be presumed to have been established {0
benefit of:
a. the debtor.
b. the creditor.
&. both the debtor and the creditor.

d. neither of the parties.
period P
The debtor shall lose the right to make use of the
the following cases, except when he:
22.
an ©
&
b.
c.
bEgaton
sample obligato “
becomes insolvent. ‘ ; :
om anv undertaking tn consideration of which
violates en & : od
the creditor agreed te the period.
attempts to abscond. ;
a not furnish any guaranty or security to the
ereditor-
ceases to be alternative and becomes a4

in the following cases, except when:
1435
- icated his choice to the

the debtor has communicat E
creditor. .
the right of choice has been expressly granted to
the creditor and his choice has been
communicated to the debtor.
among the several prestations
eis practicable. ;
gures vrestations are due but one of them is
unlawful or impossible.
that are due only
D is obliged to give C a specific watch, a specific ring, ora

specific bracelet. The parties agreed that C will have the
right
to choose the thing which will be given to him.
Before C could make his choice, the watch and the ring
are lost through D’s fault, successively. What is the right
of C?
Kw
C may choose the delivery to him of the bracelet, or
price of the ring plus

damages. ,
C cannot choose the price of the watch or the price
of the ring because th . :

been lost. € said objects have already
C can only choose
t
anyway, D o have the bracelet because
can still i igati

C can only perform his obligation.
or the pric. oeonae to have delivery of the bracelet
Tin whi h :
Was lost plus damages, recent
104
24.
25.
26.
27.
~ 28.
b. If the bracelet is lost through a

before substitution, the obligation is extingyi EVent
c. If the ring is lost through a fortuitous event
substitution, the obligation is extinguisheg Altes
d. If the ring is lost through the .
substitution, the debtor shall Pp
fortuitous
debtor’s fay
It
ay damages. Aer
a. V may collect from A P20,000.00.

b. V may collect from A P5,000.00.
c V may collect from A P1,000.00.
d. V may collect from A P4,000.00.
A, B, C and D, joint debtors, are obliged to give V, W, X,Y

and Z, solidary creditors, P20,000.00.
a. V may collect from B P20,000.00,
b. V may collect from B P4,000.00.
£: V may collect from B P5,000.00.
d. V may. collect from B P1,000.00.
A, B, C and D, solidary debtors, are obliged to give V, W,

X, Y and Z, joint creditors, P20,000.00.
‘ V may collect from C P20,000.00.
V may collect from C P4,000.00.
Ao yp
» B, C and D, solidary debtors, are obliged to give V, ©:

, Y and Z, solidary creditors, P20,000.00. ‘
: V may collect from D P20, 000.00.

V may collect from D P4,000.00.
Rx >
2 op
ao
‘ je
A, 25, B, 35, and C, 17, are solidary debtors of X in
amount of P9,000.00
a. X may collect from A P9,000.00.
we X may collect from A P6,000.00.
c. — X may collect from A Pi,000.00. é
d. X may collect nothing because the oblig@
voidable, C being a minor.
tion
oBliG
29.
30.
31.
32,
105
ations
following obligations are divisible, except an
the
obligation: | efinite things. ;
A or nee for its object the execution of a certain
b. w mber of days of work. :
Teich has for its object the accomplishment of
c. w k by metrical units. — : ;
a hich by its nature is susceptible of partial
w
o performance.
s with a penal clause, the creditor as a rule
In obligation from the debtor in case of breach the
may recover
eT penalty as agreed upon, plus damages and

a.
interest.
b the penalty and damages.
c the penalty and interest.
d: only the penalty.
Consider the following statements:
1. The nullity of the principal obligation carries with

it the nullity of the penal clause.
I. x The nullity of the principal obligation does not

carry with it the nullity of the penal clause..
Ill. ¥ The nullity of the penal clause Carries with it the

nullity of the principal obligation.
IV. The nullity of the penal clause does not carry with
it the nullity of the principal obligation.
' Statements I and III are ‘ue.
: Statements I
Statements []
x Statements I and IV are true,

dd
and Ill are true.

and IV are true.
T can Tec
Over PS
Pay, P cae forech from D. If D cannot
se the ‘Mortgage on D’g Toyota
106
33.
34. -
35.
36.
OBL GAT, OK
b. T can recover nothing from D because —_—

without the knowledge and consent of p, Paid
c. T can recover P30,000.00 from D. If p cannot
T can foreclose the mortgage on D’s Toyota Pa Pay,
d. T can recover P30,000.00 from Dp, If D =
pay, T cannot foreclose the mortgage on D's Tee
car. Yota
by cess;
are true, except one. Which is it? on
Be The creditors become the owners of the Propertig,
of the debtor that were ceded to them.
yy Payment by cession extinguishes the obligations
only to the extent covered by the- proceeds of the

sale of the debtor’s properties.
The debtor must be insolvent.
Cession affects all the properties of the debtor

except those exempt from execution.
a9
D obtained froni ABC Bank a loan of P12,000,000.00

payable at the end of 10 years. Before maturity, an
extraordinary inflation’ supervened causing the value of
the debt to fall to P4,000,000.00 on the date of maturity.
On due date, D must pay ABC Bank:
a. P12,000,000.00. '
b. P4,000,000.00.
c. P36,000,000.00
d. P3,000,000.00.
B borrowed from XYZ Bank P2,000,000.00 payable ae

end of 5 years. Before maturity, an extraordinie
deflation supervened causing the value of the debt 2,3
to P5,000,000.00 on the date of maturity. On due dat
must pay XYZ Bank: oe
a. P2,000,000.00.
b. P5,000,000.00.
c P800,000.00.
d, - P20,000,000.00.
. compe!
The money or currency which the debtor may conn c a
creditor to accept in payment of a debt, whether P
. private, is known as:
oBliG
37
38.
39,
107
aTIONS
notes payable to order.

legal tender.
pill of exchange.
mercantile document,
BO TS
. and transmission of ownership of a thing by

The oeser | to the creditor as an accepted equivalent of
5 .
tne vormarice is known as:
pe payment by cesssion.
ie dation in payment.
é. application of payment.
c. . :
d consignation.
i ebts: P6,000.00 due on June 12;

Boer © tit ee is: P6,000.00 due on June 18;
ni P6,000.00 due on June 20. All debts are unsecured
except the debt due on June 20 which is secured by a
pledge of D’s diamond ring to C. By agreement, the
benefit of the term on the 4 debts was granted to C.
Assuming that D has P6,000.00 on June 18 and is ready
to pay C, which of the following statements is correct?
a. D may apply his payment of P6,000.00 to any of
the debts due on June 12, June 15, and June 18
since they are all due as of June 18.
b. D may apply his payment only to the debt due on
hag 20 because it is the most burdensome to
im. :
* _D must apply the payment proportionately to the
4 ote due as of June 18 at P2,000.00 each.
"may apply the payment to any of the four debts.
The offer made by th
creditor is known gs;
7 Consignation.
. tender of payment,
2 pplication of payment
dation in Payment.
Consi :
. Nation al :
Ss . One Wwithou :
: ficient in the follo ing aon any tender of payment is
€ debtor to pay his obligation to.his
oO
Ppear at the Place of payment. - eres
108
fe
tw
43.
44,
OBL CATION,
b. when the creditor presents the tit}. “

sobligation for collection the
c. when without just cause, the creditor Tefy

give a receipt. SES 4,
a. when Tro or more persons Claim the ser,

collect Sane TRA
Mowes P PIQOGNDGS, The obbhration is evidenaay 4,
grummsssor note. Subsegaenthr, P assigned the mote gt
ApmpBRB BiCandéChackiM The obligation of ys
Sqemasinnd dst &
z. CoESmsahion.
& canons.
c Tomine.
= _<- ~,
G2 order thet comdonstion may extinguish an obit
involving a movable property whose velue emesd
PS,d0G.00 —
2 Ik ts sufficient that the condonation and tr
. acceptance are in writing, even a private one.
b. It is required that the condonation and tit

acceptance be in a pubkc instrument.
c. The delivery of the document evidencing the debtis

sufficient since the property is movable.
d. The condonation and the acceptance may be mate

orally.
One of the following is not a requisite of le

compensation. Which is it? wat
a. That each one of the obligors be bound princ oe

and that he be at the same time a prin
creditor of the other.
b. That the two debts be due. ple
c.. That both debts be liquidated and demandab’e
a That the debts are payable at the same place
eparated 4
Henry, husband, and Wilma, wife, are legally § tioth
By order of the court which decreed the legal seP000!
Henry is obliged to give a monthly support of he mon

to Wilma payable within the first five days of t 4
a5.
47,
2 109
es Henry P10,000.00 by way of a business loan.

wilma rane hand, Henry has not vet @mven Wilma’s
an the . P10,000.00 for this month. th debts are

supp? ie ‘A hich of the following statements ts correct?
already — debts are extinguished by legal compensatian
A Smee both are already due.
wine may claim compensaton but not Henn,

5 ork may claim compensation but not Witma.
e Nether one may claim compensation because the
é anes are mot of the same kond.
debts are
m exes C P10.000.00 with G as ‘guarantor CQ on the
ner hand, owes D, PS,000.00. Both debts are already
tears ati Dis imsolvent. in this case ~
~~ ~»—odeC may collect rom G P10,000.00
a! C may collect from P2,000.00 because a
G FP
guarantor can set up compensation as regards
sam =
c C may collect nothmg fom G because BD is
Insolvent.
& C may collect P8,000.00 from G.
D borrowed P50,000.00 from C. Subsequently, D

Proposed to C that T would assume his (D’s} debt. C
accepted the proposal of D. This substitution of debtor is *

known as —
a. expromision.
delegacion.
tradition.
. dacion en Pago.
ane
Refer to the facts in No. 46.
ae T could not pay be

knowlege sisting but
on i 8€ at the time
a.
Assume also that on due

cause of his insolvency which was
was not known to D or of public
that D delegated his debt. In this
C can rey; ;
already “exiet oo because T’s insolvency was

» debt. ng at the time that D delegated his
* © Qreait “aed!
aWare of Te me a whether or not he (D) was
Substitution elvency since he (D) proposed the
110
48.
49.
90,
OBLIGAT oy,
c. C cannot hold D liable because his (D's) Obligar:

was extinguished when he was substituteg by Son
d. The novation is void because D did not take T

to determine the solvency of T when nee
delegated his debt. ©
D obliged himself to give 5 grams of “shabu” to c. La
the parties agreed that D would instead give toc 5 ae
of rice. Which of the following statements is correct? fy
a. The novation is void because the original Obligation

is void. Hence, C cannot demand the delivery of 5
sacks of rice from D.
b. The novation is valid because the new Obligation j

valid. Hence, C can demand the delivery of 5 sacks
of rice from D.
c. The original obligation although void is validated

by the new obligation. Hence, C can demand th:
delivery of 5 sacks of rice from D.
d. The new obligation is only voidable because D had

not yet performed-the original obligation at the
time of the novation. Accordingly, the new
obligation is binding and C may demand the
delivery of 5 sacks of rice from D unui the new
obligation is annulled by a proper action in court.
- On July 1, 2015, D obliged himself to give C P50,000.00if
C will marry X on or before December 31, 2015. Th

condition of the obligation is a:
2B: positive condition.
b. negative condition. _
c. joint condition.
d.. impossible condition.
is
Refer to No. 49. Which of the following statemen's
incorrect?
, ies X.
a. The obligation of D is demandable if C mame
on or-before December 31, 2015. Le already

b. The obligation of D is extinguished if it 18 x
January 1, 2016 and C has not yet married
c. The obligation of D is extinguished 07
; 2, 2015 if X dies on the said date and
yet married X.
. pputcATlO NS
51.
lil
The obligation is demandable if C ies X on

d. january 1, 2016. ae
2015, D obliged himself to give C a specific car
on July Me marry X on or before December 31, 2015.

it Bndition of the obligation is a:
¢
positive condition.
/ negative condition.
¥ divisible condition.
d
~p
impossible condition.
Refer to No. 51. Which of the following statements is

e ,
: t? i i
ae obligation of D is demandable if C marries X
on January 1, 2016. .
b The obligation of D is demandable on December 2,
: 2015 if X dies‘on the said date and D has not yet
married X. .
c. The obligation of D is demandable if it is already

January 1, 2016 and D has not yet married X.
d. The obligation is demandable if C marries X on

December 2, 2015.
D owes C P5,000.00. “T, a third person and without any

intention to be reimbursed by D, paid the debt without the
consent of D. C accepted the payment. .
a. a Payment did not extinguish the debt of D to C
i oe it was made without the consent of D.
. € payment did not extinguish the debt because it
Was not made by D himself.
The payment is considered valid because it was
d. The pat by the creditor, +

: ayment may be consi id i
intention to be reittuma es valid if T had tie
A mod ,
e Sn oatet.:
oncurrent oe nBtishing obligations up to their
debts Cunt when
a TS and Creditors of each a
b Novation, a
Pe payment,
d. Mpensa i
merger tion.
0 persons are principal

her is called: y
112
55.
56.
57.
58.
‘b Two persons are in their own right de
CBLIGAM
D owes C P6,000.00. No date for payment was
by the parties.
a. C cannot require D to pay because the

for payment.
b. C can require D to pay at anytime.
c. D is not liable to C because the objj

there being no date of payment.
d. D is not required to pay unless C goes ¢,
. © coy
asks the court to fix a period for the payment
Stipa
Tre ig no dy
Bation js y td
Under a contract executed on November 1,

obliged himself to give a specific horse to C on Decembe;
10, 2015. On December 8, 2015, C demanded th,
delivery of the horse but D did not comply. The following
day, the-horse was struck by lightning and died instantly,
2015, D
a The obligation of D is extinguished because the
“ loss is due to fortuitous event and D was notin
default.
b. The obligation of D is not extinguished because)
can deliver another horse.
c. The obligation of D is not extinguished because D

was in default. .
d. The obligation of Dis not extinguished Lecause the
demand was not made on due date.
Which of the following is not considered a‘ conditionél

obligation?
a D to pay C P5,000.00 as soon as D has the means.
b. D to pay C P5,000.00 if C marries Y.
c D to pay C P5,000.00 if C tops t
Examinations.
d. D to pay C if X dies of malaria.
2 Ss
The distinction between merger and compensation 1s "
in merger: sede plact®
a. The two debts may be payable at diffe ‘tors and
creditors of each other.
c. The debtor and creditor may agree on the
... . debts that are not yet due, only ™
d. The debtor and the creditor refer t©
person.
get-ofl a
oBll
59.
60.
61.
62.
133
GATIONS
eave of time as a mode of acquiring or losing a
The passab’ g the extinguishment of an obligation is

4 cJuding B
right
called: remission.
os novation.
b. prescription.
A merger.
ngation shall not be proper in three of the
Legal nee. Which is the exception?
[oO amodatum.
. Civil liability arising from a criminal offense.
a Gratuitous support.
d/ Bank deposit.
Cecilia, the owner of a sarisari store, purchased several
bags of “Dulcita” candy worth P5,000.00 from Olga, an
authorized dealer of the product. On due date, Cecilia,
who sells the candies at P1.00 each, tendered her
payment to Olga consistirg of 5,000 pieces of P1.00 coins.
we Olga may refuse to accept the payment and

demand that she be paid in bills.
b. Olga may not refuse -to accept the payment

because what Cecilia was offering as payment is
money circulated in the Philippines.
® Cecilia may consign the payment in court if Olga
j refuses to accent it.
be made by Cecilia was valid because the
‘ coins came from her sale :

plenty of them, les and shc had
Dominico and :
; D Fas :
Crispino for P100,006 OG” Jointly and severally liable-to
30, 2015 On June ae The obligation is due on June >
prount of the note t ¢ 2015, Dominico paid the whole
reinico on Jul ‘ Mspino. If Domingo reimburses
ae from Domingo: ®, 2015, Dominico is entitled to
. P56,000 .
1900.0 :
bh -2015. © plus interest from June 25 to July 15
. P50,000,09 plus; fl ' ° ,
2015, “interest from June 25 to June 30,
AST
63.
64.
65,
66.
TIO] gBLIGh
: 10,000.00.
c. pao,000.08 plus interest from June 39 to July i a. P30,000.00.
‘ , b. 900.00
d. P50,000.00 with a because Domin; C. i ice, because the note is void since it
says “I
paid the note betore due date. It d. promi ge” but was signed by three persons.
One of the following statements does not pertain to daw ing is a valid obligation.
Which is it?
en pago. Which is it? — ? dey «7, one of the oieed to give C P50,000.00 if C will
not swim
* ate, of the thing is transferred ‘thy # oss the Pacific Ocean.
creditor. F ive C P50,000.00 if D goes to
b. The debtor must be insolvent. b. 7 promises to 8 7
c. It does not affect all the properties of the debt OkyO: to ive C P50,000.00 if C
can fly to the
d. It does not require plurality of creditors, 2 c. D promised to give , 7
; moon. ,
, i ive C P50,000.00 if C gives him 5
One of the following does not apply to payment by cessig, d. DP To unr. ~
Which is it? grams of mary) .
a. nine oe debtor’s properties is transfer 6g. An obligation where various
prestations are due but the
b. ° The debtor must be insolvent. performance of all of uh em fs required in
order. to
c. It affects all the properties of the debtor except —_ SS aiesen andiicams
those exempt from execution. a. ° ema ive ont sganon-
d. There are several creditors. b, Seulbative Obuga —
x conjunctive obligation.
A, B and C are solidarily liable to X for P30,000.00. | d. _ simple obligation. .
pays X the whole amount due. C, however, 1s insolvent 0. AB ; ;
a. A alone will bear the share of C who is insolvet , a telie C are solidary
debtors of X in the amount of
since he (A) made the payment. ee oa ‘ Subsequently, X renounced the share of A. A
b. Acan collect from B P10,000.00. sale Boe renunciation of his share. On due date,
B
c. Acan collect from B P15,000.00 eco t but Cis i 00.00. B demanded reimbursement
from C
d. A can demand a refund of P10,000.00 1° 4. Brent. In this case:
pertaining to C’s share since C is insolvent. dB mney ae the payment of P3,000.00
from A.
. Cabrets emand any payment from A because
Anna Almeda, Belitida Bersola, and Claudia Ca the share of 4 had already b 7
, : ; condoned y been renounced “or
executed the following promissory note: ¢ B may A .
the emand P1,500.0 ae
: er : i , -00 fro ’
“I promise to pay Dolores Dominguez or ord d. se In C’s Insolvency, ne TePresenting
A's
. ay d
sum of P30,000.00 on June 30, 2015 aimed sharing in wend from A P4,500.00 so that
the}
(Sgd.) Anna § 1n the tot: l : elr
Sgd.) Belinda Bersol , Dig: al debt is equal.
(Sg dia Cabrel 1s indebteq :
(Sgd.) Claudia ; 10, C oy, to C for P20,000.00 we
contect © June 8, > 15,000.00 which ig dun tn ee om une
On June 30, 2015, Dolores Dominguez c4” Consent t, , SSiNed his ¢ an is due on June
5. On
Anna Almeda: 9 the ass; redit rights to T. D gz i
Signment but did gave his
i = not reserve his right to
116
71.
72.
PBLUGAT Oj,
from D? Pole
a. P20,000.00.
b. P15,000.00.
c. P5,000.00.
d. Nothing.
On May 1, 2015, D executed a written undertakin
obliging himself to deliver 100 sacks of rice to ¢ on Mee
31, 2015. On May 28, 2015, C demanded the delive ay
100 sacks of rice from D but D did not comply, te
following day, a fire of undetermined origin destroyed Ds
warehouse together with about 500 sacks of Tice stored

therein and from which D intended to get 100 sacks of rice
for delivery to C.
a. D’s obligation to deliver 100 sacks of rice to Cis

extinguished, the cause of the loss being a
fortuitous event.
b. D’s obligation to deliver 100 sacks of rice to C is

not extinguished because he can get 100 sacks of
rice from other sources. ;
és D’s obligation to deliver 100 sacks of rice to C is

not extinguished because D was in default.
d. D’s obligation is to pay damages because he wasin

default.
On June 1, 2014, Demetrio obtained a loan

P100,000.00 from Cornelio. The loan, which is payable™
or before June 1, 2015, is secured by a chattel pine
on Demetrio’s brand-new Toyota car with plate en
XYZ 123. On February 1, 2015, while Demetrio
opening the trunk of his car at the parking lot of a & ae
store to place the groceries he had just purchased, © at
unidentified men approached him and took his orities
gunpoint. He reported the carnapping to the auth
but his car has not been recovered.
a. Cornelio may demand immediate payme™ ecurit?
loan unless Demetrio gives another 2
therefor. gune |}
b. Cornelio may demand payment only er 0
2015 because Demetrio has the benelfi
opti
73.
74,
117
ATIONS
period and the loss of the car was due to force
mlio may no longer demand payment since the
loan was extinguished by reason of the loss of the

due to fortuitous event.
Cornelio may demand immediate payment even if
somietrio offers another security because the car is
determinate and could not be replaced.
of X who died recently, shows, among other

Thee eents/contracts, the following: ;
A certificate from Harvard University granting a
r scholarship to X. X was subjected to exhaustive
examinations and interviews before he was granted
the scholarship. He was supposed to start
studying at Harvard in 3 months’ time.
II. Articles of partnership of XYZ Enterprise showing
X as a general partner.
Il. A stock certificate of DEF Corporation showing X
as the owner of 5,000 shares of stock.
IV. A promissory note amounting to P100,000.00
executed by M in favor of X. The note is due afte
90 days. >
Which of the rights of X arising from the = said
oe /contracts will be transmitted to the heirs of X?

a. and II.
& statements
acion en Pago.
ILy . o = is insolvent.
nershi .
moe ditor/e. of the thing/s is transferred to the
vy. Plurali
a Obliga:
pertain to either payment by
ty of creditors is required,
t : : :
Ons are totally extinguished as a rule.
Statemen, Bia
t is
Statements : and IV pertain to Payment by cession.
Statements qf Ill pertain to dacion en pago.
\? and IV pertain to dacion en pugo.
. =
118 CBLIGAT,.
d. Statements III and IV pertain to Paymen,

cession. &
75. The return of what has been paid by mistake js x

a. solutio indebitt.
°b. negotiorum gestio.
c. quasi-delict.
d. natural obligation.
Nown ay:
Items 76, 77, and 78 are based on the following information:

Dolores borrowed P15,000.00 from Consuelo. Qn due
. date, Dolores was not able to pay but she promised to give
Consuelo a specific ring, a specific bracelet, or a Specific
necklace, in payment of the debt. Consuelo accepted the
offer of Dolores. ,
76. What kind of obligation is the new obligation of Dolores?

a. Facultative obligation.
b. Compound obligation.
L Alternative obligation.
d. — Simple obligation.
77. How was the obligation of Dolores to pay P15,000.00

: extinguished?
a. By compensation.
b: By novation.
c. By confusion.
d. By condonation, ;
78. Assume that before Dolores could deliver any of the i
bracelet or necklace, the ring and the bracelet a
successively through the fault of Dolores. In this c “oe of
a. Consuelo may demand the payment of the Pm”
the ring or the price of the bracelet plus 4a”
or the delivery of the necklace. nsue?

b. Dolores may deliver the necklace to ©
without any obligation to pay damages- elo wb

c. Dolores may deliver the necklace to ComSUC | ing
e
the obligation to pay damages becaus¢ :
and the necklace were lost through her fa
80.
119
ONS
nsuclo may demand the payment of the prite of
owe bracelet which was the last item that was lost,
plus damages.
ed a loan of P100,000.00 from C. D used the
lacernent fee for a job in the Middle East. The

amount as P nt showed that the loan was payable within
ean agreenth interest at 6% per annum. However, there
one year eeisian saying that the rights and obligations of
ee ‘would be transmitted to their heirs or
ans Pare in-interest. Before maturity, D died leaving his
see heir Which of the following statements is
son , ;
eoreot cannot collect from S because no mention was
~ made in the agreement between D and C that the

rights and obligations of the parties would be
transmitted to their heirs. ;
b. C can collect from S although no mention was

made in the agreement that rights and obligations
would be transmitted to the heirs.
CG, C cannot collect from S because the obligation is

personal to D.
d. C cannot collect from S because the law prohibits

the transmission of the obligation.
p obtain
Hilario, husband, and Wynona,

By order of the court which de
Hilario is oblige
to Wynona
the month.
loan.
creed the legal separation,
d to give a monthly support of P20,000.00

payable in advance
Based on the foregoing facts,

ments is incorrect?
S her support for the preceding

may
lf Wy nhona demand
Month, Hilario
b, re8ards the loan that W nora a ae
If Wy
mon
the j
ynona owes him.
th, Hilarie ae her Support for the current
ay claim c i
ni ompensation as regard
that Wynona owes him. oe
nona dema
wife, are legally separated. —
120
81.
82.
CBLIGATI,,
ci If Hilario demands payment of the loan, W

may set up compensation as regards her aero
for the preceding month that Hilario owes her Por
d. If Hilario demands payment of the loan, Wyn

may set up compensation as regards her xiptet
for the current month that Hilario owes her, a
One of the following obligations is not demand
once. Which is it?
a. D to give his car to C. No date was fixe by th

parties for the date of delivery. #
b. D to give his car to C until C completes his Course

in BS Accountancy.
D to give his car to C until X dies.
c. 4
a D to give C his car should C enroll in ps
Accountancy. ‘
able at
D owes C the following debts: P6,000.00 due on Januay
1; P6,000.00 due on January 15; P6,000.00 due on
January 31; P6,000.00 due on February 15; P6,000.00
due on February 28; and P6,000.00 due on March 15. All
the debts are unsecured except the one due on February
28, The parties stipulated that C may demand payment
on or before the due date of each debt. Asstme that today
is February 16. D, however, has not yet paid any of the

debts. He has in possession P6,000.00 which he intends
to pay to C.
a. D may apply the payment to the debt due ©

February 28 because it is the most burdensome ®
him.
b. D may apply the payment to any of the ie

unsecured debts. ews
D may apply the payment to any of the Sn
that have become due as of today, February } “w
a D may apply the payment to all of the debts 16,

have become due as of today, February
proportionately at P1,509.00 each.
c.
3
D made a promise to give a ring to C. Before D Op
deliver a ring to C, C borrowed D's ring. After 4 wee c

demanded the return of the ring that he had lent © “156
refused to return the ring claiming that tbet?
oBl
84.
GATIONS
12
tion between his obligation to return the ring of
compensa obligation to give him a ring.. Based on the

D and ie facts which of the following statements is
foregoln ’
incorrect? entitled to claim compensation.
a. is not entitled to claim compensation. ;
b. . may oppose the compensation being claimed by
c. °
Gal D may claim the compensation should C

d. de a and the delivery of a ring from him (D).
j -negotiable promissory note with Pia as

Maile — aamened the note to Aiko, Aiko assigned the
eee Bea; Bea assigned the note to Carmina, Carmina
assigned the note to Helen, and Helen assigned it back to
Malle Maila’s obligation is extinguished by condonation.
b. ' Maila’s obligation is extinguished by confusion.
c. Maila’s obligation is extinguished by compensation.

d Maila’s obligation is not extinguished because the
note is not negotiable.
Lafuente is a lessee of Oberon'’s building. Under the lease

contract, Lafuente must pay the monthly rental of
P10,000.00 to Oberon at Oberon’s office within the first 5
days of the month in advance. On the sixth month of the
lease, Lafuente went to Oberon’s office to pay the rental
El
Oberon wes by Elcano, an employee of Oberon, that
fen at nein entrust the payment to him, Santiago, a

demanded eat who happened to be around, however,
Obe, a on te must pay to him claiming that as
Payment, Given ae One authorized to receivé the
whom you iit the situation where you do not know to
Modes of perme your payment, which of the following
Lafuentes €nt would you avail yourself of if you were
122
86.
87.
88.
89.
OBLIG Atioy,
D promised to give C 10 sacks of rice when X, ie
dies, The obligation of Dto Cis: | her,
a. An obligation with a suspensive condition,
b. An obligation with a resolutory condition,
c. An obligation with a period,
d, A pure obligation.
D bought a plane ticket for Hong Kong from Wings —
Company. Later, however, D cancelled his flight to Ho
Kong because of the SARS epidemic in the place, Upen

being informed of the cancellation, Wings ‘Travel lold p
that D could get the refund of his plane ticket within two
days. In the meantime, D thought of going insiead {)
Australia so he called Wings Travel to send to him a ticke
for Brisbane promising to pay the cost of the ticket in two
days. Assuming that the refund due to D for his unused
plane ticket to Hongkong is of the same amount as the
cost of his plane ticket to Australia, D two days later need
not pay Wings Travel by reason of:
a. " confusion.
_b. novation.
c. compensation.
d. condonation.
On a certain year, D was obliged under. a contract

executed on March 1 to deliver an agricultural land wt
on April 1. D, however, actually delivered the land a
the fruits thereof to C on May 1. C had the right
fruits of the agricultural land beginning on:
a. March 1.
b. April 1.
Cs May 1. tit
d. The _ period should be fixed by the court 00
can be determined when C is entitled to the
o wnet of tbe
Refer to the foregoing number. C became the ©

egncultural land and the fruits thereof on:
March 1.
April 1.
May 1.
pg
, Vas
op oaT0n®
rhe period should be fixed by the court so that it
d. determined when C actually became the
. be ‘ ‘
TK of the agricultural land and ite fruits.
owne *
. ~ the : > hand, and his
, Cc before the dejive ry, on one ’
the right of delivery, on the other hand, of the
90. ‘ht after the
cal land and its fruits, to him are referred to as

«a iture ant
personal right and real right, respectively,

Real right and personal right, respectively.
Both are considered a personal right.
Both are considered a real right.
a
b
¢.
d.
that in No. 88, D did not deliver the land and
Instead, he delivered the same to X, who

th when he acquired the land and its fruits,
1, Assuming
? its fruits to C.
was in good fai
il 30.
7 oa is the rightful owner of the land.
b. Cis the rightful owner of the land.
c. Chas a right of action against X.
d. «° Ccannot ask for damages against D.
92. Which of the following is not a proper remedy for the

creditor?
a, To compel the debtor to make the delivery, if the
obligation is to deliver a determinate thing.
b. To ask that the obligation be complied with at the
expense of the debtor, if the obligation is to deliver
@ generic thing,
the obligation is r to perform the obligation, if
4 an obligation to do. .
ne ask the debtor that what has been done be
ss he, if the obligation is an obligation not to do.
"The deliv,
os checks hate creditor of mercantile documents such
a. . Produce the effect of payment:
b/ hen the delivery. .
c, When ney have been cashed.
rou
‘ been Pats = the fault of the debtor they have
whe,
n they are deposited in the bank.
let VBLIG ATIO, I
8
94. Which of the following statements concerning de

incorrect? ; a lay iy
a. There is no delay in obligations not to do,
b. ‘Delay, as a rule, exists, when the debto
. . rT
perform his obligation on the date it is due not
c. Demand, as a rule, is required, in order fo

exist.
d. When time is of the essence of the contract ‘4

on the part of the debtor exists despite the abe lay
of demand. ete
r delay ty
95. When the debtor and the creditor agree to a dacion en

pago (transfer of ownership of property to the Creditor to
settle a monetary obligation), before such transfer of
ownership, there is actually a:
a. compensation.
b. confusion.
c. condonation.
d. novation.
96. The delivery of mercantile documents such as checks wil

produce the effect of payment:
a. when through ‘the fault of the creditor they have
been impaired.
“b. upon delivery of the mercantile document.
n° when they are certified by the bank.
d. when they are presented to the bank for payment.
97. XYZ is a cooperative store. On July 1, 2014, it pal

Government of the City of Manila certain taxes bee
that it owed the same. After six’ months, XYZ learne git
it was not subject to the said taxes. Accordingly, ae tion
to recover the said taxes it previously ‘paid. The oO al
of the Government of the City of Manila to return
taxes paid is based on:
a. negotiorum gestio. .
Bb. solutio indebiti.
c. — quasi-delict. nds
fae efur
d. The Government is exempt from giving tax I :
a”
98. S sold 100 bottles of imported “Fundador” bravnting ic

who paid immediately the price thereof am°
Atos
opniGaTion®
0.00 S promised to deliver the brandy to B within
p20,00 . from their agreement. On the agreed date of
one wee s delivered to B 100 bottles of fake “Fundador’”
deliv The contract between S and B is:
pran ‘yoidable. .
F void.
7 valid.
c rescissible.
99.
100.
oan from C amounting to P50,000.00 which

10 equal monthly installments. The loan
t of 1% per month which D agreed to give to
T a student whom C is sending to school. To secure the
’ D executed a chattel mortgage on his car. Although
ren been paying the monthly interest to T, D could not
pay any of the installments due. In view thereof, D’
roposed, and C accepted, that D should give instead a
diamond ring to C in place of the loan of P50,000.00
within two months from their new agreement. T, however,
was not notified of the new obligation. Based on the
foregoing facts, which of the following statements is
incorrect?
a. D’s obligation to give C P50,000.00 is extinguished
by novation.
b, The accessory contract of chattel mortgage is
exmenished by the new agreement between D and
7 a
and C,
d.
The new contract did not extinguish D’s liability to

pay interest to T,
D obtained a !
js payable in
bears interes
Alternat; a nos
in whee obligation and facultative obligation are similar
a Th, I the following respects?
f € night of choice m ; :
debtor Of creditor. ay be given either to the

Cveral restatioe ’
Only one tations are due.
restati
“ render emai tation
ther j 2g as
The obliga T in substitution.
tion be : at
the choice of the eieitatae obligation once
communicated, tation is made and
b,
c,
is due but the debtor ‘may |
«
126
161.
102,
CBLGen,
za
D borrowed P5,000,00 from C. The obligation jg pes

full after 30 days. In which of the following ee rable
fustified in making a consignation of hig Payme is 5
court? Tit iy
4a. If C refuses to accept the payment in the for
check which is certified by the ban, ride
supported by sufficient funda. S by
b. If C refuses to accept the payment co
5,000 pieces of P1,00 coins.
c. If C refuses to accept the first installme
in the form of a P1,000.00 bill, D prom
Nsisting af
Nt paymery
: ising to pa
the balance of the debt in 4 equal month
installments.
d. If C refuses to accept the
payment Consisting of
250 pieces of P20,00 bills,
Which of the following condonations will not extinguish
the debtor’s obligation?
a. The condonation is in a public instrument. The

acceptance is made orally. The condonation
involves a computer printer whose value 1s
P4,000.00.
b, The condonation and the acceptance are in a

public instrument. The condonation involves &
parcel of land.
c, The condonation and the acceptance are made

orally with the creditor delivering to the 7
simultaneously the promissory note amounting
P10,000.00. aid
d. The condonation is in a public instrument. re
acceptance is made in a private instrument,"
condonation involves a television set ™
P20,000.00
vel
tn which of the following independent cases is the Pe ee

the debtor's debt not subrogated to the righ!s
creditor? ° read bY?
& Dawes C P10,000.00. The debt is Secu sin
pledge of D's ring to C.D also owes X, PS"
X peys C P10,000.00 without the knowled
ge FP
104.
108,
oa 127
hic
p ones C P10,000.00, The dete is secured by a

badge of D's ring tC. X% pays C P1G,000.09 with
pO aR
ae consent of D. eo
awen © P10,060,00, The obligation is
r rat teed by G. G pays C P16,000.06 withour
guaran
the knowledge of D . :
7 C P10,000.00, The obligation is
ay ey y ‘
DoW % pays © P10,000.00 without
guaranteed by G.
the pnowledge of p
| his only horse to B for P10,000,00 cash. The
§ sole agreed that © shall deliver the horse within one
partie thi their agreement. Nothing is mentioned in the

2 ’
week I w the horse will be cared for by S before
agreement On ho
enn _
fein ‘3 must take care of the horse with the diligence of
a good father of a family before delivery.
b. S need not take care of the horse because nothing

was mentioned in the agreement on how the horse
will be cared for.
c. S must take care of the horse with extraordinary

diligence,
a. The absence of a stipulation en how the horse
must be cared tor renders the sale void because
such stipulation is an essential element of the

contract,
D owes © the following debts:
= P3,000.00 due on August

10; P3,000.00 due on .
August 20: August 15; P3,000.00 due on

ig (oe HG PS.000,00 due on August 25 which is
ay edge of D string, | seinys he ¥ ay

D pays € P30 00.8 x. [today is August 22, and
with neither D nor C designati

debt to whie u ether D nor C designating the
be applied. ch the Payment shall apply, the Pparment shall
*. To the debt due
& a first-pay" basis.

@ the debts due on
Aue ¢
To The rm Proportion
© debt due on A
a =—s- S™Erous to pH.
on August 10, following the “first
ately at P1,000.00 each.
ebts Proportionately at P750.00 each.
August 10, August 15. and
Ugust 25, since it is the most
128 OBLIGAy
Oy
106. M executed a promissory note payable
P100,000.00. The note, which bears interest 7 P te

month, is payable after 60 days. On the date of nan he
P proceeded to M's place to collect but when dem, ity,

the presentation of the promissory note, p could
present it claiming that it had been lost. M ig abl Mot
willing to pay the whole amount due including the t © ang
but he is at a loss on what to do because P does nee
the instrument. On the other hand, if he does not nae
amount due, the interest on the principal will i the
accrue. If you were M, the remedy that you wil! Ue ty
avail yourself of is: They
a. dacion en pago.
b. payment by cession.
c. consignation.
d.
application of payment.
107. A, B, C and D owe X, Y and Z the sum of P12,000.00,
‘Based on the foregoing data, which of the followig
statements is incorrect? :
a. _. The obligation is joint.
b. There are 7 distinct debts in the obligation.
c. ‘Each debtor is liable only for a total P3,0U0.00.
d. Each creditor is entitled to collect a maximum d

P4,000.00, . :
108. P took a public bus in going to his office. Although P pei
; his fare, the bus conductor did not issue to him a ie
Along the way, the bus met an accident causing 4 a
injury to P and other passengers. If P is to mate
damages from the bus owner, the source of the
owner’s liability is:
a. “contract.
b. quasi-delict.
c. law.
d. P cannot recover any amount
was issued.
because 1° tc!
109. One of the following obligations is void. Which is ; a gil?

a. _—D to give C P50,000.00 if C does not un
without stopping. ans:
b. _D to give C P50,000.00 when D has the ™°
opt
110.
1.
112,
GATIONS sa?
D to give C P50,000.00 if D buys a brand-new car,
& p to give C P56,000.00 if C runs for barangay
& chairman next year
hich of the following obligations is a pure obligation and

whic
} Jable at once? .
is ae allow C to use D’s car until December 31,
a.
015 ; , -_
5 to allow C to use D’s car until C finishes his

b. course in Accounting. . .
D to give C his car. No mention is made when D

& shall give the car. / ;
4 D to give C a car if C finishes his course in
‘ Accounting.
On January 1, 2014, D obtained a loan of P100,000.00

from C. The loan is secured by a chattel mortgage on D's
car and is payable on December 31, 2014. On September
26, 2014, the car was taken at gunpoint from D while he
was starting its engine at the parking lot of a department
store.
a. D’s loan obligation is extinguished. However, D
must give a property which C may sell to satisfy
his claim. P
b. D’s loan obligation subsists. However, C may
demand its immediate payment unless D give
another security. \
D’s loan obligation subsists. However, C may not
demand immediate payment since the lore of the
Security was without the fault of D. D, moreover, '
1S not required to give a new securi
d, D’s loan bli ~ . . curity. '
obligation is extinguished together with
the mort :
the faalt of since the loss of the car was without
of D.
A
fa a B are the owners of adj
When a one day, B got sick
Second noticed that B wa
them ss Y, he himself too
the Cleaning the pi
neces: ext three days
Sary
acent poultry and piggery

and failed to visit his farm.
S not again around during the
k care of the animals by feeding
and poultry pens. A did this for
nti B returned. A incurred
Penses amounting to P5,000.00 in .
6a)
tet
113.
114,
7/115.
MIELIG son : j
ed
the process. Under the circumstances, B jg obs

reimburse A for such expenses which the latter co %
by reason of: Ure
a. contract.
b. solutio indebiti.
Ci negotiorum gestio.
d. quasi-delict.
D has a savings deposit with XYZ Bank in the amo

P20,000.00 which D may withdraw anytime from
bank. He also has a loan obligation to xyz ce
amounting to P20,000.00 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 Bank 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.
Unt of
Which of the following is an indivisible obligation?
a. To give a rendition tonight of Handel’s “Messiah’ in

a concert at the Folk Arts Theater. ;
b. To construct a pavement measuring 2 meters wide

and 10 meters long.
c To lecture for 5 Saturdays in a tax seminar.
d, Ta pay a loan obligation of P100,000.00 in i

equal monthly installments.
Devera obtained a loan of P50,000.00 from Centeno one

engaged in the business of financing. The written oat d
of the parties provides that the loan shall bear ee thé
12% per annum and shall be paid in full together 47,
interest at the end of 12 months at Centeno’s pm
office. On due date, Devera proceeded 0 a was
business office to pay his debt but the ple enpie
padlocked and showed no signs that it had been oe do #8
for some time. Devera is now at a loss on what “ hie
Centeno did not forward his present address tio
opucaTio’”
end of the year and incur further interest. Which
at the of action wil} you recominend to Devera?
course Tender of payment
a. Compensation
b. Consignation
d Application of payment
QG0.00 from C. The parties agreed at
16. P borrowed ee eigation was constituted that should D so
the tae may give his agricultural land to C by way of.
asst, en pago to Pay his loan obligation on due date.
117.
118,
The obligation 0
perp
{D to Cis:
a conjunctive obligation.
a simple obligation.
an alternative obligation
a facultative obligation.
One of the distinctions betweerl a facultative obligation

and an alternative obligation is that in an alternative
obligation:
a,
b.
c,
d/
le
Only one thing is principally due.
The right of choice belongs to the debtor alone.
f the obligation to give a principal thing is void, the

obligation to give the substitute is also void. -
If all prestations except one arc impossible, that

which is possible must still be given.
D stole the carabao of C. D was arrested, tried in court

and co
term, D was also

carabao.
it to C.
a.
b,
re
d.
- D’s fault,
nvicted. Aside from being sentenced to a prison

sa ordered by the court to return the
owever, the carabao died before D could deliver
D is not liable to C
Carabao is a fo
D is liable
‘ if the cause of the death of the

rtuitous event.
to c only if the carabao died because of
D is liab} ; iid
o the ox naa whatever may be the cause of death

has bao.
of the den to C whatever may be the cause
to retum th ot the carabao because his obligation
Court ang € carabao was due to

| not on his own volition.
an order of the |
120.
121.
Under a contract between D and C, Dis obligeg

10 bags of detergent soap to C 10 days after the exson
of their agreement. On due date, D delivered to ¢ ee
of detergent soap which he mixed with chalk. bap,
a. The contract entered into between p and
voidable because of the fraud employed byD Ci,
b. The contract is valid. The fraud employed
does not affect the validity of the contract but)
obliged to pay damages to C. kk
c. The contract is void because of the fraud employ
by D in the performance of his obligation, mm
d. The contract is rescissible because of the d
suffered by C.
to det;
AMages
D obtained a loan from C in the amount of PS0,000.09,

Unable to give cash on due date in payment of his loa
obligation, D proposed to C that he would be giving
instead his diamond ring to settle his debt. C agreed and
accepted the ring from D. The new agreement between D
and C involved both:
a. Novation and application of payment.
b. Novation and dacion en pago.
c. Compensation and payment by cession.
d. Confusion and tender of payment
Salas and Bersamin entered into a contract whereby Salas _
would deliver 5 pieces of genuine Rolex wristwatches

Bersamin. Salas proposed to Bersamin that should oo
deliver 5 units of fake pieces of Rolex wristwatches
reason of financial difficulties on his part, Bersamin . it
not sue him for damages on the ground of
. Salas
Bersamin accepted the proposal. On due date, po
delivered 5 pieces of fake Rolex wristwatches. nase’
discovery of the fraud, Bersamin sues Salas for da!
Salas contends that he cannot be held liable for gales

because Bersamin waived his right to hold him
liable on the ground of fraud if the reason theree
financial difficulties of Salas. 5 pecs’

a. Bersamin cannot sue Salas for damage nan
the reason for the waiver is valid, 1° — 7th
ason
difficulties of Salas, which is a valid re
waiver,
opi
122.
123,
124,
ra BO
ATION?
ersamin can sue Salas for the annulment of the

ontract since it is voidable-.
a rsamin can Sue Salas for damages because the
< . .
c ie he made is void. Nonetheless, the contract
a
1 yi lid. rn! ;
is Va ; ‘ sue Sales for the rescission of the
d.
contract since it is rescissible.
of “X” shirts worth P2,000.00 per box

B ordered 7 oot rediately the total price of P20,000.00.
from s Paine the goods after their delivery to his store,
while Sed that one box was missing. Upon being
B discos S$ apologized for the error and promised to
Sera ihe rice of P2,000.00 within three days as there
cial ° Sore stock of “X” shirts available. In the
ce entimie B ordered and received from S one box of “Y”
shirts which was also worth P2,000.00 promising to pay
the same within three days. On the third day, assuming
that S had not yet refunded the price of the undelivered
*X” shirts to B, B need not pay S the price of “Y” shirts by
claiming:
a. consignation.
b.. . compensation.
c. condonation.
d novation.
‘The following are obligations with a term or period, except:

a. D to give C P50,000.00 on December 1, 2015.
b. to give C PS0,000.00 on- Christmas day next

year,
‘ father . P50,000.00 upon the death of C’s

gt ,
D to give C P59
years, 000.00 if C's father dies within 2
A, B and :
? C are li
Reouneed the: sha
mes insolvent,
Kean collet 7™ C P8,000.00

Ollect from ¢ a0.
: CAN collect fro 1000.00

£8N Collect no
le in solidum to X for P12,000.00. X

are of A who accepted it. Later, B
m C P12,000.00,
thing from C,
aoe
134
125.
sy
P BUIGAM
Ace Realty Company (Ace) ordered 6 units of «ph

typewriters from Central Office Machines (Centra Ordeyy
price of P8,000.00 per unit. However, Central delive: th
Ace 6 units of “Remington” typewriters, a Superior bra
which was priced at P8,500.00 per unit. Centray inf rand,
Ace that it will bill the latter for the «p en
typewriters at P8,000.00 only. Ace refused to acene
geet > : eDt th
Remington” typewriters.
a. Central can compel Ace to the accept

“Remington” typewriters since they are of ied
quality. Te
b. Central cannot compel Ace to the ACCEP the

“Remington” typewriters although they ar &
superior quality.
c. Central can compel Ace to accept the “Remingtor’
typewriters since Ace is required to pay only th

price of “Borden” typewriters.
d. Central can compel Ace to accept the “Remingtr’

typewriters since all that is required of Central &
to deliver a typewniter that can perform the sm
function as the one that was ordered.
Prime Engineering Review Center (PERC) stated in te

leaflets it distributed last January that any reviewee wh
places first in the censure examinations for engine
this year will receive a cash prize of P150,000.00. .
a. The obligation of PERC is subject to a suspens®
condition. rte
b. The obligation of PERC is subject to a ress
condition. , .
c. The obligation of PERC is a pure obligation. with #
d. The obligation of PERC is an obligation
suspensive period.
‘ atu
Three of the following statements pertain to
obligation. Which one does not? . ’
a. It is not enforceable in a court of justice: g ro*
b. Obligation exists by reason of equity 4°
justice.
¢. If performed voluntarily, recovery ©
»made.
d. There is juridical necessity to perform ate

¥
an no jong?
opi
128.
129.
130.
GATIONS
149
ains warehouse in Davao, while C has a grains

p has 4 er in Cebu. D borrowed 10 sacks of rice worth
warehouse from C for D’s customer in Cebu. Later, C
p10,000.0 0 sacks of rice which was also worth
porrowed 0 from D for C’s customer in Davao. Both the
p10,000-0 are already due. Transport costs to Davao
obligation® P1,000.00, while those for Cebu amount to
amoun .
pa00.00, and C need not pay each other since their debts
a. compensated each other. . ,
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).
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.
db.
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.
None, because the assignment ‘made by C was

without the knowledge of D. ;
D owes Cc . .
hand, ov P20,000.00 due on
March 1, p3 00 € following debts: 8,000.00 due on
March 14, on Mee ae on March 8, P5,000,00 due on
Notice to D but ain Ba, assigned his right to T with
®signment t giving his

. On consent to the
b P20,000.00 °°" 15, T can collect from D:
c. P9,000.00,
P4,000.00
os
ta
past
132.
&. Nese,
without the consent
On December 1, 2014, Miss Santos, @ professor CF Min,

e Lepanto Tran
premises at six o'clock in the morning and would cena
exactly 6:30 am. However, Lepanto Transport failed ,
send a bus on the Gate, time and place agreed upon, Ase
result, Miss Santos and her class failed to atteng te
celebration. Ms. Santos sued Lepanto Transport f
damages on the ground of delay in the performance of
obligation. For its defense, Lepanto Transport claime

there was no delay because Miss Santos never made
demand.
a. There was no delay because Miss Santos did no

make any demand.
b. Lepanto Transport was in delay since demand was

not required. . : :
c. Miss Santos should have obtained the services

another company when the bus of Lepatl
Transport did not arrive.
d. Miss Santos should have reminded ee

Transport from time to time before the due ¢@
its obligation to provide for a bus.
premise?
onthl
vat tht
Leveriza, the owner of an apartment, leased the

to Toribio. The terms of the lease provide for 4
_Yental of P6,000.00 which Toribio must Pay om i
residence of Leveriza about two blocks roreit®

apartment. For the month of December, Tor eo
the residence of Leveriza but the latter was Ot oribiO
receive the payment. Not wanting to go back, reriZas we
the payment with Nograles, a neighbor of ae Hower
Promised to give the payment to Leveriza- himst
Nograles spent the amount he received . over
Based on the foregoing facts, which of the
statements is incorrect?
ort
133.
134,
10 att Q N 3
lav?
The payment by Toribio to Nograles is valid since

a. tye latter is A neighbor of Leveriza,
The payment by Torbio is not valid because
Noerales was not authorized to receive the
WOR .
ment. os
S verias can demand payment from Toribio for the

December rental.
Toribio can go after Nograles for the amount
misspent by Nograles.
i creditors: X, P20,000.00; Y¥,

eis od and Z PS0,000.00. D is insolvent so he
Seas 2 assign all his properties (except those exempt
from execution) to his creditors in payment of his debts.
The creditors accept the offer and are able to sell the
debtor’s properties for P70,000.00. ; Based on the
foregoing facts, which of the following statements is
incorrect?
a. The special mode of payment availed of by D is

payment by cession. .
b. D is released from his total liability of P100,000.00

even if there is no stipulation to that effect.
c. D is released from his liability only to the extent of

P70,000.00 in the absence of any stipulation giving
him total release.
The creditors did not become the owners of D’s
Properties at the time of their assignment.

On Ma: . .
lot to . 31, 2014, D promised to give a specific house and
ek ee ne Bar Examination. On September

‘ é oe
Bar Examination which C tamination. The result of the
2015 ang u took was released on March 26,

and lot; © passed it. ¢ shall be entitled to the house
. Gn May 31,2014,
[ep ember 24, 2014

whe eeh 26, 2015...
Ww
hen he Teceives his rating
AP op
135.
136.
137.
138.
139.
a
_b. P2,500.00.
c
A and B are indebted to X and Y for 10,000.00, A

share in the debt in the ratio of 1:3; while X ang Vane
in the credit in the ratio of 2:3. Shan
How much may X collect from A if the debtors ar

debtors, while the creditors are joint creditors?
P10,000.00,
P2,500.00.
P4,000.00.
P1,000.00.
e Joing
Bese
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.
How much may X collect from A if there is passive

solidarity?
P10,000.00.
P4,000.00.
d. P1,000.00.
A, B and C are solidary debtors of X, Y and Z. solid
creditors, in the amount of P2,700.00. X renounces he
whole obligation without the consent of Y and 2.
debtors accepted the renunciation.
a. The whole obligation is extinguished.

b. Only P900.00 is extinguished. .
c. No part of the obligation is extinguished

not all the creditors consented to the renun
d. Only P300.00 is extinguished.
becaust
ciation
A, B and C are solidary debtors of X in the cepts the
P3,000.00. X renounces the share of A and A 4 nsolver

renunciation. Thereafter, B becomes
Ultimately: 0.00:
0
a. C alone will shoulder the balance of sas ghouls
b. A will shoulder P500.00, while ©
P1,500.00.
os
140.
141,
149,
GATIONS -
c will shoulder only his share of P1,000.00. A will

c no longer shoulder any amount since his share
was already renounced by X.
A will shoulder P1,000.00, while C will shoulder
a: p1,000.00, for the remaining balance of P2,000.00.

A, Band C are obliged to deliver a specific horse to X, Y
_ 2 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
‘ Gemand 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 C’s share of
the obligation. .
O was cleaning the glass window of his building wherf a

large piece of broken glass fell down directly hitting the
Aes ofacar which was parked below. C, the owner of the
ar, was not around. i
liable for the ae Sensing that he would be made
mage on the car, O immediately w

down and cleaned the mess. W had
“i O, seeing that W had

Papua z that happened, proposed to give W
is fled, wp that W would not testify in case a court case
money. agreed to the proposal and accepted the
followin ased on the foregoing facts, which of the
a O's ceements is incorrect?
b. The ope if any, is based on quasi-delict.
m ee
#3 both of them, nt between O and W is binding on.
d. W may te
tify in i
The s court despite the agreem
vs agreement between O and Ww is void. mi
P30,9 and © ar ;
00.00, joint chet debtors of X and Y for
Att?
143.
144,
145.
EON
a. X may collect P30,000.00 from either A,B
Thereafter, he must give to Y pys ion C

representing the share of Y. 1400.9
b. X may collect P30,000.00 from the debtors b

more than P10,000.00 from each of pra
Thereafter, he must give to Y pjs5 oon
representing the share of Y. Ww.
c. X may collect P15,000.00 from either A, Bor

Thereafter, he is not obligated to give any amp a
to Y.
d. X may collect P15,000.00 from the debtors but ny

more than P5,000.00 from each of then
Thereafter, he is not obligated to give any amo:

to-Y.
S, a supplier of fresh fish from Lucena City, hired T, the

owner of a trucking company, for a fee of P3,000.00t
bring the fish catch of S to the Dampa Market 2
Paranaque 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.
§
Refer to the preceding number. In the contract between
and T:
a. S is the obligor and T is the obligee.
b. S is the obligee and T is the obligor. of eact
c. ‘Both S and T are obligors and obligees
other. na?
d. The Dampa Market is the obligee of both $n

. ving any
D obtained a loan of P200,000.00 from C. Not a payer
cash on due date when C visited him to deman eithet ps
D offered to C to accept, at C’s choice, 11 of whic

necklace, diamond ring, or a parcel of land, t request
D showed to C, C accepted the proposal, ee m t0 ay
that he be given one week to decide which 1% ford
Before the week was over, however, arm
took the necklace and diamond ring from D
oplives
D’s obligation became a simple obligation to deliver
a the parcel of land.
D’s ‘obligation to give P200,000.00 is revived
b. because C was deprived of his right to choose.
D's obligation to give 200,000.00 was
c. extinguished by personal novation.
d D's obligation is now to give the parcel of land or
146.
147.
14g,
p200,000.00, at C’s option.
The following are characteristics of a facultative obligation,

e o
t: oo:
exceP Only one thing is principally due.
b. ~ The right of choice cannot be given to the creditor.
of . The debtor must give the substitute in case the
. principal thing is lost due to the debtor’s fault

before substitution. .
d. / If the principal is void, the debtor is not obliged to
give the substitute.
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.
t D may apply the payment to any of the five debts.
D may apply the payment to any. of the four debts

: that have become due as of January 17.
° May apply the payment either to the debt due on

d. anuary 1 or January 20.
D may appl -
January “a ly the payment only to sas debt due on
Refer to :
designate the rreceding number. Assume that D did not
mils case: ebt to which the payment shall apply. In
b, ay apply the
iat apply the
c may ap become due as of January 17.
January y tHe payment either to the debt due on
or January 20 only since the amount of
payment to any of the five debts.
payment to any of the four debts
% ~ 343
re SUSI eGR —
. . ‘ > cannot comnel C 1 eccepe the perment be wes
oe ne RES SS ENS SINE SS SE emcee Wey | c “ame Secause = Ggiter most make his
pevmect
8 ; on eetite to tee soshes of Ris crediter
~ a » me od Ss accoram™ © : Sues 0 a ee — fo
. 8 eS em ee et ae Q may ciake Sis payment in check and comme! ©
SHEERS 5 CE a & - a weept the payment simee this Soom ts the mest
nee Refer o> Ne. TAT. Assume the crediter dig ao comvert eo ioe on
designate the debt to which the payment shalt a ; ~ tne Gsllowing is 2
characteristic of exromisien
— | eS | as wien oe cor
& Fayment shail be applied Propertionately te the ff, but ee is mate with or
without the consent of the
Gebts. x cS oo
b. Fayments shal it be applied Propertenately te the Se eetrd person who makes the
payment to the
four debts that have become due as of January 7 > reditor is always entitled to
subrogation.
c. Payment shall be applied only to the debt due on ve case of insolvency of the
new debtor, the creditor
ary 1 since it is the first debt that has become c. may still recover from the
original debtor under
e. :
: . = i mstances.
d. Payment shall be applied Proportionately to the certain coed be the debtor
himself.
debt due on January 1 and January 20 since the d. It is initiated by the
oar na SABRES es of tie sania areca 153. D, a depositor of ABC Bank, visited the
branch of the
— bank at Espana Boulevard to withdraw from i
Dacion en pago : pecial automated teller machine (ATM). After pressing correctly
80. of wa t. ve ° te on which of - anal the amount of P500.00, the machine
dispensed 10 pieces
=e ves ‘ of P500.00 bills or a total of P5,000.00. The receipt
a. On the number of creditors involved released by the ATM showed that only P500.00
was
we tn the ithdrawn.
; rties involved in wr
» — one one a. D does not have to return the excess of P4,500.00
&. On the purpose of the payment. 3 nie it was not his fault that the ATM would
d. On whether the debtor is released completely b ispense more than what he wanted
to withdraw.
his obligation/s. : D does not have to return the excess of P4,500.00
. D. because the receipt did not indicate that the said
151. D is indebted to C for P52,000.00. On due ore i nena was withdrawn.
tendered payment amounting to P52,000.00 ee w must return the excess of P4,500.00
because it
consisted of the following: 47 pieces of P1,000.00 7 for 8 d. & case of payment
that was not due.
a total of P4+7,000.00; and 250 pieces of P20.00 ext th must return the excess of
P4,500.00 because
total of P5,000.00. C refused to accept the PayT 0 es sen bank will likely discover
that he was the one
demanded that D make his payment all in a bot _ Sing the ATM when the overpayment
was made.
wince, according io him, the P20.00 bills were a Te. D is indebt :
eT ee Pe CMY, «eel a debe ig eed to e in the amount of P100,000.00. The
Mester atitied on Barany by G *, 2 mortgage of the lot of D and the
b Cs teen eae wccept oe the PAD, “ICUNt of the lesan a prada informing D, paid the
totai
z Te cS ai - aS c % , F
Justified Hence, D cannot consign the P# : ‘ .
a
144
155.
156.
157.
a. G cannot collect from D. He cannot algo fo

the mortgage. TEChog,
b. G can collect from D. However, if D cannot
* cannot foreclose the mortgage. Pay, ¢
c. G can collect from D. If D cannot Pay, g
foreclose the mortgage. > Can
d. G cannot collect from D. However,
G can
the mortgage. forectoy
A, B and C are liable to X in the amount of P30,000 0
The debt is evidenced by a promissory nate which reads
promise to pay X or order P30,000.00”. The note ig Signed
by A, Band C. X indorsed the note to Y, Y to Z, and Ztok
for merchandise Z bought from A.
a. The obligation under the note is totally

extinguished. .
b.. _ The obligation under the note is extinguished on}

up to P10,000.00.
c. The obligation under-the note is extinguished ony

up to P20,000.00. ,
d. No part of the obligation is extinguished.
When two persons are claiming the same right to collet

from you and you are in doubt as to whom you will gt
your payment, your remedy so that you will not pay tot
wrong person is:
a. tender of payment.
b application of payment
c. dacion en pago. ;
a. consignation.
Decoroso borrowed P50,000.00 from Collantes 3

Gualberto as guarantor. However, Collantes '* Bott
indebted to Decoroso in the amount of P30,000.00. pest
debts have become due. Collantes demanded pe wit
from Decoroso but Decoroso has become insole arta
assets of only P15,000.00 which he used ™
payment of his debt to Collantes. In this case: for
a. Collantes can hold Gualberto _ liable ot set a
remaining P35,000.00. Gualberto canno’ °' iy!
. nt
compensation as regards the amu
OBLIGATo,
" opLIGATIONS .
158.
159,
145
Collantes owes Decoroso because he (Gualberto) is

not a principal debtor.
Collantes can hold Gualberto liable for only
b. p5,000.00 because Gualberto can set up

compensation as regards the amount that
Collantes owes Decoroso. '
Collantes can hold Gualberto liable for the amount
c. of P30,000.00 only because that is the amount

that Collantes owes Decoroso.
d Collantes cannot hold Gualberto liable for any
amount because the insolvency of Decoroso

released Gualberto from liability. ,
A and B are joint debtors of W, X, Y and Z, solidary
creditors, in the amount of P20,000.00. In this case:
a. W can collect from either A or B P20,000.00. Then

W must give P5,000.00 each to X, Y and Z.
b. W can collect only the -maximum amount of

P10,000.00 each from A and B. If W is able to
collect P10,000.00 from A, W must give P2,506.00
each to X, Y and Z. . If W is able to collect
P10,000.00 from B, W must give P2,500.00 each to
X, Y and Z.
c W can collect only the amount of P5,000.00 from
either A or B. When he collects the said amount, W

does not have to give the amount of P1,250.00
each to X, Y and Z. .
W can collect only the maximum amount of
ee each from A and B. When he collects the
ihe See of P5,000.00, W does not have to give

ount of P1,250.00 each to X, Y and Z.
D owes ¢ P6,000,00
another debt of P12, thio January: 10,. dnd
Both q 000.00 which is due on Janu 20.

are alread. ae unsecured and non-interest bearing. and
ives to a D, however, has only P3,000.00 which he
Payment shud Out informing C as to which debt the
Teceipt he innate” c also did not indicate on the
Payment shall Sepht te to which of the two debts the
this case:
160.
161.
2014, The loan, which D has the option of paying
MONS
The payment of P3,000.00 shall be applied

debt due on January 10 because it was the tir the
become due. | St ty
The payment of P3,000.00 shall be applied ty
debt due on January 20 because it is of g ge the
amount. . ter
Payment cannot be applied to either of
debts because it is incomplete.
The payment of P3,000.00 shall be applicg

proportionately in the amount of P1,000.00 to th
debt due on January 10, «nd P2,000.00 to the del
due on January 20.
the ty
obtained a loan of P500,000.00 from C on January 1,
On or
before December 31, 2014, is secured by a building owned

by D and bears interest of 1% per month. On June 30,
2014, the building was razed in a fire without the fault of
D.
a.
Mario Marquez executed a promissory note whic
C may demand immediate payment of the loan

from D on June 30, 2014 since the security
therefor was lost, unless D gives another security.
C may not demand immediate payment of the loan
from the D because the loss of the building was
C may demand payment of the loan from D only 0

December 31, 2014 because the benefit of 2
period was given to D who was given the option
pay on or before the due date. .
C may no longer demand payment since t

was extinguished by reason of the loss ©
building.
he loan
f the
h reads 4
follows:
rez the
I promise to pay to the order of Pablo Pe
sum of P50,000,00 on January 31, 2016.
(Sod. ) Gilbert Garcia

Guarantor
(Sgd.) Mario Marquez

Maker
oBL
162.
163.
164.
GATIV™ . es
perez indorsed the note to Alfonso Abad, Alfonso

o Benito Buenviaje, Benito Buenviaje to Carlos
and Carlos Cuaresma to Gilbert Garcia. The
f the note to Gilbert Garcia produced the
pablo
Abad ¢
Cuaresma,
negotiation ©
f:
alice extinguishing both the loan and the guaranty.
a.
extinguishing the loan but not the guaranty.

- extinguishing the guaranty but not the loan.
4 neither extinguishing the loan nor the guaranty,
D borrowed P50,000.00 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 ring to settle the debt. C accepted the
proposal and received the ring. Immediately after
receiving the ring, C sold it to B. D’s obligation to give
P50,000.00 to C is extinguished by:
a. dacion en pago.
b. payment by cession.
Cc. sale,
d. application of payment.
D is obliged to deliver a specific Toyota car to C. The

parties agreed that should D so desire, he. may deliver his
only Lancer car to C as a substitute. Before D could make
any substitution, the Lancer car was damaged beyond’
repair through the fault of D.
a D’s obligation to deliver - thé Toyota car is

b extinguished.
‘ D is obliged to pay damages to C for the loss of the
° Lancer car, :
* Dis still oblicea
4 due date. ed to deliver the Toyota car to C on
° D is obliged ¢
substitute. d to get another Lancer car aS a
Dis obj
ed t : ' os
Necklace on © deliver either a Specific bracelet, a specific
» SF a specific rj ‘ :
the Agreement - a Ting to C. No mention was made in
ee. Before due © Parties as to who has the right of
a T\
165,
166.
ON MAMANY ATION,
Subsequently, the ring was lost through a fortuj

QUy
event. . 7
a. D’s obligation to C is extinguished by forty;
event. itoy,
b, D is obliged to pay damages to C because h
in default when he did not respond to the hatte Wag
c. D’s obligation is not extinguished as he may a
either the bracelet or the necklace, Clivey
d. D’s obligation became a simple obligation whe
informed D of his (C’s) preference on the object ¢
be given to him. to
D, a professional singer, agreed to sing for a fee of

P20,000.00 at the birthday party of C who was a fan ofp,
Due to numerous commitments, D could not ZO to the
party of C. So he sent X, another professional singer who
was known to sing better than D, to sing at C’s party, and
informed C that the latter necded to pay only P10,000.00,
a. D may validly assign his obligation to sing because
the reduced fee was advantageous to C.
b. D may validly assign his obligation to sing because
X% could perform the obligation better than him.
c. D may not validly assign his obligation to sing
because it is personal in nature. :
d. C cannot refuse the performance of the obligation
by X because the obligation to sing is transmissible
since it would not require much effort on the pat
of either D or X who are both professional singers
D received a check for P5,000.00 drawn against ABC ee

in payment of a debt due him. Upon cashing the chee 4
réquested the teller to give him 10 pieces of P500.00
and to place the money in an envelope. As he we the
hurry, D left the bank without bothering to ced the
cash, Shortly after reaching his office, D counters 10
money in the envelope and discovered that it contan
pleces of P1,060.00 bill or an excens of P5,000.00. excess

A, 1) doen not have the oblipation to return aie
of P5,000,00, because it wan not hiv fault t
OBL
167.
168,
GATIONS
149
p does not have the obligation to return the
‘excess of P5,000.00 because the bank will not
likely know who among the bank clients received
such excess amount.

D must return the excess of P5,000.00 because he
has the obligation to do so under the principle of
tio indebiti.
ee return the excess of P5,000.00 because he
has the obligation to do so under the principle of

negotiorum gestio.
The following condonations are presented to you for

evaluation:
I.
Il.
A condonation involving a debt of an immovable

property which was embodied in a private
instrument together with the acceptance thereof.
A condonation involving a money debt of P6,000.00

made and accepted orally with the creditor making
a simultaneous delivery to the debtor of the
promissory note evidencing the credit.
In your evaluation of the above condonations, the

obligation is:
a.
b
Ss
d
Th
L
I.
extinguished in both I and II.

extinguished in I only.
not extinguished in either I or II,

extinguished in II only,
¢ following cases are presented to you for evaluation:
D is obliged to deliver a specific computer to C.

pare the scheduled delivery, the computer was
ed in a fire through no fault of D.
is soe to deliver 10 sacks of rice to C. Before
= Be cduled delivery, the warehouse of D
intenden 500 sacks of rice from which D

“nded to get 16 sacks of rice for delivery to C,
Was razed jn a fir

: | fire togeth i
through no ies maith
Ww In
‘ . of your *
teller w Son in excess : cva
auld py him an mount ext ishe
luation of the
Wat stated in the cheek,
abov: ther ohiledeink 3

d by logs tn: © cases, thé’ obligation is.
b. Neither I nor Il.
x I only.
d. II only.
169, Which of the following obligations is void?
a. D agreed to hire C as manager of his (D's
if C is willing to relocate to Cebu.
KB. D agreed to paint the portrait of C if D y;
U enrgy
- in a painting class this coming month.

c. D promised to pay his debt to C amountin
P20,000.00 as soon as possible. 8 fo
d. D agreed to give a monthly support of P5,000.00 1,
Cc until D ends his contract of employment
overseas.
170. D owes C P50,000.00. The obligation is secured by the

guaranty of G_and a real mortgage on D's ty
Subsequently, G, without the knowledge of D, paid C the
amount of P50,000.00. Z
a. G can go after D’ to collect and if D cannot pay, 6
can foreclose the mortgage because he is entitled

to subrogation.
b. G can go after D to collect and if D cannot pay, 6

; to compensation.
Gi G can go after D to collect and if D cannot pay,

to condonation. |
d. G can go after D to collect but he is not entitled

any other right because the payment he made?
was without the knowledge of D.
to:
171, One peso, P5.00 and P10.00 coins are legal tender up
a. P100.00.
b. P500.00,
f£ ——-P1,000.00.
d, Any amount.
9 | coins a
172. One centavo, P0.05, PO.10, and P0.25. centavo ©
legal tender up to:
& ° P100.00,
b. P500.00.
ope
173.
174,
175.
176,
p1,000.00.
(Any amount.
der up to:
Is are tegal ten
All bi 95,000.00.
bh __P10,000.00.
‘ p100,000.00.
c. ount.
d: Any am :
) a loan of P5,000.00 from C. On due date, D

dered payment amounting to P5,000.00 consisting of
5,000 pieces of P1.00 coin.
» The payment offered by D is legal tender.
b C may not refuse to accept the payment.

Should C refuse to accept the payment, D may
resort to consignation (deposit of the payment in
court). . ;
d. C may demand that he be paid in bills.
D obtained
c.
D is obliged to deliver 20 sacks of “Dinorado” rice to C.

The parties agreed that should D fail to perform his
obligation as stipulated, D will pay a penalty of P1,000.00.
On due date, D made a delivery of 20 sacks of rice but
each sack contained a mixture of “Dinorado” rice and
another variety of lower quality. C discovered the fraud.
a. C may demand the payment of the stipulated

penalty only.
b, C may demand the payment of the stipulated
penalty as well as damages although there was no

Stipulation on the latter.
Sey demand the payment of damages in
a on to the stipulated penalty only if there was
d. a ari with respect to damages.
y demand the payment of damages in

addition to the sti :
ulated
to pay the penalty. 7, DRneIy ont SED sets
D obtain ,
evidenced py do of PS50,000.00 from C. The loan was
Nothing g Promissory note executed by D which said
: bout Sea cease

tie right ta collect en omissibility of the loan obligation or
nc died leaving A month before the due date of the
& S, his son, as heir. On due date, S
los SATION,
i D for
resented the promissory note to Payment
efascil claiming that he owed C but not S. ’
a. D may refuse to pay because the right f

belonged only to C. Colley
b. D may not refuse to pay because the right ¢
; collect was transmitted to S who was the 7

notwithstanding the absence of an a,
but
Cy
I of
€
that effect. Breement i,
c. D may refuse to pay because there wns
stipulation that right to collect the loan wo wy
transmitted to C’s heirs. k
d, D may refuse to pay because the transmis
sj
the credit right is prohibited by law. md
177. These statements are presented to you:
I. Several prestations are due but all must

performed to extinguish the obligation.
Il. If there are void prestations, the other prestations
may still be valid; hence, the obligation remains,
In your evaluation of the foregoing statements:
a. Both statements refer to an alternation obligation.
b. Neither statement refers to an _ alternative

obligation. ;
Cc. Only Statement I refers to an alternative obligation.
d: Only Statement II refers to an alternate
= obligation.
178. D obtained a loan of P50,000.00 from C. The same

payable after 60 days. On due date, D, not pag
sufficient cash, offered: to give either his ring the
bracelet to C. C accepted the offer. Based ae is
foregoing facts, which of the following stateme?
incorrect? ae agit 8
a. The original obligation of D is an obligation
period. : igh ed by
b. The original obligation of D is exting™
'. novation (0:
< : . ngs
- The right to choose the item to be give? bet
(on a
; n.
d. The new obligation is an alternative obligat?
opie
179:
180.
181,
182,
aww
ATIONS
owed P50,000.00 from C. The debt, which is

D sete within one year, is secured by a mortgage that D
a
payad ted on his lot. The mortgage is recorded in the

constitu of Property. C dies before the due date of the
Registry | was not able to collect any amount of his loan
debt a from D. He was survived by S, his only son
receivab e D, taking advantage of the situation, sold the lot
ad ao was not aware of the mortgage constituted
to
thereon.
The mortgage is not binding on T since he was not

aware of it at the time he bought the lot.
s the son of C, has the right to collect the

rs amount of the note from D and foreclose the
mortgage if the D cannot pay.
The mortgage is not binding on T since D was in
bad faith when he sold the lot to T.
d. The right to collect the loan and foreclose the
mortgage were extinguished upon the death of C.
a.
A, an agent of P, owes B P20,000.00. BB, on the other

hand, owes P, P20,000.00. 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.
On January 1, 2014, D and C agreed that D would deliver

° C a specific agricultural land on July 1, 2014. From
teh wede 3 June 30, 2014, D harvested palay from the
ae orth P20,000.00. D actually delivered the land to C
eptember 30, 2014. At that time, crops valued at
P15,000.0 ~ . °
unharvested, "¢ grew beginning on July 1, 2014 remained
. C had a i i
del ; personal right against D for the
a 7a the thing and its fruits beginning on:
; anuary 1, 2014,
«. June 30, 2014.
a Duly 1, 2014,
September 30, 2014.
C acqui
Wired a rea} ri 3
¢ January act ed the thing and its fruits on:
154
183.
184.
185.
186.
PBLUGAn,
c. July 1, 2014.
d. September 30, 2014,
The palay harvested from the agricultural lang

in Item 181 is an example of:
Y industrial fruit.
natural fruit.
civil fruit.
It is not a fruit.
Mention,
Bo op
D is obliged to deliver his only horse to C on May a7

2014. C made a demand against D for the delivery of
horse on May 31, 2014. However, D failed to deliver
horse. In view thereof, C consulted you and ask whichy
the following remedies are available to him.
1. Compel D to deliver the horse to him.

II. Get a horse from another person at D’s expense,
Ill. Demand payment of damages from D.
’ Which of the foregoing remedies may be availed of by (?
a. I and III.
b. II and III.
c. I only.
d. II only.
D is obliged to repair the car of C. D failed to repair tt

car despite the demands made by C. D wants to kno
‘from you which of the following remedies are available!
him: ; ‘
IL. Compel D repair the car. at Ds
II. Have the car repaired by another person
expense. :
Ill. Demand payment of damages from D.
by &
Which of the foregoing remedies may be availed of
a. I and JJ. ,
b. Il and II.
c. I only.
d. Il only.
: is:
The kind of fraud which renders a contract voidable
Bz. causal fraud.
187.
188.
189,
| gpiiGATIONS
b.
c.
d.
D was obli
9015. On suc
155
incidental fraud.
fraud in performance.
future fraud.
ged to deliver a specific car to C on May 31,

h date, however, D failed to deliver the car.
C also did not make any demand for the delivery of the
car.
a.
b.
D was in delay when he failed to deliver the car on
due date. . . :
D was not in delay when he failed to deliver the car
on due date.
D would be on delay only if C made a demand for

the delivery of the car on or before due date.
D was in delay whether demand was made or not

since time was of the essence of the contract.
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,
2014. The condition of the obligation is:
b.
Cc.
d.
negative.
positive,
impossible.
no condition exists.
Which of th
incorrect? o e following statements is
a.
b,
os Obligation is extinguished “if it is already

the dew * mane and C has not yet presented to D
; ot absolute sale duly si *

D’s obligations e duly signed by X.
ate without his havi i

the deed of absolute sale. avane signed
D’s obligation ; .
or before bon 1s demandable if C presents to D on
ae duly signed by x
S oblivatiq, :
Obligation is demandable if it is already
Janu
Fh 1, 2015 and C has not yet presented to D
of absolute sale duly signed by X,
S extinguished on December 5, 2014
€cember 31, 2014 the deed of absolute
156
190.
191.
192.
193.
va.
OB Lig. oy
D promised to give P20,000.00 to C provideg C

sign a contract with X on or before December
The condition of the obligation is:
a. negative.
b. positive.
c. impossible.
d. no condition exists.
does
31, 204
Refer to No. 190. Which of the following state
incorrect?
a. D’s obligation becomes demandable if it js alr

January 1, 2015 and C has not yet signed op
contract with X.
b. D’s obligation becomes demandable on Dee

5, 2014 if X dies on such date without ¢
signed the contract with X.
c. D’s obligation is extinguished if C signs »

contract with X on or before December 31, 2014,
d. D’s obligation is extinguished if it is alreay

January 1, 2015 and C has not yet signed th
contract with X.
mb
having
D is obliged to give P50,000.00 to C if C tops the CPi

Examination and a specific lot if C can reduce the tas
to be paid by D in D’s tax return by unlawful means.
a. Both conditions must be fulfilled so that C m™
demand the payment of P50,000.00 and the
delivery of the specific lot. ith
b. C may demand the payment of P50,000.00
tops the CPA Examination. se tot if
c. C may demand the delivery of the specific lo es
can reduce through unlawful means the tae
be paid by D.
d. C may not demand the payment of.
the delivery of the specific lot even 1
conditions since the conditions are 1
0 ast
f he fulfills
ndivisible.
tne off
Three of the following are the char acteristics
condition. Which is the exception?
It may or may not happen.
b. It may refer to the future.
OB
194.
195.
196,
197
pIGATIONS
157
It merely fixes the time for the efficaciousness of ari
& obligation.
It may refer to a past event unknown to the

parties.
ac are solidary debtors of X in the amount of

A, 7 S00 00, C was insane at the time the obligation was
p30, oe .
constituted possibly collect from A the amount of
a.
000.00.
Poe ay possibly collect from A the amount of
000.00.
Be ay possible collect from A the amount of
P10,000.00.
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.
b.
c.
The delivery of promissory notes payable to order or other

bills of exchange or other mercantile documents shall
produce the effect of payment when they are:
a. delivered.
be cashed.
c. - have been impaired through the fault of the debtor.

d, deposited in the bank.
D owes C P10,000.00. T offers to pay D’s obligation and
tells D that D need not reimburse him. However, D does °
not give his consent to T’s offer not to be reimbursed. C,

nonetheless, accepts the payment from T.
a. The payment is valid insofar as C is concerned
5 Since he accepted the payment, e
. a payment is not valid because D did not give
18 consent to T’s offer not to be reimbursed for the
Payment,
The payment is not valid because it was not D
him
d. The vn who made the payment.
b .
© reimbursed and D consented to the payment.
Which of .
the following payments'is not. valid?
@yment will be valid if T had the intention to:
tet
yi
i py 9 y
pa
iy
2.
b.
c.
d.
199,
b.
d.
D obtieme
Dght min
Gate, D paid his loon obligeton of P10,000.09
had since become Insane. Of the totel amount
Jost P4,090.00 and spent P6,000.00 for his §
mecessary expenses.
y
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A
oO
cr
mt
t
al er
fh
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et
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ee
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hi
hug
o
en of P10,000.00 fom C who
xe time he Erented the Joan to D
ths
. On dy
tec Why
Teceived, ¢
ood and othe
th
tt
Bi
a
The obligation is totally extinguished Decause ¢

received the payment in full.
The obligation is extinguished up to P4,000.00.

The obligation is extinguished up to P6,000.00.
No part of the obligation is extinguished because (
was insane at the time he received the payment.
Which of the following payments is not valid?
Payment to a third person who acquires the

creditor’s right after the payment.
Payment which, although made to a third person,

was ratified by the creditor.
Payment to a third person who does not have the

authority to receive the payment but the creditor
by his conduct, has led the debtor to believe .
the third person had authority to receN
payment.
Payment made in good faith to a person

possession of the instrument but not the credit.
in
200. The following statements concerning payment by ces

are true, except:
a.
b.
c.
ies
the creditors become the owners of the propa
of the debtor that were ceded to them. «ya ions
payment by cession extinguishes the Oph i
only to the extent covered by the proceeds
_ Sale of the debtor’s properties.
the debtor must be insolvent.
202.
mw
% .. = t Tht me ~
+ ofects ali the properties of the debtor except
affe
pe
+ fae —
shoes exempt Irom Ckeecuasn
PO ~ ae on Jun 5 The debts represented the
pa GOe oe eensines which were dehvered to D on a weekiy
pace - tehe & debts, the one duc on May 22 is secured
bass a D's ring. By agreement of the parties, C

by @ ae a payment even before the due date of the
may Comer May 31, D had not paid any of the 6 debts.
ey 23 “Dp wanted to make payment but he had oniy
EO mer apply the payment to the debt due on June
a. na} 3 a
5.
b. D must apply the payment proportionately to the 5
debts that have become d=* as of May 31 at

P800.00 each.
c. D may apply the payment to the debt due on May
22 which is the most burdensome to him.
d. D must apply the payment to all the debts

proportionately at P666.67 each.
Refer to No. 201. Assuming that D did not designate the

debt to be paid when he remitted the amount of P4,000.00
toC on May 31. C issued a receipt for the payment he
received from D but he did not also designate the debt
that was being paid. In this case:
a. The payment shall be applied proportionately to
the debts that have become due as of May 31
bh Proportionately at P800.00 each. -
: Sad payment shall be applied to the debt due on
a 22 since it is the debt that is most onerous to
The Payment sh i
a} all be applied to all debts
4 Proportionately at P666.67.
The .
beat ment shall not- be applhed to any debt
'Se there was no designation by the parties.
B issued :
debt of p Onis
OM note ayable to the ord: { C for;

ial ts Payable to» order of C fora
90.90 hich bears interest at 2% per month .
169
204.
205.
206.
- & When the nature of the obligation requires th:
In order that condonation may extinguish an obligate?
PAGANO 3
On due date, X went to the place of D to colleg the:

claiming that C assigned the note to him. X, S dey
could not present the promissory note claiming we =
had lost it. D wants to make the payment booms he
does not want the interest to accrue but he is at lon be
to whether he would make the payment to X. In thig
the course of action that you will advise D to take jg.
a consignation.
b. tender of payment.
c. application of payment.
d. dation in payment.
The obligation is not extinguished by reason of the logs a

the thing through a fortuitous event in three of 4,
following cases. Which is the exception?
assumption of risks.
b. When the debtor has incurred in delay.
a When the obligation is to give a determinate thing

and the parties have not stipulated whether or nd
there shall be liability in case of fortuitous events.
d. When the debtor has promised to deliver the sam

thing to two or more persons who do not have the
same interest.
involving a movable property whose value exceeds
P5,000.00 — :
a. It is sufficient that the condonation and acceptant

are in writing, even a private one.
b. _- It is required that the condonation and acceptan®

must be in a public instrument. ake debts
c. The delivery of the document evidencing the

sufficient since the property is movable. be elt
d. The condonation and acceptance may
orally. 2
of
In order for legal compensation to take place, Me pout

requisites are: that each one of the obligOTS © inci
principally, and that he be at the same time ® PL git |
creditor of the other, and that the two debts —
osud
207.
208.
209,
_ Bive his consent
RATIONS use
in addition, the following requisites must be present,

il That both debts consist of a sum of money or if the
= things due are consumable, that they be of the
game kind and also of the same quality if the latter
has been stated.
That both debts be liquidated and demandabie.

That the debts must have the same amount.
That over neither of them there should be any

retention or controversy commenced by third
persons and communicated in due time to the
debtor.
ao
D owes C P20,000.00 due on June 20. C owes D

P14,000.00 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. P20,000.00.
b. P6,000.00.
c. P14,000.00.
d. Nothing.
_D owes C P30,000.00 due on June 20. C owes D the
following debts: P15,000.00 due on June 2; P4,000.00

due on June 14; P6,000.00 due on June 16; and
P3,000.0 due on June 18. -On June 17, C assigned his
Tight to X. C notified D of the assignment but D did not
thereto. On June 20, X may collect from
P30,000.00.
P5,000.00.
P2,000.00. : : ig
Nothing. ”
og
Rep
Refer to ,
When C mien Assume the same facts except that
Dw D about j ;. ent of his‘credit to X, C did not

to collect that p le: only on June 20 when X went.to
ca . :
3 se, X may collect fiom De of the assignment. In this
b, 30,000.00. :
210.
211.
212.
-D is obliged to deliver a specific horse to C for entry
)OF
c. P2,000.00.
d. Nothing.
D owes C P50,000.00. Subsequently, D Propose
that T will assume his (D’s) debt. C accepted the a toe
of D. This type of novation which involves

substitution of the debtor is known as: the
A. Delegacion.
b Expromision.
c. Objective novation.
d Subrogation.
Assume the facts in No. 210. Assume also that on de

date, T could not pay because of his insolvency which ya,
in fact subsisting but was not known to D or of public
knowledge at the time that he delegated his debt. In this
case - ;
a. C can revive D’s debt because T’s insolvency was

already existing at the time that D delegated his
debt.
b. C can revive D’s debt whether or not he (D) was

aware of T’s insolvency since he (D) proposed th
- substitution. :
c. C cannot hold D liable because his (D’s) obligate:

was extinguished when he was substituted byT
d. The novation is void because D did not take sé

to determine the solvency of T when he D
delegated his debt.
sory tht
derby. The day before the agreed date of anes
horse broke its right front leg. While it could st
could no longer mun. 2 is ne
a The obligation to deliver the hors «a

3 % * the horsé
extinguished since only one leg of
injured.
b. The obligation is extinguished becaus parti
to the right front leg of the horse 3S @ am =a
that is so important in relation to obligat® ig
The obligation to deliver the een wal
extinguished because the horse could st
att
e in
sy bes
e th
Ope
913.
214.
215.
216.
‘Qt?
The obligation of D is not extinguished because he

d. can get a horse from other sources.
-. obliged to pay C P10,000.00 on or before June 30. C

De pliged to pay D P10,000.00 on June 15. Who may
a“ compensation on June 15?
. D only.
b. C only.
c. __Bither D or C.
d. Neither D nor C.
D is obliged to pay C P10,000.00 on or before June 15. C

is obliged to pay D P10,000.00 on June 30. Who may
claim compensation on June 15?
a. D only.
b. C only.
C. Either D or C.
d. Neither D nor C.
A, 17 years old, B, 25, and C, 30, jointly borrowed

P6,000.00 from X. How much may X collect from B?
P6,000.00.
P4,000.00.
P2,000.00.
Nothing, because A was a minor at the time the

obligation was constituted.
Boop
Refer to No. 215. Assu
me the same fact

debtors are bound soli atts exeept that the
from B? darily. How much may X collect

a. P6,000.00. .
b. P4,000.00. *
2 P2,000.00.
; Nothing because _ _.
i ee A was a minor at the ti
obligation was constituted. e mee

A,B and ci:
date, Aon Se borrowed P3,000.00 from X. On due
b P3,000.00. How much may X collect from B?
c P2,000.00
164
218.
219.
220.
221.
222.
OBLIGATIGn,
r to No. 217. Assume the same facts except

scone are solidarily bound. How much may x ate
from B? thy
a. P3,000.00.
b. P2,000.00.
c. P1,500,00.
d. P1,000.00.
A, B and C are jointly liable to X in the amount

P12,000.00. On due date, X demanded payment fret
but A refused to pay. How much may X collect from B?
a. P12,000.00 plus damages for delay.
b. P8,000.00 plus damages for delay.
c. P4,000.00 plus damages for delay.
d. P4,000.00 without any damages.
Refer to No. 219. Assume the same facts except that A,B
and C are solidarily liable to X in the amount d
P12,000.00. On due date, X demanded payment froms
but A refused to pay. How much may X collect from B?
a. P12,000.00 plus damages for delay.
b. P8,000.00 plus damages for delay.
c. P4,000.00 plus damages for delay.

d. P4,000.00 without any damages.
i ; saved from
During a flood, the properties of D were | who
destruction by C without the knowledge ait

then away. C incurred necessary and useful cepen
the act of saving D’s properties. For such expense: cil the
a. D must reimburse C although C acted wit
consent of D. 2c acted
b, D is not required to reimburse C becaus
without D’s consent.
c. D must reimburse C because there war wi
contract between D and C.’ se act of savitd
d. D need not reimburse C because CS ae eguires™
D's properties is a gratuitous act that
compensation.
an ieopl
905!
i 1
D is obliged to give his only car to C on Decembe care w
On December 1, 2014, D did not deliver th?
osu
223.
224.
following day, armed men forcibly took the car from D's
garage.
a.
b.
D’s obligation to give the car is extinguished.
D must give another car of the same kind and

quality to C because he was already in delay when
the loss took place. .
D is obliged to pay damages to C.
D must give another car or pay damages at the

option of C.
a9
Orlando brought his typewriter at the shop of Remigio for
repair. Orlando made several demands for the repair work
to be done but Remigio did not undertake the repairs.
Eventually, Remigio returned the typewriter, unrepaired
and with several parts missing.
I. Orlando can have the typewriter repaired by

another repair shop with the repair cost thereof
chargeable to Remigio.
IL Orlando can compel Remigio to undertake the

repairs. .
Ill. Orlando can ask for damages for the missing parts
of the typewriter at the expense of Remigio.
Which of the above remedies may be availed of by

Orlando?
a Tand II,
b. Wand Il. °
C. Tand III. :
d. All of I, I and II,
D obtai
guarantor a loan, of P30,000.00 from C with G as

Both debts are due,» wer hand, owes G P30,000.00.
l,
If C sues D
ed » D may Successfully put up the defense
mpe ;
I. If c peso because C owes G, D’s guarantor.
D may not
IM, Ir pensation as to what Cc Oe HAE SELEH GG tt
Vv compensate pay and C sues G, G can put u
< Both D’s dest ee fe owes him P30,000.00 p
extiney; © C and C’s qd :
Suished by legal compensation. RR ae
OE
226.
228.
ie, “Ty,

a. ._ T and Il are true.
b. It and IV are true.
cand IV are true.
d. Il and III are true.
The following obligations are demandable at once, except
a. An obligation with a condition antecedent.
b. An obligation without any term or condition

c. An obligation with an in diem period. .
d. An obligation with a condition not to ag
impossible thing. rN
The following statements are presented to you:
I. © It may or may not happen.
II. It always refers to the future.
Ill. C It may refer to a past event unknown to the

parties. :
IV. It merely fixes the time for the efficaciousness of ay

obligation.

a. I and III refer to period.
b Iand Ill refer to condition.

c. II and IV refer to condition.
d. Ill and IV refer to period.
The creditor has a right to the fruits of the thing from th

time: , beet
a. the thing and its fruits have actually
delivered.
b. the contract is perfected. eo
& the obligation to deliver the thing arises. stg fru
d. the payment of the price of the thing and !
has been made.
riod with?
s supe
supe
One of the following is an obligation with 2 P¢

suspensive effect. Which is it?
a. “I will give you P5,000.00 per month 4
. beginning January 1 of next year.” s
b. ‘I will give you P5,000.00 per month @
until you finish your law course.”
osu
229.
230.
231.
GATIONS 167
“I will give you P5,000.00 per month for your

medicines if your physical examination says you
are sick.” 5
d “I will give you P5,000.00 per month as support

until you are able to find work.”
D is obliged to give Object I, Object 2 or Object 3 to C.

The right of choice as to which object will be delivered to C
belongs to: ;
a. both the parties.
4. D only.
Cc. C only.
d. neither of the parties.
a an alternative obligation.
. a facultative obligation.
Cc. a conjunctive obligation.
The obligation referred to in the preceding number is:

b
Refer to No. 229. Assume the following:
1 Object 1 and Object 2 are lost through D’s fault,

and later Object 3 is lost through a fortuitous
event.
Il. Object 1 and Object‘2 are lost through a fortuitous
event, and later Object 3 is lost through D’s fault.
In your evaluation of the fore
obligation ie extinguished going statements, D’s
i both I and I.
. neither I nor II. :
- T only,
d. Monly,
D owes C
P . :
Other hand 20,000.00 with G as guarantor C, on the
a. Solvent. In this case —" :

b cme collect from G P20,000.00
‘ 000.00.
Buaranto, wet from G_ P5,000.00 because a
What the Set up compensation as regards
Teditor may owe the principal debtor.
a a nc et
ssn one ERIN
233.
234.
235.
236.
AY '
C may collect nothing from G because
insolvent.
C may collect P15,000.00 from G.
d.
It transfers to the person taking the place of the ae
all the rights pertaining to the credit, either again
debtor or against third persons, be they guaranty,”
possessors of mortgages. Ors &
a. Substitution.
b. Subrogation.
c Transfiguration.
d. Transformation.
These statements are presented to you: ¢
I. = A stipulation that an obligation shall be paid hi

currency other than Philippine legal tender js yi
Il. * ‘A ccashier’s check is as good as cash; hence, it
legal tender.

a. Both statements are true.
p- Both statements are false.
c. Only Statement I is true.
d. Only Statement II is true.
If there is a concurrence of two or more creditors ant

two or more debtors in one and the same obligation,
obligation is presumed to be:
a. individual and collective.
b, solidary. .
Cc. joint and several.
A. joint.
A, B and C are joint debtors of W, x, ¥ and a

n this
creditors, in the amount of p24,000.00. !
can demand: B, oe
a. P8,000.00 from A, P8,000.00 from

P8,000.00 from C. ;
b. P24,000.00 from either A, B or C- B, &
c. ' P2,000.00 from A, P2,000.00 from
P2,000.00 from C.
d. P6,000.00 from either A, B or C.
OB
237.
938.
239.
240
‘P20,000.00.
LIGA : feed OAC
A, B and Cc are solidary debtors of X in the amount of

p30,000.00. If A is insolvent, how much may X collect
?
a B+ 30,000.00.
‘b, P10,000.00.
< _-P20,000.00.
4, P15,000.00.
A, B and C are solidary debtors of X in the amount of

P60,000.00. A, however, was a minor at the time the
obligation was constituted. If X sues B, B will be liable to
X for: .
a. P60,000.00.
b. P40,000.00
Cc. P20,000.00.
d. P30,000.00.
Donita owed Carmina P200,000.00. The loan is secured

by a mortgage of Donita’s lot. After a month Donita paid
( Without the knowledge of Donita, Teresa
paid Carmina P200,000.00 believing that Donita still owed
the amount of P200,000.00.
a. — can demand P200,000.00 from Donita, and
if Donita cannot pay, Teresa can for ;
mortgage on the lot. Jen He
eresa cannot claim reimbursement fro i
: J m Donita
because she paid Carmina without Donita’
knowledge. "
Teresa
can demand P180,000.00 from Donita, and
if Donita cannot
pay, Teresa
d mortgage on the lot. cannot foreclose the
T
fom con recover the amount of P200,000.00
Teresa. if Donita refuses to reimburse
D borrow,
ed P C
cash to pa 50,000.00 from c. Not having. sufficient
his dian the debt, D proposed sat

the ni ond ring. ¢ accepted fied ae sclved
a iV
D's oblig
b. cession.
ati i i i
c On 1s extinguished by payment by
8 Oblipatign ; a é )
iZation is extinguished by consignation,
170
241.
242.
23,
244,
OBLIGg Ao,
D’s obligation is extinguished by dacion en be

a D’s obligation is not extinguished at all bees
the payment should have been in cash, Uy
nsation will not take place if;

em One dali have different due dates,
4 the debts are payable at different places,
: there is a controversy or retention involv}
. the debts commenced by third per,
communicated in due time to the debtor,
d. both debts consist in a sum of money,
NB one y
Sons and
wes C the following debts: P3,000.00 due on y I

5,000.00 due on July 6, P2,000.00 due on July sa
P2,000.00 due on July 25. If today is July 22, and D giv
P2,000.00 to C but neither he nor C indicates the debt,
which the payment shall apply, the payment shall »
ied to:
app The debt due on July 15 or July 25 because the
payment is of the same amount as the said debts,
b. To any of the debts due on July 1 or July6 &
partial payment or to the debt due on July 15 :
full payment, since the said debts have already
become due as of the time the payment is made. 5
To the debts due on July 1, July 6 and July #
" P1,000.00, #
proportionately at P600.00, ,
P400.00, respectively. . wage
dé. ‘To all the Actes proportionately in the
3:5:2:2,
Which of the following, is a void obligation? to
a “Dt give C P50,000,00 if C does not Y é#
moon,” in
3 =D to give C P50,000.00 if D cat vt ©
sweepstakes.” D has not yet

sweepstakes ticket. ing KP
c. “D to give C P50.000.00 if D marries x
d. “ft give © P50.000.00 if C marries * att
ebt is pay é
D borrowed P200,000.00 from C. The 4 i morteae’

after 6 months and is secured by a chatte
oBLIGATIONS mes
945.
246.
- Worried that th
, ing crops. A month before due date, the crops

D a er pletely destroyed by Typhoon “Ondoy.” P
wer D’s obligation to pay the loan is extinguished,
b. C may now demand immediate payment of the loan
unless D furnishes another security.
C must wait for the due date before he can demand
payment because the loss of the security is without
the fault of D.
d Both the loan obligation and the chattel mortgage

‘ are extinguished due to fortuitous event.
c.
M obtained a loan of P50,000.00 from P. The loan is

evidenced by promissory note executed by M with G
signing as a guarantor of the debt. P assigns the note to
A,AtoB,BtoC,andCtoG. The assignment of the note
to G extinguished
a. _, both the loan and the guaranty.
b. only the loan.
c. only the guaranty.
‘d neither the loan nor the guaranty with G now as
the new creditor.
M makes an interest-bearing promissory note amounting

to P100,000,00 payable to the order of P. The back of the
promissory note contains the following indorsements: P to
A, Ato B, B to C, and C to H who is now in possession of
the note, On due date, H goes to the office of M to collect
but he finds R who is i € €

ds R tryi ;
Ah rying to collect the amount on the
4 power of attorney su di i
his fee Ppotedly executed in
is favor by C, M is now confused on whorn to pay, He is
© Interest will keep on accruing if he does
Hot pay, If yoy « ;

om you will do ~~? ein the position of M, the safest thing
4,
Pay 'o H because as holder
b, 5, dulred title to the note,
ioe K because as the agent of C, he is ar
< HON Of the

ITY to ¥
1 deposit the payment by way of
( Court Arie
d Thee ation.
bo efore the ¢ i
hae ; selabe et
ust car the two. t your fault that they
and indorsee, he
bid
247.
243.
_250.
Se Only Statement I is true.
EY
opltt
When the debtor binds himself to pay as soon a i

7 ee obligation is void because Poy
dependent upon @ condition that ig Potestag
hie part. tiny
b. The obligation is valid, but the crestitoy tre
and ask the court to fix the period for the
of the obligahon
The obligation is void because there ix ng »
of minds between the parties as to an »
element theres!
d. The obligation is suspended until the detay,
the meens to pay his debt. a -
ot
95
Mt py
hs
obugation of a school to provide its studeng

The obugat Pp ts tf
and secure enivironment and an atmosphere cond
learning is an obligation arising from:

a lew.
x contract.
c, quasi-comtract.
é quasi-defict.
hese statements are presented to you:

I. There is no delay in obligations nottodo., _
ii. Delay is applicable only to the debtor, never 54
creditor. ~

a. Both statements are true. 953.
b. Both statements are false.
d. Only Statement II is true.
. pply:
The principle of negotiorum gestio does not apply egiect
a. When the property or business is not
abandoned. peel ra
b. When the officious manager has .

authorized by the owner. 234
In both (a) and (b).

In neither (a) nor (b).
pp
sATIONS it
are indebled to W, %, Y and Zin the amount of

CaF
| 4,000 09 each from A, GH and 0
rf and ©
oe p00 ot) int
‘ W ran
- ‘Then, he must grve PO,006 09 each to K, ¥ and Z,

yi can collect P2,099.09 each from A, Band ©
. Then, he pe ed not pve ary ames to %, ¥ arud 3
Wo can collect PO,0090 O9 frems either A, Boor t
“ Then, he need nut yve any amount to K, Y end Z,
Gorm the amount he collected,
; i can cert 724,999.09 from either A, Bor 0
Thee ne suet give Pl O90 9 each to K, ¥ end 7
Qetia obtained 2 loar A PSOIIOS from Cores
wevable of January 31. On Jarmuzary 23, Deke o®eret +,
Asuver her Giamnand ring ff the tame value on January 31
+, Coranon to wettle the dett. Corezen aeneptet the ofler
on the were Gete. Thos. om Jermuery 31, Deke Seton
ter Giasnond ring to Corazon Based on tie ieee
wets, which of the lowing statements is correct?
z [elias foam cbigzten of PSO OOO .00 wes

extinguished om January 23
b. Dela hac an obligetion to gre the diamond ring to

C on January 31
c. Deka’s loan obligation of FPSO00000 wzes
pxunguisned on Jamuasy 31 when she deSvered
her diamond ring to Corazon.
é clia'’s lean cbligation of PS5G,000.00 was

extinguished by nevation.
A, B and C are liable individ: iy and collectively to X in
the amount of P30,000.00. On due date, X demanded
Payment fror wey. is i E

7 om A. However, C is insolvent. In this case:
ie x my collect P20,000.00 only from either A or B.

; * may collect P30,000.00 from either A or B.
A P15,000.00
= wt 1
P15,000.00 o ly. , -OO only, and from B,
000
» m A P10,000.00
P10,000.00 only. only, and from B,
d,
D obliged hi ;
t0 the moon, tt © Sive P50,000.00 to C if C does not fly
2 out
Th § a .
° obligation is immediately demandable.
§
t
4
i
oo hantats nese ess
255.
256.
OBLg Ay
b. Both the obligation and the condition

Cc. The condition of the obligation are Void,
impossible. = Phys
d. The obligation becomes demandable at
time. Some Fite,
On January 1, 2015, D borrowed P5009 000.00

with interest at 10% per annum. The loan obli from ¢
the interest are due on December 31, 2015. Cation ay
a. D may compel C to acce
December 31, 2015, PE PAYMERE defy
b. C may compel D to make
December 31, 2015.
c. Both {a) and (b) are correct.
d. Both (a) and (b) are incorrect.
Payment bef,
Refer to the facts in the preceding number. Assuma;

that on due date, D has only PS500,000.00 and he of
this amount to C who is willing to accept it as peru
payment.
a. The payment shall applied in its entirety tp &
principal. D_ still owes C the interes ¢

b. The payment shall be applied first to the interest
P50,000.00. The balance of P450,000.00 shal &

applied to the principal; hence, D still owes ¢
P50,000.00 for the principal which will continat
bear interest.
extinguished because C accepted the pare

without any protest or objection.
e oF
D obtained a loan of P1,000,000.00 from CTs

which is due on December 31, 2015, is secur’ 0,
mortgage of D’s brand-new Toyota Innova waters #
1, 2015, the van was swept away by flood ™ found
height of Typhoon Olga and could ne lone 00 000.00 he
a. D’s obligation to give Pl, hereof wes
extinguished because the security t
st gations
or
'g obligation P1,000,000.00 became demandable
b. june 1, 2015, unless he gives another security.
on Nopligation t give P1,000,000.00 and the
c. chattel mortgage are extinguished by reason of
fortuitous event,
p's obligation to give P1,060,000.00 subsists, tut
d. C cannot demand its payment before December
31, 2015
sented to you:
tements are pre sente
258 These Payrient is still possible when two persons are
debtors and creditors of each other.
Payment is impossible when a person is both the
" debtor and the creditor of the same obligation.
’b. Both statements are false.
é. Only Statement I is true.
d. Only Statement | false.
259. These statements are presented to you:
289.
i A quasi-contract is an implied contract. «

I. There is no delay in obiigations not to do.-

b. Both statements are false.
c, Only Statement I is true.
& Only Statement I false.
D 7
a P50,000.00 from C. On due date, D offered to
the dept — his bracelet or his necklace in payment of
Obligation ai days from the due date of the original
due date. D* accepted the offer. Two days before the new
a. 7S Ting was lost through his fault.
obligation is a facultative obligation.
obliged to pay damages to C for the loss of

The = due to his fault,
del; ght of choice
vered belongs to C,
b D's new
° Dis not
c. the ring
as to which thing will be —
261.
262.
263.
264.
265.
wo GATION, |
a. The loss of the ring deprived .

choice. seep D Of the righ y
The waiver of an action for fraud is valid in
a future fraud.
b. past fraud.
c. both fa) and (b).
d. mm neither (a) nor {b).
the Case of
i:
a
D is indebted to C for P100,000.00 which is alread; dee:
D offers to give a certified check to C to settle the dee
a. If C refuses to accept the check, D may resort to i

consignation to settle the obligation.
b. if C refuses to accept the check, D may replace the

check with 100,000 pieces of P1.00 coin and
compel C to accept it.
ec. If C refuses to accept the check, D may replace the

check with 5,000 pieces of P20.00 bill, and if
refuses to accept it, D may consign the payment.
d. If C accepts the certified check, D’s obligation is

automatically extinguished.
Which of the following statements concerning jacultative
obligation is correct? /
a. Two or more prestations are due.
b. The right to make the substitution belongs to the

debtor only. r the
c. The loss of the substitute due to the fault >

debtor will make him liable for damages.
d. The loss of the principal thing due to
event will make the debtor obliged to 4
substitute.
fortuitous
eliver the
ent by.
Which of the following is not a feature of paym
cession?
a. There is a plurality of creditors.
b. The debtor must be insolvent. ‘iy in

Cc: All the debtor’s properties are generally
, the cession. + Kabilitie>

lia
yolved in
9
‘ : : en page
Which of the following is not a feature of dacion
ees
NS
a gat?
oF
There may be two or more creditors involved.
std ie =
a bine debtor must be msolvent.
x. Not ali the properties of the debtor are involved.
The debtor is generally released from his
sey wee =
“ oebugation/s
268,
owed P10.000.00 from C.

D oe nsane. Nonetheless, D gave C P10,000.00 te
S the debt. When C's guardian learned of the
- ern by D, C was found to have only P3,000.60
Se in his wailet and that he had lost P1,500.00 in a
gambling game, and used P5,500.00 to buy his food. In
al eeayment is valid only up to P3,000.00.
Payment is valid only up to P8,500.00.
Payment is valid up to P10,000.00.
The total payment is not valid because C was
incapacitated at the time he received the payment.

Bo gp
Consignation, without any tender of payment, will release

the debtor from liability in the following cases, except
when:
a. The creditor is absent or unknown, or does not
‘ appear at the place of payment.
: The creditor is capacitated to receive payment.
“ Without just cause, the creditor refuses to give a

receipt.
Two or more
collect,
d.
persons claim the same right to
D ow
2015. Cc P20,000.00
‘ payable on or before March 31,

2015, 5 iS obliged to
AB.g tesutt _ Pay D P20,000.00 on March 15,
a Coane gat which of the following is incorrect?
b, D ma an compensation on March 15, 2015.
C, C ‘ee lean compensation on March 15, 2015.
his debt . compensation on March 31, 2015 if

Unpaid » and D’s debt to him, remained
a 5 miaiy - of such date. ; :

C's debt tO hie pensation on March 31, 2015 if
OF euch ae debt to C, remained
>
f
a
?
¢
beet
“|
19 0)
269.
270.
271.
272.
D owes C P30,000.00 due on Apnmil 1, 2015,
P30,000.00 due on March 15, 2015. What red

compensation may possibly take place today if dg
February 14, 2015? Oday i
a. Voluntary
b. Legal
c. Facultative
d. Judicial
When a third person pays the creditor without intend;

to be reimbursed and the debtor did not give his cont
to the donation:
The payment is valid as to the creditor who
accepted it. :
The debtor is under no obligation to reimburse the

third person.
The payment is not valid because no one can pay

the debt of another.
The creditor is obliged to return the payment to the

third person.
The following obligations are immediately demandable,

except: ‘
a.
b.
pure obligation
obligation with a period with a resolutory effect.

c. obligation with a negative impossible condition.
d. obligation with a condition antecedent.
These statements are presented to you: 7

I, . Anobligation cannot exist without a contrac’
tl. A contract can exist without an obiigation.

b Both statements are false.
c. Only Statement I is true.

d. Only Statement II is true. a
iv
end of
D borrowed P500,000.00 from C payable at te ation mi
years. Due to supervening extraordinary date
&
value of the debt fell to P250,000,00 om th
. &
pauls
gi4.
275.
276,
27,
NS é
TiO? z !
How much must D pay C on the date of
maturity.
jon that demand shall not be required in order to
. 1 t . : ¢
Astipula debtor in delay is generally to the disadvantage
make the
of the:
a debtor.
creditor. . ; ¢
both the debtor and the creditor. .
neither the debtor nor the creditor.
b.
c.
d. .
The absence of stipulation on liability in case of fertuitous

event is generally to the advantage of the:
‘ debtor.
creditor. :
both the debtor and the creditor.
neither the debtor nor the creditor.
pooR
These statements concerning legal compensation are

presented to you:
1 Legal compensation cannot take place if the debts

have different due dates.
Legal compensation may take place although the

debts are payable at different places.
I.
In you ; ‘
a. your evaluation of the foregoing statements:
. — statements are true.

_ oth Statements are false. is
Z On Statement 1 is true.
nly Statement I] is true.
A,B ang .
: c : ay
indebted “re Solidarily indebted to X for P9,000.00. X is

" T
here ie | P9,000.00. Both debts are due.
There ig ei compensation up to P3,000.00,

There is legal combensation up to P6,000.00.
Ahas no e*! Compensation up to P9,000.00..
Tight t :
and C at: P3000 0G a SEDUCE from B
aR
180
278.
279.
280.
281.
OBLIGATION
Refer to the same facts in the preceding numbe
that the debtors are jointly liable to X. As a result EXCepe

of the following statements is incorrect? » Which
a. There is legal compensation up to P3,000 00
b. B and C are still indebted to X for P3,000 Ps ;
c. X still owes A P6,000.00. mu €ach,

d. There is no legal compensation at all.
It is a mode of extinguishing an obligation which h

two-fold function: One is to extinguish an old obligatine
and the other to substitute a new one in its place, *
Novation
Compensation
Remission
‘ Consignation
2.9 op
D owes C the following debts: P4,000,00 due on February

1, P7,000.00 due on February 5, P5,000.00 due on
February 10, and P4,000.00 due on February 20. By
agreement of the parties, the benefit of the period was
given to D. If today is February 14, and D has not paid
any of the said debts, but is offering P4,000.00 to C as
payment today, to which debt may D apply the payment?
a. To the debt due on February 1 amounting to

P4,000.00 only. ,
b. To the debt due on February 20 amounting to

P4,000.00 only. 90, at
Cc. To the debt due on February 1 or February “™

his option.
d. To all the debts proportionately at er

P1,400,00.00, P1,000.00, and
respectively.
‘ at
Refer to the preceding number. Supposing ee debt t?
gave the payment to C, D did not designe dicate
which the payment shall apply. Neither di ag being paid:
Yr,
the receipt that he issued to D which debt
Which debt is being paid? mounting ©

a. The debt due on February | @ 3
P4,000.00 only. unting ©

b. The debt due on February 20 @m°
P4,000 09 only.
oBLl
982.
283.
284,
285,
To the debts due on February 1, February 5 and
r February 10 proportionately at P1,000.00,

P1,750.00, and P1,250.00, respectively,
4 To all the debts proportionately at P800.00,
‘ P1,400,00.00, P1,000.00, and P800.00,
respectively.
the young and other products of animals, produced with
the intervention of human labor are considered as:
a. civil fruits
b. industrial fruits
FA natural fruits
d. accessions
If two or more persons claim the same right to collect from
the debtor, the debtor’s appropriate rernedy is:
a. tender of payment.
be consignation.
C. payment by cession.
d. dation in payment.
D promised to deliver a specific horse to C on October 31,
2015, with the stipulation that he will give C 100 grams of

shabu” as penalty if he fails to deliver the horse on the
said date. Which obligation is void?
a. The principal obligation only.
* The penalty only,
d.
Bot or tee
i h the principal obligation and the penalty,
ither the Principal obligation nor the penalty.
Disag
a pled cbtor of C for P20,000.00. The debt i
ge of D's diamon 8 secured by
Before th d ring which is in C’s possession

ting to D, whe C voluntarily returned the diamond
ng? ch was extinguished by the return of the
Both
the debt of P20,000.00 and the pledge of the
diam i
b, Ond ring,
Zz ae debt of P20,000,00 onl
q € pledge of the dj
Neither the re diamond ring only.
. €
the diamona ving of P20,000 00 nor the pledge of
TEST II - MATCHING TYPE.
NLL ‘ON
Indicate your answers
the letter representing the statement or phrase z Writing

describes, defines or explains the numbered items, at dest
Terms
1. Solutio indebiti 26. Obligation
2. Obligation with a penal 27. Mora accipiendi
clause 28. Positive condition
3. Delegacion 29. Inflation
4. Real right __ 30. Indivisible obligation
5. Alternative obligation 31. Solidary obligation
6. Exdie 32. Negligence
7. Passive solidarity 33. Expromision
8. Joint obligation 34. Industrial fruits
9, Personal right 35. Reciprocal obligation
10. Efficient cause 36. In diem
11. Determinate thing ‘JN 37. Suspensive condition
12. Payment by cession ~ 38. Condonation
13. Fortuitous event ~*> 39. Deflation
14, Day certain ~ 40. Facultative obligation
15. Active solidarity “41. Negative condition
16. Application of payment °*42. Negotiorum gestio
17. Dation in payment 143. Condition
18. Potestative condition +44, Payment
: 19. Accessories ‘) 45. Legal tender
20. Prestation _< 46. Generic thing
21. Natural fruits oG 47. Civil fruits .
22, Penal clause 48, Resolutory condition
23. Unilateral obligation 1 49. Consignation
24. Subrogation 1. 50, Confusion
25. Accion pauliana
Statements
A. The happening thereof extinguishes the obligation:
B. The reason why the obligation exists. te pe rforman
Cc. Several prestations are due but the comple
of one of them extinguishes the obligation. eson upo! ue
Assumption of the obligation by @ third pe
oc
initiative of the debtor.
oBllG
= TRS
ww OD NS
“wa
‘<s
x
NX
8g
aR
SR AE
ATION?
urn of what has been paid by mistake,

essory undertaking to assume greater ‘liability in
preach in the obligation.
ot be foreseen, or even if foreseen is inevitable.
is a greater liability in case of breach in
Ret
An ace
case of
It cann
There
performance. . . .
rnforceable only against a definite passive subject.
Choosing the debt to which payment is to be applied.
It never perishes. .
Only one of the parties to the obligation is obliged to

comply with a prestation.
Spontaneous products of the soil and the young and other

products of animals.
Added to a thing for its better use, enjoyment or

perfection.
Assignment of the debtor’s properties to his creditors.
It consists of giving, doing or not doing something.
The obligations arise out of the same cause and must be

fulfilled at the same time.
Only one prestation is due but the debt

or may re
another in substitution. pee
y
obli a tion Im @
Juridical necessity to give, to do or not to do
The substitution of another person in the place-of the

creditor, where the for
MOF, mer s i
creditor in relation to the debe ee ment ol tie

That which the debtor
or payment.
oducts ys ;
That och i su with the intervention of human labor.

known when, ecessarily come although it may not be
Delay on t
A Sharp
may compel the creditor to accept
“ Part of the creditor.

udden increase in mone
Without
a e
Tansactions, ~~ sPonding
M
hig Se™ent of the
On Consent,
© who h
ligation, S the righ
Sation, Sht to demand
Obligation 7 performance of the
S
Y or credit or both
crease in business
.
Property or affairs of another without
USsceptible of parti
aps; Partial per
8€Inst the whole World. formance.
ethan ial
1
cs
#
if
i
,
184
KK.
LL,
OBLIGATE,
Ny
The remedy of creditors to impugn contrac
by the debtor to defraud thern,
Period with a suspensive effect.
They refer to those arising oul of a juridical relat
ng the rent of an apartment,
An uncertain event that wields an influence
relation,
Delivery and transmission of ownership of a thing t
debtor to his creditor to settle a monetary obligation ie
Any one of the debtors may be held liable for the
obligation, and any one of the creditors is entit
demand payment of the whole obligation,
The condition that some event will not happen at Q
determinate time.
Delivery of the sum or thing due with the judicig
authority. 3
Solidarity on the part of the debtors.
Depends upon the sole will of one of the contracting
parties.
Omission of the diligence required by the nature of the
obligation and corresponds with the circumstances of the
person, of the time, and of the place.
Each debtor is liable only for a proportionate part of the
debt, and each creditor is entitled only to a proportionate
part of the credit.

Period with a resolutory effect. a
The reduction in volume in circulation of the medium 0
exchange. ;
Substitution of debtor initiated by a third person. PY

; i f his right to
Gratuitous abandonment by the creditor 0
obligation.
Qualities of debtor and creditor are merge
person.
Mh eritere
ion, Buch
On A legal
Whole
led tg
d in the sam
The happening thereof gives rise to an obligabor™ erminatt
de
The condition that some event happens at 4
i al
time. . d from
Particularly designated or physically segregate
others of the same class. .
None of the foregoing. te
RUE" 1
TEST Ill’ - TRUE OR FALSE. Write the word “TE. jase
statement is true, and the word ‘FALSE’ if th
e statemen j
| Inity |
~—
Soy
at
ation 5
obligation to pive a determinate thing which js

to a Sunpensive condition, the creditor has a right
autiee fruits of the thing upon the perfection of the

to te
ioation. ‘ Pa .
obi fan criminally liable is also civilly liable.
1 Ape ’
a! Obligations arising from contracts have the force of law
Cet ween the contracting parties,

Ce ore obligation cannot be enforced in a court of
1 An "
jee et obliged to give something is also obliged to take

5. A n of it with the diligence of a father of a good family,
eid the law or stipulation of the parties requires a

a o
ater degree of care.
In an
~~
r Fane debtor fails to perform an obligation to do, the

° creditor may compel the debtor to comply with the
obligation.
7,7 If an obligation to do has been poorly done, the creditor

may have the same be undone at the expense of the.
debtor.
8. F Asa general rule, the debtor incurs in delay if he does not

perform his obligation on the date it is due.
9.7 If the obligation consists in the delivery of a determinate

thing, the debtor who incurs in delay shall not .be
responsible for loss due to fortuitous event.
10.F A waiver of an action for future fraud is valid.
ILF Inan obligation to give an indeterminate thing, the loss or

the shies are of the same kind will extinguish
WT Aete of mor be ne of the loss is a fortuitous event.
as armed robbery or piracy are
considered fortuitous e i i
13, the debtor’s will eos eens ie s
‘T AS a general Tule, rights ac
“47 i. oe hansmissible,
14 obligation subj iti
18. F qnandable at buck, = ayaa ne
obligation which j j
that ig tesa 1S subject to a suspensive condition
quired in virtue of an obligation
ist wines valid, n the part of the debtor at the same

Obligatio
his n where the q i : ’
17,7 fis means pe it him t een binds himself to pay when
x rvligation whic is a conditional obligation, .

On is an oblig: a
tion with q period.
h is demandable upon the death of a_
aN ee Ne 7 NE RELEASE
]
3
q
sneha ae tt ai
——
me
ho
te
IS)
QV
ms]
ho
to
‘8
\
OBLIGAM
The condition not to do an impossible thing sh

considered as not having been agreed Upon, Ip a be
case, the obligation is inmediately demandable. Uch
The condition that some event happen ata detern:
time shall extinguish the obligation as soon ag tata
expires or it has become indubitable that the eves Eig
not take place. t wy
The conditton shall be deemed fulfilled
voluntarily prevents its fulfillment,
The effects of a conditional obligation to give, once

condition has been fulfilled shall retroact to the day
constitution of the obhgation. .
A thing, although it still physically
considered lost if it goes out of commerce.
In an obligation to sive a determinate thing which .
subject to a suspensive condition, the deterioration of the
thing without the debtor's fault shall render the dette
hable for damages.
A condition may refer to a past event unknown to ts
if the debio,
the
Of the
ext sts, may be
Hi the thing is improved at the expense of the debtor heir

@ suspenstve condition, the debtor may
4
y!
;
v
'
)
"
8
a
sf
a
i
é
A
i
§
6
g
oh.
Q
P
mh
= -
7 lose the mght ok
< - a ‘ rect
period if the security that he has given is tosi ct
ture.
- - ge . < ee we 1¢ fu
The period in an obligation always refers te th
ine = patangs tote |

. < << = <t < -t £ ehoice belongs os
in alternative obligations, the right of choice ted to oF
dior unless it has been expressly gran
btor. ned 2
in alternative obligations, the creditor may be compet
receive part of one and part of another ert ea subs
In a facultative obligation, the loss of petitertion Ess
through a fortuitous event before the su effect oF
been made by the debtor, shall have oe cm
debtor's obligation to deliver the principal He
When there are two or more debtors and/ Se
creditors in one and the same obligation, the
ne F
presumed to be a solidary obligation.
opto”
+e
>
a]
as
tp
“a
TIONS 187
arity may exist although the creditors and debtors
solidar be bound in the same manner and by the same

a and conditions.
ee e an instrument containing the words “I promise to

aes is signed by two or more persons, they are deemed to
pa ‘intly and severally liable.
be jornty ivisible obligation, a demand made by one of
joint ind mn | ¢
= on creditors against all the joint debtors is a valid
the J ~
cma oe debtor who obtains remission of the whole
rbligation is entitled to reimbursement from his co-
debtors. - - —— i ivgati
A solidary creditor may assign his rights in the obligation
without the consent of the other creditors. ; :
If an insolvent solidary debtor cannot reimburse his share
to the debtor paying the obligation, such share shall be
borne by all his co-debtors in proportion to the debt of
apt creditor in a joint indivisible obligation may validh,
renounce or condone the whole obligation,
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.
The nullity of the penal clause in an obligation carries
with it the nullity of the Principal obligation.
Asa rule, the creditor may demand fulfillment of the

obligation and the penalty at the same time.
ent means not only the delivery of money but also to

Tmance of the obligation in any other manner.
A third person who has an interest in the fulfillment of the

cbigation, Such as a guaran
~ accept payment.
Payment made j
Possessign oe im good faith by the debtor to a person in
Pesment made foot teleases him from liability.

NUSt first he an at Obligation which is interest-bearing
applied to the Principal before the interest.
Pee tes creditor shall be valid if he
.~ debtor of i
diferent ee _2 thing may compel the creditor to accept a
coy more valuable than that which
188
53.
ry
ni
vI
OBLIc ATIOx,
If an obligation is physically divisible, the debt

compel the creditor to accept partial payments. or May
When the debt is in part liquidated and part Unlion:
the creditor may demand and the debtor may ete,

payment of the former without waiting for the ct the
of the latter. Widatip,,

The debtor may compel the creditor to accept a cen:
check as payment since the bank guarantees the ch
be covered with sufficient funds. eck ty

Payment by a third person who does not intend ¢,
reimbursed by the debtor shall be deemed to ie
donation which requires the consent of the delta:
However, even if-the debtor does not

payment shall nevertheless be valid wi
creditor.
Payment may be applied to a debt not yet-due if the tera
was constituted in favor of the party making th
application.
For dacion en pago to apply, the debtor must be insolvent,
in payment by cession, the creditors become the owners of
the properties abandoned by the debtor for the payment of
his debts.
Whenever the thing is lost while in the possession of the
debtor, it shall be presumed to have been lost through his
fault.
The debtor shall be released totally from his debts when
he assigns his properties to his creditors.
Consignation without tender of payment is sufficient if two
or more persons claim the same right to collect.
Before the court has declared that the consignal
been properly made or the creditor has accepte
consignation, the debtor may withdraw the sum or
depasited in court as a matter of right.
When the debt of a thing certain proceeds from 4
offense, the deblor. shall be exempted from the pay
the price if the thing is lost through a fortuitous ev i
In obligations to do, the debtor's obligation is ar ra
if the prestation becomes physically Imponsible due
frialt, ' 4
The condonation or remission of an obligation mu
accepted in order for it to be extinguished.
give his consent

th respect to the
ion has
d the
thing
criminal
yment of
ent.
ished
hit
te:
189
which takes place in the person of the principal

< mereet reditor extinguishes the obligation of guaranty.
or © consists in sum of money and another debt

5 in a consumable thing are extinguished by
n as long as both debts have the same
ready due.
f a debt in money exceeding P5,000.00
es that the condonation and the
bt wh ich
, ‘ consist 7
6 yhich ce pensatio
ae init and are al
¢ i condonation 0!
Bo be valid requir e
to n public instrument.
must bel . . . : ee
acceptanesion of the principal obligation carries with it the
T The re
f es accessory obligation.
“remission of hich takes place in the person of the
- Confusion ishes the principal obligation
guarantor extingy h nsation of debts
~ oe parties may agree upon the compe
6 that are not yet due. : _
es 7 Legal compensation takes place by operation of law even if
= the debts are payable at different places. ;
~ Compensation cannot be set up against a creditor who

has acclaim for support by gratuitous title. .
7.7 Novation may take place by changing the object or

principal conditions of the obligation.
72. ¥ Ifthe old obligation is void, the novation will still be valid
if the new obligation is valid.
73.7 Ifthe new obligation is void, the original one shall subsist,
unless the parties intended that the old obligation shall be
_ _ extinguished in any event. ;
74.7 Conventional subrogation requires the consent of the
m4 onginal parties and the third person.
wtuence of novation, accessory obligations are
dd euhed except if they may benefit third persons who

not give their consent.
When the principal obligation is extinguished as a’
eS RE DSLAM
ib
it
te
exceed
ae
TEST I - MULTIPLE CHOICE
36.
37.
38.
39.
40.
Oh tm
PND
31,
32,
33.
34.
w&
wn
190
OBUGAN
ANSWERS TO DIAGNOSTIC EXERCIgp,
OU
COPOWO>D>WOO>>YODO0OWOM>UUDOOODOW>
41.
42.
43.
44,
45.
46.
47.
48.
49,
50.
51.
52.
53.
54.
95.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
OBLIGATIONS
POOF BO>WO>LOU>>HOKUDU>>OWNMU> UNS OD
71. B
106,
107,
108.
109,
110,
111,
112,
113.
114.
115,
116.
117,
118.
119,
120.
121.
122.
123.
124,
125.
126.
127.
BoOoWoUruruwaAwWNDoOKUOFSFy>oOWoOoOrZOO
s
TION
opto"
201.
a «i. : 202.
1. 172. 3.
MG 3. D 20
442: C 173. D 204.
143. 174. 205.
C 5, B
5 A 176. B "
"% € 177, D 207.
vt 208.
7 178. C 209.
182 479, B
B D 210.
Hc 180. 211.
ma BLE 212
sl. 182, D ae
152 183. A av
pac (184 5 215.
155. ATER 216.
5, DI 217
7B «187. B 7.
53, B -=«d'88. B 218.
isp 9. D 219.
1599. D. (189. a0
160, A 190. A .
161. C 191, D 221.
12. A 192, B 222.
163, C 193, C 223.
164. C 194. B 224.
165, C 195, B 225.
166. C 196. A 226.
167. C =197. D 227.
168. C 198, ¢ 228.
169. B 199. H 229,
0. A 200. A 230.
ae -MATCHING TYPE
11.
i° a
4. X 13. L
Ly 14. U
6, J 15, EE
4 Nh 17, Y
9. y 18. ww
20. cc
231.
232.
233.
234.
235.
236.
237.
238.
239.
240.
241.
242.
243.
244.
245.
246.
247.
248.
249,
250.
251.
252.
253.
254,
255.
256.
- 257.
258.
259,
260.
PUPrFOWPFUOFSSPOUFPUWONOUSWONFSFODSaFoPrBa
wa
wDUor>mwwWUrFDOWNOWMNOWMANANWSAOVH
261. B
262. C
263. B
264. D
265. B
266. B
267.
268.
269.
270.
271.
272.
273.
274,
275.
276.
277;
278.
279.
280.
281.
282.
283.
284,
285.
31.
32.
33.
34.
35.
36. K
37. GG
38. A
39. LL
40. UU
<ORER
B
A
A
A
D
B
Cc
A
A
D
Cc
D
A
Cc
Cc
Cc
B
B
Cc
OBLIGATIO,,
192
EST HI- TRUE OR FALSE se
FALSE 31. TRUE 40. 7 fe FALgp

FALSE 16. TRUE 32: FALSE 47. 2. TRUE
TRUE 17. TRUE 33. TRUE 48. FALSE 63. TRUp
TRUE . TRUE 34. TRUE 49. FALSE 64. Fars,
TRUE +o TRUE 35. FALSE 50. TRUE 65. FALgp
age 91. TRUE 36. FALSE 51. FALSE 66, TRUE
oe oe. 37. FALSE 52. TRUE 67. FAtgp
: 92, TRUE
FALSE 53. FALSE 38. TRUE 53. TRUE 68. TRug
FALSE 24. TRUE 39. FALSE 54. FALSE 69. TRuE
0. FALSE 25. FALSE 40. TRUE 55. FALSE 70. TRUE

HY FALSE 26 FALSE 41, FALSE 56. TRUE 71. TRUE
i2. TRUE 27. FALSE 42. FALSE 57. FALSE 72. FALsp
13. FALSE 28. TRUE 43. TRUE 58. TRUE 73. TRUE
14. TRUE 29. FALSE 44. TRUE 59. TRUE 74. TRUE
15. FALSE 30. FALSE 45, TRUE 60. FALSE 75. TRUE
OD IW Yi ty G9 19 we

Notes in Obligations by F. Soriano

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NOTES -

(For Accountancy Students and CPA Reviewees)

Special Lecturer, University of the East - Manila

. (Other Schools and Centers)

Notes in Business Law -

(For Accountancy Students and CPA Reviewees)

‘Sales, Agency and Credit Transactions (Law and Application)

An obligation is a juridical necessity to give, to do or not

cannot be enforced through the courts, it may be disregarded

(Note: Unless otherwise indicated, articles of law refer to

1. Active subject (creditor or obligee) - The party who has the

2. Passive subject (debtor or obligor) - The party who is

3: Prestation - The object or subject matter of the obligation.

4.5 Efficient cause — The vinculum or the legal or juridical tie

‘annum on December 31,.2015 pursuant to a contract of

2. D is obliged to transport the goods of C from Manila to

active subject and D is the passive subject. Asregardsthe _— |

i Nevin rine ca R stem TMI Rie ibe tt Fe

the passive su : ig the efficient cause for

Civil obligation and natural obligation distinguished

A civil obligation (as defined in Art. 1156) is based on

A natural obligation, on the other hand, is based op

M is the maker of a pron.

makes the payment to P although the obligation has prescribed,

owed P the amount of

ry note with P as payee for’

Examples: The National Internal Revenue Code

Mendicancy Law which prohibits the giving of alms to

Contracts ~ A contract is a meeting of minds between two

Obligations arising from contracts have the force of

Examples: A contract of lease which provides for

Quasi-contracts - They refer to certain lawful, voluntary

a. Negotiorum gestio - This refers to the voluntary

Example: D and C are the owners of

leaves. C incurred necessary and useful expenses

Solutio indebiti - This refers to payment by mistake

Example: D, the payee of check for

Some cases on tax refund:

UST Cooperative vs. City of Manila

Facts: ABC Cooperative paid municipal

Held: ABC Cooperative can recover such

return what has been paid by mistake under a“

delay what it has errone?

observe fairness and honesty in paying taxes, it

It should not unjustly enrich itself at the

expense of the taxpayers. x x x Under the Tax Code

When, without the knowledge of the person

When funeral expenses are borne by a

When the person o

insane or other indigent

of reimbursement from the person obliged

eighteen year o er of a child under

Person is injured or eon

helped while he is not

5) When during a fire, flood, storm. or Oth

-6) When the government, upon failure of any

7) When by accident or other fortuitous ev t,

the rules on co-ownership are applicable.

8) When in a small community, a majority of

Any person who is constrained to pay the

* punishable by law - These are crimes

: * of a crime makes the off il

includes “stitution, reparation of the dames

“xam le: : i jvil