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Practice Test 1 – RFBT – CPA Reviewer for Free
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Practice Test for all CPALE subjects with answers and explanations.
Practice Test 1 – RFBT
Obligation
1. It is a rule of conduct, just, obligatory, promulgated by legitimate authority,
and of common observance and benefit.
a. Law
b. Obligation
c. Contract
d. Memorandum of Agreement
A. Some of the examples of obligation arising from law are the duty to par taxes
under the National Internal Revenue Code or the Local Government Code. The
obligation to support one’s family under the Family Code of the Philippines.
2. A system of norms or rules of a character general and common which regulate
the relations of persons, individual or collective, and which protects the person in
his personality as well as his interests both moral and patrimonial.
a. Business law
b. Civil law
c. Criminal law
d. Taxation law
B. The Law on Obligations, Contracts, Sales, Agency, Mutuum, Commodatum,
Pledge, Mortgage, Guaranty, Deposit, and Partnership are under Civil Law)
3. I. The object of civil law is the redress of wrongs by compelling compensation or
restitution.
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II. In the case of crimes, the main object of the law is to punish the wrongdoer.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
C.
4. It is a juridical necessity to give, to do or not to do.
a. Law
b. Obligation
c. Contract
d. Memorandum of Agreement
B. Art. 1156, New Civil Code.
5. Which of the following is not considered as quasi- contract?
a. Solutio indebiti
b. When in fact the manager has been tacitly authorized by the owner
c. Negotiorum gestio
d. Reimbursement due to the person who saved from destruction the property
during fire or storm without the knowledge of the owner.
B.
6. I. An obligation “to do” includes all kinds of work or service.
II. An obligation “to give” is a prestation which consists in the delivery of a movable
or an immovable thing.
a. Only I is true
b. Only II is true
c. Both are true
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d. Both are false
C. An obligation “to do” includes all kinds of work or service; while an obligation
“to give” is a prestation which consists in the delivery of a movable or an
immovable thing to create a real fight, or for the use of the recipient, or for its
simple possession, or in order to return it to its owner (Asian Construction and
Development Corporation vs. Philippine Commercial International Bank, G.R. No.
153827, April 26, 2006).
7. It is a claim or title to an interest in anything whatsoever that is enforceable by
law.
a. Receivable
b. Warranty
c. Right
d. Property
C. If a person has a right, the other person has resulting obligation.
8. I. An obligation is a power, privilege, or immunity guaranteed under a
constitution, statute, or decisional law, or recognized as a result of long usage,
constitutive of a legally enforceable claim of one person against the other.
II. For every right enjoyed by any person, there is a corresponding obligation on
the part of another person to respect such right.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
B. The first paragraph refers to “right” and not “obligation.”
9. It is a juridical relation whereby a person may demand from another the
observance of a determinative conduct, and in case of breach, may demand
satisfaction from the assets of latter.
a. Law
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b. Action
c. Contract
d. Obligation
D. An obligation is a juridical relation whereby a person (called the creditor) may
demand from another (called the debtor) the observance of a determinative
conduct (the giving, doing or not doing), and in case of breach, may demand
satisfaction from the assets of the latter (Makati Stock Exchange, Inc. et. al. vs.
Miguel V. Campos substituted by Julia Ortigas Vda. De Campos, G.R. No. 138814,
April 16, 2009).
10. X has been missing for some time leaving no one to manage his properties. A
and B jointly took charge of the management thereof. However, due to the
negligence of A, the properties of X were damaged. The liability thereof to X for
damages shall be:
a. Only A shall be liable
b. Both shall be jointly liable
c. Both shall be solidarily liable
d. A and B are not liable
C. The responsibility of two or more officious managers shall be solidary, unless
the management was assumed to save the thing or business from imminent
danger (Art. 2146, NCC).
11. It is one by which a party sues another for the enforcement or protection of a
right, or the prevention or redress of a wrong.
a. Civil action
b. Special Proceeding
c. Administrative action
d. Criminal action
A.
12. It is the act or omission by which a party violates a right of another.
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a. Reason of action
b. Motive of action
c. Cause of action
d. Source of action
C.
13. The three essential elements of a cause of action are the following, except:
a. The legal right of the plaintiff.
b. The correlative obligation of the defendant.
c. The act or omission of the plaintiff in violation of said legal right.
d. The act or omission of the defendant in violation of said legal right.
C.
14. Obligation of the debtor to deliver a thing, movable or immovable, to the
creditor.
a. Obligation to give
b. Obligation not to give
c. Obligation to do
d. Obligation not to do
A.
15. When a thing is particularly designated or physically segregated from all other
of the same class.
a. Specific thing
b. Generic thing
c. Indeterminate thing
d. All of the above
A. (Art. 1460, NCC.)
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16. Where X voluntarily takes charge of the neglected business of Y without the
latter ’s authority where reimbursement must be made for necessary and useful
expenses, there is a:
a. Quasi delict
b. Quasi contract
c. Negotiorum gestio
d. Solutio indebiti
C.
17. When a thing is designated merely by its class or genus without any particular
designation or physical segregation from all others of the same class.
a. Specific thing
b. Determinate thing
c. Indeterminate thing
d. All of the above
C. (Gaisano Cagayan, Inc. vs. Insurance Company of North America, G.R. No.
147839, June 8, 2006.)
18. I. Obligation to do is also known as negative personal obligation.
II. Obligation not to do is otherwise known as positive personal obligation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
D. Obligation to do is also known as positive personal obligation, while obligation
not to do is otherwise known as negative personal obligation.
19. The following are the essential elements of an obligation, except:
a. Debtor
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b. Creditor
c. Presentation
d. Juridical tie
C. One of the essential elements of an obligation is prestation or subject matter
or object and not presentation. It is the particular conduct of the debtor or obligor
which may consist in giving, doing, or not doing something.
The debtor is the person who has the obligation to give, to do or not to do.
The creditor is the person who has the right to demand compliance of the
obligation to give, to do or not to do.
The juridical tie creates the create the relation between the passive subject or
obligor and the active subject or obligee.
An obligation is a juridical necessity to give, to do, or not to do. The obligation is
constituted upon the occurrence of the essential elements thereof, viz: (a) The
vinculum juris or juridical tie which is the efficient cause established by the
various sources of obligations (law, contracts, quasi-contracts, delicts and quasidelicts); (b) the object which is the prestation or conduct; required to be observed
(to give, to do or not to do); and (c) the subject-persons who, viewed from the
demandability of the obligation, are the active (obligee) and the passive (obligor)
subjects (Ang Yu Asuncion, et. al. vs. CA and Buen Realty Development
Corporation, G.R. No. 109125, December 2, 1994).
20. The following are the sources of an obligation, except:
a. Contract
b. Law
c. Prestation
d. Quasi-delict
C. Prestation is an essential element of an obligation not a source of obligation.
The sources of obligation are following:
a. Law;
b. Contracts;
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c. Quasi-contracts;
d. Acts or omissions punished by law; and
e. Quasi-delicts (Art. 1157, NCC).
The source of obligation under Article 1157, NCC are exclusive.
21. It is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to do render some service.
A. Contract
B. Quasi-contract
C. Law
D. Quasi-delict
A. (Art. 1305, NCC)
A contract undergoes various stages that include its negotiation or preparation its
perfection and, finally, its consummation.
Negotiation covers the period from the time the prospective contracting parties
indicate interest in the contract to the time the contract is concluded (perfected).
The perfection of the contract takes place upon the concurrent of the essential
elements thereof.
The stage of consummation begins when the parties perform their respective
undertakings under the contract culminating in the extinguishment thereof (Ang
Yu Asuncion, et.al. vs. CA and Buen Realty Development Corporation, G.R. No.
109125, December 2, 1994.).
It is fundamental that a contract is the law between the parties. Obligations arising
from contracts have the force of law between the contracting parties and should
be complied with in good faith. Unless the stipulations in a contract are contrary to
law, morals, good customs, public order or public policy, the same are binding
between the parties. It is a general principle of law that no one may be permitted
to change his mind or disavow and go bank upon his own acts, or to proceed
contrary thereto, to the prejudice of the party. Likewise, it is settled that if the terms
of the contract clearly express the intention of the contracting parties, the literal
meaning of stipulations would be controlling (Edsel Liga vs. Allegro Resources
Corp., G.R. No. 175554, December 23, 2008.).
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22. It refers to certain lawful, voluntary, and unilateral acts to the end that no one
shall be unjustly enriched or benefited at the expense of another.
A. Contract
B. Quasi-contract
C. Law
D. Quasi-delict
B. Quasi is a latin term which means “as of”.
Following Article 22 of the New Civil Code, two conditions must concur to declare
that a person has unjustly enriched himself or herself, namely:
A. A person is unjustly benefited; and
B. Such benefit is derived at the expense of or to the damage of another (Victoria
Moreno-Lentfer, et.al. vs. Hans Jurgen Wolff, G.R. No. 152317, November 10, 2004).
Under the law, there are three kinds of quasi-contracts, namely:
A. Negotiorum Gestio
B. Solutio Indebiti
C. Other Quasi-Contracts
23. Whoever voluntarily takes charge of the agency or management of the
business or property of another, without any power from the latter, is obliged to
continue the same until the termination of the affair and its incidents, or to require
the person concerned to substitute him, if the owner is in a position to do so.
A. Quasi-contract
B. Quasi-delict
C. Negotiorum gestio
D. Solution indebiti
C. There is no Negotiorum Gestio in either of these instances:
A. When the property or business is not neglected or abandoned;
B. If in fact the manager has been tacitly authorized by the owner (Art. 2144,
NCC).
24. There is no negotiorum gestio in one of these instances:
I. When the property or business is not neglected or abandoned.
II. If in fact the manager has been tacitly authorized by the owner.
A. Only I is true
B. Only II is true
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C. Both are true
D. Both are false
C
25. If something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises.
A. Quasi-contract
B. Quasi-delict
C. Negotiorum gestio
D. Solutio indebiti
D. For the extra-contractual obligation of solution indebiti to arise, the following
requisites must be proven:
A. The absence of a right to collect the excess sums and
B. The payment was made by mistake (Titan-Ikeda Construction and
Development Corporation vs. Primetown Property Group, Inc. G.R. No. 158768,
February 12, 2008).
26. It refers to an act or omission which causes damage to another, there being
fault or negligence. The parties have no pre-existing contractual relation.
A. Quasi-contract
B. Quasi-delict
C. Negotiorum gestio
D. Solution indebiti
B
27. X by mistake delivered to A and B a sum of money which should have been
delivered to C and D. X now demand the return of the same from A and B. The
liability of the latter for the sum of money to which they are not entitled shall be:
A. A and B shall be liable solidarily
B. A and B shall be liable jointly
C. They are not liable
D. X has no right to recover
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A. The responsibility of two or more payees, when there has been payment of what
is not due, is solidary (Art. 2157, NCC).
28. In delict or acts or omissions punished by law, what is not included in civil
liability?
A. Restitution
B. Reparation of the damaged caused
C. Indemnification for consequential damages
D. Interest
D. Every person criminally liable for a felony is also civilly liable (Art. 100, Revised
Penal Code).
The restitution of the thing itself must be made whenever possible, with allowance
for any deterioration, or diminution of value as determined by the court.
29. The following are requisites of quasi-delict, except:
A. Damage suffered by defendant.
B. Damage suffered by plaintiff.
C. Fault or negligence of the defendant.
D. Connection of cause and effect between the fault or negligence of defendant
and the damage incurred by plaintiff.
A. A plaintiff is the party who brings a civil suit in a court of law. A defendant is a
person sued in a civil proceeding or accused in a criminal proceeding.
30. I. Negligence is the failure to observe that degree of care, precaution, and
vigilance that the circumstances justly demand.
II. Negligence is the failure to observe for the protection of the interests of
another person that degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such other person suffers injury.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
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31. I. There is exact mathematical formula to determine proximate cause.
II. Proximate cause is based upon mixed considerations of logic, common sense,
policy and precedent.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. Proximate cause is defined as that cause, which, in natural and continuance
sequence, unbroken by any efficient intervening cause, produces the injury, and
without which the result would not have occurred. More comprehensively,
proximate cause is that cause acting first and producing the injury, either
immediately or by setting other events in motion, all constituting a natural and
continuous chain of events, each having a close causal connection with its
immediate predecessor, the final event in the chain immediately affecting the injury
as natural and probable result of the cause which first acted, under such
circumstances that the person responsible for the first event should, as an
ordinarily prudent and intelligent person, have reasonable ground to expect at the
moment of his act or default that an injury to some person might probably result
therefrom.
There is no exact mathematical formula to determine proximate cause. It is based
upon mixed considerations of logic, common sense, policy and precedent (Dy
Teban Trading, Inc. vs. Jose Ching and/or Liberty Forest, Inc. and Cresilito M.
Limbaga, G.R. No. 161803, February 4, 2008.).
32. A thing is determinate when it is particularly designated or physically
segregated from all other of the same class.
A. Indeterminate thing
B. Generic thing
C. Specific thing
D. Immovable thing
C. Examples are: “The car of X with plate number ABC 123.” “The only laptop of Y.”
“This particular book in my table.” The house of X and Y located at No.456 Walter
Road, Barangay Stone Hill, La Trinidad, Benguet.”
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33. The object thereof is designated merely by its class or genus without any
particular designation or physical segregation from all others of the same class.
A. Generic thing
B. Determinate thing
C. Specific thing
D. Movable thing
A. The object of a generic thing is designated merely by its class or genus without
any particular designation or physical segregation from all others of the same class,
the loss or destruction of anything of the same kind even without the debtor ’s fault
and before he has incurred in delay will not have the effect of extinguishing the
obligation. This rule is based on the principle that the genus of a thing can never
perish. Genus nunquan perit. An obligation to pay money is generic; therefore, it is
not excused by fortuitous loss of any specific property of the debtor (Gaisano
Cagayan, Inc. vs. Insurance Company of North America, G.R. No. 147839, June 8,
2006).
34. I. If the object of obligation is a generic thing, the loss or destruction of
anything of the same kind even without the debtor ’s fault and before he has
incurred in delay will not have the effect of extinguishing the obligation.
II. An obligation to pay money is generic.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
35. Which of the following is not an obligation of the debtor in specific real
obligation?
A. To deliver the specific or determinate thing which he has obligated himself to
give.
B. To take care of the thing with extraordinary diligence.
C. To deliver the accessions and accessories.
D. To pay damages in case of breach of the obligation.
B. The debtor is obliged to take care of the thing with the proper diligence of a
good father of a family or ordinary diligence unless the law or the stipulation of the
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parties requires another standard of care, i.e. extraordinary diligence (Art. 1163,
NCC).
36. Which of the following is not a right of the debtor in generic real obligation?
A. To ask for performance of the obligation.
B. To ask that the obligation be complied with at the expense of the debtor.
C. To recover damages in case of breach of the obligation.
D. To compel specific performance.
D. The remedy of specific performance is applicable only in specific real obligation.
In addition, the creditor can claim for damages if the debtor in the performance of
his obligation is guilty of fraud, negligence, delay, or contravention of the tenor of
his obligation.
37. Extreme care that a person of unusual prudence exercise to secure rights or
property.
A. Extraordinary diligence
B. Ordinary diligence
C. Due diligence
D. Diligence of a good father of a family.
A. (Black’s Law Dictionary, p. 489, Eight Edition)
38. I. The highest degree of diligence is expected, and high standards of integrity
and performance are required of the banking business.
II. The degree of diligence required of banks is more than that of a good father of
a family.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. The fiduciary nature of banking, previously imposed by case law, is now
enshrined in Republic Act No. 8791 or the General Banking Law of 2000. Section 2
of the law specifically says that the State recognizes the “fiduciary nature of
banking that requires high standards of integrity and performance (Associated
Bank vs. Vicente Henry Tan, G.R. No. 156940, December 14, 2004).”
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39. The following statements explain negligence, except:
a. Is the conduct that creates an undue risk of harm to others.
b. It is expected from, and ordinarily exercised by, a person who seeks to satisfy a
legal requirement or to discharge and obligation.
c. It is the failure to observe that degree of care, precaution and vigilance that the
circumstances justly demand.
d. It is the omission to do something which a reasonable man, guided by
considerations that ordinarily regulate the conduct of human affairs, would do, or
doing something that a prudent and reasonable man would not do.
B
40. I. It is presumed that a person driving a motor vehicle has been negligent if at
the time of the mishap, he was violating any traffic regulation.
II. The Civil Code characterizes negligence as the omission of that diligence
required by the nature of the obligation and corresponds with the circumstances of
the persons, of the time and of the place.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. (Art. 2185 & 1173, NCC)
41. I. When the plaintiff’s own negligence was not the immediate and proximate
cause of his injury, he cannot recover damages.
II. If the plaintiff’s negligence was only contributory, the immediate and proximate
cause of the injury being the defendant’s lack of due care, the plaintiff may
recover damages, but the courts shall mitigate the damages to be awarded.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D. (Art. 2179, NCC)
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42. I. When an employee cause damage due to his own negligence while
performing his own duties, there arises the presumption that his employer is
negligent, rebuttable only by proof of observance of the extraordinary diligence.
II. In the selection of prospective employees, employers are required to examine
their employees as to their qualifications, experience, and service records.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. For example, in one case decided by the Supreme Court, it held that the fact
that the employee was driving a motorcycle alone with only a student permit is
proof enough that the employer was negligent—either the employer did not know
that the employee only had a student permit, or he allowed him to drive alone
knowing this deficiency. The Court held: “Whichever way we look at it, we arrive at
the same conclusion: that the employer failed to exercise the due diligence
required of him as an employer in supervising her employee (Stephen Cang and
George Nardo y Josol vs. Herminia Cullen, G.R. No. 163078, November 25, 2009).”
43. It is the power of one person to demand of another, as a definite passive
subject, the fulfillment of a prestation to give, to do, or not to do.
A. Personal right
B. Real right
C. Definite right
D. Indefinite right
A. A personal right is the power of one person to demand of another, as a definite
passive subject, the fulfillment of a prestation to give, to do, or not do (Salvador
Adorable and Ligaya Adorable vs. CA, et. al., G.R. No. 119466, November 25, 1999).
44. It is the power belonging to a person over a specific thing, without a passive
subject individually determined, against whom such right may be personally
exercised.
A. Personal right
B. Real right
C. Definite right
D. Indefinite right
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B. A real right is the power belonging to a person over a specific thing, without a
passive subject individually determined, against whom such right may be
personally exercised (Salvador Adorable and Ligaya Adorable vs. CA, et.al., G.R. No.
119466, November 25, 1999).
For example, on February 1, 2018, X agreed with Y to deliver and transfer
ownership to the latter his only parcel of land on February 14, 2018. Hence,
between February 1 and February 14, 2018, Y had only personal right against X
(the definite passive subject). Upon delivery on February 14, 2018, Y had a real
right that is enforceable against the whole world.
45. These are the spontaneous products of the soil, and the young and other
products of animals.
A. Real fruits
B. Natural fruits
C. Industrial fruits
D. Civil fruits
B. Examples of natural fruits are: “Grass and plants produced by lands without
cultivation or labor ”, Eggs and chicks of chicken.”
46. These are produced by lands of any kind through cultivation or labor.
A. Real fruits
B. Natural fruits
C. Industrial fruits
D. Civil fruits
C. Examples of industrial fruits are: “Rice, and vegetables, (like cabbage, potatoes,
tomatoes, and others) produced by lands through cultivation or labor.”
47. These are the rents of buildings, the price of leases of lands and other property
and the amount of perpetual or life annuities or other similar income.
A. Real fruits
B. Natural fruits
C. Industrial fruits
D. Civil fruits
C. Civil fruits are the rents of buildings, the price of leases of lands and other
property and the amount of perpetual or life annuities or other similar income (Art.
442, NCC).
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48. Are those which arise from the same cause, and which each party is a debtor
and a creditor of the other, such that the obligation of one is dependent upon the
obligation of the other?
A. Reciprocal obligation
B. Unilateral obligation
C. Natural obligation
D. Specific obligation
A. Reciprocal obligations, like in contract of sale, are those which arise from the
same cause, and which each party is a debtor and a creditor and debtor of the
other, such that the obligation of one is dependent upon the obligation of the
other. They are to be performed simultaneously, so that the performance of one is
conditioned upon the simultaneous fulfillment of the other (Antonio R. Cortes vs.
CA and Villa Esperanza Development Corporation, G.R. No. 126083, July 12, 2006).
49. I. When what is to be delivered is a generic thing, the creditor may compel the
debtor to make the delivery.
II. If the thing to be delivered is a determinate thing, the creditor may ask that
the obligation be complied with at the expense of the debtor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D. Specific performance is the right of the creditor or obligee to compel the
debtor to make delivery of the determinate thing if the debtor or obligor will not
perform his obligation.
The creditor may ask that the obligation to deliver the generic or indeterminate
thing be complied with at the expense of the debtor and that the creditor cannot
demand a generic thing of superior quality, nor the debtor deliver a generic thing
of inferior quality.
50. It signifies all of those things which are produced by the thing which is the
object of the obligation as well as all of those which are naturally or artificially
attached thereto.
A. Determinate thing
B. Indeterminate thing
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C. Accessions
D. Accessories.
C. Accessions signifies all of those things which are produced by the thing which is
the object of the obligation as well as all of those which are naturally or artificially
attached thereto (Art. 440, NCC).
51. Is signifies all of those things which have for their object the embellishment, use
or preservation of another thing which is more important and to which they are
not incorporated or attached.
A. Determinate thing
B. Indeterminate thing
C. Accessions
D. Accessories
D. It signifies all of those things which have for their object the embellishment, use
or preservation of another thing which is more important and to which they are
not incorporated or attached. In other words, it includes all of those things which
are necessary or convenient for the perfection of another thing, such as the
equipment of a factory, the spare parts and tools of a machine, the key of a house,
and others of a similar nature (8 Manresa, 5th Ed., Bk. 1, pp. 109-110).
52. I. If a person obliged to do something fails to do it, the same shall be
executed at his cost.
II. The same rule shall be observed if he does it in contravention of the tenor of
the obligation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
53. When does delay begins?
A. Delay begins from the time the obligor actually defaulted from his obligation.
B. Delay begins from the time the obligor defaulted from his obligation with a
reasonable time from the maturity of his obligation.
C. Delay begins from the time the obligor defaulted from his obligation within 5
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days from the maturity of his obligation.
D. Delay begins from the time the oblige judicially or extrajudicially demands from
the obligor the performance of the obligation.
D. Mora or delay is the failure to perform the obligation in due time because of
dolo (malice) or culpha (negligence) (Titan-Ikeda Construction & Development
Corporations vs. Primetown Property Group, Inc. G.R. No. 158768, February 12,
2008).
For example, X bound himself to deliver his only car to Y on February 14, 2018. On
said date, X failed to deliver the car. Is X in legal delay? No, X is not yet in legal
delay because oblige, Y, did not make a judicial or extrajudicial demand.
Accordingly, if Y made an extrajudicial demand on February 14, 2018, and despite
such demand X failed to deliver, he is already in legal delay. Therefore, if X is in
delay, he will be liable for damages because delay is a ground for asking damages.
54. Which of the following is not a requisite of default?
A. That the obligation be demandable and already liquidated.
B. That the debtor defaulted on maturity date of the obligation.
C. That the debtor delays performance
D. That the creditor requires the performance judicially and extrajudicially.
B. Where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169,
Civil Code) but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of damages may
be deem to have been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the amount finally adjudged
(Benny Y. Hung vs BPI Card Finance Corp., G.R. No. 182398, July 20, 2010).
55. In the following instances, demand is not necessary, except:
A. When the obligation or the law expressly so declares.
B. When from the nature and the circumstances of the obligation it appears that
the designation of the time when the thins is to be delivered or the service is to
be rendered was a controlling motive for the establishment of the contract.
C. In unilateral obligation.
D. When the demand would be useless, as when the obligor has rendered it
beyond his power to perform.
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C
56. I. Mere delinquency in payment does not necessarily mean delay in the legal
concept.
II. Default generally begins from the moment the creditor demands the
performance of the obligation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
57. Delay in the fulfillment of an obligation by reason of cause imputable to the
debtor.
A. Moral solvendi
B. Mora accipiendi
C. Compensatio morae
D. Creditor ’s default
A. The two kinds of mora solvendi are:
A. Mora Solvendi ex re
It is when the obligation is an obligation to give.
B. Mora Solvendi ex persona
It is when the obligation is an obligation to do (8 Manresa, 5th Ed., Bk. 1, p. 125).
58. Delay of the oblige or creditor to accept the delivery of the thing which is the
object of the obligation.
A. Mora solvendi
B. Mora accipiendi
C. Compensatio morae
D. Debtor ’s default
A. Mora accipiendi or the delay of the obligee or creditor to accept the delivery of
the thing which is the object of the obligation (8 Manresa, 5th Ed., Bk. 1, p. 125).
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59. Default on the part of both parties because neither has completed their part in
their reciprocal obligation.
A. Mora solvendi
B. Mora accipiendi
C. Compensatio morae
D. Debtor ’s default
C. Compensatio morae is the default on the part of both parties because neither
has completed their reciprocal obligation. This mutual delay of the parties cancels
out the effects of default, such that it is as no one is guilty of delay (Antonio R.
Cortes vs. CA and Villa Esperanza Development Corporation, G.R. No. 126083, July
12, 2006).
60. I. In compensation morae, the parties cancel out the effects of default, such
that it is as if no one is guilty of delay.
II. In reciprocal obligations, as in a contract of sale, the general rule is that the
fulfillment of the parties’ respective obligations should be simultaneous.
A. Only I is true
B. Only II is true
C. Both are true
D. Bot h are false
C. In reciprocal obligations, as in a contract of sale, the general rule is that the
fulfillment of the parties’ respective obligations should be simultaneous. Hence, no
demand is generally necessary because once a party fulfills his obligation and the
other party does not fulfill his, the latter automatically incurs in delay. But when
different dates for performance of the obligations are fixed, the other party would
incur in delay only from the moment the other party demands fulfillment of the
former ’s obligation. Thus, even in reciprocal obligations, if the period for the
fulfillment of the obligation is fixed, demand upon the oblige is still necessary
before the obligor can be considered in default and before a cause of action for
rescission will accrue (Solar Harvest, Inc. vs. Davao Corruption Carton Corporation,
G.R. No. 176868).
61. When the amount is known or is determinable by inspection of the terms and
conditions of the relevant promissory notes and related documentation.
A. Debt is due
B. Debt is demandable
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C. Debt is liquidated
D. Debt is unliquidated
C. A debt is liquidated when the amount is known or is determinable by
inspection of the terms and conditions of the relevant promissory notes and
related documentation (Selegna Management Corporation and Spouses Edgardo
and Zenaida Angeles vs. United Coconut Planters Bank, G.R. No. 165662, May 3,
2006).
62. Is the legal invasion of a legal right?
A. Injury
B. Grievance
C. Damage
D. Damages
A. INJURY VS. DAMAGE VS. DAMAGES
Injury
Damage
Damages
Is the legal invasion
of a legal right (Jose
V. Lagon vs. CA and
Menandro V. Lapuz,
G.R. No. 119107,
March 18, 2005).
Is the hurt, loss or
harm which results
from the injury (Jose V.
Lagon vs. CA and
Menandro V. Lapuz,
G.R. No. 119107, March
18, 2005).
Damages are the
recompense or
compensation awarded for
the damage suffered (So
Ping Bun vs. CA, et.al., G.R.
No. 120554, September 21,
1999).
63. In the hurt, loss or harm which results from the injury?
A. Loss
B. Grievance
C. Damage
D. Damages
C
64. Are the recompense or compensation awarded for the damage suffered?
A. Loss
B. Grievance
C. Damage
D. Damages
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D
65. Which is not a mode of voluntary breach of the obligation?
A. Fraud
B. Acts or omissions punished by law
C. Negligence
D. Delay
B. The two kinds of breach of the obligation are the following:
1. Voluntary breach of the obligation
This arises either by fraud, negligence, delay and in any manner contravene the
tenor of the obligation. The debtor or obligor may be held liable for damages if
these will result in the breach of the obligation.
2. Involuntary breach of the obligation
This arises due to fortuitous events. The debtor or obligor will be exempted from
liability.
66. Which is a mode of involuntary breach of the obligation?
A. Fraud
B. Fortuitous event
C. Negligence
D. Delay
C
67. It refers to all kinds of deception, whether through insidious machination,
manipulation, concealment, or misrepresentation, that would lead an ordinarily
prudent person into error after taking the circumstances into account.
A. Contravention of the tenor of the obligation.
B. Mora
C. Culpa
D. Fraud
D. Fraud refers to all kinds of deception, whether through insidious machination,
manipulation, concealment, or misrepresentation, that would lead an ordinarily
prudent person into error after taking the circumstances into account (Solidbank
Corporation/Metropolitan Bank and Trust Company, G.R. No. 167346, April 2, 2007).
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68. Is basically a deception used by one party prior to or simultaneous with the
contract, in order to secure the consent of the other?
A. Incidental fraud
B. Subsidiary fraud
C. Causal fraud
D. Contributory fraud
C. In contracts, a fraud known as dolo causante or causal fraud is basically a
deception used by one party prior to or simultaneous with the contract, in order to
secure the consent of the other. Needless to say, the deceit employed must be
serious (Solidbank Corporation/Metropolitan Bank and Trust Company, G.R. No.
167346, April 2, 2007).
X enticed Y to buy his cell phone which he claims to be genuine and that he
bought it overseas. Further he claims that the market value of said cell phone at
present is P20,000 but he is selling it to Y for only P10,000. Consequently, Y bought
the said cell phone because of the representations of X. If the representations of X
were all false, then the fraud employed by X is causal fraud. The purpose of which
is to induce Y to buy his cell phone. The remedy of the aggrieved party Y is to file a
case of annulment of contract because the contract is defective. Such defective
contract us called voidable contract. Voidable contract will be explained in the law
on contracts.
69. That which is not serious in character and without which the other party would
have entered into the contract anyway.
A. Incidental fraud
B. Subsidiary fraud
C. Causal fraud
D. Contributory fraud69. That which is not serious in character and without which
the other party would have entered into the contract anyway.
A. Incidental fraud
B. Subsidiary fraud
C. Causal fraud
D. Contributory fraud
A. In contradistinction, only some particular or accident of the obligation is
referred to by incidental fraud or dolo incidente, or that which is not serious in
character and without which the other party would have entered into the contract
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anyway (Solidbank Corporation/Metropolitan Bank and Trust Company, G.R. No.
167346, April 2, 2007).
70. I. Dolo incidente is a fraud which induces a party to enter into a contract.
II. Dolo causante is not the reason that induced the party to enter into a contract.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D. Dolo Causante vs. Dolo Incidente
Dolo Causante
Dolo Incidente
A fraud which induces a party to
enter into a contract.
It is not the reason that induced the
party to enter into a contract.
It is a fraud which renders the
contract voidable (see Art. 1390,
NCC).
It is a fraud which renders a party to
be liable for damages.
71. I. Dolo incidente is a fraud which renders the contract voidable.
II. Dolo causante is a fraud which renders a party to be liable for damages.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D
72. I. Fraud must be established by clear and convincing evidence; mere
preponderance of evidence is not adequate.
II. Bad faith is not synonymous with fraud, in that it involves a design to mislead
or deceive another.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
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A. Fraud must be established by clear and convincing evidence; mere
preponderance of evidence is not adequate. Bad faith, on the other hand, imports
a dishonest purpose of some moral obliquity and conscious doing of a wrong, not
simply bad judgment or negligence. It is synonymous with fraud, in that it involves
a design to mislead or deceive another (Solidbank Corporation/Metropolitan Bank
and Trust, G.R. No. 167346, April 2, 2007).
73. I. Negligence signifies willfulness or deliberate intent to cause damage or
injury to another.
II. Negligence signifies mere want of care or diligence and not the voluntariness
of act or omission.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. FRAUD (DOLO) VS. NEGLIGENCE (CULPA)
Fraud (dolo)
Negligence (culpa)
Willfulness or deliberate intent to
cause damage or injury to another.
Mere want of care or diligence and not
the voluntariness of act or omission.
Liability cannot be mitigated by
courts.
Liability may be mitigated by courts.
Waiver for future fraud is void.
Waiver for future negligence may be
valid.
74. I. In fraud, liability cannot be mitigated by courts.
II. In negligence, liability may be mitigated by courts.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
75. I. In fraud, waiver for future fraud is void.
II. In negligence, waiver for future fraud negligence may be valid.
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A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Kinds of Civil Negligence
Culpa Contractual
Fault or negligence of obligor by virtue of which he is unable to perform his
obligation arising from a pre-existing contract.
Culpa Aquiliana/Quasi-delict
Fault or negligence of a person whose failure to observe the required diligence to
the obligation causes damage to another.
Culpa Contractual vs. Culpa Aquiliana
Culpa Contractual
Culpa Aquiliana
There is a pre-existing contractual
relation.
There is no pre-existing contractual
relation.
The negligence of the defendant is
merely an incident in the
performance of an obligation.
The negligence of the defendant is
substantive and independent.
The source of the liability of the
defendant is the breach of contract.
The source of the liability is the
defendant’s negligent act or omission
itself.
The proof of the contract and of its
breach is sufficient prima facie to
warrant recovery.
The negligence of the defendant
must be proved.
The liability of the employer is based
upon the principle that the
negligence of the employee is
conclusively presumed to be the
negligence of the employer.
The liability of the employer is based
upon the principle that the
negligence of the employee is prima
facie presumed to be the negligence
of the employer.
Proof of due diligence in the
selection and supervision of
employees is not available as a
defense.
Proof of due diligence in the
selection and supervision of
employees is available as a defense.
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76. The omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would do; or
the doing of something which a prudent and reasonable man would not do.
A. Breach of contract
B. Fraud
C. Negligence
D. Delay
C. The Supreme Court held that negligence is the omission to do something which
a reasonable man, guided by those considerations which ordinarily regulate the
conduct of human affairs, would do; or the doing of something which a prudent
and reasonable man would not do. It is want of care required by the circumstances
(Roberto C. Sicam and Agencia de R.C. Sicam, Inc. vs Lulu V. Jorge and Cesar Jorge,
G.R. No. 159617, August 8, 2007).
77. It is want of care required by the circumstances.
A. Breach of contract
B. Negligence
C. Delay
D. Fraud
B
78. Is that conduct that naturally or reasonably creates undue risk or harm to
others?
A. Negligence
B. Breach of contract
C. Fraud
D. Delay
A. Negligence, as commonly understood, is that conduct that naturally or
reasonably creates undue risk or harm to others. It may be a failure to observe that
degree of care, precaution or vigilance that the circumstances justly demand; or to
do any other act that would be done by a prudent and reasonable person, who is
guided by considerations that ordinarily regulate the conduct of human affairs
(Mindex Resources Development vs. Ephraim Morillo, G.R. No. 138123, March 12,
2002).
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79. Negligence is direct, substantive, and independent. This pertains to:
A. Culpa civil
B. Culpa contractual
C. Culpa aquiliana
D. Contractual negligence
C.
Culpa Contractual
Culpa Aquiliana
Culpa Criminal
Negligence is merely
incidental to the
performance of an
obligation already
existing because of a
contract.
Negligence is direct,
substantive, and
independent.
Negligence is direct,
substantive and
independent.
There is always a preexisting contractual
relation.
There is no preexisting contractual
relation.
No pre-existing
contractual relation.
Source of obligation:
breach or nonfulfillment
of contract.
Source of obligation:
defendant’s negligent
act or omission.
Source of obligation:
defendant’s criminal act.
Requires proof by
preponderance of
evidence.
Requires proof by
preponderance of
evidence.
Requires proof beyond
reasonable doubt.
Defense of a good father
of a family in the
selection and supervision
of employees is not a
proper or complete
defense, though it may
mitigate damages.
Defense of a good
father of a family in
the selection and
supervision of
employees is a proper
or complete defense.
Defense of a good father
of a family in the
selection and supervision
of employees is not a
proper defense. The
employee’s guilt is
automatically the
employer ’s guilt if the
former is insolvent.
Proof of existence of a
contract and breach
thereof gives rise to a
presumption of fault.
Plaintiff has to prove
negligence of the
defendant.
Accused is presumed
innocent until the
contrary is proved.
80. This requires proof beyond reasonable doubt.
A. Culpa civil
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B. Culpa contractual
C. Culpa aquiliana
D. Culpa criminal
D
81. Defense of a good father of a family in the selection and supervision of
employees is a proper or complete defense.
A. Culpa civil
B. Culpa contractual
C. Culpa aquiliana
D. Culpa criminal
C
82. Which one of the following is not a requisite of mora solvendi?
A. The obligation is demandable and liquidated.
B. The obligation is not necessarily demandable.
C. The debtor delays performance.
D. The creditor judicially or extrajudicially requires the debtor ’s performance.
B. The following are the requisites of mora solvendi:
A. The obligation is demandable and liquidated;
B. The debtor delays performance; and
C. The creditor judicially or extrajudicially requires the debtor ’s performance (Polo
S. Pantaleon vs. American Express International, Inc., G.R. No. 174269, May 8, 2009).
83. Which of the following is not a requisite of mora accipiendi?
A. An offer of performance by the creditor who has the required capacity.
B. An offer of performance by the debtor who has the required capacity.
C. The offer must be to comply with the prestation as it should be performed.
D. The creditor refuses the performance without just cause.
A. The requisites of mora accipiendi are:
A. An offer of performance by the debtor who has the required capacity;
B. The offer must be to comply with the prestation as it should be performed; and
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C. The creditor refuses the performance without just cause (Polo S. Pantaleon vs.
American Express International, Inc. G.R. No. 174269, May 8, 2009).
84. One is entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. Such compensation is referred to as:
A. Moral damages
B. Actual damages
C. Nominal damages
D. Temperate damages
B. The kinds of damages under the civil code are the following:
1. Actual or compensatory;
2. Moral;
3. Nominal;
4. Temperate or moderate;
5. Liquidated; or
6. Exemplary or corrective.
It is a hornbook principle that damages may be awarded only if proven.
Except as provided by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by his as he has duly proved.
Such compensation is referred to as actual or compensatory damages (Art. 2199,
NCC).
85. It includes physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury.
A. Moral damages
B. Actual damages
C. Nominal damages
D. Temperate damages
A. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. Though incapable of pecuniary computation, moral damages
may be recovered if they are the proximate result of the defendant’s wrongful act
or omission (Art. 2217, NCC).
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86. I. Moral damages are in the category of an award designed to compensate
the claimant for actual injury suffered and to impose a penalty on the wrongdoer.
II. The award of moral damages is not meant to enrich the complainant at the
expense of the defendant, but to enable the injured party to obtain means,
diversion, or amusements that will serve to obviate the moral suffering he has
undergone.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. Moral damages avail in cases of breach of contract where the defendant acted
fraudulently or in bad faith, and the court should find that under the
circumstances, such damages are due (Polo S. Pantaleon vs. American Express
International, Inc., G.R. No. 174269, May 8, 2009). However, moral damages are in
the category of an award designed to compensate the claimant for actual injury
suffered and not to impose a penalty on the wrongdoer. The award is not meant to
enrich the complainant at the expense of the defendant, but to enable the injured
party to obtain means, diversion, or amusements that will serve to obviate the
moral suffering he has undergone. It is aimed at the restoration, within the limits of
the possible, of the spiritual status quo ante, and should be proportionate to the
suffering inflicted (Joseph Saludaga vs Far Eastern University and Edilberto C. de
Jesus, G.R. No. 179337, April 30, 2008).
Moral damages avail in cases of breach of breach of contract of contract where
the defendant acted fraudulently or in bad faith, and the court should find that
under the circumstances, such damages are due (Polo S. Pantaleon vs. American
Express International, Inc., G.R. No. 174269, May 8, 2009).
There is no hard-and-fast-rule in determining what would be fair and reasonable
amount of moral damages, since each case must be governed by its own peculiar
facts, however, it must be commensurate to the loss or injury suffered (Polo S.
Pantaleon vs. American Express International, Inc., G.R. No. 174269, May 8, 2009).
In the absence of bad faith, ill will, malice or wanton conduct, respondent cannot
be held liable for moral damages (Victorina Savellano, et.al. vs. Northwest Airlines,
G.R. No. 151783, July 8, 2003).
In a long line of cases, the Supreme Court has consistently ruled that in the
absence pf a wrongful act or omission or of fraud or bad faith, moral damages
cannot be awarded (Spouses Erlinda Batal and Frank Batal vs. Spouses Luz San
Pedro and Kenichiro Tominaga, G.R. No. 164601, September 27, 2006).B. Moral
damages avail in cases of breach of contract where the defendant acted
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fraudulently or in bad faith, and the court should find that under the
circumstances, such damages are due (Polo S. Pantaleon vs. American Express
International, Inc., G.R. No. 174269, May 8, 2009). However, moral damages are in
the category of an award designed to compensate the claimant for actual injury
suffered and not to impose a penalty on the wrongdoer. The award is not meant to
enrich the complainant at the expense of the defendant, but to enable the injured
party to obtain means, diversion, or amusements that will serve to obviate the
moral suffering he has undergone. It is aimed at the restoration, within the limits of
the possible, of the spiritual status quo ante, and should be proportionate to the
suffering inflicted (Joseph Saludaga vs Far Eastern University and Edilberto C. de
Jesus, G.R. No. 179337, April 30, 2008).
Moral damages avail in cases of breach of breach of contract of contract where
the defendant acted fraudulently or in bad faith, and the court should find that
under the circumstances, such damages are due (Polo S. Pantaleon vs. American
Express International, Inc., G.R. No. 174269, May 8, 2009).
There is no hard-and-fast-rule in determining what would be fair and reasonable
amount of moral damages, since each case must be governed by its own peculiar
facts, however, it must be commensurate to the loss or injury suffered (Polo S.
Pantaleon vs. American Express International, Inc., G.R. No. 174269, May 8, 2009).
In the absence of bad faith, ill will, malice or wanton conduct, respondent cannot
be held liable for moral damages (Victorina Savellano, et.al. vs. Northwest Airlines,
G.R. No. 151783, July 8, 2003).
In a long line of cases, the Supreme Court has consistently ruled that in the
absence pf a wrongful act or omission or of fraud or bad faith, moral damages
cannot be awarded (Spouses Erlinda Batal and Frank Batal vs. Spouses Luz San
Pedro and Kenichiro Tominaga, G.R. No. 164601, September 27, 2006).
87. Are damages adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for any loss suffered by him?
A. Moral damages
B. Actual damages
C. Nominal damages
D. Temperate damages
C. Nominal damages are adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated or recognized,
and for the purpose of indemnifying the plaintiff for any loss suffered by him (Art.
2221, NCC).
Nominal damages are recoverable if no actual, substantial or specific damages
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were shown to have resulted from the breach. The amount of such damages is
addressed to the sound discretion of the court, taking into account the relevant
circumstances (Virtoria Savellano, et.al. vs. Northwest airlines, G.R. No. 151783, July
8, 2003).
88. Damages which may be recovered when the court finds that some pecuniary
loss has been suffered but its amount cannot, from the nature of the case, be
provided with certainty.
A. Moral damages
B. Actual damages
C. Nominal damages
D. Temperate damages
D. Temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be provided with certainty (Art. 2224, NCC).
89. Are those agreed upon by the parties to a contract to be paid in case of breach
thereof?
A. Moral damages
B. Actual damages
C. Liquidated damages
D. Nominal damages
C. Liquidated damages are those agreed upon by the parties to a contract to be
paid in case of breach thereof (Art. 2226, NCC).
90. Damages are imposed, by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages.
A. Actual damages
B. Exemplary damages
C. Liquidated damages
D. Nominal damages
Exemplary or corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate, liquidated or
compensatory damages (Art. 2229, NCC).
Also, attorney’s fees are allowed when exemplary damages are awarded and when
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the party to a suit is compelled to incur expenses to protect his interest (Spouses
Gerry and Annalyn Fernandez vs Mercury Drug Corporation, et.al., G.R. CV No.
83632, August 8, 2006).
As to the award of exemplary damages, the law allows in by way of example for
the public good. The business of banking is impressed with public interest and
great reliance is made on the bank’s sworn profession of diligence and meticulous
in giving irreproachable service. For petitioner ’s failure to carry out its responsibility
and to account for respondents’ lost check, we hold that the lower courts did not
err in awarding exemplary damages to the latter (Solidbank Corporation/
Metropolitan Bank and Trust Company vs. Spouses Peter and Susan Tan, G.R. No.
167346, April 2, 2007).
91. The voluntary relinquishment or abandonment, express or implied, of a legal
right or advantage.
A. Waiver
B. Condonation
C. Compensation
D. Force majeure
A
92. It imports a dishonest purpose or some moral obliquity or conscious doing of a
wrong.
A. Fraud
B. Bad faith
C. Damage
D. Injury
B
93. Is any event which cannot be foreseen, or which, though foreseen, is inevitable?
A. Accident
B. Injury
C. Fortuitous event
D. Calamity
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C
94. I. Fortuitous events by definition are extraordinary events not foreseeable or
avoidable.
II. In fortuitous event, the mere difficulty to foresee the happening is not
impossibility to foresee the same.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Fortuitous events by definition are extraordinary events not foreseeable or
avoidable. It is therefore, not enough that the event should not have been
foreseen or anticipated, as is commonly believed but it must be one impossible to
foresee or to avoid. The mere difficulty to foresee the happening is not impossible
to foresee the same (Roberto C. Sicam and Agencia de R.C. Sicam, Inc. vs. Lulu V.
Jorge and Cesar Jorge, G.R. No. 159617, August 8, 2007).
A fortuitous event may either be an act of God, or natural occurrences such as
floods or typhoons, or an act of man such as riots, strikes or wars. However, when
the loss is found to be partly the result of a person’s participation-whether by
active intervention, neglect or failure to act—the participation-whether by active
intervention, neglect or failure to act—the whole occurrence is humanized and
removed from the rules applicable to a fortuitous event (Asset Privatization Trust
vs. T.J. Enterprises, G.R. No. 167195, May 8, 2009).
95. Which is not an element of a fortuitous event?
A. The cause of the unforeseen and unexpected occurrence must have been
dependent of human will
B. The event that constituted the caso fortuito must have been impossible to
foresee or, if foreseeable, impossible to avoid.
C. The occurrence must have been such as to render it impossible for the debtors
to fulfill their obligation in a normal manner.
D. The obligor must have been free from any participation in the aggravation of
the resulting injury to the creditor.
A. The elements of a fortuitous event are:
1. The cause of the unforeseen and unexpected occurrence must have been
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independent of human will;
2. The event that constituted the caso fortuito must have been impossible to
foresee or, if foreseeable, impossible to avoid;
3. The occurrence must have been such as to render it impossible for the debtors
to fulfill their obligation in a normal manner, and;
4. The obligor must have been free from any participation in the aggravation of
the resulting injury to the creditor (Asset Privatization Trust vs. T.J. Enterprises, G.R.
No. 167195, May 8, 2009).
96. I. In order for a fortuitous event to exempt one from liability, it is necessary
that one has committed no negligence or misconduct that may have occasioned
the loss.
II. An act of God can be invoked to protect a person who has failed to take steps
to forestall the possible adverse consequences of such a loss.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. In order for a fortuitous event to exempt one from liability, it is necessary that
one has committed no negligence or misconduct that may have occasioned the
loss. An act of God cannot be invoked to protect a person who has failed to take
steps to forestall the possible adverse consequences of such a loss. One’s
negligence may have concurred with an act of God in producing damage and
injury to another; nonetheless, showing that the immediate or proximate cause of
the damage or injury was a fortuitous event would not exempt one from liability.
When the effect is found to be partly the result of a person’s participation —
whether by active intervention, neglect or failure to act – the occurrence is
humanized and removed from the rules applicable to acts of God (Mindex
Resources Development vs. Ephraim Morillo, G.R. No. 138123, March 12, 2002).
97. Which is not an element of a fortuitous event?
A. The cause of the breach of the obligation must be independent of the will of
the debtor.
B. The event must be neither unforeseeable nor unavoidable.
C. The event must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner.
D. The debtor must be free from any participation in, or aggravation of the injury
to the creditor.
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B. To exempt the obligor from liability for a breach of an obligation by reason of a
fortuitous event, the following requisites must concur: (a) the cause of the breach
of the obligation must be independent of the will of the debtor; (b) the event must
be either unforeseeable or unavoidable; (c) the event must be such as to render it
impossible for the debtor to fulfill his obligation a normal manner; and (d) the
debtor must be free from any participation in, or aggravation of the injury to the
creditor (Mondragon Leisure and Resorts Corporation vs. CA, et.al. G.R. No. 154188,
June 15, 2005).
98. I. In an obligation to deliver a generic thing, the loss or destruction of
anything of the same kind does not extinguish the obligation.
II. An obligation to pay money is generic; therefore, it is not excused by fortuitous
loss of any specific property for the debtor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Under Article 1263 of the Civil Code, “in an obligation to deliver a generic thing,
the loss or destruction of anything of the same kind does not extinguish the
obligation.” If the obligation is generic in the sense that the object thereof is
designated merely by its class or genus without any particular designation or
physical segregation from all others of the same class, the loss or destruction of
anything of the same kind even without the debtor ’s fault and before he has
incurred in delay will not have the effect of extinguishing the obligation. This rule is
based on the principle that the genus of a thing can never perish. Genus nunquan
perit. An obligation to pay money is generic: therefore, it is not excused by
fortuitous loss of any specific property of the debtor (Gaisano Cagayan, Inc. vs.
Insurance Company of North America, G.R. No. 147839, June 8, 2006).
Where the obligation consists in the payment of money, the failure of the debtor
to make payment even by reason of a fortuitous event shall not relieve him of his
liability. The rationale for this is that the rule than an obligor should be held
exempt from liability when the loss occurs thru a fortuitous event only holds true
when the obligation consists in the delivery of a determinate thing and there is no
stipulation holding him liable even in case of fortuitous event. It does not apply
when the obligation is pecuniary in nature (Gaisano Cagayan, Inc. vs. Insurance
Company of North America, G.R. No. 147839, June 8, 2006).
99. I. Carnapping per se can be considered as a fortuitous event.
II. The burden of proving that the loss was due to fortuitous event rests on him
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who invokes it.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. On the merits. It is not a defense for a repair shop of motor vehicles to escape
liability simply because the damage or loss of a thing lawfully placed in its
possession was due to carnapping. Carnapping per se cannot be considered as a
fortuitous event. The fact that a thing was unlawfully and forcefully taken from
another ’s rightful possession, as in cases of carnapping, does not automatically
give rise to a fortuitous event. To be considered as such, carnapping entails more
than the mere forceful taking of another ’s property. It must be proved and
established that the event was an act of God or was done solely by third parties
and that neither the claimant nor the person alleged to be negligent has any
participation. In accordance with the Rules of evidence, the burden of proving that
the loss was due to a fortuitous event rest on him who invokes it (Jimmy Co vs. CA
and Broadway Motor Sales, Corporation, G.R. No. 124922, June 22, 1998).
Robbery per se, just like carnapping, is not a fortuitous event (Roberto C. Sicam
and Agencia de R.C. Sicam, Inc. vs. Lulu V. Jorge and Cesar Jorge, G.R. No. 159617,
August 8, 2007).
100. I. A possessor in bad faith shall not be liable for deterioration or loss in every
case, even if caused by a fortuitous event.
II. If the obligor delays, or has promised to deliver the same thing to two or more
persons who do not have the same interest he shall not be responsible for any
fortuitous event until he has effected the delivery.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D. A possessor in bad faith shall be liable for deterioration or loss in every case,
even if caused by a fortuitous event (Art. 552, NCC).
If the obligor delays, or has promised to deliver the same thing to two or more
persons who do not have the same interest, he shall be responsible for any
fortuitous event until he has effected the delivery (Art. 1165, NCC).
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101. In commodatum, the bailee is liable for the loss of the thing, even if it should
be through a fortuitous event, except:
A. If he devotes the thing to any purpose different from that for which it has been
loaned.
B. If he keeps it longer than the period stipulated, or after the accomplishment of
the use for which the commodatum has been constituted.
C. If the thing loaned has been delivered with appraisal of its value, unless there is
a stipulation exempting the bailee from responsibility in case of a fortuitous
event.
D. If, being able to save either the thing borrowed or his own thing, he chose to
save the former.
D. The bailee is liable for the loss of the thing, even if it should be through a
fortuitous event:
1. If he devotes the thing to any purpose different from that for which it has been
loaned;
2. If he keeps it longer than the period stipulated, or after the accomplishment of
the use for which the commodatum has been constituted.
3. If the thing loaned has been delivered with appraisal of its value, unless there is
a stipulation exempting the bailee from responsibility in case of a fortuitous event;
4. If he lends or leases the thing to a third person, who is not a member of his
household;
5. If, being able to save either the thing borrowed or his own thing, he chose to
save the latter (Art. 1942, NCC).
102. The depositary is liable for the loss of the thing through a fortuitous event,
except:
A. If it is so stipulated.
B. If he uses the thing with the depositor ’s permission.
C. If he delays its return.
D. If he allows others to use it, even though he himself may have been authorize
to use the same.
B. The depositary is liable for the loss of the thing through a fortuitous event:
1. If it is stipulated;
2. If he uses the thing without the depositor ’s permission;
3. If he delays its return;
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4. If he allows others to use it, even though he himself may have been authorized
to use the same (Art. 1979, NCC).
103. The officious manager shall be liable for any fortuitous event, except:
A. If he undertakes risky operations which the owner was not accustomed to
embark upon.
B. If he has preferred his own interest to that of the owner.
C. If he fails to return the property or business after demand by the owner.
D. If he assumed the management in good faith.
D. The official manager shall be liable for any fortuitous event:
1. If he undertakes risky operations which the owner was not accustomed to
embark upon;
2. If he has preferred his own interest to that of the owner;
3. If he fails to return the property or business after demand by the owner;
4. If he assumed the management in bad faith (Art. 2147, NCC).
104. I. The receipt of the principal by the creditor without reservation with respect
to the interest, shall give rise to the presumption that said interest has been paid.
II. The receipt of a later installment of a debt without reservation as to prior
installments, shall likewise raise the presumption that such installments have been
paid.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Example of paragraph 1: In a promissory note, X borrowed from Y the amount
of P100,000 with an interest of 12% per annum or 1% per month. Thereafter, X paid
P100,000 and Y issued a receipt for the principal. It is presumed that the interest
had been paid. This is because Article 1254 of the Civil Code provides that if the
debt produces interest, payment of the principal shall not be deemed to have been
made until the interests have been covered.
Example of paragraph 2: In a promissory note, X borrowed from Y the amount of
P100,000 payable in ten (10) equal monthly installments (P10,000 per month).
Thereafter, X paid P10,000 and Y issued a receipt for the 7th installment. It is
presumed that the first six (6) installments were paid.
105. A presumption which may be contradicted or overcome by other evidence.
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A. Conclusive presumption
B. Definite presumption
C. Disputable presumption
D. Questionable presumption
C. A presumption is disputable or rebuttable if it may contradicted or overcome
by other evidence.
106. A presumption which is irrebuttable upon the presentation of the evidence
and any evidence tending to rebut the presumption is not admissible.
A. Conclusive presumption
B. Uncertain presumption
C. Disputable presumption
D. Questionable presumption
A. A presumption is conclusive when the presumption becomes irrebuttable upon
the presentation of the evidence and any evidence tending to rebut the
presumption is not admissible (29 Am Jur 2d, Evidence, sec.183).
107. The following are instances of disputable presumptions, except:
A. That money paid by one to another was due to the latter.
B. The tenant is not permitted to deny the title of his landlord at the time
commencement of the relation of landlord and tenant between them.
C. That a thing delivered by one to another belonged to the latter.
D. That prior rents or installments had been paid when a receipt for the later one
is produced.
B
108. The following are instances of disputable presumptions, except:
A. That there was a sufficient consideration for a contract.
B. That person acting as co-partners have entered into a contract of copartnership.
C. Whenever a party has, by his own declaration, act, or omission, intentionally
and deliberately led another to believe a particular thing true, and to act upon
such belief, he cannot, in any litigation arising out of such declaration, act or
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omission, be permitted to falsify it.
D. That an obligation delivered up to the debtor has been paid.
C
109. Spouses H and W obtained from A and B a loan amounting to P6,000,000 at
3% interest per month. The loan was secured by a mortgage on a parcel of land.
Thereafter, the parties executed a Contract of Sale conveying the mortgaged
property in favor of H and W. Subsequently, A and B gave H and W an exclusive
option to repurchase the land for P10,000,000. This was embodied in a document
denominated as an Option to Buy. On this same documents, A and B
acknowledged receipt of a total sum of P10,000,000 as consideration for the
purchase of the land. The Option to Buy provided that if the option is exercised
after December 5, 1998, the purchase price shall increase at the rate of P300,000 or
3% of the purchase price every month until September 5, 1999 and thereafter at
the rate P381,000 or 3.81% of the purchase price every month, with the fifth of
every month as the cut-off date for said increases.
Are the 3% and 3.81% stipulated monthly interest valid?
A. Yes, because the Usury Law has been suspended by a certain Central Bank
Circular.
B. Yes, because the parties are free to stipulate on the interest to be imposed on
monetary obligations.
C. No, because the Court will temper interest rates if they are unconscionable.
D. No, because what is only required is that the interest due should be that
stipulated in writing, and in the absence thereof, the rate shall be 12% per annum.
C
110. One of the following is a determinate thing
A. A car with plate no. AB123
B. A red book
C. A black cellphone
D. A 10 inches laptop
A
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111. B, Inc. contracted C, Inc., a stevedoring company, to load and stow a shipment
of 146,288 cartons of fresh green bananas and 15,202 cartons of fresh pineapples
into the cargo hold of a vessel. The vessel was docked at the port of Davao City
and the goods were to be transported by it to the port of Inchon, Korea. B, Inc.
insured the shipment J Co.
C, Inc. loaded and stowed the cargoes aboard the vessel. The vessel set sail from
the port of Davao City and arrived at the port of Inchon, Korea. It was then
discovered upon discharge that some of the cargo was in bad condition. In a
survey report, it was stated that 16,069 cartons of the banana shipment and 2,185
cartons of the pineapple shipment were so damaged that they no longer had
commercial value.
B, Inc. filed a claim for the damages. J Co. evaluated the claim and thereafter sent
a check in the amount of $210,266.43 to B Inc., the latter then issued a subrogation
receipt to J Co. Thereafter J Co. instituted an action for damages against C, Inc.
Is C, Inc., under obligation to observe the extraordinary degree of diligence in the
conduct of its business?
A. No, because if there is no law or contract stating the degree of diligence which
is to be observed in the performance of an obligation then that which is expected
of a good father of a family or ordinary diligence shall be required.
B. Yes, because its participation was to load the cargoes no board the vessel which
requires utmost care.
C. No, because its participation was to load the cargoes on board the vessel which
requires ordinary care.
D. None of the above.
A
112. X, an official of TESDA, boarded the LRT to be able to arrive in Caloocan in
time for her 3 p.m. meeting when her handbag was slashed and the contents were
stolen by an unidentified person. Among those stolen were her wallet and
government-issued cellular phone. She then reported the incident to the police
authorities; however, the thief was not located, and the cellphone was not
recovered. She also reported the loss to her immediate superior, and she requested
that she be freed from accountability from the cellphone. The COA Auditor denied
her request on the ground that she lacked the diligence required in the custody of
government property and was ordered to pay the purchase value. Is X liable?
A. Yes, X is liable because putting her cellphone in her bag is not sufficient care of a
cellphone while travelling on board the LRT.
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B. Yes, X is liable as she should have rode a jeep or bus.
C. No, X is not liable because riding the LRT is not a negligent act more so because
X’s mode of transit was influenced by time considerations.
D. No, X is not liable as she boarded the LRT to be able to arrive in Caloocan in
time for her 3 p.m. meeting.
C
113. D borrowed P50,000 from C. C dies before he has collected the debt leaving S,
his son as heir. Which of the following statements is correct?
A. S can collect from D although D and C did not agree that the right to the debt
will pass on to the heirs of C.
B. S cannot collect because the credit right is personal to C.
C. S can collect only if D and C agreed that the right to the debt will pass on the
heirs of C.
D. S cannot collect because the law prohibits the transmission of the credit right.
A
114. X was the disbursing officer of the Ternate Beach Project of the Philippine
Tourism in Cavite. In the morning of July 1, 2018, a Friday, he went to Manila to
encash a check covering the wages of the employees. However, the processing of
the check was delayed and was completed at about 3 p.m. Nevertheless, he
decided to encash the check because the employees would be waiting for their pay
the following day; otherwise, the workers would have to wait until July 5, the
earliest time, when the main office would open. At the time, he had two choices:
(1) return to Ternate, Cavite that same afternoon and arrive early evening; or (2)
take the money with him to his house in Marilao, Bulacan, spend the night there,
and leave for Ternate the following day. He chose the second option, thinking it
was the safer one. Thus, at past 3 p.m., he took a jeep bound for Bulacan. While
the jeep was on EDSA, the jeep was held up and the money kept by X was taken. X
chased the robbers and caught pleaded guilty. The other robber who held the
stolen money escaped. The Commission on Audit found X negligent because he
had not brought the cash proceeds of the check to his office in Ternate, Cavite for
safekeeping, which is the normal procedure in the handling of funds. Is X liable?
A. No, because the robbers attacked X in broad daylight in the jeep while it was on
a busy highway and in the presence of other passengers; hence, could not be said
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to be a result of his negligence.
B. Yes, because he should not have allowed the delayed encashment of the check.
C. No, because X chased the robbers and caught up with one robber who was
subsequently convicted robbery.
D. Yes, because he decided to encash the check despite knowledge of the fact that
it was already late.
A
115. W received from X a pendant with diamonds to be sold on commission basis,
but which W failed to subsequently return because of a robbery committed upon
her in the evening of January 16, 2018 while walking alone in a dark alley carrying
the said pendant. X files an action against W for recovery of the pendant or is
value, but W set up the defense that the robbery extinguished her obligations. Is W
liable?
A. No, because the robbery took place without any concurrent fault on W’s part.
B. Yes, because the conduct of W in returning alone to her house in the evening
carrying jewelry of considerable value would have been negligence per se.
C. No, because the incident was unforeseen.
D. Yes, because W committed delay.
B
116. J is a usufructuary of a fishpond. J entered into a contract leasing the fishpond
to Y for a period of 5 years. Paragraph of the lease contract states that the lessee
“cannot sublease” the fishpond.
X is a businessman engaged in the operation of fishponds. Y persuaded X to take
over the operation of said fishpond. X acceded to the proposal. X and Y executed a
written agreement whereby X would take possession of the fishpond in
consideration of the amount of P100,000.
X incurred expenses for the improvement of the fishpond. However, sometime in
June 2018, J, went to the fishpond and presented X with a letter showing that Y has
surrendered possession of the fishpond to him. Is Y liable for subleasing the
fishpond?
A. No, because as a lessee he can transfer his rights over the subject matter of the
contract of lease.
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B. Yes, because as a lessee he cannot transfer his rights over the subject matter of
the contract of lease.
C. No, because subleasing is not prohibited by law.
D. Yes, because when an obligation consists in not doing and the obligor does what
has been forbidden him, it shall also be undone at his expense. In this case, Y led
X to incur expenses to improve the operation of the fishpond.
D
117. It is an obligation which is demandable at once.
A. Pure obligation
B. Conditional obligation
C. Alternative obligation
D. Divisible obligation
A. (Art. 1179, NCC)
An obligation whose performance does not depend upon a future or uncertain
event upon a past event unknown to the parties and which is demandable at once.
There is nothing to exempt the obligor from compliance therewith (Air Philippines
Corp. vs. International Business Aviation Services Phils., Inc., G.R. No. 151963,
September 9, 2004).
118. It is an obligation whose fulfillment or extinguishment depends upon a future
and uncertain event.
A. Pure obligation
B. Conditional obligation
C. Alternative obligation
D. Obligation with a period
B. (Art. 1179, NCC)
An obligation where the acquisition of rights, as well as the extinguishment or loss
of those already acquired, shall depend upon the happening of the event which
constitutes the condition (Art. 1181, NCC).
119. A promissory note signed by X and dated March 31, 2018 is worded as follows.
“I promise to pay Y the sum of P75,000 provided that if she should fail in the May
2018 CPA board examination, he shall return to me said amount.” The above note
gives rise to an obligation with:
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A. Suspensive condition
B. Casual condition
C. Resolutory condition
D. Answer not given
C
120. An obligation whose fulfillment or extinguishment depends upon a future and
certain event.
A. Divisible obligation
B. Facultative obligation
C. Alternative obligation
D. Obligation with a period
D. (Art. 1193, NCC)
121. Whenever in an obligation a period is designated, it is presumed to have been
established for the benefit of:
A. Both the creditor and the debtor
B. The creditor
C. The debtor
D. The third party
A
122. An obligation which involves multiple prestation and a substitute prestation.
A. Divisible obligation
B. Facultative obligation
C. Alternative obligation
D. Obligation with a period
C. (Art. 1199, NCC)
123. An obligation which involves a principal prestation and a substitute prestation.
A. Joint obligation
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B. Facultative obligation
C. Solidary obligation
D. Obligation with a period
B. (Art. 1206)
124. An obligation where each debtor can be made to pay only his share in the
obligation.
A. Joint obligation
B. Facultative obligation
C. Solidary obligation
D. Obligation with a period
A. (Art. 1207, NCC)
125. An obligation where one debtor can be made to pay for the whole obligation
subject to reimbursement.
A. Joint obligation
B. Facultative obligation
C. Solidary obligation
D. Obligation with a period
C. (Art. 1207, NCC)
126. X, Y, and Z are solidarily liable to A for P90,000 which matures on July 1, 2018.
On May 1, 2018, X paid A for the whole amount of the debt. If on December 1,
2018, X will be reimbursed by Y, the latter will be liable for:
A. P30,000 with interest from July 1, 2018 to December 1, 2018.
B. P30,000 without interest.
C. P30,000 with interest from May 1, 2018 to July 1, 2018.
D. P30,000 with interest from May 1, 2018 to December 1, 2018.
A. The law states that: “He who made the payment the payment may claim from
his co-debtors only the share which corresponds to each, with the interest for the
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payment already made. If the payment is made before the debt is due, no interest
for the intervening period may be demanded (Art. 1217, NCC).
127. This is a promissory note: “We promise to pay A, B, and C the sum of P18,000”
(signed) X, Y and Z.
A. Z is obliged to pay C P6,000
B. Z is obliged to pay C P2,000
C. Z is obliged to pay C P12,000
D. Z is obliged to pay A, B and C, P18,000
B. Where an instrument containing the word “we promise to pay” is signed by two
or more persons, they are deemed to be jointly liable thereon. Thus X, Y, and Z are
jointly liable. The payees A, B, and C are also presumed to be join.
128. A, B, and C solidary debtors owe solidary creditors X and Y P30,000. X remitted
the entire obligation in favor of A. The effect is:
A. The obligation is not extinguished until A collects from B and C.
B. The obligation is not yet extinguished until Y is paid by X his share of the credit.
C. A cannot recover from B and C because remission in his favor extend to the
benefit of B and C.
D. A can recover from B and C their respective share of the debt.
C. The principle is “one for all, all for one.” Hence, the remission for one is the
remission for all.”
129. X Corp. operates a credit card system. One of the requirements for the
issuance of the card is that an applicant should have a surety. K applied for a
Regular Card with X Corp. He got as his surety his own sister-in-law, L. Thus, K
signed the printed application form and L signed the Surety Undertaking.
Thereafter, X Corp. issued to K Card No. 0123. He used this card and incurred credit
charged plus appropriate interest and service charges in the aggregate amount of
P166,408. He defaulted in the payment of this obligation. X Corp. demanded of L
to pay said obligation.
A. X Corp. was certainly within its rights to proceed singly against L, as surety and
solidary debtor, without prejudice to any action it may later file against K, until the
obligation is fully satisfied.
B. X Corp. cannot proceed against L because the liability of L is under the contract
of a surety which is in essence secondary only to a valid principal obligation.
C. X Corp. was certainty within its rights to proceed singly against L., as surety and
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solidary debtor, but the latter cannot proceed against K.
D. X Corp. cannot proceed against L because the liability of L is solidary.
A
130. An obligation whose performance of the prestation can be fulfilled is parts.
A. Divisible obligation
B. Obligation with a penal clause
C. Alternative obligation
D. Indivisible obligation
A. (Art. 1223, NCC)
131. An obligation whose performance of the prestation cannot be fulfilled in parts.
A. Divisible obligation
B. Obligation with a penal clause
C. Alternative obligation
D. Indivisible obligation
D. (Art. 1233, NCC)
132. An obligation which contains an undertaking to assume greater liability in
case of breach of said obligation.
A. Divisible obligation
B. Obligation with a penal clause
C. Alternative obligation
D. Indivisible obligation
B. (Art. 1226, NCC)
133. Every future event and uncertain event upon which an obligation is made to
depend.
A. Penalty
B. Period
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C. Condition
D. Force majeure
C. Condition has been defined as “every future event and uncertain event upon
which an obligation is made to depend. It is a future and uncertain event upon
which the acquisition or resolution of rights is made to depend by those who
execute the juridical act.”
The Supreme Court has held that “when the obligation assumed by a party to a
contract is expressly subjected to a condition, the obligation cannot be enforced
against him unless the condition is complied with. “Furthermore, “the obligatory
force of a conditional obligation is subordinated to the happening of a future and
uncertain event, so that if that event does not take place, the parties would stand
as if the conditional obligation had never existed (Felix I. Gonzales vs. The Heirs of
Thomas and Paula Cruz, G.R. No. 131784, September 16, 1999).”
134. I. When the obligation assumed by a party to a contract is expressly
subjected to a condition, the obligation cannot be enforced against him unless
the condition is complied with.
II. The obligatory force of a conditional obligation is subordinated to the
happening of a future and uncertain event, so that if that event does not take
place, the parties would stand as if the conditional obligation had never existed.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
135. I. If the suspensive condition is fulfilled, the obligation arises or becomes
effective.
II. If the resolutory condition is fulfilled, the obligation is extinguished.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Example of suspensive condition: X bound himself to deliver his only car to his
son Y if the latter will pass all his enrolled subjects this semester. Thus, if the latter
will pass all his subjects, X is obligated to deliver his only car to him.
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Example of resolutory condition: X gave his only car to his son Y with the
agreement that the latter will return said car if he will fail the Certified Public
Accountant board examinations. Thus, the obligation is immediately demandable.
However, if Y fails said examination, he must return the car because the happening
of the condition will extinguish the obligation of X.
Suspensive vs. Resolutory obligation
Suspensive condition
Resolutory condition
If the suspensive condition is
fulfilled, the obligation arises or
becomes effective.
If the resolutory condition is fulfilled,
the obligation is extinguished.
If the suspensive condition is not
fulfilled, no juridical relation is
created.
If the resolutory condition is not
fulfilled, the juridical relation is
consolidated.
In suspensive condition, rights are
not yet acquired, but there is a hope
or expectancy that they will soon be
acquired.
In resolutory condition, rights are
already acquired, but subject to the
threat of extinction (8 Manresa, 5th Ed.,
Bk. 1, p.311).
136. I. If the resolutory condition is not fulfilled, no juridical relation is created.
II. If the suspensive condition is not fulfilled, the juridical relation is consolidated.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D
137. A, B, and C (co-owners for brevity) executed a document in favor of F where
the latter paid a down payment of P50,000 and the balance will be P1,240,000. It
was stipulated that the co-owners bind themselves to effect the transfer in their
names from their deceased father, X, the Transfer Certificate of Title (TCT)
immediately upon receipt of the down payment. Moreover, they agreed that if the
titles were already in the names of the co-owners they will execute the deed of
absolute sale of said property and F shall immediately pay the balance. On the
same date, F, paid the down payment of P50,000.
On February 6, 2018, the property originally registered in the name of the coowners’ father was transferred in their names under TCT No. 002. On February 18,
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2018, the co-owners sold the property covered by TCT No. 002 to G for P1,580,000.
For this reason, the co-owners canceled and rescinded the contract with F by
depositing the down payment paid in the bank in trust for F. Subsequently, F, filed a
complaint for specific performance against the co-owners. What is the legal effect
of the issuance of new title in the name of the co-owners?
A. The rights and obligations of the parties did not yet become mutually due and
demandable as the co-owners sold the property to a third person.
B. The rights and obligations of the parties with respect to the perfected contract
of sale became mutually due and demandable as of the time of fulfillment or
occurrence of the suspensive condition on February 6, 2018.
C. There is fraud; hence, the co-owners are liable for damages.
D. Specific performance is not the proper remedy.
B
138. H and W spouses and E entered into a contract to sell wherein the latter
agreed to sell to the former, for P3,170,220, five parcels of land. The spouses shall
make a down payment of P500,000 upon signing of the contract. The balance shall
be paid in three installments. The spouses failed to pay the last installment.
Thereafter, the spouses offered to pay the unpaid balance, which had already been
delayed by one and a half year, which E refused to accept. On September 23, 2018,
E sold the same parcels of land to X.
The spouses filed a complaint to compel E to accept the spouses’ payment.
A. E is not within her rights to sell the subject land to X. E and X are in bad faith.
Payment of the price is a positive suspensive condition, failure of which is a
breach that prevents the obligation of the vendor to convey title from becoming
effective.
B. The agreement of the parties that a violation of the terms of the contract would
cause its cancellation even without court intervention is not valid.
C. The stipulation in the contract providing for automatic rescission upon nonpayment is defective.
D. E is within her rights to sell the subject lands to X. There can be no rescission of
an obligation that is still non-existent due to the non-happening of the
suspensive condition.
D. The contract entered into by the parties is a contract to sell and no a contract of
sale.
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139. I. In resolutory condition, rights are not yet acquired, but there is a hope or
expectancy that they will soon be acquired.
II. In resolutory condition, rights are already acquired, but subject to the threat of
extinction.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B
140. It is a classification of a condition where the fulfillment of the condition
depends upon the will of one of the contracting parties.
A. Potestative condition
B. Impossible condition
C. Casual condition
D. Mixed condition
A. For example, “I will you my only watch if I will go the shopping mall today.”
141. The fulfillment of the condition depends upon chance and/or upon the will of
a third person.
A. Potestative condition
B. Impossible condition
C. Casual condition
D. Mixed condition
C. For example, “I will give you my only bicycle if it rains today.”
142. The fulfillment of the condition depends partly upon the will of a party to the
obligation and partly upon chance and/or the will of a third person.
A. Potestative condition
B. Impossible condition
C. Casual condition
D. Mixed condition
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D. “I will give you my only car if I will go to the shopping mall today and if it rains
today.”
143. Y and spouses H and W entered into a contract to sell involving a parcel of
land. At the time, the land was untitled although H and W were paying taxes
thereon. Under the contract, Y undertook to secure title to the property in H and
W’s names. Of the P312,840 purchase price, Y was to pay a downpayment of
P50,000 upon signing of the contract, and the balance was to be paid within ten
days from the issuance of a court order directing issuance of a decree of
registration for the property.
On December 27, 2017, the court ordered the issuance of a decree of registration
in the name of H and W. H and W then demanded payment of the balance of the
purchase price. On February 28, 2018, Y made a payment of P100,000 to H and W,
still insufficient to cover the full purchase price. Shortly thereafter, H and W offered
to sell to Y one-half of the property for all the payments the latter had made,
instead of rescinding the contract. Y did not accept H and W’s proposal. Instead, Y
offered to pay the balance in full for the entire property. H and W refused the offer.
Can H and W rescind the contract?
A. Yes, because H and W have the right to rescind such contract.
B. No, because the obligation of H and W thereunder did not arise. There can be
no rescission of an obligation that is non-existent, considering that the suspensive
condition therefor has not yet happened.
C. No because H and W have no right to rescind such contract.
D. Yes, because Y failed to comply with his obligation to pay the full purchase price
of February 28, 2018.
B
144. The condition is capable of realization according to nature, law, public policy,
or good customs.
A. Positive condition
B. Negative condition
C. Possible condition
D. Impossible condition
C
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145. The condition is not capable of realization according to nature, law, morals,
good customs, public order or public policy.
A. Positive condition
B. Negative condition
C. Possible condition
D. Impossible condition
D. Impossible condition may either be:
A. Physical, that is contrary to law of nature, or
B. Legal, that is contrary to law, morals, good customs or public policy
146. The condition involves the performance of an act.
A. Positive condition
B. Negative condition
C. Possible condition
D. Impossible condition
A. In positive condition, obligation is extinguished as soon as the time expires or
if it becomes indubitable that the event will not take place.
147. The condition involves the non-performance of an act.
A. Positive condition
B. Negative condition
C. Possible condition
D. Impossible condition
B. In negative condition, the obligation is effective from the moment the time
indicated has lapsed, or if it has become evident that the event cannot occur,
although the time indicated has not yet lapsed.
For example, “X promised to give his only car to Y if the latter will not marry Z this
year 2018.”
148. The condition is susceptible of partial realization.
A. Conjunctive condition
B. Alternative condition
C. Indivisible condition
D. Divisible condition
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C
149. The condition is not susceptible of partial realization.
A. Conjunctive condition
B. Alternative conjunction
C. Indivisible condition
D. Divisible condition
C
150. There are several conditions, all of which must be realized.
A. Conjunctive condition
B. Alternative condition
C. Indivisible condition
D. Divisible condition
A
151. There are several conditions, one which must be realized.
A. Conjunctive condition
B. Alternative condition
C. Indivisible condition
D. Divisible condition
B
152. It is also known as condition precedent.
A. Suspensive condition
B. Resolutory condition
C. Casual condition
D. Mixed condition
A
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153. I. If the fulfillment of a potestative condition depends exclusively upon the
will of the creditor, the conditional obligation shall be void.
II. If the fulfillment of a potestative condition depends exclusively upon the will of
the debtor, the conditional obligation shall be valid.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D
154. These are conditions which are contrary to the law of nature.
A. Positive impossible condition.
B. Physical impossible condition
C. Legal impossible obligation
D. Negative impossible obligation
B
155. These are conditions which are contrary to law, morals, good customs, public
order, or public policy.
A. Positive impossible condition.
B. Physical impossible condition
C. Legal impossible condition
D. Negative impossible condition
C
156. Which of the following statements is not correct?
A. In divisible obligation that part thereof, which is not affected by the impossible
obligation or unlawful condition shall be valid.
B. If the condition is negative, not to do an impossible thing, it shall be
considered as not having been agreed upon.
C. If the obligation is pre-existing and not depending on the fulfillment of the
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impossible condition for its existence, only the condition is void.
D. In divisible obligation that part thereof, which is not affected by the impossible
or unlawful condition shall be void.
D
157. X, offered a parcel of land to V. V visited the property and, except for the
presence of squatters in the area, he liked the place. Later, X called on V with a
proposal that should he advance the amount of P50,000 which could be used in
taking up an ejectment case against the squatters, X would agree to sell the
property for a low price. V expressed his concurrence. Thereafter, a contract,
denominated “Deed of Conditional Sale,” was executed between them.
A few months later, judgment was rendered ordering the squatters to vacate the
premises. The decision was handed down beyond the 60-day period stipulated in
the contract. A few days later, X, prompted by V’s continued refusal to accept the
return of P50,000 advance payment, filed for rescission of the deed of “conditional”
sale. Is X’s action for rescission justified?
A. No, because it is X who has failed in her obligation under the contract. V did not
breach the agreement.
B. Yes, because V refused the return of the P50,000 advance payment.
C. No, because the contract is conditional sale and not absolute sale. Moreover, X’s
failure “to remove the squatters from the property” within the stipulated period
gives V the right to either refuse to proceed with the agreement.
D. Yes, because V failed to pay the balance of the contract.
A
158. The remedy of requiring exact performance of a contract in the specific form
in which it was made, or according to the precise terms agreed upon.
A. Resolution
B. Specific performance
C. Rescission
D. Fulfillment
B. Black’s Law Dictionary defined specific performance as “the remedy of requiring
exact performance of a contract in the specific form in which it was made, or
according to the precise terms agreed upon. The actual accomplishment of a
contract by a party bound to fulfill it.”
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Evidently, before the remedy of specific performance may be availed of, there must
be a breach of the contract.
Under a contract to sell, the title of the thing to be sold is retained by the seller
until the purchases makes full payment of the agreed purchase price. Such
payment is a positive suspensive condition, the non-fulfillment of which is not a
breach of but merely an event that prevents the seller conveying title to the
purchaser. The non-payment of the purchase price renders the contract to sell
ineffective and without force and effect. Thus, a cause of action for specific
performance does not arise (Ayala Life Assurance, Inc. vs. Ray Burton Development
Corporation, G.R. No. 163075, January 23, 2006).
159. The condition shall be deemed fulfilled when the obligor voluntarily prevent its
fulfillment.
A. Doctrine of constructive fulfillment of suspensive condition.
B. Doctrine of implied performance
C. Doctrine of express performance
D. Doctrine of constructive extinguishment of obligation
A. “The condition shall be deemed fulfilled when the obligor voluntarily prevent its
fulfillment.”
The following are the requisites of the doctrine of constructive fulfillment of
suspensive condition:
The condition is suspensive;
The debtor actually prevents the fulfillment of the condition; and
The debtor acts voluntarily or willfully.
160. The following are requisite of the doctrine of constructive fulfillment of
suspensive condition, except:
A. The condition is suspensive.
B. The condition is resolutory.
C. The debtor actually prevents the fulfillment of the condition.
D. The debtor acts voluntarily or willfully.
B
161. A thing is lost when it, except:
A. Perishes.
B. Goes out of commerce.
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C. Disappears in such a way that its existence is unknown or it cannot be
recovered.
D. Deteriorates.
D. (Art. 1189, NCC)
162. It gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law
otherwise provides.
A. Lease
B. Antichresis
C. Usufruct
D. Commodatum
C. Usufruct gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law
otherwise provides (Art. 562, NCC).
163. A person who has the right to the benefits of another ’s property.
A. Lessor
B. Antichretic creditor
C. Usufructuary
D. Bailor
C. Usufructuary, is one having the right to a usufruct; specifically, a person who
has the right to the benefits of another ’s property (Black’s Law Dictionary, p. 1580,
Eight Edition).
The rights of the usufructuary are:
1. The usufructuary may make on the property held in usufruct such useful
improvements or expenses for mere pleasure as he may deem proper, provided he
does not after its form or substance; but he shall have no right to be indemnified
therefor. He may, however, remove such improvements, should it be possible to do
so without damage to the property (Art. 579, NCC).
2. The usufructuary may set off the improvements he may have made on the
property against any damage to the same (Art. 580, NCC).
164. I. When the conditions have for their purpose the extinguishment of an
obligation to give, the parties, upon the fulfillment of said conditions, shall return
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to each other what they have received.
II. The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
165. It has the effect of “unmaking a contract, or its undoing from the beginning,
and not merely its termination.”
A. Rescission
B. Specific performance
C. Annulment
D. Void
A. Rescission has the effect of “unmaking a contract, or its undoing from the
beginning, and merely its termination.” Hence, rescission creates the obligation to
return the object of the contract. It can be carried out only when the one who
demands rescission can return whatever he may be obliged to restore. To rescind is
to declare a contract void at its inception and to put an end to it though in never
was. It is not merely to terminate it and release the parties from further obligations
to each other, but to abrogate it from the beginning and restore the parties to
their relative positions as if no contract has been made (Unlad Resources
Development Corporation, et.al. vs. Renato P. Dragon, et.al., G.R. No. 149338, July
28, 2008).
Extrajudicial rescission of a contract is not possible without an express stipulation
to that effect (Spouses Reynaldo Alcaraz and Esmeralda Alcaraz vs. Pedro M.
Tangga-an, et.al., G.R. No. 128568, April 9, 2003).
The Supreme Court, however, has held in Tan v. Court of Appeals, that:
The power to rescind obligation is implied in reciprocal ones in case one of the
obligors should not comply with what is incumbent upon him x x x. However, it is
equally settled that, in the absence of a stipulation to the contrary, this power must
be invoked judicially; it cannot exercised solely on a party’s own judgment that the
other has committed a breach of the obligation. Where there is nothing in the
contract empowering a party to rescind it without resort to the courts, such party’s
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action in unilaterally terminating the contract x x x is unjustified (Victoria Ong, vs.
Ernesto Bognalbal and CA, G.R. No. 149140, September 12, 2006).
166. Are those which arise from the same cause, wherein each party is a debtor
and a creditor of the other, such that the performance of one is conditioned upon
the simultaneous fulfillment of the other?
A. Unilateral obligation
B. Reciprocal obligation
C. Real obligation
D. Personal obligation
B. Reciprocal obligations are those which arise from the same cause, wherein
each party is a debtor and a creditor of the other, such that the performance of
one is conditioned upon the simultaneous fulfillment of the other. From the
moment one of the parties fulfills his obligation, delay by the other party begins
(ASJ Corporation and Antonio San Juan vs. Sps. Efren & Maura Evangelista, G.R.
No. 158086, February 14, 2008).
167. I. Rescission is allowed only where the breach is substantial and fundamental
to the fulfillment of the obligation.
II. The right to rescind may be waived expressly only.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. The right of resolution of a party to an obligation under Article 1191 of the
Civil Code is predicated on a breach of faith by the other party that violates the
reciprocity between them (Virgilio R. Romero vs. CA and Enriqueta Chua Vda. De
Ongsiong, G.R. No. 107207, November 23, 1995). Rescission, however, is allowed
only where the breach is substantial and fundamental to the fulfillment of the
obligation (Fidela del Castillo Vda. De Mistica vs. Spouses Bernardino Naguiat and
Maria Paulina Gerona-Naguiat, G.R. No. 137909, December 11, 2003).
Article 1191 of the Civil Code provides that the power to rescind obligation is
implied in reciprocal ones, in case one of the obligors should not comply with what
is incumbent upon him. The rescission referred to in this article, more appropriately
referred to as resolution, is not predicated on injury to economic interests on the
part of the party plaintiff, but of breach of faith by the defendant which is violative
of the reciprocity between the parties. The right to rescind may be waived,
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expressly or impliedly (Sps. Lino Francisco and Guia Francisco vs. DEAC
Construction, Inc., and Geomar A. Dadula, G.R. No. 171312, February 4, 2008).
168. It means bringing the parties back to their original status prior to the
inception of the contract.
A. Mutual rescission
B. Mutual annulment
C. Mutual restitution
D. Mutual ratification
C. Mutual restitution is required in cases involving rescission under Article 1191.
This means bringing the parties to their original status prior to the inception of the
contract. Article 1385 of the Civil Code provides the effects of rescission, to wit:
ART. 1385. Rescission creates the obligation to return the things which were the
object of the contract, together with their fruits, and the price with its interest;
consequently, it can be carried out only when he who demands rescission can
return whatever he may be obliged to restore.
Neither shall rescission take place when the things which are the object of the
contract are legally in the possession of third persons who did not act in bad faith.
169. I. The rescission has the effect of abrogating the contract in some parts.
II. When a decree for rescission is handed down, it is the duty of the court to
require both parties to surrender that which they have respectively received and
to place each other as far as practicable in his original situation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B
170. I. The power to rescind obligations is implied in reciprocal ones in case of
one of the obligors should not comply with what is incumbent upon him.
II. It is settled that, in the absence of a stipulation to the contrary, power to
rescind obligations must be invoked judicially.
A. Only I is true
B. Only II is true
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C. Both are true
D. Both are false
C. The right to rescind a contract arises once the other party defaults in the
performance of his obligation.
171. Is an interval of time, exerting an influence on an obligation as a consequence
of a juridical act, either suspends its demandability or produces its extinguishment?
A. Period
B. Condition
C. Demand
D. Delay
A. Period is a time of definite length. Definite, having distinct or certain limits;
determinate in extent of character; limited; fixed – as definite period (Capiral vs.
Manila Electric Company, L-15721, December 27, 1963).
When the debtor binds himself to pay when his means permit him to do so, the
obligation shall be deemed to be one with a period.
Examples of phrases similar to “when his means permit him to do so”
1. “When I have money”
2. “As soon as I have money”
3. “When I can afford to pay”
In connection with the above, the following provision is material, to wit:
Art. 1179. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the
duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of
the debtor.
In every case, the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once fixed by the
courts, the period cannot be changed by them.
The period is presumed to have been established for the benefit of both the
creditor and debtor.
The extension of a lease contract must be made before the term of the agreement
expires, not after. Upon the lapse of the stipulated period, courts cannot belatedly
extend or make a new lease for the parties, even on the basis of equity.
Thus, the period of the lease contract is deemed to have been set for the benefit of
both parties. Its renewal may be authorized only upon their mutual agreement or
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at their joint will. Its continuance, effectivity or fulfillment cannot be made to
depend exclusively upon the free and uncontrolled choice of just one party. While
the lessee has the option to continue or to stop paying the rentals, the lessor
cannot be completely deprived of any say on the matter. Absent any contrary
stipulation in a reciprocal contract, the period of lease is deemed to be for the
benefit of both parties (LL and Company Development and Agro-Industrial
Corporation vs. Huang Chao Chun and Yang Tung Fa, G.R. No. 142378, March 7,
2002)
172. I. A condition has for its requisites futurity and certainty.
II. A term or period has for its requisites futurity and uncertainty.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D. Obligation with a period is an obligation for whose fulfillment a day certain
has been fixed, shall be demandable only when the day comes.
A day certain is understood to be that which must necessarily come, although it
may not be known when (Art. 1193, NCC). Moreover, when the debtor binds
himself to pay when his means permit him to do so, the obligation shall be
deemed to be one with a period (Art. 1180, NCC).
For example, X promised to give his particular laptop to Y on December 30, 2018.
173. I. A condition may or may not happen.
II. A term or period will surely come to pass, although it may not be known when.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. CONDITION vs. TERM/PERIOD
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Condition
Term or Period
A condition refers to an event
A term or period refers to an interval of time
A condition has for its
requisites futurity and
uncertainty
A term or period has for its requisites futurity
and certainty
A condition may or may not
happen
A term or period will surely come to pass
although it may not be known when
A condition has retroactive
effects
A term or period does not have retroactive
effects unless there is an agreement to the
contrary
174. Obligations for whose fulfillment a day certain has been fixed, shall be
demandable only when that day comes.
A. Resolutory period
B. In diem
C. Ex die
D. Suspensive condition
C. An obligation with a suspensive period (ex die) is an obligation for whose
fulfillment a day certain has been fixed, it shall be demandable only when that day
comes (Art. 1193, NCC).
For example, X promised to give P10,000 to Y on February 14, 2018. Take note that
X will be liable upon demand by Y on February 14, 2018.
175. Obligations which take effect at once, but terminate upon arrival of the day
certain.
A. Suspensive period
B. In diem
C. Ex die
D. Resolutory condition
B. Obligation with a resolutory period (in diem) take effect at once, but terminate
upon arrival of the day certain (Art. 1193, NCC).
For example, X promised to give P100 a day to Y until May 30, 2018. Let it be
noted that the obligation of X is immediately demandable. However, X’s liability to
Y will be extinguished on May 30, 2018.
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176. The court is not authorized to fix a period. The following are the exceptions,
except:
A. If the obligation does not fix a period, but from its nature and circumstances it
can be inferred that a period was intended.
B. If the period depends upon the will of the creditor.
C. In under the circumstances the parties have contemplated a period.
D. When the debtor binds himself to pay when his means permit him to do so.
B. General Rule:
The court is not authorized to fix a period.
Exceptions:
1. If the obligation does not fix a period, but from its nature and circumstances it
can be inferred that a period was intended (Art. 1197, NCC).
2. If the period depends upon the will of the debtor (Art. 1197, NCC).
3. If under the circumstances the parties have contemplated a period (Art. 1197,
NCC).
4. When the debtor binds himself to pay when his means permit him to do so
(Art. 1180, NCC).
177. The debtor loses the right to make use of period in the following instances,
except:
A. When after the obligation has been contracted, he become insolvent, unless hi
gives a guaranty or security for the debt.
B. When the debtor furnished the creditor the guaranties or securities.
C. When the debtor violates any undertaking in consideration of which the
creditor agreed to the period.
D. When the debtor attempts to abscond.
B. The debtor loses right to make use of period in the following instances:
1. When after the obligation has been contracted, he becomes insolvent, unless
he gives a guaranty or security for the debt;
Example:
In a contract of loan agreed upon on JULY 1, 2018, X, the debtor, and Y, the
creditor, agreed that X will pay his obligation in the amount of P100,000 on
December 31, 2018. Further they agreed that Y cannot demand payment either
that December 31, 2018. Subsequently, on September 1, 2018, X turned insolvent.
In this case, Y need not wait for December 31, 2018, he can immediately demand
the obligation, as an exception. However, if X gives a guarantor or pledge or
mortgage as security, the Y only demand the obligation on December 31, 2018.
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2. When he does not furnish to the creditor the guaranties or securities which he
has promised;
Example:
In a contract of loan agreed upon on July 1, 2018, X, the debtor, and Y, the creditor,
agreed that X will pay his obligation in the amount of P100,000 on December 31,
2018. X, likewise, promised to deliver his only car, as pledge or security, on August
1, 2018. Further they agreed that Y cannot demand payment earlier that December
31, 2018.
On August 1, 2018, X failed to deliver his only car; hence his obligation becomes
immediately demandable. This means that Y need not wait for December 31, 2018
before he can make a demand.
3. When by his own acts he has impaired said guaranties or securities after their
establishment, and when through a fortuitous event they disappear, unless he
immediately gives new ones equally satisfactory:
Example:
In a contract of loan agreed upon on July 1, 2018, X, the debtor, and Y, the creditor,
agreed that X will pay his obligation in the amount of P100,000 on December 31,
2018. In order for Y to grant the said loan of X, the latter mortgaged his only house
as a security. However, on October 1, 2018, said house was totally destroyed by an
earthquake. Consequently, the obligation of X becomes immediately demandable
and Y need not wait for December 31, 2018 unless X will give a new security which
is satisfactory to Y. For instance, a land to be constituted as a real estate mortgage
in favor of Y.
4. When debtor violates any undertaking, in consideration of which the creditor
agreed to the period;
Example:
On October 1, 2018, X asked Y for the latter to lend P10,000 to the former to be
paid on December 31, 2018. Y told X that he can lend the said amount provided
that X will no longer smoke cigarette until December 31, 2018; otherwise, the
obligation becomes immediately demandable. X agreed to the said undertaking. If
on November 1, 2018, X was caught smoking cigarette, then his obligation become
immediately demandable.
5. When the debtor attempts to abscond.
Attempt to abscond means attempt to escape. This is a sign of bad faith because
the debtor intends to evade his obligation.
178. A owes B P150,000 due on June 30, 2018. A executed a mortgaged in favor of
B on A’s building. On June 10, 2018, the mortgaged building was totally lost due to
an earthquake. On June 12, 2018, B demanded payment from A. Is B’s demand
valid?
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A. No. The obligation is one with a definite period, thus the creditor cannot
demand fulfillment of the obligation before it due.
B. No. the mortgage was extinguished because the object of the contract was lost
through a fortuitous event.
C. Yes. The debt becomes due at once because the object of mortgage was lost.
D. Yes. The debt becomes due at once because the period’s benefits is given solely
to the creditor thereby giving the creditor the right to demand performance even
before the due date.
C. The debtor loses right to make use of period when, by his own acts, he has
impaired said guaranties or securities after their establishment, and when through
a fortuitous event they disappear, unless he immediately gives new ones equally
satisfactory.
179. An obligation where there is only one object.
A. Simple obligation
B. Conjunctive obligation
C. Compound obligation
D. Distributive obligation
A. Examples: “X bound himself to deliver his only dog to Y.” “D owes C P5,000.”
180. An obligation where there are two or more objects.
A. Simple obligation
B. Compound obligation
C. Conjunctive obligation
D. Distributive obligation
B. There are two kinds of compound obligation, that is, conjunctive obligation
and distributive obligation.
181. An obligation where there are two or more objects and all of them are due.
A. Simple obligation
B. Conjunctive objective
C. Compound obligation
D. Distributive obligation
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B. Conjunctive obligation is an obligation where there are two or more objects
and all of them are due. All of the objects must be performed to extinguish the
obligation.
For example, X obliged himself to give his only cell phone, only laptop, and only TV
to Y on August 1, 2018. On said date, X must deliver all the three objects together
with their accessions and accessories (based on the principle of accessory follows
the principal) for his obligation to be extinguished. Otherwise, if X delivers only the
cell phone or only the cell phone and the laptop, then his obligation is not
extinguished. The rule also is “complete payment/performance.”
182. An obligation where all of the objects must be performed to extinguished the
obligation.
A. Simple obligation
B. Conjunctive obligation
C. Compound obligation
D. Distributive obligation
B
183. An obligation where one, two or more of the objects are due. One of the
objects must be performed to extinguish the obligation.
A. Alternative obligation
B. Facultative obligation
C. Compound obligation
D. Distributive obligation
D. There are two kinds of distributive obligation, that is, alternative obligation
and facultative obligation.
ALTERNATIVE vs. FACULTATIVE OBLIGATION
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Alternative
Facultative
In alternative obligations several
objects are due
In facultative obligations only one
object is due.
Alternative obligations may be
complied with by the delivery of one
of the objects or by the performance
of one of the prestations which are
alternatively due.
Facultative obligations may be
complied with by the delivery of
another object or the performance
of another prestation in substitution
of that which is due.
In alternative obligations, the right of
choice may pertain even to the
creditor or to a third person.
In facultative obligations, the right
of choice pertains only to the
debtor.
In alternative obligations, the loss or
impossibility of all of the objects or
prestations which are due without any
fault of the debtor is necessary to
extinguish the obligation.
In facultative obligations, loss or
impossibility of the object or
prestation which is due without any
fault of the debtor is sufficient to
extinguish the obligation.
The nullity of one of the objects does
not invalidate the obligation which is
still in force with respect to those
which have no defect.
The nullity of the principal object
invalidates the obligation, even if
the substitute object is valid.
The impossibility of all the objects due
without the fault of the debtor
extinguishes the obligation.
The impossibility of the principal
object is sufficient to extinguish the
obligation even if the substitute
object is possible.
184. An obligation where two or more objects are due but the performance of one
sufficient
A. Alternative obligation
B. Facultative obligation
C. Compound obligation
D. Distributive obligation
A. (Art. 1199, NCC).
X obliged himself to give his only cell phone, or his only laptop, or his only TV to Y
on December 31, 2018. The delivery of either of these objects will extinguish the
obligation of X.
185. An obligation where only one object is due but the debtor may substitute
another object.
A. Alternative obligation
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B. Facultative obligation
C. Compound obligation
D. Distributive obligation
B. (Art. 1206, NCC).
X promised to give his only parcel of land to Y. However, as a substitute, he will
deliver his only car. Take note that the parcel of land is the principal object and the
car is the substitute object.
186. D is obliged to give C a specific ring. The parties agreed that D may give a
specific bracelet as a substitute. Which of the following is true?
A. If the ring is lost through a fortuitous event before substitution, the obligation
is extinguished.
B. If the bracelet is lost through a fortuitous event before the substitution, the
obligation is extinguished.
C. If the ring is lost through a fortuitous event after substitution, the obligation is
extinguished.
D. If the ring is lost through the debtor ’s fault after substitution, the debtor shall
pay damages.
A
187. I. A person alternatively bound by different prestations shall completely
perform both of them.
II. The creditor cannot be compelled to receive part of one and part of the other
undertaking.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. (Art. 1199, NCC)
188. I. In alternative obligation, the right of choice belongs to the creditor, unless
it has been expressly granted to the debtor.
II. The debtor shall have no right to choose those prestations which are
impossible, unlawful or which could not have been the object of the obligation.
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A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. RULE:
In an alternative obligation, the right of choice belongs to the debtor.
Example:
X obliges himself to give his only cell phone, or his only laptop, or his only TV to Y.
A problem will arise if X wants to deliver the cell phone while Y wants to receive the
laptop. Thus, if the parties did not stipulate on who will choose, then the right to
choose belongs to X, the debtor.
EXCEPTION:
The exception is when the choice has been expressly given to the creditor (Art.
1205, NCC).
Example:
In the immediately preceding example, if X communicated to Y that it will be the
latter who will choose and Y agreed then Y can choose the laptop.
LIMITATION:
The debtor shall have no right to choose those prestations which are impossible,
unlawful or which could not have been the object of the obligation.
Note:
Once the selection has been communicated, it becomes irrevocable. The law does
not require the other party to consent to the choice made by the party entitled to
choose.
The law does not also require a form to be use by a party entitled to choose in
communicating his choice to the other party. Hence, it may be in any form
provided that it is sufficient to make the other party know that the election has
been made. It may be made orally or in writing.
Note:
The law provides that the debtor shall lose the right of choice when among the
prestations whereby he is alternatively bound, only one practicable.
The obligation, in this case, becomes a simple obligation and also pure obligation
because the debtor objects may have been lost or become impossible.
For example, X is bound to give his only cell phone, or his only laptop, or his only
TV to Y on December 31, 21018. If the cell phone and the TV were both lost, then it
becomes a simple obligation. Consequently, X will just deliver the laptop.
189. I. In alternative obligations, when the choice has been expressly given to the
creditor, the obligation shall cease to be alternative from the day when the
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selection has been communicated to the debtor.
II. The debtor shall lose the right of choice when among the prestations whereby
he is alternatively bound, only one is practicable.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. When the choice has been expressly given to the creditor, the obligation shall
cease to be alternative from the day when the selection has been communicated
to the debtor.
190. D obliged to give C a specific watch, a specific ring, or a 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?
A. C may choose the delivery to him of the bracelet, or the price of the watch, or
the price of the ring plus damages.
B. C cannot choose the price of the watch or the price of the ring because the said
objects have already been lost.
C. C can only choose to have the bracelet because anyway, D can still perform his
obligation.
D. C can only choose to have delivery of the bracelet or the price of the ring which
was the last item that was lost plus damages.
A
191. An obligation where only one prestation has been agreed upon, but the
obligor may render another in substitution.
A. Alternative obligation
B. Facultative obligation
C. Compound obligation
D. Distributive obligation
B
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192. I. Alternative obligations may be complied with by the delivery of one of the
objects or by the performance of one of the prestations which are alternatively
due.
II. Facultative obligations may be complied with the delivery of another object or
the performance of another prestation in substitution of that which is due.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
193. I. In alternative obligations, the right of choice may pertain even to the
creditor.
II. In facultative obligations, the right of choice pertains only to the creditor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A
194. I. In alternative obligations, the loss or impossibility of all of the objects or
prestations which are due without any fault of the debtor is necessary to
extinguish the obligation.
II. In facultative obligations, loss or impossibility of the object or prestation which
is due without the fault of the debtor is sufficient to extinguish the obligation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Effects of loss of objects of alternative obligation when choice belongs to
debtor
1. Loss due to fortuitous event
A. All od the objects are lost
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The obligation of the debtor is extinguished.
Example:
X obliged himself to give his only cell phone, or his only laptop, or his only TV to Y.
If all of these were lost through a typhoon, then the obligation of X is extinguished.
B. Only one of the objects remains
The debtor must deliver to the creditor the remaining object. Consequently, the
obligation ceases to be alternative and it becomes a simple obligation.
Example:
X is obliged to give his only cell phone, or his only laptop, or his only TV to Y. If
only the cell phone was lost through a typhoon, then X is liable to deliver either
the laptop or the TV at his option. The obligation is still alternative because there
are two remaining objects.
2. Loss due to debtor’s fault
A. All of the objects are lost
The creditor shall have a right to indemnity for damages based on the value of the
last thing which disappeared or service which become impossible. Damages other
than the value of the last thing or service may also be awarded (Art. 1204, NCC).
Example:
X obliged himself to give his only cell phone, or his only laptop, or his only TV to Y.
When through X’s fault, all of these objects were lost successively, meaning the first
object that was lost was the cell phone followed by laptop and finally the TV, then
X will be liable for damages taking as a basis the value of the TV. Also, damages
other than the value of TV may be awarded like moral damages.
B. Only one of the objects remains
The debtor must deliver to the creditor the remaining object. Consequently, the
obligation ceases to be alternative as it became a simple obligation.
Example:
X obliged himself to give his only cell phone, or his only laptop, or his only TV to Y.
If the cell phone and laptop were both lost through the negligence of X then he is
liable to deliver the TV. It becomes a simple obligation because there is only one
object. Take note that there is negligence in the present case which is a ground for
asking damages; however, X is not liable for damages because of the nature of the
obligation which is alternative meaning there are two or more objects. Moreover,
there remains an object so that all the essential elements of the obligation are still
intact.
C. Two or more of the objects remain
The debtor must deliver that which he shall choose from among the remainder.
Consequently, the obligation still subsists retaining its alternative character.
Example:
X obliged himself to give his only cell phone, or his only laptop, or his only TV to Y.
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If only the cell phone was lost through the negligence of X then he is liable to
deliver the laptop or the TV at his option. The obligation is still alternative because
there are two remaining objects. Again, take note that there is negligence in the
present case which is a ground for asking damages; however, X is not liable for
damages because of the nature of the obligation which is alternative meaning
there are two or more objects.
Effects of loss of objects of alternative obligation when choice belongs to
creditor
1. Loss due to fortuitous event
A. All of the objects are lost
The obligation of the debtor is extinguished.
Example:
X is obliged to give his only cell phone, or his only laptop, or his only TV to Y. If all
of these were lost through a typhoon, then the obligation of X is extinguished.
B. Only one of the objects remains
The debtor must deliver to the creditor the remaining object. Consequently, the
obligation ceases to be alternative and it has become simple obligation.
Example:
X obliged himself to give his only cell phone, or his only laptop, or his only TV to Y.
If the cell phone and laptop were both lost through a typhoon, then X is liable to
deliver the TV. It becomes a simple obligation because there is only object.
C. Two or more of the objects remain
The debtor must deliver that which the creditor shall choose from among the
remainder. Consequently, the obligations still subsist retaining its alternative
character.
Example:
X obliged himself to give his only cell phone, or his laptop, or his only TV to Y. If
only the cell phone was lost through a typhoon, then X is liable to deliver either
laptop or the TV, this time, at the option of creditor Y. The obligation is still
alternative because there are two objects.
Loss due to debtor’s fault
All of the objects are lost
The creditor shall choose the price on any of the objects with indemnity for
damages (Art. 1205, NCC).
Example:
X is obliged to give his only cell phone, or his only laptop, or his only TV to Y. When
through X’s fault, all of these objects were lost successively, meaning the first
object that was lost was the cell phone followed by laptop and finally the TV, then Y
will have three options, that is, Y can choose the value of the cell phone plus
damages or the value of the laptop plus damages, or the value of the TV plus
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damages. Take note that the ground for asking damages here is negligence.
Only one of the objects remains
The creditor may choose the object which remains and debtor cannot be held
liable for damages. However, the creditor may also choose the value of any one of
the objects which were lost, plus damages. Consequently, the obligation ceases to
be alternative and it became a simple obligation (Art. 1205, NCC).
X obliged himself to give his only cell phone, or his only laptop, or his only TV to Y.
If only the cell phone and the laptop were both lost through the negligence of X,
then Y, as creditor, may choose the value of the cell phone plus damages or the
value of the laptop plus damages. Y may also choose delivery to him of the TV, the
remaining object, however, there is no damages because there is no ground for
asking damages. Negligence, as a ground for asking damages, attached only to the
loss of the cell phone and the laptop.
Two or more of the objects remain
The debtor must deliver that which the creditor shall choose from among the
remainder and the debtor cannot be held liable for damages. However, the creditor
may also choose any of the objects which were lost and the debtor is liable for the
value of the object plus damages. Consequently, the obligation still subsists
retaining its alternative character (Art. 1205, NCC).
Example:
X obliged himself to give his only cell phone, or his only laptop, or his only TV to Y.
If only the cell phone was lost through the negligence of X then Y may opt for the
delivery to him of either the laptop or the TV with no damages because there is no
ground for asking damages or negligence did not attach to the obligation.
However, Y may opt to choose the value of the cell phone plus damages because
negligence attached to the said obligation.
The foregoing rules are applicable to personal obligations, obligations do or not to
do, in case one, some, or all of the prestations should become impossible.
195. I. In alternative obligations, the impossibility of all the objects due without
the fault of the debtor extinguishes the obligation.
II. In facultative obligations, the culpable loss of the object which the debtor may
deliver in substitution before the substitution is effected does not give rise to any
liability on the part of such debtor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
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C. The creditor is entitled to indemnity for damages when through the fault of the
debtor:
A. All the things which are alternatively the object of the obligation have been
lost; or
B. The compliance of the obligation has become impossible.
The indemnity shall be fixed taking as a basis of the value of the last thing which
disappeared, or that of the service which last became impossible.
Damages other than the value of the last thing or service may also be awarded.
196. I. In alternative obligations, the nullity of one of the objects does not
invalidate the obligation which is still in force with respect to those which have no
defect.
II. In facultative obligations, the nullity of the principal object invalidates the
obligation, even if the substitute object is valid.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Effect of Loss or deterioration of substitute in facultative obligation
1. Before substitution
The loss or deterioration of the thing intended as a substitute, though the
negligence of the obligor does not render him liable.
Example:
X promised to give his only laptop to Y. Moreover, he obliged also to deliver his cell
phone as a substitute in case he cannot deliver the laptop. Subsequently, the cell
phone was lost through the negligence of X. What is the legal effect of this loss? X
is still liable to deliver the laptop. This is because what is due is still the laptop, the
principal obligation as there was no substitution made.
What if the cause of the loss of the cell phone is through fortuitous event? Is the
obligation extinguish? X is still liable to deliver the laptop for the same reason that
what is due is the laptop.
What if what was lost is the laptop? If the cause of loss is through fortuitous event,
then the obligation is extinguished but if the cause of loss is through the
negligence of X, then he is liable for damages. Take note there was no substitution
yet. When is there substitution? There is substitution if the debtor communicated
to the creditor that he will deliver the cell phone (substitute thing) on maturity
date.
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2. After substitution
The obligor is liable for damages for the loss or deterioration of the substitute on
account of his delay, negligence or fraud because once the substitution is made
the obligation is converted into a simple obligation with the substitute thing as the
object of the obligation.
Example:
X promised to give his only laptop to Y. Moreover, he obliged also to deliver his cell
phone as a substitute in case he cannot deliver the laptop. A few days before the
due date, X informed Y that he will not deliver the laptop and that he will deliver
the cell phone on due date. Take note that after such communication, the
obligation became simple obligation and no longer facultative obligation. Thus, if
the cell phone was lost through the negligence of X then he will be liable for
damages. Conversely, if the cell phone was lost through fortuitous event, the
obligation is extinguished.
197. The credit or debt is divided into as many shares as there are creditors or
debtors, the credits or debts being considered distinct from one another.
A. Alternative obligation
B. Facultative obligation
C. Joint obligation
D. Solidary obligation
C. Joint obligation is when the credit or debt is divided into as many shares as
there are creditors or debtors, the credits or debts being considered distinct from
one another. Consequently, it is an obligation where the whole debt is to be paid
or fulfilled proportionately by the different debtors and/or to be demanded
proportionately by the different creditors (Art. 1208, NCC).
198. It is an obligation where the whole debt is to be paid or fulfilled
proportionately by the different debtors and/or to be demanded proportionately
by the different creditors.
A. Joint obligation
B. Solidary obligation
C. Alternative obligation
D. Facultative obligation
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A
199. I. In case of concurrence of two or more creditors or of two or more debtors
in one and the same obligation, and in the absence of express and indubitable
terms characterizing the obligation as solidary, the presumption is that the
obligation is only joint.
II. It is incumbent upon the party alleging that the obligation is indeed joint in
character to prove such fact with a preponderance of evidence.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. The Civil Code provisions establish that in case of concurrence of two or more
creditors or of two or more debtors in one and the same obligation, and in the
absence of express and indubitable terms characterizing the obligations as solidary,
the presumption is that the obligation is only joint. It does become incumbent
upon the party alleging that the obligation is indeed solidary in character to prove
such fact with a preponderance of evidence (Salvador P. Escano and Mario Silos vs.
Rafael Ortigas, Jr., G.R. No. 151953, June 29, 2007).
A joint obligation, which is defined as an obligation where there is concurrence of
several creditors, or of several debtors, or of several creditors and debtors, by virtue
of which each of the creditors has a right to demand, and each of the debtors is
bound to render, compliance with his proportionate part of the prestation which
constitutes the object of the obligation. Article 1208 of the Civil Code mandates
the equal sharing of creditors in the payment of debt in the absence of any law or
stipulation to the contrary (Philippine Commercial International Bank vs. CA &
Atlas Consolidated Mining & Development Corporation, G.R. No. 121989, January
31, 2006).
200. The following are other terms interchangeably used with joint obligations,
except:
A. Conjoint
B. Mancomunada
C. Mancomunada solidaria
D. Mancomunada simple
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C. Other terms interchangeably used with joint obligations
1. “Joint” or “jointly”; or
2. “Conjoint” means mancum or mancomunada; or
3. “Mancomunada simple”
4. “Pro rate obligation”; or (Lafarge Cement Philippines, Inc., et.al., vs. Continental
Cement
5. “Proportionate.”
201. The following are the effects of joint obligation, except:
A. The defect of each obligation arising from the personal defect of a particular
joint debtor or joint creditor does not affect the obligation or right of the other
joint parties.
B. Insolvency of one joint debtor makes the other joint debtor or debtors
responsible for his proportionate share.
C. The demand by the creditor or creditors on one joint debtor puts him in delay
in case of non-payment while the other joint debtor or debtors are not liable.
D. The defenses of one joint debtor are not necessarily available to the other joint
debtor or debtors.
B. Effects of joint obligation
1. The defect of each obligation arising from the personal defect of a particular
joint debtor or joint creditor does not affect the obligation or right of the other
joint parties.
2. Insolvency of one joint debtor does not make the other joint debtor or debtors
responsible for his proportionate share.
3. The demand by the creditor or creditors on the joint debtor puts him in delay
in case of non-payment while the other joint debtor or debtors are not liable.
4. The defenses of one joint debtor are not necessarily available to the other joint
debtor or debtors.
For example, B and C owes X and Y the amount of P100,000. In the present case,
since there is no agreement, it is disputably presumed that the obligation of B and
C are joint and that the credit of X and Y are also joint. It means that B’s share in
the obligation P50,000 so that he will only pay X P25,000 and another P25,000 to Y.
This is the same with C. As to X, his credit is P50,000 so that he can only demand
from B the amount of P25,000 and from C the other P25,000. This is the same with
Y.
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202. An obligation where each one of the debtors is bound to render and/or each
of the creditors has a right to demand entire compliance with the prestation.
A. Alternative obligation
B. Facultative obligation
C. Joint obligation
D. Solidary obligation
D. Other terms interchangeably used with solidary obligations
1. “Solidary obligations” may be used interchangeably with “joint and several” or
“several”.” Thus, use of the term “joint and solidary” is confusing and ambiguous; or
(Lafarge Cement Philippines, Inc., et.al., vs. Continental Cement Corporation, et.al.,
G.R. No. 155173, November 23, 2004)
2. “In solidum”; or
3. “Mancomunada solidaria”; or
4. “Juntos o separadamente”; or
5. “Individually and collectively.”
For example, B and C owes X and Y the amount of P100,000. Their agreement is
solidary. Thus, B and C can pay the entire amount of P100,000 subject to
reimbursement so that if it is B who paid the P100,000 to X, B can ask
reimbursement of P50,000 from C. On the other hand, if X received the amount of
P100,0000, it is his obligation to give the P50,000 to Y, his share of the obligation.
203. The following are other terms interchangeably used with joint obligations,
except:
A. Pro rata
B. In solidum
C. Mancomunada
D. Proportionale
B
204. A, B, C and D, solidary debtors, are obliged to give V, W, X, Y and Z, solidary
creditors, P39,000.
A. V may collect from D P39,000.
B. V may collect from D P9,750.
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C. V may collect from D P7,800.
D. V may collect from D P29,000.
A
205. The following are other terms interchangeably used with joint obligations,
except:
A. Juntos o separadamente
B. Jointly
C. Mancum
D. Proportionate
A
206. The following are other terms interchangeably used with solidary obligations,
except:
A. Joint and several
B. Several
C. Proportionate
D. Juntos o separadamente
C
207. The following are other terms interchangeably used with solidary obligations,
except:
A. Joint and several
B. Several
C. Juntos o separadamente
D. Mancum
D
208. The following are other terms interchangeably used with solidary obligations,
except:
A. Joint and several
B. Conjoint
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C. Individually and collectively
D. Juntos o separadamente
B
209. This is a promissory note:
“I promise to pay A, B and C the sum of P18,000” (sgd) D, E, and F.
A. F is obliged to pay P6,000.
B. F is obliged to pay P2,000.
C. F is obliged to pay P12,000
D. F is obliged to pay P18,000
A. D, E, and F are solidarily liable the payees are joint creditors.
210. I. In a “joint” obligation, each obligor answers only for a part of the whole
liability.
II. In a “solidary” or “joint and several” obligation, the relationship between the
active and the passive subjects is so close that each of them must comply with or
demand the fulfillment of the whole obligation.
a. Only I is true
b. Only II is true
C. Both are true
d. Both are false
C. In a “joint” obligation, each obligor answers only for a part of the whole liability;
in a “solidary” or “joint and several” obligation, the relationship between the active
and the passive subjects is so close that each of them must comply with or
demand the fulfillment of the whole obligation (Lafarge Cement Philippines, Inc., et
al., vs. Continental Cement Corporation, et.al., G.R. No. 155173, November 23,
2004).
211. I. The well-entrenched rule is that solidary obligations cannot be inferred
lightly. They must be positively and clearly expressed.
II. A liability is solidary “only when the obligation expressly so states, when the law
so provides or when the nature of the obligation so requires.”
a. Only I is true
b. Only II is true
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c. Both are true
d. Both are false
C. A solidary obligation is one in which each of the debtors is liable for the entire
obligation, and each of the creditors is entitled to demand the satisfaction of the
whole obligation from any or all of the debtors. On the other hand, a joint
obligation is one in which each debtor is liable only for a proportionate part of the
debt, and the creditor is entitled to demand only a proportionate part of the credit
from each debtor. The well-entrenched rule is that solidary obligations cannot be
inferred lightly. They must be positively and clearly expressed. A liability is solidary
“only when the obligation expressly so states, when the law so provides or when
the nature of the obligation so requires (PH Credit Corporation vs. CA & Carlos M.
Farrales, G.R. No. 109648, November 22, 2001).”
212. A, B, C, and D are joint creditors of X and Y, solidary debtors, in the amount
that solidary obligations cannot be inferred lightly. They must be positively and
clearly expressed. A liability is solidary “only when the obligation expressly, states
when the law so provides or when the nature of the obligation
of P40,000. How much can A, B, and C collect from X?
a. A, B and C could collect P20,000 from X.
b. A, B and C could collect P30,000 from X.
c. A, B and C could collect all the P40,000 from X.
d. A, B and C could collect P20,000 from X and P10,000 from Y.
B. The creditors are joint parties while the debtors are solidarily liable, Hence, each
one of the debtors can pay the entire obligation; however, each of the creditors
can only demand their respective obligation. Observe that the problem is asking
for the share of three (3) creditors.
213. I. In case of breach of a joint indivisible obligation, it is converted into an
indemnity for damages.
II. The obligation is deemed to be divisible when it is to give definite things and
those which are not susceptible of partial performance.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
A. The obligation is deemed to be indivisible when it is to give definite things and
those which are not susceptible of partial performance (Art. 1225, NCC).
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For example, A and B promised to deliver a specific car to X and Y. Take note that
their agreement is silent as to whether it is joint or solidary; hence, it is presumed
to be joint. It is worthy to note also that the object is a car meaning it is an
indivisible thing that is why all the creditors should collectively make a demand and
that the debtor should collectively perform their respective obligations. Otherwise,
there is no complete payment or performance.
Assuming that both X and Y made a demand on maturity date against A and B
and that A is willing to deliver the particular car but B is not willing to deliver. By
way of analysis, A owes 50% of the obligation and the other 50% is owed by B.
Hence, even if A is willing to deliver the specific car, the 50% of the car cannot be
determined because it is indivisible. Consequently, the obligation of A and B will be
converted into an indemnity for damages. If the car has a market value of
P1,000,000 then A will pay P500,000 with no additional damages because he is
willing to deliver. However, B will be paying P500,000 plus damages because he is
not willing to deliver that may result to delay, a ground for asking damages.
Assuming that both A and B are willing to deliver; however, B turned insolvent,
what would be the legal effect? The answer is that A will just have to wait for B to
become solvent and thereafter to collect his share in the obligation.
In case of breach of a joint indivisible obligation, Art. 1224, NCC, provides:
Art. 1224. A joint indivisible obligation gives rise to indemnity for damages from
the time anyone of the debtors does not comply with his undertaking. The debtors
who may have been ready to fulfill their promises shall not contribute to the
indemnity beyond the corresponding portion of the price of the thing or of the
value of the service in which the obligation consists.
Hence, in case of breach of a joint indivisible obligation, it is converted into an
indemnity for damages. The joint debtors who failed or refused to comply with his
obligation shall bear the burden of paying all of the damages to the creditor or
joint creditors.
For those joint debtors who may have been ready to comply with their obligation
shall not contribute to the indemnity beyond the corresponding portion of the
price of the thing or the value of the service in which the obligation consists.
214. I. Indivisibility refers to the juridical tie or legal tie or vinculum juris that is
not capable of partial performance.
II. Solidarity refers to the prestation.
a. Only I is true
b. Only II is true
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c. Both are true
d. Both are false
D. In case, there is a concurrence of two or more creditors or more debtors in one
and the same obligation, Article 1207 of the Civil Code states that among them,
“there is a solidary liability only when the obligation expressly so states, or when
the law or the nature of the obligation requires solidarity.” Article 1210 supplies
further caution against the broad interpretation of solidarity by providing: “The
indivisibility of an obligation does not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.”
These Civil Code provisions establish that in case of concurrence of two or more
creditors or of two or more debtors in one and the same obligation, and in the
absence of express and indubitable terms characterizing the obligation as solidary,
the presumption is that the obligation is only joint. It thus becomes incumbent
upon the party alleging that the obligation is indeed solidary in character to prove
such fact with a preponderance of evidence (Salvador P. Escaño and Mario M. Silos
vs. Rafael Ortigas, Jr., G.R. No. 151953, June 29, 2007).
215. I. Indivisibility exists even if there is only one debtor and one creditor.
II. Solidarity exists only if there are two or more debtors or two or more creditors.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
C. INDIVISIBILITY vs. SOLIDARITY
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Indivisibility
Solidarity
Indivisibility refers to the prestation
that is not capable of partial
performance.
Solidarity refers to the juridical tie or
legal tie or vinculum juris.
Indivisibility exists even if there is
only one debtor and one creditor.
Solidarity exists only if there are two or
more debtors or two or more creditors.
In indivisibility, each debtor is not
bound to fulfill the obligation more
than his share and each creditor
cannot demand fulfillment of the
obligation more than his share.
In solidarity, each debtor is bound to
the fulfillment or compliance of the
entire obligation and each creditor
may demand the fulfillment or
compliance of the entire obligation.
In case of breach of the obligation,
the indivisible obligation is
converted into indemnity for
damages; thus, the indivisible
character of the obligation is
terminated.
In case of breach of the obligation, the
solidary character of the obligation
remains.
In indivisibility, only the debtors
guilty of breach of the obligation is
liable for damages.
In solitary, all the debtors are liable for
damages even if only one of them is
guilty of breach of the obligation.
In indivisibility, if one debtor is
insolvent, the other debtors are not
liable for his share.
In solidarity, if one debtor is insolvent,
all the other debtors who are solvent
are proportionately liable for the share
of the former.
216. I. In case of breach of the obligation, the indivisible obligation is converted
into indemnity for damages; thus, the indivisible character of the obligation is
terminated.
II. In case of breach of the obligation, the solidary character of the obligation
becomes joint.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
A
217. It may be defined as a tie or vinculum among several creditors of one and the
same obligation.
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a. Passive solidarity
b. Active solidarity
c. Mixed solidarity
d. None of the above
B. For example, X owes A, B, and C the amount of P300,000. Their agreement is
that the creditors are solidary. In this case, either of A, B, may collect the entire
credit of P300,000 subject to the giving of the share of the other co-solidary
creditors. For instance, if B demanded from I the debt and the latter paid P300,000,
X is obligated to give the share of A and C in the amount of P100,000 each.
218. It may be defined as a tie or vinculum among several debtors of one and the
same obligation.
a. Passive solidarity
b. Active solidarity
c. Mixed solidarity
d. None of the above
A. For example, X and Y, solidary debtors, are obligated to B in the amount of
P100,000. Since this is passive solidarity, if B demanded from Y, Y will pay the entire
amount of P100,000 and thereafter he has a right to ask for reimbursement of
P50,000 from X, the latter ’s share.
219. This is solidarity among the debtors and creditors.
a. Passive solidarity
b. Active solidarity
c. Mixed solidarity
d. None of the above
C. X and Y are indebted to B and C the amount of P500,000. They stipulated that
the nature of the obligation will be solidary on the part of both debtors and
creditors. Thus, either of X or Y may pay the entire obligation subject to
reimbursement of the other ’s share. On the other hand, either of B or C may
demand the P500,000 subject to the giving of the share of the other party.
220. I. Each one of the solidary creditors may do whatever may be useful or
beneficial to the others but not anything which may be prejudicial to the latter.
II. As a general rule, a solidary creditor can assign his rights based on the principle
of transmissibility of rights.
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a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
A. The law provides that each one of the solidary creditors may do whatever may
be useful or beneficial to the others but not anything which may be prejudicial to
the latter.
For example, B and C, solidary debtors, are indebted to X and Y, solidary creditors,
in the amount of P1,000,000 which will mature on December 31, 2018. On said
date, either X or Y must make a demand. This demand is beneficial to the other cosolidary creditor; otherwise, the debt might be extinguished because of
prescription (a mode of extinguishing an obligation through the lapse of time).
Additionally, if the debtors paid the obligation because of the demand then the
said act of making a demand is beneficial again to the other co-solidary creditor.
Contrariwise, if X or Y will not make a demand, said negative act is prejudicial to
the other co-solidary creditor.
A solidary creditor cannot assign his rights without the consent of the others.
221. Is a mode of extinguishing an obligation by changing the object or principal
conditions, or by substituting the person of the debtor, or by subrogating a third
person in the rights of the creditor?
a. Novation
b. Compensation
c. Merger of rights
d. Remission
A. The law declares that novation, compensation, confusion or remission of the
debt, made by any of the solidary creditors with any of the solidary debtors, shall
extinguish the obligation.
The creditor who may have executed any of these acts, as well as he who collects
the debt, shall be liable to the others for the share in the obligation corresponding
to them.
For example, B and C solidarily owes X and Y the amount of P100,000. Band C
agreed with X only that instead of paying the amount of P100,000, B and C will just
deliver a specific car. Upon delivery by B and C of the specific car to X, their
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obligation is extinguished. Nonetheless, X is liable for the share of Y
in the amount of P50,000.
222. It is a mode of extinguishing an obligation that take place when two persons,
in their own right, are creditors and debtors of each other.
a. Merger of rights
b. Novation
C. Remission
d. Compensation
D. The law declares that novation, compensation, confusion or remission of the
debt, made by any of the solidary creditors with any of the solidary debtors, shall
extinguish the obligation.
The creditor who may have executed any of these acts, as well as he who collects
the debt, shall be liable to the others for the share in the obligation corresponding
to them.
For example, B and C solidarily owes X and Y the amount of P100,000. Prior to this
agreement X was already indebted to B for P100,000 because of a separate
contract. If X and B agreed to a compensation or set-off, then the obligation is
extinguished; however, X is liable to Y in the amount of P50,000 as this is his share
in the obligation. Also, C must pay B’s share in the amount of P50,000.
223. The obligation is extinguished from the time the characters of creditor and
debtor are merged in the same person.
a. Confusion
b. Novation
c. Remission
d. Compensation
A. The law declares that novation, compensation, confusion or of the debt, made
by any of the solidary creditors with any of the debtors, shall extinguish the
obligation.
The creditor who may have executed any of these acts, as well as he who collects
the debt, shall be liable to the others for the share in the obligation corresponding
to them.
For example, B and C solidary debtors owe solidary creditors X and Y the amount
of P100,000 as evidenced by a negotiable promissory note. X and Y negotiated this
promissory note to H then the latter negotiated it to I then to J then to K then to L
then back to B only. In this case, obligation is extinguished.
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Nevertheless, C is liable to B for his share in the amount of P50,000. This is because
when B and C issued the promissory note to X and Y, they are both debtors in the
amount of P100,000 (B’s share of P50,000 plus C’s share of P50,000) and thereafter
when L negotiated the same promissory note to B only (L is the debtor for
P100,000 and B only is the creditor for P100,000), the latter is the only creditor in
the amount of P100,000 which was extinguished due to merger of rights.
Therefore, it is just but right that C should pay B his share P50,000.
224. It is an act of liberality by virtue of which the obligee, without receiving any
price or equivalent, renounces the enforcement of the obligation.
a. confusion
b. Novation
c. Condonation
d. Compensation
C. The law declares that novation, compensation, confusion, or remission of the
debt, made by any of the solidary creditors with any of the solidary debtors, shall
extinguish the obligation.
The creditor who may have executed any of these acts, as well as he who collects
the debt, shall be liable to the others for the share in the obligation corresponding
to them.
For example, B and C solidary debtors owe X and Y the amount of P100,000. Before
the date matures, X condoned or remitted the obligation in favor of B. In this case,
the obligation of B and C are extinguished because of the condonation or
remission. If the remission is without the knowledge or consent of Y, X is liable to Y
in the amount of P50,000. Moreover, C is not liable to B for his share because of
the principle “all for one, one for all” thus; “the remission of one, is the remission of
all.”
The law provides that the remission of the whole obligation, obtained by one of
the solidary debtors, does not entitle him to reimburse from his co-debtors.
For example, X and Y solidarily obliged themselves to pay B the amount of
P300,000 on December 31, 2018. Because of their present financial condition, X
pleaded with B for the latter to extinguish the obligation. Consequently, B
condoned the obligation. Now, X is demanding from Y the amount of P150,000
because he alleged that it was through his efforts that B condoned the obligation.
Is X correct? No, because the remission of the obligation obtained by him does not
entitle him to reimbursement. Take note that the principle of solidary obligation is
“all for one and one for all”; hence, the “remission or condonation of one is the
remission or condonation of all.”
The remission made by the creditor of the share which affects one of the solidary
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debtors does not release the latter from his responsibility towards the co-debtors,
in case the debt has been totally paid by anyone of them before the remission was
effected.
For example, X and Y solidarily obliged themselves to pay B and C the amount of
P150,000. Later, B remitted or condoned only the share of X (P75,000). Unknown to
X, the whole obligation was already paid by Y to C before the remission took place.
In this case, X is still liable to Y because the obligation was extinguished first by
payment before the condonation set in. Take note that both payment and
condonation are modes of extinguishing an obligation, its only that payment in
this case precedes the condonation.
25. I. Solidarity makes a solidary obligor an indispensable party in a suit filed by
the creditor.
II. When the law expressly provides for solidarity of the obligation, each obligor
may be compelled to pay the entire obligation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of
the solidary debtors.
Thus, the Supreme Court has ruled in Operators Incorporated vs. American Biscuit
Co. Inc. stated thus:
“x x x solidarity does not make a solidary obligor an indispensable party in a suit
filed by the creditor. Article 1216 of the Civil Code says that the creditor may
proceed against anyone of the solidary debtors or some or all of them
simultaneously (Constante Amor de Castro and Corazon vs. CA and Francisco
Artigo, G.R. No. 115838, July 18, 2002).”
When the law expressly provides for solidarity of the obligation, as in the liability of
co-principals in a contract of agency, each obligor may be compelled to pay the
entire obligation. The agent may recover the whole compensation from any one of
the co-principals (Constante Amor de Castro and Corazon Amor de Castro vs. CA
and Francisco Artigo, G.R. No. 115838, July 18, 2002).
226. I. Suretyship is merely an accessory or a collateral to a principal obligation.
II. A surety is considered in law to be on the same footing as the principal debtor
in relation to whatever is adjudged against the latter.
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A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Suretyship is merely an accessory or a collateral to a principal obligation.
Although a surety contract is secondary to the principal obligation, the liability of
the surety is direct, primary, and absolute; or equivalent to that of a regular party
to the undertaking. A surety becomes liable to the debt and duty of the principal
obligor even without possessing a direct or personal interest in the obligations
constituted by the latter (International Finance Corporation vs. Imperial Textile
Mills, Inc., G.R. No. 160324, November 15, 2005).
A surety is considered in law to be on the same footing as the principal debtor in
relation to whatever is adjusted against the latter (International Finance
Corporation vs. Imperial Textile Mills, Inc., G.R. No. 160324, November 15, 2005).
227. I. A solidary debtor will not be able to recover from the co-debtors the full
amount already paid to the creditor, because the right to recovery extends only to
the proportional share of the other co-debtors, and not as to the particular
proportional share of the solidary debtor who already paid.
II. A surety who pays the creditor has the right to recover the full amount paid, and
not just any proportional share, from the principal debtor or debtors.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. In the case of joint and several debtors, Article 1217 makes plain that the
solidary debtor who effected the payment to the creditor may claim from his codebtors only the share which corresponds to each, with the interest for the
payment already made. Such solidary debtor will not be able to recover from the
co-debtors the full amount already paid to the creditor, because the right to
recovery extends only to the proportional share of the other co-debtors, and not
as to the particular proportional share of the solidary debtor who already paid. In
contrast, even as the surety is solidarily bound with the principal debtor to the
creditor, the surety who does pay the creditor has the right to recover the full
amount paid, and not just any proportional share, from the principal debtor or
debtors. Such right to full reimbursement falls within the other rights, actions, and
benefits which pertain to the surety by reason of the subsidiary obligation assumed
by the surety.
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228. The following actions must be commenced within six years:
A. Upon the quasi-contract
B. Upon a quasi-delict
C. Upon an obligation created by law
D. Upon a written contract
A. By prescription, one acquires ownership and other real rights through the lapse
of time in the manner and under the conditions laid down by law. In the same way,
rights and conditions are lost by prescription (Art. 1106, NCC). Also, actions
prescribe by the mere lapse of time fixed by law (Art. 1139, NCC).
The following articles are the pertinent rules on prescription of actions, to wit:
1. Actions to recover movables shall prescribe eight years from the time the
possession thereof is lost, unless the possessor has acquired the ownership by
prescription for a less period, according to Articles 1132, and without prejudice to
the provisions of Article 559, 1505, and 1133 (Art. 1140, NCC).
2. Real actions over immovables prescribe after thirty years.
This provision is without prejudice to what is established for the acquisition of
ownership and other real rights by prescription (Art. 1141, NCC).
3. A mortgage action prescribes after ten years (Art. 1142, NCC).
4. The following rights, among others specified elsewhere in the Civil Code, are
not extinguished by prescription:
A. To demand a right of way (Art. 649, NCC); and
B. To bring an action to abate a public or private nuisance (Art. 1143, NCC).
5.The following actions must be brought within ten years from the time the right
of action accrues:
A. Upon a written contract;
B. Upon an obligation created by law; and
C. Upon a judgment (Art. 1144, NCC).
6. The following actions must be commenced within six years:
A. Upon an oral contract; and
B. Upon a quasi-contract (Art. 1145, NCC).
7. The following actions must be instituted within four years:
A. Upon an injury to the rights of the plaintiff; and
B. Upon a quasi-delict (Art. 1146, NCC);
8. The following actions must be filed within one year:
A. For forcible entry and detainer; and
B. For defamation (Art. 1147, NCC);
9. The limitations of action mentioned in Articles 1140 to 1142, and 1144 to 1147
are without prejudice to those specified in other parts of the Civil Code, in the
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Code of Commerce, and in special laws (Art. 1148, NCC).
10. All other actions whose periods are not fixed in this Code or other laws must
be brought within five years from the time the right of action accrues (Art. 1149,
NCC).
X and Y solidarily obliged themselves to pay B the amount of P150,000.
Subsequently, the obligation was extinguished through prescription as B did not
make a demand. However, X still paid the obligation and thereafter he is
demanding from Y his share of P75,000. In this case, Y is not obliged to reimburse
X because the obligation was already extinguished through the lapse of time. Take
note of the principle that a solidary party may do anything which is beneficial but
not prejudicial. In here, X made a prejudicial act because he still paid despite the
fact that the obligation was extinguished.
229. The following actions must be brought within ten years from the time the
right of action accrues:
A. Upon a quasi-contract
B. Upon a quasi-delict
C. Upon an obligation created by law
D. Upon an oral contract
C
230. The following actions must be instituted within four years:
A. Upon a quasi-contract
B. Upon a quasi-delict
C. Upon an obligation created by law
D. Upon an oral contract
B
231. Are those which have as their object a prestation which is susceptible of
partial performance without the essence of the obligation being changed?
A. Joint obligation
B. Solidary obligation
C. Divisible obligation
D. Indivisible obligation
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C. A thing is divisible when, if separated into parts, its essence is not changed or
its value is not decreased disproportionately, because each of the parts into which
it is divided are homogenous and analogous to each other as well as to the thing
itself (4 Sanchez Roman 93-94).
An example is the obligation to deliver 10 sacks of rice.
232. Are those which have as their object a prestation which is not susceptible of
partial performance, because otherwise the essence of the obligation will be
changed?
A. Joint obligation
B. Indivisible obligation
C. Solidary obligation
D. Divisible obligation
B. A thing is indivisible when, if separated into parts, its essence is changed or its
value is decreased disproportionately (4 Sanchez Roman 93-94).
An example is the obligation to deliver a specific car.
233. Is an obligation with an accessory undertaking by virtue of which the obligor
assumes a greater liability in case of breach of the obligation?
A. Divisible obligation
B. Quantitative obligation
C. Qualitative obligation
D. Obligation with a penal clause
D. The purposes of penal clause are the following:
1. It is attached to an obligation in order to insure performance (Filinvest Land,
Inc., vs. CA, et.al., G.R. No. 138980, September 20, 2005).
2. The penalty shall substitute the indemnity for damages and payment of
interests in case of noncompliance (Art. 1226, NCC).
The functions of penal clause are the following:
1. To provide for liquidated damages.
2. To strengthen the coercive force of the obligation by the threat of greater
responsibility in the event of breach (Filinvest Land, Inc., vs. CA et.al., G.R. No.
138980, September 20, 2005).
234. It is a kind of division in a divisible obligation where the thing can be
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materially divided into parts and such parts are homogenous to each other, such as
when the parts are separated from each other as in the case of movables, or when
the limits of the parts are fixed by metes and bound as in the case of immovables.
A. Quantitative division
B. Qualitative division
C. Ideal division
D. None of the above
A. The division is quantitative when the thing can be materially divided into parts
and such parts are homogenous to each other, such as when the parts are
separated from each other as in the case of movables, or when the limits of the
parts are fixed by metes and bounds as in the case of immovable (4 Sanchez
Roman 93-94).
An example is the obligation of X to deliver 10 obligations and Contracts book to B
and C.
235. It is a kind of division in a divisible obligation where the thing can be
materially divided, but the parts are not homogenous to each other, such as in the
partition of an inheritance.
A. Quantitative division
B. Qualitative division
C. Ideal division
D. None of the above
B. The division is qualitative when the thing can be materially divided, but the
parts are not homogenous to each other, such as in the partition of an inheritance
(4 Sanchez Roman 93-94).
An example is when X inherits a particular car while Y inherits a specific parcel of
land.
236. It is a kind of division in a divisible obligation where the thing can only be
separated into undivided parts, not material parts, as in the case of co-ownership.
A. Quantitative division
B. Qualitative division
C. Ideal division
D. None of the above
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C. The division is ideal or intellectual when the thing can only be separated into
ideal or undivided parts, not material parts, as in the case of co-ownership (4
Sanchez Roman 93-94).
An example is when X, Y, and Z inherits from their deceased father one parcel of
land. They own 1/3 each of the said parcel of land.
237. I. In obligation with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interests in case of non- compliance.
II. It functions to strengthen the coercive force of the obligation and to provide,
in effect, for what could be the liquidated damages resulting from such a breach.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. The function of the obligation with a penal clause is to strengthen the coercive
force of the obligation and to provide, in effect, for what could be the liquidated
damages resulting from such a breach (Tolomeo Ligutan & Leonidas De La Lanna
vs. CA & Security Bank & Trust Company, G.R. No. 138677, February 12, 2002).
238. The obligation attached to a principal obligation in order to complete the
same or take its place in the case of breach.
A. Principal obligation
B. Accessory obligation
C. Obligation with a penal clause
D. Indivisible obligation
B. An accessory obligation is dependent for its existence on the existence of a
principal obligation. A principal obligation may exist without an accessory
obligation but an accessory cannot exist without a principal obligation. For
example, the contract of mortgage is an accessory obligation to enforce the
performance of the main obligation of indebtedness. An indebtedness can exist
without the mortgage but a mortgage cannot exist without the indebtedness,
which is the principal obligation. Another example is that a loan between the
parties is a principal obligation. A penal clause in a loan is an accessory obligation.
The accessory obligation of penal clause is to enforce the main obligation of
payment of the loan. If therefore the principal obligation does not exist, the
penalty being accessory cannot exist.
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239. I. A principal obligation may exist without an accessory obligation and an
accessory obligation can exist without a principal obligation.
II. An accessory obligation is dependent for its existence on the existence of a
principal obligation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. A penal clause is an accessory undertaking to assume greater liability in case of
breach and is attached to an obligation in order to secure its performance. The
penalty shall substitute the indemnity for damages and the payment of interests in
case of non-compliance. But if such stipulation is found contrary to law for being
usurious, it can be nullified by the courts without affecting the principal obligation
(Banco Filipino Savings and Mortgage vs. Juanita B. Ybanez, et.al., G.R. No. 148163,
December 6, 2004).
For example, X promised to deliver a particular TV to Y on December 31, 2018. As
an additional stipulation, they agreed that X will be liable to pay P5,000 penalty in
case of failure to deliver said obligation on maturity date. The principal obligation
here is the delivery of the TV and the accessory obligation is the penalty of P5,000
in case of default.
240. The penalty shall substitute the indemnity for damages and the payment of
interests in case of noncompliance. The following are the exceptions to the
aforesaid rule, except:
A. When there is a stipulation to the contrary.
B. When the obligor refuses to pay the penalty.
C. When the obligor is guilty of fraud in the fulfillment of the obligation.
D. When the obligor is in default.
D. In obligation with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance, except:
When there is a stipulation to the contrary.
When the obligor refuses to pay the penalty.
When the obligor is guilty of fraud in the fulfillment of the obligation.
241. I. In obligations with a penal clause, the penalty shall substitute the
indemnity for damages and the payment of interests in case of noncompliance;
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therefore, proof of actual damages suffered by the creditor is necessary in order
that the penalty may be demanded.
II. A stipulated penalty may be equitably reduced by the courts if it is iniquitous or
unconscionable or if the principal obligation has been partly or irregularly
complied with.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. In obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance (Art. 1226, NCC);
therefore, proof of actual damages suffered by the creditor is not necessary in
order that the penalty may be demanded.
A penalty clause, expressly recognized by law, is an accessory undertaking to
assume greater liability on the part of an obligor in case of breach of an obligation.
It functions to strengthen the coercive force of the obligation and to provide, in
effect, for what could be the liquidated damages resulting from such a breach. The
obligor would then be bound to pay the stipulated indemnity without the necessity
of proof on the existence and on the measure of damages caused by the breach.
Although a court may not at liberty to ignore the freedom of the parties to agree
on such terms and conditions as they see fit that contravene neither law nor
morals, good customs, public order, or public policy, a stipulated penalty,
nevertheless, may be equitably reduced by the courts if it is iniquitous or
unconscionable or if the principal obligation has been partly or irregularly complied
with (Tolomeo Ligutan & Leonidas De La Lanna vs. CA & Security Bank & Trust
Company, G.R. No. 138677, February 12, 2002).
As a general rule, courts are not at liberty to ignore the freedom of the parties to
agree on such terms and conditions as they see fit as long as they are not contrary
to law, morals, good customs, public order, or public policy. Nevertheless, courts
may equitably reduce a stipulated penalty in the contract in two instances: (1) if the
principal obligation has been partly or irregularly complied; and (2) even if there
has been no compliance if the penalty is iniquitous or unconscionable (Filinvest
Land, Inc., CA, et.al., G.R. No. 138,980, September 20, 2005).
242. In the following instances, the penalty may be reduced by the courts, except:
A. When the principal obligation has been partly complied with by the debtor.
B. When the principal obligation has been irregularly complied with by the debtor.
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C. If the penalty is iniquitous or unconscionable.
D. If the penalty has been remitted.
D. The question of whether a penalty is reasonable or iniquitous can be partly
subjective and partly objective. Its resolution would depend on such factors as, but
not necessarily confined to, the type, extent, and purpose of the penalty, the
nature of the obligation, the mode of breach and its consequences, the
supervening realities, the standing and relationship of the parties, and the like, the
application of which, by and large, is addressed to the sound discretion of the
court. In Rizal Commercial Banking Corp. vs. Court of Appeals, the Supreme Court
has tempered the penalty charges after taking into account the debtor ’s pitiful
situation and its offer to settle the entire obligation with the creditor bank. The
stipulated penalty might likewise be reduced when a partial or irregular
performance is made by the debtor. The stipulated penalty might even be deleted
such as when there has been substantial performance in good faith by the obligor,
when the penalty clause itself suffers from fatal infirmity, or when exceptional
circumstances so exist as to warrant it (Tolentino Ligutan and Leonidas De La Llana
vs. CA & Security Bank & Trust Company, G.R. No. 138677, February 12, 2002).
243. I. The nullity of the penal clause does not carry with it that of the principal
obligation.
II. The nullity of the principal obligation carries with it that of the penal clause.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. The law provides that the nullity of the penal clause does not carry with it that
of the principal obligation. Moreover, the nullity of the principal obligation carries
with it that of the penal clause.
X promised to pay P50,000 to Y on December 31, 2018. As an additional stipulation,
they agreed that X will be liable to deliver 1 kilogram of illegal drugs as penalty in
case of failure to deliver his obligation on maturity date. The obligation to pay
P50,000 is valid; however, the penalty is void meaning as if it did not exist from the
very beginning. Thus, only the penalty is disregarded.
What if X promised to deliver one kilogram of illegal drugs to Y on December 31,
2018. As an additional stipulation, they agreed that X will be liable to pay P50,000
as penalty in case of failure to deliver his obligation on maturity date. The entire
obligation is void. Accessory follows the principal.
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244. R was an approved cardholder of Y bank. R made some purchases through the
use of the said credit card and defaulted inn paying for said purchases. She
subsequently received a letter dated January 5, 2018 from Y bank, demanding
payment of the amount of P100,000.
Under the Terms and Conditions Governing the Issuance and Use of the card, the
charges or balance thereof remaining unpaid after the due date indicated on the
monthly Statement of Accounts shall bear interest at the rate of 3% per month and
an additional penalty fee equivalent to another 3% per month. Is the penalty
reasonable or iniquitous?
A. The stipulated penalty charge of 3% per month or 36% per annum, in addition
to regular interest, is indeed iniquitous and unconscionable.
B. The stipulated penalty charge of 3% per month or 36% per annum is not
iniquitous and unconscionable as the parties freely stipulated on such agreement.
C. The stipulated penalty charge of 3% per month or 36% per annum is iniquitous
and unconscionable hence it should be reduced to the legal interest of 2.5% per
month.
D. The stipulated penalty charge of 3% per month or 36% per annum is not
iniquitous and unconscionable; thus, the court need not reduce it.
A
245. P acquired two parcels of land in an auction sale from the Land Bank of the
Philippines. NOG, an agriculture cooperative, was the occupant of the disputed
parcels of land under a subsisting contract of lease with Land Bank. The monthly
rent is P30,000.
Upon the expiration of the lease contract, P demanded that NOG vacate the
leased premises and surrender its possession to P. NOG refused on the ground that
it was, at the time, contesting P’s acquisition of the parcels of land in question.
Subsequently, P files an action for ejectment. He asked, inter alia, for the
imposition of the contractually stipulated penalty of P5,000 per day of delay in
surrendering the possession of the property to him.
A. The penalty is reasonable because the parties agreed on it hence, it is presumed
that they can afford such penalty.
B. NOG was an agricultural cooperative, ordering it to pay a penalty of P5,000 per
day on top of the monthly rent of P30,000 would seriously deplete its income and
drive it to bankruptcy. Hence, the penalty should be reduced.
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C. The penalty is not reasonable because it is P150,000 per month (P5,000 x 30).
D. The penalty is not reasonable because P5,000 per day is burdensome.
B
246. X, Inc., awarded to Y Corp. the development of its residential subdivisions
consisting of 2 parcels of land. Liquidated damages were fixed by the parties to
serve as penalty in case Y Corp. fails to fulfill its obligation on time.
Notwithstanding three extensions granted by X Corp. to Y Corp., the latter failed to
finish the contracted works. It is 94.53% complete. X Corp. wrote Y Corp. advising
the latter of its intention to hold Y Corp. liable for liquidated damages (penalty)
which it had incurred. Y Corp. claims that its failure to finish the contracted work
was due to inclement weather.
A. The liquidated damages agreed upon by the parties should not be reduced
because the penalty is not iniquitous.
B. As it is settled that the project was already 94.53% complete and that X Corp.
did agree to extend the period for completion of the project, which extensions X
Corp. included in computing the amount of the penalty, the reduction thereof is
clearly warranted.
C. The liquidated damages should not be reduced at it is clear manifestation of the
parties’ meeting of the minds.
D. The liquidated damages should be reduced because there is no substantial
difference between a penalty and liquidated damages.
B
247. Are contracts, whereby the parties undertake reciprocal obligations to resolve
their differences thus avoiding litigation, or put an end to one already
commenced?
A. Mutual desistance
B. Compromise agreement
C. Waiver
D. Memorandum of Agreement
B. Compromise agreements are contracts, whereby the parties undertake
reciprocal obligations to resolve their differences thus avoiding litigation, or put an
end to one already commenced.
Reciprocal concessions are the very heart and life of every compromise agreement.
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By the nature of a compromise agreement, it brings the parties to agree to
something which neither of them may actually want, but for the peace it will bring
them without a protracted litigation. Essentially, the parties to it have to bend a
little or else break in the process. In Raneses v. Teves, it was stated “it is the trial
court’s duty to examine and study the compromise agreement should be
eschewed.” A watchful fidelity to this doctrinal yardstick has always been enjoined
to arrive at a peaceful settlement of a mired justiciable issue.
Once approved judicially, the Compromise Agreement cannot and must not be
disturbed except for vices of consent or forgery.
In Abinujar v. Court of Appeals, the Supreme Court even went further and declared
that the nonfulfillment of the terms and conditions of a Compromise Agreement
approved by the court justifies execution thereof and the issuance of the writ for
the said purpose is the court’s ministerial duty enforceable by Mandamus (Aurelio
P. Alonzo and Teresita A. Sison vs. Jaime and Perlita San Juan, G.R. No. 137549,
February 11, 2005).
248. It means not only the delivery of money but also the performance, in any
other manner, of an obligation.
A. Payment
B. Condonation
C. Merger of rights
D. Compensation
A. In Jimenez v. NLRC, the Supreme Court held that were one, sued for a debt,
admits that the debt was originally owed, and pleads payment in whole or in part,
it is incumbent upon him to prove such payment. Indeed, though the plaintiff may
admit that some payments have been made, this admission does not change the
burden of proof. The defendant still has the burden of establishing payment
beyond those admitted by the plaintiff.
249. I. The general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove nonpayment.
II. The rule so well-settled is that a receipt of payment is the evidence of the fact
of payment.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
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C. Apropos is the rule so well-settled that a receipt of payment is the best evidence
of the fact of payment. In Monfort v. Aguinaldo, the Supreme Court held that the
receipts of payment, although not exclusive, were deemed to be the best evidence.
250. I. The law provides that the delivery of mercantile documents including
checks “ shall produce the effect of payment only when they have been deposited
.”
II. A debt shall not be understood to have been paid unless the thing or service in
which the obligation consists has been completely delivered or rendered, as the
case may be.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. A receipt is a written and signed acknowledgment that money has or goods
have been delivered, while a voucher is a documentary record of a business
transaction. The references to alleged check payments in the vouchers presented
do not vest them with the character of receipts.
It should be noted that a voucher is not necessarily evidence of payment. It is
merely a way or method of recording or keeping track of payments made. It must
be supported by an actual payment of cash duly receipted for as is customary
among businessmen or the issuance of a check subsequently encashed. The law
provides that the delivery of mercantile documents including checks “shall produce
the effect of payment only when they have been cashed (Aurelio P. Alonzo and
Teresita A. Sison vs. Jaime and Perlita San Juan, G.R. No. 137549, February 11,
2005).”
251. A debt shall not be understood to have been paid unless the thing or service
in which the obligation consists has been completely delivered or rendered as the
case may be.
A. Principle of integrity
B. Principle of honesty
C. Principle of loyalty
D. Principle of delivery
A. For example, X promised to pay Y P5,000. X also bound himself to repair the
bicycle of Z. If X paid his obligation of P5,000 to Y, then there is payment. However,
if there is advance payment of P3,000 leaving a balance of P2,000 then there is no
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payment. I likewise, if X repaired the bicycle of Z, then there is performance. But if
X partially required only the bicycle, then there is no performance. Payment or
performance must be completely delivered or rendered.
252. If the buyer failed to pay the down payment on time. But then, the seller
accepted, without any objections, the delayed payments of the buyer. The legal
effect is:
A. The obligation of that buyer is that he is liable for his delay.
B. The obligation of that buyer is not extinguished.
C. The obligation of that buyer is deemed fully complied with.
D. The obligation of that buyer is that he is liable for his negligence.
C. In one case, the buyer failed to pay the down payment on time. But then, the
seller accepted, without any objections, the delayed payments of the buyer; hence,
the Supreme Court held that as provided in Article 1235 of the New Civil Code, the
obligation of that buyer is deemed complied with:
Art. 1235. When the oblige accepts the performance, knowing its incompleteness
or irregularity, and without expressing any protest or objection, the obligation is
deemed fully complied with (Arra Realty Corporation and Spouses Carlos Arguelles
and Remedios De la Roma Arguelles vs. Guarantee Development Corporation and
Insurance Agency and Engr. Erlinda Enaloza, G.R. No. 142310, September 20, 2004).
This is the import of Article 1235 which was explained in this wise:
“The word accept, as used in Article 1235 of the Civil Code, means to take as
satisfactory or sufficient, or agree to an incomplete or irregular performance.
Hence, the mere receipt of a partial payment is not equivalent to the required
acceptance of performance as would extinguish the whole obligation.” (Arturo M.
Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines Vo.
4, p. 279., 1992 ed.)
There is thus a clear distinction between acceptance and mere receipt (Constante
Amor de Castro and Corazon Amor de Castro vs. CA and Francisco Artigo, G.R. No.
115838, July 18, 2002).
When creditors receive partial payment, they are not ipso facto deemed to have
abandoned their prior demand for full payment. Article 1235 of the Civil Code
provides:
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“When the obligee accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or objection, the obligation is
deemed fully complied with.”
Thus, to imply that creditors accept partial payment as complete performance of
their obligation their acceptance must be made under circumstances that indicate
their intention to consider the performance complete and to renounce their claim
arising from the defect (Selena Management Corporation and Spouses Edgardo
and Zenaida Angeles vs. United Coconut Planters Bank, G.R. No. 165662, May 3,
2006).
253. I. The creditor is not bound to accept payment or performance by a third
person who has no interest in the fulfillment of the obligation, unless there is a
stipulation to the contrary.
II. Whoever pays for another may demand from the debtor what he has paid,
except that if he paid without the knowledge or against the will of the debtor, he
can recover only in so far as the payment has been beneficial to the debtor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. (Art. 1236, NCC)
254. I. Payment by an incapacitated person is valid.
II. When a minor who has entered into a contract without the consent of the
guardian voluntarily pays a sum of money or delivers a fungible thing in
fulfillment of the obligation, there shall be no right to recover the same from the
oblige who has spent or consumed it in good faith.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B
255. Payment shall be made to the following, except:
A. Creditor
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B. Creditor ’s successor in interest
C. Any person authorized to receive it
D. Any person
D. To whom payment must be made?
1. Person in whose favor the obligation has been constituted (creditor or obligee);
2. His successor in interest; or
3.Any person authorized to receive it.
256. I. Payment made by the debtor to a wrong party does not extinguish the
obligation as to the creditor, if there is no fault or negligence which can be
imputed to the latter.
II. Even when the debtor acted in utmost good faith and by mistake as to the
person of his creditor, or through error induced by the fraud of a third person, the
payment to one who is not in fact his creditor, or authorized to receive such
payment, is voidable.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. Payment made by the debtor to a wrong party does not extinguish the
obligation as to the creditor, if there is no fault or negligence which can be
imputed to the latter. Even when the debtor acted in utmost good faith by mistake
as to the person of his creditor, or through error induced by the fraud of a third
person, the payment to one who is not in fact his creditor, or authorized to receive
such payment, is void, except as provided in Article 1241. Such payment does not
prejudice the creditor, and accrual of interest is not suspended by it (Cited in Allied
Banking Corporation vs. Lim Sio Wan, et.al., G.R. No. 133179, March 27, 2008).
257. I. Generally, payment to an incapacitated person is valid.
II. Payment to a person who is incapacitated to administer his property shall be
valid if he has kept the thing delivered, or insofar as the payment has been
beneficial to him.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
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B. (Art. 1241, NCC)
258. Payment made to a third person shall also be valid insofar as it has redounded
to the benefit of the creditor. Such benefit to the creditor need not be provided in
the following cases, except:
A. Subrogation
B. Ratification
C. Waiver
D. Estoppel
C. (Art. 1241, NCC)
259. I. It is a general rule that payment to an unauthorized person is not valid.
II. Payment made in good faith to any person in possession of the credit shall
release the debtor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. (Art. 1241, NCC)
260. It is when a property is alienated to the creditor in satisfaction of a debt in
money.
A. Dation in payment
B. Cession in payment
C. Barter
D. Option contract
A. In dacion en pago, as a special mode of payment, the debtor offers another
thing to the creditor who accepts it as equivalent of payment of an outstanding
debt. The undertaking really partakes in one sense of the nature of sale, that is, the
creditor is really buying the thing or property of the debtor, payment for which is to
be charged against the debtor ’s debt. As such the elements of a contract of sale,
namely, consent, object certain, and cause or consideration must be present. In its
modern concept, who actually takes place in dacion en pago is an objective
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novation of the obligation where the thing offered as an accepted equivalent of
the performance of an obligation is considered as the object of the contract of
sale, while the debt is considered the purchase price. In any case, common consent
is an essential prerequisite be it sale or novation, to have the effect of totally
extinguishing the debt or obligation.”
261. I. In dacion en pago, the debtor offers another thing to the creditor who
accepts it as equivalent of payment of an outstanding debt.
II. It is an objective novation of the obligation; hence, common consent of the
parties is required in order to extinguish the obligation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
262. The requisites for dacion en pago are, except:
A. There must be performance of the prestation in lieu of payment which may
consist in the delivery of a corporeal thing or a real right or a credit against the
third person.
B. There must be delivery, actual or constructive, as it is a real contract.
C. There must be some difference between the prestation due and that which is
given in substitution.
D. There must be an agreement between the creditor and debtor that the
obligation is immediately extinguished by reason of the performance of the a
prestation different from that due.
B. The requisites for dacion en pago are:
1. There must be a performance of the prestation in lieu of payment (animo
solvendi) which may consist in the delivery of a corporeal thing or a real right or a
credit against the third person;
2. There must be some difference between the prestation due and that which is
given in substitution (aliud pro alio); and
3. There must be an agreement between the creditor and debtor that the
obligation is immediately extinguished by reason of the performance of a
prestation different from that due (Agrifina Aquintey vs. Spouses Felicidad and Rico
Tibong, G.R. No. 166704, December 20, 2006).
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In a true dacion en pago, the assignment of the property extinguishes the
monetary debt (Spouses Wilfredo N. Ong and Edna Shiela Paguio-Ong vs. Roban
Lending Corporation, G.R. No. 172592, July 9, 2008).
Dacion en pago is the delivery and transmission of ownership of a thing by the
debtor to the creditor as an accepted equivalent of the performance of an existing
obligation. It is a special mode of payment where the debtor offers another thing
to the creditor who accepts it as equivalent to the payment of an outstanding
debt. For dacion en pago to exist, the following elements must concur:
A. Existence of a money obligation;
B. The alienation to the creditor of a property by the debtor with the consent of
the former; and
C. Satisfaction of the money obligation of the debtor (Rockville Excel International
Exim Corporation vs. Spouses Oligario Culla and Bernadita Miranda, G.R. No.
155716, October 2, 2009).
263. For dacion en pago to exist, the following elements must concur, except:
A. Existence of a money obligation.
B. The alienation to the creditor of a property by the debtor with the consent of
the former.
C. The agreement must be in a document, private or public.
D. Satisfaction of money obligation of the debtor.
C
264. I. Dacion en pago is a special mode of payment whereby the debtor offers
another thing to the creditor who accepts it as equivalent of payment of an
outstanding obligation.
II. The undertaking is really one of sale, that is, the creditor is really buying the
thing or property of the debtor, payment for which is to be charged against the
debtor ’s debt.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
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265. I. Dacion en pago is a special mode of payment whereby the debtor offers
another thing to the creditor who accepts it as equivalent of payment of an
outstanding obligation.
II. It is only when the thing offered as an equivalent is accepted by the creditor
that novation takes place, thereby, totally extinguishing the debt.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
266. I. Dacion en pago is the delivery and transmission of ownership of another
thing by the debtor to the creditor as an accepted equivalent of performance of
an obligation.
II. Dacion en pago partakes of the nature of a contract of sale, where the thing
offered by the debtor is the object of the contract, while the debt is the
consideration or purchase price.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
267. I. A debt shall not be understood to have been paid unless the thing or
service in which the obligation consists has been completely delivered or
rendered.
II. The extrajudicial expenses required by the payment shall be for the account of
the creditor.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. (Art. 1247)
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268. Partial payments are allowed in the following cases:
I. When there is an express stipulation to that effect.
II. When the debt is in part liquidated and in part unliquidated.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
269. When the amount is known or determinable by inspection of the terms and
conditions of the relevant promissory notes and related documentation.
A. Debt is due
B. Debt is liquidated
C. Debt is unliquidated
D. Debt is demandable
B. A debt is liquidated when the amount is known or is determinable by
inspection of the terms and conditions of the relevant promissory notes and
related documentation (Selegna Management and Spouses Edgardo and Zenaida
Angeles vs. United Coconut Planters Bank, G.R. No. 165662, May 3, 2006).
For example, X and Y are partners in XY Partnership. In their agreement, X
promised to pay Y P100,000 due on February 14, 2018 of the current year plus 10%
of X’s share in this year ’s net income from XY Partnership. On February 14, 2018, Y
can demand the P100,000 from X because it was already determined. The 10% of
the 2018 net income of XY Partnership is still unliquidated; thus, payment cannot
be effected yet.
270. The delivery of promissory notes payable to order, or bills of exchange or other
mercantile document shall not produce the effect of payment, except:
When they have been cashed.
When through the fault of the creditor they have been impaired.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
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C. The rules in payment of debts in money are the following:
1. The payment of debts in money shall be made in the currency stipulated, and if
it is not possible to deliver such currency, then in the currency which is legal tender
in the Philippines.
2. The delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents shall not produce the effect of payment, except:
A. When they have been cashed.
B. When through the fault of the creditor they have been impaired.
271. I. As a general rule, a check constitutes legal tender, but a creditor may
validly refuse it.
II. A check does not constitute legal tender but it does not prevent a creditor
from accepting a check as payment.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. True, jurisprudence holds that, in general a check does not constitute a legal
tender, and that a creditor may validly refuse it. It must be emphasized, however,
that this dictum does not prevent a creditor from accepting a check as payment. In
other words, the creditor has the option and discretion of refusing or accepting it
(Far East Bank & Trust Company vs. Diaz Realty, Inc. G.R. No. 138588, August 23,
2001).
272. The sharp increase of money or credit, or both, without a corresponding
increase in business transaction.
A. Deflation
B. Extraordinary deflation
C. Extraordinary inflation
D. Inflation
D. Inflation has been defined as the sharp increase of money or credit, or both,
without a corresponding increase in business transaction. There is inflation when
there is an increase in the volume of money and credit relative to available goods,
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resulting is substantial and continuing rise in the general price level (Equitable PCI
Bank, et.al. vs. Ng Sheung Ngor, et.al. G.R. No. 171545, December 19, 2007).
273. For extraordinary inflation (or deflation) to affect an obligation, the following
requisites must be proven, except:
A. That there was an official declaration of extraordinary inflation or deflation
from the Bangko Sentral ng Pilipinas (BSP).
B. That the obligation was contractual in nature.
C. That the parties expressly agreed to consider the effects of the extraordinary
inflation or deflation.
D. That the obligation was not contractual in nature.
D. For extraordinary inflation (or deflation) to affect an obligation, the following
requisites must be proven:
1. That there was an official declaration of extraordinary inflation or deflation from
the Bangko Sentral ng Pilipinas (BSP);
2. That the obligation was contractual in nature; and
3. That the parties expressly agreed to consider the effects of the extraordinary
inflation or deflation (Equitable PCI Bank, et.al. vs. Sheung Ngor, et.al., G.R. No.
171545, December 19, 2007).
274. I. In case of extraordinary inflation or deflation, the value of the currency at
the time of the establishment of the obligation shall be the basis for the payment
when no agreement to the contrary is stipulated, has strict application only to
contractual obligations.
II. A contractual agreement is not needed for the effects of extraordinary inflation
to be taken into account to alter the value of the currency.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. The Supreme Court held that Article 1250 of the Civil Code, providing that, in
case of extraordinary inflation or deflation, the value of the currency at the time of
the establishment of the obligation shall be the basis for the payment when no
agreement to the contrary is stipulated, has strict application only to contractual
obligations. In other words, a contractual agreement is needed for the effects of
extraordinary inflation to be taken into account to alter the value of the currency
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(Maria Paz V. Nepomuceno and Fermin A. Nepomuceno vs. City of Surigao and
Salvador Sering, G.R. No. 146091, July 28, 2008).
275. I. As a general rule, payment shall be made in the place of business of the
debtor.
II. There being no express stipulation and if the undertaking is to deliver a
determinate thing, the payment shall be made wherever the thing might be at
the moment the obligation was constituted.
A. Only I is true
B. Only II is true
C. Both are true
D. Both false
B. The rules on the place of payment of the obligation are the following:
1. Payment shall be made in the place stipulated by the parties.
2. If there is no stipulation and the obligation is to deliver a determinate thing,
payment shall be made wherever the thing might be at the moment the obligation
was constituted.
3. In any other case the place of payment shall be the domicile of the debtor. If
the debtor changes his domicile in bad faith or after he has incurred in delay, the
additional expenses shall be born by him.
276. These are the rules on the place of payment of the obligation, except:
A. Payment shall be made in the place stipulated by the parties.
B. If there is not stipulation and obligation is to deliver a determinate thing,
payment shall be made wherever the thing might be at the moment the
obligation was constituted.
C. In any other case the place of payment shall be the domicile of the debtor.
D. In any other case the place of payment shall be at the municipal trial court
where the obligation was perfected.
D
277. The designation of the debt to which the payment must be applied when the
debtor has several obligations of the same kind in favor of the same creditor.
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A. Application of payment
B. Dacion en pago
C. Cession in payment
D. Tender of payment and consignation
A. The special forms of payment are the following:
1. Application of payment (Art. 1252-Art. 1254, NCC)
2. Dation in payment (Art. 1254, NCC)
3. Payment by cession (Art. 1255, NCC)
4. Tender of payment and consignation (Art. 1256-1261, NCC
Application of payment may be defined as the designation of the debt to which
the payment must be applied when the debtor has several obligations of the same
kind in favor of the same creditor (8 Manresa, 5th Ed., Bk. 1, p.598).
The requisites of application of payment are the following:
1. There must be only one debtor and only one creditor.
2. There must be two or more debts of the same kind;
3. All of the debts must be due; and
4. The amount paid by the debtor must bot be sufficient to cover the total
amount of all the debts.
Example:
X owes Y the following obligation:
1. P5,000 with due date of January 15, 2018;
2. P10,000 with due date of February 14, 2018;
3. P20,000 with due date of April 1, 2018;
4. 2 sacks of bordagol rice due on April 15, 2018;
5. P50,000 due on July 1, 2018.
Today is May 1, 2018 and X has P5,000 which he intends to pay his obligation.
There is no application of payment on the 4th obligation because it will only be
extinguished later on by delivering a rice of the same kind, quality and quantity.
There is also no application of payment on the 5th obligation as it is not yet due.
What if X wants to apply the P5,000 to the obligation which matured on January
15, 2018 but Y wants that it will be deducted on the P20,000 obligation. This is the
kind of situation which will be resolved by the rules on application of payment.
Applying the rules on application of payment, X has a preferential right to apply.
Thus, the P5,000 will be deducted from the first obligation so as to totally
extinguished the said obligation.
If X does not want to make use of the application of payment, then the 3rd rule
maybe used and that is it will be applied to the debt which is most onerous to the
debtor. In this case, there is no debt that is most onerous to the debtor because
there is no factual circumstances to indicate that the obligation is burdensome like
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guaranty, surety, pledge, real estate mortgage, chattel mortgage, or interest.
Hence, if the 1st obligation is secured by a pledge involving a cell phone, the 2nd
obligation is secured by a guaranty and the 3rd obligation contains a stipulation as
to interest then it should be mentioned in the facts of the case on what is most
onerous obligation to the debtor. Like if the debtor wants to have cell phone, then
he might extinguish the first obligation so that he can acquire the cell phone which
is in the possession of Y being a real contract (perfected by delivery of the object to
the pledgee). If he wants to lessen his interest, then he might apply his apply his
payment to the third obligation.
If there is no debt which is most onerous to the debtor, then last rule may apply,
that is, the payment of P5,000 shall be applied to all of the debts proportionately.
278. The following are special forms of payment, except:
A. Application of payment
B. Dation in payment
C. Check encashment
D. Payment by cession
C
279. The following are requisites of application of payment, except:
A. There must be only one debtor and only one creditor.
B. There must be one or more debts of the same kind.
C. All of the debts must be due.
D. The amount paid by the debtor must not be sufficient to cover the total
amount of all the debts.
B
280. The rules on application of payment are the following, except:
A. The right to designate the debt to which the payment shall be applied belongs
primarily to the debtor.
B. If the debtor does not apply payment, the creditor may designate which debt is
paid by specifying in the receipt.
C. If the creditor did not apply or if applicable is void, the debt which is most
onerous to the creditor, among those due, shall be deemed to have been
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satisfied.
D. If the debts due are of the same nature and burden, the payment shall be
applied to all of them proportionately.
C. The rules on application of payments are the following:
1. The right to designate the debt to which the payment shall be applied belongs
primarily to the debtor. He may declare at the time of making the payment, to
which of them the same must be applied.
2. If the debtor does not apply payment, the creditor may designate which debt is
paid by specifying in the receipt.
3. If the creditor did not apply or if application is void, the debt which is most
onerous to the debtor, among those due, shall be deemed to have been satisfied.
4. If the debts due are of the same nature and burden, the payment shall be
applied to all of them proportionately.
281. I. The debtor ’s right to apply payment is mandatory.
II. The debtor ’s right to apply payment cannot be waived.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
D. The debtor ’s right to apply payment is not mandatory. This is clear from the use
of the word “may” rather than the word “shall” in the provision which reads: “He
who has various debts of the same kind in favor of one and the same creditor, may
declare at the time of making the payment, to which of the same must be applied.”
Indeed, the debtor ’s right to apply payment has been considered merely directory,
and not mandatory, following the Supreme Court’s earlier pronouncement that
“the ordinary acceptation of the terms ‘may’ and ‘shall’ may be resorted to as
guides in ascertaining the mandatory or directory character of statutory provisions.”
Article 1252 gives the right to the debtor to choose to which of several obligations
to apply a particular payment that he tenders to the creditor. But like likewise
granted in the same provision is the right of the creditor to apply such payment in
case the debtor fails to direct its application. This is obvious in Art. 1252, par. 2, viz.:
“If the debtor accepts from the creditor a receipt in which an application of
payment is made, the former cannot complain of the same.” It is the directory
nature of this right and the subsidiary right of the creditor to apply payments when
the debtor does not elect to do so that makes this right, like any other right,
waivable.
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A debtor, in making a voluntary payment, may at the time of payment direct an
application of it to whatever account he chooses, unless he has assigned or waived
that right. If the debtor does not do so, the right passes to the creditor, who may
make such application as he chooses. But if neither party has exercised its option,
the court will apply the payment according to the justice and equity of the case,
taking into consideration all its circumstances (Premier Development Bank vs.
Central Surety and Insurance Company, Inc., G.R. No. 176246, February 13, 2009).
282. I. In case the debtor does not make the application of payment nor the
creditor does not also state in which application of payment is made, then
application is made by operation of law.
II. If the debts due of the same nature and burden, meaning there is no debt
which is most onerous, the payment shall be applied to all of them
proportionately.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Example of Proportionate Application of Payment
X owes Y following three debts:
1. P25,000 with due date of January 15, 2018;
2. P50,000 with due date of February 14, 2018;
3. P25,000 with due date of April 1, 2018;
P100,000 Total
X paid P20,000 on May 1, 2018. Assuming the X and Y did not make an application
of payment and that the three obligations are of the same nature and burden.
How should the P20,000 be applied? The answer will be:
1. P25,000-P5,000 (P25,000/P100,000 x P20,000) = P20,000
2. P50,000-P10,000 (P50,000/P100,000 x P20,000) = P40,000
3. P25,000-P5,000 (P25,000/P100,000 x P20,000) = P20,000
Balance P80,000
283. A special form of payment whereby the debtor abandons all of his property for
whereby the debtor abandons all of his property for the benefit of his creditors in
order that from the proceeds thereof the latter may obtain payment of their
credits.
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A. Application of payment
B. Payment by cession
C. Dation in payment
D. Tender of payment and consignation
B. Cession or assignment may be defined as a special form of payment whereby
the debtor abandons all of his property for the benefit of his creditors in order that
from the proceeds thereof the latter may obtain payment of their credits (8
Manresa, 5th Ed., Bk. 1, p. 606).
284. The following are requisites of payment by cession, except:
A. There must be two or more creditors.
B. The debtor must be partially or relatively insolvent.
C. The solvency of the debtor is immaterial.
D. There must be an acceptance of the cession by the creditors.
C. The requisites of payment by cession are the following:
1. There must be two or more creditors;
Article 1255 contemplates the existence of two or more creditors and involves the
assignment of all the debtor ’s property (Development Bank of the Philippines vs.
CA and Lydia Cuba, G.R. No. 118342, January 5, 1998).
2. The debtor must be partially or relatively insolvent, and
3. There must be an acceptance of the cession by the creditors.
Example:
X owes P1,000,000 to Y1, P2,000,000 to Y2, P3,000,000 to Y3 and P4,000,000 to Y4
for a total debt of P10,000,000. The non-cash assets of X has a book value of
P7,000,000. The concept of payment by cession is that X will deliver his non-cash
assets to Y1, Y2, Y3 and Y4 who will sell it and deduct the proceeds from X’s
obligation. Hence, if they were able to sell X’s assets for a total amount of
P6,500,000, the remaining obligation of X to Y1, Y2, Y3 and Y4 will be P3,500,000.
285. I. In payment by cession the debtor is not necessarily in a state of financial
difficulty.
II. In dacion en pago the debtor is in a state of partial or relative insolvency.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
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D. DATION EN PAYMENT vs. PAYMENT BY CESSION
Dation in payment
Payment by cession
In dacion en pago, there may be only one
creditor.
In payment by cession, plurality
of creditors is essential.
In dacion en pago, the debtor is not
necessarily in a state of financial difficulty.
In payment by cession, the
debtor is in a state of partial or
relative insolvency.
In dacion en pago, what is delivered by
the debtor is merely a thing to be
considered as the equivalent of the
performance of the obligation.
In payment by cession, what is
ceded by the debtor is the
universality of all his property.
In dacion en pago, the payment
extinguishes the obligation to the extent
of the value of the thing delivered either
as agreed upon or as may be proved,
unless the silence of the parties signifies
that they consider the delivery of the
thing as the equivalent of the
performance of the obligation.
In payment by cession, the
effect is merely to release the
debtor for the net proceeds of
the things ceded or assigned,
unless there is a contrary
intention (8 Manresa, 5th Ed., BK.
1, pp. 611-612; 3 Castan, 7th., p.
257).
286. I. In dacion en pago, what is delivered by the debtor is merely a thing to be
considered as the equivalent of the performance of the obligation.
II. In payment by cession, what is ceded by the debtor is the universality of all his
property.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
287. It is the definitive act of offering the creditor what is due him or her together
with the demand that the creditor accepts the same.
A. Consignation
B. Payment by cession
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C. Dation in payment
D. Tender of payment
D. Tender of payment is the definitive act of offering the creditor what is due him
or her, together with the demand that the creditor accept the same. When a
creditor refuses the debtor ’s tender of payment, the law allows the consignation of
the thing or the sum due. Tender and consignation have the effect of payment, as
by consignation, the thing due is deposited and placed at the disposal of the
judicial authorities for the creditor to collect (Manuel Go Cinco and Araceli S. Go
Cinco vs. CA, et.al., G.R. No. 151903, October 9, 2009). More important, there must
be a fusion of intent, ability and capability to make such offer, which must be
absolute and cover the amount due (Far East Bank & Trust Company vs. Diaz
Realty, Inc., G.R. No. 138588, August 23, 2001).
Well-settled is the rule that tender of payment must be accompanied by
consignation in order that the effects of payment may be produced (Subhash C.
Pasricha and Josephine A. Pasricha vs. Don Luis Dison Realty, Inc., G.R. No. 136409,
March 14, 2008).
288. The thing due is deposited and placed at the disposal of the judicial
authorities for the creditor to collect.
A. Consignation
B. Payment by cession
C. Dation in payment
D. Tender of payment
A
289. Is the act of depositing the thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses to accept payment, and it generally
requires a prior tender of payment?
A. Payment by cession
B. Dation in payment
C. Consignation
D. Tender of payment
C. It must be borne in mind however that a mere tender of payment is not enough
to extinguish an obligation. The Supreme Court distinguished consignation from
tender of payment and reiterated the rule that both must be validly done in order
to effect the extinguishment of the obligation, thus:
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Consignation is the act of depositing the thing due with the court or judicial
authorities whenever the creditor cannot accept or refuses to accept payment, and
it generally requires a prior tender of payment. It should be distinguished from
tender of payment. Tender is the antecedent of consignation, that is, an act
preparatory to the consignation, which is the principal, and from which are derived
the immediate consequences which the debtor desires or seeks to obtain. Tender
of payment may be extrajudicial, while consignation is necessarily judicial, and the
priority of the first is the attempt to make a private settlement before proceeding
to the solemnities of consignation. Tender and consignation, where validly made,
produces the effect of payment and extinguishes the obligation (Cited in B.E. San
Diego, Inc. vs. Rosario T. Alzul, G.R. No. 169501, June 8, 2007).
290. I. Tender is the antecedent of consignation, that is, an act preparatory to the
consignation, which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain.
II. Tender of payment may be judicial, while consignation is necessarily
extrajudicial, and the priority of the first is the attempt to make a private
settlement before proceeding to the solemnities of consignation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. X owes Y P100,000 with 12% interest per annum. At maturity date, X offered to
pay, however, Y refused to receive the payment. What is the remedy of X because
to him, payment of interest is already burdensome? X’s remedy is to deposit the
sum of money with the court so as to extinguish his obligation.
291. One of the following is not a requisite of consignation.
A. There was a debt due.
B. Previous notice of the consignation had been given to the person interested in
the performance of the obligation.
C. The amount due was placed at the disposal of the court.
D. After the consignation had been made, the person interested may not be
notified of the action.
D. The requisites of consignation are the following:
In order that consignation may be effective, the debtor must show that:
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1. There was a debt due;
2. The consignation of the obligation had been made because the creditor to
whom tender of payment was refused to accept it, or because s/he was absent or
incapacitated, or because several persons claimed to be entitled to receive the
amount due or because the title to the obligation has been lost;
3. Previous notice of the consignation had been given to the person interested in
the performance of the obligation;
4. The amount due was placed at the disposal of the court; and
5.After the consignation had been made, the person interested was notified of
the action (E. San Diego, Inc. vs. Rosario T. Alzul, G.R. No. 169501, June 8, 2007).
Failure in any of these requirements is enough ground to render a consignation
ineffective (Teddy G. Pabugais vs. Dave P. Sahijwani, G.R. No. 156846, February 23,
2004).
292. I. The codal provision of the Civil Code dealing with consignation should be
accorded a mandatory construction.
II. There should be notice to the creditor prior and after consignation as required
by the Civil Code.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. It must be stated that in the case of Soco v. Militante (123 SCRA 160, 166-167
[1983]), the Supreme Court ruled that the codal provision of the Civil Code dealing
with consignation (Articles 1252-1261) should be accorded a mandatory
construction.
The Supreme Court held that the essential requisites of a valid consignation must
be complied with fully and strictly in accordance with the law. Articles 1256 to 1261,
New Civil Code. That these Articles must be accorded a mandatory construction is
clearly evident and plain from the very language of the codal provisions themselves
which require absolute compliance with the essential requisites therein provided.
Substantial compliance is not enough for that would render only directory
construction to the law. The use of the words ‘shall’ and ‘must’ which are
imperative, operating to impose a duty which may be enforced, positively indicated
that all the essential requisites of a valid consignation must be complied with. The
Civil Code Articles expressly and explicitly direct what must be essentially done inn
order that a consignation shall be valid and effectual.
Likewise, the Supreme Court enumerated the requirements prescribed by law for a
valid consignation. One of the given requirements is that after consignation had
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been made, the person interested was notified thereof (Art. 1178, Civil Code). The
reason for such a requirement was given by the Supreme Court. It statedThe reason for the notification to the persons interested in the fulfillment of the
obligation after consignation had been made, which is separate and distinct from
the notification which is made prior to the consignation, is stated in Cabanas v.
Calo, G.R. No. L-10927, October 30, 1958, 104 Phil. 1058, thus: ‘There should be
notice to the creditor and after consignation as required by the Civil Code. The
reason for this is obvious, namely, to enable the creditor to withdraw the goods or
money deposited. Indeed, it would be unjust to make him suffer the risk for any
deterioration, depreciation, or loss of such goods or money by reason of lack of
knowledge of the consignation (Leonila J. Licuanan vs. Hon. Ricardo D. Diaz, Judge
Branch XXVII, Court of First Instance of Manila and Aida Pineda).
293. I. The rationale for consignation is to avoid the performance of an obligation
becoming more onerous to the debtor by reason of causes not imputable to him.
II. Tender is the antecedent of consignation, that is, an act preparatory to the
consignation, which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
294. I. Without the notice first announced to the persons interested in the
fulfillment of the obligation, the consignation as payment is voidable.
II. The fact that in previous years’ payment in check was accepted does not place
its creditor in estoppel from requiring the debtor to pay his obligation in cash.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false.
B. In order that consignation may be effective, the debtor must first comply with
certain requirements prescribed by law. The debtor must show (1) that there was a
debt due; (2) that the consignation of the obligation has been made because the
creditor to whom tender of payment was made refused to accept it, or because he
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was absent or incapacitated, or because several persons claimed to be entitled to
receive the amount due (Art. 1176, Civil Code); (3) that previous notice of the
consignation had been given to the person interested in the performance of the
obligation (Art. 1177, Civil Code); (4) that the amount due was placed at the
disposal of the court (Art. 1178, Civil Code); and (5) that after the consignation had
made the person interested was notified thereof (Art. 1178, Civil Code). Failure in
any of these requirements is enough ground to render a consignation ineffective.
(Jose Ponce de Leon vs. Santiago Syjuco, Inc., 90 Phil. 311).
Without the notice first announced to the person interested in the fulfillment of
the obligation, the consignation as a payment is void. (Limkako vs. Teodoro, 74 Phil.
313).
In order to be valid, the tender of payment must be made in lawful currency. While
payment in check by the debtor ay be acceptable as valid, if no prompt objection
to said payment is made (Desbarats vs. Vda. de Mortera, L-4915, May 25,1956) the
fact that in previous years’ payment in check was accepted does not place its
creditor in estoppel from requiring the debtor to pay his obligation in cash (Sy vs.
Eufemio, L-10572, Sept. 30, 1958). Thus, the tender of a check to pay for an
obligation is not a valid tender of payment thereof (Desbarats vs. Vda. de Mortera,
supra). (Soledad Soco vs. Hon. Militante and Regino Francisco, Jr., G.R. No. L-58961,
June 28, 1983).
295. I. Payment in check by the debtor may be acceptable as valid, if no prompt
objection to said payment is made.
II. If, the consignation having been made, the creditor should authorize the
debtor to withdraw the same, he shall lose every preference which he may have
over the thing.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. (Art. 1261, NCC)
True jurisprudence holds that, in general, a check does not constitute a legal
tender, and that a creditor may validly refuse it. It must be emphasized, however,
that this dictum does not prevent a creditor from accepting a check as payment. In
other words, the creditor has the option and the discretion of refusing or accepting
it (Far East Bank & Trust Company vs. Diaz Realty, Inc., G.R. No. 138588, August 23,
2001).
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While it is true that in general, a manager ’s check is not a legal tender, the creditor
has the option of refusing or accepting it. Payment in check by the debtor may be
acceptable as valid, if no prompt objection to said payment is made (Teddy G.
Pabugais vs. Dave P. Sahijwani, G.R. No. 156846, February 23, 2004).
296. The following are the effects if the debtor withdraws after proper consignation,
except:
A. The obligation remains.
B. The obligation is extinguished.
C. The creditor shall lose every preference which he may have over the thing.
D. The co-debtors, guarantors and sureties shall be released.
B. The following are the effects if after proper consignation the debtor withdraws
with the authority of the creditor:
1. The obligation remains.
2. The creditor shall lose every preference which he may have over the thing.
3. The co-debtors, guarantors and sureties shall be released.
For example, X owes Y P50,000 due on December 31, 2018. G is the guarantor. On
said date, Y refused the payment of X without any valid reason. Subsequently, X
consign the P50,000 in court. Thereafter, X pleased with Y to withdraw P50,000 as
he needed the said amount to pay hospital bills. Y agreed. What are the legal
effects of this withdrawal with the consent of Y? The obligation of X remains. Y shall
lose his preference over the P50,000 and G will be released from the obligation to
pay P50,000.
297. The following are the requisites in order that an obligation to give a
determinate thing will be extinguished, except:
A. The obligation is to deliver a determinate thing.
B. The obligation is to deliver an indeterminate thing.
C. The thing is lost without the fault of the debtor.
D. The thing is lost before the debtor has incurred in delay.
B
298. I. An obligation to pay money is generic; therefore, it is not excuse by
fortuitous loss of any specific property of the debtor.
II. Where the obligation consists in the payment of money, the failure of the
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debtor to make he payment even by reason of a fortuitous event shall not relieve
him of his liability.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. If the obligation is generic in the sense that the object thereof is designated
merely by its class or genus without any particular designation or physical
segregation from all others of the same class, the loss or destruction of anything of
the same kind even without the debtor ’s fault and before he has incurred in delay
will not have the effect of extinguishing the obligation. This rule is based on the
principal that the genus of a thing can never perish. Genis nunquan perit. An
obligation to pay money is generic; therefore, it is not excused by fortuitous loss of
any specific property of the debtor (Gaisano Cagayan, Inc. vs. Insurance Company
of North America, G.R. No. 147839, June 8, 2006).
299. I. The general rule is that if the thing is lost while in the possession of the
debtor, is shall be presumed that the loss was due to his fault. Unless there is
proof to the contrary.
II. The general rule also applied in case of earthquake, flood, storm, or other
natural calamity.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. If the thing is lost while in the possession of the debtor, shall be presumed that
the loss was due to his fault, unless there is proof to the contrary.
However, if the obligor delays, or has promised to deliver the same thing to two or
more persons who do not have the same interest, he shall be responsible for any
fortuitous event until he has effected the delivery (Art. 1165, NCC) regardless of the
presence of the fault or negligence.
The general rule does not apply in case of earthquake, flood, storm, or other
natural calamity.
For example, X promised to deliver a specific cell phone to Y on December 31,
2018. Before the said date, the cell phone was lost. The disputable presumption is
that the cell phone was lost through the fault of X. However, such presumption will
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not stand if the cause of the loss was proven that it was due to earthquake, flood,
storm, or other natural calamity.
300. When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole
or in part.
A. Doctrine of force majeure
B. Doctrine of fortuitous events
C. Doctrine of unforeseen events
D. Doctrine of foreseen events
C. (Art. 1267, NCC)
301. I. Bad faith imports a dishonest purpose or some moral obliquity and
conscious doing of wrong.
II. Bad faith means a breach of a known duty through some
motive or interest or
ill will that partakes of the nature of fraud.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
302. I. Good faith is presumed.
II. The burden of proving good faith rests on the one alleging it.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. Good faith is presumed, the burden of proving bad faith rests on the one
alleging it (Victorino Magat, Jr., vs. CA and Santiago A. Guerrero G.R. No. 124221,
August 4, 2000).
303. An act of liberality, by virtue of which, without receiving any equivalent, the
creditor renounces the enforcement of the obligation, which is extinguished in its
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entirety or in that part or aspect of the same to which the remission refers.
A. Condonation
B. Confusion
C. Compensation
D. Novation
A. Condonation or remission of debt is an act of liberality, by virtue of which,
without receiving any equivalent, the creditor renounces the enforcement of the
obligation, which is extinguished in its entirety or in that part or aspect of the same
to which the remission refers. It is an essential characteristic of remission that it be
gratuitous, that there is no equivalent received for the benefit given; once such
equivalent exists, the nature of the act changes. It may become dation in payment
when the creditor receives a thing different from that stipulated; or novation, when
the object or principal conditions of the obligation should be changed; or
compromise, when the matter renounced is in litigation or dispute and in
exchange of some concession which the creditor receives (Rafael Arsenio S. Dizon,
in his capacity as the judicial administer of the estate of the deceased Jose P.
Fernandez vs. CTA and CIR, G.R. No. 140944, April 30, 2008).
304. The following are requisites of condonation, except:
A. It must be gratuitous.
B. It must be accepted by the creditor.
C. The obligation must be demandable.
D. The parties must have capacity.
B. The following are the requisites of condonation or remission:
1. It must be gratuitous;
2. It must be accepted by the debtor;
3. The obligation must be demandable;
4. The parties must have capacity;
5. The condonation must not be inofficious; and
6. The condonation must comply with the forms of donation, if it is an express
condonation.
305. The following are requisites of condonation, except:
A. It must be onerous.
B. The parties must have capacity.
C. The condonation must not be inofficious.
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D. The condonation must comply with the forms of donation, if it is an express
condonation.
A. The following provisions explain the principle on inofficious donation;
Art. 750. The donations may comprehend all the present property of the donor, or
part thereof, provided he reserves, in full ownership or in usufruct, sufficient means
for the support of himself, and of all relatives who, at the time of the acceptance of
the donation, are by law entitled to be supported by the donor. Without such
reservation, the donation shall be reduced in petition of any person affected.
Art. 752. The provisions of Article 750 notwithstanding, nor person may give or
receive, by way of donation, more than he may give or receive by will.
The donation shall be inofficious in all that may exceed this limitation.
306. I. The donation and acceptance of a movable, the value of which exceeds
P5,000.00 must be made in writing, otherwise the same shall be voidable.
II. The delivery of a private document evidencing a credit, made voluntarily by the
creditor to the debtor, implies the renunciation of the action which the former had
against the latter.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. The forms of donation are provided in Arts. 748 and 749, NCC to wit:
Art. 748. The donation of a movable may be made orally or in writing. An oral
donation requires the simultaneous delivery of the thing or of the document
representing the right donated.
If the value of the personal property donated exceeds five thousand pesos, the
donation and the acceptance shall be made in writing, otherwise, the donation
shall be void.
Art. 749. In order that the donation of an immovable may be valid, it must be
made in a public document, specifying therein the property donated and the value
of the changes which the done must satisfy.
The acceptance may be made in the same deed of donation or in a separate public
document, but it shall not take effect unless it is done during the lifetime of the
donor.
If the acceptance is made in a separate instrument, the donor shall be notified
thereof in an authentic form, and this step shall be noted in both instruments.
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307. I. The rationale for allowing the presumption of renunciation in the delivery of
a private instrument is that, unlike that of a public instrument, there could be just
one copy of the evidence of credit.
II. The renunciation of the principal debt shall not extinguish the accessory
obligations.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. Article 1271 of the New Civil Code provides that the delivery of a private
document evidencing a credit, made voluntarily by the creditor to the debtor,
implies the renunciation of the action which the former had against the latter.
If in order to nullify this waiver it should be claimed to be inofficious, the debtor
and his heirs may uphold it by proving that the delivery of the document was
made in virtue of payment of the debt.
For example, X owed Y the amount of P30,000 evidenced by a promissory note
which was not notarized; thus, a private document. Subsequently, Y delivered this
promissory note to X. The disputable presumption is that Y condoned the
obligation of X.
It may not be amiss to add that Article 1271 of the Civil Code raises a presumption,
not of payment, but of the renunciation of the credit where more convincing
evidence would be required what normally would be called for to prove payment.
The rationale for allowing the presumption of renunciation in the delivery of a
private instrument is that, unlike that of a public instrument, there could be just
one copy of the evidence of credit. Where several originals are made out of a
private document, the intendment of the law would thus be to refer to the delivery
only of the original rather than to the original duplicate of which the debtor would
normally retain a copy. It would thus be absurd if Article 1271 were to be applied
differently (Trans-Pacific Industrial Supplies, Inc. vs. CA and Associated Bank, G.R.
No. 109172, August 19, 1994).
308. Is the meeting in the same person of the qualities of creditor and debtor with
respect to one and the same obligation?
A. Condonation
B. Confusion
C. Compensation
D. Novation
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B. Confusion or merger is the meeting in the same person of the qualities of
creditor and debtor with respect to one and the same obligation (4 Sanchez
Roman 421). The obligation is extinguished. If a debtor is his own creditor,
enforcement of the obligation becomes absurd, since one cannot claim against
himself (8 Manresa 349).
The following are the requisites of confusion or merger:
1. The merger of the characters of the creditor and debtor must be in the same
person (Art. 1275, NCC);
2. The merger must take place in the person of either the principal creditor or the
principal debtor (Art. 1267, NCC); and
3. The merger must be complete and definite.
For example, X(debtor) made a negotiable promissory note in favor of Y (creditor)
as he obtained a loan from the latter in the same amount of P50,000.
Subsequently, Y negotiated this to A. Thus, Y becomes the debtor and B becomes
the creditor. Later, B negotiated this to C. Accordingly, B becomes the debtor and C
becomes the creditor. Afterwards, C negotiated this promissory note back to X.
Therefore, C becomes the debtor and X becomes the creditor. Take note that at the
start, X was the debtor who becomes now the creditor of himself so that there is
confusion or merger of rights that will extinguish the obligation.
309. I. The obligation is extinguished if the merger or confusion takes place in the
person of the principal debtor or creditor.
II. If the confusion takes place in the person of any of the guarantors, there is
extinguishment of the principal obligation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
The obligation is extinguished if the merger or confusion takes place in the person
of the principal debtor or creditor. However, if the confusion takes place in the
person of any of the guarantors, there is no extinguishment of the principal
obligation.
For example, X made a negotiable promissory note in favor of Y as he obtained a
loan from the latter in the amount of P50,000. G is the guarantor. Y negotiated the
promissory note to A. A negotiated this to B. B further negotiated this to X. In this
case the obligation is extinguished and G, the guarantor, is also released from his
subsidiary obligation.
What if B instead of negotiating it to X negotiated it to G? In this case, X is liable to
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pay G? Take note that the contract of guaranty is extinguished because the
guarantor is now the new creditor.
310. I. In a joint obligation, if the confusion takes place in one of the joint debtors,
the principal obligation is partially extinguished up to the share which corresponds
to him.
II. In a solidary obligation, if the confusion takes place in one of the solidary
debtors, the entire obligation is extinguished.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. In a joint obligation, if the confusion takes place in one of the joint debtors, the
principal obligation is partially extinguished up to the share which corresponds to
him. This is because of the nature of a joint obligation wherein the joint debtors
are liable pro rata equally or that the debts being considered distinct from one
another.
For example, B and C jointly made a negotiable promissory note in favor of X as
they obtained a loan from the latter in the amount of P50,000. Subsequently, X
negotiated this promissory note to B. Is the obligation of B and C extinguished?
Merger took place only with regard to the obligation of B. Therefore, B’s obligation
is extinguished but C’s obligation remains. C’s creditor now will be B to the amount
of P25,000.
In a solidary obligation, if the confusion takes place on one of the solidary
debtors, the entire obligation is extinguished. This is because of the nature of a
solidary obligation wherein the solidary debtors are bound to render, entire
compliance with the prestation. The remedy of the debtor in whom confusion took
place may claim reimbursement from co-debtors for the shares which corresponds
to them.
311. I. In compensation, there must be two persons, who, in their own right, are
creditors and debtors of each other.
II. In confusion, there in only one person in whom is merged the qualities of
creditor and debtor.
A. Only I is true
B. Only II is true
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C. Both are true
D. Both are false
C. Compensation vs. Confusion
Compensation
Confusion
In compensation, there must be two
persons, who in their own right, are
creditors and debtors of each other
In confusion, there is only one
person in whom is merged the
qualities of creditor are debtor
In compensation, there must be at least
two obligations
In confusion, there is only one
obligation
312. I. In compensation, there must be at least two obligations.
II. In confusion, there is only one obligation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. In Roman Law, compensation was the reciprocal extinction of claims between
mutual debtors (Selwyn F. Lao and Edgar Manansala vs. Special Plans, Inc., G.R. No.
164791, June 29, 2010).
For example, in a contract, X owed Y P20,000 due on December 31, 2018. In
another contract Y owed X the amount of P20,000 due also on December 31, 2018.
In this case, there is total compensation.
KINDS OF COMPENSATION
1. AS TO CAUSE
A. Legal
When it takes effect by operation of law from the moment all the requisites
prescribed by law are present (Arts. 1278, 1279, NCC). Legal compensation takes
place ipso jure when all the requisites of law are present (Mavest (U.S.A.) Inc., and
Mavest Manila Liaison Office vs. Sampaguita Garment Corporation, G.R. No.
127454, September 21, 2005).
The relationship between banks and depositors has been held to be that of
creditor and debtor. Thus, legal compensation under Article 1278 of the Civil Code
may take place “when all the requisites mentioned in Article 1279 are present, “as
follows:
“(1) That each one of the obligors be bound principally, and that he be at same
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time a principal creditor of the other;
(2) 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;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced
by third persons and communicated in due time to the debtor (Associated Bank
(Now Westmont Bank) vs. Vicente Henry Tan, G.R. No. 156940, December 14,
2004).”
b. Voluntary or Conventional
When it takes place by agreement of the parties (Art. 1282, NCC).
Conventional or voluntary compensation which occurs when the parties agree to
the mutual extinguishment of their creditors or to compensate their mutual
obligation even in the absence of some of the legal requisites (Mavest (U.S.A) Inc.,
and Mavest Manila Liaison Office vs. Sampaguita Garment Corporation, G.R. No.
127454, September 21, 2005).
Requisites of conventional compensation
1. That each of the parties can dispose of the credit he seeks to compensate, and
2. That they agree to the mutual extinguishment of their credits (United Planters
Sugar Milling Co., Inc., vs. CA, et.al., G.R. No. 126890, April 2, 2009).
c. Judicial
When it takes effect by judicial decree (Art. 1283, NCC).
D. Facultative
When the compensation can be set up only by one of the parties (Arts. 1287 and
1288, NCC).
Example:
When one of the debts arises from a contract of deposit, commodatum, and civil
liability arising from a crime (see Art. 1287 and 1288, NCC).
2. AS TO EFFECT
A. Total
When two debts are of the same amount (Art. 1281, NCC).
B. Partial
When the two debts are not of the same amount (Art. 1281, NCC).
Concededly, the Civil Code lists compensation as one of the modes of
extinguishing the obligations of persons who, in their own right, are creditors and
debtors of each other. Compensation may be legal or conventional. Legal
compensation takes place ipso jure when all the requisites of law are present, as
opposed to conventional or voluntary compensation which occurs when the parties
agree to the mutual extinguishment of the credits or to compensate their mutual
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obligations even in the absence of some of the legal requisites.
For compensation to validly take place, the governing Civil Code provisions require
the concurrence of well-defined conditions. At its minimum, compensation
presupposes two persons who, in their own right and as principals, are mutually
indebted to each other respecting equally demandable and liquidated obligations
over any of which no retention or controversy commenced and communicated in
due time to the debtor exists. But while compensation, be it legal or conventional,
requires the confluence in the parties of the characters of mutual debtors and
creditors, their rights as such creditors, or their obligations as such debtors, need
not spring from one and the same contract or transaction (Mavest (U.S.A.) Inc., and
Mavest Manila Liaison Office vs. Sampaguita Garment Corporation, G.R. No.
127454, September 21, 2005).
313. The following are the requisites of legal compensation, except:
A. That each one of the obligors be bound subsidiarily, and that he be at the
same time a principal creditor of the other.
B. 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.
C. That the two debts are due
D. That they be liquidated and demandable.
A
314. The following are the requisites of conventional compensation:
I. That each of the parties can dispose of the credit he seeks to compensate.
II. That they agree to the mutual extinguishment of their credits.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
315. I. Legal compensation takes place ipso jure when all the requisites of law are
present.
II. Conventional compensation occurs when the parties agree to the mutual
extinguishment of their credits or to compensate their mutual obligations even in
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the absence of some of the legal requisites.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
316. Is a claim which has been formally passed upon by the highest authority?
A. Debt
B. Payable
C. Liability
D. Claim
A. The Supreme Court held that:
Compensation or offset takes place by operation of law when two persons, in their
own right, are creditor and debtor of each other. For compensation to take place, a
distinction must be made between a debt and a mere claim. A debt is a claim
which has been formally passed upon the highest authority to which it can in law
be submitted and has been declared to be a debt. A claim, on the other hand, is a
debt in embryo. It is mere evidence of a debt and must pass thru the process
prescribed by law before it develops into what is properly called a debt (E.G.V.
Realty Development Corporation and Cristina Condominium vs. CA Unisphere
International, Inc., G.R. No. 120236, July 20, 1999).
317. It is mere evidence of a debt and must pass thru the process prescribed by law
before it develops into what is properly called a debt.
A. Debt
B. Payable
C. Liability
D. Claim
D
318. I. Compensation requires confluence in the parties of the characters of
mutual debtors and creditors, although their rights as such creditors or their
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obligations as such debtors need not spring from one and the same contract or
transaction.
II. The relationship of the depositors and the Bank or similar institution is that of
creditor-debtor. Such deposit may be set-off against the obligation of the depositor
with the bank or similar institution.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Article 1980 of the New Civil Code provides that fixed, savings and current
deposits of money in banks and similar institutions shall be governed by the
provisions concerning simple loans. Under Article 1953, of the same Code, a person
who secures a loan of money or any other fungible thing acquires the ownership
thereof, and is bound to pay the creditor an equal amount of the same kind and
quality. The relationship of the depositors and the Bank or similar institution is that
of creditor-debtor. Such deposit may be setoff against the obligation of the
depositor with the bank or similar institution (Spouses Ramon M. Nisce and A.
Natividad Paras-Nisce vs. Equitable PCI Bank, Inc., G.R. No. 167434, February 19,
2007).
319. I. Compensation can take place where one claim is still subject of litigation.
II. A claim is liquidated when the amount and time of payment is fixed.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. Compensation cannot take place where one claim is still the subject of litigation,
as the same cannot be deemed liquidated (Spouses Alejandro Mirasol and Lilia E.
Mirasol vs. CA, et.al., G.R. No. 128448, February 1, 2001).
A claim is liquidated when the amount and time of payment is fixed. If
acknowledged by the debtor, although not in writing, the claim must be treated as
liquidated (Selwyn F. Lao and Edgar Manansala vs. Special Plans, Inc., G.R. No.
164791, June 29, 2010).
To liquidate means “to make the amount of indebtedness or an obligation clear
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and settled in the form of money (Spouses Onesiforo and Rosario Alinas vs.
Spouses Victor and Elena Alinas, G.R. No. 158040, April, 2008).”
320. I. A debt is an amount actually ascertained. It is a claim which has been
formally passed upon by the courts to which it can in law be submitted and has
been declared to be a debt.
II. A claim, on the other hand, is a debt in embryo. It is mere evidence of a debt
and must pass thru the process prescribed by law before it develops into what is
properly called a debt.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. Debt vs. Claim
Debt
Claim
A debt is an amount actually
ascertained. It is a claim which
has been formally passed
upon by the courts or quasijudicial bodies to which it can
in law be submitted and has
been declared to be a debt.
A claim, on the other hand, is a debt in
embryo. It is mere evidence of a debt and
must pass thru the process prescribed by law
before it develops into what is properly called
a debt. (Premiere Development Bank vs.
Alfredo C. Flores, in his capacity as presiding
judge of RTC of Pasig City, Branck 167, et.a.,
G.R. No. 175339, December 16, 2008).
321. I. The guarantor may set up compensation as regards what the creditor may
owe the principal debtor.
II. Compensation may be total or partial. When the two debts are the same
amount, there is partial compensation.
A. Only I Is true
B. Only II is true
C. Both are true
D. Both are false
A. (Art. 1281, NCC)
322. It occurs when the parties agree to the mutual extinguishment of their credits
or to compensate their mutual obligations even in the absence of some of the
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legal requisites.
A. Conventional compensation
B. Involuntary compensation
C. Legal compensation
D. Illegal compensation
A. Conventional or voluntary compensation occurs when the parties agree to the
mutual extinguishment of their credits or to compensate their mutual obligations
even in the absence of some of the legal requisites (Mavest (U.S.A.) Inc., and
Mavest Manila Liaison Office vs. Sampaguita Corporation, G.R. No. 127454,
September 21, 2005).
Legal compensation vs. Conventional compensation
Legal compensation
Conventional compensation
Legal compensation takes place by
operation of law when all the requisites are
present, as opposed to conventional
compensation which takes place when the
parties agree to compensate their mutual
obligation even in the absence of some
requisites. The only requisites of
conventional compensation are (1) that
each of the parties can dispose of the
credit he seeks to compensate, and (2) that
they agree to the mutual extinguishment
of their credits (United Planters Sugar
Milling Co. Inc. (UPSUMPCO) vs. et.al., G.R.
No. 126890, April 2, 2009).
We recognize the concept of
conventional compensation,
defined as occurring “when the
parties agree to compensate
their mutual obligations even if
some requisite is lacking such
as that provided in Article
1282.” It is intended to
eliminate or overcome
obstacles which prevent ipso
jure extinguishment of their
obligations.
323. The requisites of conventional compensation are:
I. That each of the partners can dispose of the credit he seeks to compensate.
II. That they agree to the mutual extinguishment of their credits.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
324. If one of the parties to a suit over an obligation has a claim for damages
against the other, the former may set it off by proving his right to said damages
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and the amount thereof.
A. Extrajudicial compensation
B. Judicial compensation
C. Conventional compensation
D. Voluntary compensation
B. (Art. 1283, NCC)
325. The transfer of rights, especially contractual rights, from one party to another.
A. Contract of sale
B. Contract of barter
C. Assignment of rights
D. Cession in payment
C
326. The effects of assignment of rights are the following, except:
A. If the debtor consented to the assignment of rights made by a creditor in favor
of a third person, he cannot set up against the assignee the compensation which
pertain to him against the assignor.
B. If the debtor consented to the assignment of rights made by a creditor in favor
of a third person and he reserved his right to the compensation, then he can set
up against the assignee the compensation which pertain to him against the
assignor.
C. If the assignment is made without the knowledge of the debtor, he may set up
the compensation of all credits prior to the same and also later ones until he had
of the assignment.
D. If the assignment is made without the knowledge of the debtor, he cannot set
up the compensation of all credits prior to the same and also later ones until he
had knowledge of the assignment.
D. Effects of assignment of rights
1. If the debtor consented to the assignment of rights made by a creditor in favor
of a third persons, he cannot set up against the compensation which pertain to
him against the assignor.
2. If the debtor consented to the assignment of rights made by a creditor in favor
of a third person and he reserved his right to the compensation, then he can set
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up against the assignee the compensation which pertain to him against the
assignor.
Example:
X owes Y P20,000 due on December 31, 2018 while in another contract Y owes X
the amount of P5,000 due on December 20, 2018. (Take note that both debts
should have been extinguished by operation of law up to the amount of P5,000
because of partial compensation) On December 31, 2018, Y assigned his credit
(P20,000) to Z with the consent of X. In this case, Z can collect the entire amount of
P20,000 from X. Of course, X can still collect the P5,000 from Y.
However, if X reserved his right to compensation, he would only pay Z the amount
of P15,000 (P20,000-P5,000).
3. If the assignment is made without the knowledge of the debtor, he may set up
the compensation of all credits prior to the same and also later ones until he had
knowledge of the assignment.
Example.
X owes Y P40,000 due on October 1, 2018 while in another contract Y owes X the
amount of P5,000 due also on October 1, 2018. On November 15, 2018, Y assigned
his credit (P40,000) to Z without the knowledge of X. Another 30, 2018. Still another
obligation of Y in favor of X in the amount of P15,000 will mature on December 25,
2018.
X only had knowledge of the assignment on December 5, 2018. How much can Z
collect from X? Z can collect from X the amount P25,000 (P40,000-P5,000-P10,000).
The P5,000 and P10,000 are the debts that matured prior to X’s knowledge of the
assignment; hence, X can set up the defense of partial compensation.
327. I. Compensation shall be proper when one of the debts arises from a
depositum or from the obligations of a depositary or of a bailee in commodatum.
II. Compensation cannot be set up against a creditor who has a claim for support
due by gratuitous title.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. (Art. 1287, NCC)
328. The following debts cannot be compensated, except:
A. Contract arising from contract of depositum.
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B. Contract arising from contract of commodatum.
C. Contract arising from contract of support.
D. Contract arising from contract of mutuum.
D. (Art. 1287 & 1288, NCC)
DEBTS WHICH CANNOT BE COMPENSATED
1. Debts arising from contract of depositum.
Compensation shall not be proper when one of the debts arising from a depositum
or from the obligations of a depositary.
Contract of Deposit
A deposit is constituted from the moment a person receives a thing belonging to
another, with the obligation of safety keeping at and of returning the same. If the
safekeeping of the thing delivered is not the principal purpose of the contract,
there is no deposit but some other contract. (Art. 1962, NCC)
Example:
X owes Y P50,000. Y kept the cell phone of X having a value of P50,000 by way of
deposit. Can there be compensation? The general rule is that the depositary (Y)
cannot claim compensation to prevent the breach of trust and confidence because
a contract of deposit is governed by trust and confidence. The exception is that the
depositor (X) can claim compensation.
2. Debts arising from a contract of commodatum.
Compensation shall not be proper when one of the debts arises from
commodatum or of a bailee in commodatum.
Contract of Commodatum
By the contract of loan, one of the parties delivers to another, either something not
consumable so that the latter may use the same for a certain time and return it, in
which case the contract is called a commodatum; or money or other consumable
thing, upon the condition that the same amount of the same kind and quality shall
be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum the bailor retains the ownership of the thing loaned, while in
simple loan, ownership passes to the borrower (Art. 1933, NCC).
Example:
X owes Y P100,000. Y borrowed the laptop of X having a value of P100,000. Can
there be compensation? The general rule is that the borrower (Y) cannot claim
compensation to prevent the breach of trust and confidence because a contract of
commodatum is governed by trust and confidence. The exception is that the
lender (X) can claim compensation.
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3. Claims for support due by gratuitous title.
Compensation cannot be set up against a creditor who has a claim for support due
by gratuitous title.
What is support?
For, support is, amongst others, everything that is indispensable for sustenance.
The right to support cannot be: (1) renounced; (2) transmitted to third persons; nor
(3) compensated with what the recipient owes the obligor. Compensation may not
even be set up against a creditor who has a claim for support due by gratuitous
title (Margaret Ann Wainright Versoza, et.al. vs. Jose Ma. Versoza, G.R. No. L-25609,
November 27, 1968).
Art. 194. Support comprises everything indispensable for sustenance, dwelling,
clothing, medical attendance, education and transportation, in keeping with the
financial capacity of the family.
The education of the person entitles to be supported referred to in the preceding
paragraph shall include his schooling or training for some profession, trade or
vocation, even beyond the age of majority. Transportation shall include expenses in
going to and from school, or to and from place of work (Art. 194, Family Code of
the Philippines).
4. One of the debts consists in civil liability arising from a penal offense.
Debts cannot be compensated if one of the debts consist in civil liability arising
from a penal offense.
Rationale:
The raison d’etre for this is that, “if one of the debts consists in civil liability arising
from a penal offense, compensation would be improper and inadvisable because
the satisfaction of such obligation is imperative (Metropolitan Bank and Trust
Company vs. Joaquin Tonda and Ma. Cristina Tonda).”
329. Is constituted from the moment a person receives a thing belonging to
another, with the obligation of safely keeping ai and of returning the same?
A. Contract of deposit
B. Contract of guaranty
C. Contract of surety
D. Contract of loan
A
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330. One of the parties delivers to another, either something not consumable so
that the latter may use the same for a certain time and return it.
A. Contract of deposit
B. Contract of guaranty
C. Contract of commodatum
D. Contract of loan
C
331. It comprises everything indispensable for sustenance, dwelling, clothing,
medical attendance, education and transportation, in keeping with the financial
capacity of the family.
A. Deposit
B. Support
C. Guaranty
D. Surety
B
332. I. Debts can be compensated if one of the debts consists in civil liability
arising from a penal offense.
II. If a person should have against him several debts which are susceptible of
compensation, the rules on the application of payments shall apply to the order
of the compensation.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. (Art. 1289, NCC)
333. Obligation may be modified, except:
A. By changing their object or principal conditions.
B. By substituting the person of the debtor.
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C. By subrogating a third person in the rights of the creditor.
D. None of the above.
D. (Under Article 1231(6) of the New Civil Code, novation is enumerated as one of
the ways by which obligations are extinguished. Obligations may be modified by
changing their object or principal creditor or by substituting the person of the
debtor. The burden to prove the defense that an obligation has been extinguished
by novation falls on the debtor (Agrifina Aquintey vs. Spouses Felicidad and Rico
Tibong, G.R. No. 166704, December 20, 2006).
334. Is the extinguishment of an obligation by the substitution or change of the
obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or by substituting another in place of
the debtor, or by subrogating a third person in the rights of the creditor?
A. Condonation
B. Novation
C. Merger of rights
D. Compensation
B. In the civil law setting, novation is literally construed as to make new. So, it is
deeply rooted in the Roman Law jurisprudence, the principle novation non
praesumitur – that novation is never presumed. At bottom, for novation to be a
jural reality, its animus must be ever present, debitum pro debito – basically
extinguishing the old obligation for the new one (Elsa B. Reyes vs. CA, et.al., G.R.
No. 120817, November 4, 1996).
Novation is the extinguishment of an obligation by the substitution or change of
the obligation by a subsequent one which extinguished s or modifies the first,
either by changing the object or principal conditions, or by substituting another in
place of the debtor, or by subrogating a third person in the rights of the creditor. In
order that a novation can take place, the concurrence of the following requisites
are indispensable:
1. There must be a previous valid obligation;
2. There must be an agreement of the parties concerned to a new contract;
3. There must be the extinguishment of the old contract (Agro Conglomerate, Inc.
and Mario Soriano vs. CA and Regent Savings and Loan Bank, Inc., G.R. No. 117660,
December 18, 2000).
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335. I. As a general rule, no form of words or writing is necessary to give the effect
to a novation.
Novation is presumed.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
A. For the consequent creation of a new contractual obligation, consent of both
parties is, thus, required. As a general rule, no form of words or writing is necessary
to give effect to a novation (Violeta Tudtud Banate, et.al. vs. Philippine Countryside
Rural Bank, Inc. and Teofilo Soon, Jr., G.R. No. 163825, July 13, 2010).
Novation is never presumed, and the animus novandi, whether totally or partially,
must appear by express agreement of the parties, or by their acts that are too clear
and unmistakable. The extinguishment of the old obligation by the new one is a
necessary element of novation, which may be affected either expressly or impliedly.
The contracting parties must incontrovertibly disclose that their object in executing
the new contract is to extinguish the old one. Upon the other hand, no specific
form is required for an implied novation, and all that is prescribed by law would be
an incompatibility between the two contracts (Transpacific Battery Corporation and
Michael G. Say vs. Security Bank & Trust Co., G.R. No. 173565, May 8, 2009).
336. In order that a novation can take place, the concurrence of the following
requisites are indispensable, except:
A. There must be a previous void obligation.
B. There must be an agreement of the parties concerned to a new contract.
C. There must be the extinguishment of the old contract.
D. There must be the validity of the new contract.
A
337. Is made either by changing the object or the principal conditions?
A. Personal novation
B. Subjective novation
C. Real novation
D. Mixed novation
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C. KINDS OF NOVATION
1. As to the subject
A. Real or objective
Novation is made either by changing the object or the principal conditions (Romeo
C. Garcia vs. Dionisio V. Llamas, G.R. No. 154127, December 8, 2003).
In its modern concept, what actually takes place in dacion en pago is an objective
novation of the obligation where the thing offered as an accepted equivalent of
the performance of an obligation is considered as the object of the contract of
sale, while the debt is considered as the purchase price. In any case, common
consent is an essential prerequisite, be it sale or novation, to have the effect of
totally extinguishing the debt or obligation (Agrifina Aquintey vs. Spouses Felicidad
and Rico Tibong, G.R. No. 166704, December 20, 2006).
Examples:
X obliged himself to deliver a particular laptop to Y. Subsequently, they agreed that
X will no longer deliver the laptop but he will change it to delivery of two specific
cell phones. In this case, the old obligation of X to deliver the laptop is
extinguished because of the creation of a new obligation, that is, to deliver two cell
phones.
B. Personal or subjective
Novation by substituting the person of the debtor or subrogating a third person to
the rights of the creditor (Romeo C. Garcia vs. Dionisio V. Llamas, G.R. No. 154127,
December 8, 2003).
Under this mode, novation would have dual functions: one to extinguish an
existing obligation, the other to substitute a new one in its place requiring conflux
of four essential requisites, (1) a previous valid obligation; (2) an agreement of all
parties concerned to a new contract; (3) the extinguishment of the obligation; and
(4) the birth of a valid obligation (Chester Babst vs. CA, et.al., G.R. No. 99398,
January 26, 2001).
Example:
X obliged himself to deliver a particular laptop to Y. Subsequently, X and Y agreed
Z will substitute X. In this case, the obligation where X is the debtor is extinguished
because of the creation of a new obligation, that is, the new debtor will now be Z.
It can also be agreed by X and Y that W will be subrogated in the rights of Y. In
this case, the old obligation where Y is the creditor will be extinguished because of
the creation of a new obligation, that is, W becomes the new creditor. Take note
that if what is being changed is the debtor the proper term is “substitution” while
if what is being changed is the creditor the proper term is “subrogation.”
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C. Mixed
Novation is made either by changing the object or the principal conditions and by
substituting the person of the debtor or subrogating a third person to the rights of
the creditor.
Example:
X obliged himself to deliver a particular laptop Y. Subsequently, X and Y agreed
that instead of delivering the laptop, X will deliver two particular cell phones to W.
Note that there is a change in the person of the creditor and object of the
obligation.
2. As to Constitution
A. Express (Explicit declaration)
It is when the new obligation declares in unequivocal terms that the old obligation
is extinguished (Romeo C. Garcia vs. Dionisio V. Llamas, G.R. No. 154127, December
8, 2003).
The term “expressly” means that the contracting parties incontrovertibly disclose
that their object in executing the new contract is to extinguished the old one
(Leonida C. Quinto vs. People of the Philippines, G.R. No. 126712, April 14, 1999).
B. Implied (Material incompatibility)
It is implied when the new obligation is incompatible with the old one on every
point (Romeo C. Garcia vs. Dionisio V. Lllamas, G.R. No. 154127, December 8, 2003).
Upon the other hand, no specific form is required for an implied novation, and all
that is prescribed by law would be an incompatibility between the two contracts
(Leonida C. Quinto vs. People of the Philippines, G.R. No. 126712, April 14, 1999).
Test of Incompatibility
The test of incompatibility is whether the two obligations can stand together, each
one with its own independent existence (Romeo C. Garcia vs. Dionisio V. Llamas,
G.R. No. 154127, December 8, 2003). If they cannot, they are incompatible and the
latter obligation novates the first. Corollarity, changes that breed incompatibility
must be essential in nature and not merely accidental. The accidental must take
place in any of the essential elements of the obligation, such as its object, cause or
principal conditions thereof; otherwise, the change would be merely modificatory
in nature and insufficient to extinguish the original obligation (Transpacific Battery
Corporation and Michael G. Say vs. Security Bank & Trust Co., G.R. No. 173565, May
8, 2009).
Novation, as a mode of extinguishing obligations, may be done in two ways: by
explicit declaration, or by material incompatibility (implied novation). As we
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stated in Fortune Motors vs. Court of Appeals, supra:
X x x The test of incompatibility is whether the two obligations can stand
together, each one having its independent existence. If they cannot, they are
incompatible and the latter obligation novates the first. Novation must be
established either by the express terms of the new agreement or by the facts of the
parties clearly demonstrating the intent to dissolve the obligation as a
consideration for the emergence of the new one. The will to novate, whether
totally or partially, must appear by express agreement of the parties, or by their
acts which are too clear or unequivocal to be mistaken (Jeanette D. Molino vs.
Security Diners International Corporation, G.R. No. 136780, August 16, 2001).
3. As to extent or effect
A. Total or extinctive
It is extinctive when an old obligation is terminated by the creation of a new one
that takes place of the former (Romeo C. Garcia vs. Dionisio V. Llamas, G.R. No.
154127, December 8, 2003).
Dual function of Extinctive Novation
1. One to extinguish an existing obligation; and
2. To substitute a new one in its place (Violeta Tudtud Banate, et.al. vs. Philippine
Countryside Rural Bank, Inc. and Teofilo Soon, Jr., G.R. No. 163825, July 13, 2010).
B. Partial or modificatory
It is merely modificatory when the old obligation subsists to the extent that it
remains compatible with the amendatory agreement.
Whether extinctive or modificatory, novation is made either by changing the object
or the principal conditions, referred to as objective or real novation; or by
substituting the person of the debtor or subrogating a third person to the rights of
the creditor, an act known as subjective or personal novation (Romeo C. Garcia vs.
Dionision V. Llamas, G.R. No. 154127, December 8, 2003).
Total Novation vs. Partial Novation.
The Supreme Court expounded on the nature of the novation, to wit:
Novation may either be extinctive or modificatory, much being dependent on
extinguishing an existence obligation and, second, creating a new one in its stead.
This kind of novation presupposes a confluence of four essential requisites: (1) a
previous valid obligation; (2) an agreement of all parties concerned to a new
contract; (3) the extinguishment of the new old obligation; and (4) the birth of a
new valid obligation. Novation is merely modificatory where the change brought
about by any subsequent agreement is merely incidental to the main obligation
(e.g., a change in interest rates or an extension of time to pay); in this instance, the
new agreement will not have the effect of extinguishing the first but would merely
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supplement it or supplant some but not all of its provisions.
In Ong v. Bognalbal, the Court also stated, thus:
Xxx the effect of novation may be partial or total. There is partial novation when
there is only a modification or change is some principal conditions of the
obligation. It is total, when the obligation is completely extinguished. Also, the
term principal conditions in Article 1291 should be construed to include a change
in the period to comply with the obligation. Such a change in the period would
only be a partial novation since the period merely affects the performance, not
the creation of the obligation.
As can be gleaned from the foregoing, the aforementioned four essential elements
and the requirement that there be total incompatibility between the old and new
obligation, apply only to extinctive novation. In partial novation, only the terms
and conditions of the obligation are altered, thus, the main obligation is not
changed and it remains in force (Maria Soledad Tomimbang vs. Atty. Jose
Talimbang, G.R. No. 165116 citing Iloilo Traders Finance, Inc. vs. Heirs of Sps.
Soriano).
Example:
There was therefore a novation of the terms of the three promissory notes in that
the interest was waived and the principal was payable in monthly installments of
US$750. Alterations of the terms and conditions of the obligation would generally
result only in modificatory novation unless such terms and conditions are
considered to be the essence of the obligation itself. The resulting novation in this
case was, therefore, of the modificatory type, not the extinctive type, since the
obligation to pay a sum of money remains in force (Swagman Hotels and Travel,
Inc. vs. CA and Neal B. Christian, G.R. No. 161135, April 8, 2005).
4. As to Origin
A. Legal
Novation which takes place by operation of law (Art. 1300 and 1302, NCC).
B. Conventional
Novation which takes place by stipulation of the parties (Art. 1300 and 1301, NCC).
338. I. In its modern concept, what actually takes place in dacion en pago is an
objective novation of the obligation.
Novation in never presumed, and the animus novandi, must appear by express
agreement of the parties, or by their acts that are too clear and unmistakable.
A. Only I is true
B. Only II is true
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C. Both are true
D. Both are false
C
339. Novation by substituting the person of the debtor or subrogating a third
person to the rights of the creditor.
A. Objective novation
B. Subjective novation
C. Real novation
D. Mixed novation
B
340. Novation is made either by changing the object or the principal conditions
and by substituting the person of the debtor or subrogating a third person to the
rights if the creditor.
A. Objective novation
B. Subjective novation
C. Real novation
D. Mixed novation
D
341. I. Novation must be established either by the express terms of the new
agreement or by the acts of the parties clearly demonstrating the intent to dissolve
the old obligation as a consideration for the emergence of the new one.
II. The will to novate, whether totally or partially, must appear by the express
agreement of the parties, or by their acts which are too clear or unequivocal to be
mistaken.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
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C
342. When an old obligation is terminated by the creation of a new one that takes
the place of the former.
A. Total novation
B. Partial novation
C. Modificatory novation
D. None of the above
A
343. When the old obligation subsists to the extent that it remains compatible with
the amendatory agreement.
A. Total novation
B. Extinctive novation
C. Modificatory novation
D. None of the above
C
344. The initiative for the change does not come from and may even be made
without the knowledge of the debtor, since it consists of a third person’s
assumption of the obligation.
A. Delegation
B. Expromission
C. Subrogation
D. None of the above
B. In Expromision, the initiative for the change does not come from the debtor
and may even be made without his knowledge. Since a third person would
substitute for the original debtor and assume the obligation, his consent and that
of the creditor would be required (Leonida C. Quinto vs. People of the Philippines,
G.R. No. 126712, April 14, 1999).
For example, X owes Y P10,000. Subsequently, Z asked Y if the latter would agree
that he will pay the P10,000 obligation of X so that Z will become the new debtor
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and that X will be released from his obligation. Y agreed. Also, X agreed. In this
case, there is expromision, meaning the obligation of X is extinguished so that if Z
later will not pay the obligation, X is no longer liable. Take note that the initiative of
paying the obligation came from Z, a third person.
345. The debtor offers, and the creditor accepts, a third person who consents to
the substitution and assumes the obligation
A. Delegacion
B. Expromision
C. Subrogation
D. None of the above
A. Substitution of the person of the debtor may be effected by delegacion,
meaning, the debtor offers, and the creditor (delegatario), accepts a this person
who consents to the substitution and assumes the obligation, (Agrifina Aguintey vs.
Spouses Felicidad and Rico Tibong, G.R. No. 166704, December 20, 2006) thereby
releasing the original debtor from the obligation; here, the intervention and the
consent of all parties thereto would perforce be necessary.
For example, X owes Y P10,000. Subsequently, X asked Y if the latter would agree
that his brother Z will pay the P10,000 obligation of X so that Z will become the
new debtor and that X will be released from his obligation. Y agreed. Also, Z
consented. In this case, the obligation is extinguished because of delegacion so
that if Z later on will not pay, X is no longer liable. Take note that the initiative of
paying comes from the old debtor (X) himself.
In the two modes of substitution, the consent of the creditor is an indispensable
requirement (Leonida C. Quinto vs. People of the Philippines, G.R. No. 126712, April
14, 1999).
346. It means the debtor.
A. Delegado
B. Delegante
C. Delegatario
D. None of the above
A. Delegado
Means the new debtor
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Delegante
Means the original debtor
Delegatario
Means the creditor
347. It means the original debtor
A. Delegado
B. Delegante
C. Delegatario
D. None of the above
B
348. It means the creditor
A. Delegado
B. Delegante
C. Delegatario
D. None of the above
C. Novation which consists in substituting a new debtor (delegado) in the place of
the original one (delegante) may be made even without the knowledge or against
the will of the latter but not without the consent of the creditor. Substitution of the
person of the debtor may be effected by delegacion, meaning, the debtor offers,
and the creditor (delegatario), accepts a third person who consents to the
substitution and assumes the obligation. Thus, the consent of those three persons
is necessary. In this kind of novation, it is not enough to extend the juridical
relation to a third person; it is necessary that the old debtor be released from the
obligation, and the third person or new debtor take his place in the relation.
Without such release, there is no novation; the third person who has assumed the
obligation of the debtor merely becomes a co-debtor or a surety. If there is no
agreement as to solidarity, the first and the new debtor are considered obligated
jointly (Agrifina Aquintey vs. Spouses Felicidad and Rico Tibong, G.R. No. 166704,
December 20, 2006).
349. In delegacion, the insolvency of the new debtor shall not revive the action of
the creditor against the original obligor, except:
I. When said insolvency was already existing when he delegated his debt.
II. When said insolvency was of public knowledge, known to the debtor, when he
delegated his debt.
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A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C
350. I. When the principal obligation is extinguished in consequence of a
novation, the accessory obligations are not extinguished.
II. If the new obligation is void, the original one shall subsist.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
B. (Art. 1296&1297)
351. I. If the original obligation was subject to a suspensive or resolutory
condition, the new obligation shall be under the same condition.
II. Conventional subrogation must be clearly established in order that it may take
effect.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. X obliged himself to give Y a particular cell phone if Y passes the CPA board
examination. Subsequently, X and Y agreed that instead of giving a cell phone, X
will give a specific laptop. Is the giving of the laptop subject to the same suspensive
condition? Yes, X will deliver the laptop only if Y passes the CPA board examination.
There must be an express intention to novate – animus novandi. Novation is never
presumed. Article 1300 of the Civil Code provides inter alia that conventional
subrogation must be clearly established inn order that it may take effect (Elsa B.
Reyes vs. CA, et.al., G.R. No.120817, November 4, 1996).
352. Is the transfer of all the rights of the creditor to a third person, who
substitutes him in all his rights?
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A. Substitution
B. Subrogation
C. Annulment
D. Ratification
B. Subrogation is the transfer of all the rights of the creditor to a third person who
substitute him in all his rights (Edgar Ledonio vs. Capitol Development Corporation,
G.R. No. 149040, July 4, 2007).
KINDS OF SUBROGATION
1. Conventional Subrogation
That which takes place by agreement of parties.
2. Legal Subrogation
That which takes place without agreement but by operation of law because of
certain acts (Edgar Ledonio vs. Capitol Development Corporation, G.R. No. 149040,
July 4, 2007).
353. I. Assignment of rights extinguishes an obligation and gives rise to a new
one.
II. Subrogation refers to the same right which passes from one person to another.
A. Only I is true
B. Only II is true
C. Both are true
D. Both ae false
D. Conventional subrogation vs. Assignment of rights
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Conventional
subrogation
Assignment of rights
Is the transfer of all the
rights of the creditor to
a third person, who
substitute him in all his
rights which takes place
by agreement of parties.
An agreement by virtue of which the owner of a
credit (known as the assignor), by a legal cause –
such as sale, dation in payment or exchange or
donation and without need of the debtor ’s
consent, transfer that credit and its accessory
rights to another (known as the assignee), who
acquires the power to enforce it, to the same
extent as the assignor could have enforced it
against the debtor.
The debtor’s consent is
necessary.
The debtor ’s consent is not required.
Subrogation extinguishes
an obligation and gives
rise to a new one.
Assignment refers to the same right which passes
from one person to another.
The nullity of an old
obligation may be cured
by subrogation, such
that the new obligation
will be perfectly valid.
The nullity of an obligation is not remedied by the
assignment of the creditor ’s right to another
(Edgar Ledonio vs. Capitol Development
Corporation, G.R. No. 149040, July 4, 2007 citing
Arturo N. Tolentino, Commentaries and
Jurisprudence on the Civil Code of the Philippines,
Vol. IV, 1996 ed., p. 402).
The Supreme Court has consistently adhered to the foregoing distinction between
an assignment of credit and a conventional subrogation. Such distinction is
crucial because it would determine the necessity of the debtor ’s consent. In an
assignment of credit, the consent of the debtor is not necessary in order that the
assignment may fully produce the legal effects. What the law requires in an
assignment of credit is not the consent of the debtor, but merely notice to him as
the assignment takes effect only from the time, he has knowledge thereof. A
creditor may, therefore, validly assign his credit and its accessories without the
debtor ’s consent. On the other hand, conventional subrogation requires an
agreement among the parties concerned – the original creditor, the debtor, and
the new creditor. It is a new contractual relation based on the mutual agreement
among all the necessary parties (Edgar Ledonio vs. Capitol Development
Corporation, G.R. No. 149040, July 4, 2007).
In a more recent case, the Supreme Court stated: “The law does not require any
formal notice to bind the debtor to the assignee, all that the law requires is
knowledge of the assignment. Even if the debtor had not been notified, but came
to know of the assignment by whatever means, the debtor is bound by it. (Cited in
Edgar Ledonio vs. Capitol Development Corporation, G.R. No. 149040, July 4, 2007)”
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354. I. Novation by substitution of creditor requires an agreement among the
three parties concerned – the original creditor, the debtor and the new creditor.
II. Conventional subrogation of a third person requires the consent of the original
parties and of the third person.
A. Only I is true
B. Only II is true
C. Both are true
D. Both are false
C. (Art. 1301, NCC)
Well settled is the rule that novation by substitution of creditor requires an
agreement among the three parties concerned – the original creditor, the debtor
and the new creditor. It is a new contractual relation based on the mutual
agreement among all the necessary parties. Hence, there is no novation if no new
contract was executed by the parties (Elsa B. Reyes vs. CA, et.al. G.R. No. 120817,
November 4, 1996).
355. It is presumed that there is legal subrogation, except:
A. When a creditor pays another creditor who is preferred, even without the
debtor ’s knowledge.
B. When a third person, not interested in the obligation, pays with the express or
tacit approval of the debtor.
C. 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.
D. When, even without the knowledge of the debtor, a person not interested in
the fulfillment of the obligation pays.
D. (Art. 1302, NCC)
Legal subrogation is that which takes place without agreement but by operation
of law because of certain acts; this is the subrogation referred to in article 1302
(Chemphil Export and Import Corporation vs. CA, et.al., G.R. No. 112438-39,
December 12, 1995).
Example No. 1:
X owes Y P500,000 secured by a real estate mortgage. X also owes Z P200,000. The
obligation of X to Z has no guaranty or security. Later, Z (ordinary creditor) pays Y
the P500,0000 debt of X. In this case Z will be subrogated in the rights of Y which
means that Z can foreclose the mortgage in case of default by B.
Example No. 2:
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X owes Y P500,000 secured by a real estate mortgage. Z paid Y the amount of
P500,000 with the consent of X. In this case, Z is subrogated in the rights of Y.
Example No. 3:
X owes Y P500,000 secured by a real estate mortgage. It is also secured by G, as
guarantor. If G, pays Y the amount of P500,000, G will be subrogated in the rights
of Y. Moreover, the contract of guaranty is extinguished. Take note that G, being
the guarantor, is a person interested in the fulfillment of the obligation.
356. X obliged himself to give Y a specific car if Y places among the top ten in the
CPA board exam. Subsequently, they agreed that X will give Y the car if Y merely
passes the CPA board exam. This is an example of:
A. Mixed novation
B. Real novation
C. Implied novation
D. Personal novation
B
357. D owes C P10,000 payable on December 25, 2018. Later, D employed violence
to C for the latter to sign a promissory note for P10,000 payable on December 25,
2018. If all other requisites of compensation are present, are both debts
extinguished?
A. Yes, under the legal compensation
B. No, B’s consent was obtained by force
C. Yes, with the approval of the court
D. Answer not given
A
358. The following shall produce the effect of payment of debts:
A. Delivery of check
B. Tender of central bank notes
C. Delivery of promissory note
D. Answer not given
D
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359. X executed a promissory note in favor of Y and the promissory note is
negotiated by Y and subsequently is indorsed in favor of X. The obligation to pay
the promissory note is thereby extinguished because there is:
A. Confusion or merger
B. Novation
C. Remission
D. Answer not given
A
360. A certain C requested X to sell a specific car for P580,000. Y borrowed said car
from X for two days but instead of returning the car as promised. Y told X to buy
the car from C for P500,000 and that Y would pay X after Y returns from Davao.
Subsequently, C executed a deed of sale covering the car in X’s favor for P500,000
for which X is issued three checks in favor of C. X thereafter executed a deed of sale
in favor of Y. When Y returned from Davao, he refused to pay X the amount of
P500,000 saying that said amount would just be deducted from P566,000
obligation X had with Y. X in her cross-examination categorically admitted that she
is indebted to Y.
In his Answer, Y contented that; 1) as early as September 28, 2017, C has already
sold the car to X for P500,000; 2) as the time X executed the deed of sale in his
favor on March 4, 2018, X was already in possession of the deed of sale from C; 3)
the amount of P500,000 was fully paid by way of dation in payment to partially
extinguished X’s obligation with Y; 4) the contract entered into was a true sale of a
motor vehicle and the mode of payment was that of dation in payment agreed
upon at the time of the sale. Decide.
A. There is no legal compensation as one of the obligations consists of delivery of a
car and not a sum of money.
B. Legal compensation has not taken place because X and Y are not personally
both creditor and debtor of each other.
C. There is no legal compensation as both monetary obligations had not become
due and demandable.
D. By operation of law, the P500,0000 which Y owed X is off-set against the
P566,000 owed by X to Y, leaving a balance of P66,000, which X should pay.
D
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361. A, B and C owed in solidum P15,000 to X as evidenced by a promissory note.
The note prescribed on June 15, 2018. On August 1, 2018, A paid X. In this case, A
is:
A. Entitled to collect P5,000.00 each from B and C.
B. Not titled to reimbursement from his co-debtors for the shares of the latter.
C. Entitled to recover from X.
D. Answer not given.
B
362. A executes a promissory note in favor of B who subsequently indorsed it in
favor of A. The obligation to pay the promissory note is thereby extinguished
because there is?
A. Confusion or merger
B. Novation
C. Remission
D. Compensation
A
363. Payment shall be made to the following, except:
A. Creditor
B. The heirs of the creditor
C. Any person authorized to receive it
D. Any person
D
364. G and H worked for X, Inc. as assistant sales manager and salesman,
respectively. Sometime in August 2015 X, Inc. “sponsored” H to attend a training
course in Austria conducted by Z Corp., X, Inc.’s principal company. When H
returned nine months thereafter, X, Inc. directed him to sign a memorandum
providing that Z Corp. requires trainees to continue working with X, Inc. for a
period of 3 years after the training. Otherwise, each trainee shall refund to Z Corp.
$6,000 by way of compensation. On January 16, 2018 or 2 years and 4 months after
attending the training, H resigned from X, Inc.
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Immediately, X, Inc. ordered G and H to render an accounting of its various holiday
giveaways they received. In protest, G and H demanded from X, Inc. payment of
their separation benefits, commissions, vacation and sick leave benefits, and
proportionate 13th month pay. But X, Inc. refused and instead, withheld their 13th
month pay and other benefits. On April 16, 2018, G and H filed a complaint. Can
there be legal compensation between X, Inc. and H?
A. Legal compensation can take place between X, Inc. and H because they are
mutual creditor and debtor of each other.
B. Legal compensation cannot take place between X, Inc. and H because they are
not mutually creditor and debtor of each other.
C. Legal compensation can take place because in essence the two obligations can
be compensated.
D. Legal compensation cannot take place because it involves benefits.
B
365. It presupposes not only that obligor is able, ready and willing but so more so
the act of performing his obligation.
A. Promissory note
B. Tender of payment
C. Bill of exchange
D. Check
B
366. Which of the following is not a special form of payment?
A. Cession in payment
B. Application of payment
C. Consignation
D. Dacion in payment
C
367. X Inc. entered into a Contract of Lease with Y over a commercial space for the
year 2015-2018 on which X Inc. intended to operate a branch. While X Inc. was
able to secure the necessary licenses and permits for the year 2015, it failed to
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commence business operations. For the year 2016, X Inc.’s application for renewal
of barangay business clearance was “held in abeyance until further study of its
kitchen facilities.”
Hence, X Inc. was unable to operate. Fearing further business losses, X Inc.,
communicated its intent to terminate the lease contract to Y who, however, did not
accede. In August 2016, X Inc., for the second time, purportedly informed Y of its
intent to terminate the lease, and it in fact stopped paying rent. By letter of March
26, 2017, Y again demanded payment of rentals from X Inc. X Inc. denied any
liability. Decide.
A. X Inc. is not liable to pay rentals as the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the obligor may also be
released therefrom, in whole or in part.
B. X Inc. is not liable because the doctrine of unforeseen events is applicable in the
present case.
C. X Inc. is liable. Its failure to renew these permits, licenses, and authority for the
succeeding year, is not to be construed as an unforeseen event.
D. X Inc. is liable being a lessee.
C
368. X, Inc. entered into a Contract of Lease over a building owned by Y Co. from
April 16, 2013 to April 15, 2017. Upon expiration of the lease, X refused to vacate
the property despite repeated demands. Thus, on January 28, 2018, Y filled a
Complaint against X, Inc.
On July 3, 2018, court rendered a Decision, in favor of Y Co. The court orders X Inc.
to pay reasonable compensation in the amount of P585,640 a month as of April 15,
2017 until possession of the subject premises is surrendered to Y Co. Then, X Inc.
filed with the court a Motion to Consignate P1,171,280 in favor of Y Co. and to
submit the case for decision. The amount of P1,171,280 represented the reasonable
compensation for the months of July 3, 2018, when the Decision was promulgated.
Is the consignation proper?
A. Yes, because there was unjust refusal to accept.
B. Yes, because there was a notice of the consignation given to all persons
interested in the performance of the obligation.
C. Yes, because the amount due was place at the disposal of the court.
D. No, because X failed to prove that any of the requirements for proper
consignation was present.
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D
369. In tender and consignation, if after consignation is made, the creditor allows
the debtor to withdraw the thing deposited in court, which of the following is
incorrect?
A. Co-debtors, guarantors and securities are released from the obligation unless
they consented.
B. The obligation remains to subsist.
C. The obligation is extinguished.
D. None of the above.
C
370. D Co. got a loan from the former P Bank in the amount of P720,000. The loan
was secured by a real estate mortgage. In 1981, AB Corp. rented an office space in
the building constructed on the properties covered by the mortgage contract, with
the conformity of mortgagee P Bank, whereby the parties agreed that the monthly
rentals shall be paid directly to the mortgagee for D Co.’s account. On July 5, 2014,
the Central Bank closed P Bank. Sometime in December 2015, F Bank purchased
the credit of D Co. in favor of P Bank.
Subsequently, on December 14, 2016, D Co. tendered to F Bank the amount of
P1,450,000 through a check with the specific notation that it was for full payment
of its P Bank account that had been purchased by F Bank. F Bank accepted it as
payment. Is the tender of payment effective?
A. Yes, because a check is equivalent of money.
B. No, a check does not constitute legal tender, and that a creditor may validly
refuse it.
C. Yes, because F accepted D Co.’s check.
D. No, because a check prevents a creditor from accepting it as payment.
C
371. Q Co. alleged that X and Y violated their amended lease contract over a lot it
owns, when they did not pay the monthly rentals thereon. X and Y justify their
nonpayment of rentals on the ground that Q Co. refused to accept their payments.
Can X and Y can justify their nonpayment of rentals on the ground that Q Co.
refused to accept their payments?
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A. Yes, because it is beyond the control of X and Y if Q Co. refused to accept their
payment.
B. No, because they should have insisted on giving their payment based on the
principle of obligatory force of contract and compliance in good faith.
C. X and Y cannot justify their nonpayment of rentals because they should have
delivered the sum of money to Q Co. by mail.
D. X and Y cannot justify their nonpayment of rentals on the ground that Q Co.
refused to accept their payments because if the creditor to whom tender of
payment has been made refuses without just cause to accept it, the debtor shall
be released from responsibility by the consignation of the sum.
D
372. M, N, and O filed an action for annulment of contracts against X Bank. They
claimed that X Bank induced them to avail of its credit facilities by offering low
interest rates so they accepted X Bank’s proposal and signed the Bank’s preprinted promissory notes on various dates. They, however, were unaware that the
documents contained identical escalation clauses granting X Bank authority to
increase interest rates without their consent.
X Bank, asserted that M, N, and O knowingly accepted all the terms and conditions
contained in the promissory notes. In fact, they continuously availed of and
benefited from X Bank’s credit facilities for five years. After trial, the Regional Trial
Court (RTC) upheld the validity if the promissory notes. The trial court, took judicial
notice of the steep depreciation of the peso during the intervening period and
declared the existence of extraordinary deflation. Decide.
A. There is no extraordinary deflation because the obligation is not contractual in
nature.
B. There is extraordinary deflation because the increase in the purchasing power of
currency is manifestly beyond the contemplation of the parties.
C. There is extraordinary deflation because there is unusual increase in the
purchasing power of currency.
D. There is no extraordinary deflation because despite the devaluation of the peso,
the BSP never declared a situation of extraordinary inflation. Moreover, the parties
did not agree to recognize the effects of extraordinary or deflation.
D
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373. D owes C P1,000,000. G is the guarantor. A stranger, X, paid the debt of D
without the knowledge of the latter. In this case:
A. If D fails to pay X, the latter can compel G to pay him.
B. If G pays X, the former can demand reimbursement from D.
C. X cannot compel G to pay him.
D. D has no obligation to reimburse X because he paid without the consent of D.
C
374. X and Y alleged that they are the registered owners of a parcel of land.
Thereafter, X and Y discovered that a portion on the left side of the said parcel of
land was occupied by M and N for more than a year, without their prior knowledge
or consent. A demand letter was sent to M and N requiring them to vacate the
property but they refused to comply; hence, the filling of the Compliant. During
the pendency of the case, the parties agreed to enter into a Compromise
Agreement which the court approved.
The Compromise Agreement provides that M and N, showed several checks
payable to X, issued by a certain C. However, alleging that they failed to pay the
amounts due on the Compromise. Agreement, X and Y sent a letter demanding
that M and N vacate the premises. Decide.
A. The obligation of M and N is extinguished because check is equivalent to
money; thus, it is extinguished by payment.
B. The obligation of M and N is not extinguished because the delivery of mercantile
documents including checks “shall produce the effect of payment only when they
have been cashed.” In this case, it was shown that the checks were encashed by X
and Y.
C. M and N discharge their burden of proving payment because of the several
checks issued by a certain C.
D. Receipts of checks by X is the best evidence of the fact of payment; hence, the
obligation is extinguished.
B
375. Compensation cannot take place, except
A. When one debt arises from the obligations of a depositary
B. When one debt arises from the obligation of a bailee in commodatum
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C. When one debt arises because of a claim for support due to gratuitous title
D. When one debt arises from a bank deposit
D
376. A owes B P1,000,000. A proposed to B that C will pay A’s debt and that he will
be released from all liabilities to him. B and C agreed to the proposal. Later, when B
tried to collect from C, he found out that he was insolvent.
A. A is no longer liable to B because of the substitution of C in his place if he had
no knowledge of the insolvency despite it being public knowledge.
B. A is no longer liable to B even if he had knowledge of C’s insolvency provided it
is not of public knowledge.
C. A is still liable to B because even if he was the one who proposed to B that C
shall substitute him as debtor.
D. A is no longer liable to B despite the insolvency of C unless said insolvency was
of public knowledge or known to him when he delegated the debt.
D
377. P Inc., appointed B Corp. as one of its dealers of electrical wires and cables.
During the period covering December 2017 to August 17, 2018, B Corp. purchased,
on credit, from P, Inc. various electrical wires and cables in the total amount of
P4,102,438.30. On September 7, 2018, B Corp. paid P, Inc. the amount of P300,000,
thereby leaving an unpaid account on the aforesaid deliveries of P3,802,438.20. On
several occasions, P, Inc. wrote B Corp. demanding payment of its outstanding
obligations. In response, B Corp. wrote P, Inc. on October 5, 2018 requesting the
latter if it could pay its outstanding account in monthly installments of P500,000
plus 1% interest per month commencing on October 15, 2018 until fully payment.
P, Inc., however, rejected B Corp.’s offer and accordingly reiterated its demand for
the full payment of Corp.’s account. Decide.
A. B Corp. can compel P, Inc. to accept payment in installments. B Corp. is not
bound to fulfill what has been expressly stipulated therein.
B. B Corp. can be allowed to perform its obligation under such contract in parts
because their contract has the force of law between them.
C. P Inc.’s right to reject B Corp.’s offer to pay in installments is correct because the
creditor cannot be compelled partially to receive the prestations in which the
obligation consists.
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D. P Inc.’s right to reject B Corp.’s offer to pay in installments is incorrect because
the object of the obligation can be performed in parts.
C
378. C is the creditor of D in the amount of P50,000. G is the guarantor D. D paid C,
partially with P20,000. A, not knowing the partial payment of D and against the will
of D, paid C the amount of P50,000. What is the effect of this payment in the
obligation?
A. The obligation is extinguished. A cannot recover any amount from D, but A can
demand reimbursement from G in the amount of P50,000.
B. The obligation is extinguished. A can demand P30,000 from D because this
amount benefited D, or, A having been subrogated into the rights of C, can
proceed against G.
C. The obligation is not extinguished. A’s payment being against the will of D does
not extinguish the obligation.
D. The obligation is extinguished. A can demand P30,000 from D, but if D cannot
pay, A cannot ordinarily proceed against the guarantor G because A is not entitled
to subrogation.
D
379. Whenever in an obligation a period is designate, it is presumed to have been
established for the benefit of:
A. Both the creditor and the debtor
B. The creditor
C. The debtor
D. The third party
A
380. An act of liberality whereby a creditor condones the obligation of the debtor
A. Confusion
B. Compensation
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C. Remission
D. Novation
C
381. When the thing deteriorates pending the fulfillment of the suspensive
condition without the fault of the debtor, the impairment is:
A. To be borne by the party who caused the deterioration
B. To be borne partly by the debtor and partly by the creditor
C. To be borne by the debtor
D. To be borne by the creditor
D
382. A owes P10,000. With the consent of both, C pays B P5,000. Now B and C are
the creditors of A to the amount of P5,000 each. Suppose A has only P5,000. Which
is correct?
A. B and C should divide the P5,000 equally
B. C should be preferred
C. A may chose who to pay
D. B should be preferred
D
383. An obligation where only the presentation has been agreed upon but the
debtor may render another in substitution is:
A. Conjoint obligation
B. Facultative obligation
C. Simple obligation
D. Alternative obligation
B
384. X, Y, and Z are solidarily liable to A for P30,000 which matures on July 1, 2018.
On May 1, 2018, X paid A for the whole amount of the debt. If on December 1,
2018, X will be reimbursed by Y, the latter will be liable for:
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A. P10,000 with interest from July 1, 2018 to December 1, 2018
B. P10,000 without interest
C. P10,000 with interest from May 1, 2018 to July 1, 2018
D. P10,000 with interest from May 1, 2018 to December 1, 2018
A
385. A thing is not deemed lost when it:
A. Perishes
B. Disappears in such a way its existence is unknown or it cannot be recovered
C. Goes out of commerce
D. Deteriorates
D
386. A mango tree in the land of O is reclining towards the road. All of a sudden,
without a storm or an earthquake or even a strong wind, the tree falls hitting a car
belonging to Y causing a P20,000 damages. The liability of O to X arises from:
A. Law
B. Quasi-contracts
C. Contracts
D. Quasi-delict
D
387. A, B, and C solidary debtors owe solidary creditors X and Y P30,000. X remitted
the entire obligation in favor of A. The effect is:
A. The obligation is not extinguished until A collects from B and C.
B. The obligation is not yet extinguished until Y is paid by X and his share of the
credit.
C. A cannot recover from B and C because remission in his favor extend to the
benefit of B and C.
D. A can recover from B and C their respective share of the debt.
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C
388. A sign a promissory note and binds himself to pay X P100,000 plus 15% per
annum interest on June 30, 2018.
A. Before June 30, 2018, X can demand payment
B. If on June 30, 2018 A is paying X, the latter can refuse the payment
C. A can compel creditor X to accept payment before June 30, 2018
D. Because the period is for the benefit of the debtor and creditor, X can refuse
any tendered payment before June 30, 2018.
D
389. The following are the requisites of an obligation, except:
A. Passive subject, debtor or obligor
B. Active subject, creditor, or oblige
C. Efficient cause
D. Presentation
D
390. The debtor shall lose the right to make use of the period in the following
cases, except:
A. When he becomes insolvent
B. When he violates any undertaking in consideration of which the creditor
agreed to the period.
C. When the debtor attempts to abscond
D. When he does not furnish any guaranty or security to the creditor
D
391. An obligation ceases to be alternative and becomes a simple obligation in the
following cases, except:
a. When the debtor has communicated his choice to the creditor.
b. When the right of choice has been expressly granted to the creditor and his
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choice has been communicated to the debtor.
c. When among the several prestations that are due only one is practicable.
d. When several prestations are due but the performance of one is enough to
extinguish the obligation.
D
392. D is obliged to give C a specific watch, a specific ring, or a specific bracelet.
The parties agreed that C will have the right to choose the watch and the ring are
lost through D’s fault, successively. What is the thing which will be given to him.
Before C could make his choice, the right of C?
a. C may choose the delivery to him of the bracelet, or the price of the watch or
the price of the ring plus damages.
b. C cannot choose the price of the watch or the price of the ring because the said
objects have already been lost.
c. C can only choose to have the bracelet because anyway, D can still perform his
obligation.
d. C can only choose to have delivery of the bracelet or the price of the ring which
was the last item that was lost plus damages.
A
393. D obliged to give C a specific ring. The parties agreed that D may give a
specific bracelet as a substitute. Which of the following is true?
A. If the ring is lost through a fortuitous event before substitution, the obligation
is extinguished.
B. If the bracelet is lost through a fortuitous event before the substitution, the
obligation is extinguished.
C. If the ring is lost through a fortuitous event after substitution, the obligation is
extinguished.
D. If the ring is lost through the debtor ’s fault after substitution, the debtor shall
pay damages.
A
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394. It refers to a joint obligation:
a. One in which each debtor is liable for the entire obligation and each creditor is
entitled to demand the whole obligation.
b. One in which either one of the parties is indispensable and the other is not
necessary.
c. One in which the obligation of one is a resolutory condition of the other, the
non-fulfillment of which entitles the other party to rescind the contract.
d. One in which each of the debtors is liable only for a proportionate part of the
debt and each creditor is entitled only for a proportionate part of the credit.
D
395. 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?
a. S can collect from D although D and C did not agree that the right to the debt
will pass on to the heirs of C.
b. S cannot collect because the credit right is personal to C.
c. S can collect only if D and C agreed that the right to the debt will pass on the
heirs of C.
d. S cannot collect because the law prohibits the transmission of the credit right.
A
396. A, B, C and D, solidary debtors, are obliged to give V, W, X, Y and Z, solidary
creditors, P20,000.
a. V may collect from D P20,000.
b. V may collect from D P4,000.
C. V may collect from D P5,000.
d. V may collect from D P1,000.
A
397. When the period is “on or before a date”, the debtor has the benefit of the
period. This benefit is lost and the obligation becomes demandable when:
a. The debtor attempts to abscond.
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b. After contracting the obligation, the creditor suspects the debtor badoo of
becoming insolvent.
c. The guarantee given by the debtor is not acceptable to the creditor.
d. Demand by creditor could be useless.
A
398. Unless the law or the stipulation of the parties requires another standard of
care, the obligation to give a thing carries with it the obligation to take care of it
with:
A. Extra-ordinary diligence
B. Degree of care agreed upon by the parties
C. Diligence of a good father of a family
D. Diligence of a good family of a father
C
399. One of the following shall produce the effect of debts:
A. Delivery of check
B. Tender of Central Bank notes
C. Delivery of promissory note
D. Decion en pago
D
400. If the creditor to whom tender of payment has been made refuses without just
cause to accept it, the debtor shall be released from responsibility by:
A. Assignment of property
B. Consignation of the thing or sum due
C. Adjudication or pacion en pago
D. Condonation
B
401. A executes a promissory note in favor of B who subsequently indorsed it in
favor of A. The obligation to pay the promissory note is thereby extinguished
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because there is?
A. Confusion or merger
B. Novation
C. Remission
D. Compensation
A
402. This is a promissory note:
“I promise to pay A, B and C the sum of P18,000” (sgd) D, E, and F.
A. F is obliged to pay P6,000
B. F is obliged to pay P2,000
C. F is obliged to pay P12,000
D. F is obliged to pay P18,000
A
403. If the obligor binds himself to perform his obligation as soon as “he shall have
obtained a loan” from a certain bank, this obligation is:
A. With a term
B. Conditional
C. Suspensive
D. Resolutory
B
404. It presupposes not only that the obligor is able, ready and willing but more so,
in the act of performing his obligation.
A. Promissory note
B. Tender of payment
C. Bill of exchange
D. Obligation to sell
B
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405. Which of the following is not considered as quasi-contract?
A. Solution indebiti
B. When the third person without the knowledge of the debtor, pays the debt
C. Negotiorum gestio
D. Reimbursement due the person who saved the property during fire or storm
without the knowledge of the owner
B
406. In tender and consignation, if after consignation is made, the creditor allows
the debtor to withdraw the thing deposited in court, which of the following is
incorrect?
A. Co-debtors, guarantors and securities are released from the obligations unless
they consented.
B. The obligation remains to subsist.
C. The obligation is extinguished.
D. None of the above.
C
407. D owes C P10,000 payable on December 25, 2018. Later D forced C to sign a
promissory note for P10,000 payable on December 25, 2018. If all other requisites
of compensation are present, are both debts extinguished?
A. Yes, under the legal compensation
B. No, B’s consent was obtained by force
C. Yes, with the approval of the court
D. Answer not given
A
408. X has been missing for something leaving no one to manage his properties. A
and B jointly took charge of the management thereof. However, due to the fault of
A, the properties of X were damaged. The liability therefore to X for damages shall
be:
A. Only A shall be liable
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B. Both shall be jointly liable
C. Both shall be solidarily liable
D. Both shall be solidarily liable
C
409. X by mistake delivered to A and B a sum of money which should have been
delivered to C and D. X now demand the return of the same from A and B. The
liability of the latter for the sum of money to which they are not entitled shall be:
A. A and B shall be liable solidarily.
B. A and B shall be liable jointly.
C. They are not liable for having received the money in good faith.
D. X has no right to recover as he was negligent in the delivery of the money.
A
401. The obligation of mutual support for each other of husband and wife arises
from:
A. Law
B. Contract
C. Quasi-delict
D. Quasi-contract
A
411. In three of the following instances, the officious manager may still be held
liable for fortuitous events. Which is the exception?
A. If he assumed the management in bad faith
B. If he undertakes risky operations like the owner was accustomed to do
C. If he is manifestly unfit to carry on the management
D. If he has preferred his own interest to that of the owner
B
412. Marilou, who was entrusted by her principal with a diamond pendant for sale,
was robbed one evening and lost the pendant. Is Marilou excused from civil liability
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attendant to the loss of the pendant even if the robber is not yet apprehended?
A. No, because the agent acted as agent and had possession of the pendant
B. No, because the agent failed to exercise due diligence in the safekeeping of the
diamond pendant
C. Yes, due to fortuitous event
D. Answer not given
C
413. One is not a requisite needed in order that obligation shall be extinguished by
loss or destruction of the thing due:
A. When the thing is lost without the fault of the debtor
B. When the thing lost is generic
C. When the thing lost before the debtor has incurred in delay
D. When the thing lost is specific
B
414. Every obligation whose performance does not depend upon future or
uncertain event, or upon a past unknown to the parties is demandable at once.
This refers to:
A. Divisible and Indivisible Obligation
B. Joint and Solidary Obligations
C. Obligation with a Period
D. Pure and Conditional Obligation
D
415. To have the effect of payment debts in payment in money should be paid:
A. In currency which is legal tender in the Philippines.
B. By the delivery of promissory notes payable to order.
C. By delivery of checks or bills of exchange.
D. By all of the above.
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A
416. Which of the following is an element of legal compensation?
A. Debts to be compensated are due and demandable.
B. There is a controversy or adverse claim over any debts to be compensated.
C. There are 2 or more debts of the same kind.
D. There are 2 persons who are creditors and debtors of each other.
B
417. Recission of contract can take place in this case:
A. When the thing which are the object of the contract are legally in the
possession of third person who acted in bad faith.
B. When he who demands rescission can return whatever he may be obliged to
restore.
C. When the party seeking rescission can perform only as to part and rescind the
remainder.
D. When the seller cannot return the installments paid to him by the buyer.
B
418. One is not a requisite in order that obligation shall be extinguished by loss or
destruction of the thing due:
A. When the thing is lost without the fault of the debtor
B. When the thing lost is generic
C. When the thing lost before the debtor has incurred in delay
D. When the thing lost is specific
B
419. Change of persons or objectives:
A. Confusion
B. Novation
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C. Solution indebiti
D. Negotiorum gestio
C
420. A solidary obligation is one in which each of the debtors is liable for the entire
obligation or debt, and each of the creditor is entitled to the entire credit.
Obligations shall also be considered solidary under the following three exceptions.
Which does not belong to the exception?
A. When solidary is expressly stipulated in the obligation
B. When the prestation is indivisible and there are two or more debtors and
creditors
C. When the law expressly provides solidarity
D. When the nature of the obligation requires solidarity
B
421. Payment of the obligation by a solidary debtor shall not entitle him to
reimbursement from his co-debtors.
A. If such payment was made before the obligation is due.
B. If such payment was made after the obligation has prescribed or become
illegal.
C. If such payment was made in compliance with the demand to him by all the
creditors.
D. If such payment was made after the obligation has become due and
demandable and notice of payment was made to him.
B
422. A, B and C secured a loan from X. The promissory note which evidences the
obligation states: “I promise to pay” and signed by A, B and C. The obligation is:
A. Joint
B. Solidary
C. Divisible
D. Indivisible
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B
423. Consignation is a mode of payment which extinguishes an obligation. Which
of the following is not a requisite for consignation?
A. Actual consignation with the proper judicial authorities
B. Existence of a valid debt
C. There must be prior notice of consignation to persons interested in the
fulfillment of the obligation
D. The notice must be published in a newspaper of general circulation for three
consecutive weeks.
D
424. The creditor shall have a right to indemnity for damages when through the
fault of the debtor, all things which are alternatively the object of the obligation
have been lost or compliance of the obligation has become impossible. The
indemnity shall be fixed on the basis of:
A. The value of the least expensive things.
B. The value of the most expensive things
C. The value of the last thing which disappeared
D. The value of the first thing which disappeared.
C
425. A is indebted to B for P20,000. X is the guarantor if A. B is also indebted to A
for P8,000. How much will X be liable as a guarantor if B sues A and A cannot pay?
A. P12,000
B. P20,000
C. P8,000
D. X has no liability
A
426. On October 4, 2018 A is indebted to B for P50,000 for a 20-day period. A
proposed to B that X will pay A’s debt and that A will be free from all liabilities. At
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the time of delegation, X was already insolvent but this was known to A. The
insolvency is not of public knowledge. So B sues A on the ground that it was A who
made the proposal that A guaranteed X’s solvency. Decide.
A. A is liable because he is presumed to have guaranteed X’s solvency.
B. A is not liable because A does not know the insolvency of X at the time of
delegation and neither was the insolvency of public knowledge.
C. A is liable because he did not exercise due diligence in determining the
insolvency of X.
D. A is liable X agree to the proposal to make himself solidarily liable for the
obligation.
B
427. X and Y are solidary debtors of A, B, C and D, joint creditors to the amount of
P8,000. How much can A collect from X?
A. A could recover P 4,000 from X. A, in return, has to give B, C and D P 1,000
each.
B. A could recover P 2,000 only from X.
C. A could recover P 1,000 only from X.
D. A could recover P 8,000 from X, in turn has to give to B, C, and D.
B
428. Mr. AB owes Mr. CD P150,000 due on August 31, 2018. Mr. AB executed a
mortgage in favor of Mr. CD on Mr. AB’s building to guaranty the obligation. On
August 10, 2018, the mortgaged building was totally lost due to a strong typhoon.
On August 12, 2018, Mr. CD demanded payment from Mr. AB. Is Mr. CD’s demand
valid?
A. No, the obligation is with a definite period, thus the creditor cannot demand
fulfillment of the obligation as such would be prejudicial to the rights of the debtor.
B. No, the obligation is extinguished because the obligation is lost due to a
fortuitous event.
C. Yes, the debt becomes due at once because the guaranty was lost even though
a fortuitous event unless the debtor can mortgage another property that is equally
satisfactory.
D. Yes, the debt becomes due at once because the tenor benefit is given solely to
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the creditor thereby giving the creditor the right to demand performance even
before the due date.
C
429. Mr. ABC is obliged to give Mr. XYZ his only car on July 15, 2018. Mr. ABC did
not deliver on July 15, 2018. On Jul 20, 2018, an earthquake destroyed the building
where the car was garaged and the car was destroyed. Is Mr. ABC still liable?
A. No, considering that no demand to deliver was made by Mr. XYZ and the
specific thing was lost due to fortuitous event, the obligation is extinguished.
B. No, the obligation is extinguished even if the debtor is already in default,
because the debtor cab plead impossibility of performance.
C. Yes, Mr. ABC is already in legal delay, thus the obligation to deliver the lost
specific thing is converted into monetary claim for damages.
D. Yes, the creditor can instead demand for a substitute equivalent in value from
the debtor.
A
430. A and B are solidary debtors of X, Y and Z, joint creditors to the amount of P
15, 000. How much can Z collect from B?
A. Z could recover P7,500 from B.
B. Z could recover P5,000 from B.
C. Z could recover P15,000 from B. Z in turn has to give X and Y P5,000 each.
D. Z could recover P15,000 from B. B in turn can collect from A the amount of
P7,500.
B
431. Mr. S executed a first mortgage of his house in favor of Mr. D on May 15, 2017
to guaranty a mortgage loan of P200,000 due for payment on May 15, 2018. On
September 16, 2017 the house was completely destroyed by a typhoon. On
September 18, 2017, Mr. D demanded payment of the loan from Mr. S. Is Mr. D’s
demand for payment valid?
A. No, the obligation is one with a definite period, so the creditor cannot demand
payment until the definite due date arrives.
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B. No, the obligation is extinguished because the object of the obligation is lost
due a fortuitous event.
C. Yes, the obligation becomes due at once because the tenor benefit is given
solely to the creditor thereby giving the creditor the right to demand performance
even before the due date stipulated.
D. Yes, the Obligation becomes due at once because the guaranty was lost even
though a fortuitous event unless the debtor can mortgage another property that is
equally satisfactory.
D
432. A, B and C borrowed P 24,000 from Y and Z and signed a promissory note
dated January 15, 2018 and due within six months. How much can Y collect from
A?
A. P12,000
B. P4,000
C. P8,000
D. P24,000
B
433. A, B, and C borrowed P36,000 from X and Y. The three debtors signed a
promissory note dated January 10, 2018 promising to pay the creditors on or
before July 10, 2018. How much can X collect from C?
A. P18,000
B. P6,000
C. P12,000
D. P36,000
B
434. When two persons are reciprocally debtors and creditors, there is:
A. Consignation
B. Merger
C. Compensation
D. Confusion
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C
435. This is the promissory note: “We promise to pay A, B and C the sum of one
hundred eighty thousand (P180,000) pesos within 60 days. Signed by X, Y and Z.”
A. X is obliged to pay A P20,000
B. X is obliged to pay A P60,000
C. X is obliged to pay A P180,000
D. X is obliged to pay A, B and C P180,000
A
436. E is obliged to give R a 2069 specific car with plate number BAUTIN123 on
September 30, 2018. On October 10, 2018, E did not deliver the car which was
totally destroyed by an earthquake on such date. Is E still liable?
A. No. The obligation is extinguished. The specific thing was lost due to fortuitous
event and no demand to deliver was made by R.
B. Yes. E is in legal delay. R can claim damages.
C. No. Even if E is already in default, he can plead impossibility of performance.
D. Yes. R can instead demand for another car of equivalent value from E.
A
437. C is the creditor of D in the amount of P50,000. G is the guarantor of D. D paid
C partially with P20,000. A, not knowing the partial payment and against the will of
D paid C the amount of P50,000. What is the effect of this payment in the
obligation?
A. The obligation is extinguished. A cannot recover any amount from D but can
demand reimbursement from C in the amount of P50,000.
B. The obligation is extinguished. A can demand P30,000 from D because this
amount benefited D, or A, having subrogated into the rights of C can proceed
against guarantor G.
C. The obligation is not extinguished. A’s payment against the will of D does not
extinguish the obligation.
D. The obligation is extinguished. A can demand P30,000 from D if D cannot pay,
A cannot ordinarily proceed against guarantor G because A is not entitled to
subrogation.
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D
438. In this case, advance payment by the debtor is recoverable
A. If the advance payment is only for interest due.
B. If the creditor demanded for the advance payment and the debtor knew it was
not yet due.
C. If the advance payment is in reciprocity to the advance payment of the other
party.
D. If the debtor was unaware of the period.
D
439. When the debtor abandons and assigns all of his properties in favor of his
creditor for the latter to sell to satisfy his credits, this is:
A. Remission
B. Payment by cession
C. Dation in payment
D. Expromission
B
440. Mr. AB offered in writing to sell his home and lot for P7,500,000 to Mr. CD on
July 1, 2018. Mr. CD requested Mr. AB to give him 60 days within which to raise the
P750,000.00. On August 15, 2018 Mr. AB informed Mr. CD that the price is raised
and now at P1,000,000.00. Can Mr.CD compel Mr. AB to sell house and lot at
P750,000 which was offered in writing by Mr. AB?
A. Yes, because Mr. AB is already in estoppel by his written offer.
B. Yes, because the 60 days offer has not yet expired.
C. No, because Mr. CD has not accepted the offer of Mr. AB.
D. Yes, because there was already meeting of minds.
B
441. A, B, C and D are jointly creditors of E and F, solidary debtors in the amount of
P40,000.00. How much can A, B and C collect from E?
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A. A, B, C and D could collect P20,000.00 from E.
B. A, B, and C could collect P30,000.00 from E.
C. A, B, C and D could collect all the P40,000 from E.
D. A, B, C and D could collect P20,000.00 from E and P10,000.00 from F.
C
442. This mode of extinguishment of obligation is when two persons, in their own
rights are creditors and debtors of each other.
A. Merger or confusion
B. Condonation or Remission
C. Compensation
D. Novation
C
443. A obliges himself to pay X P100,000 in 30 days plus a penalty of P20,000. If A
fails to pay the obligation in due time. A failed to pay the obligation in 30 days. X
can demand from A.
A. The principal of P100,000 plus P20,000 penalty
B. The principal of P100,000 plus P20,000 penalty, plus legal interest.
C. The principal of P100,000 plus legal interest.
D. The principal of P100,000 plus P20,000 penalty plus legal interest plus damages.
A
444. A owes X P50,000 payable on or before June 30, 2018. S who is not a party to
the contract and without the consent and against the will of A paid X the P50,000
on April 2018 when the prevailing rate of interest was 12% per annum.
A. S can ask reimbursement from A in the amount of P50,000 plus 12% interest
from April to June 30, 2005.
B. S can ask reimbursement from A in the amount of P50,000
C. S cannot ask reimbursement from A because the payment by S is without the
consent and against the will of A.
D. S can ask refund from X because the payment by S was against the will of A.
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B
445. When an obligation is extinguished because of the passage of time, this is:
A. Fulfillment of resolutory condition
B. Arrival of a resolutory period
C. Prescription
D. Rescission
C
446. When the debtor abandons or transfers all his properties to the creditors so
that the creditors may sell the properties and out of the net proceeds the creditors
recover their claims, this is called:
A. Dacion en pago
B. Tender of payment and consignation
C. Payment by cession
D. Remission
C
447. When the period is “on or before a date”, the debtor has the benefit of the
period. This benefit is lost and the obligation becomes demandable when:
A. The debtor attempts to abscond
B. After contracting the obligation, the creditor suspects the debtor to becoming
insolvent.
C. The guarantee given by the debtor is not acceptable to the creditor.
D. Demand by the creditor could be useless.
A
448. It takes place when two persons in their own right, are creditor and debtor of
each other.
A. Remission
B. Confusion
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C. Novation
D. Compensation
D
449. X borrowed P5,000 from Y on February 1, 2018. On March 1, 2018, X tendered
to Y a cashier ’s check in the amount of P5,100. Y accepted the check, but forgot to
deposit it until September 30, 2018. His bank refused to accept the check as it had
become stale. Y now wants X to pay him in cash the amount of P5,100 claiming
that the previous payment was not in legal tender. X refused to pay him claiming
that Y is estopped from raising the issue a legal tender as it was his negligence in
not depositing the check immediately. Decide.
A. Y is correct, payment in check is not legal tender.
B. X is correct, Y is now estopped from raising the issue that a check is not legal
tender.
C. Y is correct, payment in cashier ’s check like manager ’s check is not legal tender.
D. Y is correct because the check was not encashed.
B
450. The following are obligations without an agreement except:
A. Delicts
B. Quasi-delicts
C. Contracts
D. All other obligations arising from law
C
451. X had a savings deposit with Y Bank in the amount of P5,000,000.
Subsequently, X obtained a car loan from the same bank in the amount of
P1,200,000, payable in 12 equal monthly installments. X issued in favor of Y bank
post-dated checks, each in the amount of P100,000, to cover the 12 monthly
installment payments. On the third, fourth, and fifth months, the corresponding
checks bounced. Is compensation applicable?
A. No, compensation is not applicable as X and Y Bank are not mutually debtor
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and creditor of each other.
B. Yes, compensation is applicable because a bank deposit is a contract of loan,
where the depositor is the creditor and the bank is the debtor.
C. No, compensation is not applicable because what is applicable is confusion.
D. Yes, compensation is applicable because a bank deposit is a contract of deposit.
B
452. X had a savings deposit with Y Bank in the amount of P5,000,000.
Subsequently, X obtained a car loan from the same bank in the amount of
P1,200,000, payable in 12 equal monthly installments. X issued in favor of Y bank
post-dated checks, each in the amount of P100,000, to cover the 12 monthly
installment payments. On the third, fourth, and fifth months, the corresponding
checks bounced. Y Bank then declared the whole obligation due, and proceeded to
deduct the amount of P1,000,000 from X’s deposit. Is the bank correct?
A. Yes, the bank is correct because the P1,000,000 balance is subject to
compensation.
B. No, the bank is not correct because what is due, demandable, and liquidated is
only up to the amount of P300,000. This is the amount that is subject to
compensation.
C. Yes, the bank is correct because it is presumed that there is acceleration clause
in the contract.
D. Yes, the bank is correct. However, it can deduct the amount of P1,200,000.
B
453. X obtained a loan of P1,000 from Y, payable within one year. Ten days after
maturity date, X tendered a manager ’s check to Y. The latter refused to accept
payment on the ground that he wanted payment in cash. Is Y’s refusal justified?
A. No, because a manager ’s check is legal tender.
B. No, because an offer of a manager ’s check in payment of a debt is a valid
tender of payment and may not be refused receipt by the creditor.
C. No, because the delivery of a check discharges an obligation.
D. Yes, because a check, whether a manager ’s check or an ordinary check is not
legal tender, and an offer of a check in payment of a debt is not a valid tender of
payment.
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D
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