Ques Review Obli

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Midterm Phase Coverage

PART III. MODES OF EXTINGUISHMENT OF OBLIGATION

Preliminary Question197. Question- How are obligation extinguished?

Answer-

1) by payment or performance2) by the loss of the thing due3) by the condonation or remission of the debt

4) by the confusion or merger of the remission of thedebt 5) by the compensation

6) by novation(Article 1231; Civil Codes of the

Philippines)

198. Question- Name the other causes for the extinguishment of obligation.Answer- Annulment, Recession, Fulfillment of a resolutory condition and

precision.( Article 1232; Civil Code of the Philippines)

Lesson I- PAYMENT199. Question- Define payment as a means to extinguish an obligation.

Answer- Payment means not only the delivery of money but also theperformance in any other manner of obligation.( Article 1232; Civil Code of the Philippines)

200. Question- Is there difference between payment and performance?Answer- None. Because payment as a cause of extinguishing an obligation doesnot refer merely to payment of money debts, but it applies as well to theperformance of any other obligation to give, to do or not to do.

(Justo R. Torres Jr.; Law on obligation and Contract; 2003)

201. Question- In law, when is a debt understood to have been paid?Answer- A debt shall be understood when the thing or service in which theobligation has been completely delivered or rendered as the case may be.(Article 1233; Civil Code of the Philippines)

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202. Question- When is an obligation considered paid, although there has been nocomplete performance?

Answer- When the oblige accepts the performance, knowing its incompletenessor iregulatority and who expressing any protest or objection, the obligation is

deemed fully complied with.(Article 1235; Civil Code of the Philippines)

203. Question- If an obligation has been substantially performed in good faith, whatcan the obligor recover?

Answer- The obligor may recover as though there had been a strict and completefulfillment, less damages suffered by the obligee.(Article 1234; Civil Code of the Philippines)

204. Question- Can a creditor be compelled to accept payment from a third person

who shall have no interest in the fulfillment of the obligation?Answer- No.(Article 1236; Civil Code of the Philippines)

205. Question- From whom a creditor accept payment?Answer-1) the debtor2) any person who has an interest in the obligation( like guarantor )3) a third person who has no interest in the obligation when there isstipulation that he can make payments

(Hector S. De Leon; The law on Obligation and Contracts; 2003)

206. Question- What are the effects by a third person who is not interested in theobligation once accepted by a creditor?

Answer-a) If made without the knowledge or against the will of the debtor- thepayer can recover from the debtor only insofar as the payment has beenbeneficial to the latter

b) If made with the knowledge of the debtor- the payer shall havethe rights of reimbursement and subrogation, that is, to recover what hehas paid and to acquire all the rights of the creditor.

(Hector De Leon; The law on Obligation and Contracts; 2003)

207. Question- If the third person who pays does not intend to be reimbursed by thedebtor, will this payment extinguish to obligation?

Answer- Yes. The payment is in any case valid as to the creditor who hasaccepted it.(Article 1238; Civil Code of the Philippines)

208. Question- Can the payment be considered as a donation?Answer- Yes. Payment made by a third person who does not intend to bereimbursed by the debtor is deemed to be a donation, which requires the debtor'sconsent.(Article 1238; Civil Code of the Philippines)

209. Question- In obligation to give will payment by one who does not have freedisposal of the thing due and capacity to alienate it, be valid?

Answer- No. In obligations to give, payment made by one who does not have thefree disposal of the thing due and capacity to alienate it shall not be valid, withoutprejudice to the provisions of Article 1427 under the Title on "NaturalObligations."

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(Article 1239; Civil Code of the Philippines)

210. Question- To whom shall payment be made.Answer- To the person in whose favor the obligation has been constituted,

or his successor in interest, or any person authorized to receive it.


211. Question- Will payment to a person who is incapacitated to administer or magehis property be valid?

Answer- Yes, if he has kept the thing delivered or insofar as the payment hasbeen beneficial to him.(Article 1241; Civil Code of the Philippines)

212. Question- When shall the payment to a third person be valid?Answer-1) if after the payment, the third person acquires the creditors right.

2) if by the creditor ratifies the payment to the third person.(Article 1241; Civil Code of the Philippines)

213. Question- When is proof of benefit to the creditor not necessary, yet thepayment to the third person is valid to extinguish the obligation?

Answer- Such benefit to the creditor need not be proved in the following cases:1) If after the payment, the third person acquires the creditor's rights;2) If the creditor ratifies the payment to the third person;3) If by the creditor's conduct, the debtor has been led to believe that thethird person had authority to receive the payment.(http://www.chanrobles.com/civilcodeofthephilippinesbook4.htm)

214. Question- Is the payment made to person in possession of credit valid, to releasethe debtor of the obligation?

Answer- Yes.Payment made in good faith to any person in possession of thecredit shall release the debtor.(Article 1242; Civil Code of the Philippines)

215. Question- What is the effect if payment is made to creditor by the debtor, afterthe latter has been judicially ordered to retain the debt?

Answer- It shall not be valid.(Article 1243; Civil Code of the Philippines)

216. Question- What are special forms of payment under the Civil Code?Answer-1) Application of Payments2) Payment by Cession

a) dacion en pago or dation in payment3) Tender of Payment and Consignation

(Justo P. Torres; Law on Obligation and Contract;1990)

217. Question- What is Donation in PaymentAnswer- ( adjudication or dacation en pago) is the conveyance of ownership asan accepted equivalent of performance.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

218. Question- What law shall govern donation in payment?Answer- Law of sales governs because donation in payment may be consideredspecie of sale in which the amount of the money debt becomes the price of thething alienated.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

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219. Question- How shall an obligation be paid if it consist of an indeterminate orgeneric thing, whose quality and circumstances have not been started?

Answer- According to article 1243, the creditor cannot demand a thing of superiorquality. Neither can the debtor deliver a thing of inferior quality. The purpose of

the obligation and other circumstances shall be taken into consideration.


220. Question- Who shall bear extra-judicial expenses of payment?Answer- article 1247 states thatunless it is otherwise stipulated, the extrajudicialexpenses required by the payment shall be for the account of the debtor.(Article 1247; Civil Code of the Philippines)

221. Question- Who shall bear judicial expenses of payment?Answer- With regard to judicial costs, the Rules of Court shall govern.(Article 1247; Civil Code of the Philippines)

222. Question- In payment, may the creditor be required to accept partialperformance?

Answer- No, the creditor cannot be compelled partially to receive the prestationsin which the obligation consist.(Article 1248; Civil Code of the Philippines)

223. Question- Under what case may partial performance be allowed?Answer-

1) when there is an express stipulation to that effect.2) when the debt is in part liquidated and in part unliquidated.3) when the different prestations in which the obligation consist aresubject to different terms or conditions.


224. Question- If an obligation is stipulated as payable in US $,can be debtor beobliged to pay in US dollars?

Answer- Yes, because the payment of debt in money in the currency stipulated.(Article 1249; Civil Code of the Philippines)

225. Question-If a money obligation contracted in the Philippines requires payment incurrency other than Philippines currency will such obligation be considered void.

Answer- yes, because agreement to pay the obligation is a currency other thanPhilippines currency is null and void as contrary to public policy.


226. Question-Republic Act no.529 Republic Act of Philippines. What does legaltender means?

Answer-The currency which a debtor can legally compel a creditor to accept in apayment of a debt in money when tendered by the debtor in the right amount.(http://www.chanrobles.com/republicacts/republicactno529.html)

227. Question-When shall the delivery of promissory notes payable to order or bills ofexchange or other mercantile document produce the effect of payment?

Answer-When they have been cashed or when through the fault of the creditorthey have been impaired.(Article 1249; Civil Code of the Philippines)

228. Question-What would be the effect if the creditor accepts the delivery ofpromissory notes payable to order if such would not effect as payment.

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Answer- according to article 1249, In the meantime, the action derived from theoriginal obligation shall be held in the abeyance.(Article 1249; Civil Code of the Philippines)

229. Question-What is the basis of payment in case an extraordinary inflation or

deflation of the currency stipulated should supervene.

Answer-the purchasing value of the currency of the time of the establishment ofthe obligation.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

230. Question-What does inflation mean?Answer-A sharp sudden increase of money or credit or both without acorresponding increase in business transaction. It causes a drop in the value ofmoney resulting in the rise of the general price level.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

231. Question-What does deflation mean?Answer-It is the reduction in volume and circulation of the available money orcredit resulting in a decline of the general price level, It is opposite in inflation.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

232. Question- At what place shall payment be made?Answer-Payment shall be made in the place designated in the obligation.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

233. Question-Who shall bear the additional expenses in payment?Answer-the debtor because if the debtor changes his domicile in bad faith or afterhe has incurred in delay, the additional expense shall be borne by him.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

234. Question-When shall application take place?Answer-it is when the application of payment is made by the party for whosebenefit the term has been constituted.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

235. Question- May application of payment be made as to debts not yet due?Answer- No application shall not be made as to debts which are not yet due.


236. Question- If the various debts of the debtor are all onerous and burdensome asto which debts shall application of payment be made?

Answer- the debt which is most onerous to the debtor, among those due, shall bedeemed to have been satisfied.(Article 1254; Civil Code of the Philippines)

237. Question- If all the debts are equally burdensome, how shall application ofpayment be made?

Answer- If the debts due are of the same nature and burden, the payment shallbe applied to all of them proportionately.(Article 1254; Civil Code of the Philippines)

238. Question- Who has the first choice of application of payment?Answer- He who has various debts of the same kind in favor of one and thesame creditor

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239. Question- When shall the debtor make use of application of payment?Answer- it is when the debtor incur several debts of the same kind into onecreditor.


240. Question- When will the principal be considered paid should the debtor producesinterest?

Answer- If the debt produces interest, payment of the principal shall not bedeemed to have been made until the interests have been covered.(Article 1253; Civil Code of the Philippines)

241. Question- Give examples of more onerous debts.Answer-

a) an exclusive debt which is not solidary is more onerous than a solidarydebt.b) older debts in case of running accounts bearing debt is older pledge.

c) debts with interest even if the non-interest.d) debts with penalty.e) debts secured by mortgage.f) advances for subsistence are more onerous than cash advances.


242. Question- What is mean by payment by cession?Answer- Another special form of payment. It is the assignment of abandonmentof all the properties of the debtor for the benefits of his creditors in order that thelatter may sale the same and apply the proceeds thereof to the satisfaction oftheir credit.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

243. Question- What are the requisites of payment be cession?Answer-

1) there must be two or more creditors.2) the debtor must be (partially) insolvent.3) the cession must be accepted by creditors.


244. Question- Will the total obligations of the debtor be extinguished by payment becession?

Answer- it is said in article 1255 that unless there is stipulation to the contrary, itshall only release the debtor from responsibility for the net proceeds of the thingassigned.(Article 1255; Civil Code of the Philippines)

245. Question- Distinguish between donation in payment and cession.Answer-

1) In donation there is usually only one creditor while in cession, there areseveral creditors.2) Donation does not presuppose the insolvency of the debtor, while incession the debtor is insolvent at the time of assignment.3) Donation does not involve all the property of the debtor while cessionextend to all the property of the debtor.


246. Question- What is meant be tender of payment?

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Answer- it is the act of the part of debtor of offering the creditor the thing oramount due. The debtor must show that he has in his possession the thing ormoney to be delivered at the time of the offer.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

247. Question- If the debtor makes a valid tender of payment which is refused by thecreditor which just cause, will the obligation be extinguished?Answer- Yes, the debtor shall be released from responsibility by the consignationof the thing or sum due.(Article 1256; Civil Code of the Philippines)

248. Question- What is consignation?Answer- the act of depositing the thing or amount due with the proper court whenthe creditor does not desire or cannot receive it, after complying with theformalities required by law. It is always judicial and it generally requisites a priortender payment which is by its very nature extrajudicial.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

249. Question- Can consignation take place without a previous valid tender ofpayment?

Answer- No. according to article 1258, Consignation shall be made by depositingthe things due.(Article 1258; Civil Code of the Philippines)

250. Question-

251. Question- Can the debtor withdraw the thing or the sum deposited?Answer- Yes, the debtor, however, may withdraw as a matter of right the thingsor sum deposited :a) before the creditor has accepted the consignation.b) before a judicial declaration that the consignation has been property made, ashe is still the owner of the same.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

252. Question-

253. Question- What is the effect if the withdrawal is consented to by the creditor?Answer- The creditor shall lose every preference which he may have over thething, and the co-debtor, guarantors, and sureties shall released.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

Lesson 2- LOSS254. Question- When is a thing considered lost?

Answer- When it perishes, or goes out of commerce or disappears in such a waythat its existence is unknown or it cannot be recovered. Loss of the thing is theequivalent of impossibility of performance on obligation to do.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

255. Question- What obligation are extinguished by loss of the thing due?Answer- It is applicable ob obligations to give but also extends to those which are

personal embracing therefore all cases which may render impossibleperformance of the prestation.(Justo P. Torres; Law on Obligation and Contract; 2003)

256. Question-What requisites must be fulfilled so that the obligations be extinguishedby the loss of the thing due?

Answer-

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1) the obligation is to deliver a specific thing.2) the loss of the thing occurs without the fault of the debtor.

3) the debtor is not guilty of delay.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

257. Question- What are the cases where loss of the determinate thing due in theabsence of fault or delay will not extinguish the debtors obligation?Answer-

1) when the law so provides2) when the stipulation so provides3) when the nature of the obligation requires the assumption of risk4) when the obligation to deliver a specific thing arises from a crime.


258. Question- Will the obligation be extinguished in case of partial loss of the specificthing which is the object of the obligation?

Answer- It depends. The courts shall determine whether, under thecircumstances, the partial loss of the object of the obligation is so important as toextinguish the obligation.(Article 1264; Civil Code of the Philippines)

259. Question- What is the presumption in case the thing is loss in the possession ofthe debtor?

Answer- A disputable presumption of fault whenever the thing to be delivered islost in the possession of the debtor.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

260. Question- In what cases do this presumption not applicable?Answer- Incase or natural calamities.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

261. Question- Does the principle of loss of the thing due apply to extinguish anobligation to do?

Answer- Yes because an obligation which consist in the delivery of a determinatething shall be extinguished if it should be lost or destroyed without the fault of thedebtor and before he has incurred in delay.(Article 1262; Civil Code of the Philippines)

262. Question- When shall the debtor be released in obligations to do?Answer The debtor in obligations to do shall also be released when theprestation becomes legally or physically impossible without the fault of obligor.(Article 1266; Civil Code of the Philippines)

263. Question- Explain physical impossibility.Answer- For example the obligor dies or becomes physically incapacitated toperform the obligation.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

264. Question-Explain Legal Impossibility. Answer- Legal impossibility occurs whenthe obligation cannot performed because it is rendered impossible by provision of lawalthough physically it may be possible of performance.


265. Question- What is the effect of fortuitous event where the obligation proceedsfrom a criminal offense? Answer- The debtor shall not be exempted from the payment ofits price, whatever maybe the cause of cause for the loss, unless the thing having been

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offered by him to the payor who should receive it, the latter refused without justificationto accept it.

(Justo P. Torres; Law on Obligation and Contract; 2003)

266. Question- Does the creditor lose all his rights in case the obligation is

extinguished by the loss of the thing due?Answer- No, the creditor shall have all the rights of action which the debtor mayhave against third person by reason of the loss.(Article 1269; Civil Code of the Philippines)

Lesson 3- REMISSION267. Question- Define condonation or remission. Answer- it is an act of liberality by

which the obligee, who receives no price or equivalent thereof, renounces theenforcement of the obligation, which is extinguished in its entirely or in that partor aspect of the same to which the remission refers.(Justo P. Torres; Law on Obligation and Contract; 2003)

268. Question- Can condonation or remission be considered a donation?Answer- yes if one and the other kind shall be subject to the rules which governinofficious donations. Express condonation shall, furthermore, comply with theforms of donation.(Article 1270; Civil Code of the Philippines)

269. Question- What are requisites of condonation or remission?Answer-

1) it must be gratuitous.2) it must be accepted by the obligor.3) the parties must have capacity.4) it must not be inofficious.5) if made expressly, it must comply with the forms of donation.6) the obligation must be demandable at the time of remission.


270. Question- What is meant by inofficious donation?Answer- it is the revocation or reduction of donation.(http://www.chanrobles.com/civilcodeofthephilippinesbook3.htm)

271. Question- What are rules on forms of donation?Answer- it shall be essentially gratuitous, and requires the acceptance by theobligor(Article 1270; Civil Code of the Philippines)

272. Question- When is the creditor implied to have renounced the action against hisdebtor?

Answer- When the delivery of a private document evidencing a credit, madevoluntarily by the creditor to the debtor.(Article 1271; Civil Code of the Philippines)

273. Question- How may the creditor nullify this waiver?Answer- It shouldbe claimed to be inofficious.(Article 1271; Civil Code of the Philippines)

274. Question- Should the debtor or his heirs want to uphold such waiver, what shouldthe prove?

Answer- the debtor and his heirs may uphold it by proving that the delivery of thedocument was made in virtue of payment of debt.(Article 1271; Civil Code of the Philippines)

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275. Question- What presumption applies in the case where the private document inwhich the debt appears is found in possession of the debtor?

Answer- Whenever the private document in which the debt appears is found inthe possession of the debtor, it shall be presumed that the creditor delivered it

voluntarily, unless the contraty is proved.(Article 1272; Civil Code of the Philippines)

276. Question- What are the kinds of remission or condonation?Answer-

1) As to its extent:a) Complete- when it covers the entire obligationb) partial- when it does not cover the entire obligation

2) As to its form:a) Express- when it is made either verbally or in writingb) Implied- when it can only be inferred from conduct

3) As to its date of effectivity:a) Intervivos- when it will take effect during the lifetime of the donorb) Mortis causa- when it will become effective upon the death of thedonor. It must comply with the formalities of a will.


277. Question- If the principal debt is remitted, what is its effect upon accessoryobligation?

Answer- Obligation which are remitted must have been demandable at the timeof remission.(Ateneo Central Bar Operation 2007, Civil Law summer Reviewer)

278. Question- When is the accessory obligation of pledge presumed to have beenremitted?

Answer- when the thing pledged, after its delivery to the creditor, is found in thepossession of the debtor, or of a third person who owns the thing.(Article 1274 Civil Code of the Philippines )

279. Question- When the accessory obligation of pledge presumed to have beenremitted?

Answer- when the thing pledge, after its delivery to the creditor, is found in thepossession of the debtor, or of a third person who owns the thing.(Article 1274 Civil Code of the Philippines)

=========================MIDTERMS==============================

MERGER OR CONFUSION280. Question Define confusion.

Answer- confusion is the meeting in one person of the equalities of creditor anddebtor with respect to the same obligation.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

281. Question- What is the requisites of obligation?Answer-1) that the characters of creditor and debtor must be int the same person.2) That it must take place in the person of either the principal creditor or theprincipal creditor or the principal debtor.3) That it must complete and definite.(Justo P. Torres; Law on Obligation and Contract; 2003)

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282. Question- Who are benefited by merger which take place in the person of theprincipal debtor or creditor?

Answer- The guarantors(Article 1276 Civil Code of the Philippines)

283. Question- What is the effect of merger take place in the person of guarantor?Answer- the extinguishment the guaranty leaves the principal obligation in force(Hector S. De Leon; The law on Obligation and Contracts; 2003)

284. Question- What is the effect if merger or confusion takes place in the person ofone of the joint debtors in a joint obligation.

Answer- None because each debtor has his own creditor to whom he is liableand confusion taking place in the person of any debtor or creditor does not affectthe others.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

285. Question- What is the effect if mergers take place in the person of one of thesolidary debtors in a solidary obligation?

Answer- It extinguishes the entire obligation because it is also a merger in theother solidary debtors.(Article 1215 Civil Code of the Philippines and Hector De Leon; The law on

Obligation and Contracts; 2003)

COMPENSATION286. Question- Define compensation

Answer- The extinguishment to the concurrent amount of the debts of twopersons who, in their own right, are debtors and creditors of each other.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

287. Question- Distinguish between compensation and confusion.Answer-

1) In confusion, there is only one person who is a creditor and debtor ofhimself, while in compensation there are two persons involved, each ofwhom is a debtor and a creditor of the other.2) In confusion, there is but one obligation, while in compensation, thereare two obligation3) In confusion, there is impossibility of payment while in compensation,there is indirect payment.

(Hector S. De Leon; The law on Obligation and Contracts; 2003)288. Question- What are the kinds of compensation?

Answer-1) By its effect or extent:

a) total- when both obligation are of the same amount and areentirely extinguished.b) partial- when the two obligation are different amount and balanceremains.

2) By its cause or origin:a) legal- when it takes place by operation of law even without theknowledge of parties.b) voluntary- when it takes by agreement of parties.c) judicial- when it takes place by order from a court un a litigation.d) facultative- when it can be set up only by one of the parties.


289. Question- What are the requisites of compensation?

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Answer-1) the parties are principal creditors and principal debtors of each other.2) both debts consist in a sum of money, or of consumable thing of thesame kind and quality.3) the two debts are due and demandable.

4) the two debts are liquidated.5) no retention or controversy commenced by a third person.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

290. Question- May compensation takes place to extinguish both obligations if one ofthe principal creditors is a secondary debtor in the former obligation?

Answer- no because it is stated in article 1279 that each one of the obligors bebound principally, and that he be at the same time a principal creditor of the other(Article 1279; Civil Code of the Philippines)

291. Question- Who is benefited if compensation takes place between the principaldebtor?

Answer- The guarantor.(Hector S. De Leon; The law on Obligation and Contracts; 2003),

292. Question- May compensation takes place between a bank and its depositor?Answer-.

293. Question- Can shareholder compensation what he gives the corporation as loanwith his shareholdings?

294. Question- Distinguish between set-off or counterclaim from compensation.

295. Question- Can compensation take place if one or both debts are rescissible orvoidable?

Answer Yes, prior to annulment. also according to article 1284,when one orboth debts are rescissible or voidable, they may be compensated against eachother before they are judicially rescinded or avoided(Hector S. De Leon; The law on Obligation and Contracts; 2003),(Article 1284; Civil Code of the Philippines)

296. Question- What are the effect of assignment of a debt which would be subject tocompensation?

297. Question- Can compensation takes place by operation of law?Answer- Yes, compensation take place by operation of law, even the debts maybe payable at different places, but there shall be an indemnity for expensed ofexchange or transportation to the place of payment.(Article 1286; Civil Code of the Philippines)

298. Question- Can compensation takes place if debts are payable at different place?Answer Yes, the indemnity contemplated above does not refer to the differencein the value of the things in their respective places but to the expenses ofmonetary exchange and expenses of transportation.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

299. Question- What are the instances where legal compensation is not allowedplaces?

Answer-1) where one of the debts arises from a deposilum2) where one of the debt arises from a commodatum

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3) where one of the debts arises from a claim support due by gratuitoustitle4) where one of the debts consists in civil liability arising from a penaloffense


300. Question- If a person should have against him several debts, which aresusceptible of compensation

Answer- The rules on the application of payment shall apply to the order of thecompensation.(Article 1289; Civil Code of the Philippines)

301. Question- can a compensation take place even though the creditors and debtorsare not aware of the compensation

Answer- No.(Hector S. De Leon; The law on Obligation and Contracts; 2003)

NOVATION302. Question- How are obligations are modified?

Answer-1) Changing their object or principal conditions2) Substituting the person of the debtor3) Subrogating a third person in the right of the creditor


303. Question-Define novation.Answer- It is the extinction of an obligation through the creation of a new onewhich substitutes it. It is the substitution or change of an obligation by another,which extinguish or modifies the first, either changing its object or principalconditions, or substituting another in place of the debtor, or subrogating a thirdperson in the rights of the creditor.(Hector S. de Leon; Law on Obligation and Contract; 2008)

304. Question- What are requisites ofAnswer-

1) A previous valid obligation2)Capacity and intention of the parties to modify or extinguish theobligation3)The modification or extinguishment of t he obligation4)The creation of new valid obligation

(Hector S. de Leon; Law on Obligation and Contract; 2008)

305. Question-In what forms may novation exist?Answer- It exist on the instance of extinguishing an existing obligation and insubstituting a new one in its place.(Hector S. de Leon; Law on Obligation and Contract; 2008)

306. Question- Name some kind of novation.Answer-1) According to origin

a) Legal - that which takes place by operation of lawb) Conventional that which takes place by agreement of the parties

2) According to how it is constitutedc) Express when it is so declared in an equivocal termsd) Implied when the old and the new obligation are essentially incompatible

with each other.3) According to extent

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a) Total or extinctive- When the old obligation is completely extinguishb) Partial or modificatory when the old obligation is merely modified

4) According to the subjecta) Real or objective when the object or the principal conditions are changedb) Personal or Subjective when the person of the debtor is substituted

and/or when a third person is subrogated in the right of the creditorc) Mixed when the object and the debtor or the creditor or both the partiesare changed(Hector S. de Leon; Law on Obligation and Contract; 2008)

307. Question- What is real novation?Answer- The change in the object or principal conditions of the obligations

(Torres;Law on Obligation and Contract; 1990)

308. Question- What is personal novation?Answer- It is when another person is substituted in place of the debtor or he is

subrogated to the rights of the creditor(Torres;Law on Obligation and Contract; 1990)

309. Question- What is mixed novation?Answer- it is the change in the person of the parties and the object s or themodifications of principal conditions(Torres;Law on Obligation and Contract; 1990)

310. Question- Is novation presumed?Answer- No. Novation is never presumed. It must be clearly and unmistakablyestabli8shed either by the express agreement of the parties or acts of theequivalent import or by the incompatibility of the two obligations which each otherin every material respects(Hector S. de Leon; Law on Obligation and Contract; 2008)

311. Question- in what forms may substation of the person of the debtors exist?Answer-

312. Question- may Substitution of the person of the debtor take place withoutconsent of the debtor?

Answer- Yes but not without the consent of the creditor(Article 1293; Civil Code of the Philippines)

313. Question-What is the effect of the new debtors insolvency or non fulfillment of theobligation, where the substitution is without the knowledge or against the will of thedebtor?

Answer- There is no effect for the reason that if the substitution is without theknowledge or against the will of the debtor, the new debtors insolvency or non-fulfillment of the obligation shall not give rise to any liability on the part of theoriginal debtor(Article 1294; Civil Code of the Philippines)

314. Question- What is the effect of the new debtors insolvency in delegacionAnswer- There is no effect. It must be noted that the article speaks only ofinsolvency, the old debtor is not liable.(Hector S. de Leon; Law on Obligation and Contract; 2008)

315 Question- In expromision what are the rights of the new debtor in case he paysthe creditor?

Answer- The right to beneficial reimbursement under the second paragraph ofArticle 1236.

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316. Question- In Delegacion, what are the rights of the new debtors who pays?Answer- The new debtor is entitled to reimbursement and subrogation(Article 1237; Civil Code of the Philippines)

317. Question- What is the effect of the accessory obligation where the principalobligation is extinguished in consequence of the novation?

Answer- It provides the exemption in the case of an accessory obligation created In favor of a third person which remains in force unless said third person give his

consent to the novation(Hector S. de Leon; Law on Obligation and Contract; 2008)

318. Question- In novation the new obligation is void will the old obligation beextinguished?

Answer- Yes. If the new obligation is void, the original one shall subsist, unless

then parties intended that the former relation should be extinguished in any event.(Article 1297; Civil Code of the Philippines)

319. Question- When is novation considered void?Answer- It is void when the original obligation was void, except when annulmentmay be claimed only by the debtor, or when ratification validates acts which arevoidable.(Article 1298; Civil Code of the Philippines)

320. Question- If the original obligation is the subject to a susceptive or resolutorycondition but the new obligation which novates it is not subject to any condition, isthe new obligation immediately demandable?

Answer- No for the reason contained in article 1299 that the efficacy of the newobligation depends upon whether the condition which affects the old obligation iscomplied with or not(Hector S. de Leon; Law on Obligation and Contract; 2008)

321. Question- In how many ways may subrogation takes place?Answer- Subrogation may takes place in two (2) ways.(Hector S. de Leon; Law on Obligation and Contract; 2008)

322. Question- What is conventional subrogation?Answer- It must be clearly established in order that it, may take effect. Hence inorder for it to exist, the consent of the original parties and of the third person mustbe secured(Hector S. de Leon; Law on Obligation and Contract; 2008)

323. Question- Can conventional subrogation be presumed or implied?Answer- Conventional subrogation can be presumed.(Article 1298; Civil Code of the Philippines)

324. Question- What is meant by legal subrogation?Answer- It takes place by the operation of law, and such, even without the consentof the parties, the obligation is extinguished while a new one is created bynovation.(Torres;Law on Obligation and Contract; 1990)

325. Question- In hat tree cases shall legal subrogation exist?Answer-1) When creditors pays another creditor who is preferred

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2) When an third person without an interest in the obligation pays wit h theapproval of the debtor

3) When a third person with an interest in the obligation pays even without theknowledge of the debtor.

(Hector S. de Leon; Law on Obligation and Contract; 2008)

326. Question- State the effect of subrogation.Answer- the effect of legal subrogation is to transfer to the new creditor the creditand all the rights and actions that could have been exercised by the formercreditor either against the debtor or against the third person, be they areguarantors or mortgagors.The effect of legal sub rogation as provided in article1303 may not be modified by agreement. The effects of conventional subrogationare subject to the stipulation of the parties.(Hector S. de Leon; Law on Obligation and Contract; 2008)

327. Question- If A is Indebted to B for P1, 000 which is a preferred credit. C anordinary creditor of A, pays B P500. Who is the creditor of A as regards thebalance of P500?

Answer- C is the creditor of A as regards to the balance of P500.(Torres;Law on Obligation and Contract; 1990)

The Law on ContractsPRELIMINARIES

328. Question- Define contract?Answer-Contract is a meeting of minds between two persons whereby one binds

himself, with respect to other, to give something or to render some service.(Article 1305; Civil Code of the Philippines)

329. Question-Distinguish contract from obligation.Answer-Contract is one source of obligation. On the other hand, obligation is thelegal tie or relation itself that exist after a contract has been entered into. There canbe no contract if theres no obligation. But obligation may exist without a contract.(Hector S. de Leon; Obligation and Contract; 2008)

330. Question-Are contract and agreement the same?Answer- no. contract are agreement enforceable through legal proceedings thoseagreement which cannot be enforce by action in the court of justice are notcontracts but merely moral or social agreement. So all contracts are agreementbut not all agreement is contracts.(Hector S. de Leon; Obligation and Contract; 2008)

331. Question-What are meant by Autonomy in contracts?Answer-Autonomy is freedom to contract.

(Hector S. de Leon; Obligation and Contract; 2008)

332. Question-what are the limitations to freedom to contract?Answer-

1) Law- it is a fundamental requirement that the contract entered into must beaccordance with, and not repugnant to an applicable statute. Its terms areembodied in every contract. Thus the law set limits.2) Police power- contractual obligation are subject as an implied reservationthere in to the possible exercise of the police power of the state(Hector S. de Leon: Obligation and Contract; 2008)

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333. Question-what are innominate contracts?Answer- it is that which has no specific name or designation.

(Hector S. de Leon: Obligation and Contract; 2008)

334. Question-Which are the kind of innominate contracts?

Answer1) do ut des (I give that you may give)2) do ut facials(I give that you may do)3) facio ut facias (I do that you may do)4) facio ut des (I do that you may give)

(Hector S. de Leon: Obligation and Contract; 2008)

335 Question-What are innominate contracts?Answer: - it is that which has no specific name or designation.(Hector S. de Leon: Obligation and Contract; 2008)

336. Question-How is innominate contracts regulated?

Answer- by1) the agreement of parties2) the provision of the Civil Code on obligation and contracts3) the rules governing the most analogous contacts4) the customs of the place


337. Question- upon whom shall a contract be binding?Answer- A contract be bind to both parties in order that it can be enforcedagainst either(Hector S. de Leon; Obligation and Contract; 2008)

338. Question- can the validity or compliance of a contract be left to the will of eitherparty?Answer- No. it cannot be left to the will of either party.


339. Question- can the determination of performance of a contract be left to a thirdperson?

Answer-Yes it can be left to a third person(Article 1309; Civil Code of the Philippines)

340. Question- Will the third persons determination be obligatory upon the parties?Answer- Its not if it is evidently inequitable. In such case, the courts shall decidewhat is equitable under the circumstances.


341. Question- is a contract binding only between the contracting parties?Answer- it is not only between them.


342. Question- when shall a contract take effect only between the contracting partiesand no one else?

Answer- When the right s and obligations arising from the contract are nottransmissible by their nature, by stipulation and by provision of law.(Hector S. de Leon; Obligation and Contract; 2008)

343. Question- To what extent shall an heir be bound under a contract?

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Answer-

344. Question- What are the cases when a contract binds no only the parties, heirsand assigns but even third personsAnswer-

1. In contracts containing stipulation in favor of a third person2. In contracts creating real rights3. In contracts entered into a defraud creditor4. In contracts which have been violated at the inducement of a third person5. In contracts creating status6. In the quasi-contract or negotiurum gestio, the owner is bound in a proper

case by contract entered by the gestor(Hector S. de Leon; Obligation and Contract; 2008)

345. Question- What is a stipulation pour autrui?Answer- It is a stipulation in a contract clearly and deliberately conferring a favorupon a third person who has a right to demand its fulfillment provided hecommunicate his acceptance to the obligor before its revocation.(Hector S. de Leon; Obligation and Contract; 2008)

346. Question- How are contracts classified according to perfection?Answer- by

1) Consensual contract or that is which is perfected by mere consent2) Real contract or that which is perfected by the delivery of the thing or

subject matter of the contract(Hector S. de Leon; Obligation and Contract; 2008)

347. Question- Define consensual contract.Answer- it is a contract which is perfected by mere consent. No delivery isnecessary in order that it may be perfected(Torres;Law on Obligation and Contract; 1990)

348. Question- Define a real contract.Answer- it is perected by the delivery of the thing subject matter of the contractsuch as depositum, pledge, or comodatum(Article 1316; Civil Code of the Philippines)

349. Question- What are the three stages in the life of a contract?Answer-

1)Preparation or conception this includes all the steps taken by theparties leading to the perfection of the contract. At this stage, the parties have notyet arrived at any definite agreement.

2) Perfection or birth this is when the parties have come to a definiteagreement or meeting of minds regarding the subject matter and cause ofcontract

3) Consummation or termination this is when the parties had performedtheir respective obligation and the contract may be said to have been fullyaccomplished or executed.(Hector S. de Leon; Obligation and Contract; 2008)

ESSENTIAL REQUISITES OF A CONTRACT350. Question-

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Answer-

351) Question- Name the classes of elements of a contract?Answer -

1) Essential elements or those without which no contract can validly exist

a) Those common to all contracts, namely, consent, object andcausesb) Those not common to all contracts

2) Natural elements of those that are presumed to exist in certaincontracts3) Accidental elements or the particular stipulations, clauses., terms orconditions established by the parties in their contract


Consent

352) Question- how is consent manifested?Answer- By the meeting of the offer and acceptance upon the thing and the

cause with are constitutes the contract.

(Art.1319: Civil Code of the Philippines)

353) Question- If A tells B that he is considering to sell his only car for 10,000 and B

replies by saying that he will buy the car for 10,000. Is there a valid contract

perfected?

Answer- Yes

(Justo P. Torres;Law on Obligation and Contract; 1990)

354) Question- when is an offer considered certain?

Answer- When the acceptance is identical with the offer to great a contrast?


355) Question- Define Acceptance

Answer- Is the manifestation by the offence of his asset to the terms of the offer.

Without acceptance, there can be no meeting of minds between the parties.


356) Question- What kind of acceptance must be in order to perfect a contract

absolute and unqualified acceptance?

357) Question- When is acceptance consider qualified?

Answer-When it is accepted absolutely in order that there will be a contract.


358) Question- When does an acceptance made by letter or telegram bind the

offerer?

359) How may acceptance be made?

Answer-By an identical in all respect with that of the offer so as to produce

consent or meeting of minds.


360) Question- Who shall fix the time, place and the manner of acceptance?

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Answer-The person making the offer may prescribe the time, the place and the

manner of acceptance.


361) Question- When is a contract perfected in the case where the offer is made

through an agent?Answer-When it is duly authorized, the act of agent is, in law, the act of principal.


362) Question- When does an offer become ineffective?

Answer-An offer become ineffective upon the death, civil interaction, insanity or

insolvency of either party before acceptance is conveyed.

(Art 1323;Civil Code of the Philippines)

363) Question- If the offence has been given a certain period within which to accept,

can the offeror still withdraw his offer?

Answer-Yes, the offer may be withdrawn at any time before acceptance by

communicating such withdrawal


364) Question- How do you call the consideration given for the option period?

Answer-Option Contract


365) Question- Distinguish option money from earnest money.

Answer-Option money is the money paid or promised to be paid in consideration

for the option while earnest money is a partial payment of the purchase price and

is considered as proof of the perfection of the contract.


366) Question- Are business advertisements considered definite offers?

Answer-No, business advertisements or thing for sales are not definite offer, but

mere invitation to make offer.


367) Question- f an advertisement for bidder is made, is the advertiser bound toaccept the highest or lowest bidder?

Answer-No, the advertiser is not bound to accept the highest or lowest bidder.


368) Question- Who cannot give consent to a contract?

Answer-

1) Unemancipated minors

2) Insane or demanded persons, and deaf-mutes who do not know how to

write.

(Art 1327;Civil Code of the Philippines)369) Question- Is the above incapacity absolute?

Answer-No

Art. 1327

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370) Question- If a contract is entered into by any one of the person declared by law as

incapacitated, will the contract be null and void?

Yes

Art. 1329

371) Question- Can an emancipated minor give consent to a contract?

Answer-Yes, Provided that it is for alienating or encumbering a personal property.

De Leon

372) Question- What are the vices of concent?

Answer

1) error or mistake (Art. 1331)

2) violence or force (Art 1335)

3) intimidation or threat or duress

4) undue influence (Art. 1337)5) fraud or deceit (Art. 1338)

373) Question- what is the nature of a contract where consent is given through

mistakes or any of the vices consent?

Answer-It is may be of fact or of law. The mistake contemplated by law is substantial

mistake of law, that is, the party would not have given his consent had he known of

mistake.

De Leon

374) Question- When is the mistake to invalidated consent?

375) Question- Will mistake as to the identity or qualifications of one the parties vitiate

consent?

Answer-Yes, only when such identity or qualifications have been the principal cause of

the contract.

Art. 1331

376) Question- How about mistake of account, will it vitiate consent?

Answer-Yes, it shall give rise to its correction.

Art. 1331

377) Question- what must be the nature of mistake in order to vitiate consent?

Answer-Mistake may be of fact or of law. In general, mistake to which Art. 1331 refers is

mistake of fact. The mistake contemplated by law is substantial mistake of fact, that is,

the party would not have given his consent had he known of the mistake.

De Leon

378) Question- A sold his car to B thinking that B is a doctor, but it turn out that B is a

lawyer. Here the mistake refers to the identity or qualification of one of the parties whichis not the principal cause of the contract.

Answer-The contract is valid.

379) Question- what must a party prove in order to enforce a contract where the other

party alleges that the contract is in a language not understood by him or that he is

unable to read?

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Answer-To prove that there has been no fraud or mistake and that the terms of the

contract have been fully explained to the former.

De Leon

380) Question- will the contract be invalidated if one of the parties alleging mistakes

knows that doubt, contingency or risk affecting the object of the contract?

Answer-No, because if the party knows beforehand the doubt, contingency, or risk

affecting the object of the contract, it is to be assumed that he was willing to take

chances and cannot therefore, claim mistakes.

De Leon: Art. 1333

381) Question- Will mistake of law invalidate consent?

Answer-No, because ignorance of the law excuses no one from compliance therewith.

This doctrine is based on public policy, dictated by expediency and necessary.

De Leon: Art 3

382) Question- when is there violence to vitiate consent?

Answer-When in order to wrest consent, serious or irresistible force is employed

Art. 1335

383) Question- So that intimidation shall vitiate the consent of the party to a contract,

what requisites must be present?

Answer-1) It must produce a reasonable and well grounded fear of an evil;

2) The evil must be imminent and grave

3) The evil must be upon his person of property, or that of his spouse, descendants, ofascendants

4) It is the reason why he enters into the contract.

De Leon

384) Question- what factor must be considered in order to determine to degree of

intimidation?

Answer-Whether or not the fear is reasonable and well grounded of the evil imminent

and grave depends upon the circumstances, including the age, sex, and condition of the

person.

De Leon

385) Question- When is there intimidation to vitiate consent?

Answer-When one of the contracting parties is compelled by reasonable and well

grounded fear of an imminent and grave evil upon his person or property, or upon the

person of property of his spouse, descendants of ascendants, to give his consent Ar.

1335

386) Question- Must there be physical force to constitute intimidation?

Answer-No, Intimidation need not resort to physical force. Intimidation is internal whileviolence is external

De Leon

387) Question- Must violence or intimidation necessarily be employed by a contracting

party in order to vitiate consent?

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Answer-No, such the threat of a court action as a means to enforce a just or legal claim

is justified and does not vitiate consent. It is a practice followed by creditors to demand

payment of their accounts with the threat that upon failure to do so an action would be

instituted in court.

De Leon

388) Question- What is there undue influence to vitiated a consent?

Answer-When a person takes improper advantage of this power over the will of another,

depriving the latter of a reasonable freedom of the choice.

Art. 1337 CCP

389) Question- what are the circumstances to consider to determine whether the

influence is undue?

Answer-The confidential, family, spiritual, and other relations between the parties, or the

fact that the person alleged to have been unduly influenced was suffering from mentalweakness, or was ignorant of in financial distress.

390) Question- What do you mean by casual fraud?

Answer-The fraud committed before or at the time of the celebration of the contract. It is

the fraud used by a party to induce the other to enter into a contract without which the

latter would not have agreed to.

De Leon

391 Question- ) what is the other kind of fraud?

I Answer-ncidental fraud, which only renders the party who employs it liable for damage.De Leon

392) Question- which kind of fraud invalidates a contract?

Answer-The casual fraud.

De Leon

393) Question- what is the effect if there is incidental fraud?

394) Question- So what casual fraud will invalidate a contract, what requisites must be

present?

Answer-1) It should be serious

2) It should not have been employed by both contracting parties

De Leon

395) Question- How is fraud committed by concealment?

Answer-By a neglect of failure to communicate that which a party to a contract knows

and oath to communicate, in other words misrepresentation.

De Leon

396) Question- Are usual exaggeration in trade in themselves fraudulent?

Answer-No

De Leon

397) Question- when shall an expression of an opinion signify fraud?

Answer-1) When it is made by an expert

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2) The other contracting party has relied on the experts opinions

3) The opinion turned out to be false or erroneous

398) Question- When shall misrepresentation by a third party vitiate consent?

Answer-None. Misrepresentation by a third person does not vitiate consent unless such

misrepresentation has create substantial mistake and the same is mutual.

Art. 1342

399) Question- What is the effect if the misrepresentation has been made in good

faith?

Answer-It is considered a mere mistake or error.

De Leon

400) Question- In how many ways may simulation of contract be made?

Answer-Simulation of contract be made in two (2) ways, first is, absolute simulation andsecond is, relative simulation.

De Leon

401) Question- when is there absolute simulation?

Answer-When the contract does not really exist and the parties do not intent to be

bound at all. It is inexistent and void.

De Leon

402) Question- When is it a relative simulation?

Answer-When the contract entered into by the parties is different from their trueagreement. The parties are bound by their real agreement provided it does not

prejudice a third person and is not intended for a purpose contrary to law, morals, good

customs, public order or public policy.

403) Question- If a contract is absolutely simulated, is it valid or void?

Answer-Void, because a contract does not really exist.

De Leon

404) Question- Will relative simulation avoid a contract?

Answer-No.

De Leon

Objects of contract

405) Question- What may be valid objects of a contract?

I Answer-n reality, the object of every contract is the obligation created but since a

contract cannot exist without an obligation, it may be said that the thing, service, or

right which Is the object of the obligation is also the object of the contract

De Leon

406) Question- What are the requisites of thing as valid object of contract?

Answer-1) The thing must be within the commerce of men, that is, it can legally be the

subject of commercial transaction (Art. 1347)

2) It must not be impossible illegally or physically (Art. 1348)

3) It must be in existence or capable of coming into existence

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4) It must be determinate or determinable without the need of a new contract between

the parties

De Leon

407) Question- Which services cannot be valid object of contract?

Answer-All service which are not contrary to law, moral, good customs, public order or

public policy may like wise be the object of a contract.

Art. 1347

408) Question- which right cannot be proper object of contracts?

Answer-All rights which are not in transmissible may also be the object of contracts

Art. 1347

409) Question- Can future inheritance be a valid object of a contract?

Answer-No, according to Art. 1347. All things which are not outside the commerce ofmen including future things, may be the object of contract

Art. 1327

410) Question- Give an example where the law allows contracts on future inheritance.

Answer-In the case of marriage settlement between future spouses who may give each

other as much as one fifth of their present property and with respect to their future

property only in the event of death, to the extent laid down by law in testamentary

succession

Art. 130

De Leon

411) Question- In the event the quantity of the object of a contract is not determinate,

will the contract be still valid?

Answer-Yes. The fact that the quantity is not determinate shall not be obstacle to the

existence of the contract, provided it is possible to determine the same, without the

need of a new contract between the parties (land)

Art. 1349

Cause of Consideration

412) Question- Define cause as an essential requisites of a contract.

Answer-Is the essential or more proximate purpose which the contracting parties have

in view at the time of entering into the contract.

De Leon

413) Question- How are contracts classified as to cause>

Answer-1) Onerous or one the cause of which for each contracting party, is the

presentation or promise of a thing or service by the other

2) Remuneratory or remunerative or one the cause of which is the service or benefitwhich is remunerated. The purpose of the contract is to reward the service that had

been previously rendered by the party remunerated

3) Gratuitous or one the cause of which is the mere liberality of the benefactor or giver

De Leon

414) Question- is motive an essential requisite for a contract?

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Answer-No, because it is purely personal or private reason with a party ahs in entering

into a contract. It is different from the cause of the contract.

De Leon

415) Question- What is the effect of absence of cause?

Answer-Confer no rights and produce no legal effect whatever thus, a contract which isabsolutely simulated or fictitious is inexistent and void.De Leon

416) Question- When is cause said to be unlawful?

Answer-When there is illegality of cause that implies, there is a cause but the same is

illegal.

De Leon

417) Question- what is the effect of unlawful cause?

Answer-Cause are also null and void (Arts. 1353, 1409)De Leon

418) Question- when is cause false?

Answer-When the contract states a valid consideration but such statement is not true.

De Leon

419) what is the effect of false cause?

Answer-The contract is rendered void because the same actually does not exist.

De Leon

420) Question- Will inadequacy of cause or Lesion of cause invalidate a contract?

Answer-No, because in general rule, Lesion or inadequacy of cause does not of it

invalidates a contract.

De Leon

421) Question- what do you mean by lesion?

Answer-Any damage caused by the fact that the price is unjust or inadequate. It is injury

suffered in consequence of inequality of situation, by one party who does not receive

the full equivalent for what he gives in a commutative contract, like a sale.

422) Question- For a valid contract, must cause be always stated?

Answer-No, because the presumption is that the cause exists and is lawful unless the

debtor proves the contrary.

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