 PROBLEMS WITH SUGGESTED ANSWERS.

1. 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
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?

* C may choose the delivery to him of the bracelet, or the price of

the watch or the price of the ring plus damages.

2. A, B, C and D are obliged to give X, Y and Z P12,000. X may collect

from A how much?

* P1,000. When the obligation is silent, it is presumed joint.

3. A, B, C and D, joint debtors are obliged to give X, Y, and Z, solidary

creditors, P12,000. How much may X collect from A?
* P 3,000. As a solidary creditor, X may collect the whole amount owed
by the joint debtor A.

4. A, B, C and D, solidary debtors, are obliged to give X, Y and Z, joint

creditors, P12,000. How much may X collect from A?

* P4,000. As a joint debtor X is entitled only to his proportionate

share, and A being a solidary debtor may be required to pay the said
amount.

5. A, B, C and D, solidary debtors, are obliged to give X, Y and Z,

solidary creditors, P12,000. How much may X collect from A?

* P12,000. X being a solidarity creditor may ask for the payment of

the whole amount in behalf of his co-creditors subject to a
responsibility of X to give the latter their corresponding shares.
Similarly, A as a solidary debtor may be required to pay the whole
amount of the obligation subject to reimbursement from his co-
debtors
6. A and B are indebted to X and Y for P10,000. A and B share in the debt in
the ratio of 1:3 while X and Y share in the credit in the ratio of 2:3.

How much may X collect from A if the debtors are joint debtors, while the
creditors are joint creditors?

* P1,000. The obligation is joint on both the debtor and creditor,

therefore there are as many debts (credits) as debtors (creditors).

COMPUTATION:
Proportionate Share of A:
¼ x P10,000 = P 2,500

Proportionate Share of X on A’s Proportionate Debt:

2/5 X P2,500= P 1,000
b. How much may X collect from A if there is active solidarity?
* P2,500(see computation above). The whole amount of the proportionate
share of A could be collected by X. As a solidary creditor, X may collect
the whole amount of the obligation corresponding against one or more
debtors.
c. How much may X collect from A if there is passive solidarity?
* P4,000. Being a joint creditor, X can collect only his corresponding
share in the credit. The full amount could be collected to A, being a
solidary debtor.

COMPUTATION:
Proportionate Share of X in the credit:
2/5 x P10,000 = P 4,000

d. How much may X collect from A if there is mixed solidarity?

P10,000. Since there is mixed solidarity the whole amount of

obligation may be collected by any of the solidary creditors against any of
the solidary debtors.
7. A, B and C are solidary debtors of X, Y and Z, solidary creditors, in the
amount of P2,700. X renounces the whole obligation without the consent of
Y and Z. The debtors accepted the renunciation. What is the legal effect of
the renunciation?

* The whole obligation is extinguished, however X shall be liable to the

corresponding shares of the other co-creditors as they have agreed upon.
8. A, B and C are solidary debtors of X in the amount of P3,000. X renounces
the share of A and A accepts the renunciation. Thereafter B becomes
insolvent. What is the legal effect of the renunciation?

* A will be liable for P500, while C will be liable for P1,500 (P1,000 + P500).
Since the remaining obligation is P2,000 after the renunciation of A’s share,
and thereafter B becomes insolvent, A and C would have to absorb the debt
corresponding to B in the amount of P1,000. This shall be divided equally by
A and C.

10. A, B and C are solidary debtors of X in the amount of P30,000. C was

insane at the time the obligation was constituted. What is the legal effect?
* X may collect from either A or B P20,000. Art. 1222
provides that a solidary debtor may avail himself of the
partial defense of the insanity of C. Such defense is
personal to C and would therefore affect only the part of
the debt to which C may be responsible.

11. A, B and C are obliged to deliver a specific horse to X,

Y and Z. What would be the legal effect when C cannot
comply with his obligation?

*This is a case of a jointly-indivisible obligation.

Assuming there was a valid demand made against all
the debtors and since C could not comply with his part of
the obligation, the obligation is converted into a
monetary obligation to pay the value of the horse plus
damages. (1224)
 12. D borrowed P10,000 from C with G as guarantor. Subsequently,
D paid C P 2,000. Unknown to D, T a third person paid C P10,000
believing that D still owed C such amount. What is the legal effect
of the payment by T?

* T can recover P8,000 from D, the law provides that only the
amount to which the debtor has benefited could be reimbursed to
the third person paying if the payment was without knowledge of
the debtor. If D cannot pay, T cannot go after G to collect. (1236)
and (1237)

 13. D owes C P10,000. T offers to pay D’s obligation and tells D that
D need not reimburse him. However, D does not give his consent to
T’s offer not to be reimbursed. C, nonetheless, accepts the payment
from T. Was the payment valid?

* The payment is valid insofar as C is concerned. The case is

deemed to be a donation, however to be constituted as such D’s
consent is necessary. (1238)
 14. D obtained a loan of P10,000 from C who was in his right mind
at the time he granted the loan. On due date, D paid his obligation
of P10,000 to C who had since become insane. C lost P4,000 of the
amount he received and spent P6,000 for his food and other
necessary expenses. Was the obligation extinguished?

* The obligation is extinguished up to P6,000 only. Payment of

an obligation to an incapacitated person shall be valid when the
person has kept the thing delivered and only insofar as the payment
has been beneficial to him. (1241)

 15. D owes C the following debts: P4,000 due on May 1; P4,000 due
on May 8; P4,000 due on May 15; P4,000 due on May 22; P4,000
due on May 29; and P4,000 due on June 5. The debts represented
the price of magazines which were delivered to D on a weekly basis.
Of the six debts, the one due on May 22 is secured by a pledge of
D’s ring. By agreement of the parties, C may demand payment even
before the due date of the debt. As of May 31, D had not paid any
of the six debts. On May 31, D wanted to make payment but he had
only P4,000. How is the payment to be applied?
* Since no agreement as to which debts should be settled
first and absent the fact that the creditor has not issued
any receipt applying the amount to any of the debts to
which the debtor has not protested and there was no
cause of invalidating the same, and the period is for the
benefit of the creditor then the P4,000 should be applied
to the one due on May 22 since it is most burdensome.
 16. Refer to no. 15 Assuming that D did not designate
the debt to be paid when he remitted the amount of
P4,000 to C on May 31. C issued a receipt for the
payment he received from D but he did not also
designate the debt that was being paid. How would the
payment be applied?

* The payment shall be applied to the debt due on May

22 since it is the most onerous.
 17. D owes C the following debts: P200,000 due on June 1, 2008 secured by
a car; P200,000 due on May 1, 2008 with 10% interest; P300,000 due on
May 1,2008 with 8% interest; P300,000 due on May 1,2008 secured by
house and lot; P200,000 due on April 1,2008 and P300,000 due on March
1, 2008. By agreement of the parties, C may demand payment even before
the due date of the debt. Today is May 1, 2008 D had not paid any of the
six debts. D wanted to make payment but he had only P1,000,000. How is
the payment to be applied?

* Since no agreement as to which debts should be settled first and absent

the fact that the creditor has not issued any receipt applying the amount to
any of the debts to which the debtor has not protested and there was no
cause of invalidating the same, furthermore the period is for the benefit of
the creditor, the P1,000,000 should be applied as follows:

 Amount available P
1,000,000

 Debt secured by house and lot

300,000
 Debt with 10% Interest
Interest 10% x P 200,000= P20,000
Principal 200,000
220,00
Balance
580,000
Debt with 8% interest
Interest 8% x P 300,000= 24,000
Principal 300,000
324,000
Balance
256,000
****
The remaining P 256,000 shall be distributed proportionately to the debts
that are due and demandable as follows:
Remaining Debts: Ratio %
Share (P256,000)
 (a)Mar 1 P 300,000 3/5 (300/500) 60%
P 153,600
 (b)Apr 1 P 200,000 2/5 (200/500) 40%
102,400 500,000
 OBLIGATION AND CONTRACTS
Grounds for Extinguishment of Obligations:

Section I. PAYMENT (Art 1232-1261)

Section II. LOSS OF THE THING DUE (Art 1262-
1269)
Section III. CONDONATION OR REMISSION
(Art 1270 – 1274)
Section IV. CONFUSION OR MERGER (Art 1275-1277)
Section V. COMPENSATION (Art 1278-1290)
Section VI. NOVATION ( Art 1291 – 1305)
PAYMENT OR
PERFORMANCE
Art. 1232 – PAYMENT means not
only the delivery of money but also
the performance, in any manner, of
an obligation
- 1233 . Debt is understood as paid if
the thing or service consisting the
obligation has been completely
DELIVERED or RENDERED
ART 1236
The creditor is not bound to accept
payment or performance by a 3rd person
who has no interest in the fulfilment of the
obligation, unless there is stipulation to the
contrary
- 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 insofar as the payment has
been beneficial to the debtor
Art. 1237
Whoever pays on behalf of the debtor without the
knowledge or against the will of the latter cannot
compel the creditor to subrogate him in his
rights, such as those arising from a mortgage,
guaranty, or penalty
Art. 1238
PAYMENT made by a 3rd person who does not
intend to be reimbursed by the debtor is
deemed to be a donation, which requires the
debtor’s consent. But the payment is in any case
valid as to the creditor who accepted it
ART 1241
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.
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 proved in the
following cases:
1. if after the payment, the 3rd 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 the 3rd person had authority to receive the
payment.
SPECIAL FORMS OF
PAYMENT
DATION IN PAYMENT
APPLICATION OF PAYMENT
PAYMENT BY CESSION
TENDER OF PAYMENT AND
CONSIGNATION

DATION IN PAYMENT: property is alienated

to the creditor in satisfaction of a debt in
money, shall be governed by the law of
sales
APPLICATION OF PAYMENT

The designation of the debt to which

should be applied the payment by a
debtor who has various debts of the
same kind in favor of one and the
same creditor
-debtor has the ist choice, otherwise,
creditor
- Interest to be paid first before principal
Payment by CESSION

It is the assignment or abandonment

of all the properties of the debtor for
the benefit of his creditors in order
that the latter may sell the same and
apply the proceeds thereof to the
satisfaction of their credits
Art 1255. only releases the debtor
from the responsibility for the net
proceeds of the thing assigned
Tender of Payment
The act, on the part of the debtor of
offering to the creditor the thing or
amount due
CONSIGNATION
Is the act of depositing the thing or
amount due with the proper court
when the creditor does not desire or
cannot receive it, after complying with
the formalities required by law.
LOSS OF THE THNG DUE
REQUISITES:
1. 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.
Art. 1262
*Loss of the thing, even in the absence of
fault and delay
- When the law so provides
- When the stipulation so provides
-when the nature of the obligation requires
the assumption to risk. Art. 1262
LOSS OF A GENERIC THING
 DOES NOT EXTINGUISH THE
OBLIGATION Art. 1263 GENUS
NUNQUAM PERUIT
1. IN CASE OF PARTIAL LOSS, THE COURT
HAS DISCRETION TO DETERMINE
WHETHER IT IS EQUIVALENT TO A
COMPLETE LOSS
2. IF THE THINGS IS LOST IN THE
POSSESSION OF THE DEBTOR, IT IS
PRESUMED THAT THE LOSS WAS DUE
TO HIS FAULT SUBJECT TO Art. 1165
and in case of looed, earthquake
floodstorm or other natural calamity.
CONDONATION OR REMISSION
OF DEBT
- GRATUITOUS ABANDONMENT BY THE
CREDITOR OF HIS RIGHT Art, 1270
Requisites:
1. Must be gratuitous

2. Must be accepted by the obligor

3. Demandable at the time the remission is

made
4. Parties have the capacity

5. Must not be Inofficious

6. Comply with the forms of dopnation, if

made expressly
Kinds of remission:
1. Complete
2. Partial
3. Express
4. Implied
5. Inter vivos
6. Mortis causa
 Donation of movable may be oral or written
 If more then P 5,000 – must be in writing
 If immovable – public instrument
 Inofficious –in excess of what he can give
by will
 Voluntary delivery of the private document –
implies renunciation of the action which the
creditor had against the debtor
 Presumption – private document in the hands
of the debtor: the creditor delivered it
voluntarily
 Effect of the renunciation of the principal debt
: shall extinguish the accessory
 Renunciation of the accessory: principal
obligation remain in force
 If the thing pledged is found in possession of
the 3rd person who owns the thing :
accessory obligation or pledge was remitted.
 CONFUSION OR MERGER
Art 1275. It is the meeting in one person of the qualities of
creditor and debtor with respect to the same obligation

REQUISITES:
1. IT MUST TAKE PLACE BETWEEN THE PRINCIPAL DEBTOR
AND CREDITOR
2. IT MUST BE COMPLETE

Effects:
1. The obligation is extinguished. Art 1276
2. In a joint obligation, will extinguish only the share
corresponding to the creditor or debtor in whom the two (2)
characters concur. Art 1277
3. In a solidary obligation, the entire obligation is extinguish
 COMPENSATION
Art. 1278. it is the extinguishment to the concurrent
amount of the debt of two persons who, in their own
right, are debtors and creditors of each other.

DISTINGUISH COMPENSATION FROM CONFUSION:

compensation confusion
- Two persons involved, - only one person who

each of whom is a debtor is a creditor & debtor

and a creditor of the other; to himself
- There are 2 obligations - there is but one obligation

- Indirect payment - impossibility of payment

 KINDS OF COMPENSATION
I. BY ITS EFFECT OR EXTENT
1. TOTAL-when both obligation are of the
same amount and are entirely extinguished
2. PARTIAL – when the 2 obligations are of
different amounts and a balance remains
II. BY ITS CAUSE OR ORIGIN
1. LEGAL- when it takes place by operation of
law even without the knowledge of the parties.
2. VOLUNTARY – when it takes place by
agreement of the parties
3. JUDICIAL- when it takes place by order
from court in a litigation
 REQUISITES OF LEGAL COMPENSATION:
1. That each one of the obligors be bound
principally, and that he be at the same time a
principal creditor of the other;
2. That both debts consists in a sum of money, or of
consumable things of the same kind or quality;
3. That the two debts are due and demandable;
4. That the two debts are liquidated
5. That over neither of them there be any retention
or controversy, commenced by 3rd persons and
communicated in due time to the debtor
Art. 1279
 INSTANCES WHEN LEGAL
COMPENSATION IS NOT ALLOWED BY
LAW
I. When debt arises from a DEPOSITUM
II. When one of the debt arises from a
COMMODATUM
III. When one of the debt arises from a claim
for support due by gratuitous title
IV. When one of the debt consist of civil
liability arising from a penal offense
Art. 1288
 NOVATION
Art. 1291. it is the extinction of an obligation through the creation of a
new one which substitute it.
- It operates only as a relative extinction, it creates a new one in place
of the old which is only modified

REQUISITES:
1. A PREVIOUS VALID OBLIGATION
2. CAPACITY AND INTENTION OF THE PARTIES TO MODIFY OR
EXTINGUISH THE OBLIGATION
3. THE MODIFICATION OR EXTINGUISHMENT OF THE OBLIGATIONS
4. THE CREATION OF A NEW VALID OBLIGATION

DIFFERENT KINDS OF NOVATION:

1. According to origin:
a. Legal - takes place by operation of law
b. Conventional – that which takes place by agreement of the parties
2. According to how it is constituted:
a. Express – when it is so declared in unequivocal terms
b. Implied – when the old and the new obligations are essentially incompatible
with each other
3. According to the extent:
a. Total or extinctive- old obligation
completely extinguished
b. Partial or modificatory - when the old
obligation is merely modified
4. According to subject:
a. Real- when the object or principal
conditions are changed
b. Personal – when the person of the
debtor is substituted/or when the 3rd
person is subrogated to the rights of the
creditor.
c. Mixed – when the object and the debtor
or creditor or both the parties are changed
OBLIGATIONS MAY BE MODIFIED BY:
1. CHANGING THEIR OBJECT OR PINCIPAL
CONDITIONS;
2. SUBSTITUTING THE PERSON OF THE
DEBTOR
3. SUBROGATING A THIRD PERSON IN THE
RIGHT OF THE CREDITOR
KINDS OF PERSONAL NOVATION:
1. SUBSTITUTION- person of the debtor is
substituted
2. SUBROGATION- 3rd person subrogated in
the right of the creditor
Art 1293
KINDS OF SUBSTITUTION:
1.EXPROMISION- takes place when the 3rd
person of his own initiative and without the
knowledge or against the will of the original
debtor assumes the obligation with the
consent of the creditor. It is essential that
old debtor be released from his obligation.

2. DELEGACION – takes place when the

creditor accepts a third person to take the
place of the debtor at the instance of the
latter. Creditor may withhold approval. All
parties must agree
KINDS OF SUBROGATION:
1. CONVENTIONAL – takes place by agreement of
the original parties and the 3rd person
- requires consent of the original parties and the
3rd person (Art. 1301)
- CONSENT is required because:
1. of debtor, because he becomes liable under
the new obligation to a new creditor
2. of the old creditor, because his right against
the debtor is extinguished
3. of the new creditor, because he may dislike
or distrust the debtor
1. LEGAL – when it takes place by operation of law
( Art. 1300)
END OF THE LECTURE