Answer the questions directly and cite the basis of your answers like the relevant principles or

provisions of law.

1. X delivers to Y his one and only dog in accordance with their contract. Is there payment
and therefore, the obligation is extinguished?

Yes, the obligation is extinguished. Under Article 1232, payment means the delivery of the thing
or performance of the service which is the object of the obligation.

2. A owes B P10,000 payable on Oct.30, 2021. If on due date A has P9,000.00 only, what
are the effects or consequences on his obligation?

If only partial payment is made, Article 1233 provides that the obligation is not extinguished
until the full amount is paid. A is still liable for the remaining P1,000.

3. X binds himself to pay W P5,000 and whatever commission she will receive from Avon
Co. for the month of November 2021. Suppose the commission is not yet liquidated, can
X pay W the amount of P5,000 ahead of the commission?

If only partial payment is made, Article 1233 provides that the obligation is not extinguished
until the full amount is paid. A is still liable for the remaining P1,000.

4. F agrees to give E a brand- new Panasonic electric stand fan in black. If F delivers to E a
brand-- new Panasonic electric stand fan in navy blue, may the creditor refuse to accept
the performance by F?

Yes, E may refuse the fan. Under Article 1244, the creditor cannot be compelled to accept a
different thing or performance.

5. Referring to no. 4, if E knowing that the electric fan was not in the color agreed upon still
accepts it without any objection or protest, What is the effect?
Note: failure to object or protest amounts to waiver or estoppel
Waiver is the abandonment or relinquishment of a right.
Through estoppel an admission or representation is rendered conclusive upon the person making
it, and cannot be denied or disproved as against the person relying thereon.

E’s acceptance without objection constitutes waiver or estoppel (Articles 1235, 1431). E is
deemed to have waived the defect.

6. A owes B P5,000 guaranteed by X payable on Oct. 30, 2021. If C, a third person offers to
pay A’s obligation, is B obliged to accept the payment? What are the effects?

B is not bound to accept C's payment unless it benefits the debtor or the payment was made with
the debtor’s consent (Article 1236).

7. Referring to no. 6, to whom should A pay his obligation? Give the effects.

A should pay B, unless there’s evidence that C has B’s authority to accept payment (Articles
1238-1239). If payment is made to C without B’s authorization, the obligation remains unless
ratified.

8. If payment or performance is made or rendered to a third person, is it valid or not?

Invalid, unless it benefits the creditor, or the payment is ratified by the creditor (Article 1236).

9. X , 18 years old, borrows P2,000 from Y, 16 years old. On due date X pays Y the amount
of P2,000. Is the payment valid?

Valid. The creditor’s minority does not affect the validity of payment unless Y is declared legally
incompetent (Article 1240).
 10. A owes B P10,000. On due date B goes to A’s residence to collect the payment and A is
ready to pay the full amount. However, they agreed that instead of cash B will accept A’s
wristwatch worth more or less P10,000 as full payment. What special form of payment is
this?

This is dation in payment (Article 1245), where the debtor delivers a thing to the creditor as
equivalent to the monetary debt.

11. X owes several creditors in the amount of P1M all due and demandable. A has no enough
money to pay for all his obligations but he owns personal and real properties. May A use
these properties to pay off his obligations?

Yes, this is cessation of payment (Article 1245), where properties may be used to settle debts if
the creditors agree.

12. A owes B the following: P1,000 due and demandable and P500 due (not yet due). A has
P500 only. To which debt is the payment to be applied? Who shall apply the payment?
What if both debts are due and demandable? What if both debts are of the same amount,
let’s say P500 and are already due?

If A has P500 only, it must first apply to the debt already due, unless A specifies otherwise
(Article 1252).

13. What if the debtor refuses to accept your payment without valid reason? What if he is
willing to accept the payment but he does not want to issue a receipt? What will you do?

The debtor may consign the payment in court to extinguish the obligation (Articles 1256-1258).

14. What is legal tender?

Legal tender refers to currency that must be accepted in payment of debts (Article 1249).
 15. A pays B the amount of P100,000 by way of a check. If B accepts the check, is A
considered to have paid the obligation?
16.
Payment is not complete until the check is encashed (Article 1249). Acceptance of the check is
provisional.

16. When may checks and other mercantile documents produce the effect of payment?

A check produces payment effect only upon encashment or acceptance as final payment by the
creditor (Article 1249).

17. In case of an extraordinary inflation or deflation of the currency stipulated should

supervene, what shall be the basis of payment?

In case of extraordinary inflation or deflation, payment must be adjusted based on the value of
the currency at the time of payment (Article 1250).

18. What are the rules regarding place of payment?

Payment should be made at the place designated in the contract or at the creditor’s residence
(Article 1251).

19. X binds himself to deliver to B a specific object. While the object is in his possession it
was lost. What is the presumption under the law? Is there such a presumption when
there’s fortuitous event?

If the object is lost without the debtor's fault, the obligation is extinguished. No presumption
arises if loss is due to a fortuitous event (Article 1262).
 20. A binds himself to deliver a specific truck to B. Before delivery, the truck engine was
stolen without fault on the part of A. Since there was only a partial loss, is the obligation
of A extinguished or not extinguished?

The obligation is not extinguished, as only part of the thing is lost. The creditor may demand
fulfillment or rescind the obligation (Article 1264).

21. What is condonation or remission of debt?

Condonation is the gratuitous forgiveness of a debt (Article 1270).

22. X is indebted to W in the sum of P2,000 evidenced by a promissory note executed in long
hand by X. If W returns the promissory note to X, what is the presumption?

Returning the note raises the presumption of remission of the debt (Article 1271).

23. A and B are indebted to X in the sum of P2,000 evidenced by a promissory note executed
by the former (A and B). If the promissory note is found in the possession of A, what is
the presumption? Does it mean that the obligation of both A and B are condoned or only
A’s share in the debt? What if the obligation of A and B is solidary? (See Joint & Solidary
obligations)

The presumption applies only to A’s share unless solidary liability exists (Article 1217).

24. W is indebted to Y for P5,000 secured by a pledge of wristwatch. If Y condones the debt
in the sum of P5,000, what is the effect?

The debt is extinguished, and the pledge must also be released (Article 1271).
 25. What is confusion or merger of rights?

Confusion occurs when the debtor and creditor become the same person (Article 1275).

26. A borrows P5,000 from B and executed a negotiable promissory note payable to the latter
on January 15, 2022. B pays the promissory note to C for a certain celphone. C pays the
promissory note to D for repairing the former’s car. D pays the promissory note to A for a
specific puppy sold to him by A. Is the obligation extinguished?

Yes, the obligation is extinguished. When the debtor becomes the holder of the negotiable note,
confusion or merger takes place (Article 1275).

27. D owes C P1,000 the same being evidenced by a promissory note with G as guarantor.
Subsequently, C indorses back the promissory note to D. What is the effect?

The obligation is extinguished by confusion or merger, as the debtor (D) and creditor (C) now
become the same person in the obligation (Article 1275).

28. Suppose in number 24, C indorses the promissory note to F and the latter indorses the
same promissory note to G, What is the effect?

The obligation remains. The endorsement merely transfers the creditor’s right to the endorsee
(Article 1249).

29. What is COMPENSATION?

Compensation occurs when two parties are debtors and creditors to each other (Article 1278).

30. What is Legal compensation?

Legal compensation, Takes place by operation of law (Article 1279).

 31. What is Voluntary compensation?

Voluntary compensation Requires mutual agreement.

32. X owes Y P500 which is now due and demandable. Y also owes X P500 also due and
demandable. Give the legal effect.

The two debts are extinguished by legal compensation under Article 1279.

33. D owes C P1,000. In another obligation, X owes D P1,000 with C as guarantor. Is there
compensation?

No, there is no compensation because the parties are not mutual debtors and creditors in both
obligations (Article 1280).

34. X owes Y P1,000 with G as guarantor due and demandable. Y owes X P1,000 due and
demandable. Suppose X becomes insolvent and Y demands payment from G (as
guarantor), may G may set up compensation as regards the debt of Y to X?

Yes, G can invoke compensation as a defense to reduce or extinguish his liability under Article
1281.

35. Can there be partial compensation ?

Yes, Article 1281 allows for partial compensation when the debts are not equal. The smaller
amount extinguishes a corresponding portion of the larger debt.
 36. What is Facultative compensation?

Facultative compensation occurs when one party has the option to oppose compensation, even if
the legal requirements are met (Article 1282).

37. May the parties agree upon the compensation of debts which are not yet due?

Yes, voluntary compensation allows parties to agree even if the debts are not yet due (Article
1282).

38. X will deliver to Y ten (10) sacks of first- class white rice due and demandable. Y is also
obliged to deliver to X ten (10) sacks of first- class white rice due and demandable. What
is the effect?

The obligations are extinguished by legal compensation (Article 1278).

39. A will deliver to B a narra dining table. B binds himself to deliver to A a bed made of dao
wood. Both obligations are due and demandable. Is there compensation?

No, there is no compensation since the objects are not of the same kind (Article 1279).

39. What are instances when compensation shall not take place?

Compensation does not take place in cases involving support, taxes, or claims from deposits or
trustee obligations, as provided under Article 1287.

39. What is NOVATION? What are the three kinds of novation?

Objective novation: Changes the object or principal condition.

Passive subjective novation: Changes the debtor with the creditor’s consent.
Active subjective novation: Changes the creditor with the debtor’s consent. (Article 1291)
 39. Is novation presumed? How may an obligation be extinguished by another obligation?

Novation is not presumed and requires clear intent to extinguish the original obligation. It can be
done expressly or impliedly by substituting the obligation or altering its essential terms (Article
1292).

43. X binds himself to give Y a male German shepherd puppy. Later on, X agrees to give Y a
male Labrador puppy. Is there novation?

Yes, this is objective novation since the object of the obligation was changed with the parties'
consent (Article 1291).

44. A agrees to deliver to W 50 bottles of multivitamins. But later they agreed to change the
object to ecstasy party drug. Is there novation? Is X still obliged to sell to W 50 bottles of
multivitamins?

There is novation, but the new obligation is illegal and void under Article 1306. Since the change
involves an illicit object, A’s obligation to deliver multivitamins is not extinguished.

45. A owes B P5,000 due on December 31, 2021. X, a third person, went to B and obliged
himself to pay the debt of A. If B accepts X in place of A, what is the effect? What kind
of substitution of debtor is this?

This is expromission, a type of passive novation. The original debtor (A) is released, and X
becomes the new debtor (Article 1293).

46. X obliged himself to deliver to Y 20 sacks of first class white rice. Later on, X brought to
Y his friend W and proposed to Y that W will take his place as debtor with respect to the
 obligation to deliver 20 sacks of first class white rice. If Y agrees to the proposal of X,
what is the effect? What kind of substitution of debtor is this?`

This is delegation, another form of passive novation. X is released from the obligation, and W
becomes the new debtor (Article 1293).

47. What is Subrogation?

Subrogation is the substitution of a third person in the place of the creditor, granting the new
creditor the same rights as the original one (Article 1300).

48. Kinds of subrogation:

A. A owes B P5,000. With the consent of A, B entered into a contract assigning
(transfer) his credit to X. What kind of subrogation is this? Define.

This is conventional subrogation, which takes place by agreement between the original creditor
(B), the new creditor (X), and with the consent of the debtor (A). It is governed by Article 1301,
requiring the voluntary transfer of rights.

B. X owes St. Peter funeral parlor the sum of P10,000. X also owes W P3,000.
Knowing the debt of X to St. Peter, W pays the obligation without the consent of
X. In this case, W is subrogated in the rights of St. Peter as preferred creditor and
he (W) is entitled to be paid ahead of other obligations.

This is legal subrogation, which occurs by operation of law when a third party (W) pays the debt
of another (X) without the debtor’s consent but to protect the third party's interest or under
circumstances provided by Article 1302.
 ● A owes B P5,000 guaranteed by X. A becomes insolvent. X paid the obligation of A to B.
X is subrogated in the rights of B.

This is legal subrogation, as the guarantor (X) steps into the creditor’s (B) position upon paying
the debt, giving the guarantor the same rights as the original creditor.

● W owes Z P10,000. With the consent of W, X paid W’s indebtedness to Z. X is

subrogated in the rights of Z.

This is conventional subrogation, as the parties mutually agreed to the substitution of creditor.

● In the above examples (letter b), what kind of subrogation that took place? Define.

The examples involve legal subrogation, which arises by operation of law without requiring the
debtor’s consent.