7. Obligations and Contracts

Unless the law or the stipulation of the parties requires another standard of care, the obligation to give a thing carries with it the obligation to take care of it with

• Extra-ordinary diligence

• Degree of care agreed upon by the parties

• Diligence of a Good Father of a Family

• Diligence of a Good Family of a Father

Answer explanation

Article 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. (1094a)

When a person voluntarily takes charge of another’s abandoned business or property without the owner’s authority where reimbursement must be made for necessary and useful expenses

• Quasi-contract

• Quasi-delict

• Negotiorum gestio

• Solutio indebiti

Answer explanation

Article 2144. Negotiorum gestio is the voluntary management of the property or affairs of another without the knowledge or consent of the latter.

If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by

• Assignment of property

• Consignation of the thing or sum

• Adjudication or dacion en pago

• Due

  Condonation

Answer explanation

Article 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be

released from responsibility by the consignation of the thing or sum due.

A obliged himself to pay B P100,000 in 30 days plus a penalty of P10,000 if A fails to pay the obligation in due time. A failed to pay the obligation in 30 days, B can demand from A

• The principal of P100,000 plus P10,000 penalty

• The principal of P100,000 plus P10,000 penalty plus legal interest

• The principal of P100,000 plus P10,000 penalty, plus legal interest, plus damages

• The principal of P100,000 plus legal interest, plus damages

Answer explanation

Article 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.

The following are the requisites of an obligation, except

• Passive subject, debtor or obligor

• Efficient cause

• Active subject, creditor or obligee

• Demand

Answer explanation

Article 1156. Elements of an obligation

1) Vinculum juris or juridical tie (also called as efficient cause)

2) Object or prestation (subject matter of the obligation)

3) Passive subject- Debtor or obligor

4) Active subject- Creditor or Obligee

Which of the following is not a remedy of a creditor if there was failure to deliver an indeterminate thing?

• Rescission of the contract

• Recover damages

• Compel delivery of a thing of superior quality than what was agreed

• Ask that the obligation be complied with at the expense of the debtor

Answer explanation

Remedies of the creditor in the case the debtor fails to comply with his obligation to deliver an indeterminate or generic thing

✓ Action for specific performance with damages.

✓ He may ask the obligation to be complied with by a third person at the expense of the debtor with damages.

If through the creditor's acts the debtor cannot make a choice according to the terms of the alternative obligation, the debtor may:

• Rescind the contract

• Rescind the contract with damages

• Rescind the contract or ask for damages, at the debtor's option

• All of the above

Answer explanation

Art. 1203. If through the creditor's acts the debtor cannot make a choice according to the terms of the obligation, the latter may rescind the contract with damages. (n)

Facultative as distinguished from alternative obligation

• The right of choice is given only to the debtor

• Various things are due, but the giving of one is sufficient

• If one of the prestations is illegal, the others may be valid and the obligation remains

• If it is impossible to give all except one, that last one must still be given

Answer explanation

Alternative Obligation is one where several prestations are due but the complete performance of one of them is sufficient to extinguish the obligation while in Facultative Obligation, only one prestation is due but the debtor may render another in substitution. In Alternative Obligation, the right of choice may be given to the creditor or third person while in Facultative Obligation, the right to make the substitution is only to the debtor.

In order that condonation may extinguish an obligation involving a movable property whose value exceeds P5,000

• It is sufficient that the condonation and the acceptance are in writing, even a private one.

• It is required that the condonation and the acceptance be in a public instrument

• The delivery of the document evidencing the debt IS sufficient since the property is movable.

• The condonation and the acceptance may be made orally.

Answer explanation

As a general rule, the form of the obligation is not an essential element/requisite. Except: (the noncompliance of the following formalities would have the effect of rendering the contract agreement void or inexistent): ---donation of personal property whose value exceeds P5,000.00, contract in writing. (Art. 748, CC) ---sale of a piece of land or any interest therein through an agent, authority of such agent be in writing. (Art. 1874, CC) ---Interests in a contract of simple loan or mutual agreement with respect to such be in writing. (Art. 1956, CC) ---antichresis, principal amount and interest be specified in writing. (Art. 2134, CC) ---Donation of immovable property be made in a public document and the acceptance be made in the same document or separate public document (Art. 749, CC) ---contribution of immovable property or real rights to common fund (partnership) must be in a public instrument with attached inventory signed by the parties. (Art. 1771, 1773, CC) ---Chattel Mortgage, personal property must be recorded in the Chattel Mortgage Register (Art. 2140, CC) ---sale or transfer of large cattle, such transfer or sale must be registered. (Sec. 22, Act No. 1147, Art. 1581, CC)

D owes C P 10,000.00 with G as guarantor. C, on the other hand, owes D, P8,000, both debts are already due but D is insolvent. In this case

• C may collect from G P 10,000.00.

• C may collect from G P2,000.00 because a guarantor can set up compensation as regards what the creditor owes the principal debtor.

• C may collect nothing from G because D is insolvent.

• C may collect P8,000.00 from G.

Answer explanation