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QUIZ NO. 3 - OBLIGATIONS AND CONTRACTS

Question No.1: A and B are joint debtors of C, D, E, and F, solidary creditors to the amount of
P1,000,000.00. How much can C recover from A?

Answer:

C, being a solidary creditor to joint debtor A can only recover the amount of P500,000.00
from the latter. Under Article 1207 of the Civil code, a solidary obligation gives rise to the
debtors fulfillment for the whole obligation.

In the given case, C, a solidary creditor is presumably entitled to the whole obligation of
P1,000,000.00 however, since A is only a joint debtor, he is only obliged to give what is due to
him. Hence, C can only recover half of the obligation from A amounting to P500,000.00.

Question No. 2: In 2020, A, B, and C bound themselves in solidum to give X P300,000.00

subject to the following stipulations: A to pay in 2021; B, if he passes the Bar; C, in 2023.

A. In 2021, how much can X demand from A?

Answer:

In 2021, X can demand the payment of P100,000.00 from A. Under Article 1211, of the
Civil code, a solidary obligation may exist even though debtors are not bound by the same terms
and conditions.

In the given case, X has the right of the whole obligation being a solidary creditor
however, divided among the debtors A, B, and C thus, the amount of P 100,000.00 shall be
demandable to each, subject to their distinct periods and conditions. Since in 2021, the payment
of A is due, X can only demand the P 100,000.00 thereof.

B. Suppose X instead made a demand on C in 2021, how much can he collect from C?

Answer:

Supposed X demands the payment of C in 2021, he cannot collect the amount

demandable to C. Under Article 1211 of the Civil Code, the period and conditions of the debtors
are distinct from each other and can only be demandable at the time their period and conditions
are due.

In the given case, only the liability of A is due and demandable in the year 2021. X in the
same year, cannot demand claim for C’s obligation since it will only be demandable in 2023.
Hence, X can only claim the obligation of A amounting to P 100,000.00 in 2021.

Question No.3: A, B, and C are jointly liable to give a particular car worth P1.2 million in favor
of D, E, F, and G. A is insolvent and the debtors, therefore cannot purchase the car to give to the
creditors. D and E have renounced their rights. The debtors are not in default. How much can
each of the creditors get from each of the debtors?

Answer:

The debtors are proportionately obligated to pay the amount of P100,000.00 to each
creditor. Since the case provides for a indivisible joint obligation, it shall be governed by the
provision under Article 1209 of the Civil code, which states that “if the division is impossible,
the right of the creditors may be prejudiced only by their collective acts, and the debt can be
enforced only by proceeding against all the debtors. If one of the latter should be insolvent, the
others shall not be liable for his share.”

In the case at bar, since the delivery of the car cannot be fulfilled due to the insolvency of
A, the obligation shall be converted into a monetary one and the latter’s obligation shall not be
borne by B and C however, F and G are obligated to compel A for the payment of his monetary
obligation. Hence, B and C are obliged to pay the amount of P 100,000.00 each to F and G only,
since D and E had already renounced their rights as creditors.

Question No.4: What are the different modes of extinguishing obligations?

Answer:

There are six (6) modes of extinguishing obligations as stipulated under Article 1231 of
the Civil code namely:

1. By payment or performance;
2. By loss of the thing due;
3. By condonation or remission of debt;
4. By confusion or merger of the rights of creditor and debtor;
5. By compensation; and
6. By novation.

Question No. 5: A owes B P1,000,000.00. Later, A paid B P700,000.00, leaving a balance of

P300,000.00. C, a classmate of A, and intending to surprise A, paid B the sum of P1,000,000.00
thinking that A still owed B that amount. He did this without the knowledge of A. How much
can C recover from A?

Answer:

C can only recover the amount of P300,000.00 from A. The provision under Article 1236,
paragraph 2 of the Civil code, states that “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” applies to this case.

In the given facts, C paid the debt of A in full without his knowledge thus, in reference to
the above provision, C is only compelled to recover the amount beneficial from A’s end which is
P300,000.00. B however, is also compelled to return the amount of P700,000.00 plus interests in
lieu of damages to C if he acted in bad faith, having knowledge of the fact that A already paid
him a portion of the debt. Hence, C can only be allowed to recover until the amount beneficial to
A.
Question No. 6: A owes B the sum of P1 million. C is the guarantor of A. A was able to pay B
the sum of P400,000. D, thinking that A still owed B P1 million, paid P1 million to B, without
the knowledge of A. May D recover from A? If so, how much? If A cannot pay, may D proceed
against the C?

Answer:

Yes, D may recover from A the amount beneficial to him amounting to P600,000.00.
Article 1237 of the Civil code which provides that, “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,” shall apply to this
case.

Based on the given facts, D’s act of paying the obligation of A without prior knowledge
of the latter does not compel him to go against C, A’s guarantor in case A cannot be able to pay
him the amount intended for recovery of payment, nor is he entitled to subrogation. Hence, D is
only entitled to the beneficial reimbursement for paying A’s debt.

Question No. 7: The debtor owes his creditor several debts, all of them due, to wit: (1) an
unsecured debt; (2) a debt secured with mortgage of the debtor’s property; (3) a debt bearing
interest; (4) a debt in which the debtor is solidarily liable with another. Partial payment was
made by the debtor. Assuming that the debtor had not specified the debts to which the payment
should be applied and, on the other hand, the creditor had not specified in the receipt he issued
the application of payment, state the order in which the payment should be applied and your
reason therefore.

Answer:

Under Article 1254 of the Civil code, it states that “when the payment cannot be applied
in accordance with the preceding rules, or if application can not be inferred from other
circumstances, the debt which is most onerous to the debtor, among those due, shall be deemed
to have been satisfied. If the debts due are of the same nature and burden, the payment shall be
applied to all of them proportionately.”

In the given case, since the application of the partial payment made by debtor for his
debts that were already due was not specified, nor reflected on the receipt, the schedule or order
for settlement of payments shall be applied first to debts that are most onerous down to the less
risky, in favor of debtor’s interests.

Firstly, “debt secured with mortgage of the debtor’s property” shall be prioritized in the
schedule of debt settlement. The reason is that, secured debts such as those with attached
mortgage of the debtor’s property, if given lesser priority would constitute either to the
foreclosure or loss of the asset. With secured debts, the creditor has in his possession a property
as a form of collateral in case of debtor’s non-payment, thus, in order to avoid such foreclosure
or loss, payment made for secured debts should be settled first.

Secondly, “debt bearing interest” shall follow. The same with secured debts, debts with
interests if given lesser priority, would be burdensome to the debtor for the reason that, such
debts incur or accumulate interests on top of the principal amount to be paid. The non-settlement
of debts with interests for a given period would result to an increased liability for the debtor.
Therefore, payment for debt bearing interest should come second in order to avoid inflation of
debt owed to creditor eliminating the risks of non-payment.

Third, payment for “debt in which the debtor is solidarily liable with another” shall
follow. The debtor taking responsibility for the entirety of the debt with another co-debtor once
it’s demandable upon him, shall be prioritized in order to avoid payment of damages and
interests in case of non-deliverance of the obligation.

Lastly, is the payment for “unsecured debt.” Among the four (4) enumerated debts of the
debtor, unsecured debts hold the less risk in terms of non-payment for it does not constitute a
collateralize obligation against debtor’s assets that can be at risk in case of non-settlement.
Hence, payment of unsecured debts shall be made last.

Upholding debtor’s best interests in matters of settling several debts that are due for one
or the same creditor is important. This is to insure that the debtor’s liabilities or obligations are
settled without the risk of losing assets and becoming insolvent. In cases of numerous debts,
those most onerous comes first in scheduling of payment in order to avoid risk while insuring
satisfaction of obligation. Hence, the partial payment made by the debtor shall be applied to his
obligation secured with a mortgage first.

Question No. 8: Lessors contended that lessees should be ejected for non-payment of new rental
rates. The latter contended that they did not agree to the new rates. Thus, the lessees offered
payment based on the old rates. The lessors refused to accept their payments. Is non-payment of
rentals justified by the lessor’s refusal to accept their payments?

Answer:

No, non-payment of rentals cannot be justified by the lessors' non-acceptance of the

offered rental payments by the lessees. Article 1256 of the Civil code, provides that, “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” shall be
applied to this case.

Based on the given facts, the refusal of the lessors to accept the rental payments of the
lessees are void due to the lack of legal basis to support the increase of rental payment rates, as
well as the lack of mutual agreement between the parties prior to its implementation. With the
refusal of lessors to accept payments, the lessees shall consign or deposit to the proper judicial
authority the rental payments due for the period applicable, to avoid ejectment and other
violations for non-payment herewith. Subsequent to which, the lessees shall inform the lessors of
the made consignment. Hence, the refusal of the lessors to accept rental payments does not
justify the non-payment of obligations.