Obligations and contracts

71. In a contract to sell real property on instalments, the failure to pay the purchase
price in full is merely a failure of a positive suspensive condition, but not a breach of the
obligation that will allow rescission under Art. 1191.

Answer: TRUE

In Padilla vs. Sps. Paredes , the court ruled that "In a contract to sell real property on
installments, the full payment of the purchase price is a positive suspensive condition, the failure
of which is not considered a breach, casual or serious, but simply an event which prevented the
obligation of the vendor to convey title from acquiring any obligatory force. The transfer of
ownership and title would occur after full payment of the purchase price."

72. A third person who pays on behalf of the debtor can demand subrogation in the
creditor’s rights.

Answer: FALSE

Art. 1236. The creditor is not bound to accept payment or performance by a third person
who has no interest in the fulfillment of the obligation, unless there is a 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.

73. As a general rule, in an obligation to give payment by one who does not have the free
disposal of the thing due and capacity to alienate it shall be void

Answer: TRUE

Art. 1239, in obligations to give, payment made by one who does not have the free disposal
of the thing due and capacity to alienate it shall not be valid, without prejudice to the
provisions of Article 1427 under the title on Natural Obligations.

74. Subrogation does not include reimbursement, but only the exercise of other rights
attached to the original obligation

Answer: TRUE

Art. 1303. Subrogation transfers to the persons subrogated the credit with all the rights
thereto appertaining, either against the debtor or against third person, be they guarantors
or possessors of mortgages, subject to stipulation in a conventional subrogation.

In Malayan Insurance Co., Inc v. Alberto it was held that, Subrogation is the substition of one
person by another with reference to a lawful claim or right, so that he who is substituted
succeeds to the rights of the of the other in relation to a debt or claim, includings its
remedies and securities.1

75. A stipulation for payment to be made in a foreign currency is valid even if the place of
payment is the Philippines.

Answer: TRUE.

Art. 1249 – the payment of debts in money shall be made in the currency stipulated, and if it
is not possible to deliver such currency, then in the currency which is legal tender in the
Philippines.

76. Dation in payment requires two or more creditors.

Answer: FALSE.

Art. 1245 – In Dation in payment, there is usually only one creditor.

77. Exceptionally, tender without consignation may be valid as payment, but shall not
stop the running of agreed interests.

Answer: FALSE.

A tender of payment without consignation does not extinguish the obligation, but it exempts
the debtor from payment of interest and/or damages.

78. Merger is when the same person becomes creditor and debtor in the same obligation.

Answer: TRUE.

Art. 1275. There is merger when the characters of creditor and debtor are merged in the
same person.

79. Remission or condonation, whether express or implied, shall comply with the forms of
donation to be valid.

Answer: TRUE.

Art. 1270. It is essentially gratuitous in character and complies with forms of donation.

80. The debtor shall be liable for damages in cases of accidental loss of the thing if he
promises to deliver the same thing to different persons having the same interests.

Answer: TRUE.

Art. 1165. x x x

1 664 SCRA 791 (2012)

If the obligor delays, or has promised to deliver the same thing to two or more persons who
do not have the same interest, he shall be responsible for any fortuitous event until he has
effected the delivery.

81. The rules of application of payments shall apply to several obligations susceptible of
compensation.

Answer: TRUE

Art. 1289. If a person should have against him several debts which are susceptible of
compensation, the rules on the application of payments shall apply to the order of the
compensation.

82. Confusion is the extinction in the concurrent amount of the obligations of those
persons who are reciprocally debtors and creditors of each other.

Answer : TRUE.

Art. 1275. The obligation is extinguished from the time the characters of creditor and debtor
are merged in the same person.

83. Change in quantity is not novation.

Answer: TRUE

Art. 1291. Obligations may be modified by:

(1) Changing their object or principal conditions;

(2) Substituting the person of the debtor;

(3) Subrogating a third person in the rights of the creditor. (1203)

84. Change in price is extinctive novation.

Answer: TRUE.

In Quinto vs. People, it was held that an extinctive novation results either by changing the
object or principal conditions, or by substituting the person of the debtor or subrogating a
third person in the rights of the cred2 itor.

Art. 1291. Obligations may be modified by:

(1) Changing their object or principal conditions;

2 Gr. No. 126712, April 14, 1999

(2) Substituting the person of the debtor;

(3) Subrogating a third person in the rights of the creditor. (1203)

85. There is novation unless incompatibility is shown.

Answer: FALSE

Art. 1292. In order that obligation may be extinguished by another which substitutes the
same, it is imperative that it be so declared in unequivocal terms, or that the old and the
new obligations be on every point incompatible with each other. -Extinguishment of the
previous obligation by the new one as a requisite of novation may be express or implied. It is
express when there is a declaration in unequivocal terms that the old obligation is
extinguished by the new which substitutes it and implied when the old and new obligations
are incompatible on every point. THUS, it is not only in showing of incompatibility that may
result in novation but also in declaration of unequivocal terms of extinguishment of the old
obligation by the new one.