OBLICON Quiz Questions with Answers

True or False (25 questions)

1. True or False: Payment means only the delivery of money.

Answer: False. Payment can also refer to the performance of a service.

2. True or False: A debt can only refer to an obligation to give something.

Answer: False. A debt can also refer to an obligation to do something or not to do something.

3. True or False: A debt is considered paid only when the thing or service has been completely
delivered or rendered.
Answer: True. This is the general rule.

4. True or False: The creditor is bound to accept payment from any third person who offers it.
Answer: False. The creditor is only bound to accept payment from the debtor, a person with an
interest in the obligation, or a third person with an agreement to make payment.

5. True or False: A third person who has no interest in the obligation can force the creditor to accept
payment.
Answer: False. The third person cannot force the creditor to accept payment, but the creditor can
choose to accept it.

6. True or False: If the creditor accepts payment from a third person, the third person is always
entitled to subrogation.
Answer: False. Subrogation depends on whether the debtor consented to the payment.

7. True or False: Payment made to a person who is incapacitated to administer his property is never
valid.
Answer: False. The payment may be valid if the incapacitated person has kept the thing delivered or
if the payment has been beneficial to them.

8. True or False: Payment made in good faith to a person in possession of the credit is always valid.
Answer: True. This is an exception to the general rule that payment must be made to the creditor.

9. True or False: A debtor can compel the creditor to accept partial payment.
Answer: False. The creditor cannot be forced to accept partial payment unless there is a stipulation
to that effect.

10. True or False: The debtor has the right to choose to which debt his payment will be applied.
Answer: True. This is the general rule.
11. True or False: The debtor can choose to credit his payment to the principal before the interest is
paid.
Answer: False. Payment must be applied first to the interest, and the balance can be credited to the
principal.

12. True or False: The right to apply payment once exercised is irrevocable.
Answer: True. Unless the creditor consents to the change.

13. True or False: Tender of payment is the act of the creditor offering to the debtor the thing or
amount due.
Answer: False. Tender of payment is the act of the debtor offering to the creditor the thing or
amount due.

14. True or False: Consignation is the act of depositing the thing due with the proper court when the
creditor cannot receive it.
Answer: True.

15. True or False: Tender of payment is necessary before the debtor can consign the thing due with
the court in all cases.
Answer: False. Tender of payment is not necessary in the five cases listed in Article 1256.

16. True or False: If the debtor withdraws the thing or sum deposited after consignation, his
obligation remains in force.
Answer: True.

17. True or False: Dation in payment is the conveyance of ownership of a thing as an accepted
equivalent of performance.
Answer: True.

18. True or False: Dation in payment always involves several creditors.

Answer: False. Dation in payment usually involves only one creditor.

19. True or False: The creditor in dation in payment becomes the owner of the thing given by the
debtor.
Answer: True.

20. True or False: Payment by cession involves the debtor abandoning all of his property for the
benefit of his creditors.
Answer: True.

21. True or False: Payment by cession is a special form of payment where there is usually only one
creditor.
Answer: False. Payment by cession involves multiple creditors.
22. True or False: The debtor in payment by cession is always insolvent.
Answer: True. The debtor is partially or relatively insolvent.

23. True or False: A thing is considered lost when it perishes, goes out of commerce, or disappears
in such a way that its existence is unknown or it cannot be recovered.
Answer: True.

24. True or False: The loss of a generic thing extinguishes the obligation to deliver it.
Answer: False. The debtor can still be compelled to deliver a thing of the same kind.

25. True or False: In case of partial loss of a specific thing, the court will always determine that the
obligation is extinguished.
Answer: False. The court will determine whether the partial loss is so important as to extinguish the
obligation.

Identification (10 questions)

1. What is the legal term for the gratuitous abandonment by the creditor of his right against the
debtor?
Answer: Condonation or Remission of Debt

2. What is the legal term for the meeting in one person of the qualities of creditor and debtor with
respect to the same obligation?
Answer: Confusion or Merger of Rights

3. What is the legal term for the designation of the debt to which should be applied the payment
made by a debtor who has various debts of the same kind in favor of one and the same creditor?
Answer: Application of Payments

4. What is the legal term for the act of the debtor of offering to the creditor the thing or amount due?
Answer: Tender of Payment

5. What is the legal term for 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?
Answer: Consignation

6. What is the legal term for the conveyance of ownership of a thing as an accepted equivalent of
performance?
Answer: Dation in Payment

7. What is the legal term for the abandonment by the debtor of all of his property for the benefit of
his creditors?
Answer: Payment by Cession
8. What is the legal term for the extinguishment to the concurrent amount of the debts of two
persons who, in their own right, are debtors and creditors of each other?
Answer: Compensation

9. What is the legal term for the money approved in a country for the payment of debts, the
purchase of goods, and other exchanges for value?
Answer: Legal Tender

10. What is the legal term for a gratuitous contract whereby one of the parties delivers to another
something not consumable so that the latter may use the same for a certain time and return it?
Answer: Commodatum

Essay (15 questions)

1. Explain the concept of payment or performance as a mode of extinguishing an obligation.

Discuss the general rule and exceptions regarding complete fulfillment.
Answer: Payment or performance is the primary mode of extinguishing an obligation. It involves
the debtor fulfilling the obligation by delivering the thing due or performing the service agreed
upon. The general rule is that the obligation is extinguished only when the thing or service has been
completely delivered or rendered. Exceptions to this rule include:

• Substantial performance in good faith.

• Acceptance of incomplete performance by the creditor.

• Stipulation allowing for partial performance.

2. Explain the concept of a third person paying the debt. Discuss the consequences of payment
made without the knowledge or against the will of the debtor, and the consequences of payment
made with the consent of the debtor.
Answer: A third person can pay the debt if they have an interest in the obligation or if there's an
agreement with the creditor. If payment is made without the knowledge or against the will of the
debtor, the third person can only recover from the debtor insofar as the payment has been beneficial
to them. However, if the debtor consented to the payment, the third person has the right of
reimbursement and subrogation, acquiring not only the right to be reimbursed but also all other
rights that the creditor could have exercised.

3. Explain the requisites and rules on application of payments. Provide an example to illustrate your
explanation.
Answer: Application of payments involves the debtor designating which debt they want to pay
when they have multiple debts of the same kind due to the same creditor. The requisites are:

• One debtor and one creditor.

• Two or more debts.

• Debts of the same kind.

• Debts must be due.

• Payment is not sufficient to cover all debts.

• Example: Max owes Brendon P5,000 payable on October 5, P2,000 payable on October 25, and
P10,000 payable on November 15. On October 25, Max pays P6,000. Max can choose to apply the
payment to:

• Debt (a) or debt (b).

• Debt (b) and a portion of debt (a).

• Debt (a) and a portion of debt (b).

4. Explain the concept of tender of payment and consignation. Discuss the five cases listed in
Article 1256 where tender of payment is not necessary before the debtor can consign the thing due
with the court.
Answer: Tender of payment is the debtor offering to the creditor the thing or amount due.
Consignation is the act of depositing the thing due with the court when the creditor cannot or does
not want to receive it. Tender of payment is not required before consignation in the following cases:

• Creditor is absent, unknown, or does not appear at the place of payment.

• Creditor is incapacitated to receive payment.

• Creditor refuses to give a receipt without just cause.

• Two or more persons claim the right to collect.

• The title of the obligation has been lost.

5. Distinguish between dation in payment and payment by cession. Discuss the main differences in
terms of creditors, financial status of the debtor, and the nature of the property transferred.
Answer: Dation in payment and payment by cession are special forms of payment where the debtor
transfers property to the creditor in lieu of paying money.

• Dation in payment typically involves a single creditor, while payment by cession involves
multiple creditors.
• The debtor in dation in payment may not necessarily be insolvent, while the debtor in payment by
cession is partially or relatively insolvent.

• In dation in payment, the debtor transfers specific property, while in payment by cession, the
debtor assigns all of their property to the creditors.

6. Explain the effect of the loss of the thing due on an obligation to give. Discuss the difference
between the effect of the loss of a determinate thing and the loss of a generic thing.
Answer: The loss of the thing due can extinguish an obligation to give depending on several
factors.

• Loss of a determinate thing without the fault of the debtor before they incurred in delay
extinguishes the obligation.

• Loss of a generic thing does not extinguish the obligation because a generic thing can always be
replaced.

• If the loss of the thing is due to the debtor's fault or they incurred in delay, the obligation is not
extinguished, and they are liable for damages.

7. Explain the presumption of fault in case of loss of the thing due. Discuss the exceptions to this
presumption and the circumstances under which the debtor may still be liable for damages.
Answer: When a thing is lost in the possession of the debtor, it is presumed that the loss was due to
their fault. This presumption is disputable, meaning the debtor can prove otherwise. Exceptions to
this presumption include situations where the loss was due to fortuitous events like earthquakes,
floods, or storms. Even without fault, the debtor may be liable for damages if they are guilty of
delay or have promised to deliver the same thing to multiple people with different interests.

8. Explain the effect of impossibility of performance on an obligation to do. Differentiate between

physical impossibility and legal impossibility, providing examples for each.
Answer: Impossibility of performance can extinguish an obligation to do.

• Physical impossibility occurs when the obligor becomes physically incapable of performing the
obligation. Example: A sculptor promises to create a statue but loses their hand in an accident.

• Legal impossibility occurs when the obligation is prohibited by law or regulations. Example: A
builder is forbidden to construct a building due to zoning restrictions.

9. Explain the concept of condonation or remission of debt. Discuss the requisites of condonation
and the effect of inofficious remission.
Answer: Condonation or remission of debt is the gratuitous abandonment by the creditor of their
right against the debtor. It is essentially a form of donation. The requisites are:

• It must be gratuitous.
• The debtor must accept the remission.

• Both parties must have legal capacity.

• The remission must not be inofficious (exceeding what the creditor can give by will). If the
remission is inofficious, the court can reduce it.

10. Explain the concept of confusion or merger of rights. Discuss the effect of confusion on a joint
obligation and on a solidary obligation.
Answer: Confusion or merger of rights occurs when the qualities of creditor and debtor merge in
the same person. This extinguishes the obligation.

• In a joint obligation, confusion extinguishes only the share corresponding to the creditor or
debtor in whom the two characters concur.

• In a solidary obligation, confusion in the person of one of the solidary debtors extinguishes the
entire obligation.

11. Explain the different kinds of compensation. Discuss the requisites of legal compensation and
the instances when legal compensation is not allowed by law.
Answer: Compensation is the extinction of debts to the concurrent amount when two persons are
creditors and debtors of each other.

• Legal compensation occurs by operation of law.

• Voluntary compensation occurs by agreement of the parties.

• Judicial compensation takes place by court order in litigation.

• Facultative compensation can be set up only by one of the parties.

• Requisites of legal compensation:

• Both parties are principal creditors and debtors.

• Both debts are due.

• Both debts are liquidated and demandable.

• Both debts consist in a sum of money or consumable things of the same kind and quality.

• There is no retention or controversy commenced by third persons.

• Legal compensation is not allowed by law in cases of:

• Depositum.

• Obligations of a depositary or bailee in commodatum.

• Support, education, or other obligations arising from family relationships.

• Civil liability arising from criminal offenses.

12. Explain the concept of novation as a mode of extinguishing an obligation. Discuss the different
types of novation and provide examples for each.
Answer: Novation is the substitution or modification of an existing obligation by a new one, which
extinguishes the old obligation.

• Subjective novation involves a change in the parties to the obligation.

• Substitution - Replacing the debtor with a new debtor.

• Delegation - The debtor appoints another person to fulfill the obligation.

• Expromission - A third person spontaneously assumes the debt of the debtor.

• Subrogation - A third person takes over the creditor's position.

• Objective novation involves a change in the object or terms of the obligation.

• Real novation - Changing the object of the obligation.

• Personal novation - Changing the terms of the obligation, such as the amount or due date.

• Mixed novation - Combining a change in both the parties and the object/terms.

13. Discuss the different modes of extinguishing an obligation, providing a brief explanation of
each and their key characteristics.
Answer: The following are the modes of extinguishing an obligation:

• Payment or performance: Fulfilling the obligation by delivering the thing due or performing the
service agreed upon.

• Loss of the thing due: The loss of the object of the obligation can extinguish the obligation if
certain conditions are met (specific thing, loss without fault, and no delay).

• Condonation or remission of debt: The creditor voluntarily forgives the debt.

• Confusion or merger of rights: The creditor and debtor become the same person.

• Compensation: Mutual extinction of debts when two persons are both creditors and debtors of
each other.

• Novation: Replacing the existing obligation with a new one.

• Prescription: The obligation is extinguished due to the lapse of time.

14. Explain the concept of an obligation in the context of Philippine law. Discuss the essential
elements of an obligation and the different sources of obligations.
Answer: An obligation in Philippine law is a juridical necessity to give, to do, or not to do. It is a
legal bond or tie that binds one party (the debtor) to another (the creditor) to perform a prestation.
The essential elements are:

• Juridical tie: The legal bond that connects the parties.

• Active subject: The creditor who has the right to demand performance.

• Passive subject: The debtor who has the duty to perform the prestation.

• Prestation: The object or service that is to be performed.

• Sources of obligation:

• Law: Obligations imposed by law.

• Contracts: Obligations arising from agreements between parties.

• Quasi-contracts: Obligations that arise from lawful acts or omissions that cause a juridical
relationship.

• Acts or omissions punished by law: Obligations arising from crimes.

• Quasi-delicts: Obligations arising from damage caused by fault or negligence.

15. Discuss the legal principles and concepts governing the performance of obligations in the
Philippines. Explain the different factors that can affect the performance of an obligation, such as
delay, impossibility of performance, and force majeure.
Answer: Performance of obligations must be made according to the terms of the obligation and in
good faith. Factors that can affect performance include:

• Delay: If the debtor fails to perform on time, they are in delay. The creditor may demand
damages.

• Impossibility of performance: If the obligation becomes impossible to perform without the fault
of the debtor, the obligation may be extinguished.

• Force majeure: An event beyond the control of the parties that prevents performance. The debtor
may be excused from liability.