Ateneo CLR II

Modes of Extinguishment (Loss … to Novation)

[Follow the Outline]

Part One
Modified True or False. Consider the statement true only when it is absolutely true.
Explain ALL your answers.
1. It is presumed that the accessory obligation of pledge has been remitted when the thing pledged, after its
delivery to the creditor, is found in the possession of the debtor.

2. When the debt of a thing certain and determinate proceeds from a criminal offense, the debtor shall not be
exempted from the payment of its price, whatever may be the cause for the loss.

3. If a person should have against him several debts which are susceptible of compensation, the rules on the
consignation shall apply to the order of the compensation.

4. In partial compensation, no obligation is totally extinguished.

5. Compensation shall take place in reciprocal obligations.

Part Two
Multiple Choice. Choose the best answer.

1. In three of the following cases, compensation shall not be proper. Which may be the exception?
a. Commodatum
b. Support
c. Civil liability arising out of criminal offenses
d. Depositum

2. When an obligation is extinguished because of the passage of time, this is:

a. Fulfillment of resolutory condition d. Rescission
b. Arrival of a resolutory period e. Dation in Payment
c. Novation

3. This is a requisite in order that an obligation shall be extinguished by loss or destruction of the thing due:
a. That the thing is lost without the fault of the debtor
b. That the thing lost is generic
c. That the thing is lost before the debtor has incurred in delay
d. That the thing lost is specific

4. Which of the following is not an element of legal compensation?

a. There is a controversy or adverse claim over any of the debts to be compensated
b. There are two or more debts of the same kind
c. There are two persons who are creditors and debtors of each other
d. Debts to be compensated are due and demandable

5. In which of the examples given below may legal compensation take place?
a. A owes B P1,000 payable October 31, 2016. B owes A P5,000 due on October 31, 2016.
b. A owes B P1,000 with C as his guarantor. B owes C P1,000
c. A owes B P1,000 payable May 31, 2016. B to deliver to A 2 piculs of sugar worth P1,000 on May 31, 2016.
d. A owes B P1,000 due on June 30, 2016. B owes A P1,000 due on June 30, 2016 but C has filed an adverse
claim against A.
e. None of the above
Part Three
Give direct and concise but complete answers.
Cite authorities, if any.

1. A obliged himself to deliver a Toyota Altis to B. Before his obligation became due and
demandable, his Toyota Altis was totally destroyed. Was the obligation of A
extinguished?

2. A obliged himself to deliver a Toyota Altis with Plate No. ABC123 to B. Before his
obligation became due and demandable, the Toyota Altis was totally destroyed. Will A
be liable to B?

3. Will partial loss of the thing/s to be delivered result in the total extinguishment of the
obligation?

4. When the performance of an obligation becomes so difficult, will that result in the
extinguishment of the obligation?

5. Is remission a form of donation? If it is, what would be the significance of such?

6. May there be partial extinguishment of an obligation by confusion?

7. What are the kinds of compensation? Is facultative compensation a distinct kind of

compensation?

8. Legal compensation will take place if both debts are in money?

9. In PNB v. Ong Acero, was there legal compensation? Why or Why not?
In Francia v. IAC, was there legal compensation? Why or Why not?

10. Samantha sold all her business interest in a sole proprietorship to Sergio for the amount
ofPhP 1 million. Under the sale agreement, Samantha was supposed to pay for all prior
unpaid utility bills incurred by the sole proprietorship. A month after the Contract to Sell
was executed, Samantha still had not paid the PhP 50,000 electricity bills incurred
prior to the sale. Since Sergio could not operate the business without electricity and the
utility company refused to restore electricity services unless the unpaid bills were settled
in full, Sergio had to pay the unpaid electricity bills. When the date for payment arrived,
Sergio only tendered PhP 950,000 representing the full purchase price, less the amount he
paid for the unpaid utility bills. Samantha refused to accept the tender on the ground that
she was the one supposed to pay the bills and Sergio did not have authorization to pay on
her behalf.

(a) What is the effect of payment made by Sergio without the knowledge
and consent of Samantha? (2.5%)
(b) Is Samantha guilty of mora accipiendi? (2.5%)
11. What are the kinds of novation as to its nature?

12. What is expromision?

13. In expromision, what will be the effects of payment by the new debtor?

14. In expromision, can the original debtor be compelled to pay if the new debtor was
insolvent when the creditor made the demand?

15. X, who has a savings deposit with Y Bank in the sum of P1,000,000.00, incurs a loan
obligation with the said Bank in the sum of P800,000.00 which has become due. When
X tries to withdraw his deposit, Y Bank allows only P200,000.00 to be withdrawn, less
service charges, claiming that compensation has extinguished its obligation under the
savings account to the concurrent amount of X’s debt. X contends that compensation is
improper when one of the debts, as here, arises from a contract of deposit. Assuming that
the promissory note signed by X to evidence the loan does not provide for compensation
between said loan and his savings deposit, who is correct?

16. Baldomero leased his house with a telephone to Jose. The lease contract provided that Jose
shall pay for all electricity, water and telephone services in the leased premises during the
period of the lease. Six months later, Jose surreptitiously vacated the premises. He left
behind unpaid telephone bills for overseas telephone calls amounting to over P20,000.00.
Baldomero refused to pay the said bill on the ground that Jose had already substituted him
as the customer of the telephone company. The latter maintained that Baldomero
remained, as his customer as far as their service contract was concerned, notwithstanding
the lease contract between Baldomero and Jose.
Who is correct, Baldomero or the telephone company? Explain.

17. Upon the proposal of a third person, a new debtor substituted the original debtor without
the latter’s consent. The creditor accepted the substitution. Later,
however, the new debtor became insolvent and defaulted in his obligation. What is the
effect of the new debtor’s default upon the original debtor?

18. In the case of JAL v. Simangan, was there novation?

In Arco Pulp v. Lim, was there novation?