Marie Frances B.

Sayson

Law of Obligations and Contracts

BSA 1 Block B

Study Guide No. 2

I. True or False. Explain briefly your answer.

1. The diligence of a good father of a family is expected and high standards of integrity and
performance are required of the banking business.

- true, The diligence of a good father of a family is required and the banking sector requires high
standards of honesty and efficiency. Banks have become an appearing presence among people, whether
as passive entities for the safekeeping and saving of money or trade, who have come to regard them
with reverence and even gratitude and, most of all, trust.

2. The degree of diligence required of banks is more than that of a good father of a family.

-true, Banks are required to observe a high degree of diligence in their affairs the bank is under
obligation to treat the accounts of its depositors with precise care, always having in mind the fiduciary
character of their partnership.

3. It is presumed that a person driving a motor vehicle has not been negligent if at the time of the
mishap, he was violating any traffic regulations.

- true, A individual driving a motor vehicle is deemed to have been reckless if he breached any traffic
regulations at the time of the accident.

4. The law characterizes diligence as the omission of that diligence required by the nature of the
obligation and corresponds with the circumstances of the persons, of the time and of the place.

- true, if the obligor does not perform the diligence that has been stipulated in the contract or the law,
he shall be liable for damages. Extraordinary diligence must be observe by the obligor.

5. When the plaintiff’s own negligence was the immediate and proximate cause of his injury, he cannot
recover damages.

- true, the defendant has nothing to do with the plaintiff’s caused by the plaintiff’s own negligence that
caused him/her an injury.

6. If the plaintiff’s negligence was only contributory, the immediate and proximate cause of the injury
being the defendant’s lack of due care, the plaintiff may recover damages, but the courts shall mitigate
the damages to be awarded.

-true, contributory negligence is conducted on the part of the injured party, contributing as a legal cause
to the harm he has suffered, which falls below the standard to which he is required to conform for his
own protection.
7. When an employee causes damages due to his own negligence while performing his own duties, there
arises the presumption that his employer is not negligent.

- true, If an employee causes harm due to his own negligence when performing his own duties, the
inference emerges that his employer did not commit negligence intentionally.

8. Default does not begin from the moment the creditor demands the performance of the obligation.

-false, For an obligation to become due, there must generally be a demand. Failure to repay a debt starts
from the moment the borrower asks that the duty be fulfilled.

9. In compensation morae, the parties cancel out the effects of default, such that it is as if no one is
guilty of delay.

-False,  the delay of the obligor cancels out the effects of the delay, such that it is as if no one is guilty of
delay. The delay of the obligor offsets the impacts of the postponement, with the end goal that it seems
as nobody is liable of the said delay.

10. In reciprocal obligations, the general rule is that the fulfilment of the parties’ respective obligations
should be simultaneous.

-True, As in a buy contract, the overall standard is that the two parties should meet their responsibilities
at the same time.

11. Dolo incidente is a fraud which induces a party to enter into a contract.

- false, Dolo causante is a fraud which induces a party to enter into a contract. In dolo causante the
fraud should be serious and should not be done by both parties to make contract liable.

12. Dolo causante is not the reason that induced the party to enter into a contract.

-false, Dolo incidente is not the reason that induced the party to enter into a contract. An accidental
fraud only obliges the person to pay damages.

13. In the selection of prospective employees, the concept of diligence requires employers to examine
their employees as to their qualifications, experience and service records.

-true, In selecting workers, the idea of determination expects businesses to analyze their
representatives regarding their capabilities, experience and administration records.

14. When what is to be delivered is a generic thing, the creditor, may compel the debtor to make the
delivery.

- true, The creditor may force the debtor to make the delivery when and what is to be delivered is a
generic item.

15. If the thing is a determinate thing, the creditor may ask that the obligation be complied with at the
expense of the debtor.’

- false, if that the thing is uncertain or conventional, he may ask that the commitment must be fulfilled
to the detriment of the account holder.
16. If a person obliged to do something fails to do it, the same shall be executed at his cost.

- true, At the point when an individual is obliged to accomplish something however he doesn't do it, it
will be forced on him.

17. If a person obliged to do something does it in contravention of the tenor of the obligation, the same
shall be executed at his cost.

- true, This rule must be observed when he does it against the tenor of obligation. It can be said that
what is neglected to do is no longer to be done.

18. Mere delinquency in payment does not necessarily mean delay in the legal concept.

- true Mere delinquency in payment, however, does not inherently mean delay in the concept of law. In
the grammatical sense, being in default is distinct from mere pause because it implies the beginning of a
special circumstance or status that has its own peculiar consequences or outcomes.

19. If the object of obligation is a generic thing, the loss or destruction of anything of the same kind even
without the debtor’s fault and before he has incurred in delay will not have the effect of extinguishing
the obligation.

- false, If the object of the obligation is a determinate thing, the loss or destruction of that thing of the
same nature would have no bearing on the responsibility of the obligation, even if the debtor is not at
fault and before the delay occurs.

20. An obligation to pay money is determinate.

-false A duty to pay money is also common. The duty may, however, be extinguished if only the minimal
generic is the thing due.

II. Answer the following questions.

1. When is an obligation with suspensive condition demandable?

- An obligation to give subject to a suspensive condition becomes demandable only upon the fulfillment
of the condition. However, once the condition is fulfilled, its effects shall retroact to the day when the
obligation was constituted.

2. If the obligation imposed a resolutory condition, when is the obligation demandable?

- When the fulfillment of the condition results in the extinguishment of rights arising out of the
obligation. Every obligation which contains a resolutory condition shall also be demandable, without
prejudice to the effects of the happening of the event. 

3. What is the effect upon the obligation if the condition imposed depends solely upon the will of the
debtor?

- When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be void
4. What is the effect upon the obligation if the condition imposed depends upon chance or upon the will
of a third person?

- If it depends upon chance or upon the will of a third person, the obligation shall take effect in

conformity with the provisions of the Civil Code.

5. If the condition imposed is not to do an impossible thing, will the obligation be affected?

-If the obligation is divisible, that part thereof which is not affected by the impossible or

unlawful condition shall be valid. The condition not to do an impossible thing shall be considered
as not having been agreed upon. The condition imposed is not capable of being performed physically.

6. When shall the obligation be demandable if the condition imposed is that some event happen a
determinate time?

-The condition that some event happen at a determinate time shall extinguish the obligation as soon as
the time expires or if has become indubitable that the event will not take place.

7. If the condition imposed is that some event will not happen at a determinate time, when shall the
obligation become effective?

- The condition that some event will not happen at a determinate time shall render the obligation
effective from the moment the time indicated has elapsed, or if it has become evident that the event
cannot occur.

8. If the obligor voluntarily prevents the fulfillment of a suspensive condition, shall the obligation
become effective?

-  If in preventing the fulfillment of the condition, the obligor acts in the exercise of a right,

the condition will NOT be deemed fulfilled.

9. What are the rules to determine the retroactive effects of the fulfillment of a suspensive condition in
conditional obligations to give?

- Once the suspensive condition is fulfilled, its effects shall retroact to the day when the obligation was
constituted.

10. Who shall determine the retroactive effects of the condition that has been complied with, in
obligations to do or not to do?

- In obligations to do and not to do, the courts shall determine, in each case, the retroactive effect of the
condition that has been complied with.

11. What are the rights of the creditor during the pendency of a suspensive condition?

- The creditor may, before the fulfillment of the condition, bring the appropriate actions for the
preservation of his right.
12. What are the rules to follow in case of improvement, loss or deterioration of the determinate thing
during the pendency of a suspensive condition in an obligation to give?

- When the conditions have been imposed with the intention of suspending the efficacy of an obligation
to give, the following rules shall be observed in case of the improvement, loss or deterioration of the
thing during the pendency of the condition:

(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;

(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is
understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such a way
that its existence is unknown or it cannot be recovered;

(3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the
creditor;

(4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of
the obligation and its fulfillment, with indemnity for damages in either case;

(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the
creditor;

(6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the
usufructuary. 

13. What rules will be applied in case of the fulfillment of a resolutory condition?

- In the case of a resolutory condition, there is no suspension or postponement of terms in a contract or

the validity of the contract/offer itself. Rights and obligations come into existence immediately upon
agreement between the parties. If a resolutory condition is fulfilled, the operation of the rights and
obligations cease.

14. What are the remedies of the aggrieved party in case one of the obligors in a reciprocal obligation
does not comply with what is incumbent upon him?

-REMEDIES IN RECIPROCAL OBLIGATIONS

CHOICE OF REMEDIES – in case one of the obligors does not comply with what is incumbent upon him,
the aggrieved party may choose between 2 remedies:

1. action for specific performance of the obligation with damages

2. action for rescission of the obligation also with damages

REMEDY OF RESCISSION FOR NON-COMPLIANCE – the principal action for rescission for non-
performance under Art.1191 must be distinguished from the subsidiary action for rescission by reason of
lesion damage under Art 1381 and from cancellation of contract based, for example, on defect in the
consent and not on violation by a party of his obligation.
15. What rules will be applied to determine the liability in case both parties to an obligation have
committed a breach of obligation?

- In case both parties have committed a breach of the obligation, the liability of the first infractor shall be
equitably tempered by the courts. If it cannot be determined which of the parties first violated the
contract, the same shall be deemed extinguished, and each shall bear his own damages.

16. For whose benefit is the period, whenever in an obligation a period is designated?

- Whenever a period is designated in an obligation, it is presumed to have been established for

the benefit of the debtor and creditor unless from the tenor of the obligation or the circumstances, it
appears that the period was established in favor of one or the other.

17. When may the courts fix a period in an obligation?

- The courts shall also fix the duration of the period when it depends upon the will of the debtor. When
the authority granted by this provision is exercised by courts, the same do not amend or modify
the obligation concerned. Article 1197 in part and parcel of all obligations contemplated therein.

18. Who has the right of choice in an alternative obligation?

- The right of choice belongs to the debtor, unless it has been expressly granted to the creditor. The
debtor shall have no right to choose those prestations which are impossible, unlawful or which could
not have been the object of obligation 

19. When does the debtor lose his right of choice in an alternative obligation?

- When all of the prestations, except one, have become impossible or unlawful, the debtor loses his right
of choice

20. When does an alternative obligation become a simple obligation?

- when the obligation loses its alternative character, it becomes a simple obligation.

21. In a facultative obligation, who shall have the right to make the substitution?

- In facultative obligation the debtor can give another prestation even if there is only one prestation
agreed upon.

22. If the obligation is solidary, how shall the debtors be liable?

- In a solidary (or joint and several) obligation, a debtor can be held liable for the whole amount, and
after that debtor pays the whole obligation, that same debtor can then proceed against his
other debtors to be paid/reimbursed for the rest of the obligation.

23. How shall the obligation be performed if the obligation is joint but the division is impossible?

- 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 other shall not be liable his share. When there are several debtors or creditors but the
prestation is indivisible, the obligation is joint unless solidarity is stipulated.
24. If one of the solidary debtors pays in full the obligation, will the obligation be extinguished?

- Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary
debtors offer to pay, the creditor may choose which offer to accept. 

25. What is the true test in determining whether an obligation is divisible or indivisible?

- Divisible Obligation - The object of this obligation, in its delivery of performance, is capable of partial
fulfillment.

Indivisible Obligation - The object of this obligation, in its delivery of performance, is not capable of
partial fulfillment.

What is the test for distinction in determining whether an obligation is divisible or not?

[1] Purpose of the obligation or

[2] Intention of the parties

26. What are the purposes of the penal clause in an obligation with a penal clause?

- A penal clause is another obligation attached to the principal one, requiring the payment or

performance of something, or simply, requiring a greater responsibility, in case of noncompliance in
order to assure performance or to deter nonperformance. Penal clauses are incorporated to obligations
to insure their performance (to make the consequence of breach as onerous as possible) and to
substitute penalty for indemnity for damages and payment of interests in non-compliance. The
main purposes are reparation and punishment.

27. Can the debtor choose to pay the penalty instead of performing the obligation in an obligation with a
penal clause?

-  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.

28. Can the creditor enforce the penalty even though he has not suffered any damage?

- The penalty may be enforced only when it is demandable.

29. State the difference between penalty and liquidated damages, if any.

- the amount fixed is a genuine pre-estimate of the loss in case of breach, it is liquidated damages.
However, if the amount fixed is without any regard to possible loss, but is mostly intended to deter the
other party in order to refrain from committing breach, it is a penalty.

30. a. What is the effect of the nullity of the penal clause upon the principal obligation?

- If the principal obligation is void, the penal clause is likewise void. The reason is that the clause cannot
stand alone. But if the nullity of the principal obligation is due to the fault of the debtor, who acted in
bad faith, by reason of which the creditor suffered damages, on equitable grounds, the penalty may be
enforced.
b. What is the effect of the nullity of the principal obligation upon the penal clause?

- The general principle that the accessory follows the principal and not vice versa. If only the penal
clause is void, the principal obligation remains valid and demandable. The penal clause is just
disregarded.