Answers to BAR Questions 2000-2009 - Obligations and Contracts

2009 Jude owned a building which he had leased to several tenants. Without informing his tenants, Jude sold the building to Ildefonso. Thereafter, the latter notified all the tenants that he is the new owner of the building. Ildefonso ordered the tenants to vacate the premises within thirty (30) days from notice because he had other plans for the building. The tenants refused to vacate, insisting that they will only do so when the term of their lease shall have expired. Is Ildefonso bound to respect the lease contracts between Jude and his tenants? Explain your answer. Yes, he is bound to respect the lease because he had actual knowledge of the existence of lease. The Civil Code provides that the purchaser of piece of land which is under lease that is not recorded in the Registry of Property may terminate the lease save in cases when there is stipulation to the contrary or when the purchaser knows of the existence of the lease. ( Article 1676 NCC) Moreover, well-settled rule that actual knowledge of the purchaser of the contract is equivalent to registration on his part.

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Rommel’s private car, while being driven by the regular family driver, Amado, hits a pedestrian causing the latter’s death. Rommel is not in the car when the incident happened. Q a) Is Rommel liable for damages to the heirs of the deceased? Explain. Would your answer be the same if Rommel was in the car at the time of the accident? Explain. (2%) Yes, by virtue of vicarious liability or the master-servant rule. But, here A(a) Rommel can seek for reimbursement A(b) Yes, by virtue of solidary liability Sarah had a deposit in a savings account with Filipino Universal Bank in the amount of five million pesos (P5,000,000.00). To buy a new car, she obtained a loan from the same bank in the amount of P1,200,000.00, payable in twelve monthly installments. Sarah issued in favor of the bank post-dated checks, each in the amount of P100,000.00, to cover the twelve monthly installment payments. On the third, fourth and fifth months, the corresponding checks bounced. The bank then declared the whole obligation due, and proceeded to deduct the amount of one million pesos (P1,000,000.00) from Sarah’s deposit after notice to her that this is a form of compensation allowed by law. Is the bank correct? Explain. Yes, the bank is correct. Under the law, when a person deposited money from the bank, creditor/debtor relationship was created. Since the bank and Sarah in the given case was creditor and debtor with respect to each other and considering that the debt was already due and demandable, compensation takes place. Rosario obtained a loan of P100,000.00 from Jennifer, and pledged her diamond ring. The contract signed by the parties stipulated that if Rosario is unable to redeem the ring on due date, she will execute a document in favor of Jennifer providing that the ring shall automatically be considered full payment of the loan. a) Is the contract valid? Explain. b) Will your answer to a) be the same if the contract stipulates that upon
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In solidary obligations. Yes. he acknowledged A(b) he is solidarily liable with Eduardo. 4) they be liquidated and demandable. 2) both debts consist in a sum of money. Further. In this case. Civil Code) Page 2 of 17 .Answers to BAR Questions 2000-2009 . To secure the PN. 1207. a) Can XYZ Bank validly assert legal compensation? b) Can Recardo’s property be foreclosed to pay the full balance of the loan? c) Does Recardo have basis under the Civil Code for claiming that the original contract was novated? Yes.Obligations and Contracts failure of Rosario to redeem the ring on due date. and also of the same quality if the latter has been stated. In the present case. a creditor has the right to demand full payment of the obligation from any of the solidary debtors. Jennifer may immediately sell the ring and appropriate the entire proceeds thereof for herself as full payment of the loan? Reasons. and had the effect of extinguishing the security since he did not give his consent (as owner of the property under the real estate mortgage) thereto. Recardo opposed the foreclosure on the ground that he is only a co-signatory. In the PN. that no demand was made upon him for payment. Any excess will be returned to the debtor. Ricardo’s property can be foreclosed to pay the full balance of the loan because when he signed as a co-signatory in the promissory note. 3) the two debts be due. they may be of the same kind. executed the promissory note (“PN”) in favor of the bank. the property must be sold and the proceeds will be applied to the loan. commenced by third persons and communicated in due time to the debtor (Art. When Eduardo defaulted on the PN. XYZ foreclosed the real estate mortgage over Recardo’s property. Since there was still a balance due on the PN after applying the rentals. Civil Code) I Q A(a) Yes. 1279. Recardo executed a real estate mortgage on his own property. The transfer of ownership in this case is not automatic. or if the things due are consumable. Eduardo. with his friend Recardo as co-signatory. all of the elements of legal compensation are present: 1) XYZ Bank is the creditor of Eduardo while Eduardo is the lessor of XYZ Bank. it amounted to a new contract or novation. Recardo said that when the bank invoked compensation between the rentals and the amount of the loan. It is not considered Pactum Commissorium. the answer will still be the same. Yes. (Art. and 5) over neither of them there be any retention or controversy. There is only Pactum Commissorium if the ownership will A(b) automatically be transferred in the event of default. This is not considered Pactum Commissorium since the debtor will have to A(a) execute a document before the ownership is to be transferred. his liability should not go beyond half the balance of the loan. they both acknowledged that they are “individually and collectively” liable and waived the need for prior demand. XYZ stopped payment of rentals on the building on the ground that legal compensation had set in. 2008 Eduardo was granted a loan by XYZ Bank for the purpose of improving a building which XYZ leased from him. XYZ Bank can validly assert legal compensation. and assuming he is liable.

00 monthly. His bank refused to accept the check because it had become stale. the contract stipulated that it may be renewed for another 2-year period upon mutual agreement of the parties. claiming that Gustavo is estopped from raising the issue of legal tender.000. this would make her privy to the agreement of Dux and Iris. payable annually in advance. and that it was Gustavo’s negligence in not depositing the check immediately that caused the check to become stale. at the rate of P25. No.600. 12. Contracts are binding between the parties. and that there has been extraordinary deflation since 1998. 21 November 1996). having accepted the check in March. A(b) validity or compliance cannot be left to the will of one of the parties (Art. 1308. Gustavo now wants Felipe to pay him in cash the amount of P5. Civil Code). This makes the mother a buyer in bad faith. because the right of first refusal is included in the contract signed by the parties. Iris claimed Q that the sale was a breach of her right of first refusal. based on the Phil P – US $ exchange rate at that time. Only if the lessee failed to exercise the right of first refusal could the lessor lawfully sell the subject property to others. Ricardo has no basis for claiming novation of the original contract when the bank invoked compensation because there was simply a partial compensation (Art.Obligations and Contracts No.135 in payment of his US $ 100 debt. 2008. if Dux decides to sell the property at the same price that the property is offered for sale to a third party. On March 1. Alternatively.Answers to BAR Questions 2000-2009 . Felipe should pay him the value of the debt at the time it was incurred. hence aware of the right of first refusal. when the Phil P – US $ exchange rate was P56 – US$1. Twenty-three months after execution of the lease contract. hence giving more ground for rescission of the sale to her (Equatorial v. The contract stipulated that it may be renewed for another 2-year period upon mutual agreement of the parties. A(c) II Dux leased his house to Iris for a period of 2 years. The contract also granted Iris the right of first refusal to purchase the property at any time during the lease. Gustavo accepted the check. and therefore. Civil Code) and this would not bar the bank from recovering the remaining balance of the obligation. Dux said there was no breach because the property was sold to his mother who is not a third party. Dux sold the house to his mother for P2 million. 1290. under no less than the same terms and conditions previously offered to the lessee. she asked the court to extend the lease for another 2 years on the same terms. a) Can Gustavo now raise the issue that the cashier’s check is not legal tender? b) Can Felipe validly refuse to pay Gustavo again? c) Can Felipe compel Gustavo to receive US$100 instead? III Q Page 3 of 17 . Granting that the mother is not a third A(a) party. Felipe tendered to Gustavo a cashier’s check in the amount of P4. 2008. Claiming that the previous payment was not in legal tender. Felipe refused to pay him again. a) Can Iris seek rescission of the sale of the property to Dux’s mother? b) Will the alternative prayer for extension of the lease prosper? Yes. Iris filed an action to rescind the sale and to compel Dux to sell the property to her at the same price. Mayfair Theater. but forgot to deposit it until Sept. Felipe borrowed $100 from Gustavo in 1998.

Gustavo previously accepted a check as payment. He is now estopped from raising the issue that a cashier’s check is not legal tender. 1191. 60 Phil 156). return the 50% downpayment? Q IV No. AB Corp. hence. unilaterally and immediately cancel the contract? c) Must AB Corp. but this was denied by XY Corp.’s failure to pay its employees on time. 2007 I Q A Illegal and impossible conditions in a simple donation v. need not return the 50% downpayment because 45% of the work was A(c) already completed. 1249 (par. as when he has unreasonably delayed in presenting the check for payment (PNB v. 4100) AB Corp. In the A(b) absence of any stipulation for automatic rescission. Although a check is not legal tender (Belisario v. AB Corp. Civil Code).’s employees claimed that they are not being paid on time. paid 50% of the total contract price. asked for extension of time. b) when the check has lost its value because of the fault of the creditor (Art. later experienced work slippage because of labor unrest in his company. the work slowdown. sent written notice canceling the contract. the labor unrest of the employees was caused by AB Corp. the balance to be paid upon completion of the work. AB Corp. A fortuitous event should occur independent of the will of the A(a) debtor or without his participation or aggravation. rescission must be judicial (Art. but AB Corp. No. 2)). whereby the former agreed to construct the research and laboratory facilities of the latter. Yes. who allowed the check to become stale. As mentioned in the facts. payment of loans should be in Philippine currency at the rate of exchange prevailing A(c) at the time of the stipulated date of payment. XY Corp. Seeto. It was his fault why the A(a) check became stale.A. 13 August 1952) Felipe cannot compel Gustavo to receive US $ 100 because under R. illegal and impossible conditions in an onerous donation. at the total contract price of P10 million. a) Can the labor unrest be considered a fortuitous event? b) Can XY Corp. would be unjustly enriching itself at the expense of AB Corp.A. and requiring AB Corp. Felipe can refuse to pay Gustavo. Under the terms of the contract. cannot unilaterally and immediately cancel the contract. otherwise. XY Corp. Illegal and impossible conditions in a simple donation are considered as not Page 4 of 17 . work was only 45% completed. As of the 17th month. Natividad. agreed to complete the facility in 18 months.Answers to BAR Questions 2000-2009 .Obligations and Contracts No. XY Corp. XY Corp. entered into a contract with XY Corp. to immediately vacate the premises. claiming that its labor problems is a case of fortuitous event. The work started immediately. there are instances when a check produces the effects of payment. for example: a) when A(b) the creditor is in estoppel or he had previously promised he would accept a check. 529. Felipe could only compel Gustavo to receive US $ 100 if they stipulated that the obligation be paid with foreign currency (R. The labor unrest cannot be considered a fortuitous event under Art. AB Corp. 1174 of the Civil Code. When it became certain that the construction could not be finished on time.

Q What are obligations without an agreement? Give five examples of situations giving rise to this type of obligation “Obligations without an agreement” are obligations that do not arise from contract such as those arising from: a) delicts.) a written contract.Answers to BAR Questions 2000-2009 .) bailee. c) solution indebiti. d.) a voluntary deposit.Obligations and Contracts written.) a contract with a stipulation that the debt will be paid through receipt of the fruits of an immovable. NCC).) selling property of the insolvent debtor. e. Such conditions shall.) letters a and b d (all of the above) An assignee in a proceeding under the insolvency Law does not have the duty of: a. c. illegal and impossible conditions imposed in an onerous donation shall annul the donation (Article 1183. e. b) quasi-delicts. c. This is so. e. be disregarded but the donation remains valid (Article 727. b. d.) collecting and discharging debts owned to the insolvent debtor c.) a necessary deposit. b.) all of the above. On the other hand.) ensuring that a debtor corporation operate the business efficiently and effectively while the proceedings are pending. c.) an extrajudicial deposit.) letters a and b e. (necessary deposit) A contract of antichresis is always: a.) letters a and b c. c. because onerous donations are governed by the law on contracts. NCC).) all of the above. b. if owing. d) negotiorum gestio.) a deposit with a warehouseman. b. (letters a and b) A deposit made in compliance with a legal obligation is: a. ensuring that a debtor corporation operate the business efficiently and effectively while the proceedings are pending II A III Q A IV Q A V Q A Q VI A Page 5 of 17 . d.) involves the payment of interests. therefore. and e) all other obligations arising from law.) comodatario. d.) suing to recover the properties of the estate of the insolvent debtor. The parties to a bailment are the: a.) bailor.

d. However.) 3/5 of the number of creditors should agree to the settlement.Answers to BAR Questions 2000-2009 . the Supreme Court even held that for the sale to be valid. a) Will the suit prosper? Explain. They own a duplex apartment and allowed Manny to live in one of the units. 439 A(a) SCRA 649. Bernie and Elena. Camaisa. In Abalos v. They agreed on a fair price of P2 Million.) the court must initiate the proposal. c. if it can be proven that they were in bad faith in backing out from the contract. b) Does Ray have any cause of action against Biong and Linda? Can he also recover damages from the spouses? Explain. Linda was not able to sign it because she was abroad. Janine. Ray. On her return.Obligations and Contracts In order to obtain approval of the proposed settlement of the debtor in an insolvency proceeding: a. must be on the same document. Rey has a cause of action against Linda and Biong for the return of the P2.000. However. another couple. Ray prepared a deed of sale to be signed by the couple and a manager’s check for P2 Million. the Supreme Court has ruled that the sale of conjugal property is void if both spouses have not given their written consent to it and even if the spouse who did not sign the Deed of Sale participated in the negotiation of the contract. After receiving the P2 Million. Makatangay.5 Million. although she was the one who negotiated the sale. Alberto and Janine migrated to the United States of America.) letters a and b None of the choices is the correct answer.00 he paid for the property. In this case.000. He may recover damages from the A(b) spouses. the signatures of the spouses. 374 SCRA 498 (2002). to signify their written consent. They found a prospective buyer. Ray sent Linda a letter confirming his intention to buy the property. one of whom is Manny. Alberto died. she refused to sign the document saying she changed her mind. In Jader-Manalo v. Linda will not be entitled to damages because Rey is not in any way in bad faith. Linda negotiated with Ray for the sale of the property. Subsequently. as this is an act contrary to morals and good customs under Articles 19 and 21 of the Civil Code. Later. Biong signed the Q deed of sale. 2/3 of the number of creditors representing 3/5 of the total liabilities must approve the same. Linda filed suit for nullification of the deed of sale and for moral and exemplary damages against Ray. Hence. offered a similar house at a lower price of P1. His widow and all his children executed an Extrajudicial Settlement of Alberto’s estate wherein the 2-door apartment was assigned by all the children to their mother. In order to obtain approval of the proposed settlement. leaving behind their 4 children.) 1/3 of the total debts must be represented by the approving creditors. Yes. e. But Ray insisted on buying the house of Biong and Linda for sentimental reason. Linda. 2006 Spouses Biong and Linda wanted to sell their house. The sale was void because Linda did not give her written consent to the sale. did not give her written consent to the sale. The latter required Manny Page 6 of 17 Q VII A I II Q . she sold the property to George. The suit will prosper. b.) 2/3 of the number of creditors should agree to the settlement. While in the United States. the sale is void.

But the Minister refused to leave. It was not perfected because although it was made in a public document and was accepted by the donee in a separate public document. c) Supposing that Carlos accepted the offer before Marvin could communicate his withdrawal thereof? Discuss the legal consequences. what legal steps will you take? Explain. Janine became the sole owner of the same. Such notification was necessary for the donation to become valid and binding. he is also using it as a place of worship on special occasions. the minister constructed a bungalow on the property he used as his residence. Spouses Alfredo and Racquel were active members of a religious congregation.Answers to BAR Questions 2000-2009 . In an affidavit he executed in behalf of the congregation. When all the co-heirs/co-owners assigned the two-door apartment to Janine in the extra-judicial partition. However. can Alfredo and Racquel evict the Minister and recover possession of the property. Manny refused to sign the contract alleging that his parents allowed him and his family to continue occupying the premises. On the fifth day.Obligations and Contracts to sign a prepared Lease Contract so that he and his family could continue occupying the unit. entitling George to the remedy of Unlawful Detainer. the Minister accepted the donation.00 as consideration for that option? Explain. Under the circumstances. the donee failed to notify the donor of such acceptance in an authentic form before the donation was revoke under article 729 of the Civil Code. I will give Manny a written demand to vacate within a definite period.000. Marvin withdrew his offer. what action will you take to protect the interest of your clients? As counsel for the couple. before Carlos could make up his mind. Upon the sale of the property to George. Manny’s lawful occupation of the property was terminated and Manny’s refusal to sign the lease contract and to vacate the premises after the period to vacate lapsed made his occupation unlawful. a) What is the effect of the withdrawal of Marvin’s Offer? b) Will your answer be the same if Carlos paid Marvin P10. claiming that aside from using the bungalow as his residence. He continued to occupy it under the same familial arrangement. If you were George’s counsel. instead of constructing a place of worship. If you were the couple’s counsel. say fifteen days. They donated a parcel of land in favor to that congregation in a duly notarized Deed of Donation subject to the condition that the Minister shall construct thereon a place or worship within 1 year from the acceptance of the donation. As George’s counsel. the spouses revoked the donation and demanded that he vacate the premises immediately. The Deed of Donation was registered with Registry of Deeds. Disappointed with the Minister.000. After the lapse of the fifteen day period I will file for an action for Unlawful Detainer to recover the possession of the apartment from Manny. hence. giving the latter 10 days within which to accept or reject the offer. Page 7 of 17 A Q III A I Q . Manny’s occupation of the premises was by mere tolerance of his parents. I may file an action for reconveyance of the property on the ground that the donation was not perfected. 2005 Marvin offered to construct the house of Carlos for a very reasonable price of P900.

Answers to BAR Questions 2000-2009 . there could be no concurrence of the offer and the acceptance. No perfected contract arises because of lack of consent. With the withdrawal of the offer. no consideration was given by Carlos for the option given. BD's contention is not correct. CA. Bernie bought on installment a residential subdivision lot from DEVLAND. Marvin will be liable for A(b) damages for breach of contract of option. He thus wrote a letter to DEVLAND informing it that he was stopping payment. Under Article 1167. a perfected contract of option was created.Obligations and Contracts The withdrawal of Marvin’s offer will cause the offer to cease in law. TX can still maintain the suit for ejectment. In this case. are liable for damages. Marvin cannot be held to have breached the contract. DEVLAND cancelled the sale and wrote Bernie. who then filed a motion to dismiss the ejectment suit on the ground that the action is already extinguished. TX filed a suit for ejectment against BD for non-payment of condominium rentals amounting to P150. those who in the performance of their obligation are guilty of contravention thereof. Carlos and Marvin are bound to fulfil A(c) what has been expressly stipulated and all consequences thereof. Under Art. Q II A III Q Page 8 of 17 . With the payment of the consideration for the option given.000. when Marvin did not give Carlos the agreed period of ten days. if Marvin would refuse to construct the house. and with the consent of the parties and the object of contract being present. Contracts are perfected by mere consent manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. there can be no consent. Consequently. BD offered and TX accepted the full amount due as rentals from BD. Carlos is entitled to have construction done by a third person at the expense of Marvin. (Spouses Clutario v. Is BD’s contention correct? Why or why not? Reason. there could be no concurrence of offer and acceptance. My answer will be the same as to the perfection of the contract for the construction of the house of Carlos. A contract to construct the house of Carlos is perfected. thus there is no perfected contract of option for lack of cause of obligation. After having faithfully paid the installments for 48 months. In the absence of concurrence of offer and acceptance. 1170 of the Civil Code. My answer will not be the same as to damages. During the pendency of the case. there is no perfected contract for the construction of the house of Carlos. Under Article 1315 of the Civil Code. even if subsequently accepted. 216 SCRA 341 [1992]). Marvin will not be liable to pay Carlos any damages for withdrawing the offer before the lapse of the period granted. Article 1318 of the Civil Code provides that there can be no contract unless the following requisites concur: (1) consent of the parties. and (3) cause of the obligation. Thus he cannot be held liable for damages. informing him that his payments are forfeited in its favor. Marvin in that case will be liable for damages under Article 1170. Bernie discovered that DEVLAND had failed to develop the subdivision in accordance with the approved plans and specifications within the time frame in the plan. as in this case. Without consent. Hence. The acceptance by the lessor of the payment by the lessee of the rentals in arrears even during the pendency of the ejectment case does not constitute a waiver or abandonment of the ejectment case. (2) object A(a) certain which is subject matter of the contract.

DEVLAND on the other hand has the right to cancel the contract after 30 days from receipt by Bernie of notice of cancellation. Discuss the rights and obligations of the parties. To make up for the expenses.R. the van was accidentally damaged by a cargo truck without his fault.00 spent. shall bear the expenses for the repair of the faulty brakes. Of the P15. Court of Appeals.00. excluding delinquency interest. No. R. oil and other materials while it was with Tito? Explain. DEVLAND is however obliged to refund to Bernie 50% of the total payments made. No. (Eugenio v. 000.Answers to BAR Questions 2000-2009 . 1996) In this case. Two months later. c) Supposing DEVLAND had fully developed the subdivision but Bernie failed to pay further installments after 4 years due to business reverses. Unfortunately while being driven by Tito. otherwise known as the Subdivision and Condominium Buyer's Protection Decree. 0000. shall shoulder the part of Page 9 of 17 A(c) IV Q A(a) . No. 957. Bernie is entitled to the refund of the cash surrender value equal to 50% of the total payments made. Under Section 23 of Presidential Decree No. 000. Drilon.R. shall govern. G. with the understanding that the latter could use it for one year for his personal or family use while Pedro works in Riyadh. G. Tito had the van tuned up and the brakes repaired. He did not tell to Tito that the brakes of the van were faulty. a) Who shall bear the P15. No. he leased it to Annabelle. No. 125347. non-payment of amortizations by the buyer is justified if nonpayment is due to the failure of the subdivision owner to develop the subdivision project according to the approved plans and within the limit for complying. b) Discuss the rights of Bernie under the circumstances.D. Drilon. (Eugenio v.1997) Before he left for Riyadh to work as a mechanic. Pedro. June 19. 2) if the contract is cancelled. Pedro work his adventure van with Tito. a cancellation option is available to Bernie. 957. January 22. G.A. 109404. DEVLAND must reimburse Bernie the total amount paid and A(b) the amortizations interest. 6552 otherwise known as the Realty Installment Buyer Protection Act.R. 1996) A(a) Under P. If Bernie opts to cancel the contract. they being extraordinary expenses incurred due to the non-disclosure by the bailor of the defect or fault. pursuant to Section 24 of P. Bernie is entitled: 1) to pay without additional interest the unpaid installments due within a grace period of four (4) months or one month for every year of installment paid.00 spent for the repair of the van? b) Who shall bear for the costs for the van’s fuel. Tito on the other hand. the action of DEVLAND is not proper. No. January 22.D. (Rillo v. After using the vehicle for two weeks. granting that the truck driver and truck owner are insolvent? Explain. the bailor. Under Section 3 thereof. 109404. c) Does Pedro have the right to retrieve the van even before the lapse of one year? d) Who shall bear the expenses for the accidental damage caused by the cargo truck. He spent a total amount of P15. plus interest at legal rate. No. Pedro returned to the Philippines and asked Tito to return the van. 957. The contract between Tito and Pedro is one of commodatum. Tito discovered that it consumed too much fuel.Obligations and Contracts a) Was the action of DEVLAND proper? Explain.

Pedro cannot demand the return of the van until the expiration of the oneA(c) year period stipulated. void ob initio. food. the bailee. said expense being ordinary for the use and preservation of the van. however. In inexistent contracts. ANNULLABLE or VOIDABLE CONTRACTS are valid until invalidated by the court but may be ratified. Both Tito and Pedro shall bear equally the costs of the extraordinary expenses. however. They said they had guests in Business Class they should attend to. if in the meantime he should have urgent need of the van. they sued the airline for a million pesos in damages. one or more requisites of a valid contract are absent. A(b) and consequently Tito. However. he may demand its return or temporary use. as there is no agreement to ratify or validate. although there is a breach of contract. They felt humiliated. In Hong Kong. they were told that they were upgraded by computer to First Class for the flight to Manila because the business section was overbooked. However. therefore. all the elements of a contract are present except that the consent of one of the contracting parties was vitiated or one of them has no capacity to give consent. No.Answers to BAR Questions 2000-2009 . Both refused to transfer despite better seats. DT and MT are entitled to actual damages only for such pecuniary losses suffered by them as a result of Page 10 of 17 I A Q II A Q III A . It gives a creditor the legal right to compel by an action in court the performance of such obligation. DT and MT were prominent members of the frequent traveler’s club of FX Airlines. they demanded an apology from FX’s management as well as indemnity payment. when the stewardess allegedly threatened to offload them if they did not avail the upgrade. A(d) having been incurred in the occasion of actual use of the van by Tito. 2004 Q Distinguish briefly but clearly between Civil Obligation and Natural Obligation Civil obligation is a juridical necessity to give to do or not to do. the bailee.00 spent for the tune-up. embarrassed and vexed. FX Airlines committed breach of contract when it upgraded DT and MT. The costs for the fuel and other materials are considered ordinary expenses. the couples were assigned seats in Business Class for which they had bought tickets. On the other hand. A natural obligation is based on equity and natural law. Distinguish briefly but clearly between Inexistent contracts and annullable contracts INEXISTENT CONTRACTS are considered as not having been entered into and. he cannot recover what was paid. shall shoulder them. over their objections. but during the transfer of luggage DT suffered pain in his arm and wrist. They do not create any obligation and cannot be ratified or validated. beverage and other services in First Class. There is no legal right to compel performance thereof but if the debtor voluntarily pays it. When none was forthcoming. On checking in.Obligations and Contracts the P15. to First Class because they had contracted for Business Class passenger. After arrival in Manila. 000. In anullable contracts. Thus they gave in. Is the airline liable for actual and moral damages? Why or why not? Explain briefly. even though he acted without fault.

However. 00 change. a P500 – peso bill. There was error in the amount of change given by RRA. While as a general rule the principal is not liable for the contract entered into by his agent in case the agent acted in his own name without disclosing his principal.Answers to BAR Questions 2000-2009 . The vendor gave him the pack plus P375. BT is subsidiarily liable for the damages arising from the criminal act. OJ hit a pedestrian who was seriously injured and later died in the hospital as a result of the accident. Was there a discount. However. In the course of his work. The contract is deemed made on his behalf. In securing a loan from Mbank. otherwise. they may recover moral damages if the cause of action is based on Article 21 of the Civil Code for the humiliation and embarrassment they felt when the stewardess threatened to offload them if they did not avail of the upgrade. the owner. Moreover. had been negligent? If so. the principal is liable. Is CX liable for the bank? Why or why not? Justify your answer. RRA. such presumption is rebuttable. DT could have avoided the alleged injury by requesting the airline staff to do the luggage transfer as a matter of duty on their part. BT. or an error in the amount given? What would be DPO’s duty. in case of an excess in the amount of change given by the vendor? How is the situational relationship between DPO and RRA denominated? Explain. BT. In such case. an oversight. Hence they are not entitled to actual damages. he will unjustly enrich himself at the expense of RRA. There is no showing that the pain in DT’s arm and wrist resulted directly from the carrier’s acts complained of. rebuttable only by proof of observance of the diligence of a good father of a family. Yes. DPO went to a store to buy a pack of cigarettes worth P225. there arises the juris tantum presumption that the employer is negligent. Likewise. He has the obligation to return the P100. When the employee causes damage due to his own negligence while performing his own duties. if any. such rule does not apply if the contract involves a thing belonging to the principal. The liability of the employer cease when they prove that they observed the diligence of a good father of a family to prevent damage.Obligations and Contracts such breach. There is also no basis to award moral damages for such breach of contract because the facts of the problem do not show bad faith or fraud on the part of the airline. There seems to be no showing that they incurred such pecuniary loss. DY did not specify that he was acting for CX in the transaction with said bank. there is a presumption of negligence on the part of the employer. This is a case of solutio indebiti in that DPO received something that is not due him. He gave the vendor. if the driver is charged and convicted in a criminal case for criminal negligence.00 only. Is there a presumption in this case that Mr. Page 11 of 17 Q IV A Q V A Q VI A . OJ was employed as professional driver of MM Transit bus owned by Mr. is the presumption absolute or no? Explain. The victim’s heirs sued the driver and the owner of the bus for damages. 00. CX executed a special power of attorney authorizing DY to secure a loan from any bank and to mortgage his property covered by the owner’s certificate of title.

the wife of ZY could sue to recover it because Article 117(7) of the Family Code provides that losses in gambling or betting are borne exclusively by the loser-spouse. ZY in turn file a suit against PX to recover the P100. but always accompanied by parents or other adults. good customs. Although the contracting parties may establish such stipulations. reported to OSWD that these children often missed going to school. the waiver is invalid and not binding. they may not do so if such are contrary to law.Obligations and Contracts DON. the winners thereafter. so PX filed in court a suit to collect the amount of P50. a) Will the collection suit against ZY prosper? b) Could Mrs. his wife may also sue to recover it under Article 2016 of the Civil Code if she and the family needed the money for support. In some scenes. A(b) conjugal or community funds may not be used to pay for such losses. But the social worker. but he had no more cash to pay in full the winner at the time the session ended. public order or public policy (Art.000 in a card game called Russian poker. If the money were exclusive property of ZY. The Child Labor Law is a mandatory and prohibitory law and the rights of the child cannot be waived as it is contrary to law and public policy. VIII Under Article 2014 of the Civil Code. DEB.000 that he won but remain Q unpaid.000 that her husband lost? The suit by PX to collect the balance of what he won from ZY will not prosper. morals. In his defense.Answers to BAR Questions 2000-2009 . Civil Code). 2003 In 1950. no action can be maintained by the winner for A(a) the collection of what he has won in a game of chance. The waiver is not valid. aside from being exposed to drugs. In the year 2000. after 50 years. terms and conditions as they may deem convenient. None of the parents complained. Alba filed an action to annul the donation and for the reconveyance of the property donated to them for the failure. Although poker may depend in part on ability. of the University to establish on the property a medical school named after their father. They work at odd hours of the day and night. He also said they signed a contract containing a waiver of their right to file any complaint in any office or tribunal concerning the working conditions of their children acting in the movies. He promised to pay PX. The producers paid the children talent fees at rates better than adult wages. Thus. DON contended all these were part of artistic freedom and cultural creativity. clauses. The University opposed the action on the ground of prescription and also Page 12 of 17 I Q . The parents’ waiver to file a complaint concerning the working conditions of their children acting in the movies is in violation of the Family Code and the Labor laws. it is fundamentally a game of chance. 1306. the heirs of Dr. secured parental consent for the employment of five minors to play certain roles in two movies he has producing at home in Makati. said DON. Q VII A Mr. They sometimes drank wine. ZY lost 100. Hence. they were filmed naked or in revealing costumes. Alba donated a parcel of land to Central University on condition that the latter must establish a medical college on the land to be named after him. If the money paid by ZY to PX was conjugal or community property. But he failed to do so despite the lapse of two months. Dr. an American businessman. Is the waiver valid and binding? Why or why not? Explain.

i. The obligation is valid. It is an obligation subject to an indefinite period because the debtor binds himself to pay when his means permit him to do so (Article 1180. NCC).C. Should the opposition of the university to the action of Dr. A II Are the following obligations valid. and if they are valid. State the effect of each of the above defenses put up by A on his obligation to pay X. Alba’s heirs be sustained? Explain. It is subject to a suspensive condition. the future and uncertain event of his becoming a lawyer. When X demanded payment from A. the donee is not yet in default. The non-compliance of the with charge or mode will give the donor the right to revoke the donation within four (4) years from the time the charge by specific performance within ten (10) years from the time the cause of action accrued. d) If the debtor promises to pay if his son. The donation may not as yet be revoked. Since the period has not been fixed as yet. The death of the son of cancer within one year is made A(d) a negative suspensive condition to his making the payment.00. a) B is only 16 years old. the obligation to pay becomes demandable (Article 1197. when is the obligation demandable in each case? a) If the debtor promises to pay as soon as he has the means to pay. Inasmuch as the time to establish the medical college has not been fixed in the Deed of Donation.e. NCC).Obligations and Contracts because it had not used the property for some purpose other than that stated in the donation. The obligation is demandable if the son does not die within one year (Article 1185. Q b) If the debtor promises to pay when he likes. The performance of this obligation A(c) does not depend solely on the will of the debtor but also on other factors outside the debtor’s control. why. the latter refused to pay on the following grounds. and therefore the donor has no cause of action to revoke the donation. if such defenses are found to be true. (Article 1182. or a “mode”. The obligation is valid. The obligation “to pay when he likes” is a suspensive condition the fulfillment A(b) of which is subject to the sole will of the debtor and. A.000. d) E was given by X an extension of 6 months without the consent of the other four co-debtors. and when the definite period as set by the court arrives. therefore the conditional obligation is void. When the creditor knows that the debtor already has the A(a) means to pay. who is sick with cancer. the donee is not yet in default in his obligation until the period is fixed by order of the court under Article 1197 of the New Civil Code. III Q Page 13 of 17 . NCC). “obligation”. and E made themselves solidarity indebted to X for the amount of P50. The establishment of a medical college is not a resolutory or suspensive condition but a “charge”. c) If the debtor promises to pay when he becomes a lawyer. does not die within one year. NCC). The obligation is valid.Answers to BAR Questions 2000-2009 . b) C has already been condoned by X c) D is insolvent.D.B. he must file an action in court to fix the period.

Is X’s contention correct? Why? This is a contract to sell and not a contract of absolute sale. the sale between the parties would automatically be Q rescinded. If the civil action is based on quasi-delict.00.000. A solidary debtor may. which payment X refused to accept. claiming that their contract of sale had already been rescinded. A may not interpose the defense of insolvency of D as a defense. Hence. If the civil action against the taxicab owners is based on culpa contractual. Applying the principle of mutual guaranty among solidary debtors. X sold a parcel of land to Y on 01 January 2002. With respect to those which personally belong to others. there is no need for reservation. since as there has been no delivery of the land. A cannot avail of the defense of D’s insolvency. a) Is it necessary for X to reserve his right to institute a civil action for damages Q against both taxicab owners before he can file a civil action for damages against them? Why? b) May both taxicab owners raise the defense of due diligence in the selection and supervision of their drivers to be absolved from liability for damages to X? Why? It depends. Y failed to pay on 01 February 2002. 2002 I Printado is engaged in the printing business. The seller has two alternative remedies: (1) specific A performance or (2) rescission or resolution under Article 1191 of the New Civil Code. avail himself of all defenses which are derived from the nature of the obligation and of those which are personal to him or A(b) pertain to his own share. It depends. As a result of a collision between a taxicab owned by A and another taxicab owned by B. a passenger of the first taxicab. X. reservation is necessary. but offered to pay three days later. A may avail of the condonation by X of C’s share of P 10. with Page 14 of 17 IV V Q . It was stipulated that if payment were not to be made by Y on 01 February 2002. In both remedies. he may avail himself thereof only as regards that part of the debt for which the latter are responsible. they cannot raise the defense. in actions filed by the creditor.00. 000. or on quasi-delict. if the action is based on culpa contractual or civil liability arising from a crime. NCC). (Article 1222. but only as to the share of that co-debtor. A guaranteed the payment of A(c) D’s share and of all the other co-debtors. there is no novation of the obligation but only an act of liberality granted to E alone. X later filed a criminal action against both drivers. was seriously injured. but only for B’s share of P A(a) 10. damages are due because of default.Answers to BAR Questions 2000-2009 . The extension of six (6) months given by X to E may be availed of by A as a A(d) partial defense but only for the share of E.Obligations and Contracts A may avail the minority of B as a defense. If the separate civil action is to recover damages arising from the A(a) criminal act. A solidary debtor may avail himself of any defense which personally belongs to a solidary codebtor. the taxicab owners may raise the defense of diligence of a good father of a family in the selection and A(b) supervision of the driver. payment and delivery to be made on 01 February 2002. Suplico supplies printing paper to Printado pursuant to an order agreement under which Suplico binds himself to deliver the same volume of paper every month for a period of 18 months.

G. In view of a court suit that Core Corp. 115117. offering for the purpose payment in form of compensation or set-off against the amount of damages it is claiming against him. (Integrated Packaging Corporation v. but Printado. Is Stockton correct? Give reason for your answer.000 volumes.R. plus attorney’s fees of P 1 million. Suplico sues Printado for the value of the unpaid deliveries under their order agreement. and it cannot favor or prejudice a third person. as a result of statements published by Stockton which are allegedly defamatory because it was calculated to injure and damage the corporation’s reputation and goodwill. In the suit filed by Suplico.000 volumes of school textbooks. Page 15 of 17 A Q II A . as it was not he who violated the order agreement. In order that compensation may be proper. The response of Core corp. No. Suplico has the right to cease making further delivery. Printado counters that: (a) Suplico cannot demand payment for deliveries made under their order agreement until Suplico has completed performance under said contract. He is not a party to the agreement entered into by and between Printado and Publico. the contentions of Printado are untenable. the two debts must be liquidated and demandable. June 8. [2000]). has filed against him for damages in the amount of P 10 million. Printado has also a standing contract with publisher Publico for the printing of 10. And the latter did not violate the order agreement (Integrated Packaging Corporation v. [Aforesaid] Such contracts do could not affect third persons like Suplico because of the basic civil law principle of relativity of contracts which provides that contracts can only bind the parties who entered into it. Stockton rejected the offer of the corporation.) Stockton is a stockholder of Core Corp. Court of Appeals. arguing that compensation between the value of the shares and the amount of damages demanded by the corporation cannot legally take effect. There is no right of compensation between his price of P10 million and Core Corp. After printing 1. was an acceptance of the offer in the exercise of its rights of first refusal. At the same time Publico sues Printado for damages for breach of contract with respect to their own printing agreement. No. Suplico cannot be held liable for damages. The articles of incorporation of Core Corp. Are the contentions of Printado tenable? Explain your answers as to each contention. even if he is aware of such contract and has acted with knowledge thereof.Obligations and Contracts Printado in turn agreeing to pay within 60 days after each delivery. Suplico has been faithfully delivering under the order agreement for 10 months but thereafter stopped doing so. He desires to sell his shares in Core Corp.Answers to BAR Questions 2000-2009 . Accordingly. Stockton gave written notice to the corporation of his offer to sell his shares of P 10 million.’s unliquidated claim for damages. Printado having failed to pay for the printing paper covered by the delivery invoices on time. for breach of contract. Printado also fails to perform under its printing contract with Publico. (b) Suplico should pay damages for breach of contract. Suplico was aware of said printing contract. supra. CA. and (c) with Publico should be liable for Printado’s breach of his contract with Publico because the order agreement between Suplico and Printado was for the benefit of Publico. Stockton is correct. provide for a right of first refusal in favor of the corporation. exclusive of the claim for attorney’s fees. Theirs is not a stipulation pour atrui. Suplico cannot be held liable for Printado’s breach of contract with Publico. because Printado has not made any payment at all. (333 SCRA 170.

Brian leased an office space in a building for a period of five years at a rental rate of P1. This will amount to a novation of the contract by substituting the debtor with a third party. The formers. There being no showing that the purchasing power of the peso had been reduced tremendously.00=$1. The planters filed an action to annul the said assignment on the ground that the Taiwanese group was not registered with the Board of Investments. As to the obligation to mill the sugar cane.00. but the latter is willing to pay only one fourth of it. The milling contract imposes reciprocal obligations on the parties. Brian refused to pay the increased rate and an action for unlawful detainer was filed against him. such substitution cannot take effect without the consent of the creditor. 1998. The lease contract provided that the lessees shall pay for the telephone services in the leased premises.00=$1. hence.000." Starting March 1. Four foreign medical students rented the apartment of Thelma for a period of one year.00 a month.000.Obligations and Contracts The case for the P10 million damages being still pending in court. His liability is only joint. It does not necessarily refer to the exchange rate of the peso to the dollar. Whether or not there exists an extraordinary inflation or deflation is for the courts to decide. on the ground of inflation proven by the fact that the exchange rate of the Philippine peso to the dollar had increased from P25. There is solidary liability only when the obligation expressly so states or when the law or Page 16 of 17 Q I A Q II A Q III A . After one semester. 2001. Thelma demanded that the fourth student pay the entire amount of the unpaid telephone bills. Under Article 1293 of the Civil Code. Ten years later.00. may annul such assignment for not having given their consent thereto. the corporation has as yet no claim which is due and demandable against Stockton. three of them returned to their home country and the fourth transferred to a boarding house. Who is correct? Why? The fourth student is correct. Will the action prosper or not? Explain briefly.000 a month. Extraordinary inflation or deflation is defined as the sharp decrease in the purchasing power of the peso. The contract of lease contained the proviso that "in case of inflation or devaluation of the Philippine peso. On July 1. the lessor increased the rental to P2. who are creditors as far as the obligation to mill their sugar cane is concerned. Thelma discovered that they left unpaid telephone bills in the total amount of P80. the sugar central is a debtor of the farmers. The sugar central has the obligation to mill the sugar cane of the farmers while the latter have the obligation to deliver their sugar cane to the sugar central. 2001 The sugar cane planters of Batangas entered into a long-term milling contract with the Central Azucarera de Don Pedro Inc. Hence. The action will prosper not on the ground invoked but on the ground that the farmers have not given their consent to the assignment. the monthly rental will automatically be increased or decreased depending on the devaluation or inflation of the peso to the dollar.00 to P50. the Central assigned its rights to the said milling contract to a Taiwanese group which would take over the operations of the sugar mill. there could be no inflation that would justify the increase in the amount of rental to be paid. pro rata. Will the action prosper? Why? The unlawful detainer action will not prosper. the sugar central will also transfer to the Taiwanese its obligation to mill the sugar cane of the farmers. Brian could refuse to pay the increased rate.Answers to BAR Questions 2000-2009 . In assigning its rights under the contract.

The parents failed to comply with their promissory note and the finance company sued them for specific performance. There being no condonation at all the defense of full payment will not be valid. therefore. in any way. the defendant is liable for the loss of the thing and even when the loss was due to force majeure. The defense of full payment will. the jewelry shop informed Kristina that the Job was not yet finished. In such case. Secondly. In such case.00 from his father.00. Kristina went to the shop to claim the ring. After he had paid P300. because it does not depend on the sole will of one of the parties. the notation was not the act of his father from which condonation may be inferred.000. Is he correct or not? Q II A No. If the notation "in full payment of the loan" was written by Arturo's father. When the administrator of his father's estate requested payment of the balance of P200. CA. 1207. Will the action prosper or not? Q I A The action will prosper. stipulate solidarity. Because she could not account for the funds entrusted to her. When his grandson passed the said examinations. The promissory note executed by Lolita’s parents is valid and binding. Arturo borrowed P500. Page 17 of 17 .000. G. 104726.R No. it would be valid because it depends on the sole will of the creditor (the donee) and not of the debtor (the donor). Kristina brought her diamond ring to a jewelry shop for cleaning. her parents executed a promissory note to pay the finance company the amount allegedly misappropriated by their daughter. In order to secure her release from jail.00. 1999.000. CC). First of all. Will this be a valid defense in an action for collection? Q III A It depends. there was an implied condonation of the balance that discharges the obligation. It merely proves his intention in making that payment but in no way does it bind his father (Yam v. it need not comply with the formalities of a donation to be effective. Kristina filed an action for damages against the jewelry shop which put up the defense of force majeure. They asked her to return five days later. Will the action prosper or not? Q IV A The action will prosper. the notation is an act of the father from which condonation may be inferred.000. 2000 Lolita was employed in a finance company. The jewelry shop undertook to return the ring by February 1.Answers to BAR Questions 2000-2009 . Pedro promised to give his grandson a car if the latter will pass the bar examinations. even if it were. The contract of lease in the problem does not." When the said date arrived. 11 February 1999). she was charged with estafa and ordered arrested. On February 6. be valid. Since the defendant was already in default not having delivered the ring when delivery was demanded by plaintiff at due date. his father died. the condition is not purely potestative. Pedro refused to give the car on the ground that the condition was a purely potestative one. the notation was written by Arturo himself. The condonation being implied.00 reading: "In full payment of the loan". The finance company then executed an affidavit of desistance which led to the withdrawal of the information against Lolita and her release from jail. the consideration being the extinguishment of Lolita’s civil liability and not the stifling of the criminal prosecution. but she was informed that the same was stolen by a thief who entered the shop the night before.Obligations and Contracts nature of the obligation requires solidarity (Art. 1999. however. Arturo replied that the same had been condoned by his father as evidenced by a notation at the back of his check payment for the P300. he is not correct. When.

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