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Suspensive and Resolutory Conditions MIGUELS ANSWER: An alternative

obligation is one where the debtor is bound


Distinguish between the effects of
by different prestations but wherein only
suspensive and resolutory conditions upon
one is due. It can be performed
an obligation
alternatively and the performance of one of
SUGGESTED ANSWER: It is evident them is sufficient to extinguish the
that a resolutory condition affects the obligation. A facultative obligation on the
obligation to which it is attached in a other hand is one where the debtor is
manner which is diametrically bound to perform one prestation with a
opposed to that of a suspensive right to choose another prestation as
condition. If the suspensive condition substitute.
is fulfilled, the obligation arises or
becomes effective if the resolutory
condition is fulfilled, the obligation is Bar Question (1988)
extinguished. If the first is not
Joint and Solidary Obligations
fulfilled, the juridical relation is
created; if the second is not fulfilled, Define joint and solidary obligations
the juridical relation is consolidated.
SUGGESTED ANSWER: When there is a
In other words, in the first, rights are
concurrence of two or more creditors or two
not yet acquired, but there is a hope
or more debtors in one and the same
or expectancy that they will soon be
obligation, such obligation may be either
acquired; in the second, rights are
joint or solidary. A joint obligation may be
already acquired but subject to the
defined as an obligation where there is a
threat of extinction.
concurrence of several creditors or several
MIGUELS ANSWER: A suspensive condition debtors, or of several creditors and debtors,
is a condition imposed upon an obligation by virtue of which each of the creditors has
and the happening of which gives rise to a right to demand, while each of the
the demandability of the the fulfillment of debtors is bound to render compliance with
such obligation. The obligation will only his proportionate part of the prestation
arise upon the fulfillment of the suspensive which constitutes the object of the
condition. Resolutory conditions on the obligation. In other words each of the
other hand, are conditions that signify the creditors is entitled to demand the payment
extinguishment of the obligation that is only of a proportionate part of the credit,
immediately imposed upon the other party. while each of the debtors is liable for the
The happening of the resolutory condition payment of only a proportionate part of the
ends the obligation of the parties and debt. A solidary obligation, on the other
extinguishes the right of the other party to hand, may be defined as an obligation
the prestation agreed upon. where there is a concurrence of several
creditors or several debtors, or of several
creditors and debtors, by virtue of which
Bar Question (1988) each of the creditors has a right to demand,
while each of the debtors is bound to render
Alternative and Facultative Obligations entire compliance with the prestation which
Define alternative and facultative constitutes the object of the obligation. In
obligations other words, each of the creditors is
entitled to demand the payment of the
SUGGESTED ANSWER: Alternative entire credit, while each of the debtors is
obligations refer to those juridical relations liable for the payment of the entire debt.
which comprehend several objects or
prestations which are due, but the payment MIGUELS ANSWER: An obligation is joint if
or performance of one of them would be there are either two or more and where the
sufficient. On the other hand, facultative entire obligation is to be paid or performed
obligations refer to those juridical relations proportionately by all of the debtors. An
where only one object or prestation has obligation is a solidary obligation if each
been agreed upon by the parties to the creditor if there are multiple has the right to
obligation, but the obligor may deliver or demand from any of the debtors the
render another in substitution. obligation that is due.
Bar Question (1988)
Solidary Obligations Bar Question (1988)
A, B and C borrowed P12,000 from X. This Forms of payment
debt is evidenced by a promissory note
Under the Civil Code, what are the different
wherein the three bound themselves to pay
special forms of payments?
the debt jointly and severally. However,
according to the note, A can be compelled SUGGESTED ANSWER: Under the Civil Code
to pay only on June 15, 1962, B can be there are actually four special forms of
compelled to pay only on June 15, 1964, payment. They are (1) application of
while C can be compelled to pay only on payment; (2) dation in payment; (3)
June 15, 1966. On June 15, 1962, X made payment by cession; and (4) tender of
a demand upon A to pay the entire payment and consignation. Strictly
indebtedness but the latter aid only P4,000. speaking, however, application of payment
Subsequently, because of As refusal to pay by its very nature, is not a special form of
the balance, X brought an action against payment.
him for collection of the amount. Will such
an action prosper? Reasons. MIGUELS ANSWER: The special forms of
payments are Dacion en pago, payment by
SUGGESTED ANSWER: For the present, the cession and consignation.
action will not prosper. It is of course true
that the obligation here is solidary and that
its solidary character is not destroyed by Bar Question (1988)
the fact that the debtors are bound by
different periods for payment is expressly Consignation
provided for in Art. 1211 of the Civil Code. What are the special requisites of
However, in solidary obligations of this type, consignation in order that it shall produce
the right of the creditor is limited to the the effect of payment?
recovery of the amount owed by the debtor
whose obligation has already matured, SUGGESTED ANSWER: In order that
leaving in suspense his right to recover the consignation shall produce the effect of
shares corresponding to the other debtors payment, it is not only essential that it
whose obligations have not yet matured. must conform with all of the requisites of
This restriction upon the creditors right payment, but it is also essential that certain
does not destroy the solidary character of special requirements prescribed by law
the obligation, because ultimately, he can must be complied with. The debtor must
still compel one and the same debtor, if that show: (1) that there is a debt due; (2) that
is his wish, to pay the entire obligation. the consignation has been made either
Therefore, in the instant case, X shall have because the creditor to whom the tender of
to wait for June 15, 1964, when Bs payment was made refused to accept the
obligation shall have matured, and for June payment without just cause, or because any
15, 1966, when Cs obligation shall have of the cause stated by law for effective
matured. On June 15, 1966, he can collect consignation without previous tender of
P4,000 from either A or B. On June 15, payment exists; (3) the previous notice of
1966, he can again collect another P4,000 the consignation had been made given to
from either A or B or C. the persons interested in the fulfillment of
the obligation; (4) that the thing or amount
MIGUELS ANSWER: The action of X will not due had been placed at the disposal of
prosper. The obligation of A, B and C is judicial authority; (5) that after the
solidary, however they are bound by consignation had been made, the persons
different periods meaning the fulfillment of interested in the fulfillment of the obligation
their obligation is imposed with an had been notified thereof.
agreement of a period on which their
obligation will be demandable. The MIGUELS ANSWER: Consignation requires
obligation being solidary, X may require that there be and existing valid debt which
payment from any of the debtors, however is due, a prior valid tender of payment, a
as discussed it is subject to a period, refusal by the creditor to accept such
making the choices of X limited to the tender of payment without any valid
debtors from whom the obligation is due reason, a prior notice of consignation to the
and demandable. interested parties, the thing due deposited
with the court and another notice to there is no declaration that the old
interested parties subsequent to the obligation is extinguished by the new one
consignation. but the old and new obligations are
incompatible and cannot co-exist. In this
case, the obligations are not incompatible,
Bar Question (1988) there is still a debt due although the
amount was reduced.
Novation
Suppose that under an obligation imposed
by a final judgement, the liability of the Bar Question (1988)
judgement debtor is to pay the amount of
Contract
P6,000 but both the judgement debtor and
the judgement creditor subsequently Merle offered to sell her automobile to Violy
entered into a contract reducing the liability for P60,000. After inspecting the
of the former to only P4,000 is there and automobile, Violy offered to buy it for
implied novation which will have the effect P50,000. This offer was accepted by Merle.
of extinguishing the judgement obligation The next day, Merle offered to deliver the
and creating a modified obligatory relation? automobile, but Violy being short of funds,
Reasons. secured postponement of the delivery,
promising to pay the price upon arrival of
SUGGESTED ANSWER: There is no implied
the steamer, Helena the steamer however
novation in this case. We see no valid
never arrived because it was wrecked by a
objection to the judgement debtor and the
typhoon and sank somewhere off the Coast
judgement creditor in entering into an
of Samar. (1) Is there a perfected contract
agreement regarding the monetary
in this case? Why? (2) Is the promise to
obligation of the former under the
pay made by Violy conditional or with a
judgement referred to. The payment by the
term? Why? (3) Can Merle compel Violy to
judgement debtor of the lesser amount of
pay the purchase price and to accept the
P4,000, accepted by the creditor without
automobile? Why?
any protest or objection and acknowledged
by the latter as in full satisfaction of the SUGGESTED ANSWER: (1) Yes, there is a
money judgement, completely extinguished perfected contract because there is already
the judgement debt and released the a concurrence between the offer and the
debtor from his pecuniary liability. acceptance with respect to the object and
the cause which shall constitute the
Novation results in two stipulationsone to
contract. Such concurrence is manifested by
extinguish an existing obligation, the other
the acceptance made by Merle of the offer
to substitute a new one in its place.
made by Violy.
Fundamental it is that novation effects a
substitution or modification of an obligation (2) I submit that the promise to pay made
by another or an extinguishment of one by Violy is not conditional, but with a term.
obligation by the creation of another. In the The promise is to pay the P50,000 upon
case at hand, we fail to see what new or arrival in this port of the steamer, Helena,
modified obligation arose out of the not if the steamer Helena shall arrive in this
payment by judgement debtor of the port. Hence, the promise is with regard to
reduced amount of P4,000 to the creditor. the date of arrival and not with regard to
Additionally, to sustain novation the fact of arrival.
necessitates that the same be so declared
(3) Yes, Merle can compel Violy to pay the
in unequivocal terms clearly and
purchase price and to accept the
unmistakably shown by the express
automobile. She will, however have to wait
agreement of the parties or by acts of
for the date when the steamer, Helena,
equivalent importor that there is complete
would have arrived were it not for the
and substantial incompatibility between the
shipwreck. After all, there is already a
two obligations.
perfected contract.
MIGUELS ANSWER: There is no implied
MIGUELS ANSWER: (1) Yes, there is a
novation, what is present is a partial
perfected contract. A contract is deemed
remission of P2,000. The amount of P4,000
perfected upon the concurrence of the
is still due and demandable. An implied
essential requisites provided for by Art.
novation is said to have occurred only if
1318 of the Civil Code. There is consent as
shown by acceptance of both parties of the SUGGESTED ANSWER: Dation in payment is
offers and counter-offers of one another, a special form of payment whereby
there is an object agreed upon which is the property is alienated to the creditor in
automobile and a cause which is the satisfaction of a debt in money. Assignment
promise to pay by Violy of the amount of property, or payment by cession is a
agreed upon for the automobile. There is a special form of payment whereby the
meeting of the minds by the parties upon debtor cedes or assigns his property to his
the object and the cause therefore there is creditors so that the proceeds thereof will
already a perfected contract. be applied in payment of his debts.
(2) The promise to pay is subject to a term.
MIGUELS ANSWER: Dation in payment is
The stipulation agreed upon by the parties the alienation by the debtor of property in
is that payment would be effected upon favor of the creditor for the purpose of
arrival therefore such is a question of when
satisfying his debt. Dation in payment is
rather than if. An obligation is subject to a
different from assignment of property in
term if the stipulation is certain to happen,
terms of different factors. In assignment of
and on the other hand subject to a property, the properties ceded are all
condition if the stipulation is future and properties of the debtor, in dation in
uncertain. In this case, the arrival is sure to
payment, what is delivered is only a specific
happen thereby making it a question of property which is considered an equivalent
when rather than if. of the outstanding monetary obligation of
the debtor. In assignment of property, it is
(3) Yes, Merle can compel Violy to pay the
necessary that the debtor be in a state of
price and accept the automobile as there
insolvency while in dation in payment there
was already a perfected contract.
is no such requirement. Also, dation in
payment is a form of novation of the
contract while assignment is not.
Bar Question (1989)
Implied Contract and Quasi-contract
Bar Question (1989)
Distinguish and implied contract from a
quasi-contract. Rescission of Contracts

SUGGESTED ANSWER: An implied contract X offered to buy the house ad lot of Y for
requires consent of the parties. A quasi- P300,000. Since X had only P200,000 in
contract is not predicated on consent, being cash at the time, he proposed to pay the
a unilateral act. The basis of an implied balance of P100,000 in four (4) equal
contract is the will of the parties. The basis monthly installments. As the title to the
of a quasi-contract is law to the end that property was to be immediately transferred
there be no unjust situation. to the buyer, X to secure the payment of
the balance of purchase price, proposed to
MIGUELS ANSWER: An implied contract is constitute a first mortgage on the property
different from a quasi-contract in terms of in favor of Y. Y agreed to the proposal so
the presence of consent. In an implied that on April 15, 1987, the contract of sale
contract, the consent of the parties is in favor of X was constituted and on the
present although it is not expressly given, it same date (April 15, 1987), X constituted
is deducible from the conduct of the parties. the said first mortgage. When the first
A quasi-contract on the other hand, does installment became due. X defaulted in the
not require the consent of the parties but is payment thereof. Y now brings an action to
an obligation based on equity and ensuring rescind the contract of sale, which X
that there be no unjust enrichment between opposed. How would you decide the
the parties. conflict? Give your reasons.
SUGGESTED ANSWER: Y can rescind.
Bar Question (1989) Specific performance and rescission are
alternative remedies in breach of reciprocal
Dation in payment obligations. The contract is only partly
What is dation in payment and how is it consummated. The price is not fully paid.
distinguished from assignment of property? The mortgage is an accessory contract of
guarantee and can be waived by the
creditor who can avail of his remedies in the Estoppel
principal contract.
What do you understand by estoppel? What
MIGUELS ANSWER: Y cannot rescind. are the different kinds of estoppel? Explain.
Jurisprudence provides that slight breaches
The Civil Code enumerates only 3 kinds of
of the contract will not justify rescission. In
estoppel: estoppel in pais and estoppel by
this case X can be deemed to have
deed; and jurisprudence gives a third,
substantially complied with the contract of
namely: estoppel by laches. Estoppel in
sale paying 2/3 of the purchase price. In
pais or by conduct arises when one by his
order to justify rescission, the breach of the
act, representation, oral admission or by his
contract should be substantial that it would
silence induces another to believe certain
defeat the object of the parties in entering
facts to exist and the other realize an act on
into the contract, that there is substantial
such belief. Estoppel by deed is that by
breach, cannot be said in this case.
virtue of which a party to a deed and his
privies are precluded from asserting as
against the other party any right or title in
Bar Question (1989)
derogation of the deed or any fact asserted
Perfection of Contract therein.

X came across an advertisement in the MIGUELS ANSWER: Estoppel is a bar from


Manila Daily Bulletin about the rush sale of denying or asserting something to the
three slightly used Toyota cars, Model 1989 contrary from that which has already been
for only P200,000 each. Finding the price to previously established as the truth by his
be very cheap and in order to be sure that own representations. The Civil Code
he gets one unit ahead of the others, X classifies estoppel into two (2) namely
immediately phoned the advertiser Y and estoppel by deed and estoppel in pais.
place an order for one car. Y accepted the Estoppel by deed is the kind of estoppel
order and promised to deliver the ordered which is in writing which bars such parties
unit on July 15, 1989. On the said date, from asserting anything to the contrary of
however, Y did not deliver the unit. X brings what is in the written document. Estoppel in
and action to compel Y to deliver the unit. pais on the other hand, is estoppel arising
Will such an action prosper? Give your from conduct that amounts to a
reasons. representation of facts.

SUGGESTED ANSWER: The contract in this


case has been perfected. However, the
Bar Question (1989)
contract is unenforceable under the Statute
of Frauds. The action will prosper if there is Civil Obligation and Natural Obligation
no objection to the oral evidence, which
How is a civil obligation distinguished from
amounts to a waiver of the stature of
a natural obligation? Give an example of a
frauds.
natural obligation
MIGUELS ANSWER: Yes, the action of X
SUGGESTED ANSWER: Civil obligations give
may prosper provided that there be no
a right of action to compel their
objection to the oral evidence presented
performance. Natural obligations, not being
regarding the oral agreement entered into
based on positive law but on equity but on
by X and Y. While there is a perfected
equity and natural law, do not grant a right
contract, it is unenforceable for failure to
of action to enforce their performance, but
comply with the Satute of Frauds, because
after voluntary fulfillment by the obligor,
it is an agreement for the sale of goods at a
they authorize the retention of what has
price not less than P500, it is required to be
been delivered or rendered by reason
in writing. However, the Civil Code also
thereof. Example of a natural obligation:
provides that contracts infringing the
when a right to sue upon a civil obligation
Stature of Frauds may be ratified provided
has lapsed by extinctive prescription, the
that there be a failure to object to the
obligor who voluntarily performs the
presentation of oral evidence to prove the
contract cannot recover what he has
same.
delivered or the value of the service he has
rendered.
Bar Question (1989)
MIGUELS ANSWER: Civil obligations are Minority is one of the restrictions provided
obligations that can be enforced through a for in the Civil Code that limits a persons
civil suit, it is an obligation which gives rise capacity to act or enter into certain
to a cause of action. Natural obligations on agreements. D,E, and F not being
the other hand are obligations do not grant represented by parents or guardians can be
a cause of action, it is an obligation that is the basis to nullify the partition.
merely based on equity. An example of a
(b) If fraud was present, the action will also
natural obligation is when a third party pays
prosper as fraud is considered as a vitiation
for the debt of another which the obligor is
of consent, which makes the contract
not legally bound to pay because it has
voidable there being a lack of one of the
prescribed but the debtor voluntarily
essential requisites of a contract.
reimburses such third person, the obligor
cannot recover what he has paid.

Bar Question (1990)


Bar Question (1990) Freedom to Stipulate
Nullity of Contracts The Japan Air Lines (JAL), a foreigner
corporation licensed to do business in the
X was the owner of a 10,000 square meter
Philippines, executed in Manila a contract of
property. X married Y and out of their
employment with Maritess Guapa under
union, A, B and C were born. After the
which the latter was hired as a stewardess
death of Y, X married Z and they begot as
on the aircraft plying the Manila-Japan-
children, D, E and F. After the death of X,
Manila route. The contrast specifically
the children of the first and second
provides that (1) the duration of the
marriages executed and extrajudicial
contract shall be two (2) years, (2)
partition of the aforestated property on May
notwithstanding the above duration, JAL
1, 1970. D, E and F were given a one
may terminate the agreement at any time
thousand square meter portion of the
by giving her notice in writing ten (10) days
property. They were minors at the time of
in advance, and (3) the contract shall be
the execution of the document. D was 17
construed as governed under and by the
years old, E was 14 and F was 12; and they
laws of Japan and only the court in Tokyo,
were made to believe by A, B and C that
Japan shall have jurisdiction to consider any
unless they sign the document they will not
matter arising from or relating to the
get any share. Z was not present then. In
contract.
January 1974, D,E and F filed an action in
court to nullify the suit alleging they JAL dismissed Maritess on the fourth month
discovered the fraud only in 1973. (a) Can of her employment without giving her due
the minority of D,E and F be a basis to notice. Maritess then filed a complaint with
nullify the partition? Explain your answer. the Labor Arbiter for reinstatement,
(b) How about fraud? Explain your answer. backwages and damages. The lawyer of JAL
contends that neither the Labor Arbiter nor
SUGGESTED ANSWER: (a) Yes, minority
any other agency or court in the Philippines
can be a basis to nullify the partition
has jurisdiction over the case in view of the
because D, E and F were not properly
above provision (3) of the contract which
represented by their parents or guardians
Maritess voluntarily signed. The contract is
at the time they contracted the extra-
the law between her and JAL. Decide the
judicial partition.
issue.
(b) In the case of fraud, when through
SUGGESTED ANSWER: Labor Legislations
insidious words or machinations of one
are generally intended as expressions of
party the other is induced to enter into the
public policy on employer-employee
contract without which he would not have
relations. The contract therefore, between
agreed to, the action still prosper because
Japan Air Lines and Maritess may apply only
under Art. 1391 of the Civil Code in case of
to the extent that its provisions are not
fraud, the action for annulment may be
inconsistent with Philippine labor laws
brought within four years from the
intended particularly to protect the
discovery of the fraud.
employees.
MIGUELS ANSWER: (a) Yes, minority can
Under the circumstances, the dismissal of
be the basis of nullifying the partition.
Maritess without complying with Philippine
labor law would be invalid and any contract but is founded on quasi-delict,
stipulation in the contract to the contrary is assuming that Sweet Taste knew of the
considered void. Since the law of the forum contract. Article 1314 of the Civil Code
in this case is the Philippine law, the issues provides that any third person who induces
should be resolved in accordance with another to violate his contract shall be
Philippine law. liable for damages to the other contracting
party.
MIGUELS ANSWER: The lawyer of JAL is
wrong. Although the parties have the MIGUELS ANSWER: Roland is bound by the
freedom to stipulate anything they want in contract he entered into with lady love.
the contract it is still subject to the rule that Rolands defense is unmeritorious and has
it is not contrary to law, morals, good no legal basis. Roland is liable for breach of
customs and public policy. The stipulations contract for violating his obligation with
in the employment contract must still be in Lady Love. Sweet Taste can also be held
compliance with labor laws in the liable for inducing Roland to violate his
Philippines as these labor laws were created contract.
in order to protect the rights of laborers in
the Philippines, stipulations violating such is
contrary to law and public policy. Bar Question (1991)
Ownership
Bar Question (1991) Pablo sold his car to Alfonso who issued a
postdated check in full payment therefor.
Nature of Contracts; Obligatoriness
Before the maturity of the check. Alfonso
Roland, a basketball star, was under sold the car to Gregorio who later sold it to
contract for one year to play-for-play Gabriel. When presented for payment, the
exclusively for Lady Love, Inc. However, check issued by Alfonso was dishonored: by
even before the basketball season could the drawee bank for the reason that he,
open, he was offered a more attractive pay Alfonso, had already closed his account
plus fringes benefits by Sweet Taste, Inc. even before he issued his check. Pablo sued
Roland accepted the offer and transferred to recover the car from Gabriel alleging that
to Sweet Taste. Lady Love sues Roland and he (Pablo) had been unlawfully deprived of
Sweet Taste for breach of contract. it by reason of Alfonsos deception. Will the
Defendants claim that the restriction to play suit prosper?
for Lady Love alone is void, hence,
SUGGESTED ANSWER: No. The suit will not
unenforceable, as it constitutes an undue
prosper because Pablo was not unlawfully
interference with the right of Roland to
deprived of the car although he was
enter into contracts and the impairment of
unlawfully deprived of the price. The
his freedom to play and enjoy basketball.
perfection of the sale and the delivery of
Can Roland be bound by the contract he the car was enough to allow Alfonso to have
entered into with Lady Love or can he a right of ownership over the car, which can
disregard the same? Is he liable at all? How be lawfully transferred to Gregorio. Art. 559
about Sweet Taste? Is it liable to Lady applies only to a person who is in
Love? possession in good faith of the property,
and not to the owner thereof. Alfonso, in
SUGGESTED ANSWER: Roland is bound by
the problem, was the owner, and, hence
the contract he entered into with Lady Love
Gabriel acquired the title to the car. Non-
and he cannot disregard the same, under
payment of the price in a contract of sale
the principles of obligatoriness of contracts.
does not render ineffective the obligation to
Obligations arising from contracts have the
deliver. The obligation to deliver a thing is
force of law between the parties.
different from the obligation to pay its
Yes, Roland is liable under the contract as price.
far as Lady Love is concerned. He is liable
MIGUELS ANSWER: No, the suit will not
for damages under Article 1170 of the Civil
prosper. Gabriel has the right to the car as
Code since he contravened the tenor of his
he bought it in good faith from Alfonso who
obligation. Not being a contracting party,
was then its rightful owner. The payment of
Sweet Taste is not bound by the contract
the price and the delivery of the car was
but it can be held liable under Art. 1314.
enough to perfect the sale and vest
The basis of its liability is not prescribed by
ownership to Alfonso. Pablos resort would be no delay yet if there is no period fixing
be to sue Alfonso for violation of BP 22 or the time when the obligation must be
the bouncing checks law for issuing a check fulfilled.
knowing that it has no funds to pay
another.
Bar Question (1992)
Liability; Solidary Obligation
Bar Question (1991)
In June 1988, X obtained a loan from A and
Period; Suspensive
executed with Y as solidary co-maker a
In a deed of sale of a realty, it was promissory note in favor of A for the sum of
stipulated that the buyer would construct a P200,000.00. The loan was payable at
commercial building on the lot while the P20,000.00 with interest monthly within the
seller would construct a private passageway first week of each month beginning July
bordering the lot. The building was 1988 until maturity in April 1989. To secure
eventually finished but the seller failed to the payment of the loan. X put up as
complete the passageway as some of the security a chattel mortgage on his car, a
squatters, who were already known to be Toyota Corolla sedan. Because of failure of
there at the time they entered into the X and Y to pay the principal amount of the
contract, refused to vacate the premises. In loan, the car was extrajudicially foreclosed.
fact, prior to its execution, the seller filed A acquired the car at A's highest bid of
ejectment cases against the squatters. The P120,000.00 during the auction sale.
buyer now sues the seller for specific
After several fruitless letters of demand
performance with damages. The defense is
against X and Y, A sued Y alone for the
that the obligation to construct the
recovery of P80.000.00 constituting the
passageway should be with a period which,
deficiency. Y resisted the suit raising the
incidentally, had not been fixed by them,
following defenses: a) That Y should not be
hence, the need for fixing a judicial period.
liable at all because X was not sued
Will the action for specific performance of
together with Y. b) That the obligation has
the buyer against the seller prosper?
been paid completely by A's acquisition of
SUGGESTED ANSWER: No. the action for the car through "dacion en pago" or
specific performance filed by the buyer is payment by cession. c) That Y should not
premature under Art. 1197 of the Civil be held liable for the deficiency of
Code. If a period has not been fixed P80,000.00 because he was not a co-
although contemplated by the parties, the mortgagor in the chattel mortgage of the
parties themselves should fix that period, car which contract was executed by X alone
failing in which, the Court may be asked to as owner and mortgagor. d) That assuming
fix it taking into consideration the probable that Y is liable, he should only pay the
contemplation of the parties. Before the proportionate sum of P40,000.00. Decide
period is fixed, an action for specific each defense with reasons.
performance is premature. It has been
SUGGESTED ANSWER: (a) This first
held in Borromeo vs. CA (47 SCRA 69), that
defense of Y is untenable. Y is still liable as
the Supreme Court allowed the
solidary debtor. The creditor may proceed
simultaneous filing of action to fix the
against any one of the solidary debtors. The
probable contemplated period of the parties
demand against one does not preclude
where none is fixed in the agreement if this
further demand against the others so long
would avoid multiplicity of suits. In addition,
as the debt is not fully paid.
technicalities must be subordinated to
substantial justice. The action for specific (b) The second defense of Y is untenable. Y
performance will not prosper. The filing of is still liable. The chattel mortgage is only
the ejectment suit by the seller was given as a security and not as payment for
precisely in compliance with his obligations the debt in case of failure to pay. Y as a
and should not, therefore, be faulted if no solidary co-maker is not relieved of further
decision has yet been reached by the Court liability on the mortgage.
on the matter.
(c) The third defense of Y is untenable. Y is
MIGUELS ANSWER: No, the action for a surety of X and the extrajudicial demand
specific performance will not prosper since against the principal debtor is not
a period has not been fixed yet. There can inconsistent with a judicial demand against
the surety. A suretyship may co-exist with a relieve it of its obligation. Is Able
mortgage. Construction entitled to the relief sought?
(d) The fourth defense of Y is untenable. Y SUGGESTED ANSWER: Yes, the Able
is liable for the entire prestation since Y Construction. Inc. is entitled to the relief
incurred a solidary obligation with X. (Arts. sought under Article 1267, Civil Code. The
1207, 1216. 1252 and 2047 Civil Code; law provides: "When the service has
Bicol Savings and Loan Associates vs. become so difficult as to be manifestly
Guinhawa 188 SCRA 642) beyond the contemplation of the parties,
the obligor may also be released therefrom,
MIGUELS ANSWER: (a) Y is wrong. The
in whole or in part."
obligation being solidary, A can demand
payment from any of the debtors at MIGUELS ANSWER: Yes, the court may
whatever amount but not exceeding that grant the relief sought by Able Construction
which is due and subject to Ys right to Inc. The Civil Code provides that the court
reimburse Xs share in the debt. may release the obligor from his
responsibility when the service has become
(b) Y is wrong. Obligation has not been
so difficult that it has gone beyond the
extinguished as there is still a deficiency of
expectations of the parties. However, the
P80,000 that X and Y must still pay A. The
intention of the parties must still prevail, it
car was merely a security provided by them
is only when the courts deem that the
to ensure A that they would pay but does
difficulty goes beyond the intention and
not equate or amount to dacion en pago or
expectation of the parties that courts may
cession which may extinguish the
intervene.
obligation.
(c) Y is wrong. Y is still a surety of X and
can still be held liable as a surety despite Bar Question (1994)
the existence of a mortgage.
Extinguishment; Loss
(d) Y is wrong. A can demand the the whole
Dino sued Ben for damages because the
P80,000 from any of the debtors the
latter had failed to deliver the antique
obligation being solidary. Y cannot be said
Marcedes Benz car Dino had purchased
to be liable for only P40,000 but for the
from Ben, which wasby agreementdue
entire amount subject to his right to get
for delivery on December 31, 1993. Ben, in
reimbursement from X of his proportionate
his answer to Dino's complaint, said Dino's
share.
claim has no basis for the suit, because as
Bar Question (1993) the car was being driven to be delivered to
Dino on January 1, 1994, a reckless truck
Extinguishment; Loss; Impossible Service
driver had rammed into the Mercedes Benz.
In 1971, Able Construction, Inc. entered The trial court dismissed Dino's complaint,
into a contract with Tropical Home saying Ben's obligation had indeed, been
Developers, Inc. whereby the former would extinguished by force majeure. Is the trial
build for the latter the houses within its court correct?
subdivision. The cost of each house, labor
SUGGESTED ANSWER: a) No. Article 1262,
and materials included, was P100,000.00.
New Civil Code provides, "An obligation
Four hundred units were to be constructed
which consists in the delivery of a
within five years. In 1973, Able found that
determinate thing shall be extinguished if it
it could no longer continue with the job due
should be lost or destroyed without the
to the increase in the price of oil and its
fault of the debtor, and before he has
derivatives and the concomitant worldwide
incurred in delay. b) The judgment of the
spiraling of prices of all commodities,
trial court is incorrect. Loss of the thing due
including basic raw materials required for
by fortuitous events or force majeure is a
the construction of the houses. The cost of
valid defense for a debtor only when the
development had risen to unanticipated
debtor has not incurred delay.
levels and to such a degree that the
Extinguishment of liability for fortuitous
conditions and factors which formed the
event requires that the debtor has not yet
original basis of the contract had been
incurred any delay. In the present case, the
totally changed. Able brought suit against
debtor was in delay when the car was
Tropical Homes praying that the Court
destroyed on January 1, 1993 since it was
due for delivery on December 31, 1993. SUGGESTED ANSWER: 1) Yes, Chito can
(Art. 1262 Civil Code) c) It depends demand payment on the 1991 promissory
whether or not Ben the seller, was already note in 1994. Although the 1978
in default at the time of the accident promissory note for P1 million payable two
because a demand for him to deliver on due years later or in 1980 became a natural
date was not complied with by him. That obligation after the lapse of ten (10) years,
fact not having been given in the problem, such natural obligation can be a valid
the trial court erred in dismissing Dino's consideration of a novated promissory note
complaint. Reason: There is default making dated in 1991 and payable two years later,
him responsible for fortuitous events or in 1993. All the elements of an implied
including the assumption of risk or loss. real novation are present: a) an old valid
obligation; b) a new valid obligation; c)
If on the other hand Ben was not in default
capacity of the parties; d) animus novandi
as no demand has been sent to him prior to
or intention to novate; and e) The old and
the accident, then we must distinguish
the new obligation should be incompatible
whether the price has been paid or not. If it
with each other on all material points
has been paid, the suit for damages should
(Article 1292). The two promissory notes
prosper but only to enable the buyer to
cannot stand together, hence, the period of
recover the price paid. It should be noted
prescription of ten (10) years has not yet
that Ben, the seller, must bear the loss on
lapsed.
the principle of res perit domino. He cannot
be held answerable for damages as the loss 2) No. The mortgage being an accessory
of the car was not imputable to his fault or contract prescribed with the loan. The
fraud. In any case, he can recover the value novation of the loan, however, did not
of the car from the party whose negligence expressly include the mortgage, hence, the
caused the accident. If no price has been mortgage is extinguished under Article
paid at all, the trial court acted correctly in
1296 of the NCC. The contract has been
dismissing the complaint. extinguished by the novation or extinction
of the principal obligation insofar as third
MIGUELS ANSWER: The trial court is
parties are concerned.
wrong. The defense of loss of the thing due
to a fortuitous event can only be used if the MIGUELS ANSWER: 1) Yes, Chino can
obligor is not yet in delay. In this case the demand payment on the 1991 promissory
car was due to be delivered on December note. The 1978 promissory note can be
31, 1993, Ben was already in delay when considered as the consideration for the new
he lost the car due to the accident, he 1991 promissory note thereby renewing the
cannot therefore use the defense loss due period of prescription starting from the
to fortuitous event. issuance of the new promissory note.
2) No, the mortgage was extinguished
when the first promissory note to which it
Bar Question (1994)
was attached prescribed. Mortgage being
Extinguishment; Novation merely an accessory contract, is
extinguished once the contract to which it
In 1978, Bobby borrowed P1,000,000 from was attached is extinguished.
Chito payable in two years. The loan, which
was evidenced by a promissory note, was
secured by a mortgage on real property. No
Bar Question (1996)
action was filed by Chito to collect the loan
or to foreclose the mortgage. But in 1991, Rescission of Contracts; Proper Party
Bobby, without receiving any amount from
In December 1985, Salvador and the Star
Chito, executed another promissory note
Semiconductor Company (SSC) executed a
which was worded exactly as the 1978
Deed of Conditional Sale wherein the
promissory note, except for the date
former agreed to sell his 2,000 square
thereof, which was the date of its execution.
meter lot in Cainta, Rizal, to the latter for
1) Can Chito demand payment on the 1991
the price of P1,000,000.00, payable
promissory note in 1994? 2) Can Chito
P100,000.00 down, and the balance 60
foreclose the real estate mortgage if Bobby
days after the squatters in the property
fails to make good his obligation under the
have been removed. If the squatters are
1991 promissory note?
not removed within six months, the
P100,000.00 down payment shall be SUGGESTED ANSWER: The telephone
returned by the vendor to the vendee, company is correct because as far as it is
Salvador filed ejectment suits against the concerned, the only person it contracted
squatters, but in spite of the decisions in his with was Baldomero. The telephone
favor, the squatters still would not leave. In company has no contract with Jose.
August, 1986, Salvador offered to return Baldomero cannot substitute Jose in his
the P100,000.00 down payment to the stead without the consent of the telephone
vendee, on the ground that he is unable to company (Art. 1293, NCC). Baldomero is,
remove the squatters on the property. SSC therefore, liable under the contract.
refused to accept the money and demanded
MIGUELS ANSWER: The telephone
that Salvador execute a deed of absolute
company is correct. The telephone company
sale of the property in its favor, at which
contracted with Baldomero, Jose is not
time it will pay the balance of the price.
included in that contract. As far as the
Incidentally, the value of the land had
telephone company is concerned, the
doubled by that time. Salvador consigned
obligation to pay the bills lies with
the P 100,000 in court, and filed an action
Baldomero regardless of whether or not he
for rescission of the deed of conditional
is the one using it. Baldomero cannot refuse
sale, plus damages. Will the action prosper?
to pay.
Explain.
SUGGESTED ANSWER: No, the action will
not prosper. The action for rescission may Bar Question (1997)
be brought only by the aggrieved party to
the contract. Since it was Salvador who Conditional Obligations; Promise
failed to comply with his conditional In two separate documents signed by him,
obligation, he is not the aggrieved party Juan Valentino "obligated" himself each to
who may file the action for rescission but Maria and to Perla, thus - 'To Maria, my true
the Star Semiconductor Company. The love, I obligate myself to give you my one
company, however, is not opting to rescind and only horse when I feel like It." - and
the contract but has chosen to waive -'To Perla, my true sweetheart, I obligate
Salvador's compliance with the condition myself to pay you the P500.00 I owe you
which it can do under Art. 1545, NCC. when I feel like it." Months passed but Juan
MIGUELS ANSWER: never bothered to make good his promises.
Maria and Perla came to consult you on
whether or not they could recover on the
basis of the foregoing settings. What would
Bar Question (1996)
your legal advice be?
Nature of Contracts; Privity of Contract
SUGGESTED ANSWER: I would advise
Baldomero leased his house with a Maria not to bother running after Juan for
telephone to Jose. The lease contract the latter to make good his promise. [This
provided that Jose shall pay for all is because a promise is not an actionable
electricity, water and telephone services in wrong that allows a party to recover
the leased premises during the period of especially when she has not suffered
the lease. Six months later. Jose damages resulting from such promise. A
surreptitiously vacated the premises. He left promise does not create an obligation on
behind unpaid telephone bills for overseas the part of Juan because it is not something
telephone calls amounting to over which arises from a contract, law, quasi-
P20,000.00. Baldomero refused to pay the contracts or quasi delicts (Art, 1157)].
said bills on the ground that Jose had Under Art. 1182, Juan's promise to Maria is
already substituted him as the customer of void because a conditional obligation
the telephone company. The latter depends upon the sole will of the obligor.
maintained that Baldomero remained as his
As regards Perla, the document is an
customer as far as their service contract
express acknowledgment of a debt, and the
was concerned, notwithstanding the lease
promise to pay what he owes her when he
contract between Baldomero and Jose. Who
feels like it is equivalent to a promise to pay
is correct, Baldomero or the telephone
when his means permits him to do so, and
company? Explain.
is deemed to be one with an indefinite
period under Art. 1180. Hence the amount
is recoverable after Perla asks the court to the solidary co-debtors are insolvent, his
set the period as provided by Art. 1197, share will be borne by his co-debtors.
par. 2.
MIGUELS ANSWER:
Bar Question (1998)
Consensual vs. Real Contracts; Kinds of
Bar Question (1998) Real Contracts
Liability; Solidary Liability Distinguish consensual from real contracts
and name at least four (4) kinds of real
Joey, Jovy and Jojo are solidary debtors
contracts under the present law.
under a loan obligation of P300,000.00
which has fallen due. The creditor has, SUGGESTED ANSWER: Consensual
however, condoned Jojo's entire share in Contracts are those which are perfected by
the debt. Since Jovy has become insolvent, mere consent (Art. 1315. Civil Code). Real
the creditor makes a demand on Joey to Contracts are those which are perfected by
pay the debt. the delivery of the object of the obligation.
(Art. 1316, Civil Code) Examples of real
1) How much, if any, may Joey be
contracts are deposit, pledge, commodatum
compelled to pay
and simple loan (mutuum).
2) To what extent, if at all, can Jojo be
MIGUELS ANSWER: Consensual contracts
compelled by Joey to contribute to such
are contracts that are perfected by mere
payment?
consent of the parties, from that moment of
SUGGESTED ANSWER: 1. Joey can be consent, the parties are already bound to
compelled to pay only the remaining fulfill the obligation agreed upon. Real
balance of P200.000, in view of the contracts on the other hand are contracts
remission of Jojo's share by the creditor. that are perfected by the delivery of the
(Art. 1219, Civil Code) object. Delivery is required for real
contracts to be valid in addition to the
2. Jojo can be compelled by Joey to presence of the other essential elements of
contribute P50.000 Art. 1217. par. 3, Civil a contract. Examples of real contracts are
Code provides. "When one of the solidary deposit, pledge, commodatum, and
debtors cannot, because of his insolvency, mutuum.
reimburse his share to the debtor paying
the obligation, such share shall be borne by
all his co-debtors, in proportion to the debt
Bar Question (1999)
of each."
Conditional Obligations; Resolutory
Since the insolvent debtor's share which
Condition
Joey paid was P100,000, and there are only
two remaining debtors - namely Joey and In 1997, Manuel bound himself to sell Eva a
Jojo - these two shall share equally the house and lot which is being rented by
burden of reimbursement. Jojo may thus be another person, if Eva passes the 1998 bar
compelled by Joey to contribute examinations. Luckily for Eva, she passed
P50.000.00. said examinations.
MIGUELS ANSWER: 1) Joey can be (a) Suppose Manuel had sold the same
compelled to pay the remaining house and lot to another before Eva passed
demandable debt of P200,000. Since the the 1998 bar examinations, is such sale
creditor has condoned Jojos entire share, valid? Why?
the creditor can only demand for the shares
(b) Assuming that it is Eva who is entitled
of Joey and Jovy. Since the obligation is
to buy said house and lot, is she entitled to
solidary, Joey can be compelled to pay for
the rentals collected by Manuel before she
the entire remaining balance after
passed the 1998 bar examinations? Why?
subtracting Jojos share.
SUGGESTED ANSWER: (a) Yes, the sale to
2) Jojo can be compelled to pay P50,000
the other person is valid. However, the
which is half of the share of Jovy, a co-
buyer acquired the property subject to a
debtor who has become insolvent. The Civil
resolutory condition of Eva passing the
Code provides that when one or more of
1998 Bar Examinations. Hence, upon Evas
passing the bar, the rights of the other MIGUELS ANSWER: The action will prosper.
buyer terminated and Eva acquired The defense of force majeure or fortuitous
ownership of the property. event can be used when there is an
unforeseen event that prevents the obligor
(b) Under Art. 1164, there is no obligation
from performing his obligation. However,
on the part of Manuel to deliver the fruits
the Civil Code provides that for it to be a
(rentals) of the thing until the obligation to
valid defense, the obligor must not be in
deliver the thing arises. As the suspensive
default. In this case, since the obligor was
condition has not been fulfilled, the
already in default, he cannot invoke the
obligation to sell does not arise.
defense of fortuitous event.
MIGUELS ANSWER: (a) The sale is valid. If
the buyer bought the house and lot in good
faith, without knowledge of the obligation of Bar Question (2000)
Manuel to Eva, the buyer need not return
Consideration; Validity
the property to Eva because he bought it in
good faith and for value. If however he was Lolita was employed in a finance company.
made aware of the agreement between Because she could not account for the funds
Manuel and Eva, he is obliged to return entrusted to her, she was charged with
such property as the ownership is subject to estafa and ordered arrested. In order to
the condition of Eva passing the bar exam. secure her release from jail, her parents
executed a promissory note to pay the
(b) No, Eva is not entitled to the rentals of
finance company the amount allegedly
the house and lot prior to her passing the
misappropriated by their daughter. The
bar examinations. The right to the fruits of
finance company then executed an affidavit
the object will only be vested upon the
of desistance which led to the withdrawal of
other party once he has the right to
the information against Lolita and her
demand for the thing that is the object of
release from jail. The parents failed to
the contract. Eva only had the right to
comply with their promissory note and the
demand for the house and lot upon the
finance company sued them for specific
happening of the condition, therefore she
performance. Will the action prosper or not?
has no right to demand for the rentals prior
to that. SUGGESTED ANSWER: The action will
prosper. The promissory note executed by
Lolita's parents is valid and binding, the
Bar Question (2000) consideration being the extinguishment of
Lolita's civil liability and not the stifling of
Loss of the thing due; Force Majeure
the criminal prosecution.
Kristina brought her diamond ring to a
MIGUELS ANSWER: The action will prosper.
jewelry shop for cleaning. The jewelry shop
The promissory note is valid and can
undertook to return the ring by February 1,
therefore give rise to a cause of action upon
1999." When the said date arrived, the
non-fulfillment. The parents failing to pay,
jewelry shop informed Kristina that the Job
the finance company can therefore sue
was not yet finished. They asked her to
them for the payment of the amount due.
return five days later. On February 6, 1999,
Kristina went to the shop to claim the ring,
but she was informed that the same was
Bar Question (2000)
stolen by a thief who entered the shop the
night before. Kristina filed an action for Conditional Obligations
damages against the jewelry shop which
put up the defense of force majeure. Will Pedro promised to give his grandson a car if
the action prosper or not? the latter will pass the bar examinations.
When his grandson passed the said
SUGGESTED ANSWER: The action will examinations, Pedro refused to give the car
prosper. Since the defendant was already in on the ground that the condition was a
default not having delivered the ring when purely potestative one. Is he correct or not?
delivery was demanded by plaintiff at due
date, the defendant is liable for the loss of SUGGESTED ANSWER: No, he is not
the thing and even when the loss was due correct. First of all, the condition is not
to force majeure. purely potestative, because it does not
depend on the sole will of one of the
parties. Secondly, even if it were, it would Bar Question (2001)
be valid because it depends on the sole will
Extinguishment; Extraordinary Inflation or
of the creditor (the donee) and not of the
Deflation
debtor (the donor).
On July 1, 1998, Brian leased an office
MIGUELS ANSWER: No, he is not correct. A
space in a building for a period of five years
potestative condition is a condition whose
at a rental rate of P1,000.00 a month. The
fulfillment is depenedent on the sole will of
contract of lease contained the proviso that
one of the parties. The condition imposed
"in case of inflation or devaluation of the
by Pedro of his grandson passing the bar is
Philippine peso, the monthly rental will
not a potestative condition, it is a mixed
automatically be increased or decreased
condition as its fulfillment is dependent on
depending on the devaluation or inflation of
chance and upon the will of the parties.
the peso to the dollar." Starting March 1,
2001, the lessor increased the rental to
P2,000 a month, on the ground of inflation
Bar Question (2000)
proven by the fact that the exchange rate
Extinguishment; Condonation of the Philippine peso to the dollar had
increased from P25.00=$1.00 to
Arturo borrowed P500,000.00 from his P50.00=$1.00. Brian refused to pay the
father. After he had paid P300,000.00, his increased rate and an action for unlawful
father died. When the administrator of his detainer was filed against him. Will the
father's estate requested payment of the action prosper? Why?
balance of P200,000.00. Arturo replied that
the same had been condoned by his father SUGGESTED ANSWER: The unlawful
as evidenced by a notation at the back of detainer action will not prosper.
his check payment for the P300,000.00 Extraordinary inflation or deflation is
reading: "In full payment of the loan". Will defined as the sharp decrease in the
this be a valid defense in an action for purchasing power of the peso. It does not
collection? necessarily refer to the exchange rate of
the peso to the dollar. Whether or not there
SUGGESTED ANSWER: It depends. If the exists an extraordinary inflation or deflation
notation "in full payment of the loan" was is for the courts to decide. There being no
written by Arturo's father, there was an showing that the purchasing power of the
implied condonation of the balance that peso had been reduced tremendously, there
discharges the obligation. In such case, the could be no inflation that would justify the
notation is an act of the father from which increase in the amount of rental to be paid.
condonation may be inferred. The Hence, Brian could refuse to pay the
condonation being implied, it need not increased rate.
comply with the formalities of a donation to
be effective. The defense of full payment MIGUELS ANSWER: The action will not
will, therefore, be valid. prosper. For the defense of inflation or
deflation to be valid, there must be an
When, however, the notation was written by official pronouncement or declaration
Arturo himself. It merely proves his
intention in making that payment but in no
way does it bind his father (Yam v. CA, G.R
Bar Question (2001)
No. 104726. 11 February 1999). In such
case, the notation was not the act of his Extinguishment; Assignment of Rights
father from which condonation may be
The sugar cane planters of Batangas
inferred. There being no condonation at all
entered into a long-term milling contract
the defense of full payment will not be
with the Central Azucarera de Don Pedro
valid.
Inc. Ten years later, the Central assigned its
MIGUELS ANSWER: It is a valid defense if rights to the said milling contract to a
the condonation was done by the father. If Taiwanese group which would take over the
the notation at the back of the check was operations of the sugar mill. The planters
written by the father then it may be filed an action to annul the said assignment
deemed an implied condonation of the on the ground that the Taiwanese group
remaining balance of the loan. was not registered with the Board of
Investments. Will the action prosper or not?
Explain briefly.
SUGGESTED ANSWER: The action will when the obligation expressly so states or
prosper not on the ground invoked but on when the law or nature of the obligation
the ground that the farmers have not given requires solidarity (Art. 1207, CC). The
their consent to the assignment. The milling contract of lease in the problem does not, in
contract imposes reciprocal obligations on any way, stipulate solidarity.
the parties. The sugar central has the
MIGUELS ANSWER: The fourth student is
obligation to mill the sugar cane of the
correct. The obligation is a joint obligation.
farmers while the latter have the obligation
When the obligation concerns multiple
to deliver their sugar cane to the sugar
debtors without stating the nature of the
central. As to the obligation to mill the
obligation of each, it is presumed that the
sugar cane, the sugar central is a debtor of
obligation is joint. There is solidary
the farmers. In assigning its rights under
obligation only when the parties intend that
the contract, the sugar central will also
the obligation be solidary. Solidary
transfer to the Taiwanese its obligation to
obligations are never presumed and must
mill the sugar cane of the farmers. This will
be specifically stated in the agreement,
amount to a novation of the contract by
otherwise, the default rule is that it is a
substituting the debtor with a third party.
joint obligation.
Under Article 1293 of the Civil Code, such
substitution cannot take effect without the
consent of the creditor. The formers, who
are creditors as far as the obligation to mill Bar Question (2002)
their sugar cane is concerned, may annul Extinguishment; Compensation
such assignment for not having their
consent thereto. Stockton is a stockholder of Core Corp. He
desires to sell his shares in Core Corp. In
MIGUELS ANSWER: The action will prosper. view of a court suit that Core Corp. has filed
The assignment should be annulled. The against him for damages in the amount of P
assignment of the rights by Central 10 million, plus attorneys fees of P 1
Azucarera to the Taiwanese group amounts million, as a result of statements published
to a novation of the contract with the by Stockton which are allegedly defamatory
substitution of the debtor. For there to be a because it was calculated to injure and
valid substitution, consent of the creditor damage the corporations reputation and
must be obtained. In this case, the consent goodwill. The articles of incorporation of
of the farmers was not obtained by the Core Corp. provide for a right of first refusal
Central Azucarera before assigning the in favor of the corporation. Accordingly,
rights to the Taiwanese group. The Stockton gave written notice to the
assignment is therefore invalid. corporation of his offer to sell his shares of
P 10 million. The response of Core corp.
was an acceptance of the offer in the
Bar Question (2001) exercise of its rights of first refusal, offering
for the purpose payment in form of
Liability; Lease; Joint Liability
compensation or set-off against the amount
Four foreign medical students rented the of damages it is claiming against him,
apartment of Thelma for a period of one exclusive of the claim for attorneys fees.
year. After one semester, three of them Stockton rejected the offer of the
returned to their home country and the corporation, arguing that compensation
fourth transferred to a boarding house. between the value of the shares and the
Thelma discovered that they left unpaid amount of damages demanded by the
telephone bills in the total amount of corporation cannot legally take effect. Is
P80,000.00. The lease contract provided Stockton correct? Give reason for your
that the lessees shall pay for the telephone answer.
services in the leased premises. Thelma
SUGGESTED ANSWER: Stockton is correct.
demanded that the fourth student pay the
There is no right of compensation between
entire amount of the unpaid telephone bills,
his price of P10 million and Core Corp.s
but the latter is willing to pay only one
unliquidated claim for damages. In order
fourth of it. Who is correct? Why?
that compensation may be proper, the two
SUGGESTED ANSWER: The fourth student debts must be liquidated and demandable.
is correct. His liability is only joint, hence, The case for the P 10million damages being
pro rata. There is solidary liability only still pending in court, the corporation has as
yet no claim which is due and demandable delivery. And the latter did not violate the
against Stockton. order agreement (Integrated Packaging
Corporation v. Court of Appeals, (333 SCRA
MIGUELS ANSWER: Stockton is correct. In
170, G.R. No. 115117, June 8, [2000]).
order for there to be a valid compensation,
one of the requisites that Art. 1279 of the Suplico cannot be held liable for damages,
Civil Code provides is that the debts be for breach of contract, as it was not he who
liquidated and demandable. In this case, violated the order agreement, but Printado.
since the claim for damages is still pending Suplico cannot be held liable for Printados
in court, the amount has not been breach of contract with Publico. He is not a
liquidated yet therefore one of the party to the agreement entered into by and
requisites for a valid compensation is between Printado and Publico. Theirs is not
lacking. a stipulation pour atrui. [Aforesaid] Such
contracts do could not affect third persons
like Suplico because of the basic civil law
Bar Question (2002) principle of relativity of contracts which
provides that contracts can only bind the
Nature of Contracts; Relativity of Contracts parties who entered into it, and it cannot
Printado is engaged in the printing favor or prejudice a third person, even if he
business. Suplico supplies printing paper to is aware of such contract and has acted
Printado pursuant to an order agreement with knowledge thereof. (Integrated
under which Suplico binds himself to deliver Packaging Corporation v. CA, supra.)
the same volume of paper every month for MIGUELS ANSWER: The contentions of
a period of 18 months, with Printado in turn Printado are unmeritorious. Printado failed
agreeing to pay within 60 days after each to comply with his obligation to pay Suplico
delivery. Suplico has been faithfully for the printing papers that Suplico has
delivering under the order agreement for 10 delivered, Suplico therefore had the right to
months but thereafter stopped doing so, stop making further delivery until Printado
because Printado has not made any complies with their obligation. Suplico
payment at all. Printado has also a standing cannot be held liable for damages as it was
contract with publisher Publico for the Printado who breached the contract
printing of 10,000 volumes of school because of their non-payment despite the
textbooks. Suplico was aware of said prior deliveries made by Suplico of the
printing contract. After printing 1,000 printing papers. Suplico cannot be held
volumes, Printado also fails to perform liable for the failure of Printado to comply
under its printing contract with Publico. with Printados obligation to Publico as
Suplico sues Printado for the value of the Suplico is not part of the contract between
unpaid deliveries under their order the prior two.
agreement. At the same time Publico sues
Printado for damages for breach of contract
with respect to their own printing
Bar Question (2003)
agreement. In the suit filed by Suplico,
Printado counters that: (a) Suplico cannot Conditional Obligations
demand payment for deliveries made under
Are the following obligations valid, why, and
their order agreement until Suplico has
if they are valid, when is the obligation
completed performance under said
demandable in each case? a) If the debtor
contract; (b) Suplico should pay damages
promises to pay as soon as he has the
for breach of contract; and (c) with Publico
means to pay; b) If the debtor promises to
should be liable for Printados breach of his
pay when he likes; c) If the debtor
contract with Publico because the order
promises to pay when he becomes a
agreement between Suplico and Printado
lawyer; d) If the debtor promises to pay if
was for the benefit of Publico. Are the
his son, who is sick with cancer, does not
contentions of Printado tenable? Explain
die within one year.
your answers as to each contention
SUGGESTED ANSWER: (a) The obligation is
SUGGESTED ANSWER: No, the contentions
valid. It is an obligation subject to an
of Printado are untenable. Printado having
indefinite period because the debtor binds
failed to pay for the printing paper covered
himself to pay when his means permit him
by the delivery invoices on time, Suplico
to do so (Article 1180, NCC). When the
has the right to cease making further
creditor knows that the debtor already has of the other four co-debtors. State the
the means to pay, he must file an action in effect of each of the above defenses put up
court to fix the period, and when the by A on his obligation to pay X, if such
definite period as set by the court arrives, defenses are found to be true.
the obligation to pay becomes demandable
SUGGESTED ANSWER: (a) A may avail the
9Article 1197, NCC)
minority of B as a defense, but only for Bs
(b) The obligation to pay when he likes share of P 10,000.00. A solidary debtor
is a suspensive condition the fulfillment of may avail himself of any defense which
which is subject to the sole will of the personally belongs to a solidary co-debtor,
debtor and, therefore the conditional but only as to the share of that co-debtor.
obligation is void. (Article 1182, NCC).
(b) A may avail of the condonation by X of
(c) The obligation is valid. It is subject to a Cs share of P 10, 000.00. A solidary debtor
suspensive condition, i.e. the future and may, in actions filed by the creditor, avail
uncertain event of his becoming a lawyer. himself of all defenses which are derived
The performance of this obligation does not from the nature of the obligation and of
depend solely on the will of the debtor but those which are personal to him or pertain
also on other factors outside the debtors to his own share. With respect to those
control which personally belong to others, he may
avail himself thereof only as regards that
(d) The obligation is valid. The death of the
part of the debt for which the latter are
son of cancer within one year is made a
responsible. (Article 1222, NCC).
negative suspensive condition to his making
the payment. The obligation is demandable (c) A may not interpose the defense of
if the son does not die within one year insolvency of D as a defense. Applying the
(Article 1185, NCC). principle of mutual guaranty among solidary
debtors, A guaranteed the payment of Ds
MIGUELS ANSWER: (a) VALID. It is an
share and of all the other co-debtors.
obligation subject to an indefinite period
Hence, A cannot avail of the defense of Ds
and is demandable upon the fixing of the
insolvency.
period by the parties or through the courts.
(d) The extension of six (6) months given
(b) VOID. The obligation is an obligation
by X to E may be availed of by A as a
subject to a potestative condition which
partial defense but only for the share of E,
according to the Civil Code are considered
there is no novation of the obligation but
void.
only an act of liberality granted to E alone.
(c) VALID. The obligation is an obligation
MIGUELS ANSWER: (a) The share of that
subject to a suspensive condition and is
co-debtor would be deducted from the total
demandable upon the occurrence of the
amount due. The minority of one of the
condition or as in this case upon him
solidary co-debtors is a valid defense and
becoming a lawyer.
would benefit his co-debtors
(d) VALID. The obligation is subject to a
(b) The part of C will be deducted from the
suspensive condition. It is demandable
total amount that is due and demandable
upon the end of 1 year if his son has not
from the remaining co-debtors.
died by then.
(c) The co-debtors would have to shoulder
the share of an insolvent co-debtor in
Bar Question (2003) proportion to their share in the debt

Liability; Solidary Obligation; Mutual (d) The extension would benefit A only as
Guaranty to the share of E. The amount that is
demandable would therefore be reduced to
A,B,C,D, and E made themselves solidarity an amount subtracting the share of E until
indebted to X for the amount of his share becomes due and demandable.
P50,000.00. When X demanded payment
from A, the latter refused to pay on the
following grounds. a) B is only 16 years old.
Bar Question (2004)
b) C has already been condoned by X c) D
is insolvent. d) E was given by X an Inexistent Contracts vs. Annullable
extension of 6 months without the consent Contracts
Distinguish briefly but clearly between Marvin will not be liable to pay Carlos any
Inexistent contracts and annullable damages for withdrawing the offer before
contracts. the lapse of the period granted. In this
case, no consideration was given by Carlos
SUGGESTED ANSWER: Inexistent
for the option given, thus there is no
Contracts are considered as not having
perfected contract of option for lack of
been entered into and, therefore, void ab
cause of obligation. Marvin cannot be held
initio. They do not create any obligation and
to have breached the contract. Thus, he
cannot be ratified or validated, as there is
cannot be held liable for damages.
no agreement to ratify or validate. On the
other hand, Annullable or Voidable MIGUELS ANSWER: The withdrawal of the
Contracts are valid until invalidated by the offer means that there can be no contract.
court but may be ratified. In inexistent A contract would only be born upon the
contracts, one or more requisites of a valid meeting of the minds of the parties and the
contract are absent. In anullable contracts, acceptance of the offer of one by the other.
all the elements of a contract are present There being no offer, acceptance cannot be
except that the consent of one of the effected thereby eliminating the possibility
contracting parties was vitiated or one of of having a contract.
them has no capacity to give consent.
b) Will your answer be the same if Carlos
MIGUELS ANSWER: Inexistent contracts paid Marvin P10,000.00 as consideration for
are contracts that have no force and effect that option? Explain.
from the beginning and which cannot be
SUGGESTED ANSWER: My answer will be
ratified by lapse of time. An annullable
the same as to the perfection of the
contract or a voidable contract on the other
contract for the construction of the house of
hand are contracts which are valid until
Carlos. No perfected contract arises
annulled. Voidable contracts are subject to
because of lack of consent. With the
ratification.
withdrawal of the offer, there could be no
concurrence of offer and acceptance.
Bar Question (2005) MIGUELS ANSWER: Yes, my answer will be
the same. Since there is no perfected
Contract of Option; Elements
contract, no obligation arises.
Marvin offered to construct the house of
c) Supposing that Carlos accepted the offer
Carlos for a very reasonable price of
before Marvin could communicate his
P900,000.00, giving the latter 10 days
withdrawal thereof? Discuss the legal
within which to accept or reject the offer.
consequences.
On the fifth day, before Carlos could make
up his mind, Marvin withdrew his offer. a) SUGGESTED ANSWER: A contract to
What is the effect of the withdrawal of construct the house of Carlos is perfected.
Marvin's offer? Contracts are perfected by mere consent
manifested by the meeting of the offer and
SUGGESTED ANSWER: The withdrawal of
the acceptance upon the thing and the
Marvin's offer will cause the offer to cease
cause which are to constitute the contract.
in law. Hence, even if subsequently
(Gomez v. Court of Appeals, G.R. No.
accepted, there could be no concurrence of
120747, September 21, 2000)
the offer and the acceptance. In the
absence of concurrence of offer and Under Article 1315 of the Civil Code, Carlos
acceptance, there can be no consent. and Marvin are bound to fulfill what has
(Laudico v. Arias Rodriguez, G.R. No. been expressly stipulated and all
16530, March 31, 1922) Without consent, consequences thereof. Under Article 1167,
there is no perfected contract for the if Marvin would refuse to construct the
construction of the house of Carlos. house, Carlos is entitled to have the
(Salonga v. Farrales, G.R. No. L-47088, July construction be done by a third person at
10, 1981) Article 1318 of the Civil Code the expense of Marvin. Marvin in that case
provides that there can be no contract will be liable for damages under Article
unless the following requisites concur: (1) 1170.
consent of the parties; (2) object certain
MIGUELS ANSWER: If the offer was
which is the subject matter of the contract;
accepted before it was withdrawn there is a
and (3) cause of the obligation.
valid contract that can be the source of (c) Does Recardo have basis under the
obligations arising from their agreements. Civil Code for claiming that the
original contract was novated?
SUGGESTED ANSWER: (a) XYZ may validly
Bar Question (2007)
assert the partial compensation of both
Obligations debts, but it should be facultative
compensation because not all of the 5
What are the obligations without an requisites of legal compensation are
agreement? Give examples of situations present. The payment of the rentals by XYZ
giving rise to this type of obligation. Bank is not yet due, but the principal
SUGGESTED ANSWER: Obligations without obligation of loan where both Eduardo and
an agreement are obligations that do not Recardo are bound solidarily and therefore
arise from contract such as those arising any of them is principally bound to pay the
from: 1) delicts 2) quasi-delicts 3) solutio entire loan, is due and demandable without
indebiti 4) negotiorum gestio and 5) all need of demand. XYZ Bank may declare its
other obligations arising from law obligation to pay rentals as already due and
demand payment from any of the two
debtors.
Bar Question (2008) (b) No, because there was no prior demand
Compensation on Ricardo, depriving him of the right to
reasonably block the foreclosure by
Eduardo was granted a loan by XYZ Bank payment. The waiver of prior demand in the
for the purpose of improving a building PN is against public policy and violates the
which XYZ leased from him. Eduardo, right to due process. Without demand,
executed the promissory note in favor of there is no default and the foreclosure is
the bank with his friend Recardo as co- null and void. Since the mortgage, insofar
signatory. In the PN, they both as Ricardo is concerned is not violated, a
acknowledged that they are individually requirement under Act 3135 for a valid
and collectively liable and waived the need foreclosure of real estate mortgage is
for prior demand. To secure the PN, absent.
Recardo executed a real estate mortgage
on his own property. When Eduardo In the case of DBP vs Licuanan, it was held
defaulted on the PN, XYZ stopped payment that: the issue of whether demand was
of rentals on the building on the ground made before the foreclosure was effected is
that legal compensation had set in since essential. If demand was made and duly
there was still a balance due on the PN received by the respondents and the latter
after applying the rentals. XYZ foreclosed still did not pay, then they were already in
the real estate mortgage over Recardos default and foreclosure was proper.
property. Recardo opposed the foreclosure However, if demand was not made, then the
on the ground that he is only a co- loans had not yet become due and
signatory; that no demand was made upon demandable. This meant that respondents
him for payment, and assuming he is liable, had not defaulted in their payment and the
his liability should not go beyond half the foreclosure was premature.
balance of the loan. Further, Recardo said (c) None of the three kinds of novation is
that when the bank invoked compensation applicable. There is no objective novation,
between the rentals and the amount of the whether express or implied, because there
loan, it amounted to a new contract or is no change in the object or principal
novation and had the effect of extinguishing
conditions of the obligation. There is no
the security since he did not give his substitution of debtors, either.
consent (as owner of the property under Compensation is considered as abbreviated
the real estate mortgage) thereto. or simplified payment and since Recardo
(a) Can XYZ Bank validly assert legal bound himself solidarily with Eduardo, any
compensation? facultative compensation which occurs does
(b) Can Recardos property be not result in partial legal subrogation.
foreclosed to pay the full balance Neither Eduardo nor Recardo is a third
of the loan? person interested in the obligation under
Art. 1302 of the Civil Code
MIGUELS ANSWER: (a) XYZ may assert (a) No, because Gustavo is guilty of
compensation. The requisites for a valid estoppel by laches. He led Felipe to
application of compensation are present in believe he could pay by cashiers
this case. XYZ and Eduardo are creditors of check, and Felipe relied that such
one another, Eduardo as to the promissory cashier check would be encashed
note that is due and XYZ as to the rentals this extinguishing his obligation.
which are also due, both debts are Because of Gustavos inaction of
demandable and both consists in debts of a more than six months the check
sum of money that is liquidated and became stale and Felipe will be
demandable. All of the requisites for prejudiced if he will be required to
compensation are present and this XYZ may pay $100 at the exchange rate
validly apply compensation in the fulfillment ofP56 to $1. The exchange should
of the debt of Eduardo to them. be the rate at the time of payment
(b) Yes, if the payment is valid. Since
(b) Recardos property may be foreclosed
the bank considered the cashiers
upon proper showing that demand was
check as being stale for not having
made upon him and he failed to pay,
been encashed on time, then the
without which foreclosure cannot be
cashiers check may be issued
effected.
again. At any rate, non-payment of
(c) None. There is no novation in this case the amount to Gustavo would
as there was no change in object, condition, constitute unjust enrichment
or debtor. (c) Yes, Felipe can compel Gustavo to
pay $100. Under RA 529, as
amended by RA 4100, Payment
Bar Question (2008) can only be in Philippine currency
as it would be against public policy,
Felipe borrowed $100 from Gustavo in null and void and of no effect.
1998, when the Phil P - US$ exchange rate However, under RA 8183, payment
was P56 - US$1. On March 1, 2008, Felipe may be made in the currency
tendered to Gustavo a cashier's check in agreed upon, and the rate of
the amount of P4,135 in payment of his exchange to be followed is at the
US$ 100 debt, based on the Phil P - US$ time of payment.
exchange rat at that time. Gustavo
accepted the check, but forgot to deposit it MIGUELS ANSWER: (a) Gustavo cannot use
until Sept. 12, 2008. His bank refused to the defense that the check was not legal
accepted the check because it had become tender because he has already accepted it.
stale. Gustavo now wants Felipe to pay him Gustavos acceptance of the check was
in cash the amount of P5,600. Claiming that tantamount to a valid payment thereby
the previous payment was not in legal extinguishing the obligation. While a check
tender, and that there has been is not legal tender, Gustavo is bound by
extraordinary deflation since 1998, and estoppel from questioning it as he accepted
therefore, Felipe should pay him the value it despite knowing such.
of the debt at the time it was incurred. (b) Yes, Felipe can refuse to pay Gustavo
Felipe refused to pay him again, claiming again. The acceptance of the payment of
that Gustavo is estopped from raising the Felipe by Gustavo effectively extinguished
issue of legal tender, having accepted the his obligation to him. Gustavo was
check in March, and that it was Gustavo's negligent in not encashing the check
negligence in not depositing the check immediately and Felipe should not be
immediately that caused the check to faulted for that.
become stale.
(c) Yes if it was the currency agreed upon
(a) Can Gustavo now raised the issue by the parties, otherwise, Felipe should pay
that the cashier's check is not legal in Philippine peso which is the legal tender
tender? in the Philippines.
(b) Can Felipe validly refuse to pay
Gustavo again? Bar Question (2008)
(c) Can Felipe compel Gustavo to
AB Corp. entered into a contract with XY
receive US$100 instead?
Corp. whereby the former agreed to
SUGGESTED ANSWER: construct the research and laboratory
facilities of the latter. Under the terms of The following are the elements of an
the contract, AB Corp. agreed to complete obligation except:
the facility in 18 months, at the total
A. Juridical/Legal Tie
contract price of P10 million. XY Corp. paid
B. Active Subject
50% of the total contract price, the balance
C. Passive Subject
to be paid upon completion of the work.
D. Consideration
The work stated immediately, but AB Corp.
later experienced work slippage because of SUGGESTED ANSWER: D. Consideration
labor unrest in his company. AB Corp.'s
employees claimed that they are not being Bar Question (2011)
paid on time; hence, the work slowdown. Upon the proposal of a third person, a new
As of the 17th month, work was only 45% debtor substituted the original debtor
completed. AB Corp. asked for extension of without the latters consent. The creditor
time, claiming that its labor problems is a accepted the substitution. Later, however,
case of fortuitous event, but this was the new debtor became insolvent and
denied by XY Corp. When it became certain defaulted in his obligation. What is the
that the contruction could not be finished effect of the new debtors default upon the
on time, XY Corp. sent written notice original debtor?
cancelling the contract, and requiring AB
Corp. to immediately vacate the premises. A. The original debtor is freed of liability
since novation took place and this relieved
(a) Can the labor unrest be considered him of his obligation.
a fortuitous event? B. The original debtor shall pay or perform
(b) Can XY Corp. unilaterally and the obligation with recourse to the new
immediately cancel the contract? debtor.
(c) Must AB Corp. return the 50% C. The original debtor remains liable since
downpayment? he gave no consent to the substitution.
SUGGESTED ANSWER: (a) Labor unrest is D. The original debtor shall pay or perform
not a fortuitous event that will excuse AB 50% of the obligation to avoid unjust
Corp. from complying with its obligation of enrichment on his part.
constructing the research and laboratory SUGGESTED ANSWER: A. The original
facilities of XY Corp. the labor unrest, which debtor is freed of liability since novation
may even be attributed in large part to AB took place and this relieved him of his
Corp. itself, is not the direct cause of non- obligation.
compliance by AB Corp. It is independent of
its obligation. It is similar to the failure of a
DBP borrower to pay her loan just because Bar Question (2011)
her plantation suffered losses due to the When bilateral contracts are vitiated with
cadang-cadang disease. It does not excuse vices of consent, they are rendered
compliance with the obligation.
A. rescissible.
(b) Yes, XY Corp. may unilaterally cancel B. void.
the obligation but this is subject to the risk C. unenforceable.
that the cancellation of the reciprocal D. voidable.
obligation being challenged in court and if SUGGESTED ANSWER: D. Voidable
AB Corp. succeeds, then XY Corp. will be
declared in default and be liable for
damages Bar Question (2011)
(c) No, under the principle of quantum An agent, authorized by a special power of
meruit, AC Corp. has the right to retain attorney to sell a land belonging to the
payment corresponding to his percentage of principal succeeded in selling the same to a
accomplishment less the amount of buyer according to the instructions given
damages suffered by XY Corp. because of the agent. The agent executed the deed of
the delay or default. absolute sale on behalf of his principal two
days after the principal died, an event that
neither the agent nor the buyer knew at the
Bar Question (2012) time of the sale. What is the standing of
Elements of an Obligation the sale?
A. Voidable. Bar Question (2011)
B. Valid. Rudolf borrowed P1 million from Rodrigo
C. Void. and Fernando who acted as solidary
D. Unenforceable. creditors. When the loan matured, Rodrigo
wrote a letter to Rudolf, demanding
SUGGESTED ANSWER: B. Valid
payment of the loan directly to him. Before
Rudolf could comply, Fernando went to see
Bar Question (2011) him personally to collect and he paid him.
Did Rudolf make a valid payment?
Contracts take effect only between the A. No, since Rudolf should have split the
parties or their assigns and heirs, except payment between Rodrigo and Fernando.
where the rights and obligations arising B. No, since Rodrigo, the other solidary
from the contract are not transmissible by creditor, already made a prior demand for
their nature, by stipulation, or by provision payment from Rudolf.
of law. In the latter case, the assigns or C. Yes, since the payment covers the whole
the heirs are not bound by the contracts. obligation.
This is known as the principle of D. Yes, since Fernando was a solidary
A. Relativity of contracts. creditor, payment to him extinguished the
B. Freedom to stipulate. obligation.
C. Mutuality of contracts. SUGGESTED ANSWER: B. No, since
D. Obligatory force of contracts Rodrigo, the other solidary creditor, already
SUGGESTED ANSWER: A. Relativity of made a prior demand for payment from
Contracts Rudolf.

Bar Question (2011)


Bar Question (2011) Allan bought Billys property through Carlos,
A buyer ordered 5,000 apples from the an agent empowered with a special power
seller at P20 per apple. The seller delivered of attorney (SPA) to sell the same. When
6,000 apples. What are the rights and Allan was ready to pay as scheduled, Billy
obligations of the buyer? called, directing Allan to pay directly to him.
A. He can accept all 6,000 apples and pay On learning of this, Carlos, Billy's agent,
the seller at P20 per apple. told Allan to pay through him as his SPA
B. He can accept all 6,000 apples and pay a provided and to protect his commission.
lesser price for the 1,000 excess apples. Faced with two claimants, Allan consigned
C. He can keep the 6,000 apples without the payment in court. Billy protested,
paying for the 1,000 excess since the seller contending that the consignation is
delivered them anyway. ineffective since no tender of payment was
D. He can cancel the whole transaction made to him. Is he correct?
since the seller violated the terms of their A. No, since consignation without tender
agreement. of payment is allowed in the face of
SUGGESTED ANSWER: A. He can accept all the conflicting claims on the plaintiff.
6,000 apples and pay the seller at P20 per B. Yes, as owner of the property sold,
apple. Billy can demand payment directly to
himself.
Bar Question (2011) C. Yes, since Allan made no
Lino entered into a contract to sell with announcement of the tender.
Ramon, undertaking to convey to the latter D. Yes, a tender of payment is required
one of the five lots he owns, without for a valid consignation.
specifying which lot it was, for the price of SUGGESTED ANSWER: A. No, since
P1 million. Later, the parties could not consignation without tender of payment is
agree which of five lots he owned Lino allowed in the face of the conflicting claims
undertook to sell to Ramon. What is the on the plaintiff.
standing of the contract?
A. Unenforceable. Bar Question (2011)
B. Voidable. X sold Y 100 sacks of rice that Y was to pick
C. Rescissible. up from Xs rice mill on a particular date. Y
D. Void did not, however, appear on the agreed
SUGGESTED ANSWER: D. Void date to take delivery of the rice. After one
week, X automatically rescinded the sale
without notarial notice to Y. Is the obligee to retain the obligors payment or
rescission valid? performance.
A. Yes, automatic rescission is allowed
since, having the character of movables and Bar Question (2011)
consumables, rice can easily deteriorate. Anne owed Bessy P1 million due on October
B. No, the buyer is entitled to a customary 1, 2011 but failed to pay her on due date.
30-day extension of his obligation to take Bessy sent a demand letter to Anne giving
delivery of the goods. her 5 days from receipt within which to pay.
C. No, since there was no express Two days after receipt of the letter, Anne
agreement regarding automatic rescission. personally offered to pay Bessy in
D. No, the seller should first determine that manager's check but the latter refused to
Y was not justified in failing to appear accept the same. The 5 days lapsed. May
SUGGESTED ANSWER: A. Yes, automatic Annes obligation be considered
rescission is allowed since, having the extinguished?
character of movables and consumables, A. Yes, since Bessys refusal of the
rice can easily deteriorate. managers check, which is presumed
funded, amounts to a satisfaction of the
Bar Question (2011) obligation.
Roy and Carlos both undertook a contract B. No, since tender of payment even in
to deliver to Sam in Manila a boat docked in cash, if refused, will not discharge the
Subic. Before they could deliver it, obligation without proper consignation in
however, the boat sank in a storm. The court.
contract provides that fortuitous event shall C. Yes, since Anne tendered payment of the
not exempt Roy and Carlos from their full amount due.
obligation. Owing to the loss of the motor D. No, since a managers check is not
boat, such obligation is deemed converted considered legal tender in the Philippines.
into one of indemnity for damages. Is the SUGGESTED ANSWER: B. No, since tender
liability of Roy and Carlos joint or solidary? of payment even in cash, if refused, will not
A. Neither solidary nor joint since they discharge the obligation without proper
cannot waive the defense of fortuitous consignation in court.
event to which they are entitled.
B. Solidary or joint upon the discretion of Bar Question (2011)
Sam. The presence of a vice of consent vitiates
C. Solidary since Roy and Carlos failed to the consent of a party in a contract and this
perform their obligation to deliver the motor renders the contract
boat. A. Rescissible.
D. Joint since the conversion of their liability B. Unenforceable.
to one of indemnity for damages made it C. Voidable.
joint. D. Void.
SUGGESTED ANSWER: D. Joint since the SUGGESTED ANSWER: C. Voidable.
conversion of their liability to one of
indemnity for damages made it joint. Bar Question (2012)
Obligation
Bar Question (2011)
A natural obligation under the New Civil It is a conduct that may consist of giving,
Code of the Philippines is one which doing, or not doing something.
A. The obligor has a moral obligation to do,
otherwise entitling the obligee to A. Obligation
damages. B. Juridical necessity
B. Refers to an obligation in writing to do C. Prestation
or not to do. D. Contract
C. The obligee may enforce through the SUGGESTED ANSWER: C. Prestation
court if violated by the obligor.
D. Cannot be judicially enforced but
authorizes the obligee to retain the obligors Bar Question (2012)
payment or performance.
SUGGESTED ANSWER: D. Cannot be Delay
judicially enforced but authorizes the
A debtor is liable for damages in case of D. The creditor is guilty of fraud,
delay if he is guilty of any of the following negligence or delay or if he
except: contravened the tenor of the
obligation
A. Default (mora)
B. Mistake SUGGESTED ANSWER: C. The thing to be
C. Negligence delivered is generic
D. Breach through contravention of the
tenor thereof
Bar Question (2012)
SUGGESTED ANSWER: B. Mistake
Solidary Obligation
Bar Question (2012)
Buko, Fermin and Toti bound themselves
Delay
solidarily liable to pay Ayee the amount of
This term refers to delay on the part of both P5,000. Suppose Buko paid the obligation,
the debtor and creditor in reciprocal what is his right as against his co-debtors
obligations
A. Buko can ask for reimbursement from
A. Mora accipendi Fermin and Toti
B. Mora solvendi B. Buko can sue Fermin and Toti for
C. Compensation morae damages
D. Solution indebiti C. Buko can sue for rescission
D. Buko can claim a refund from Ayee
SUGGESTED ANSWER: C. Compensation
morae SUGGESTED ANSWER: A. Buk can ask for
reimbursement from Fermin and Toti

Bar Question (2012)


Bar Question (2012)
Delay
Solidary Obligation
The following are requisites of mora
solvendi, except Buko, Fermin and Toti bound themselves
solidarily to pay Ayee the sum of P10,000.
A. Obligation pertains to the debtor and
When the obligation became due and
is determinate, due, demandable and
demandable, Ayee sued Buko for the
liquidated
payment of the P10,000. Buko moved to
B. Obligation was performed on its
dismiss on the ground that ther was failure
maturity date
to implead Fermin and Toti who are
C. There is a judicial or extrajudicial
indispensable parties. Will the motion to
demand by the creditor
dismiss prosper? Why?
D. Failure of the debtor to comply with
such demand A. Yes, because Fermin and Toto should
have been impleaded as their
SUGGESTED ANSWER: B. Obligation was
obligation is solidary
performed on its maturity date
B. No, because the creditor may proceed
against anyone of the solidary debtors
or some or all of them simultaneously
Bar Question (2012) C. No, because a motion to dismiss is a
Fortuitous Event prohibited pleading
D. Yes, because Fermin and Toto should
A debtor may still be held liable for loss or also pay their share of the obligation
damages even if it was caused by a
fortuitous event in any of the following SUGGESTED ANSWER: B. No, because the
instances, except: creditor may proceed against anyone of the
solidary debtors or some or all of them
A. The debtor is guilty of dolo, malice or simultaneously
bad faith, has promised the same
thing to tow or more persons who do
not have the same interest Bar Question (2012)
B. The debtor contributed to the loss
C. The thing to be delivered is generic Solidary Obligation
Buko, Fermin and Toti are solidary debtors SUGGESTED ANSWER: A. No, not yet. The
of Ayee. Twelve (12) years after the delivery of the promissory notes payable to
obligation became due and demandable, order or bills of exchange or other
Buko paid Ayee and later on asked for mercantile documents shall produce the
reimbursement of Fermins and Totis effect of payment only when they have
shares. Is Buko correct? Why? been cashed, or when through the fault of
the creditor they have been impaired.
A. No, because the obligation has
already prescribed
B. Yes, because the obligation is solidary
Bar Question (2012)
C. No, because in solidary obligation
anyone of the solidary creditors can Compensation
pay the entire debt
D. Yes, because Fermin and Toti would The following are the requisites of legal
be unduly enriched at the expense of compensation, except:
Buko A. That each of the obligors is bound
SUGGESTED ANSWER: A. No, because the principally and that he be the same
obligation has already prescribed. time a principal creditor of the other
B. That both debts consist in s asum pf
money or if the things due are
consumable, they be the same kind,
Bar Question (2012)
and also of the same quality if the
Buko, Fermin and Toti are solidary debtors latter has been stated
under a loan obligation of P300,000 which C. That the two (2) debts are not yet
has fallen due. The creditor has, however, due
condoned Fermins entire share in the debt. D. That they be liquidated and
Since Toti has become insolvent, the demandable
creditor makes a demand on Buko to pay
SUGGESTED ANSWER: C. That the two (2)
the debt. How much, if any may Buko be
debts are not yet due.
compelled to pay?
A. P 200,000
B. P 300,000 Bar Question (2012)
C. P 100,000
D. P 150,000 Contracts

SUGGESTED ANSWER: A. P 200,000 Which of the following statements are


correct?
A. All contracts are perfected by mere
Bar Question (2012) consent
B. All contracts are perfected by delivery
Payment
of the object
Dina bought a car from Jai and delivered a C. All contracts are required to be in
check in payment of the same. Has Dina writing
paid the obligation? Why? D. All contracts are required to have a
valid consideration
A. No, not yet. The delivery of the
promissory notes payable to order or SUGGESTED ANSWER: D. All contracts are
bills of exchange or other mercantile required to have a valid consideration
documents shall produce the effect of
payment only when they have been
cashed, or when through the fault of Bar Question (2012)
the creditor they have been impaired.
B. Yes, because a check is a valid legal Contracts
tender of payment. It is a principle which holds that parties are
C. It depends. If the check is a bound not only by what has been expressly
managers check or cashiers check it provided for in the contract but also to the
will produce the effect of payment. If natural consequences that flow out of such
its an ordinary check, no payment. agreement.
D. Yes, because a check is as good as
cash. A. Obligatory force of contracts
B. Mutuality of contracts The following are the ways by which
C. Autonomy of contracts innominate contracts are regulated except:
D. Relativity of contracts
A. By the stipulation of the parties
SUGGESTED ANSWER: A. Obligatory force B. By the general principles of quasi-
of contracts contracts and delicts
C. By the rules governing the most
analogous nominate contracts
Bar Question (2012) D. By the customs of the place

It is a principle which holds that contracts SUGGESTED ANSWER: B. By the general


must be binding to both parties and its principles of quasi-contracts and delicts
validity and effectivity can never be left to
the will of one of the parties
Bar Question (2012)
A. Obligatory force of contracts
B. Mutuality of contracts Contracts
C. Autonomy of contracts
The following are solemn contracts
D. Relativity of contracts
(contracts which must appear in writing),
SUGGESTED ANSWER: B. Mutuality of except:
contracts
A. Donations of real estate or of
movables if the value exceeds P5,000
B. Stipulation to pay interest in loans
Bar Question (2012)
C. Sale of land through an agent
It refers to the rule that a contract is (authority must be in writing)
binding not only between the parties but D. Construction contract of a building
extends to the heirs, successors in interest
SUGGESTED ANSWER: D. Construction
and assignees of the parties, provided that
contract of a building
the contact involved transmissible rights by
their nature or by stipulation of law.
A. Obligatory force of contracts Bar Question (2012)
B. Mutuality of contracts
Contracts
C. Autonomy of contracts
D. Relativity of contracts The following are rescissible contracts,
except:
SUGGESTED ANSWER: D. Relativity of
contracts A. Entered into by guardian whenever
ward suffers damage more that of
value of property
Bar Question (2012) B. Agreed upon in representation of
absentees, if absentee suffers lesion
Contracts
by more than value of property
It is a rule which holds that the freedom of C. Contracts where fraud is committed
parties to contract includes the freedom to on creditor (accion pauliana)
stipulate, provided the stipulations are not D. Contracts entered into by minors.
contrary to law, morals, good customs,
SUGGESTED ANSWER: D. Contracts entered
public order or public policy.
into by minors
A. Obligatory force of contracts
B. Mutuality of contracts
C. Autonomy of contracts Bar Question (2012)
D. Relativity of contracts
Contracts
SUGGESTED ANSWER: C. Autonomy of
The following are requisites before a
contracts
contract entered into in fraud of creditors
may be rescinded except:
Bar Question (2012) A. There must be credit existing prior to
the celebration of the contract
Contracts
B. There must be fraud, or at least, the If one of the parties to the contract is
intent to commit fraud to the without juridical capacity, the contract is:
prejudice of the creditor seeking
A. Voidable
rescission
B. Rescissible
C. The creditor cannot in any legal
C. Void
manner collect his credit (subsidiary
D. Unenforceable
character of rescission)
D. The object of the contract must be SUGGESTED ANSWER: C. Void
legally in the possession of a 3rd
person in good faith
SUGGESTED ANSWER: D. The object of the Bar Question (2012)
contract must be legally in the possession Contracts
of a 3rd person in good faith
When both parties to the contract are
Bar Question (2012) minors, the contract is
The following are the characteristics of a A. Voidable
voidable contract, except: B. Rescissible
A. Effective until set aside C. Void
B. May be assailed/attacked only in an D. Unenforceable
action for that purpose SUGGESTED ANSWER: D. Unenforceable
C. Can be confirmed or ratified
D. Can be assailed only by either party
SUGGESTED ANSWER: D. Can be assailed Bar Question (2012)
only by either party Contracts
When the consent of one of the parties was
Bar Question (2012) vitiated, the contract is

Void Contracts A. Voidable


B. Rescissible
The following are void contracts except: C. Void
A. Pactum commisorium D. Unenforceable
B. Pactum de non alienando SUGGESTED ANSWER: A. Voidable
C. Pactum leonine
D. Pacto de retro
SUGGESTED ANSWER: D. Pacto de retro Bar Question (2012)
Obligation

Bar Question (2012) An obligation which is based on equity and


natural law is known as
Right to the Fruits of the Thing Due
A. Pure
The creditor has the right to the fruits of B. Quasi-contract
the thing from the time: C. Civil
A. The thing is delivered D. Natural
B. The obligation to deliver the thing SUGGESTED ANSWER: D. Natural
arises
C. The contract is perfected
D. The fruits are delivered Bar Question (2012)
SUGGESTED ANSWER: B. The obligation to Contract
deliver the thing arises
Consent was given by one in representation
of another but without authority. The
Bar Question (2012) contract is:

Contracts A. Voidable
B. Rescissible
C. Void A. If Aligada refuses to deliver the land
D. Unenforceable on the agreed date despite payment
by Balane, the latter may not
SUGGESTED ANSWER: D. Unenforceable
successfully sue Aligada because the
contract is oral
B. If Aligada refused to deliver the land,
Bar Question (2012) Balane may successfully sue for
Contract fulfillment of the obligation even if he
has not tendered payment of the
Michael Fermin, without the authority of purchase price
Pascual Lacas owner of a car, sold the same C. The contract between the parties is
car in the name of Mr. Lacas to Atty. Buko. rescissible
The contract between Atty. Buko and Mr. D. The contract between the parties is
Lacas is subject to ratification by the parties
A. Void because of the absence of SUGGESTED ANSWER: D. The contract
consent from the owner, Mr. Lacas between the parties is subject to ratification
B. Valid because all the essential by the parties
requisites of a contract are present
C. Unenforceable because Michael
Fermin had no authority but he sold Bar Question (2012)
the car in the name of Mr. Lacas, the
owner Contracts
D. Rescissible because the contract
Which of the following statements is wrong?
cause lesion to Atty. Buko
A. Creditors are protected in cases of
SUGGESTED ANSWER: C. Unenforceable
contracts intended to defraud them
because Michael Fermin had no authority
B. Contracts take effect only between
but he sold the car in the name of Mr.
the parties, their assigns and heirs,
Lacas, the owner
except in case where the rights and
obligations arising from the contract
are not transmissible by their nature,
Bar Question (2012) or by stipulation or by provision of
Contracts law
C. If a contract should contain some
Which of the following contracts is void? stipulation in favor of a third person,
A. An oral sale of a parcel of land he may demand its fulfillment
B. A sale of land by an agent in a public provided he communicated his
instrument where his authority from acceptance to the obligor before its
the principal is oral revocation
C. A donation of a wrist watch worth D. In contracts creating real rights, third
P4,500 persons who come into possession of
D. A relatively simulated contract the object of the contract are not
bound thereby
SUGGESTED ANSWER: B. A sale of land by
an agent in a public instrument where his SUGGESTED ANSWER: D. In contracts
authority from the principal is oral creating real rights, third persons who come
into possession of the object of the contract
are not bound thereby
Bar Question (2012)
Oral Contracts Bar Question (2013)
Aligada orlly offered to sell his two-hectares Form of Contracts
rice land to Balane for P10 million. The offer
was orally accepted. By agreement, the and Lito obtained a loan of Php 1,000,000 from
was to be delivered (through execution of a Ferdie payable within one year. To secure
notarized deed od sale) and the price was payment, Lito executed a chattel mortgage
to be paid exactly one month from their on a Toyota Avanza and a real estate
oral agreement. Which statement is most mortgage on a 200-square meter piece of
accurate? property. (a) Would it be legally significant
from the point of view of validity and and real estate mortgages, they must
enforceability if the loan and the mortgages appear in a public instrument. But for
were in public or private instruments? (b) purposes of enforceability, it is submitted
Litos failure to pay led to the extra-judicial that the form of the contract, whether in a
foreclosure, Lito tendered a managers public of private document, would be
check to Ferdie to redeem the property. immaterial.
Ferdie refused to accept payment on the
Also, under Article 1358, acts and contracts
ground that he wanted payment in cash;
which have for their object the creation or
the check does not qualify as legal tender
transmission of real rights over immovable
and does not include the interest payment.
property must be in a public document for
Is Ferdies refusal justified?
greater efficacy and a real estate mortgage
SUGGESTED ANSWER: (a) From the point is a real right over immovable property.
of view of validity and enforceability there
(b) Ferdies refusal is justified. A check,
would be legal significance if the mortgage
whether a managers check or ordinary
was in a public or private instrument. As for
check, is not legal tender, and an offer of a
the loan, there is no legal significance
check in payment of a debt is not a valid
except if interest were charged on the loan,
tender of payment and may be refused
in which case the charging of interest must
receipt by the oblige or creditors. Mere
be in writing.
delivery of checks does not discharge the
A contract of loan is a real contract and is obligation under a judgement. A check shall
perfected upon the delivery of the object of produce the effect of payment only when
the obligation (Art. 1934, Civil Code). Thus, they have been cashed or when through the
a contract of loan is valid and enforceable fault of the creditor, they have been
even if it is nether in a private nor in a impaired (Art. 1249, Civil Code).
public document.
However, it is not necessary that the right
As a rule contracts shall be obligatory in of redemption be exercised by delivery of
whatever form they may have been entered legal tender. A check may be used for the
into provided all the essential requisites for exercise of right of redemption, the same
their validity are present. With regard to its being a right and not an obligation. The
enforceability, a contract of loan is not tender of a check is sufficient to compel
among those enumerated under Article redemption but is not in itself a payment
1403(2) of the Civil Code, which are tht relives the redeemer from his liability to
covered by the Statute of Frauds. pay the redemption price.
It is important to note that under Article Redemption within the period allowed by
1358 of the Civil Code, all other contracts law is not a matter of intent but a question
where the amount involved exceeds five of payment or valid tender of full
hundred pesos must appear in writing, even redemption price within the said period.
a private one. However, the requirement is Whether the redemption is being made
not for the validity of the contract, but only under Act 3135 or under the general
for its greater efficacy. banking law, the mortgagor or his assignee
is required to tender payment to make said
With regard the chattel mortgage, Act No.
redemption valid.
1508, the Chattel Mortgage Law, requires
an affidavit of good faith stating that the Moreover, Ferdies refusal was justified on
chattel mortgage is supposed to stand as the ground that the amount tendered does
security for the loan; thus for validity of the not include interest. In order to effect the
chattel mortgage it must be in a public redemption of the foreclosed property, the
document and recorded in the Chattel payment to the purchaser must include the
Mortgage Register in the Registry of Deeds. following sums: (a) the bid price; (b) the
A real estate mortgage under the provisions interest on the bid price, computed at one
of Article 2125 of the Civil Code requires per centum per month; and (c) the
that in order that a mortgage may be assessments or taxes, if any, paid by the
validly constituted the document in which it purchaser with the same rate of interest.
appears must be recorded. If the
MIGUELS ANSWER: (a) There would only
instrument is not recorded, the mortgage is
be legal significance if the mortgage was in
nevertheless valid and binding between the
a public or private instrument, it does not
parties. Hence for validity of both chattel
matter for the loan. A contract of loan is
valid regardless if it be in a private or public red tape hindered his efforts and he could
document. For the mortgage on the other only deliver after 30 days. Homer refused
hand, its validity would be dependent upon to accept the late delivery and to pay on
it being in a public document. the ground that the agreed term had not
been complied with. As lending investor,
(b) Ferdies refusal is justified. A check is
Gary granted a P1,000,000 loan to Isaac to
not considered as legal tender. The creditor
be paid within two years from execution of
may validly refuse to accept the debtors
the contract. As security for the loan, Isaac
offer of payment if it is payment through a
promised to deliver to Gary his Toyota
check.
Innova within seven (7) days, but Isaac
failed to do so. Gary was thus compelled to
demand payment for the loan before the
Bar Question (2013) end of the agreed two-year term. Was
Solidary Obligation Homer justified in refusing to accept the
tobacco leaves?
A, B,C and D are the solidary debtors of X
for P40,000. X released D from the A. Yes, Homer was justified in refusing
payment of his share of P10,000. When the to accept the tobacco leaves. The
obligation became due and demandable, C delivery was to be made within a
turned out to be insolvent. Should the share month. Garys promise of delivery on
of insolvent debtor C be divided only a best effort basis made the delivery
between the two other remaining debtors, A uncertain. The term therefore was
and B? ambiguous.
B. No, Homer was not justified in
A. Yes, remission of Ds share carries refusing to accept the tobacco leaves.
with it total extinguishment of his He consented to the terms and
obligation to the benefit of the conditions of the sale and must abide
solidary debtors by it. Obligations arising from
B. Yes, the Civil Code recognizes contract have the force of law
remission as a mode of extinguishing between the contracting parties.
an obligation. This clearly applies to D C. Yes, Homer was justified in his refusal
C. No, the rule is that gratuitous acts to accept the delivery. The contract
should be restrictively construed, contemplates an obligation with a
allowing only the least transmission of term. Since the delivery was made
rights. after 30 days, contrary to the terms
D. No, as the release of the share of one agreed upon, Gary could not insist
debtor would then increase the that Homer accept the tobacco
burden of other debtors without their leaves.
consent. D. No, Homer was not justified in
SUGGESTED ANSWER: D. When one of the refusing to accept the tobacco leaves.
solidary debtors cannot, because of his There was no terms in the contract
insolvency, reimburse his share to the but a mixed condition. The fulfillment
debtor paying the obligation, such share of the condition did not depend purely
shall be borne by all his co-debtors, in on Garys will but on other factors,
proportion to the debt of each. Additionally, e.g. the shipping company and the
D was released only from his share of government. Homer should comply
P10,000, not from the solidary tie that with his obligation
binds him to A, B and C. SUGGESTED ANSWER: B. It is clear
under the facts that the period of
delivery of the tobacco leaves was not
Bar Question (2013) guaranteed. Gary anticipated other
Delay factors which may prevent him from
making the delivery within a month. True
Gary is a tobacco trader and also a lending enough transportation problems and
investor. He sold tobacco leaves to Homer government redtape did. Such slight
for delivery within a month although the delay was, thus excusable. Obligations
period for delivery was not guaranteed. arising from contract have the force of
Despite Garys efforts to deliver on time, law between the contracting parties and
transportation problems and government should be complied with in good faith.
Can Gary compel Isaac to pay his loan even Dorotea to accept rental payments, the
before the end of the two-year period? lessees, Ruth et al., filed a complaint for
consignation of the rentals before the
A. Yes, Gary can compel Isaac to
Regional Trial Court (RTC) of Manila without
immediately pay the loan. Non-
notifying Dorotea. Is the consignation valid?
compliance with the promised
guaranty or security renders the SUGGESTED ANSWER: The consignation is
obligation immediately demandable. not valid. Article 1257 of the Civil Code
Isaac lost his right to make use fo the provides that in order that the consignation
period. of the thing due may release the obligor, it
B. Yes, Gary can compel Isaac to must first be announced to the persons
immediately pay the loan. The interested in the fulfillment of the
delivery of the Toyota Innova is a obligation. Moreover, Article 1258 of the
condition for the loan. Isaacs failure same code provides that consignation
to deliver the car violated the having been made, the interested parties
condition upon which the loan was shall also be notified thereof. In this case
granted. It is but fair for Gary to Dorotea, an interested party was not
demand immediate payment. notified of the consignation. The
C. No, Gary cannot compel Isaac to consignation is therefore not valid for non-
immediately pay the loan. The compliance with Article 1257.
delivery of the car as security for the
MIGUELS ANSWER: Consignation is not
loan is an accessory contract; the
valid. For consignation to be valid, there
principal contract is still the
must be intitial and subsequent notification
P1,000,000 loan. Thus, Isaac can still
given to all interested parties. In this case,
make use of the period.
Dorotea, an interested party was not
D. No, Gary cannot compel Isaac to
notified, thereby making the consignation
immediately pay the loan. Equity
invalid.
dictates that Gary should have
granted a reasonable extension of
time for Isaac to deliver his Toyota
Innova. It would be unfair and Bar Question (2014)
burdensome for Isaac to pay the Novation
P1,000,000 simply because the
promised security was not delivered. J.C. Construction (J.C.) bought steel bars
from Matibay Steel Industries (MSI) which
SUGGESTED ANSWER: A. Non- is owned by Buddy Batungbacal. J.C. failed
compliance with the promised guaranty to pay the purchased materials worth
or security renders the obligation P500,000 on due date. J.C. persuaded its
immediately demandable. Isaac lost his client Amoroso with whom it had
right to make use of the period. Under receivables to pay its obligation to MSI.
Article 1198(2) of the Civil Code, the Amoroso agreed and paid MSI the amount
debtor shall lose every right to make use of P50,000. After two (2) other payments,
of the period when he does not furnish Amoroso stopped making further payments.
to the creditor the guaranties and Buddy filed a complaint for collection of the
securities which he has promised. balance of the obligation and damages
against J.C. J.C. denied any liability
claiming that its obligation was
Bar Question (2014) extinguished by reason of novation which
took place when MSI accepted partial
Consignation
payments from Amoroso on its behalf. Was
Dorotea leased portions of her 2,000 sq.m the obligation of J.C. Construction to MSI
lot to Monet, Kathy, Celai and Ruth for five extinguished by novation? Why?
(5) years. Two (2) years before the
SUGGESTED ANSWER: No, the obligation of
expiration of the lease contract, Dorotea
J.C. Construction to MSI was not
sold the property to PM Realty and
extinguished by novation. Under Article
Development Corporation. The following
1292 of the Civil Code, in order that an
month, Dorotea and PM Realty stopped
obligation may be extinguished by another
accepting rental payments from all the
which substitute the same, it is imperative
lessees because they wanted to terminate
that it be so declared in unequivocal terms,
the lease contracts. Due to the refusal of
or that the old and the new obligation be on if a person obliged to do something fails to
every point incompatible with each other. do it, the same shall be executed at his
Novation by substitution of debtor requires cost. In this case, X failed to do his
the consent of the creditor as provided in obligation of making the dresses of Karla,
Article 1923 of the Civil Code. This therefore the obligation must be executed
requirement is not present as in this case. at his cost. Furthermore, X cannot use the
In Magdalena Estates Inc. v Rodriguez it defense of fortuitous event as X is already
was ruled that the mere fact that the in delay, according to Article 1165 of the
creditor received payment from a third Civil Code, if the obligor delays, he shall be
person does not constitute novation and responsible for fortuitous event until he has
does not extinguish the obligation of the effected delivery.
original debtor. Since there was no
novation, the obligation of the original
debtor is not extinguished. Thus the Bar Question (2015)
obligation of J.C. Construction to MSI
subsists. Requisites to a Contract: Consent

MIGUELS ANSWER: The obligation of JC Jackie, 16, inherited a townhouse. Because


Construction to MSI was not extinguished. she wanted to study in an exclusive school,
For there to be novation by substitution of she sold her townhouse by signing a Deed
the debtor, the consent of the creditor must of Sale and turning over possession of the
be taken. The mere fact that MSI received same to the buyer. When the buyer
payment from Amoroso does not discovered that she was still a minor, she
necessarily imply that there was promised to execute another Deed of Sale
substitution. when she turns 18. When Jackie turned 25
and was already working, she wanted to
annul the sale and return the buyer's
money to recover her townhouse. Was the
Bar Question (2015)
sale contract void, voidable or valid? Can
Fortuitous Event Jackie still recover the property? Explain.
X, a dressmaker, accepted clothing SUGGESTED ANSWER: The contract of sale
materials from Karla to make two dresses is voidable. Where one of the parties is
for her. On the day X was supposed to incapable of giving consent to a contract,
deliver Karla's dresses, X called up Karla to the contract is voidable. (Art. 1390, Civil
say that she had an urgent matter to attend Code.) It appears that only Jackie was
to and will deliver them the next day. That incapacitated by virtue of her minority.
night, however, a robber broke into her
Jackie cannot recover the property. First,
shop and took everything including Karla's
since the contract is voidable, Jackie only
two dresses. X claims she is not liable to
had 4 years from the time she attained the
deliver Karla's dresses or to pay for the
age of majority to bring the action for
clothing materials considering she herself
annulment of the contract (Art. 1391, Civil
was a victim of the robbery which was a
Code). In this case, Jackie should have
fortuitous event and over which she had no
brought the action for annulment of the
control. Do you agree? Why?
contract within four years after turning
SUGGESTED ANSWER: No, I do not agree. eighteen years old, or up until the age of
The obligation involved in this case is an twenty-two. Since she is already 25 years
obligation to do, since Xs obligation is to old. the period for bringing the action has
make dresses for Karla. Under Article 1167 prescribed. Second, Jackie may he
of the Civil Code, if a person obliged to do considered to have actively misrepresented
something fails to do it, the same shall be as to her age. Thus, she will be bound to
executed at his cost. Although X may not be the contract under the principle of estoppel.
compelled to deliver the dresses to Karla,
MIGUELS ANSWER: The contract is
she may he held liable for the cost of
voidable. Since Jackie was only sixteen
having another person to make the dresses
when she entered into the contract, she
for Karla, which including the cost of the
was still incapable of giving her consent
materials.
thereby making the contract voidable for
MIGUELS ANSWER: No, I do not agree. lack of one of the essential requisites of a
Article 1167 of the Civil Code provides that valid contract.
Jackie cannot recover the property anymore when the law or the nature of the obligation
because the action has already prescribed. requires solidarity (Art. 1207, Civil Code).
Jackie has 4 years upon reaching the age of In this case, there is no indication that they
majority to bring an action to annul the bound themselves solidarity to pay Cita, nor
contract. More than 4 years had already does the law or nature of the obligation
passed, action has therefore prescribed. require solidarity. Hence, Juancho, Don and
Pedros obligation is joint, and Cita can only
demand payment of 1/3 of the obligation
Bar Exam Question (2015) from Pedro, which is presumed to be his
share in the obligation in the absence of
Remission of Obligation stipulation to the contrary (Art. 1208, Civil
lya and Betty owed Jun P500,000 for Code).
advancing their equity in a corporation they MIGUELS ANSWER: No, Cita may not
joined as incorporators. Iya and Betty demand payment of the entire amount from
bound themselves solidarity liable for the just one of the debtors. Solidary liability is
debt. Later, Iya and Jun became never presumed. For the obligation to be
sweethearts so Jun condoned the debt of considered solidary it must be expressly
P500,000 May lya demand from Betty specified in the agreement. There being no
P250,000 as her share in the debt? Explain specification as to the nature of the liability
with legal basis. of the debtors, it is presumed that there be
SUGGESTED ANSWER: No, lya may not joint liability. Cita can therefore only
demand reimbursement from Betty. The demand an amount that is in proportion to
remission of the whole obligation, obtained the debt of each of the co-debtor.
by one of the solidary debtors, does not
entitle him or her to reimbursement from
his co-debtors (Art. 1220, Civil Code). Bar Question (2015)

MIGUELS ANSWER: No, the condonation of Delay and Solution Indebiti


the entire debt in favor of one of the
Sara borrowed P50,000 from Julia and
creditor has the effect of extinguishing the
orally promised to pay it within six months.
whole debt to the benefit of his co-debtors.
When Sara tried to pay her debt on the 8th
month, Julia demanded the pavment of
interest of 12% per annum because of
Bar Exam Question (2015) Saras delay in payment. Sara paid her debt
Joint and Solidary Obligations and the interest claimed by Julia. After
rethinking, Sara demanded back from Julia
Juancho, Don and Pedro borrowed the amount she had paid as interest. Julia
P150,000 from their friend Cita to put up an claims she has no obligation to return the
internet cafe orally promising to pay her the interest paid by Sara because it was a
full amount after one year. Because of their natural obligation which Sara voluntarily
lack of business know-how, their business performed and can no longer recover. Do
collapsed. Juancho and Don ended up you agree? Explain.
penniless but Pedro was able to borrow
money and put up a restaurant which did SUGGESTED ANSWER: No, I do not agree
well. Can Cita demand that Pedro pay the with Julia. For a creditor to be entitled to
entire obligation since he, together with the compensatory interest, the debtor must be
two others, promised to pay the amount in in delay. As a rule, in order for delay to
full after one year? Defend your answer. exist, demand must have been made. In
this case, there was no demand made upon
SUGGESTED ANSWER: No, Cita may not the expiration of the 6-month period; thus,
demand payment of the entire obligation Sara cannot be considered in delay, and is
from Pedro. The concurrence of two or not liable to pay compensatory interest.
more creditors or of two or more debtors in There being no obligation to pay
one and the same obligation does not imply compensatory interest, Julia must return
that each one of the former has a right to the interest mistakenly paid since she was
demand, or that each one of the latter is not entitled thereto, and delivery was made
bound to render, entire compliance with the merely through mistake. If something is
prestation. There is a solidary liability only received when there is no right to demand
when the obligation expressly so states, or it, and it was unduly delivered through
mistake, the obligation to return it arises SUGGESTED ANSWER: NO SUGGESTED
(Art. 2154, Civil Code). ANSWER FROM REPUTABLE SOURCE
AVAILABLE YET
MIGUELS ANSWER: No, I do not agree.
Julia must return the amount paid by Sara MIGUELS ANSWER: Yes, the obligation is
as interest as not doing so would amount to extinguished by reason of dacion en pago.
unjust enrichment. For interest to accrue, There is dacion en pago when the debtor
the debtor must be in delay, and for there alienates property in favor of the creditor,
to be delay, there must be demand. In this with the constn of the latter to satisfy
case, there was no demand made by Julia monetary obligation. In this case, Butch
against Sara, therefore Sara was not in alienated his SUVs in favor of Hagibis
delay and is not required to pay for the Corporation and such was credited as
interest. The interest must be returned to payment for the loan that he owes the
Sara. corporation. It is presumed that the loan is
equivalent to the SUVs as Hagibis and
Butch had agreed to this arrangement
Bar Question (2015) already.

Civil and Natural Obligations


Distinguish civil and natural obligations. Bar Question (2016)

SUGGESTED ANSWER: Civil obligations give Novation


a right of action to compel their
Jerico, the project owner, entered into a
performance. Natural obligations, not being
Construction Contract with Ivan for the
based on positive law but on equity and
latter to construct his house. Jojo executed
natural law, do not grant a right of action to
a Surety undertaking to guarantee the
enforce their performance, but after
performance of the work by Ivan. Jerico
voluntary fulfillment by the obligor, they
and Ivan later entered into a Memorandum
authorize the retention of what has been
of Agreement (MOA) revising the work
delivered or rendered by reason thereof
schedule of Ivan and the subcontractors.
(Art. 1423, Civil Code).
The MOA stated that all the stipulations of
MIGUELS ANSWER: Civil obligations are the original contract not in conflict with said
obligations that can be enforced through a agreement shall remain valid and legally
civil suit, it is an obligation which gives rise effective. Jojo filed a suit to declare him
to a cause of action. Natural obligations on relieved of his undertaking as a result of the
the other hand are obligations do not grant MOA because of the change in the work
a cause of action, it is an obligation that is schedule. Jerico claims there is no novation
merely based on equity. of the Construction Contract. Decide the
case and explain.
SUGGESTED ANSWER: NO SUGGESTED
Bar Question (2016) ANSWER FROM REPUTABLE SOURCE
Dacion en pago AVAILABLE YET

Butch got a loan from Hagibis Corporation MIGUELS ANSWER: Jerico is correct. There
(Hagibis) but he defaulted in the payment. is no novation. Novation exists when there
A case for collection of a sum of money was is a change in the object, condition or
filed against him. As a defense, Butch debtor or when the terms of the old
claims that there was already an contract and the new contract are
arrangement with Hagibis on the payment incompatible and incapable of being
of the loan. To implement the same, Butch reconciled. In this cae, the mere change in
already surrendered five (5) service utility the work schedule does not render the old
vehicles (SUVs) to the company for it to sell contract incompatible with the new contract
and the proceeds to be credited to the loan and does not change the object of the
as payment. Was the obligation of Butch contract which is still to construct Jericos
extinguished by reason of dacion en pago house
upon the surrender of the SUVs? Decide
and explain.