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Obligations and Contracts - Finals

This are the reconstructed questions asked in my final exams in OBLICON under Atty. Jose Ortiz, Jr.


A, B, C, D and E agreed to be solidarily indebted to X in the amount of P50,000. X demanded payment from A. A
rejected the payment on the grounds of:

a. B was 15 years old at the time of the perfection of the contract

b. C debt was condoned by X
c. D was insane at the time of the perfection of the contract
d. E debt was extended by X for 6 months without the consent of his co-debtors

Give the effect of the following defenses of A, if they were found to be true.


Sabit owed Patong P10,000. It was agreed that Sabit may give his typewriter, his refrigerator or his ring in
December 1, 2001 to satisfy the debt. It was expressly stated that Sabit may give it in lieu of the P10,000. In March
1, 2001, typewriter was deliberately destroyed by Sabit. In April 1, 2001, the refrigerator was destroyed by fire. In
November 1, 2001, armed robbers stole the ring. Sabit claims the obligation is extinguished. Decide.


Erap and GMA are close friends. In view of their friendship, GMA owe Erap P1 million payable “when her means
permit.” The friendship grew sour, and Erap wanted to demand payment.

As legal counsel, what remedy would you advise Erap?


Pedro sent as telegram to Maria, March 1, 2001, which is an offer to buy a land for P100,000. It was received by
Maria on March 2 at 1:00 PM. She sent her acceptance to Pedro and was received at 5:00 PM. But at 2:00 PM,
Pedro withdrew his offer, sent it via telegram, and was received 4:00 PM. Decide.


Lana Puri owns a house at Q.C. and rents it to Dina Virginia, without written contract for 2 years at P8,000/month.
In January 1, 2001, Lana offered to sell the leased premises orally to Dina for P10 million, within 90 days from
January 1, 2001. Dina gave P100 as option money.

Before the end of the 90 day period, Dina went to Lana to purchase the said premises. But Lana did not want to
sell the said property on ground that Mann Y. Akiss had offered t purchase the leased premises for P15 million.
Dina sued to compel Lana to accept the money and execute the necessary deed of sale. Lana alleged the following:

a. That there was no perfected contract of sale.

b. That the option is unenforceable under Article 1403 of the Civil Code.
c. That the option money is insufficient.
1. A made a promisory note in favor of B. The instrument was not dated. What kind of obligation
does A have?
a. Pure Obligation
b. Conditional Obligation
c. Obligation without a period
d. Indivisible Obligation

2. A and B made a promisory note in favor of B. The body of the instrument read:
“I oblige myself to pay P1,000,000.00 to B on or before September 15, 2015.”
What kind of obligation is present above?
a. Divisible Obligation
b. Joint Obligation
c. Solidary Obligation
d. Obligation with a period
e. Conditional Obligation
f. A, B & E
g. A, B & D
h. B, C & D

3. X, Y, and Z bound themselves individually and collectively to give a house to A on December 15,
2015. The house is worth P5,000,000.00. Prior the arrival of the period, Z became insolvent. What
are the remedies of A against the debtors?
a. Rescission
b. Action for Damages
c. Specific performance
d. Action for Attachment
e. All of the above
f. None of the above
g. A or C

4. A and B bound themselves solidarily to deliver a motor cycle to C with chasy no. 12345 on or
before September 9, 2014. One year after the arrival of the period, the motorcycle was destroyed due
to a powerful cyclone. Are A and B liable for damages to C?
a. Yes because they are already in delay.
b. No because they are not yet in delay.
c. Yes because the loss was due to their fault.
d. No because the loss was without their fault.
e. A & C
f. B & D
5. A and B bound themselves solidarily to C under the following terms and conditions:
1. A will pay P15,000.00 to C on August 30, 2015.
2. B will pay P30,000.00 to C on December 30, 2016.
Their agreement was reduced into writing.
On January 1, 2025 C demanded for the payment of the entire P45,000.00 from A. But A refused to
pay, arguing that C already slept on his right to collect the debt.
Is A correct in refusing to pay?
a. No because prescription is not one of the valid defenses in a solidary obligation.
b. Yes because prescription is one of the defenses avaliable to a solidary debtor.
c. No because the right did not yet prescribe.
d. Yes because even if the right did not yet prescribe, applying principles of equity and fairness, C can
no longer demand because he already slept on his rights.
Sample Questions:

1. Dux leased his house to Iris for a period of two years, at the rate of P25,000.00 monthly, payable annually in
advance. The contract stipulated that it may be renewed for another two-year period upon mutual agreement of the
parties. The contract also granted Iris the right of first refusal to purchase the property at any time during the lease, if
Dux decides to sell the property at the same price that the property is offered for sale to a third party. Twenty-three
months after execution of the lease contract, Dux sold breach of her right of first refusal. Dux said there was no
breach because the property was sold to his mother who is not a third party. Iris filed an action to rescind the sale and
to compel Dux to sell the property to her at the same price. Alternatively, she asked the court to extend the lease for
another two years on the same terms.
a.) Can Iris seek rescission of the sale of the property to Dux's mother?
b.) Will the alternative prayer for extension of the lease prosper? (Bar Question)

2. AB Corp. entered into a contract with XY Corp. whereby the former agreed to construct the research and
laboratory facilities of the latter. Under the terms of the contract, AB Corp. agreed to complete the facility in 18
months, at the total contract price of P10 million. XY Corp. paid 50% of the total contract price, the balance to be paid
upon completion of the work. The work started immediately, but AB Corp. later experienced work slippage because of
labor unrest in its company. AB Corp.'s employees claimed that they are not being paid on time; hence, the work
slowdown. As of the 17th month, work was only 45% completed. AB Corp. asked for extension of time, claiming that
its labor problems is a case of fortuitous event, but this was denied by XY Corp. When it became certain that the
construction could not be finished on time, XY Corp. sent written notice cancelling the contract, and requiring AB
Corp. to immediately vacate the premises.
a.) Can the labor unrest be considered a fortuitous event?
b.) Can XY Corp. unilaterally and immediately cancel the contract? (Bar Question)

3. On January 15, 2010, D borrowed P10,000 from C and executed a promissory note whereby he obligated himself
to pay the said amount "as soon as possible." C is presently in need of money and has consulted you on the legal
steps he should take to be able to collect from D since the latter has refused to pay, saying that "it is not yet
possible" for him to pay the debt. What advice will you give C?

4. A obligated himself to deliver a particular cow to B. It was agreed that the cow would be delivered on Jan. 1, 2010.
On Jan. 6, 2010, while A was taking the cow to B, the animal was struck by a passenger bus owned by X Co. and
driven by D, as a result of which the cow died. A passenger on the bus, C, was also injured. It was ascertained that
the cause of the accident was a defect in the steering knuckle of the bus, which caused the driver to lose control of
the vehicle.
a.) B has sued A for damages for failure to deliver the cow. Will the action prosper?
b.) C has also sued X Co. for damages for the injuries he sustained. Will the action prosper? Why?
5. On January 1, 1985, A, B, and C, solidary debtors, obligated themselves to pay X and Y, solidary creditors, the
amount of P12,000. It was ascertained that the debt would be paid on January 5, 1988. On February 3, 1986,
however, X, acting alone and without the knowledge of Y, agreed with A that the amount of debt will be reduced to
P9,000 and that the payment will be made on March 7, 1994. Y demanded payment of P12,000 from B on January 5,
1988 and, when the latter failed to pay, sued him. How much, if any, can Y legally collect from B as of January 5,

6. A, B, C, D, and E, solidary debtors owe the following due and demandable debts to X, Y, and Z, solidary creditors.
(a) P500,000 + 10% interest
(b) P1,000,000 + 10% interest
(c) P2,500,000 + 10% interest
(d) P3,000,000 secured by a real estate
(e) P4,000,000 + 10 % interest
(f) P750,000 + 20% interest; and
(g) P250,000 + 10% interest

Of the total amount of debt due and demandable, A's obligation consists of 16% of the total amount; B's share is 8%;
C is 25%; D is also 16%; and the remaining is the obligation of E. The proportionate shares of the creditors are - X-
40%; Y-30%; and Z-30%.

When Y demanded from A payment of the entire obligation, the latter paid only P6,000,000. Hence, Y went to E who
paid only P3,000,000. After those payments were made, B and C became insolvent making it financially impossible
for them to reimburse A and E.

a.) Assuming there was no prior agreement among the debtors and creditors on the manner the said payments were
to be applied, how should application of payments be made?
b.) Assuming the debtors do not exercise their rights to choose as to how to apply the payments and the creditors do
not propose, how should application of payments be effected?
c.) Since B and C are now insolvent, how much can A collect from D and B?
d.) How much should X give to Y and Z? How much should Y give to X and Z?
e.) Can A and E extinguish their obligation to each other by compensation? How about X and Y?

7. Lorna Tolentino filed a complaint against Regal Films to recover P250,000 representing the balance of her
compensation as leading actress in a motion picture produced by the company. The lower court dismissed the
complaint because the claim of Lorna Tolentino was not evidenced by any written document, either public or private
in violation of Article 1358 of the New Civil Code. Was the ruling correct?

8. A taxi cab owned by Lester and driven by Johnny collided with another taxi cab also owned by Lester driven by
Pedro. As a consequence of the accident Korina, a passenger in the cab driven by Johnny was seriously injured;
while a pedestrian, Mary, a wife and mother of three children was killed.
a.) May Lester, Johnny, and Pedro be held liable for the injuries sustained and for the death of Mary?
b.) In a "Yes" answer above, if Johnny and Pedro cannot pay the damages, may Lester be held accountable for
whatever amount his drivers are liable for?

9. X borrowed money from Y with a stipulation that the amount shall earn interest at 5% per month, and a penalty of
4% per month in case of default. X defrauded; hence, Y demanded the performance of the obligation. X interposed
the defense that the penalty imposed in the contract is excessive and iniquitous. Hence, the court must reduce it.
Is the defensce proper?

10. A borrower agreed to pay his debt in 60 days, and in case of non-payment to render free service as
driver/servant. When due date came, borrower refused to render free service. Decide the case.