This is a thirty (30) item take home exercise.

Most of the questions that follow are familiar

questions in Credit Transaction being part of Civil Law.
Some relates to obligations and contracts, sales, and
negotiable instruments, but that is how questions are framed
as these topics are all grafted into one subject.

Your answers should be based on the latest laws,

amendments, and jurisprudence if any.

I will not give you hard time by not requiring that

your answers should be hand written and converted thereafter
to photo or PDF file given the difficulty for document
scanner and huge data size thereafter. So no need for that.
Just read, analyze the questions, and do your research. Work
as a group. Coordinate. Discuss with each other and validate
your answer.

Encode your answers below the given questions and cite

your reference. Except for the reference, your answer to
each question should be presented in such a manner as if
taking the bar examination.

Do not copy - paste. That as an insult to your

brilliance, to yourself, and to your group.

Your merits will be based on correctness, briefness of

explanation, and completeness.

Here you go.

1. X Corp entered into a contract with Y Corp for the construction of the latter’s
warehouse. In consideration thereof, Y Corp was obliged to pay X Corp the
amount of P50,000,000.00 within a period of one (1) month from the time of the
project’s completion. To secure the payment of the said sum, D Inc. entered into a
surety agreement with S Company.

After more than a month from the completion date of the project, C Corp
remained unpaid. Claiming that it was suffering from serious financial reverses, D
In.c, asked C Corp. for an extension of three (3) months to pay the P50,000,000.00
it still owed , to which C Corp. agreed. However, after more than three (3) months,
D Inc. still refused to pay. Hence, C Corp. proceeded to collect the above sum
from the surety, S Company.

For its part, S Company refused the claim and raiosed the defense that the
extension of time granted by C Corp. to D, Inc., without its consent released it
from liability.

a. Will the defense of S Company against the claim hold water?

Page 1 of 7 Take Home Exercises - Credits

 b. Assuming that S Company instead refused the claim on the ground that
C Corp. has yet to exhaust D, Inc.’s property to satisfy the claim before
proceedings against it, will this defense prosper?

2. Saachi opened a savings bank account with Shanghainese Bank. He made an

initial deposit of PhP100,000. Part of the bank opening forms that he was required
to sign when he opened the account was a Holdout Agreement which provided
that, should he incur any liability or obligation to the bank, the bank shall have the
right to immediately and automatically take over his savings account deposit.
After he opened his deposit account, the Shanghainese Bank discovered a scam
wherein the funds in the account of another depositor in the bank was withdrawn
by an impostor. Shanghainese Bank suspected Saachi to be. the impostor, and filed
a criminal case of estafa against him. While the case was still pending with the
Prosecutor's office, the bank took over Saachi's savings deposit on the basis of the
Holdout Agreement.

a. What kind of contract is created when a depositor opens a deposit

account with a bank?
b. In this case, did the bank have the right to take over Saachi's bank
deposit?

3. Sebastian, who has a pending assessment from the Bureau of Internal Revenue
(BIR), was required to post a bond. He entered into an agreement with Solid
Surety Company (SSC) for SSC to issue a bond in favor of the BIR to secure
payment of his taxes, if found to be due. In consideration of the issuance of the
bond, he executed an Indemnity Agreement with SSC whereby he agreed to
indemnify the latter in the event that he was found liable to pay the tax. The BIR
eventually decided against Sebastian, and judicially commenced action against
both Sebastian and SSC to recover Sebastian's unpaid taxes. Simultaneously, BIR
also initiated action to foreclose on the bond. Even before paying the BIR, SSC
sought indemnity from Sebastian on the basis of the Indemnity Agreement.
Sebastian refused to pay since SSC had not paid the BIR anything yet, and alleged
that the provision in the Indemnity Agreement which allowed SSC to recover from
him, by mere demand, even if it (SSC) had not yet paid the creditor, was void for
being contrary to law and public policy. Can Sebastian legally refuse to pay SSC?

4. Simeon was returning to Manila after spending a weekend with his parents in
Sariaya, Quezon. He boarded a bus operated by the Sabbit Bus Line (SBL) on
August 30, 2013. In the middle of the journey, the bus collided with a truck
coming from the opposite direction, which was overtaking the vehicle in front of
the truck. Though the driver of the SBL bus tried to avoid the truck, a mishap
occurred as the truck hit the left side of the bus. As a result of the accident, Simeon
suffered a fractured leg and was unable to report for work for one week. He sued
SBL for actual and moral damages. SBL raised the defense that it was the driver of
the truck who was at fault, and that it exercised the diligence of a good father of a
family in the selection and supervision of its driver.
a. Is SBL liable for actual damages? Moral damages?
b. Will SBL be liable to pay interest if it is required to pay damages, and
delays in the payment of the judgment award? What is the rate of
interest, and from when should the interest start running?

Page 2 of 7 Take Home Exercises - Credits

 5. Zeny and Nolan were best friends for a long time already. Zeny borrowed
₱10,000.00 from Nolan, evidenced by a promissory note whereby Zeny promised
to pay the loan "once his means permit." Two months later, they had a quarrel that
broke their long-standing friendship.

Nolan seeks your advice on how to collect from Zeny despite the tenor of
the promissory note. What will your advice be? Explain your answer.

6. Kevin signed a loan agreement with ABC Bank. To secure payment, Kevin
requested his girlfriend Rosella to execute a document entitled "Continuing
Guaranty Agreement" whereby she expressly agreed to be solidarily liable for the
obligation of Kevin.

Can ABC Bank proceed directly against Rosella upon Kevin's default even
without proceeding against Kevin first? Explain your answer.

7. With regard to an award of interest in the concept of actual and compensatory

damages, please state the guidelines regarding the manner of computing legal
interest in the following situations:
a. When the obligation is breached and it consists in the payment of a sum of
money like a loan or forbearance of money;
b. When the obligation does not constitute a loan or forbearance of money.

8. On March 13, 2008, Ariel entered into a Deed of Absolute Sale (DAS) with Noel
where the former sold his titled lot in Quezon City with an area of three hundred
(300) square meters to the latter for the price of P300,000.00. The prevailing
market value of the lot was P3,000.00 per square meter. On March 20, 2008, they
executed another "Agreement To Buy Back/Redeem Property" where Ariel was
given an option to repurchase the property on or before March 20, 2010 for the
same price. Ariel, however, remained in actual possession of the lot. Since Noel
did not pay the taxes, Ariel paid the real property taxes to avoid a delinquency
sale.

On March 21, 2010, Ariel sent a letter to Noel, attaching thereto a

manager's check for P300,000.00 manifesting that he is redeeming the property.
Noel rejected the redemption claiming that the DAS was a true and valid sale
representing the true intent of the parties. Ariel filed a suit for the nullification of
the DAS or the reformation of said agreement to that of a Loan with Real Estate
Mortgage. He claims the DAS and the redemption agreement constitute an
equitable mortgage. Noel however claims it is a valid sale with pacto de retro and
Ariel clearly failed to redeem the property.

As the RTC judge, decide the case with reasons.

9. Iya and Betty owed Jun P500,000.00 for advancing their equity in a corporation
they joined as incorporators. Iya and Betty bound themselves solidarily liable for
the debt. Later, Iya and Jun became sweethearts so Jun condoned the debt of
P500,000.00. May lya demand from Betty P250,000.00 as her share in the debt?
Explain with legal basis.

Page 3 of 7 Take Home Exercises - Credits

 10. Juancho, Don and Pedro borrowed P150,000.00 from their friend Cita to put up an
internet cafe orally promising to pay her the full amount after one year. Because of
their lack of business know-how, their business collapsed. Juancho and Don ended
up penniless but Pedro was able to borrow money and put up a restaurant which
did well. Can Cita demand that Pedro pay the entire obligation since he, together
with the two others, promised to pay the amount in full after one year? Defend
your answer.

11. Sara borrowed P50,000.00 from Julia and orally promised to pay it within six
months. When Sara tried to pay her debt on the 8th month, Julia demanded the
payment of interest of 12o/o per annum because of Sara's delay in payment. Sara
paid her debt and the interest claimed by Julia. After rethinking, Sara demanded
back from Julia the amount she had paid as interest. Julia claims she has no
obligation to return the interest paid by Sara because it was a natural obligation
which Sara voluntarily performed and can no longer recover. Do you agree?
Explain.

12. Donna pledged a set of diamond ring and earrings to Jane for P200,000.00 She
was made to sign an agreement that if she cannot pay her debt within six months,
Jane could immediately appropriate the jewelry for herself. After six months,
Donna failed to pay. Jane then displayed the earrings and ring set in her jewelry
shop located in a mall. A buyer, Juana, bought the jewelry set for P300,000.00.

a. Was the agreement which Donna signed with Jane valid? Explain with
legal basis.
b. Can Donna redeem the jewelry set from Juana by paying the amount she
owed Jane to Juana? Explain with legal basis.
c. Give an example of a pledge created by operation of law.

13. Due to the continuous heavy rainfall, the major streets in Manila became flooded.
This compelled Cris to check-in at Square One Hotel. As soon as Crisgot off from
his Toyota Altis, the Hotel’s parking attendant got the key of his car and gave him
a valet parking customer’s claim stub. The attendant parked his car at the
basement of the hotel. Early in the morning, Cris was informed by the hotel
manager that his car was carnapped.
a. What contract, if any, was perfected between Cris and the Hotel when Cris
surrendered the key of his car to the Hotel’s parking attendant?
b. What is the liability, if any, of the Hotel for the loss of Cris’ car?

14. Lito obtained a loan of P1,000,000 from Ferdie, payable within one year. To
secure payment, Lito executed a chattel mortgage on a Toyota Avanza and a real
estate mortgage on a 200-square meter piece of property.
a. Would it be legally significant - from the point of view of validity and
enforceability - if the loan and the mortgages were in public or private
instruments?
b. Lito's failure to pay led to the extra-judicial foreclosure of the
mortgaged real property. Within a year from foreclosure, Lito tendered
a manager's check to Ferdie to redeem the property. Ferdie refused to
accept payment on the ground that he wanted payment in cash: the
check does not qualify as legal tender and does not include the interest
payment. Is Ferdie's refusal justified?

Page 4 of 7 Take Home Exercises - Credits

 15. A, B, C and D are the solidary debtors of X for P40,000. X released D from the
payment of his share of PI 0,000. When the obligation became due and
demandable, C turned out to be insolvent.

Should the share of insolvent debtor C be divided only between the two
other remaining debtors, A and B? 

16. Amador obtained a loan of P300,000 from Basilio payable on March25, 2012. As
security for the payment of his loan, Amador constituted a mortgage on his
residential house and lot in Basilio's favor. Cacho, a good friend of Amador,
guaranteed and obligated himself to pay Basilio, in case Amador fails to pay his
loan at maturity.
a. If Amador fails to pay Basilio his loan on March 25, 2012, can Basilio
compel Cacho to pay? 
b. If Amador sells his residential house and lot to Diego, can Basilio
foreclose the real estate mortgage?

17. Cruz lent Jose his car until Jose finished his Bar exams. Soon after Cruz delivered
the car, Jose brought it to Mitsubishi Bokawkan for maintenance check up and
incurred costs of P8,000. Seeing the car's peeling and faded paint, Jose also had
the car repainted for P10,000. Answer the two questions below based on these
common facts.
a. After the bar exams, Cruz asked for the return of his car. Jose said he
would return it as soon as Cruz has reimbursed him for the car
maintenance and repainting costs of P 18,000. Is Jose's refusal justified?
b. During the bar exam month, Jose lent the car to his girlfriend, Jolie, who
parked the car at the Mall of Asia's open parking lot, with the ignition
key inside the car. Car thieves broke into and took the car. Is Jose liable
to Cruz for the loss of the car due to Jolie's negligence?

18. Gary is a tobacco trader and also a lending investor. He sold tobacco leaves to
Homer for delivery within a month, although the period for delivery was not
guaranteed. Despite Gary's efforts to deliver on time, transportation problems and
government red tape hindered his efforts and he could only deliver after 30 days.
Homer refused to accept the late delivery and to pay on the ground that the agreed
term had not been complied with.
As lending investor, Gary granted a Pl,000,000 loan to Isaac to be paid
within two years from execution of the contract. As security for the loan, Isaac
promised to deliver to Gary his Toyota Innova within seven (7) days, but Isaac
failed to do so. Gary was thus compelled to demand payment for the loan before
the end of the agreed two-year term.
a. Was Homer justified in refusing to accept the tobacco leaves?
b. Can Gary compel Isaac to pay his loan even before the end of the two-year
period?

19. Betty entrusted to her agent, Aida, several pieces of jewelry to be sold on
commission with the express obligation to turn over to Betty the proceeds of the
sale, or to return the jewelries if not sold in a month's time. Instead of selling the
jewelries, Aida pawned them with the Tambunting Pawnshop, and used the money
for herself. Aida failed to redeem the pawned jewelries and after a month, Betty
discovered what Aida had done. Betty brought criminal charges which resulted in
Aida's conviction for estafa.

Page 5 of 7 Take Home Exercises - Credits

 Betty thereafter filed an action against Tambunting Pawnshop for the
recovery of the jewelries. Tambunting raised the defense of ownership,
additionally arguing that it is duly licensed to engage in the pawnshop and lending
business, and that it accepted the mortgage of the jewelry in good faith and in the
regular course of its business. If you were the judge, how will you decide the case?

20. Buko, Fermin and Toti bound themselves solidarily to pay Ayee the amount
of P 5,000.00. Suppose Buko paid the obligation, what is his right as against his
co-debtors?

21. Buko, Fermin and Toti bound themselves solidarily to pay Ayee the sum
of P 10,000.00. When the obligation became due and demandable, Ayee sued
Buko for the payment of the P 10,000.00. Buko moved to dismiss on the ground
that there was failure to implead Fermin and Toti who are indispensable parties.
Will the motion to dismiss prosper? Why?

22. Buko, Fermin and Toti are solidary debtors of Ayee. Twelve (12) years after the
obligation became due and demandable, Buko paid Ayee and later on asked for
reimbursement of Fermin’s and Toti’s shares. Is Buko correct? Why?

23. Buko, Fermin and Toti are solidary debtors under a loan obligation
of P 300,000.00 which has fallen due. The creditor has, however, condoned
Fermin’s entire share in the debt. Since Toti has become insolvent, the creditor
makes a demand on Buko to pay the debt. How much, if any, may Buko be
compelled to pay?

24. Dina bought a car from Jai and delivered a check in payment of the same. Has
Dina paid the obligation? Why?

25. Siga-an granted a loan to Villanueva in the amount of P 540, 000.00. Such
agreement was not reduced to writing. Siga-an demanded interest which was paid
by Villanueva in cash and checks. The total amount Villanueva paid accumulated
to P 1, 200, 000.00. Upon advice of her lawyer, Villanueva demanded for the
return of the excess amount of P 660, 000.00 which was ignored by Siga-an.
a. Is the payment of interest valid? Explain.
b. Is solution indebiti applicable? Explain.

26. Eulalia was engaged in the business of buying and selling large cattle. In order to
secure the financial capital, she advanced for her employees (biyaheros). She
required them to surrender TCT of their properties and to execute the
corresponding Deeds of Sale in her favor. Domeng Bandong was not required to
post any security but when Eulalia discovered that he incurred shortage in cattle
procurement operation, he was required to execute a Deed of Sale over a parcel of
land in favor of Eulalia. She sold the property to her grandneice Jocelyn who
thereafter instituted an action for ejectment against the Spouses Bandong.

To assert their right, Spouses Bandong filed an action for annulment of sale
against Eulalia and Jocelyn alleging that there was no sale intended but only
equitable mortgage for the purpose of securing the shortage incurred by Domeng
in the amount of P 70, 000.00 while employed as "biyahero" by Eulalia. Was the
Deed of Sale between Domeng and Eulalia a contract of sale or an equitable

Page 6 of 7 Take Home Exercises - Credits

 mortgage?

27. a. What is the difference between “guaranty” and “suretyship”?

b. Distinguish antichresis from usufruct.
c. Distinguish commodatum from mutuum.

28. Illustrate the procedure in extrajudicial foreclosure of mortgage.

29. Illustrate the procedure in judicial foreclosure of mortgage.

30. Narrate your best original joke. Make sure it is laughable.

---end---

Encode your complete names here:

______________________________

(Family Name, Given Name, M.I.)

Optional: Encode any remarks or one (1) academic question related to

the subject. In case of the latter, the same may or may not be
answered depending on the availability of time as the semester closes.

Important: Save your work as MS Word. The file name should be:
ANSWER-CREDIT- (insert your section), Example: ANSWER-CREDIT-2A. Then
send to meshack.macwes@gmail.com on May 21, 2020 only at any time from
12:01 AM to 11:59 PM otherwise your file may be lost elsewhere in the
mountains of e-mails being sent which may cause inconvenience to you
and me.

The good Lord bless and keep you.

Page 7 of 7 Take Home Exercises - Credits