OBLIGATIONS & CONTRACTS 1

SAMPLE PROBLEMS WITH SUGGESTED ANSWERS.

1. D is obliged to deliver 5 bags of powder soap to C 7 days from their agreement. On

due date, D delivered 5 bags of powder soap mixed with chalk. What is the status of the
agreement between D and C?
* The agreement is valid. The fraud was committed during the performance of the
obligation and not during the agreement of the parties. This is a case of incidental fraud
(dolo incidente) not causal fraud (dolo causante).

2. D is obliged to give C a specific watch, a specific ring or a specific bracelet. The

parties agreed that C will have the right to choose the thing which will be given to him.
Before C could make his choice, the watch and the ring are lost through D’s fault,
successively. What is the right of C?
* C may choose the delivery to him of the bracelet, or the price of the watch or
the price of the ring plus damages.

3. A, B, C and D are obliged to give X, Y and Z P12,000. X may collect from A how
much?
* P1,000. When the obligation is silent, it is presumed joint.

4. A, B, C and D, joint debtors are obliged to give X, Y, and Z, solidary creditors,

P12,000. How much may X collect from A?
* P 3,000. As a solidary creditor, X may collect the whole amount owed by the
joint debtor A.

5. A, B, C and D, solidary debtors, are obliged to give X, Y and Z, joint creditors,

P12,000. How much may X collect from A?
* P4,000. As a joint debtor X is entitled only to his proportionate share, and A
being a solidary debtor may be required to pay the said amount.

6. A, B, C and D, solidary debtors, are obliged to give X, Y and Z, solidary creditors,

P12,000. How much may X collect from A?
* P12,000. X being a solidarity creditor may ask for the payment of the whole
amount in behalf of his co-creditors subject to a responsibility of X to give the latter their
corresponding shares. Similarly, A as a solidary debtor may be required to pay the whole
amount of the obligation subject to reimbursement from his co-debtors.

7. A and B are indebted to X and Y for P10,000. A and B share in the debt in the ratio of
1:3 while X and Y share in the credit in the ratio of 2:3.

a. How much may X collect from A if the debtors are joint debtors, while the
creditors are joint creditors?
* P1,000. The obligation is joint on both the debtor and creditor, therefore
there are as many debts (credits) as debtors (creditors).

COMPUTATION:
Proportionate Share of A:
¼ x P10,000 = P 2,500

Proportionate Share of B on A’s Proportionate Debt:

2/5 X P2,500= P 1,000
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b. How much may X collect from A if there is active solidarity?

* P2,500(see computation above). The whole amount of the proportionate
share of A could be collected by X. As a solidary creditor, X may collect the whole
amount of the obligation corresponding against one or more debtors.

c. How much may X collect from A if there is passive solidarity?

* P4,000. Being a joint creditor, X can collect only his corresponding
share in the credit. The full amount could be collected to A, being a solidary debtor.

COMPUTATION:
Proportionate Share of X in the credit:
2/5 x P10,000 = P 4,000

d. How much may X collect from A if there is mixed solidarity?

P10,000. Since there is mixed solidarity the whole amount of obligation
may be collected by any of the solidary creditors against any of the solidary debtors.

8. A, B and C are solidary debtors of X, Y and Z, solidary creditors, in the amount of

P2,700. X renounces the whole obligation without the consent of Y and Z. The debtors
accepted the renunciation. What is the legal effect of the renunciation?
* The whole obligation is extinguished, however X shall be liable to the
corresponding shares of the other co-creditors as they have agreed upon.

9. A, B and C are solidary debtors of X in the amount of P3,000. X renounces the share
of A and A accepts the renunciation. Thereafter B becomes insolvent. What is the legal
effect of the renunciation?
* A will be liable for P500, while C will be liable for P1,500 (P1,000 + P500).
Since the remaining obligation is P2,000 after the renunciation of A’s share, and
thereafter B becomes insolvent, A and C would have to absorb the debt corresponding
to B in the amount of P1,000. This shall be divided equally by A and C.

10. A, B and C are solidary debtors of X in the amount of P30,000. C was insane at the
time the obligation was constituted. What is the legal effect?
* X may collect from either A or C P20,000. Art. 1222 provides that a solidary
debtor may avail himself of the partial defense of the insanity of C. Such defense is
personal to C and would therefore affect only the part of the debt to which C may be
responsible.

11. A, B and C are obliged to deliver a specific horse to X, Y and Z. What would be the
legal effect when C cannot comply with his obligation?
*This is a case of a jointly-indivisible obligation. Assuming there was a valid
demand made against all the debtors and since C could not comply with his part of the
obligation, the obligation is converted into a monetary obligation to pay the value of the
horse plus damages. (1224)

12. D borrowed P10,000 from C with G as guarantor. Subsequently, D paid C P 2,000.

Unknown to D, T a third person paid C P10,000 believing that D still owed C such
amount. What is the legal effect of the payment by T?
* T can recover P8,000 from D, the law provides that only the amount to which
the creditor has benefited could be reimbursed to the third person paying if the payment
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was without knowledge of the creditor. If D cannot pay, T cannot go after G to collect.
(1236)

13. D owes C P10,000. T offers to pay D’s obligation and tells D that D need not
reimburse him. However, D does not give his consent to T’s offer not to be reimbursed.
C, nonetheless, accepts the payment from T. Was the payment valid?
* The payment is valid insofar as C is concerned. The case is deemed to be a
donation, however to be constituted as such D’s consent is necessary. (1238)

14. D obtained a loan of P10,000 from C who was in his right mind at the time he
granted the loan. On due date, D paid his obligation of P10,000 to C who had since
become insane. C lost P4,000 of the amount he received and spent P6,000 for his food
and other necessary expenses. Was the obligation extinguished?
* The obligation is extinguished up to P6,000 only. Payment of an obligation to an
incapacitated person shall be valid when the person has kept the thing delivered and
only insofar as the payment has been beneficial to him. (1241)

15. D owes C the following debts: P4,000 due on May 1; P4,000 due on May 8; P4,000
due on May 15; P4,000 due on May 22; P4,000 due on May 29; and P4,000 due on
June 5. The debts represented the price of magazines which were delivered to D on a
weekly basis. Of the six debts, the one due on May 22 is secured by a pledge of D’s
ring. By agreement of the parties, C may demand payment even before the due date of
the debt. As of May 31, D had not paid any of the six debts. On May 31, D wanted to
make payment but he had only P4,000. How is the payment to be applied?
* Since no agreement as to which debts should be settled first and absent the
fact that the creditor has not issued any receipt applying the amount to any of the debts
to which the debtor has not protested and there was no cause of invalidating the same,
and the period is for the benefit of the creditor then the P4,000 should be applied to the
one due on May 22 since it is most burdensome.

16. Refer to no. 15 Assuming that D did not designate the debt to be paid when he
remitted the amount of P4,000 to C on May 31. C issued a receipt for the payment he
received from D but he did not also designate the debt that was being paid. How would
the payment be applied?
* The payment shall be applied to the debt due on May 22 since it is the most
onerous.

17. D owes C the following debts: P200,000 due on June 1, 2008 secured by a car;
P200,000 due on May 1, 2008 with 10% interest; P300,000 due on May 1,2008 with 8%
interest; P300,000 due on May 1,2008 secured by house and lot; P200,000 due on April
1,2008 and P300,000 due on March 1, 2008. By agreement of the parties, C may
demand payment even before the due date of the debt. Today is May 1, 2008 D had not
paid any of the six debts. D wanted to make payment but he had only P1,000,000. How
is the payment to be applied?
* the period is for the benefit of the creditor, the P1,000,000 should be applied as
follows:

Since no agreement as to which debts should be settled first and absent the fact
that the creditor has not issued any receipt applying the amount to any of the debts to
which the debtor has not protested and there was no cause of invalidating the same,
furthermore
OBLIGATIONS & CONTRACTS 4

Amount available P 1,000,000

Debt secured by house and lot 300,000

Balance 800,000

Debt with 10% Interest

Interest 10% x P 200,000= P20,000

Principal 200,000 220,000

Balance 580,000

Debt with 8% interest

Interest 8% x P 300,000= 24,000

Principal 300,000 324,000

Balance 256,000

****
The remaining P 256,000 shall be distributed proportionately to the debts that are due
and demandable as follows:

Remaining Debts: Ratio % Share (P256,000)

(a)Mar 1 P 300,000 3/5 (300/500) 60% P 153,600
(b)Apr 1 P 200,000 2/5 (200/500) 40% 102,400
500,000

18. Francis, husband and Mitch, wife are legally separated. By order of the court which
decreed the legal separation, Francis is obliged to give a monthly support of P20,000 to
Mitch payable in advance within the first five days of the month. Mitch owes Francis
P20,000 by way of loan. On the other hand, Francis has not yet given Mitch’s support for
P20,000 for the preceding month and another P20,000 for the present month. All the
debts are due. Can compensation take place?
* Yes. If Mitch demands her support for the current month, Francis may claim
compensation as regards the loan that Mitch owes him.

19. D owes C P20,000 with G as Guarantor. C, on the other hand, owes D, P15,000.
Both debts are already due but D is insolvent. Can compensation take place?
* Yes. A guarantor can set up compensation as regards what the creditor may
owe the principal debtor. However, C may still collect from G P5,000.

20. D owes C P20,000 due on June 20. C owes D P14,000 due on June 15. On June 12,
C assigned his right to X. D consented to such assignment without any reservation of his
right to the compensation. On June 20, how much may X collect from D?
* P20,000. No compensation shall take place since there was no reservation of
such right by D upon the assignment of the credit. (1285 par 1)
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21. D owes C P30,000 due on June 20. C owes D the following debts: P15,000 due on
June 2; P4,000 due on June 14; P6,000 due on June 16; and P3,000 due on June 18.
On June 17, C assigned his right to X. C notified D of the assignment but D did not give
his consent thereto. How much may X collect from D on June 20?
* P5,000. Since the assignment, although with knowledge, is without consent of
D therefore compensation shall take place but only to the debts prior to the assignment.
(1285 par 2)

22. Refer to no. 21. Assume the same facts except that when C made the assignment of
his credit to X, C did not notify D about it. It was only on June 20 when X went to D to
collect that D learned of the assignment. How much may X collect from D?
* P2,000. The assignment is without knowledge of D, therefore the latter may set
up compensation of all credits prior to the same and also later ones until he had
knowledge of the assignment. (1285 par 3)

23. D owes C P50,000. Subsequently, D proposed to C that T will assume his (D’s) debt.
C accepted the proposal of D. On due date, T could not pay because of his insolvency
which was in fact existing but was not known to D or of public knowledge at the time that
he delegated his debt. Can C hold D liable?
*C cannot hold D liable because his (D’s) obligation was extinguished when he
was substituted by T. (1295)

24. D obliged himself to give 10 grams of shabu to C. Later, the parties agreed that D
would instead give to C 10 sacks of rice. Is the novation valid?
* Novation is void because the original obligation is void, therefore there is
nothing to novate. Hence, C cannot demand the delivery of 10 sacks of rice from D.

25. S sold his cabinet to B for P5,000. The parties gave their consent freely to the
contract before its perfection. After delivery of the cabinet to B and his payment of the
price to S, B was informed by N, his neighbour that B paid too much for the cabinet since
he (N), knew of a similar item that is sold for a lower amount. B now wants to set aside
the contract because he believed he got a bad bargain. Decide.
* B may not set aside the contract based on the principle of Mutuality of Contract.

26. A and B entered into a joint venture contract whereby B agreed to put up a
restaurant on the lot of A. N, A’s neighbour who owned a lot across A’s lot, learned of
the transaction between A and B. Anticipating that many customers would patronize the
restaurant, N decided to improve his vacant lot for parking. He incurred P20,000 for a
guardhouse and other improvements which he had not yet paid to his contractor. Later,
however, A and B mutually cancelled their earlier contract and entered into a new one
whereby B agreed to put up the restaurant on another lot belonging to A which was
located about 100 meters from the original area. N learned of the cancellation of the
contract and decided that he would sue A and B for damages he allegedly sustained by
reason threof. Decide.
* A is not entitled to sue A and B for the damages he sustained. This is not a
case of a stipulation pour autrui, where the parties in a contract deliberately conferred
upon a third person a favor or benefit. The benefit that would have been received by N
from the contract between A and B was only incidental and did not give him the right to
recover damages.
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27. D obtained a loan from C amounting to P200,000. To secure the loan, D mortgaged
his lot. C registered the mortgage with the Register of Deeds. Later, D sold the lot to X
who was not aware that the lot was mortgaged. On the due date of the loan, C
demanded payment but D could not pay. Accordingly, C decided to foreclose the
mortgage on the lot. X, however opposed the foreclosure claiming that he was not bound
by the mortgage since he was not a party thereto. Decide.
* X was bound by the mortgage. Subsequent purchaser is bound by the
mortgage registered in the Register of Deeds even if he is not aware of it. The contract
herein is one which creates real rights therefore third persons who come into possession
of the object of contract is bound thereby. (1312)
28. S sold his only horse to B for P30,000. The parties agreed that S shall deliver the
horse one week from the execution of their agreement. B, however, should pay the price
immediately and in certified check. In the place of S and B, it was the custom that
anyone selling a horse should place a horseshoe on its feet. Is the seller bound to place
a horseshoe on the horse?
* S is obliged to place a horseshoe on the horse because the observance of
custom or usage is a consequence of entering into a contract. (1315)

29. On June 1, S offered to sell a specific generator set to B for P300,000. B sent his
letter of acceptance to S on June 8. On June 10, however, S became insolvent. On June
12, S received the letter of acceptance. Was the contract perfected?
* The contract was not perfected because the insolvency of S occurred before he
came to learn of the acceptance of his offer. It is well settled rule that an offer becomes
ineffective upon the insolvency of either party before acceptance is conveyed. (1323)

30. P gave a special power of attorney to A to sell P’s house and lot for P2M. On May 7,
A, pursuant to the authority granted to him by P, offered to sell the house and lot to B at
the price of P2M. B accepted the offer on May 8 by sending a letter of acceptance to A
on such date, which letter of acceptance was received by A on May 10. On May 11, P
died before A could inform him of B’s acceptance. Was the contract perfected?
* The contract was perfected on May 10 when A received the letter of
acceptance. An offer made through an agent is accepted from the time acceptance is
communicated to him. (1322)

31. On May 1, S offered to sell his car for P500,000 to B who was interested in buying
the same. In his letter to B, S stated that he was giving B up to May 31 to decide
whether to buy the car or not. On May 25, S personally went to B to inform him that he
was no longer willing to sell the car unless the price was increased to P600,000 because
another buyer was interested in buying the car for the said amount of P600,000. May S
validly withdraw his offer?
*S may validly withdraw his offer to B and all that S needs to do is to inform B of
such withdrawal. Such withdrawal must be made before the lapse of the period of
acceptance, unless there is an option founded upon a consideration, as something paid
or promised. (1324)

32. B purchased 100 pieces of notebook from S at P41.95. When B reached home, he
discovered that the invoice showed a total amount due of P4,915 instead of P4,195. Is
the contract valid?
*The contract is valid. The mistake is a simple mistake of account and does not
render the consent of the parties vitiated. This shall only give rise to correction. Mistake
to vitiate consent must refer to the substance of the thing which is the object of the
OBLIGATIONS & CONTRACTS 7

contract or to a principal condition which moved the parties to enter into a contract
(1331) *The excess P720.00 should be returned by B.*

33. D has been for more than 10 years the personal physician of P, a sickly man of 70
years. D talked to P almost everyday in the course of giving medical service to P to
convince P to donate his lot to D since D told him that he was the only one who could
take care of him. Because of the persistence of D, P finally signed the deed of donation
of the lot in D’s favor with all the formalities required by law. Is the deed of donation
valid?
*The deed of donation is voidable on the ground of undue influence. (1337)

34. A, who knew that his ring was embellished with glass, told B that the embellishment
was emerald. B, who knew that his watch was gold-plated, told A that it was made of
pure gold. Believing that A’s ring was embellished with emerald and A, believing that B’s
watch was made of pure gold, then entered into a contract whereby they exchanged
their respective articles. A week later, B discovered that the ring was adorned only with
an ordinary glass. Can B ask for annulment of the contract?
* Neither party can ask for annulment since both are guilty of fraud. The contract
therefore is valid. In order that a contract may be considered voidable and be annulled
fraud must not be committed by both parties. (1344)

35. S and B entered into a contract where they made it appear that S was selling his lot
and building to B. The truth, however was that S was donating his lot and building to B.
What is the status of the contract?
* The contract is a relative simulated contract. Therefore the parties are bound by
the contract of donation, their true intention, since no third person is prejudiced and their
purpose is not contrary to law, moral, good customs, public order or public policy. (1346)

36. S and B orally entered into a contract whereby S sold his one-year production of
mangoes to B for P100,000. B gave a downpayment of P20,000 for which S issued a
receipt. What is the status of the contract between S and B?
* The contract is valid. Future things may be the object of contracts. (1347 par 1)

37. A died leaving properties estimated at P1M to his sons S and T. Subsequently, S
sold through a private instrument one-half of his inheritance to B for P300,000, although
his share was still to be delivered. What is the status of the contract?
*The contract is valid since the inheritance is an existing inheritance. (1347 par 2)

38. S sold his car to B for P100,000 so that he can have money to purchase shabu. B
knew nothing of the motive of S. Was the contract valid?
*The contract is valid because the illegal motive of S does not affect its validity.
Motive is different from the cause of the contract. (1351)

39. D and C entered into a contract wherein D agreed to give to C P50,000 within 30
days from the date of the execution of their agreement, which however does not state
the consideration received by D from C. What is the status of the contract?
*The contract is valid because the cause is presumed to exist and is lawful
unless the contrary is proved by the debtor. (1354)

40. G, the guardian of M, a minor sold the fish harvested from the fishpond of M for
P20,000. The fish, however had a value of P30,000. What is the status of the sale?
OBLIGATIONS & CONTRACTS 8

*The sale is rescissible because M suffered the minimum amount of lesion

required by law to make the contract rescissible. (1/4 x 30,000= 7,500, the lesion is
10,000). (1381 par 1)

41. D owes the following creditors: X, P50,000; Y, P60,000; and Z, P90,000. He has
assets valued at P400,000. Subsequently, D donated, among his assets, a parcel of
land valued at P250,000 to C. The donation and acceptance were made in a public
instrument. What is the status of the donation of the land made by D to C?
* The donation is rescissible. It is presumed to have been made in fraud of
creditors. The remaining value of the assets after donation would be insufficient to cover
the debts contracted by D before the donation. (1387 par 1)

42. C filed a complaint in court against D to collect a money debt amounting to

P500,000. After due hearing, the court rendered judgment in favor of C. Shortly after the
rendition of the judgment and before C has collected D’s debt, D sold a parcel of land to
X. Z, another creditor, learned of the sale made by D to X and now files an action to
rescind the sale. Who has a better right to rescind the sale of D to X?
*Both C and Z have a right to rescind the sale since the sale is presumed in fraud
of creditors having been made by the party against whom judgment has been rendered.
(1387 par 2

43. R, the representative of A, an absentee sold the corn with a value of P30,000 and
the palay with a value of P50,000, harvested from A’s agricultural farm for a total price of
P50,000. A, whose domicile was subsequently known, was informed of the sale made by
G. May A seek rescission?
*A may seek rescission of the total sale to recover the damages he suffered.
(1381 par 2)

44. S, 17 ½ years old sold his bicycle to B, 24, for P12,000. The price is payable in 12
monthly instalments. After reaching 18, S continued to collect the remaining six
installments until the price was paid in full. Can S annul the contract?
*S may no longer annul the contract. There was implied ratification when S upon
reaching the age of majority continued to collect the remaining instalments. (1393)

45. M, the manager of an electric company offered to by a one-square meter lot from S
for P400. M showed S his power of attorney executed by the electric company and duly
signed by the board of directors. M informed S that the lot would be the site of an electric
post which the electric company would erect. S agreed to the odder of M. M agreed to
come back the following day to give the company check for the purchase price as well
as the written contract. When M returned to the place of S, S refused to sign the contract
and accept the check. S told M that at any rate, M or the electric company could not
enforce the contract since it was not in writing. Is S correct?
*The contract must be in writing for it to be enforceable against S. This is a sale
of real property.

46. On June 1, 2005, B, a businessman, met by chance C, a building contractor at the

lobby of a hotel. Over a cup of coffee, B informed C that he would be needing the
services of C for the construction of a three-storey building that B was planning to put up
beginning August 1, 2006. B added that he would be paying C the amount of P4M for
the construction. C agreed to B’s proposal. In the meantime, B gave C a check for
P500,000 representing the downpayment on the contract price. Except for the table
OBLIGATIONS & CONTRACTS 9

napkin on which B made some sketches of the building, no written contract was signed
by the parties. On August 1, 2006, B called up C to inform him that the construction
would begin within the next two weeks. C told B that he would no longer want to proceed
with the contract and that he would be returning the downpayment. May B enforce the
contract?
*B may enforce the contract against C although there was no formal agreement
signed by the parties because C was deemed to have ratified the contract by his
acceptance of the downpayment.

47. D was checking out of a hotel when he found out that he had lost his wallet. Since he
had no money to pay his bills, he texted G, a businessman friend to help him. Upon
reading the text message, G texted M, the hotel manager, who knew G since G was a
frequent guest at the hotel whenever he visited the area. The text message read:
“Please let D leave. If he does not pay, I will be the one to pay.” No other information
was contained in the text message. Thereafter, D signed a promissory note in favor of
the hotel. Is the promise of G enforceable?
*If D cannot pay, M cannot enforce the promise of G since G’s promise is not the
writing required by law. (1403 2b)

48. S, insane, orally sold his radio to B, 17 years old for P400. When T, the mother of S
learned about the sale, she asked S to give to her the amount that he had received. S
obediently gave the amount of P400 which his mother used to buy their food. What is the
status of the contract?
*The contract is voidable because the mother of S is deemed to have ratified the
contract. (1407)

49. Francis promised to give P10,000 by way of support to Mitch, if Mitch agrees to live
with Francis as his wife without the benefit of marriage. Mitch because she truly loves
Francis accepted his promise. After 6 months, because Mitch was seen with Edgar, her
ex-boyfriend, Francis left their home and never came back. Can Mitch now still receive
the support promised by Francis?
*The contract between Francis and Mitch is illegal and constitutes an offense,
therefore it is void.
50. B, a law student informed O that he needed a bicycle which he would use in going to
and from San Beda College of Law-Alabang. O told B that he may get the bicycle in O’s
room. Was there a perfected contract?
* Yes. The contract is one of commodatum, where one party loaned something to
another. In this case, the bicycle was loaned by O to B.