OBLIGATIONS & CONTRACTS SAMPLE PROBLEMS WITH SUGGESTED ANSWERS.

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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 chal . !hat is the status of the agreement between D and C" # $he agreement is valid. $he fraud was committed during the performance of the obligation and not during the agreement of the parties. $his is a case of incidental fraud %dolo incidente) not causal fraud (dolo causante). &. D is obliged to give C a specific watch, a specific ring or a specific bracelet. $he parties agreed that C will have the right to choose the thing which will be given to him. 'efore C could ma e his choice, the watch and the ring are lost through D(s fault, successively. !hat 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. ). *, ', C and D are obliged to give +, , and - .1&,///. + may collect from * how much" # .1,///. !hen the obligation is silent, it is presumed 0oint. 1. *, ', C and D, 0oint debtors are obliged to give +, ,, and -, solidary creditors, .1&,///. 2ow much may + collect from *" # . ),///. *s a solidary creditor, + may collect the whole amount owed by the 0oint debtor *. 5. *, ', C and D, solidary debtors, are obliged to give +, , and -, 0oint creditors, .1&,///. 2ow much may + collect from *" # .1,///. *s a 0oint debtor + is entitled only to his proportionate share, and * being a solidary debtor may be re3uired to pay the said amount. 4. *, ', C and D, solidary debtors, are obliged to give +, , and -, solidary creditors, .1&,///. 2ow much may + collect from *" # .1&,///. + being a solidarity creditor may as for the payment of the whole amount in behalf of his co5creditors sub0ect to a responsibility of + to give the latter their corresponding shares. 6imilarly, * as a solidary debtor may be re3uired to pay the whole amount of the obligation sub0ect to reimbursement from his co5debtors. 7. * and ' are indebted to + and , for .1/,///. * and ' share in the debt in the ratio of 17) while + and , share in the credit in the ratio of &7). a. 2ow much may + collect from * if the debtors are 0oint debtors, while the creditors are 0oint creditors" # .1,///. $he obligation is 0oint on both the debtor and creditor, therefore there are as many debts %credits8 as debtors %creditors8. COMPUTATION: .roportionate 6hare of *7 9 x .1/,/// :

. &,5//

.roportionate 6hare of ' on *(s .roportionate Debt7 &;5 + .&,5//: . 1,///

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&

b. 2ow much may + collect from * if there is active solidarity" # .&,5//%see computation above8. $he whole amount of the proportionate share of * could be collected by +. *s a solidary creditor, + may collect the whole amount of the obligation corresponding against one or more debtors. c. 2ow much may + collect from * if there is passive solidarity" # .1,///. 'eing a 0oint creditor, + can collect only his corresponding share in the credit. $he full amount could be collected to *, being a solidary debtor. COMPUTATION: .roportionate 6hare of + in the credit7 &;5 x .1/,/// : . 1,/// d. 2ow much may + collect from * if there is mixed solidarity" .1/,///. 6ince there is mixed solidarity the whole amount of obligation may be collected by any of the solidary creditors against any of the solidary debtors. <. *, ' and C are solidary debtors of +, , and -, solidary creditors, in the amount of .&,7//. + renounces the whole obligation without the consent of , and -. $he debtors accepted the renunciation. !hat is the legal effect of the renunciation" # $he whole obligation is extinguished, however + shall be liable to the corresponding shares of the other co5creditors as they have agreed upon. =. *, ' and C are solidary debtors of + in the amount of .),///. + renounces the share of * and * accepts the renunciation. $hereafter ' becomes insolvent. !hat is the legal effect of the renunciation" # * will be liable for .5//, while C will be liable for .1,5// %.1,/// > .5//8. 6ince the remaining obligation is .&,/// after the renunciation of *(s share, and thereafter ' becomes insolvent, * and C would have to absorb the debt corresponding to ' in the amount of .1,///. $his shall be divided e3ually by * and C. 1/. *, ' and C are solidary debtors of + in the amount of .)/,///. C was insane at the time the obligation was constituted. !hat is the legal effect" # + may collect from either * or C .&/,///. *rt. 1&&& provides that a solidary debtor may avail himself of the partial defense of the insanity of C. 6uch defense is personal to C and would therefore affect only the part of the debt to which C may be responsible. 11. *, ' and C are obliged to deliver a specific horse to +, , and -. !hat would be the legal effect when C cannot comply with his obligation" #$his is a case of a 0ointly5indivisible obligation. *ssuming 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. %1&&18 1&. D borrowed .1/,/// from C with ? as guarantor. 6ubse3uently, D paid C . &,///. @n nown to D, $ a third person paid C .1/,/// believing that D still owed C such amount. !hat is the legal effect of the payment by $" # $ can recover .<,/// 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 nowledge of the creditor. Af D cannot pay, $ cannot go after ? to collect. %1&)48 1). D owes C .1/,///. $ offers to pay D(s obligation and tells D that D need not reimburse him. 2owever, D does not give his consent to $(s offer not to be reimbursed. C, nonetheless, accepts the payment from $. !as the payment valid" # $he payment is valid insofar as C is concerned. $he case is deemed to be a donation, however to be constituted as such D(s consent is necessary. %1&)<8 11. D obtained a loan of .1/,/// from C who was in his right mind at the time he granted the loan. On due date, D paid his obligation of .1/,/// to C who had since become insane. C lost .1,/// of the amount he received and spent .4,/// for his food and other necessary expenses. !as the obligation extinguished" # $he obligation is extinguished up to .4,/// only. .ayment of an obligation to an incapacitated person shall be valid when the person has ept the thing delivered and only insofar as the payment has been beneficial to him. %1&118 15. D owes C the following debts7 .1,/// due on Bay 1C .1,/// due on Bay <C .1,/// due on Bay 15C .1,/// due on Bay &&C .1,/// due on Bay &=C and .1,/// due on Dune 5. $he debts represented the price of magaEines which were delivered to D on a wee ly basis. Of the six debts, the one due on Bay && is secured by a pledge of D(s ring. 'y agreement of the parties, C may demand payment even before the due date of the debt. *s of Bay )1, D had not paid any of the six debts. On Bay )1, D wanted to ma e payment but he had only .1,///. 2ow is the payment to be applied" # 6ince 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 .1,/// should be applied to the one due on Bay && since it is most burdensome. 14. Fefer to no. 15 *ssuming that D did not designate the debt to be paid when he remitted the amount of .1,/// to C on Bay )1. C issued a receipt for the payment he received from D but he did not also designate the debt that was being paid. 2ow would the payment be applied" # $he payment shall be applied to the debt due on Bay && since it is the most onerous. 17. D owes C the following debts7 .&//,/// due on Dune 1, &//< secured by a carC .&//,/// due on Bay 1, &//< with 1/G interestC .)//,/// due on Bay 1,&//< with <G interestC .)//,/// due on Bay 1,&//< secured by house and lotC .&//,/// due on *pril 1,&//< and .)//,/// due on Barch 1, &//<. 'y agreement of the parties, C may demand payment even before the due date of the debt. $oday is Bay 1, &//< D had not paid any of the six debts. D wanted to ma e payment but he had only .1,///,///. 2ow is the payment to be applied" # 6ince 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 the period is for the benefit of the creditor, the .1,///,/// should be applied as follows7

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Amount available Debt secured by h use !"d # t 'alance Debt $%th &'( I"terest Anterest .rincipal 'alance Debt $%th )( %"terest Anterest .rincipal 'alance <G x . )//,///: &1,/// )//,/// 1/G x . &//,///: .&/,/// &//,///

. 1,///,/// )//,/// <//,///

&&/,/// 5</,///

)&1,/// &54,///

**** $he remaining . &54,/// shall be distributed proportionately to the debts that are due and demandable as follows7
Re+!%"%", Debts: %a8Bar 1 . )//,/// %b8*pr 1 . &//,/// R!t% );5 %)//;5//8 &;5 %&//;5//8 ( 4/G 1/G Sh!re -P./01'''2 . 15),4// 1/&,1//

5//,/// 1<. Hrancis, husband and Bitch, wife are legally separated. 'y order of the court which decreed the legal separation, Hrancis is obliged to give a monthly support of .&/,/// to Bitch payable in advance within the first five days of the month. Bitch owes Hrancis .&/,/// by way of loan. On the other hand, Hrancis has not yet given Bitch(s support for .&/,/// for the preceding month and another .&/,/// for the present month. *ll the debts are due. Can compensation ta e place" # ,es. Af Bitch demands her support for the current month, Hrancis may claim compensation as regards the loan that Bitch owes him. 1=. D owes C .&/,/// with ? as ?uarantor. C, on the other hand, owes D, .15,///. 'oth debts are already due but D is insolvent. Can compensation ta e place" # ,es. * guarantor can set up compensation as regards what the creditor may owe the principal debtor. 2owever, C may still collect from ? .5,///. &/. D owes C .&/,/// due on Dune &/. C owes D .11,/// due on Dune 15. On Dune 1&, C assigned his right to +. D consented to such assignment without any reservation of his right to the compensation. On Dune &/, how much may + collect from D" # .&/,///. Io compensation shall ta e place since there was no reservation of such right by D upon the assignment of the credit. %1&<5 par 18

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&1. D owes C .)/,/// due on Dune &/. C owes D the following debts7 .15,/// due on Dune &C .1,/// due on Dune 11C .4,/// due on Dune 14C and .),/// due on Dune 1<. On Dune 17, C assigned his right to +. C notified D of the assignment but D did not give his consent thereto. 2ow much may + collect from D on Dune &/" # .5,///. 6ince the assignment, although with nowledge, is without consent of D therefore compensation shall ta e place but only to the debts prior to the assignment. %1&<5 par &8 &&. Fefer to no. &1. *ssume the same facts except that when C made the assignment of his credit to +, C did not notify D about it. At was only on Dune &/ when + went to D to collect that D learned of the assignment. 2ow much may + collect from D" # .&,///. $he assignment is without nowledge of D, therefore the latter may set up compensation of all credits prior to the same and also later ones until he had nowledge of the assignment. %1&<5 par )8 &). D owes C .5/,///. 6ubse3uently, D proposed to C that $ will assume his %D(s8 debt. C accepted the proposal of D. On due date, $ could not pay because of his insolvency which was in fact existing but was not nown to D or of public nowledge at the time that he delegated his debt. Can C hold D liable" #C cannot hold D liable because his %D(s8 obligation was extinguished when he was substituted by $. %1&=58 &1. D obliged himself to give 1/ grams of shabu to C. Jater, the parties agreed that D would instead give to C 1/ sac s of rice. As the novation valid" # Iovation is void because the original obligation is void, therefore there is nothing to novate. 2ence, C cannot demand the delivery of 1/ sac s of rice from D. &5. 6 sold his cabinet to ' for .5,///. $he parties gave their consent freely to the contract before its perfection. *fter delivery of the cabinet to ' and his payment of the price to 6, ' was informed by I, his neighbour that ' paid too much for the cabinet since he %I8, new of a similar item that is sold for a lower amount. ' now wants to set aside the contract because he believed he got a bad bargain. Decide. # ' may not set aside the contract based on the principle of Butuality of Contract. &4. * and ' entered into a 0oint venture contract whereby ' agreed to put up a restaurant on the lot of *. I, *(s neighbour who owned a lot across *(s lot, learned of the transaction between * and '. *nticipating that many customers would patroniEe the restaurant, I decided to improve his vacant lot for par ing. 2e incurred .&/,/// for a guardhouse and other improvements which he had not yet paid to his contractor. Jater, however, * and ' mutually cancelled their earlier contract and entered into a new one whereby ' agreed to put up the restaurant on another lot belonging to * which was located about 1// meters from the original area. I learned of the cancellation of the contract and decided that he would sue * and ' for damages he allegedly sustained by reason threof. Decide. # * is not entitled to sue * and ' for the damages he sustained. $his 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. $he benefit that would have been received by I from the contract between * and ' was only incidental and did not give him the right to recover damages.

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&7. D obtained a loan from C amounting to .&//,///. $o secure the loan, D mortgaged his lot. C registered the mortgage with the Fegister of Deeds. Jater, D sold the lot to + who was not aware that the lot was mortgaged. On the due date of the loan, C demanded payment but D could not pay. *ccordingly, C decided to foreclose the mortgage on the lot. +, however opposed the foreclosure claiming that he was not bound by the mortgage since he was not a party thereto. Decide. # + was bound by the mortgage. 6ubse3uent purchaser is bound by the mortgage registered in the Fegister of Deeds even if he is not aware of it. $he contract herein is one which creates real rights therefore third persons who come into possession of the ob0ect of contract is bound thereby. %1)1&8 &<. 6 sold his only horse to ' for .)/,///. $he parties agreed that 6 shall deliver the horse one wee from the execution of their agreement. ', however, should pay the price immediately and in certified chec . An the place of 6 and ', it was the custom that anyone selling a horse should place a horseshoe on its feet. As the seller bound to place a horseshoe on the horse" # 6 is obliged to place a horseshoe on the horse because the observance of custom or usage is a conse3uence of entering into a contract. %1)158 &=. On Dune 1, 6 offered to sell a specific generator set to ' for .)//,///. ' sent his letter of acceptance to 6 on Dune <. On Dune 1/, however, 6 became insolvent. On Dune 1&, 6 received the letter of acceptance. !as the contract perfected" # $he contract was not perfected because the insolvency of 6 occurred before he came to learn of the acceptance of his offer. At is well settled rule that an offer becomes ineffective upon the insolvency of either party before acceptance is conveyed. %1)&)8 )/. . gave a special power of attorney to * to sell .(s house and lot for .&B. On Bay 7, *, pursuant to the authority granted to him by ., offered to sell the house and lot to ' at the price of .&B. ' accepted the offer on Bay < by sending a letter of acceptance to * on such date, which letter of acceptance was received by * on Bay 1/. On Bay 11, . died before * could inform him of '(s acceptance. !as the contract perfected" # $he contract was perfected on Bay 1/ when * received the letter of acceptance. *n offer made through an agent is accepted from the time acceptance is communicated to him. %1)&&8 )1. On Bay 1, 6 offered to sell his car for .5//,/// to ' who was interested in buying the same. An his letter to ', 6 stated that he was giving ' up to Bay )1 to decide whether to buy the car or not. On Bay &5, 6 personally went to ' to inform him that he was no longer willing to sell the car unless the price was increased to .4//,/// because another buyer was interested in buying the car for the said amount of .4//,///. Bay 6 validly withdraw his offer" #6 may validly withdraw his offer to ' and all that 6 needs to do is to inform ' of such withdrawal. 6uch withdrawal must be made before the lapse of the period of acceptance, unless there is an option founded upon a consideration, as something paid or promised. %1)&18 )&. ' purchased 1// pieces of noteboo from 6 at .11.=5. !hen ' reached home, he discovered that the invoice showed a total amount due of .1,=15 instead of .1,1=5. As the contract valid" #$he contract is valid. $he mista e is a simple mista e of account and does not render the consent of the parties vitiated. $his shall only give rise to correction. Bista e to vitiate consent must refer to the substance of the thing which is the ob0ect of the

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contract or to a principal condition which moved the parties to enter into a contract %1))18 #$he excess .7&/.// should be returned by '.# )). D has been for more than 1/ years the personal physician of ., a sic ly man of 7/ years. D tal ed to . almost everyday in the course of giving medical service to . to convince . to donate his lot to D since D told him that he was the only one who could ta e care of him. 'ecause of the persistence of D, . finally signed the deed of donation of the lot in D(s favor with all the formalities re3uired by law. As the deed of donation valid" #$he deed of donation is voidable on the ground of undue influence. %1))78 )1. *, who new that his ring was embellished with glass, told ' that the embellishment was emerald. ', who new that his watch was gold5plated, told * that it was made of pure gold. 'elieving that *(s ring was embellished with emerald and *, believing that '(s watch was made of pure gold, then entered into a contract whereby they exchanged their respective articles. * wee later, ' discovered that the ring was adorned only with an ordinary glass. Can ' as for annulment of the contract" # Ieither party can as for annulment since both are guilty of fraud. $he contract therefore is valid. An order that a contract may be considered voidable and be annulled fraud must not be committed by both parties. %1)118 )5. 6 and ' entered into a contract where they made it appear that 6 was selling his lot and building to '. $he truth, however was that 6 was donating his lot and building to '. !hat is the status of the contract" # $he contract is a relative simulated contract. $herefore the parties are bound by the contract of donation, their true intention, since no third person is pre0udiced and their purpose is not contrary to law, moral, good customs, public order or public policy. %1)148 )4. 6 and ' orally entered into a contract whereby 6 sold his one5year production of mangoes to ' for .1//,///. ' gave a downpayment of .&/,/// for which 6 issued a receipt. !hat is the status of the contract between 6 and '" # $he contract is valid. Huture things may be the ob0ect of contracts. %1)17 par 18 )7. * died leaving properties estimated at .1B to his sons 6 and $. 6ubse3uently, 6 sold through a private instrument one5half of his inheritance to ' for .)//,///, although his share was still to be delivered. !hat is the status of the contract" #$he contract is valid since the inheritance is an existing inheritance. %1)17 par &8 )<. 6 sold his car to ' for .1//,/// so that he can have money to purchase shabu. ' new nothing of the motive of 6. !as the contract valid" #$he contract is valid because the illegal motive of 6 does not affect its validity. Botive is different from the cause of the contract. %1)518 )=. D and C entered into a contract wherein D agreed to give to C .5/,/// within )/ days from the date of the execution of their agreement, which however does not state the consideration received by D from C. !hat is the status of the contract" #$he contract is valid because the cause is presumed to exist and is lawful unless the contrary is proved by the debtor. %1)518 1/. ?, the guardian of B, a minor sold the fish harvested from the fishpond of B for .&/,///. $he fish, however had a value of .)/,///. !hat is the status of the sale"

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<

#$he sale is rescissible because B suffered the minimum amount of lesion re3uired by law to ma e the contract rescissible. %1;1 x )/,///: 7,5//, the lesion is 1/,///8. %1)<1 par 18 11. D owes the following creditors7 +, .5/,///C ,, .4/,///C and -, .=/,///. 2e has assets valued at .1//,///. 6ubse3uently, D donated, among his assets, a parcel of land valued at .&5/,/// to C. $he donation and acceptance were made in a public instrument. !hat is the status of the donation of the land made by D to C" # $he donation is rescissible. At is presumed to have been made in fraud of creditors. $he remaining value of the assets after donation would be insufficient to cover the debts contracted by D before the donation. %1)<7 par 18 1&. C filed a complaint in court against D to collect a money debt amounting to .5//,///. *fter due hearing, the court rendered 0udgment in favor of C. 6hortly after the rendition of the 0udgment and before C has collected D(s debt, D sold a parcel of land to +. -, another creditor, learned of the sale made by D to + and now files an action to rescind the sale. !ho has a better right to rescind the sale of D to +" #'oth C and - have a right to rescind the sale since the sale is presumed in fraud of creditors having been made by the party against whom 0udgment has been rendered. %1)<7 par & 1). F, the representative of *, an absentee sold the corn with a value of .)/,/// and the palay with a value of .5/,///, harvested from *(s agricultural farm for a total price of .5/,///. *, whose domicile was subse3uently nown, was informed of the sale made by ?. Bay * see rescission" #* may see rescission of the total sale to recover the damages he suffered. %1)<1 par &8 11. 6, 17 K years old sold his bicycle to ', &1, for .1&,///. $he price is payable in 1& monthly instalments. *fter reaching 1<, 6 continued to collect the remaining six installments until the price was paid in full. Can 6 annul the contract" #6 may no longer annul the contract. $here was implied ratification when 6 upon reaching the age of ma0ority continued to collect the remaining instalments. %1)=)8 15. B, the manager of an electric company offered to by a one5s3uare meter lot from 6 for .1//. B showed 6 his power of attorney executed by the electric company and duly signed by the board of directors. B informed 6 that the lot would be the site of an electric post which the electric company would erect. 6 agreed to the odder of B. B agreed to come bac the following day to give the company chec for the purchase price as well as the written contract. !hen B returned to the place of 6, 6 refused to sign the contract and accept the chec . 6 told B that at any rate, B or the electric company could not enforce the contract since it was not in writing. As 6 correct" #$he contract must be in writing for it to be enforceable against 6. $his is a sale of real property. 14. On Dune 1, &//5, ', a businessman, met by chance C, a building contractor at the lobby of a hotel. Over a cup of coffee, ' informed C that he would be needing the services of C for the construction of a three5storey building that ' was planning to put up beginning *ugust 1, &//4. ' added that he would be paying C the amount of .1B for the construction. C agreed to '(s proposal. An the meantime, ' gave C a chec for .5//,/// representing the downpayment on the contract price. Lxcept for the table

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nap in on which ' made some s etches of the building, no written contract was signed by the parties. On *ugust 1, &//4, ' called up C to inform him that the construction would begin within the next two wee s. C told ' that he would no longer want to proceed with the contract and that he would be returning the downpayment. Bay ' enforce the contract" #' 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. 17. D was chec ing out of a hotel when he found out that he had lost his wallet. 6ince he had no money to pay his bills, he texted ?, a businessman friend to help him. @pon reading the text message, ? texted B, the hotel manager, who new ? since ? was a fre3uent guest at the hotel whenever he visited the area. $he text message read7 M.lease let D leave. Af he does not pay, A will be the one to pay.N Io other information was contained in the text message. $hereafter, D signed a promissory note in favor of the hotel. As the promise of ? enforceable" #Af D cannot pay, B cannot enforce the promise of ? since ?(s promise is not the writing re3uired by law. %11/) &b8 1<. 6, insane, orally sold his radio to ', 17 years old for .1//. !hen $, the mother of 6 learned about the sale, she as ed 6 to give to her the amount that he had received. 6 obediently gave the amount of .1// which his mother used to buy their food. !hat is the status of the contract" #$he contract is voidable because the mother of 6 is deemed to have ratified the contract. %11/78 1=. Hrancis promised to give .1/,/// by way of support to Bitch, if Bitch agrees to live with Hrancis as his wife without the benefit of marriage. Bitch because she truly loves Hrancis accepted his promise. *fter 4 months, because Bitch was seen with Ldgar, her ex5boyfriend, Hrancis left their home and never came bac . Can Bitch now still receive the support promised by Hrancis" #$he contract between Hrancis and Bitch is illegal and constitutes an offense, therefore it is void. 5/. ', a law student informed O that he needed a bicycle which he would use in going to and from 6an 'eda College of Jaw5*labang. O told ' that he may get the bicycle in O(s room. !as there a perfected contract" # ,es. $he contract is one of commodatum, where one party loaned something to another. An this case, the bicycle was loaned by O to '.