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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.
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.
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
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.