[Company name]

[Document title]

Submitted by: Maria Therese Louise C. Miguel

3D; ID No. 14-182
Bar Question (1988)
Suspensive and Resolutory Conditions
Distinguish between the effects of suspensive and resolutory conditions upon
an obligation
SUGGESTED ANSWER: It is evident that a resolutory condition affects the
obligation to which it is attached in a manner which is diametrically opposed
to that of a suspensive condition. If the suspensive condition is fulfilled, the
obligation arises or becomes effective if the resolutory condition is fulfilled,
the obligation is extinguished. If the first is not fulfilled, the juridical relation
is created; if the second is not fulfilled, the juridical relation is consolidated.
In other words, in the first, rights are not yet acquired, but there is a hope or
expectancy that they will soon be acquired; in the second, rights are already
acquired but subject to the threat of extinction.
MIGUELS ANSWER: A suspensive condition is a condition imposed upon an
obligation and the happening of which gives rise to the demandability of the
the fulfillment of such obligation. The obligation will only arise upon the
fulfillment of the suspensive condition. Resolutory conditions on the other
hand, are conditions that signify the extinguishment of the obligation that is
immediately imposed upon the other party. The happening of the resolutory
condition ends the obligation of the parties and extinguishes the right of the
other party to the prestation agreed upon.

Bar Question (1988)

Alternative and Facultative Obligations
Define alternative and facultative obligations
SUGGESTED ANSWER: Alternative obligations refer to those juridical relations
which comprehend several objects or prestations which are due, but the
payment or performance of one of them would be sufficient. On the other
hand, facultative obligations refer to those juridical relations where only one
object or prestation has been agreed upon by the parties to the obligation,
but the obligor may deliver or render another in substitution.
MIGUELS ANSWER: An alternative obligation is one where the debtor is bound
by different prestations but wherein only one is due. It can be performed
alternatively and the performance of one of them is sufficient to extinguish
the obligation. A facultative obligation on the other hand is one where the
debtor is bound to perform one prestation with a right to choose another
prestation as substitute.

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Bar Question (1988)
Joint and Solidary Obligations
Define joint and solidary obligations
SUGGESTED ANSWER: When there is a concurrence of two or more creditors
or two or more debtors in one and the same obligation, such obligation may
be either joint or solidary. A joint obligation may be defined as an obligation
where there is a concurrence of several creditors or several debtors, or of
several creditors and debtors, by virtue of which each of the creditors has a
right to demand, while each of the debtors is bound to render compliance with
his proportionate part of the prestation which constitutes the object of the
obligation. In other words each of the creditors is entitled to demand the
payment only of a proportionate part of the credit, while each of the debtors
is liable for the payment of only a proportionate part of the debt. A solidary
obligation, on the other hand, may be defined as an obligation where there is
a concurrence of several creditors or several debtors, or of several creditors
and debtors, by virtue of which each of the creditors has a right to demand,
while each of the debtors is bound to render entire compliance with the
prestation which constitutes the object of the obligation. In other words, each
of the creditors is entitled to demand the payment of the entire credit, while
each of the debtors is liable for the payment of the entire debt.
MIGUELS ANSWER: An obligation is joint if there are either two or more and
where the entire obligation is to be paid or performed proportionately by all
of the debtors. An obligation is a solidary obligation if each creditor if there
are multiple has the right to demand from any of the debtors the obligation
that is due.

Bar Question (1988)

Solidary Obligations
A, B and C borrowed P12,000 from X. This debt is evidenced by a promissory
note wherein the three bound themselves to pay the debt jointly and severally.
However, according to the note, A can be compelled to pay only on June 15,
1962, B can be compelled to pay only on June 15, 1964, while C can be
compelled to pay only on June 15, 1966. On June 15, 1962, X made a demand
upon A to pay the entire indebtedness but the latter aid only P4,000.
Subsequently, because of As refusal to pay the balance, X brought an action
against him for collection of the amount. Will such an action prosper? Reasons.
SUGGESTED ANSWER: For the present, the action will not prosper. It is of
course true that the obligation here is solidary and that its solidary character
is not destroyed by the fact that the debtors are bound by different periods

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for payment is expressly provided for in Art. 1211 of the Civil Code. However,
in solidary obligations of this type, the right of the creditor is limited to the
recovery of the amount owed by the debtor whose obligation has already
matured, leaving in suspense his right to recover the shares corresponding to
the other debtors whose obligations have not yet matured. This restriction
upon the creditors right does not destroy the solidary character of the
obligation, because ultimately, he can still compel one and the same debtor,
if that is his wish, to pay the entire obligation. Therefore, in the instant case,
X shall have to wait for June 15, 1964, when Bs obligation shall have matured,
and for June 15, 1966, when Cs obligation shall have matured. On June 15,
1966, he can collect P4,000 from either A or B. On June 15, 1966, he can
again collect another P4,000 from either A or B or C.
MIGUELS ANSWER: The action of X will not prosper. The obligation of A, B
and C is solidary, however they are bound by different periods meaning the
fulfillment of their obligation is imposed with an agreement of a period on
which their obligation will be demandable. The obligation being solidary, X
may require payment from any of the debtors, however as discussed it is
subject to a period, making the choices of X limited to the debtors from whom
the obligation is due and demandable.

Bar Question (1988)

Forms of payment
Under the Civil Code, what are the different special forms of payments?
SUGGESTED ANSWER: Under the Civil Code there are actually four special
forms of payment. They are (1) application of payment; (2) dation in
payment; (3) payment by cession; and (4) tender of payment and
consignation. Strictly speaking, however, application of payment by its very
nature, is not a special form of payment.
MIGUELS ANSWER: The special forms of payments are Dacion en pago,
payment by cession and consignation.

Bar Question (1988)

Consignation
What are the special requisites of consignation in order that it shall produce
the effect of payment?
SUGGESTED ANSWER: In order that consignation shall produce the effect of
payment, it is not only essential that it must conform with all of the requisites

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of payment, but it is also essential that certain special requirements prescribed
by law must be complied with. The debtor must show: (1) that there is a debt
due; (2) that the consignation has been made either because the creditor to
whom the tender of payment was made refused to accept the payment without
just cause, or because any of the cause stated by law for effective consignation
without previous tender of payment exists; (3) the previous notice of the
consignation had been made given to the persons interested in the fulfillment
of the obligation; (4) that the thing or amount due had been placed at the
disposal of judicial authority; (5) that after the consignation had been made,
the persons interested in the fulfillment of the obligation had been notified
thereof.
MIGUELS ANSWER: Consignation requires that there be and existing valid
debt which is due, a prior valid tender of payment, a refusal by the creditor to
accept such tender of payment without any valid reason, a prior notice of
consignation to the interested parties, the thing due deposited with the court
and another notice to interested parties subsequent to the consignation.

Bar Question (1988)

Novation
Suppose that under an obligation imposed by a final judgement, the liability
of the judgement debtor is to pay the amount of P6,000 but both the
judgement debtor and the judgement creditor subsequently entered into a
contract reducing the liability of the former to only P4,000 is there and implied
novation which will have the effect of extinguishing the judgement obligation
and creating a modified obligatory relation? Reasons.
SUGGESTED ANSWER: There is no implied novation in this case. We see no
valid objection to the judgement debtor and the judgement creditor in
entering into an agreement regarding the monetary obligation of the former
under the judgement referred to. The payment by the judgement debtor of
the lesser amount of P4,000, accepted by the creditor without any protest or
objection and acknowledged by the latter as in full satisfaction of the money
judgement, completely extinguished the judgement debt and released the
debtor from his pecuniary liability.
Novation results in two stipulationsone to extinguish an existing obligation,
the other to substitute a new one in its place. Fundamental it is that novation
effects a substitution or modification of an obligation by another or an
extinguishment of one obligation by the creation of another. In the case at
hand, we fail to see what new or modified obligation arose out of the payment
by judgement debtor of the reduced amount of P4,000 to the creditor.
Additionally, to sustain novation necessitates that the same be so declared in

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unequivocal terms clearly and unmistakably shown by the express agreement
of the parties or by acts of equivalent importor that there is complete and
substantial incompatibility between the two obligations.
MIGUELS ANSWER: There is no implied novation, what is present is a partial
remission of P2,000. The amount of P4,000 is still due and demandable. An
implied novation is said to have occurred only if there is no declaration that
the old obligation is extinguished by the new one but the old and new
obligations are incompatible and cannot co-exist. In this case, the obligations
are not incompatible, there is still a debt due although the amount was
reduced.

Bar Question (1988)

Contract
Merle offered to sell her automobile to Violy for P60,000. After inspecting the
automobile, Violy offered to buy it for P50,000. This offer was accepted by
Merle. The next day, Merle offered to deliver the automobile, but Violy being
short of funds, secured postponement of the delivery, promising to pay the
price upon arrival of the steamer, Helena the steamer however never arrived
because it was wrecked by a typhoon and sank somewhere off the Coast of
Samar. (1) Is there a perfected contract in this case? Why? (2) Is the promise
to pay made by Violy conditional or with a term? Why? (3) Can Merle compel
Violy to pay the purchase price and to accept the automobile? Why?
SUGGESTED ANSWER: (1) Yes, there is a perfected contract because there is
already a concurrence between the offer and the acceptance with respect to
the object and the cause which shall constitute the contract. Such concurrence
is manifested by the acceptance made by Merle of the offer made by Violy.
(2) I submit that the promise to pay made by Violy is not conditional, but with
a term. The promise is to pay the P50,000 upon arrival in this port of the
steamer, Helena, not if the steamer Helena shall arrive in this port. Hence,
the promise is with regard to the date of arrival and not with regard to the
fact of arrival.
(3) Yes, Merle can compel Violy to pay the purchase price and to accept the
automobile. She will, however have to wait for the date when the steamer,
Helena, would have arrived were it not for the shipwreck. After all, there is
already a perfected contract.
MIGUELS ANSWER: (1) Yes, there is a perfected contract. A contract is
deemed perfected upon the concurrence of the essential requisites provided
for by Art. 1318 of the Civil Code. There is consent as shown by acceptance
of both parties of the offers and counter-offers of one another, there is an

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object agreed upon which is the automobile and a cause which is the promise
to pay by Violy of the amount agreed upon for the automobile. There is a
meeting of the minds by the parties upon the object and the cause therefore
there is already a perfected contract.
(2) The promise to pay is subject to a term. The stipulation agreed upon by
the parties is that payment would be effected upon arrival therefore such is
a question of when rather than if. An obligation is subject to a term if the
stipulation is certain to happen, and on the other hand subject to a condition
if the stipulation is future and uncertain. In this case, the arrival is sure to
happen thereby making it a question of when rather than if.
(3) Yes, Merle can compel Violy to pay the price and accept the automobile as
there was already a perfected contract.

Bar Question (1989)

Implied Contract and Quasi-contract
Distinguish and implied contract from a quasi-contract.
SUGGESTED ANSWER: An implied contract requires consent of the parties. A
quasi-contract is not predicated on consent, being a unilateral act. The basis
of an implied contract is the will of the parties. The basis of a quasi-contract
is law to the end that there be no unjust situation.
MIGUELS ANSWER: An implied contract is different from a quasi-contract in
terms of the presence of consent. In an implied contract, the consent of the
parties is present although it is not expressly given, it is deducible from the
conduct of the parties. A quasi-contract on the other hand, does not require
the consent of the parties but is an obligation based on equity and ensuring
that there be no unjust enrichment between the parties.

Bar Question (1989)

Dation in payment
What is dation in payment and how is it distinguished from assignment of
property?
SUGGESTED ANSWER: Dation in payment is a special form of payment
whereby property is alienated to the creditor in satisfaction of a debt in money.
Assignment of property, or payment by cession is a special form of payment
whereby the debtor cedes or assigns his property to his creditors so that the
proceeds thereof will be applied in payment of his debts.

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MIGUELS ANSWER: Dation in payment is the alienation by the debtor of
property in favor of the creditor for the purpose of satisfying his debt. Dation
in payment is different from assignment of property in terms of different
factors. In assignment of property, the properties ceded are all properties of
the debtor, in dation in payment, what is delivered is only a specific property
which is considered an equivalent of the outstanding monetary obligation of
the debtor. In assignment of property, it is necessary that the debtor be in a
state of insolvency while in dation in payment there is no such requirement.
Also, dation in payment is a form of novation of the contract while assignment
is not.

Bar Question (1989)

Rescission of Contracts
X offered to buy the house ad lot of Y for P300,000. Since X had only P200,000
in cash at the time, he proposed to pay the balance of P100,000 in four (4)
equal monthly installments. As the title to the property was to be immediately
transferred to the buyer, X to secure the payment of the balance of purchase
price, proposed to constitute a first mortgage on the property in favor of Y. Y
agreed to the proposal so that on April 15, 1987, the contract of sale in favor
of X was constituted and on the same date (April 15, 1987), X constituted the
said first mortgage. When the first installment became due. X defaulted in the
payment thereof. Y now brings an action to rescind the contract of sale, which
X opposed. How would you decide the conflict? Give your reasons.
SUGGESTED ANSWER: Y can rescind. Specific performance and rescission are
alternative remedies in breach of reciprocal obligations. The contract is only
partly consummated. The price is not fully paid. The mortgage is an accessory
contract of guarantee and can be waived by the creditor who can avail of his
remedies in the principal contract.
MIGUELS ANSWER: Y cannot rescind. Jurisprudence provides that slight
breaches of the contract will not justify rescission. In this case X can be
deemed to have substantially complied with the contract of sale paying 2/3 of
the purchase price. In order to justify rescission, the breach of the contract
should be substantial that it would defeat the object of the parties in entering
into the contract, that there is substantial breach, cannot be said in this case.

Bar Question (1989)

Perfection of Contract

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X came across an advertisement in the Manila Daily Bulletin about the rush
sale of three slightly used Toyota cars, Model 1989 for only P200,000 each.
Finding the price to be very cheap and in order to be sure that he gets one
unit ahead of the others, X immediately phoned the advertiser Y and place an
order for one car. Y accepted the order and promised to deliver the ordered
unit on July 15, 1989. On the said date, however, Y did not deliver the unit. X
brings and action to compel Y to deliver the unit. Will such an action prosper?
Give your reasons.
SUGGESTED ANSWER: The contract in this case has been perfected. However,
the contract is unenforceable under the Statute of Frauds. The action will
prosper if there is no objection to the oral evidence, which amounts to a waiver
of the stature of frauds.
MIGUELS ANSWER: Yes, the action of X may prosper provided that there be
no objection to the oral evidence presented regarding the oral agreement
entered into by X and Y. While there is a perfected contract, it is unenforceable
for failure to comply with the Satute of Frauds, because it is an agreement for
the sale of goods at a price not less than P500, it is required to be in writing.
However, the Civil Code also provides that contracts infringing the Stature of
Frauds may be ratified provided that there be a failure to object to the
presentation of oral evidence to prove the same.

Bar Question (1989)

Estoppel
What do you understand by estoppel? What are the different kinds of
estoppel? Explain.
The Civil Code enumerates only 3 kinds of estoppel: estoppel in pais and
estoppel by deed; and jurisprudence gives a third, namely: estoppel by laches.
Estoppel in pais or by conduct arises when one by his act, representation, oral
admission or by his silence induces another to believe certain facts to exist
and the other realize an act on such belief. Estoppel by deed is that by 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 derogation of the deed or any fact
asserted therein.
MIGUELS ANSWER: Estoppel is a bar from denying or asserting something to
the contrary from that which has already been previously established as the
truth by his own representations. The Civil Code classifies estoppel into two
(2) namely estoppel by deed and estoppel in pais. Estoppel by deed is the kind
of estoppel which is in writing which bars such parties from asserting anything
to the contrary of what is in the written document. Estoppel in pais on the

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other hand, is estoppel arising from conduct that amounts to a representation
of facts.

Bar Question (1989)

Civil Obligation and Natural Obligation
How is a civil obligation distinguished from a natural obligation? Give an
example of a natural obligation
SUGGESTED ANSWER: Civil obligations give a right of action to compel their
performance. Natural obligations, not being based on positive law but on
equity but on equity and natural law, do not grant a right of action to enforce
their performance, but after voluntary fulfillment by the obligor, they
authorize the retention of what has been delivered or rendered by reason
thereof. Example of a natural obligation: when a right to sue upon a civil
obligation has lapsed by extinctive prescription, the obligor who voluntarily
performs the contract cannot recover what he has delivered or the value of
the service he has rendered.
MIGUELS ANSWER: Civil obligations are obligations that can be enforced
through a civil suit, it is an obligation which gives rise to a cause of action.
Natural obligations on the other hand are obligations do not grant a cause of
action, it is an obligation that is merely based on equity. An example of a
natural obligation is when a third party pays for the debt of another which the
obligor is not legally bound to pay because it has prescribed but the debtor
voluntarily reimburses such third person, the obligor cannot recover what he
has paid.

Bar Question (1990)

Nullity of Contracts
X was the owner of a 10,000 square meter property. X married Y and out of
their union, A, B and C were born. After the death of Y, X married Z and they
begot as children, D, E and F. After the death of X, the children of the first
and second marriages executed and extrajudicial partition of the aforestated
property on May 1, 1970. D, E and F were given a one thousand square meter
portion of the property. They were minors at the time of the execution of the
document. D was 17 years old, E was 14 and F was 12; and they were made
to believe by A, B and C that unless they sign the document they will not get
any share. Z was not present then. In January 1974, D,E and F filed an action
in court to nullify the suit alleging they discovered the fraud only in 1973. (a)

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Can the minority of D,E and F be a basis to nullify the partition? Explain your
answer. (b) How about fraud? Explain your answer.
SUGGESTED ANSWER: (a) Yes, minority can be a basis to nullify the partition
because D, E and F were not properly represented by their parents or
guardians at the time they contracted the extra-judicial partition.
(b) In the case of fraud, when through insidious words or machinations of one
party the other is induced to enter into the contract without which he would
not have agreed to, the action still prosper because under Art. 1391 of the
Civil Code in case of fraud, the action for annulment may be brought within
four years from the discovery of the fraud.
MIGUELS ANSWER: (a) Yes, minority can be the basis of nullifying the
partition. Minority is one of the restrictions provided for in the Civil Code that
limits a persons capacity to act or enter into certain agreements. D,E, and F
not being represented by parents or guardians can be the basis to nullify the
partition.
(b) If fraud was present, the action will also prosper as fraud is considered as
a vitiation of consent, which makes the contract voidable there being a lack of
one of the essential requisites of a contract.

Bar Question (1990)

Freedom to Stipulate
The Japan Air Lines (JAL), a foreigner corporation licensed to do business in
the Philippines, executed in Manila a contract of employment with Maritess
Guapa under which the latter was hired as a stewardess on the aircraft plying
the Manila-Japan-Manila route. The contrast specifically provides that (1) the
duration of the contract shall be two (2) years, (2) notwithstanding the above
duration, JAL may terminate the agreement at any time by giving her notice
in writing ten (10) days in advance, and (3) the contract shall be construed
as governed under and by the laws of Japan and only the court in Tokyo,
Japan shall have jurisdiction to consider any matter arising from or relating to
the contract.
JAL dismissed Maritess on the fourth month of her employment without
giving her due notice. Maritess then filed a complaint with the Labor Arbiter
for reinstatement, backwages and damages. The lawyer of JAL contends that
neither the Labor Arbiter nor any other agency or court in the Philippines has
jurisdiction over the case in view of the above provision (3) of the contract
which Maritess voluntarily signed. The contract is the law between her and
JAL. Decide the issue.

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SUGGESTED ANSWER: Labor Legislations are generally intended as
expressions of public policy on employer-employee relations. The contract
therefore, between Japan Air Lines and Maritess may apply only to the
extent that its provisions are not inconsistent with Philippine labor laws
intended particularly to protect the employees.
Under the circumstances, the dismissal of Maritess without complying with
Philippine labor law would be invalid and any stipulation in the contract to
the contrary is considered void. Since the law of the forum in this case is the
Philippine law, the issues should be resolved in accordance with Philippine
law.
MIGUELS ANSWER: The lawyer of JAL is wrong. Although the parties have
the freedom to stipulate anything they want in the contract it is still subject
to the rule that it is not contrary to law, morals, good customs and public
policy. The stipulations in the employment contract must still be in
compliance with labor laws in the Philippines as these labor laws were
created in order to protect the rights of laborers in the Philippines,
stipulations violating such is contrary to law and public policy.

Bar Question (1991)

Nature of Contracts; Obligatoriness
Roland, a basketball star, was under contract for one year to play-for-play
exclusively for Lady Love, Inc. However, even before the basketball season
could open, he was offered a more attractive pay plus fringes benefits by
Sweet Taste, Inc. Roland accepted the offer and transferred to Sweet Taste.
Lady Love sues Roland and Sweet Taste for breach of contract. Defendants
claim that the restriction to play for Lady Love alone is void, hence,
unenforceable, as it constitutes an undue interference with the right of Roland
to enter into contracts and the impairment of his freedom to play and enjoy
basketball.
Can Roland be bound by the contract he entered into with Lady Love or can
he disregard the same? Is he liable at all? How about Sweet Taste? Is it liable
to Lady Love?
SUGGESTED ANSWER: Roland is bound by the contract he entered into with
Lady Love and he cannot disregard the same, under the principles of
obligatoriness of contracts. Obligations arising from contracts have the force
of law between the parties.
Yes, Roland is liable under the contract as far as Lady Love is concerned. He
is liable for damages under Article 1170 of the Civil Code since he contravened
the tenor of his obligation. Not being a contracting party, Sweet Taste is not

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bound by the contract but it can be held liable under Art. 1314. The basis of
its liability is not prescribed by contract but is founded on quasi-delict,
assuming that Sweet Taste knew of the contract. Article 1314 of the Civil Code
provides that any third person who induces another to violate his contract
shall be liable for damages to the other contracting party.
MIGUELS ANSWER: Roland is bound by the contract he entered into with lady
love. Rolands defense is unmeritorious and has no legal basis. Roland is liable
for breach of contract for violating his obligation with Lady Love. Sweet Taste
can also be held liable for inducing Roland to violate his contract.

Bar Question (1991)

Ownership
Pablo sold his car to Alfonso who issued a postdated check in full payment
therefor. Before the maturity of the check. Alfonso sold the car to Gregorio
who later sold it to Gabriel. When presented for payment, the check issued by
Alfonso was dishonored: by the drawee bank for the reason that he, Alfonso,
had already closed his account even before he issued his check. Pablo sued to
recover the car from Gabriel alleging that he (Pablo) had been unlawfully
deprived of it by reason of Alfonsos deception. Will the suit prosper?
SUGGESTED ANSWER: No. The suit will not prosper because Pablo was not
unlawfully deprived of the car although he was unlawfully deprived of the
price. The perfection of the sale and the delivery of the car was enough to
allow Alfonso to have a right of ownership over the car, which can be lawfully
transferred to Gregorio. Art. 559 applies only to a person who is in possession
in good faith of the property, and not to the owner thereof. Alfonso, in the
problem, was the owner, and, hence Gabriel acquired the title to the car. Non-
payment of the price in a contract of sale does not render ineffective the
obligation to deliver. The obligation to deliver a thing is different from the
obligation to pay its price.
MIGUELS ANSWER: No, the suit will not prosper. Gabriel has the right to the
car as he bought it in good faith from Alfonso who was then its rightful owner.
The payment of the price and the delivery of the car was enough to perfect
the sale and vest ownership to Alfonso. Pablos resort would be to sue Alfonso
for violation of BP 22 or the bouncing checks law for issuing a check knowing
that it has no funds to pay another.

Bar Question (1991)

Period; Suspensive

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In a deed of sale of a realty, it was stipulated that the buyer would construct
a commercial building on the lot while the seller would construct a private
passageway bordering the lot. The building was eventually finished but the
seller failed to complete the passageway as some of the squatters, who were
already known to be there at the time they entered into the contract, refused
to vacate the premises. In fact, prior to its execution, the seller filed ejectment
cases against the squatters. The buyer now sues the seller for specific
performance with damages. The defense is that the obligation to construct the
passageway should be with a period which, incidentally, had not been fixed
by them, hence, the need for fixing a judicial period. Will the action for specific
performance of the buyer against the seller prosper?
SUGGESTED ANSWER: No. the action for specific performance filed by the
buyer is premature under Art. 1197 of the Civil Code. If a period has not been
fixed although contemplated by the parties, the parties themselves should fix
that period, failing in which, the Court may be asked to fix it taking into
consideration the probable contemplation of the parties. Before the period is
fixed, an action for specific performance is premature. It has been held in
Borromeo vs. CA (47 SCRA 69), that the Supreme Court allowed the
simultaneous filing of action to fix the probable contemplated period of the
parties where none is fixed in the agreement if this would avoid multiplicity of
suits. In addition, technicalities must be subordinated to substantial justice.
The action for specific performance will not prosper. The filing of the ejectment
suit by the seller was precisely in compliance with his obligations and should
not, therefore, be faulted if no decision has yet been reached by the Court on
the matter.
MIGUELS ANSWER: No, the action for specific performance will not prosper
since a period has not been fixed yet. There can be no delay yet if there is no
period fixing the time when the obligation must be fulfilled.

Bar Question (1992)

Liability; Solidary Obligation
In June 1988, X obtained a loan from A and executed with Y as solidary co-
maker a promissory note in favor of A for the sum of P200,000.00. The loan
was payable at P20,000.00 with interest monthly within the first week of each
month beginning July 1988 until maturity in April 1989. To secure the payment
of the loan. X put up as security a chattel mortgage on his car, a Toyota Corolla
sedan. Because of failure of X and Y to pay the principal amount of the loan,
the car was extrajudicially foreclosed. A acquired the car at A's highest bid of
P120,000.00 during the auction sale.

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After several fruitless letters of demand against X and Y, A sued Y alone for
the recovery of P80.000.00 constituting the deficiency. Y resisted the suit
raising the following defenses: a) That Y should not be liable at all because X
was not sued together with Y. b) That the obligation has been paid completely
by A's acquisition of the car through "dacion en pago" or payment by cession.
c) That Y should not be held liable for the deficiency of P80,000.00 because
he was not a co-mortgagor in the chattel mortgage of the car which contract
was executed by X alone as owner and mortgagor. d) That assuming that Y
is liable, he should only pay the proportionate sum of P40,000.00. Decide each
defense with reasons.
SUGGESTED ANSWER: (a) This first defense of Y is untenable. Y is still liable
as solidary debtor. The creditor may proceed against any one of the solidary
debtors. The demand against one does not preclude further demand against
the others so long as the debt is not fully paid.
(b) The second defense of Y is untenable. Y is still liable. The chattel mortgage
is only given as a security and not as payment for the debt in case of failure
to pay. Y as a solidary co-maker is not relieved of further liability on the
mortgage.
(c) The third defense of Y is untenable. Y is a surety of X and the extrajudicial
demand against the principal debtor is not inconsistent with a judicial demand
against the surety. A suretyship may co-exist with a mortgage.
(d) The fourth defense of Y is untenable. Y is liable for the entire prestation
since Y incurred a solidary obligation with X. (Arts. 1207, 1216. 1252 and
2047 Civil Code; Bicol Savings and Loan Associates vs. Guinhawa 188 SCRA
642)
MIGUELS ANSWER: (a) Y is wrong. The obligation being solidary, A can
demand payment from any of the debtors at whatever amount but not
exceeding that which is due and subject to Ys right to reimburse Xs share in
the debt.
(b) Y is wrong. Obligation has not been extinguished as there is still a
deficiency of P80,000 that X and Y must still pay A. The car was merely a
security provided by them to ensure A that they would pay but does not equate
or amount to dacion en pago or cession which may extinguish the obligation.
(c) Y is wrong. Y is still a surety of X and can still be held liable as a surety
despite the existence of a mortgage.
(d) Y is wrong. A can demand the the whole P80,000 from any of the debtors
the obligation being solidary. Y cannot be said to be liable for only P40,000
but for the entire amount subject to his right to get reimbursement from X of
his proportionate share.

14
Bar Question (1993)
Extinguishment; Loss; Impossible Service
In 1971, Able Construction, Inc. entered into a contract with Tropical Home
Developers, Inc. whereby the former would build for the latter the houses
within its subdivision. The cost of each house, labor and materials included,
was P100,000.00. Four hundred units were to be constructed within five years.
In 1973, Able found that it could no longer continue with the job due to the
increase in the price of oil and its derivatives and the concomitant worldwide
spiraling of prices of all commodities, including basic raw materials required
for the construction of the houses. The cost of development had risen to
unanticipated levels and to such a degree that the conditions and factors which
formed the original basis of the contract had been totally changed. Able
brought suit against Tropical Homes praying that the Court relieve it of its
obligation. Is Able Construction entitled to the relief sought?
SUGGESTED ANSWER: Yes, the Able Construction. Inc. is entitled to the relief
sought under Article 1267, Civil Code. The law provides: "When the service
has become so difficult as to be manifestly beyond the contemplation of the
parties, the obligor may also be released therefrom, in whole or in part."
MIGUELS ANSWER: Yes, the court may grant the relief sought by Able
Construction Inc. The Civil Code provides that the court may release the
obligor from his responsibility when the service has become so difficult that it
has gone beyond the expectations of the parties. However, the intention of
the parties must still prevail, it is only when the courts deem that the difficulty
goes beyond the intention and expectation of the parties that courts may
intervene.

Bar Question (1994)

Extinguishment; Loss
Dino sued Ben for damages because the latter had failed to deliver the antique
Marcedes Benz car Dino had purchased from Ben, which wasby agreement
due for delivery on December 31, 1993. Ben, in his answer to Dino's
complaint, said Dino's claim has no basis for the suit, because as the car was
being driven to be delivered to Dino on January 1, 1994, a reckless truck
driver had rammed into the Mercedes Benz. The trial court dismissed Dino's
complaint, saying Ben's obligation had indeed, been extinguished by force
majeure. Is the trial court correct?
SUGGESTED ANSWER: a) No. Article 1262, New Civil Code provides, "An
obligation which consists in the delivery of a determinate thing shall be
extinguished if it should be lost or destroyed without the fault of the debtor,

15
and before he has incurred in delay. b) The judgment of the trial court is
incorrect. Loss of the thing due by fortuitous events or force majeure is a valid
defense for a debtor only when the debtor has not incurred delay.
Extinguishment of liability for fortuitous event requires that the debtor has not
yet incurred any delay. In the present case, the debtor was in delay when the
car was destroyed on January 1, 1993 since it was due for delivery on
December 31, 1993. (Art. 1262 Civil Code) c) It depends whether or not Ben
the seller, was already in default at the time of the accident because a demand
for him to deliver on due date was not complied with by him. That fact not
having been given in the problem, the trial court erred in dismissing Dino's
complaint. Reason: There is default making him responsible for fortuitous
events including the assumption of risk or loss.
If on the other hand Ben was not in default as no demand has been sent to
him prior to the accident, then we must distinguish whether the price has been
paid or not. If it has been paid, the suit for damages should prosper but only
to enable the buyer to recover the price paid. It should be noted that Ben, the
seller, must bear the loss on the principle of res perit domino. He cannot be
held answerable for damages as the loss of the car was not imputable to his
fault or fraud. In any case, he can recover the value of the car from the party
whose negligence caused the accident. If no price has been paid at all, the
trial court acted correctly in dismissing the complaint.
MIGUELS ANSWER: The trial court is wrong. The defense of loss of the thing
due to a fortuitous event can only be used if the obligor is not yet in delay. In
this case the car was due to be delivered on December 31, 1993, Ben was
already in delay when he lost the car due to the accident, he cannot therefore
use the defense loss due to fortuitous event.

Bar Question (1994)

Extinguishment; Novation
In 1978, Bobby borrowed P1,000,000 from Chito payable in two years. The
loan, which was evidenced by a promissory note, was secured by a mortgage
on real property. No action was filed by Chito to collect the loan or to foreclose
the mortgage. But in 1991, Bobby, without receiving any amount from Chito,
executed another promissory note which was worded exactly as the 1978
promissory note, except for the date thereof, which was the date of its
execution. 1) Can Chito demand payment on the 1991 promissory note in
1994? 2) Can Chito foreclose the real estate mortgage if Bobby fails to make
good his obligation under the 1991 promissory note?
SUGGESTED ANSWER: 1) Yes, Chito can demand payment on the 1991
promissory note in 1994. Although the 1978 promissory note for P1 million

16
payable two years later or in 1980 became a natural obligation after the lapse
of ten (10) years, such natural obligation can be a valid consideration of a
novated promissory note dated in 1991 and payable two years later, or in
1993. All the elements of an implied real novation are present: a) an old valid
obligation; b) a new valid obligation; c) capacity of the parties; d) animus
novandi or intention to novate; and e) The old and the new obligation should
be incompatible with each other on all material points (Article 1292). The two
promissory notes cannot stand together, hence, the period of prescription of
ten (10) years has not yet lapsed.
2) No. The mortgage being an accessory contract prescribed with the loan.
The novation of the loan, however, did not expressly include the mortgage,
hence, the mortgage is extinguished under Article 1296 of the NCC. The
contract has been extinguished by the novation or extinction of the principal
obligation insofar as third parties are concerned.
MIGUELS ANSWER: 1) Yes, Chino can demand payment on the 1991
promissory note. The 1978 promissory note can be considered as the
consideration for the new 1991 promissory note thereby renewing the period
of prescription starting from the issuance of the new promissory note.
2) No, the mortgage was extinguished when the first promissory note to which
it was attached prescribed. Mortgage being merely an accessory contract, is
extinguished once the contract to which it was attached is extinguished.

Bar Question (1996)

Rescission of Contracts; Proper Party
In December 1985, Salvador and the Star Semiconductor Company (SSC)
executed a Deed of Conditional Sale wherein the former agreed to sell his
2,000 square meter lot in Cainta, Rizal, to the latter for the price of
P1,000,000.00, payable P100,000.00 down, and the balance 60 days after the
squatters in the property have been removed. If the squatters are not
removed within six months, the P100,000.00 down payment shall be returned
by the vendor to the vendee, Salvador filed ejectment suits against the
squatters, but in spite of the decisions in his favor, the squatters still would
not leave. In August, 1986, Salvador offered to return the P100,000.00 down
payment to the vendee, on the ground that he is unable to remove the
squatters on the property. SSC refused to accept the money and demanded
that Salvador execute a deed of absolute sale of the property in its favor, at
which time it will pay the balance of the price. Incidentally, the value of the
land had doubled by that time. Salvador consigned the P 100,000 in court,
and filed an action for rescission of the deed of conditional sale, plus damages.
Will the action prosper? Explain.

17
SUGGESTED ANSWER: No, the action will not prosper. The action for
rescission may be brought only by the aggrieved party to the contract. Since
it was Salvador who failed to comply with his conditional obligation, he is not
the aggrieved party who may file the action for rescission but the Star
Semiconductor Company. The company, however, is not opting to rescind the
contract but has chosen to waive Salvador's compliance with the condition
which it can do under Art. 1545, NCC.
MIGUELS ANSWER:

Bar Question (1996)

Nature of Contracts; Privity of Contract
Baldomero leased his house with a telephone to Jose. The lease contract
provided that Jose shall pay for all electricity, water and telephone services in
the leased premises during the period of the lease. Six months later. Jose
surreptitiously vacated the premises. He left behind unpaid telephone bills for
overseas telephone calls amounting to over P20,000.00. Baldomero refused
to pay the said bills on the ground that Jose had already substituted him as
the customer of the telephone company. The latter maintained that Baldomero
remained as his customer as far as their service contract was concerned,
notwithstanding the lease contract between Baldomero and Jose. Who is
correct, Baldomero or the telephone company? Explain.
SUGGESTED ANSWER: The telephone company is correct because as far as
it is concerned, the only person it contracted with was Baldomero. The
telephone company has no contract with Jose. Baldomero cannot substitute
Jose in his stead without the consent of the telephone company (Art. 1293,
NCC). Baldomero is, therefore, liable under the contract.
MIGUELS ANSWER: The telephone company is correct. The telephone
company contracted with Baldomero, Jose is not included in that contract. As
far as the telephone company is concerned, the obligation to pay the bills lies
with Baldomero regardless of whether or not he is the one using it. Baldomero
cannot refuse to pay.

Bar Question (1997)

Conditional Obligations; Promise
In two separate documents signed by him, Juan Valentino "obligated" himself
each to Maria and to Perla, thus - 'To Maria, my true love, I obligate myself to
give you my one and only horse when I feel like It." - and -'To Perla, my true
sweetheart, I obligate myself to pay you the P500.00 I owe you when I feel

18
like it." Months passed but Juan never bothered to make good his promises.
Maria and Perla came to consult you on whether or not they could recover on
the basis of the foregoing settings. What would your legal advice be?
SUGGESTED ANSWER: I would advise Maria not to bother running after Juan
for the latter to make good his promise. [This is because a promise is not an
actionable wrong that allows a party to recover especially when she has not
suffered damages resulting from such promise. A promise does not create an
obligation on the part of Juan because it is not something which arises from a
contract, law, quasi-contracts or quasi delicts (Art, 1157)]. Under Art. 1182,
Juan's promise to Maria is void because a conditional obligation depends upon
the sole will of the obligor.
As regards Perla, the document is an express acknowledgment of a debt, and
the promise to pay what he owes her when he feels like it is equivalent to a
promise to pay when his means permits him to do so, and is deemed to be
one with an indefinite period under Art. 1180. Hence the amount is
recoverable after Perla asks the court to set the period as provided by Art.
1197, par. 2.
MIGUELS ANSWER:

Bar Question (1998)

Liability; Solidary Liability
Joey, Jovy and Jojo are solidary debtors under a loan obligation of
P300,000.00 which has fallen due. The creditor has, however, condoned Jojo's
entire share in the debt. Since Jovy has become insolvent, the creditor makes
a demand on Joey to pay the debt.
1) How much, if any, may Joey be compelled to pay
2) To what extent, if at all, can Jojo be compelled by Joey to contribute to
such payment?
SUGGESTED ANSWER: 1. Joey can be compelled to pay only the remaining
balance of P200.000, in view of the remission of Jojo's share by the creditor.
(Art. 1219, Civil Code)
2. Jojo can be compelled by Joey to contribute P50.000 Art. 1217. par. 3, Civil
Code provides. "When one of the solidary debtors cannot, because of his
insolvency, reimburse his share to the debtor paying the obligation, such
share shall be borne by all his co-debtors, in proportion to the debt of each."
Since the insolvent debtor's share which Joey paid was P100,000, and there
are only two remaining debtors - namely Joey and Jojo - these two shall share

19
equally the burden of reimbursement. Jojo may thus be compelled by Joey to
contribute P50.000.00.
MIGUELS ANSWER: 1) Joey can be compelled to pay the remaining
demandable debt of P200,000. Since the creditor has condoned Jojos entire
share, the creditor can only demand for the shares of Joey and Jovy. Since
the obligation is solidary, Joey can be compelled to pay for the entire
remaining balance after subtracting Jojos share.
2) Jojo can be compelled to pay P50,000 which is half of the share of Jovy, a
co-debtor who has become insolvent. The Civil Code provides that when one
or more of the solidary co-debtors are insolvent, his share will be borne by his
co-debtors.

Bar Question (1998)

Consensual vs. Real Contracts; Kinds of Real Contracts
Distinguish consensual from real contracts and name at least four (4) kinds of
real contracts under the present law.
SUGGESTED ANSWER: Consensual Contracts are those which are perfected
by mere consent (Art. 1315. Civil Code). Real Contracts are those which are
perfected by the delivery of the object of the obligation. (Art. 1316, Civil Code)
Examples of real contracts are deposit, pledge, commodatum and simple loan
(mutuum).
MIGUELS ANSWER: Consensual contracts are contracts that are perfected by
mere consent of the parties, from that moment of consent, the parties are
already bound to fulfill the obligation agreed upon. Real contracts on the other
hand are contracts that are perfected by the delivery of the object. Delivery
is required for real contracts to be valid in addition to the presence of the
other essential elements of a contract. Examples of real contracts are deposit,
pledge, commodatum, and mutuum.

Bar Question (1999)

Conditional Obligations; Resolutory Condition
In 1997, Manuel bound himself to sell Eva a house and lot which is being
rented by another person, if Eva passes the 1998 bar examinations. Luckily
for Eva, she passed said examinations.
(a) Suppose Manuel had sold the same house and lot to another before Eva
passed the 1998 bar examinations, is such sale valid? Why?

20
 (b) Assuming that it is Eva who is entitled to buy said house and lot, is she
entitled to the rentals collected by Manuel before she passed the 1998 bar
examinations? Why?
SUGGESTED ANSWER: (a) Yes, the sale to the other person is valid. However,
the buyer acquired the property subject to a resolutory condition of Eva
passing the 1998 Bar Examinations. Hence, upon Evas passing the bar, the
rights of the other buyer terminated and Eva acquired ownership of the
property.
(b) Under Art. 1164, there is no obligation on the part of Manuel to deliver the
fruits (rentals) of the thing until the obligation to deliver the thing arises. As
the suspensive condition has not been fulfilled, the obligation to sell does not
arise.
MIGUELS ANSWER: (a) The sale is valid. If the buyer bought the house and
lot in good faith, without knowledge of the obligation of Manuel to Eva, the
buyer need not return the property to Eva because he bought it in good faith
and for value. If however he was made aware of the agreement between
Manuel and Eva, he is obliged to return such property as the ownership is
subject to the condition of Eva passing the bar exam.
(b) No, Eva is not entitled to the rentals of the house and lot prior to her
passing the bar examinations. The right to the fruits of the object will only be
vested upon the other party once he has the right to demand for the thing
that is the object of the contract. Eva only had the right to demand for the
house and lot upon the happening of the condition, therefore she has no right
to demand for the rentals prior to that.

Bar Question (2000)

Loss of the thing due; Force Majeure
Kristina brought her diamond ring to a jewelry shop for cleaning. The jewelry
shop undertook to return the ring by February 1, 1999." When the said date
arrived, the jewelry shop informed Kristina that the Job was not yet finished.
They asked her to return five days later. On February 6, 1999, Kristina went
to the shop to claim the ring, but she was informed that the same was stolen
by a thief who entered the shop the night before. Kristina filed an action for
damages against the jewelry shop which put up the defense of force majeure.
Will the action prosper or not?
SUGGESTED ANSWER: The action will prosper. Since the defendant was
already in default not having delivered the ring when delivery was demanded
by plaintiff at due date, the defendant is liable for the loss of the thing and
even when the loss was due to force majeure.

21
MIGUELS ANSWER: The action will prosper. The defense of force majeure or
fortuitous event can be used when there is an unforeseen event that prevents
the obligor from performing his obligation. However, the Civil Code provides
that for it to be a valid defense, the obligor must not be in default. In this
case, since the obligor was already in default, he cannot invoke the defense
of fortuitous event.

Bar Question (2000)

Consideration; Validity
Lolita was employed in a finance company. Because she could not account for
the funds entrusted to her, she was charged with estafa and ordered arrested.
In order to secure her release from jail, her parents executed a promissory
note to pay the finance company the amount allegedly misappropriated by
their daughter. The finance company then executed an affidavit of desistance
which led to the withdrawal of the information against Lolita and her release
from jail. The parents failed to comply with their promissory note and the
finance company sued them for specific performance. Will the action prosper
or not?
SUGGESTED ANSWER: The action will prosper. The promissory note executed
by Lolita's parents is valid and binding, the consideration being the
extinguishment of Lolita's civil liability and not the stifling of the criminal
prosecution.
MIGUELS ANSWER: The action will prosper. The promissory note is valid and
can therefore give rise to a cause of action upon non-fulfillment. The parents
failing to pay, the finance company can therefore sue them for the payment
of the amount due.

Bar Question (2000)

Conditional Obligations
Pedro promised to give his grandson a car if the latter will pass the bar
examinations. When his grandson passed the said examinations, Pedro
refused to give the car on the ground that the condition was a purely
potestative one. Is he correct or not?
SUGGESTED ANSWER: No, he is not correct. First of all, the condition is not
purely potestative, because it does not depend on the sole will of one of the
parties. Secondly, even if it were, it would be valid because it depends on the
sole will of the creditor (the donee) and not of the debtor (the donor).

22
MIGUELS ANSWER: No, he is not correct. A potestative condition is a condition
whose fulfillment is depenedent on the sole will of one of the parties. The
condition imposed by Pedro of his grandson passing the bar is not a
potestative condition, it is a mixed condition as its fulfillment is dependent on
chance and upon the will of the parties.

Bar Question (2000)

Extinguishment; Condonation
Arturo borrowed P500,000.00 from his father. After he had paid P300,000.00,
his father died. When the administrator of his father's estate requested
payment of the balance of P200,000.00. Arturo replied that the same had
been condoned by his father as evidenced by a notation at the back of his
check payment for the P300,000.00 reading: "In full payment of the loan".
Will this be a valid defense in an action for collection?
SUGGESTED ANSWER: It depends. If the notation "in full payment of the
loan" was written by Arturo's father, there was an implied condonation of the
balance that discharges the obligation. In such case, the notation is an act of
the father from which condonation may be inferred. The condonation being
implied, it need not comply with the formalities of a donation to be effective.
The defense of full payment will, therefore, be valid.
When, however, the notation was written by Arturo himself. It merely proves
his intention in making that payment but in no way does it bind his father
(Yam v. CA, G.R No. 104726. 11 February 1999). In such case, the notation
was not the act of his father from which condonation may be inferred. There
being no condonation at all the defense of full payment will not be valid.
MIGUELS ANSWER: It is a valid defense if the condonation was done by the
father. If the notation at the back of the check was written by the father then
it may be deemed an implied condonation of the remaining balance of the
loan.

Bar Question (2001)

Extinguishment; Extraordinary Inflation or Deflation
On July 1, 1998, Brian leased an office space in a building for a period of five
years at a rental rate of P1,000.00 a month. The contract of lease contained
the proviso that "in case of inflation or devaluation of the Philippine peso, the
monthly rental will automatically be increased or decreased depending on the
devaluation or inflation of the peso to the dollar." Starting March 1, 2001, the
lessor increased the rental to P2,000 a month, on the ground of inflation

23
proven by the fact that the exchange rate of the Philippine peso to the dollar
had increased from P25.00=$1.00 to P50.00=$1.00. Brian refused to pay the
increased rate and an action for unlawful detainer was filed against him. Will
the action prosper? Why?
SUGGESTED ANSWER: The unlawful detainer action will not prosper.
Extraordinary inflation or deflation is defined as the sharp decrease in the
purchasing power of the peso. It does not necessarily refer to the exchange
rate of the peso to the dollar. Whether or not there exists an extraordinary
inflation or deflation is for the courts to decide. There being no showing that
the purchasing power of the peso had been reduced tremendously, there could
be no inflation that would justify the increase in the amount of rental to be
paid. Hence, Brian could refuse to pay the increased rate.
MIGUELS ANSWER: The action will not prosper. For the defense of inflation
or deflation to be valid, there must be an official pronouncement or declaration

Bar Question (2001)

Extinguishment; Assignment of Rights
The sugar cane planters of Batangas entered into a long-term milling contract
with the Central Azucarera de Don Pedro Inc. Ten years later, the Central
assigned its rights to the said milling contract to a Taiwanese group which
would take over the operations of the sugar mill. The planters filed an action
to annul the said assignment on the ground that the Taiwanese group was not
registered with the Board of Investments. Will the action prosper or not?
Explain briefly.
SUGGESTED ANSWER: The action will prosper not on the ground invoked but
on the ground that the farmers have not given their consent to the
assignment. The milling contract imposes reciprocal obligations on the parties.
The sugar central has the obligation to mill the sugar cane of the farmers while
the latter have the obligation to deliver their sugar cane to the sugar central.
As to the obligation to mill the sugar cane, the sugar central is a debtor of the
farmers. In assigning its rights under the contract, the sugar central will also
transfer to the Taiwanese its obligation to mill the sugar cane of the farmers.
This will amount to a novation of the contract by substituting the debtor with
a third party. Under Article 1293 of the Civil Code, such substitution cannot
take effect without the consent of the creditor. The formers, who are creditors
as far as the obligation to mill their sugar cane is concerned, may annul such
assignment for not having their consent thereto.
MIGUELS ANSWER: The action will prosper. The assignment should be
annulled. The assignment of the rights by Central Azucarera to the Taiwanese
group amounts to a novation of the contract with the substitution of the
24
debtor. For there to be a valid substitution, consent of the creditor must be
obtained. In this case, the consent of the farmers was not obtained by the
Central Azucarera before assigning the rights to the Taiwanese group. The
assignment is therefore invalid.

Bar Question (2001)

Liability; Lease; Joint Liability
Four foreign medical students rented the apartment of Thelma for a period of
one year. After one semester, three of them returned to their home country
and the fourth transferred to a boarding house. Thelma discovered that they
left unpaid telephone bills in the total amount of P80,000.00. The lease
contract provided that the lessees shall pay for the telephone services in the
leased premises. Thelma demanded that the fourth student pay the entire
amount of the unpaid telephone bills, but the latter is willing to pay only one
fourth of it. Who is correct? Why?
SUGGESTED ANSWER: The fourth student is correct. His liability is only joint,
hence, pro rata. There is solidary liability only when the obligation expressly
so states or when the law or nature of the obligation requires solidarity (Art.
1207, CC). The contract of lease in the problem does not, in any way, stipulate
solidarity.
MIGUELS ANSWER: The fourth student is correct. The obligation is a joint
obligation. When the obligation concerns multiple debtors without stating the
nature of the obligation of each, it is presumed that the obligation is joint.
There is solidary obligation only when the parties intend that the obligation be
solidary. Solidary obligations are never presumed and must be specifically
stated in the agreement, otherwise, the default rule is that it is a joint
obligation.

Bar Question (2002)

Extinguishment; Compensation
Stockton is a stockholder of Core Corp. He desires to sell his shares in Core
Corp. In view of a court suit that Core Corp. has filed against him for damages
in the amount of P 10 million, plus attorneys fees of P 1 million, as a result of
statements published by Stockton which are allegedly defamatory because it
was calculated to injure and damage the corporations reputation and
goodwill. The articles of incorporation of Core Corp. provide for a right of first
refusal in favor of the corporation. Accordingly, Stockton gave written notice
to the corporation of his offer to sell his shares of P 10 million. The response

25
of Core corp. was an acceptance of the offer in the exercise of its rights of first
refusal, offering for the purpose payment in form of compensation or set-off
against the amount of damages it is claiming against him, exclusive of the
claim for attorneys fees. Stockton rejected the offer of the corporation,
arguing that compensation between the value of the shares and the amount
of damages demanded by the corporation cannot legally take effect. Is
Stockton correct? Give reason for your answer.
SUGGESTED ANSWER: Stockton is correct. There is no right of compensation
between his price of P10 million and Core Corp.s unliquidated claim for
damages. In order that compensation may be proper, the two debts must be
liquidated and demandable. The case for the P 10million damages being still
pending in court, the corporation has as yet no claim which is due and
demandable against Stockton.
MIGUELS ANSWER: Stockton is correct. In order for there to be a valid
compensation, one of the requisites that Art. 1279 of the Civil Code provides
is that the debts be liquidated and demandable. In this case, since the claim
for damages is still pending in court, the amount has not been liquidated yet
therefore one of the requisites for a valid compensation is lacking.

Bar Question (2002)

Nature of Contracts; Relativity of Contracts
Printado is engaged in the printing business. Suplico supplies printing paper
to Printado pursuant to an order agreement under which Suplico binds himself
to deliver the same volume of paper every month for a period of 18 months,
with Printado in turn agreeing to pay within 60 days after each delivery.
Suplico has been faithfully delivering under the order agreement for 10
months but thereafter stopped doing so, because Printado has not made any
payment at all. Printado has also a standing contract with publisher Publico
for the printing of 10,000 volumes of school textbooks. Suplico was aware of
said printing contract. After printing 1,000 volumes, Printado also fails to
perform under its printing contract with Publico. Suplico sues Printado for the
value of the unpaid deliveries under their order agreement. At the same time
Publico sues Printado for damages for breach of contract with respect to their
own printing agreement. In the suit filed by Suplico, Printado counters that:
(a) Suplico cannot demand payment for deliveries made under their order
agreement until Suplico has completed performance under said contract; (b)
Suplico should pay damages for breach of contract; and (c) with Publico should
be liable for Printados breach of his contract with Publico because the order
agreement between Suplico and Printado was for the benefit of Publico. Are
the contentions of Printado tenable? Explain your answers as to each
contention

26
SUGGESTED ANSWER: No, the contentions of Printado are untenable. Printado
having failed to pay for the printing paper covered by the delivery invoices on
time, Suplico has the right to cease making further delivery. And the latter did
not violate the order agreement (Integrated Packaging Corporation v. Court
of Appeals, (333 SCRA 170, G.R. No. 115117, June 8, [2000]).
Suplico cannot be held liable for damages, for breach of contract, as it was
not he who violated the order agreement, but Printado. Suplico cannot be held
liable for Printados breach of contract with Publico. He is not a party to the
agreement entered into by and between Printado and Publico. Theirs is not a
stipulation pour atrui. [Aforesaid] Such contracts do could not affect third
persons like Suplico because of the basic civil law principle of relativity of
contracts which provides that contracts can only bind the parties who entered
into it, and it cannot favor or prejudice a third person, even if he is aware of
such contract and has acted with knowledge thereof. (Integrated Packaging
Corporation v. CA, supra.)
MIGUELS ANSWER: The contentions of Printado are unmeritorious. Printado
failed to comply with his obligation to pay Suplico for the printing papers that
Suplico has delivered, Suplico therefore had the right to stop making further
delivery until Printado complies with their obligation. Suplico cannot be held
liable for damages as it was Printado who breached the contract because of
their non-payment despite the prior deliveries made by Suplico of the printing
papers. Suplico cannot be held liable for the failure of Printado to comply with
Printados obligation to Publico as Suplico is not part of the contract between
the prior two.

Bar Question (2003)

Conditional Obligations
Are the following obligations valid, why, and if they are valid, when is the
obligation demandable in each case? a) If the debtor promises to pay as soon
as he has the means to pay; b) If the debtor promises to pay when he likes;
c) If the debtor promises to pay when he becomes a lawyer; d) If the debtor
promises to pay if his son, who is sick with cancer, does not die within one
year.
SUGGESTED ANSWER: (a) The obligation is valid. It is an obligation subject
to an indefinite period because the debtor binds himself to pay when his means
permit him to do so (Article 1180, NCC). When the creditor knows that the
debtor already has the means to pay, he must file an action in court to fix the
period, and when the definite period as set by the court arrives, the obligation
to pay becomes demandable 9Article 1197, NCC)

27
(b) The obligation to pay when he likes is a suspensive condition the
fulfillment of which is subject to the sole will of the debtor and, therefore the
conditional obligation is void. (Article 1182, NCC).
(c) The obligation is valid. It is subject to a suspensive condition, i.e. the future
and uncertain event of his becoming a lawyer. The performance of this
obligation does not depend solely on the will of the debtor but also on other
factors outside the debtors control
(d) The obligation is valid. The death of the son of cancer within one year is
made a negative suspensive condition to his making the payment. The
obligation is demandable if the son does not die within one year (Article 1185,
NCC).
MIGUELS ANSWER: (a) VALID. It is an obligation subject to an indefinite
period and is demandable upon the fixing of the period by the parties or
through the courts.
(b) VOID. The obligation is an obligation subject to a potestative condition
which according to the Civil Code are considered void.
(c) VALID. The obligation is an obligation subject to a suspensive condition
and is demandable upon the occurrence of the condition or as in this case
upon him becoming a lawyer.
(d) VALID. The obligation is subject to a suspensive condition. It is
demandable upon the end of 1 year if his son has not died by then.

Bar Question (2003)

Liability; Solidary Obligation; Mutual Guaranty
A,B,C,D, and E made themselves solidarity indebted to X for the amount of
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. b) C has already been
condoned by X c) D is insolvent. d) E was given by X an extension of 6 months
without the consent of the other four co-debtors. State the effect of each of
the above defenses put up by A on his obligation to pay X, if such defenses
are found to be true.
SUGGESTED ANSWER: (a) A may avail the minority of B as a defense, but
only for Bs share of P 10,000.00. A solidary debtor may avail himself of any
defense which personally belongs to a solidary co-debtor, but only as to the
share of that co-debtor.
(b) A may avail of the condonation by X of Cs share of P 10, 000.00. A solidary
debtor may, in actions filed by the creditor, avail himself of all defenses which

28
are derived from the nature of the obligation and of those which are personal
to him or pertain to his own share. With respect to those which personally
belong to others, he may avail himself thereof only as regards that part of the
debt for which the latter are responsible. (Article 1222, NCC).
(c) A may not interpose the defense of insolvency of D as a defense. Applying
the principle of mutual guaranty among solidary debtors, A guaranteed the
payment of Ds share and of all the other co-debtors. Hence, A cannot avail of
the defense of Ds insolvency.
(d) The extension of six (6) months given by X to E may be availed of by A as
a partial defense but only for the share of E, there is no novation of the
obligation but only an act of liberality granted to E alone.
MIGUELS ANSWER: (a) The share of that co-debtor would be deducted from
the total amount due. The minority of one of the solidary co-debtors is a valid
defense and would benefit his co-debtors
(b) The part of C will be deducted from the total amount that is due and
demandable from the remaining co-debtors.
(c) The co-debtors would have to shoulder the share of an insolvent co-debtor
in proportion to their share in the debt
(d) The extension would benefit A only as to the share of E. The amount that
is demandable would therefore be reduced to an amount subtracting the share
of E until his share becomes due and demandable.

Bar Question (2004)

Inexistent Contracts vs. Annullable Contracts
Distinguish briefly but clearly between Inexistent contracts and annullable
contracts.
SUGGESTED ANSWER: Inexistent Contracts are considered as not having
been entered into and, therefore, void ab initio. They do not create any
obligation and cannot be ratified or validated, as there is no agreement to
ratify or validate. On the other hand, Annullable or Voidable Contracts are
valid until invalidated by the court but may be ratified. In inexistent contracts,
one or more requisites of a valid contract are absent. In anullable contracts,
all the elements of a contract are present except that the consent of one of
the contracting parties was vitiated or one of them has no capacity to give
consent.
MIGUELS ANSWER: Inexistent contracts are contracts that have no force and
effect from the beginning and which cannot be ratified by lapse of time. An

29
annullable contract or a voidable contract on the other hand are contracts
which are valid until annulled. Voidable contracts are subject to ratification.

Bar Question (2005)

Contract of Option; Elements
Marvin offered to construct the house of Carlos for a very reasonable price of
P900,000.00, giving the latter 10 days within which to accept or reject the
offer. On the fifth day, before Carlos could make up his mind, Marvin withdrew
his offer. a) What is the effect of the withdrawal of Marvin's offer?
SUGGESTED ANSWER: The withdrawal of Marvin's offer will cause the offer
to cease in law. Hence, even if subsequently accepted, there could be no
concurrence of the offer and the acceptance. In the absence of concurrence
of offer and acceptance, there can be no consent. (Laudico v. Arias Rodriguez,
G.R. No. 16530, March 31, 1922) Without consent, there is no perfected
contract for the construction of the house of Carlos. (Salonga v. Farrales, G.R.
No. L-47088, July 10, 1981) Article 1318 of the Civil Code provides that there
can be no contract unless the following requisites concur: (1) consent of the
parties; (2) object certain which is the subject matter of the contract; and (3)
cause of the obligation.
Marvin will not be liable to pay Carlos any damages for withdrawing the offer
before the lapse of the period granted. In this case, no consideration was
given by Carlos for the option given, thus there is no perfected contract of
option for lack of cause of obligation. Marvin cannot be held to have breached
the contract. Thus, he cannot be held liable for damages.
MIGUELS ANSWER: The withdrawal of the offer means that there can be no
contract. A contract would only be born upon the meeting of the minds of the
parties and the acceptance of the offer of one by the other. There being no
offer, acceptance cannot be effected thereby eliminating the possibility of
having a contract.
b) Will your answer be the same if Carlos paid Marvin P10,000.00 as
consideration for that option? Explain.
SUGGESTED ANSWER: My answer will be the same as to the perfection of the
contract for the construction of the house of Carlos. No perfected contract
arises because of lack of consent. With the withdrawal of the offer, there could
be no concurrence of offer and acceptance.
MIGUELS ANSWER: Yes, my answer will be the same. Since there is no
perfected contract, no obligation arises.

30
c) Supposing that Carlos accepted the offer before Marvin could communicate
his withdrawal thereof? Discuss the legal consequences.
SUGGESTED ANSWER: A contract to construct the house of Carlos is
perfected. Contracts are perfected by mere consent manifested by the
meeting of the offer and the acceptance upon the thing and the cause which
are to constitute the contract. (Gomez v. Court of Appeals, G.R. No. 120747,
September 21, 2000)
Under Article 1315 of the Civil Code, Carlos and Marvin are bound to fulfill
what has been expressly stipulated and all consequences thereof. Under
Article 1167, if Marvin would refuse to construct the house, Carlos is entitled
to have the construction be done by a third person at the expense of Marvin.
Marvin in that case will be liable for damages under Article 1170.
MIGUELS ANSWER: If the offer was accepted before it was withdrawn there
is a valid contract that can be the source of obligations arising from their
agreements.

Bar Question (2007)

Obligations
What are the obligations without an agreement? Give examples of situations
giving rise to this type of obligation.
SUGGESTED ANSWER: Obligations without an agreement are obligations that
do not arise from contract such as those arising from: 1) delicts 2) quasi-
delicts 3) solutio indebiti 4) negotiorum gestio and 5) all other obligations
arising from law

Bar Question (2008)

Compensation
Eduardo was granted a loan by XYZ Bank for the purpose of improving a
building which XYZ leased from him. Eduardo, executed the promissory note
in favor of the bank with his friend Recardo as co-signatory. In the PN, they
both acknowledged that they are individually and collectively liable and
waived the need for prior demand. To secure the PN, Recardo executed a real
estate mortgage on his own property. When Eduardo defaulted on the PN, XYZ
stopped payment of rentals on the building on the ground that legal
compensation had set in since there was still a balance due on the PN after
applying the rentals. XYZ foreclosed the real estate mortgage over Recardos
property. Recardo opposed the foreclosure on the ground that he is only a co-

31
signatory; that no demand was made upon him for payment, and assuming
he is liable, his liability should not go beyond half the balance of the loan.
Further, Recardo said that when the bank invoked compensation between the
rentals and the amount of the loan, it amounted to a new contract or novation
and had the effect of extinguishing the security since he did not give his
consent (as owner of the property under the real estate mortgage) thereto.
(a) Can XYZ Bank validly assert legal compensation?
(b) Can Recardos property be foreclosed to pay the full balance of the
loan?
(c) Does Recardo have basis under the Civil Code for claiming that the
original contract was novated?
SUGGESTED ANSWER: (a) XYZ may validly assert the partial compensation of
both debts, but it should be facultative compensation because not all of the 5
requisites of legal compensation are present. The payment of the rentals by
XYZ Bank is not yet due, but the principal obligation of loan where both
Eduardo and Recardo are bound solidarily and therefore any of them is
principally bound to pay the entire loan, is due and demandable without need
of demand. XYZ Bank may declare its obligation to pay rentals as already due
and demand payment from any of the two debtors.
(b) No, because there was no prior demand on Ricardo, depriving him of the
right to reasonably block the foreclosure by payment. The waiver of prior
demand in the PN is against public policy and violates the right to due process.
Without demand, there is no default and the foreclosure is null and void. Since
the mortgage, insofar as Ricardo is concerned is not violated, a requirement
under Act 3135 for a valid foreclosure of real estate mortgage is absent.
In the case of DBP vs Licuanan, it was held that: the issue of whether demand
was made before the foreclosure was effected is essential. If demand was
made and duly received by the respondents and the latter still did not pay,
then they were already in default and foreclosure was proper. However, if
demand was not made, then the loans had not yet become due and
demandable. This meant that respondents had not defaulted in their payment
and the foreclosure was premature.
(c) None of the three kinds of novation is applicable. There is no objective
novation, whether express or implied, because there is no change in the object
or principal conditions of the obligation. There is no substitution of debtors,
either. Compensation is considered as abbreviated or simplified payment and
since Recardo bound himself solidarily with Eduardo, any facultative
compensation which occurs does not result in partial legal subrogation. Neither
Eduardo nor Recardo is a third person interested in the obligation under Art.
1302 of the Civil Code

32
MIGUELS ANSWER: (a) XYZ may assert compensation. The requisites for a
valid application of compensation are present in this case. XYZ and Eduardo
are creditors of one another, Eduardo as to the promissory note that is due
and XYZ as to the rentals which are also due, both debts are demandable and
both consists in debts of a sum of money that is liquidated and demandable.
All of the requisites for compensation are present and this XYZ may validly
apply compensation in the fulfillment of the debt of Eduardo to them.
(b) Recardos property may be foreclosed upon proper showing that demand
was made upon him and he failed to pay, without which foreclosure cannot be
effected.
(c) None. There is no novation in this case as there was no change in object,
condition, or debtor.

Bar Question (2008)

Felipe borrowed $100 from Gustavo in 1998, when the Phil P - US$ exchange
rate was P56 - US$1. On March 1, 2008, Felipe tendered to Gustavo a cashier's
check in the amount of P4,135 in payment of his US$ 100 debt, based on the
Phil P - US$ exchange rat at that time. Gustavo accepted the check, but forgot
to deposit it until Sept. 12, 2008. His bank refused to accepted the check
because it had become stale. Gustavo now wants Felipe to pay him in cash
the amount of P5,600. Claiming that the previous payment was not in legal
tender, and that there has been extraordinary deflation since 1998, and
therefore, Felipe should pay him the value of the debt at the time it was
incurred. Felipe refused to pay him again, claiming that Gustavo is estopped
from raising the issue of legal tender, having accepted the check in March,
and that it was Gustavo's negligence in not depositing the check immediately
that caused the check to become stale.
(a) Can Gustavo now raised the issue that the cashier's check is not legal
tender?
(b) Can Felipe validly refuse to pay Gustavo again?
(c) Can Felipe compel Gustavo to receive US$100 instead?
SUGGESTED ANSWER:
(a) No, because Gustavo is guilty of estoppel by laches. He led Felipe to
believe he could pay by cashiers check, and Felipe relied that such
cashier check would be encashed this extinguishing his obligation.
Because of Gustavos inaction of more than six months the check
became stale and Felipe will be prejudiced if he will be required to
pay $100 at the exchange rate ofP56 to $1. The exchange should be
the rate at the time of payment

33
 (b) Yes, if the payment is valid. Since the bank considered the cashiers
check as being stale for not having been encashed on time, then the
cashiers check may be issued again. At any rate, non-payment of
the amount to Gustavo would constitute unjust enrichment
(c) Yes, Felipe can compel Gustavo to pay $100. Under RA 529, as
amended by RA 4100, Payment can only be in Philippine currency as
it would be against public policy, null and void and of no effect.
However, under RA 8183, payment may be made in the currency
agreed upon, and the rate of exchange to be followed is at the time
of payment.
MIGUELS ANSWER: (a) Gustavo cannot use the defense that the check was
not legal tender because he has already accepted it. Gustavos acceptance of
the check was tantamount to a valid payment thereby extinguishing the
obligation. While a check is not legal tender, Gustavo is bound by estoppel
from questioning it as he accepted it despite knowing such.
(b) Yes, Felipe can refuse to pay Gustavo again. The acceptance of the
payment of Felipe by Gustavo effectively extinguished his obligation to him.
Gustavo was negligent in not encashing the check immediately and Felipe
should not be faulted for that.
(c) Yes if it was the currency agreed upon by the parties, otherwise, Felipe
should pay in Philippine peso which is the legal tender in the Philippines.
Bar Question (2008)
AB Corp. entered into a contract with XY Corp. whereby the former agreed to
construct the research and laboratory facilities of the latter. Under the terms
of the contract, AB Corp. agreed to complete the facility in 18 months, at the
total contract price of P10 million. XY Corp. paid 50% of the total contract
price, the balance to be paid upon completion of the work. The work stated
immediately, but AB Corp. later experienced work slippage because of labor
unrest in his company. AB Corp.'s employees claimed that they are not being
paid on time; hence, the work slowdown. As of the 17th month, work was only
45% completed. AB Corp. asked for extension of time, claiming that its labor
problems is a case of fortuitous event, but this was denied by XY Corp. When
it became certain that the contruction could not be finished on time, XY Corp.
sent written notice cancelling the contract, and requiring AB Corp. to
immediately vacate the premises.
(a) Can the labor unrest be considered a fortuitous event?
(b) Can XY Corp. unilaterally and immediately cancel the contract?
(c) Must AB Corp. return the 50% downpayment?
SUGGESTED ANSWER: (a) Labor unrest is not a fortuitous event that will
excuse AB Corp. from complying with its obligation of constructing the

34
research and laboratory facilities of XY Corp. the labor unrest, which may even
be attributed in large part to AB Corp. itself, is not the direct cause of non-
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 her plantation suffered
losses due to the cadang-cadang disease. It does not excuse compliance with
the obligation.
(b) Yes, XY Corp. may unilaterally cancel the obligation but this is subject to
the risk that the cancellation of the reciprocal obligation being challenged in
court and if AB Corp. succeeds, then XY Corp. will be declared in default and
be liable for damages
(c) No, under the principle of quantum meruit, AC Corp. has the right to retain
payment corresponding to his percentage of accomplishment less the amount
of damages suffered by XY Corp. because of the delay or default.

Bar Question (2012)

Elements of an Obligation
The following are the elements of an obligation except:
A. Juridical/Legal Tie
B. Active Subject
C. Passive Subject
D. Consideration
SUGGESTED ANSWER: D. Consideration
Bar Question (2011)
Upon the proposal of a third person, a new debtor substituted the original
debtor without the latters consent. The creditor accepted the substitution.
Later, however, the new debtor became insolvent and defaulted in his
obligation. What is the effect of the new debtors default upon the original
debtor?
A. The original debtor is freed of liability since novation took place and this
relieved him of his obligation.
B. The original debtor shall pay or perform the obligation with recourse to the
new debtor.
C. The original debtor remains liable since he gave no consent to the
substitution.
D. The original debtor shall pay or perform 50% of the obligation to avoid
unjust enrichment on his part.
SUGGESTED ANSWER: A. The original debtor is freed of liability since novation
took place and this relieved him of his obligation.

35
Bar Question (2011)
When bilateral contracts are vitiated with vices of consent, they are rendered
A. rescissible.
B. void.
C. unenforceable.
D. voidable.
SUGGESTED ANSWER: D. Voidable

Bar Question (2011)

An agent, authorized by a special power of attorney to sell a land belonging
to the principal succeeded in selling the same to a buyer according to the
instructions given the agent. The agent executed the deed of 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 time of the sale. What is the
standing of the sale?
A. Voidable.
B. Valid.
C. Void.
D. Unenforceable.
SUGGESTED ANSWER: B. Valid

Bar Question (2011)

Contracts take effect only between the parties or their assigns and heirs,
except where the rights and obligations arising from the contract are not
transmissible by their nature, by stipulation, or by provision of law. In the
latter case, the assigns or the heirs are not bound by the contracts. This is
known as the principle of
A. Relativity of contracts.
B. Freedom to stipulate.
C. Mutuality of contracts.
D. Obligatory force of contracts
SUGGESTED ANSWER: A. Relativity of Contracts

Bar Question (2011)

A buyer ordered 5,000 apples from the seller at P20 per apple. The seller
delivered 6,000 apples. What are the rights and obligations of the buyer?

36
A. He can accept all 6,000 apples and pay the seller at P20 per apple.
B. He can accept all 6,000 apples and pay a lesser price for the 1,000 excess
apples.
C. He can keep the 6,000 apples without paying for the 1,000 excess since
the seller delivered them anyway.
D. He can cancel the whole transaction since the seller violated the terms of
their agreement.
SUGGESTED ANSWER: A. He can accept all 6,000 apples and pay the seller at
P20 per apple.

Bar Question (2011)

Lino entered into a contract to sell with Ramon, undertaking to convey to the
latter one of the five lots he owns, without specifying which lot it was, for the
price of P1 million. Later, the parties could not agree which of five lots he
owned Lino undertook to sell to Ramon. What is the standing of the contract?
A. Unenforceable.
B. Voidable.
C. Rescissible.
D. Void
SUGGESTED ANSWER: D. Void

Bar Question (2011)

Rudolf borrowed P1 million from Rodrigo and Fernando who acted as solidary
creditors. When the loan matured, Rodrigo wrote a letter to Rudolf,
demanding payment of the loan directly to him. Before Rudolf could comply,
Fernando went to see him personally to collect and he paid him. Did Rudolf
make a valid payment?
A. No, since Rudolf should have split the payment between Rodrigo and
Fernando.
B. No, since Rodrigo, the other solidary creditor, already made a prior demand
for payment from Rudolf.
C. Yes, since the payment covers the whole obligation.
D. Yes, since Fernando was a solidary creditor, payment to him extinguished
the obligation.
SUGGESTED ANSWER: B. No, since Rodrigo, the other solidary creditor,
already made a prior demand for payment from Rudolf.

Bar Question (2011)

Allan bought Billys property through Carlos, an agent empowered with a
special power of attorney (SPA) to sell the same. When Allan was ready to
pay as scheduled, Billy called, directing Allan to pay directly to him. On
learning of this, Carlos, Billy's agent, told Allan to pay through him as his SPA
provided and to protect his commission. Faced with two claimants, Allan
consigned the payment in court. Billy protested, contending that the

37
consignation is ineffective since no tender of payment was made to him. Is
he correct?
A. No, since consignation without tender of payment is allowed in the face
of the conflicting claims on the plaintiff.
B. Yes, as owner of the property sold, Billy can demand payment directly
to himself.
C. Yes, since Allan made no announcement of the tender.
D. Yes, a tender of payment is required for a valid consignation.
SUGGESTED ANSWER: A. No, since consignation without tender of payment
is allowed in the face of the conflicting claims on the plaintiff.

Bar Question (2011)

X sold Y 100 sacks of rice that Y was to pick up from Xs rice mill on a particular
date. Y did not, however, appear on the agreed date to take delivery of the
rice. After one week, X automatically rescinded the sale without notarial
notice to Y. Is the rescission valid?
A. Yes, automatic rescission is allowed since, having the character of movables
and consumables, rice can easily deteriorate.
B. No, the buyer is entitled to a customary 30-day extension of his obligation
to take delivery of the goods.
C. No, since there was no express agreement regarding automatic rescission.
D. No, the seller should first determine that Y was not justified in failing to
appear
SUGGESTED ANSWER: A. Yes, automatic rescission is allowed since, having
the character of movables and consumables, rice can easily deteriorate.

Bar Question (2011)

Roy and Carlos both undertook a contract to deliver to Sam in Manila a boat
docked in Subic. Before they could deliver it, however, the boat sank in a
storm. The contract provides that fortuitous event shall not exempt Roy and
Carlos from their obligation. Owing to the loss of the motor boat, such
obligation is deemed converted into one of indemnity for damages. Is the
liability of Roy and Carlos joint or solidary?
A. Neither solidary nor joint since they cannot waive the defense of fortuitous
event to which they are entitled.
B. Solidary or joint upon the discretion of Sam.
C. Solidary since Roy and Carlos failed to perform their obligation to deliver
the motor boat.
D. Joint since the conversion of their liability to one of indemnity for damages
made it joint.
SUGGESTED ANSWER: D. Joint since the conversion of their liability to one of
indemnity for damages made it joint.

Bar Question (2011)

38
A natural obligation under the New Civil Code of the Philippines is one which
A. The obligor has a moral obligation to do, otherwise entitling the obligee to
damages.
B. Refers to an obligation in writing to do or not to do.
C. The obligee may enforce through the court if violated by the obligor.
D. Cannot be judicially enforced but authorizes the obligee to retain the
obligors payment or performance.
SUGGESTED ANSWER: D. Cannot be judicially enforced but authorizes the
obligee to retain the obligors payment or performance.

Bar Question (2011)

Anne owed Bessy P1 million due on October 1, 2011 but failed to pay her on
due date. Bessy sent a demand letter to Anne giving her 5 days from receipt
within which to pay. Two days after receipt of the letter, Anne personally
offered to pay Bessy in manager's check but the latter refused to accept the
same. The 5 days lapsed. May Annes obligation be considered extinguished?
A. Yes, since Bessys refusal of the managers check, which is presumed
funded, amounts to a satisfaction of the obligation.
B. No, since tender of payment even in cash, if refused, will not discharge the
obligation without proper consignation in court.
C. Yes, since Anne tendered payment of the full amount due.
D. No, since a managers check is not considered legal tender in the
Philippines.
SUGGESTED ANSWER: B. No, since tender of payment even in cash, if refused,
will not discharge the obligation without proper consignation in court.

Bar Question (2011)

The presence of a vice of consent vitiates the consent of a party in a contract
and this renders the contract
A. Rescissible.
B. Unenforceable.
C. Voidable.
D. Void.
SUGGESTED ANSWER: C. Voidable.

Bar Question (2012)

Obligation
It is a conduct that may consist of giving, doing, or not doing something.
A. Obligation
B. Juridical necessity
C. Prestation
D. Contract

39
SUGGESTED ANSWER: C. Prestation

Bar Question (2012)

Delay
A debtor is liable for damages in case of delay if he is guilty of any of the
following except:
A. Default (mora)
B. Mistake
C. Negligence
D. Breach through contravention of the tenor thereof
SUGGESTED ANSWER: B. Mistake
Bar Question (2012)
Delay
This term refers to delay on the part of both the debtor and creditor in
reciprocal obligations
A. Mora accipendi
B. Mora solvendi
C. Compensation morae
D. Solution indebiti
SUGGESTED ANSWER: C. Compensation morae

Bar Question (2012)

Delay
The following are requisites of mora solvendi, except
A. Obligation pertains to the debtor and is determinate, due, demandable
and liquidated
B. Obligation was performed on its maturity date
C. There is a judicial or extrajudicial demand by the creditor
D. Failure of the debtor to comply with such demand
SUGGESTED ANSWER: B. Obligation was performed on its maturity date

Bar Question (2012)

Fortuitous Event

40
A debtor may still be held liable for loss or damages even if it was caused by
a fortuitous event in any of the following instances, except:
A. The debtor is guilty of dolo, malice or bad faith, has promised the same
thing to tow or more persons who do not have the same interest
B. The debtor contributed to the loss
C. The thing to be delivered is generic
D. The creditor is guilty of fraud, negligence or delay or if he contravened
the tenor of the obligation
SUGGESTED ANSWER: C. The thing to be delivered is generic

Bar Question (2012)

Solidary Obligation
Buko, Fermin and Toti bound themselves solidarily liable to pay Ayee the
amount of P5,000. Suppose Buko paid the obligation, what is his right as
against his co-debtors
A. Buko can ask for reimbursement from Fermin and Toti
B. Buko can sue Fermin and Toti for damages
C. Buko can sue for rescission
D. Buko can claim a refund from Ayee
SUGGESTED ANSWER: A. Buk can ask for reimbursement from Fermin and
Toti

Bar Question (2012)

Solidary Obligation
Buko, Fermin and Toti bound themselves solidarily to pay Ayee the sum of
P10,000. When the obligation became due and demandable, Ayee sued Buko
for the payment of the P10,000. Buko moved to dismiss on the ground that
ther was failure to implead Fermin and Toti who are indispensable parties. Will
the motion to dismiss prosper? Why?
A. Yes, because Fermin and Toto should have been impleaded as their
obligation is solidary
B. No, because the creditor may proceed against anyone of the solidary
debtors or some or all of them simultaneously
C. No, because a motion to dismiss is a prohibited pleading
D. Yes, because Fermin and Toto should also pay their share of the
obligation

41
SUGGESTED ANSWER: B. No, because the creditor may proceed against
anyone of the solidary debtors or some or all of them simultaneously

Bar Question (2012)

Solidary Obligation
Buko, Fermin and Toti are solidary debtors of Ayee. Twelve (12) years after
the obligation became due and demandable, Buko paid Ayee and later on
asked for reimbursement of Fermins and Totis shares. Is Buko correct? Why?
A. No, because the obligation has already prescribed
B. Yes, because the obligation is solidary
C. No, because in solidary obligation anyone of the solidary creditors can
pay the entire debt
D. Yes, because Fermin and Toti would be unduly enriched at the expense
of Buko
SUGGESTED ANSWER: A. No, because the obligation has already prescribed.

Bar Question (2012)

Buko, Fermin and Toti are solidary debtors under a loan obligation of P300,000
which has fallen due. The creditor has, however, condoned Fermins entire
share in the debt. Since Toti has become insolvent, the creditor makes a
demand on Buko to pay the debt. How much, if any may Buko be compelled
to pay?
A. P 200,000
B. P 300,000
C. P 100,000
D. P 150,000
SUGGESTED ANSWER: A. P 200,000

Bar Question (2012)

Payment
Dina bought a car from Jai and delivered a check in payment of the same. Has
Dina paid the obligation? Why?
A. No, not yet. The delivery of the promissory notes payable to order or
bills of exchange or other mercantile documents shall produce the effect

42
 of payment only when they have been cashed, or when through the fault
of the creditor they have been impaired.
B. Yes, because a check is a valid legal tender of payment.
C. It depends. If the check is a managers check or cashiers check it will
produce the effect of payment. If its an ordinary check, no payment.
D. Yes, because a check is as good as cash.
SUGGESTED ANSWER: A. No, not yet. The delivery of the promissory notes
payable to order or bills of exchange or other mercantile documents shall
produce the effect of payment only when they have been cashed, or when
through the fault of the creditor they have been impaired.

Bar Question (2012)

Compensation
The following are the requisites of legal compensation, except:
A. That each of the obligors is bound principally and that he be the same
time a principal creditor of the other
B. That both debts consist in s asum pf money or if the things due are
consumable, they be the same kind, and also of the same quality if the
latter has been stated
C. That the two (2) debts are not yet due
D. That they be liquidated and demandable
SUGGESTED ANSWER: C. That the two (2) debts are not yet due.

Bar Question (2012)

Contracts
Which of the following statements are correct?
A. All contracts are perfected by mere consent
B. All contracts are perfected by delivery of the object
C. All contracts are required to be in writing
D. All contracts are required to have a valid consideration
SUGGESTED ANSWER: D. All contracts are required to have a valid
consideration

Bar Question (2012)

Contracts

43
It is a principle which holds that parties are bound not only by what has been
expressly provided for in the contract but also to the natural consequences
that flow out of such agreement.
A. Obligatory force of contracts
B. Mutuality of contracts
C. Autonomy of contracts
D. Relativity of contracts
SUGGESTED ANSWER: A. Obligatory force of contracts

Bar Question (2012)

It is a principle which holds that contracts must be binding to both parties and
its validity and effectivity can never be left to the will of one of the parties
A. Obligatory force of contracts
B. Mutuality of contracts
C. Autonomy of contracts
D. Relativity of contracts
SUGGESTED ANSWER: B. Mutuality of contracts

Bar Question (2012)

It refers to the rule that a contract is binding not only between the parties but
extends to the heirs, successors in interest and assignees of the parties,
provided that the contact involved transmissible rights by their nature or by
stipulation of law.
A. Obligatory force of contracts
B. Mutuality of contracts
C. Autonomy of contracts
D. Relativity of contracts
SUGGESTED ANSWER: D. Relativity of contracts

Bar Question (2012)

Contracts
It is a rule which holds that the freedom of parties to contract includes the
freedom to stipulate, provided the stipulations are not contrary to law, morals,
good customs, public order or public policy.
A. Obligatory force of contracts
44
 B. Mutuality of contracts
C. Autonomy of contracts
D. Relativity of contracts
SUGGESTED ANSWER: C. Autonomy of contracts

Bar Question (2012)

Contracts
The following are the ways by which innominate contracts are regulated
except:
A. By the stipulation of the parties
B. By the general principles of quasi-contracts and delicts
C. By the rules governing the most analogous nominate contracts
D. By the customs of the place
SUGGESTED ANSWER: B. By the general principles of quasi-contracts and
delicts

Bar Question (2012)

Contracts
The following are solemn contracts (contracts which must appear in writing),
except:
A. Donations of real estate or of movables if the value exceeds P5,000
B. Stipulation to pay interest in loans
C. Sale of land through an agent (authority must be in writing)
D. Construction contract of a building
SUGGESTED ANSWER: D. Construction contract of a building

Bar Question (2012)

Contracts
The following are rescissible contracts, except:
A. Entered into by guardian whenever ward suffers damage more that
of value of property
B. Agreed upon in representation of absentees, if absentee suffers lesion
by more than value of property
C. Contracts where fraud is committed on creditor (accion pauliana)

45
 D. Contracts entered into by minors.
SUGGESTED ANSWER: D. Contracts entered into by minors

Bar Question (2012)

Contracts
The following are requisites before a contract entered into in fraud of creditors
may be rescinded except:
A. There must be credit existing prior to the celebration of the contract
B. There must be fraud, or at least, the intent to commit fraud to the
prejudice of the creditor seeking rescission
C. The creditor cannot in any legal manner collect his credit (subsidiary
character of rescission)
D. The object of the contract must be legally in the possession of a 3 rd
person in good faith
SUGGESTED ANSWER: D. The object of the contract must be legally in the
possession of a 3rd person in good faith
Bar Question (2012)
The following are the characteristics of a voidable contract, except:
A. Effective until set aside
B. May be assailed/attacked only in an action for that purpose
C. Can be confirmed or ratified
D. Can be assailed only by either party
SUGGESTED ANSWER: D. Can be assailed only by either party

Bar Question (2012)

Void Contracts
The following are void contracts except:
A. Pactum commisorium
B. Pactum de non alienando
C. Pactum leonine
D. Pacto de retro
SUGGESTED ANSWER: D. Pacto de retro

Bar Question (2012)

46
Right to the Fruits of the Thing Due
The creditor has the right to the fruits of the thing from the time:
A. The thing is delivered
B. The obligation to deliver the thing arises
C. The contract is perfected
D. The fruits are delivered
SUGGESTED ANSWER: B. The obligation to deliver the thing arises

Bar Question (2012)

Contracts
If one of the parties to the contract is without juridical capacity, the contract
is:
A. Voidable
B. Rescissible
C. Void
D. Unenforceable
SUGGESTED ANSWER: C. Void

Bar Question (2012)

Contracts
When both parties to the contract are minors, the contract is
A. Voidable
B. Rescissible
C. Void
D. Unenforceable
SUGGESTED ANSWER: D. Unenforceable

Bar Question (2012)

Contracts
When the consent of one of the parties was vitiated, the contract is
A. Voidable
B. Rescissible
C. Void

47
 D. Unenforceable
SUGGESTED ANSWER: A. Voidable

Bar Question (2012)

Obligation
An obligation which is based on equity and natural law is known as
A. Pure
B. Quasi-contract
C. Civil
D. Natural
SUGGESTED ANSWER: D. Natural

Bar Question (2012)

Contract
Consent was given by one in representation of another but without authority.
The contract is:
A. Voidable
B. Rescissible
C. Void
D. Unenforceable
SUGGESTED ANSWER: D. Unenforceable

Bar Question (2012)

Contract
Michael Fermin, without the authority of Pascual Lacas owner of a car, sold
the same car in the name of Mr. Lacas to Atty. Buko. The contract between
Atty. Buko and Mr. Lacas is
A. Void because of the absence of consent from the owner, Mr. Lacas
B. Valid because all the essential requisites of a contract are present
C. Unenforceable because Michael Fermin had no authority but he sold the
car in the name of Mr. Lacas, the owner
D. Rescissible because the contract cause lesion to Atty. Buko
SUGGESTED ANSWER: C. Unenforceable because Michael Fermin had no
authority but he sold the car in the name of Mr. Lacas, the owner
48
Bar Question (2012)
Contracts
Which of the following contracts is void?
A. An oral sale of a parcel of land
B. A sale of land by an agent in a public instrument where his authority
from the principal is oral
C. A donation of a wrist watch worth P4,500
D. A relatively simulated contract
SUGGESTED ANSWER: B. A sale of land by an agent in a public instrument
where his authority from the principal is oral

Bar Question (2012)

Oral Contracts
Aligada orlly offered to sell his two-hectares rice land to Balane for P10 million.
The offer was orally accepted. By agreement, the and was to be delivered
(through execution of a notarized deed od sale) and the price was to be paid
exactly one month from their oral agreement. Which statement is most
accurate?
A. If Aligada refuses to deliver the land on the agreed date despite payment
by Balane, the latter may not successfully sue Aligada because the
contract is oral
B. If Aligada refused to deliver the land, Balane may successfully sue for
fulfillment of the obligation even if he has not tendered payment of the
purchase price
C. The contract between the parties is rescissible
D. The contract between the parties is subject to ratification by the parties
SUGGESTED ANSWER: D. The contract between the parties is subject to
ratification by the parties

Bar Question (2012)

Contracts
Which of the following statements is wrong?
A. Creditors are protected in cases of contracts intended to defraud them

49
 B. Contracts take effect only between the parties, their assigns and heirs,
except in case where the rights and obligations arising from the contract
are not transmissible by their nature, or by stipulation or by provision
of law
C. If a contract should contain some stipulation in favor of a third person,
he may demand its fulfillment provided he communicated his
acceptance to the obligor before its revocation
D. In contracts creating real rights, third persons who come into possession
of the object of the contract are not bound thereby
SUGGESTED ANSWER: D. In contracts creating real rights, third persons who
come into possession of the object of the contract are not bound thereby

Bar Question (2013)

Form of Contracts
Lito obtained a loan of Php 1,000,000 from Ferdie payable within one year. To
secure payment, Lito executed a chattel mortgage on a Toyota Avanza and a
real estate mortgage on a 200-square meter piece of property. (a) Would it
be legally significant from the point of view of validity and enforceability if the
loan and the mortgages were in public or private instruments? (b) Litos failure
to pay led to the extra-judicial foreclosure, Lito tendered a managers check
to Ferdie to redeem the property. Ferdie refused to accept payment on the
ground that he wanted payment in cash; the check does not qualify as legal
tender and does not include the interest payment. Is Ferdies refusal justified?
SUGGESTED ANSWER: (a) From the point of view of validity and enforceability
there would be legal significance if the mortgage was in a public or private
instrument. As for the loan, there is no legal significance except if interest
were charged on the loan, in which case the charging of interest must be in
writing.
A contract of loan is a real contract and is perfected upon the delivery of the
object of the obligation (Art. 1934, Civil Code). Thus, a contract of loan is valid
and enforceable even if it is nether in a private nor in a public document.
As a rule contracts shall be obligatory in whatever form they may have been
entered into provided all the essential requisites for their validity are present.
With regard to its enforceability, a contract of loan is not among those
enumerated under Article 1403(2) of the Civil Code, which are covered by the
Statute of Frauds.
It is important to note that under Article 1358 of the Civil Code, all other
contracts where the amount involved exceeds five hundred pesos must appear

50
in writing, even a private one. However, the requirement is not for the validity
of the contract, but only for its greater efficacy.
With regard the chattel mortgage, Act No. 1508, the Chattel Mortgage Law,
requires an affidavit of good faith stating that the chattel mortgage is
supposed to stand as security for the loan; thus for validity of the chattel
mortgage it must be in a public document and recorded in the Chattel
Mortgage Register in the Registry of Deeds. A real estate mortgage under the
provisions of Article 2125 of the Civil Code requires that in order that a
mortgage may be validly constituted the document in which it appears must
be recorded. If the instrument is not recorded, the mortgage is nevertheless
valid and binding between the parties. Hence for validity of both chattel and
real estate mortgages, they must appear in a public instrument. But for
purposes of enforceability, it is submitted that the form of the contract,
whether in a public of private document, would be immaterial.
Also, under Article 1358, acts and contracts which have for their object the
creation or transmission of real rights over immovable property must be in a
public document for greater efficacy and a real estate mortgage is a real right
over immovable property.
(b) Ferdies refusal is justified. A check, whether a managers check or
ordinary check, is not legal tender, and an offer of a check in payment of a
debt is not a valid tender of payment and may be refused receipt by the oblige
or creditors. Mere delivery of checks does not discharge the obligation under
a judgement. A check shall produce the effect of payment only when they
have been cashed or when through the fault of the creditor, they have been
impaired (Art. 1249, Civil Code).
However, it is not necessary that the right of redemption be exercised by
delivery of legal tender. A check may be used for the exercise of right of
redemption, the same being a right and not an obligation. The tender of a
check is sufficient to compel redemption but is not in itself a payment tht
relives the redeemer from his liability to pay the redemption price.
Redemption within the period allowed by law is not a matter of intent but a
question of payment or valid tender of full redemption price within the said
period. Whether the redemption is being made under Act 3135 or under the
general banking law, the mortgagor or his assignee is required to tender
payment to make said redemption valid.
Moreover, Ferdies refusal was justified on the ground that the amount
tendered does not include interest. In order to effect the redemption of the
foreclosed property, the payment to the purchaser must include the following
sums: (a) the bid price; (b) the interest on the bid price, computed at one per
centum per month; and (c) the assessments or taxes, if any, paid by the
purchaser with the same rate of interest.

51
MIGUELS ANSWER: (a) There would only be legal significance if the mortgage
was in a public or private instrument, it does not matter for the loan. A
contract of loan is valid regardless if it be in a private or public document. For
the mortgage on the other hand, its validity would be dependent upon it being
in a public document.
(b) Ferdies refusal is justified. A check is not considered as legal tender. The
creditor may validly refuse to accept the debtors offer of payment if it is
payment through a check.

Bar Question (2013)

Solidary Obligation
A, B,C and D are the solidary debtors of X for P40,000. X released D from the
payment of his share of P10,000. When the obligation became due and
demandable, C turned out to be insolvent. Should the share of insolvent
debtor C be divided only between the two other remaining debtors, A and B?
A. Yes, remission of Ds share carries with it total extinguishment of his
obligation to the benefit of the solidary debtors
B. Yes, the Civil Code recognizes remission as a mode of extinguishing an
obligation. This clearly applies to D
C. No, the rule is that gratuitous acts should be restrictively construed,
allowing only the least transmission of rights.
D. No, as the release of the share of one debtor would then increase the
burden of other debtors without their consent.
SUGGESTED ANSWER: D. When one of the solidary debtors cannot, because
of his insolvency, reimburse his share to the debtor paying the obligation, such
share shall be borne by all his co-debtors, in proportion to the debt of each.
Additionally, D was released only from his share of P10,000, not from the
solidary tie that binds him to A, B and C.

Bar Question (2013)

Delay
Gary is a tobacco trader and also a lending investor. He sold tobacco leaves
to Homer for delivery within a month although the period for delivery was not
guaranteed. Despite Garys efforts to deliver on time, transportation problems
and government red tape hindered his efforts and he could only deliver after
30 days. Homer refused to accept the late delivery and to pay on the ground
that the agreed term had not been complied with. As lending investor, Gary
granted a P1,000,000 loan to Isaac to be paid within two years from execution

52
of the contract. As security for the loan, Isaac promised to deliver to Gary his
Toyota Innova within seven (7) days, but Isaac failed to do so. Gary was thus
compelled to demand payment for the loan before the end of the agreed two-
year term. Was Homer justified in refusing to accept the tobacco leaves?
A. Yes, Homer was justified in refusing to accept the tobacco leaves. The
delivery was to be made within a month. Garys promise of delivery on
a best effort basis made the delivery uncertain. The term therefore was
ambiguous.
B. No, Homer was not justified in refusing to accept the tobacco leaves. He
consented to the terms and conditions of the sale and must abide by it.
Obligations arising from contract have the force of law between the
contracting parties.
C. Yes, Homer was justified in his refusal to accept the delivery. The
contract contemplates an obligation with a term. Since the delivery was
made after 30 days, contrary to the terms agreed upon, Gary could not
insist that Homer accept the tobacco leaves.
D. No, Homer was not justified in refusing to accept the tobacco leaves.
There was no terms in the contract but a mixed condition. The fulfillment
of the condition did not depend purely on Garys will but on other factors,
e.g. the shipping company and the government. Homer should comply
with his obligation
SUGGESTED ANSWER: B. It is clear under the facts that the period of
delivery of the tobacco leaves was not guaranteed. Gary anticipated other
factors which may prevent him from making the delivery within a month.
True enough transportation problems and government redtape did. Such
slight delay was, thus excusable. Obligations arising from contract have the
force of law between the contracting parties and should be complied with
in good faith.
Can Gary compel Isaac to pay his loan even before the end of the two-year
period?
A. Yes, Gary can compel Isaac to immediately pay the loan. Non-
compliance with the promised guaranty or security renders the
obligation immediately demandable. Isaac lost his right to make use fo
the period.
B. Yes, Gary can compel Isaac to immediately pay the loan. The delivery
of the Toyota Innova is a condition for the loan. Isaacs failure to deliver
the car violated the condition upon which the loan was granted. It is but
fair for Gary to demand immediate payment.
C. No, Gary cannot compel Isaac to immediately pay the loan. The delivery
of the car as security for the loan is an accessory contract; the principal
contract is still the P1,000,000 loan. Thus, Isaac can still make use of
the period.

53
 D. No, Gary cannot compel Isaac to immediately pay the loan. Equity
dictates that Gary should have granted a reasonable extension of time
for Isaac to deliver his Toyota Innova. It would be unfair and
burdensome for Isaac to pay the P1,000,000 simply because the
promised security was not delivered.
SUGGESTED ANSWER: A. Non-compliance with the promised guaranty or
security renders the obligation immediately demandable. Isaac lost his
right to make use of the period. Under Article 1198(2) of the Civil Code,
the debtor shall lose every right to make use of the period when he does
not furnish to the creditor the guaranties and securities which he has
promised.

Bar Question (2014)

Consignation
Dorotea leased portions of her 2,000 sq.m lot to Monet, Kathy, Celai and Ruth
for five (5) years. Two (2) years before the expiration of the lease contract,
Dorotea sold the property to PM Realty and Development Corporation. The
following month, Dorotea and PM Realty stopped accepting rental payments
from all the lessees because they wanted to terminate the lease contracts.
Due to the refusal of Dorotea to accept rental payments, the lessees, Ruth et
al., filed a complaint for consignation of the rentals before the Regional Trial
Court (RTC) of Manila without notifying Dorotea. Is the consignation valid?
SUGGESTED ANSWER: The consignation is not valid. Article 1257 of the Civil
Code provides that in order that the consignation of the thing due may release
the obligor, it must first be announced to the persons interested in the
fulfillment of the obligation. Moreover, Article 1258 of the same code provides
that consignation having been made, the interested parties shall also be
notified thereof. In this case Dorotea, an interested party was not notified of
the consignation. The consignation is therefore not valid for non-compliance
with Article 1257.
MIGUELS ANSWER: Consignation is not valid. For consignation to be valid,
there must be intitial and subsequent notification given to all interested
parties. In this case, Dorotea, an interested party was not notified, thereby
making the consignation invalid.

Bar Question (2014)

Novation

54
J.C. Construction (J.C.) bought steel bars from Matibay Steel Industries (MSI)
which is owned by Buddy Batungbacal. J.C. failed to pay the purchased
materials worth P500,000 on due date. J.C. persuaded its client Amoroso with
whom it had receivables to pay its obligation to MSI. Amoroso agreed and paid
MSI the amount of P50,000. After two (2) other payments, Amoroso stopped
making further payments. Buddy filed a complaint for collection of the balance
of the obligation and damages against J.C. J.C. denied any liability claiming
that its obligation was extinguished by reason of novation which took place
when MSI accepted partial payments from Amoroso on its behalf. Was the
obligation of J.C. Construction to MSI extinguished by novation? Why?
SUGGESTED ANSWER: No, the obligation of J.C. Construction to MSI was not
extinguished by novation. Under Article 1292 of the Civil Code, in order that
an obligation may be extinguished by another which substitute the same, it is
imperative that it be so declared in unequivocal terms, or that the old and the
new obligation be on every point incompatible with each other. Novation by
substitution of debtor requires the consent of the creditor as provided in Article
1923 of the Civil Code. This requirement is not present as in this case. In
Magdalena Estates Inc. v Rodriguez it was ruled that the mere fact that the
creditor received payment from a third person does not constitute novation
and does not extinguish the obligation of the original debtor. Since there was
no novation, the obligation of the original debtor is not extinguished. Thus the
obligation of J.C. Construction to MSI subsists.
MIGUELS ANSWER: The obligation of JC Construction to MSI was not
extinguished. For there to be novation by substitution of the debtor, the
consent of the creditor must be taken. The mere fact that MSI received
payment from Amoroso does not necessarily imply that there was substitution.

Bar Question (2015)

Fortuitous Event
X, a dressmaker, accepted clothing materials from Karla to make two dresses
for her. On the day X was supposed to deliver Karla's dresses, X called up
Karla to say that she had an urgent matter to attend to and will deliver them
the next day. That night, however, a robber broke into her shop and took
everything including Karla's two dresses. X claims she is not liable to deliver
Karla's dresses or to pay for the clothing materials considering she herself was
a victim of the robbery which was a fortuitous event and over which she had
no control. Do you agree? Why?
SUGGESTED ANSWER: No, I do not agree. The obligation involved in this case
is an obligation to do, since Xs obligation is to make dresses for Karla. Under
Article 1167 of the Civil Code, if a person obliged to do something fails to do

55
it, the same shall be executed at his cost. Although X may not be compelled
to deliver the dresses to Karla, she may he held liable for the cost of having
another person to make the dresses for Karla, which including the cost of the
materials.
MIGUELS ANSWER: No, I do not agree. Article 1167 of the Civil Code provides
that if a person obliged to do something fails to do it, the same shall be
executed at his cost. In this case, X failed to do his obligation of making the
dresses of Karla, therefore the obligation must be executed at his cost.
Furthermore, X cannot use the defense of fortuitous event as X is already in
delay, according to Article 1165 of the Civil Code, if the obligor delays, he shall
be responsible for fortuitous event until he has effected delivery.

Bar Question (2015)

Requisites to a Contract: Consent
Jackie, 16, inherited a townhouse. Because she wanted to study in an
exclusive school, she sold her townhouse by signing a Deed of Sale and turning
over possession of the same to the buyer. When the buyer discovered that
she was still a minor, she promised to execute another Deed of Sale when she
turns 18. When Jackie turned 25 and was already working, she wanted to
annul the sale and return the buyer's money to recover her townhouse. Was
the sale contract void, voidable or valid? Can Jackie still recover the property?
Explain.
SUGGESTED ANSWER: The contract of sale is voidable. Where one of the
parties is incapable of giving consent to a contract, the contract is voidable.
(Art. 1390, Civil Code.) It appears that only Jackie was incapacitated by virtue
of her minority.
Jackie cannot recover the property. First, since the contract is voidable, Jackie
only had 4 years from the time she attained the age of majority to bring the
action for annulment of the contract (Art. 1391, Civil Code). In this case,
Jackie should have brought the action for annulment of the contract within
four years after turning eighteen years old, or up until the age of twenty-two.
Since she is already 25 years old. the period for bringing the action has
prescribed. Second, Jackie may he considered to have actively misrepresented
as to her age. Thus, she will be bound to the contract under the principle of
estoppel.
MIGUELS ANSWER: The contract is voidable. Since Jackie was only sixteen
when she entered into the contract, she was still incapable of giving her
consent thereby making the contract voidable for lack of one of the essential
requisites of a valid contract.

56
Jackie cannot recover the property anymore because the action has already
prescribed. Jackie has 4 years upon reaching the age of majority to bring an
action to annul the contract. More than 4 years had already passed, action
has therefore prescribed.

Bar Exam Question (2015)

Remission of Obligation
lya and Betty owed Jun P500,000 for advancing their equity in a corporation
they joined as incorporators. Iya and Betty bound themselves solidarity liable
for the debt. Later, Iya and Jun became sweethearts so Jun condoned the debt
of P500,000 May lya demand from Betty P250,000 as her share in the debt?
Explain with legal basis.
SUGGESTED ANSWER: No, lya may not demand reimbursement from Betty.
The remission of the whole obligation, obtained by one of the solidary debtors,
does not entitle him or her to reimbursement from his co-debtors (Art. 1220,
Civil Code).
MIGUELS ANSWER: No, the condonation of the entire debt in favor of one of
the creditor has the effect of extinguishing the whole debt to the benefit of his
co-debtors.

Bar Exam Question (2015)

Joint and Solidary Obligations
Juancho, Don and Pedro borrowed P150,000 from their friend Cita to put up
an internet cafe orally promising to pay her the full amount after one year.
Because of their lack of business know-how, their business collapsed. Juancho
and Don ended up penniless but Pedro was able to borrow money and put up
a restaurant which did well. Can Cita demand that Pedro pay the entire
obligation since he, together with the two others, promised to pay the amount
in full after one year? Defend your answer.
SUGGESTED ANSWER: No, Cita may not demand payment of the entire
obligation from Pedro. The concurrence of two or more creditors or of two or
more debtors in one and the same obligation does not imply that each one of
the former has a right to demand, or that each one of the latter is bound to
render, entire compliance with the prestation. There is a solidary liability only
when the obligation expressly so states, or when the law or the nature of the
obligation requires solidarity (Art. 1207, Civil Code). In this case, there is no
indication that they bound themselves solidarity to pay Cita, nor does the law
or nature of the obligation require solidarity. Hence, Juancho, Don and Pedros

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obligation is joint, and Cita can only demand payment of 1/3 of the obligation
from Pedro, which is presumed to be his share in the obligation in the absence
of stipulation to the contrary (Art. 1208, Civil Code).
MIGUELS ANSWER: No, Cita may not demand payment of the entire amount
from just one of the debtors. Solidary liability is never presumed. For the
obligation to be considered solidary it must be expressly specified in the
agreement. There being no specification as to the nature of the liability of the
debtors, it is presumed that there be joint liability. Cita can therefore only
demand an amount that is in proportion to the debt of each of the co-debtor.

Bar Question (2015)

Delay and Solution Indebiti
Sara borrowed P50,000 from Julia and orally promised to pay it within six
months. When Sara tried to pay her debt on the 8th month, Julia demanded
the pavment of interest of 12% per annum because of Saras delay in
payment. Sara paid her debt and the interest claimed by Julia. After
rethinking, Sara demanded back from Julia the amount she had paid as
interest. Julia claims she has no obligation to return the interest paid by Sara
because it was a natural obligation which Sara voluntarily performed and can
no longer recover. Do you agree? Explain.
SUGGESTED ANSWER: No, I do not agree with Julia. For a creditor to be
entitled to compensatory interest, the debtor must be in delay. As a rule, in
order for delay to exist, demand must have been made. In this case, there
was no demand made upon the expiration of the 6-month period; thus, Sara
cannot be considered in delay, and is not liable to pay compensatory interest.
There being no obligation to pay compensatory interest, Julia must return the
interest mistakenly paid since she was not entitled thereto, and delivery was
made merely through mistake. If something is received when there is no right
to demand it, and it was unduly delivered through mistake, the obligation to
return it arises (Art. 2154, Civil Code).
MIGUELS ANSWER: No, I do not agree. Julia must return the amount paid by
Sara as interest as not doing so would amount to unjust enrichment. For
interest to accrue, the debtor must be in delay, and for there to be delay,
there must be demand. In this case, there was no demand made by Julia
against Sara, therefore Sara was not in delay and is not required to pay for
the interest. The interest must be returned to Sara.

Bar Question (2015)

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Civil and Natural Obligations
Distinguish civil and natural obligations.
SUGGESTED ANSWER: Civil obligations give a right of action to compel their
performance. Natural obligations, not being based on positive law but on
equity and natural law, do not grant a right of action to enforce their
performance, but after voluntary fulfillment by the obligor, they authorize the
retention of what has been delivered or rendered by reason thereof (Art. 1423,
Civil Code).
MIGUELS ANSWER: Civil obligations are obligations that can be enforced
through a civil suit, it is an obligation which gives rise to a cause of action.
Natural obligations on the other hand are obligations do not grant a cause of
action, it is an obligation that is merely based on equity.

Bar Question (2016)

Dacion en pago
Butch got a loan from Hagibis Corporation (Hagibis) but he defaulted in the
payment. A case for collection of a sum of money was filed against him. As a
defense, Butch claims that there was already an arrangement with Hagibis on
the payment of the loan. To implement the same, Butch already surrendered
five (5) service utility vehicles (SUVs) to the company for it to sell and the
proceeds to be credited to the loan as payment. Was the obligation of Butch
extinguished by reason of dacion en pago upon the surrender of the SUVs?
Decide and explain.
SUGGESTED ANSWER: NO SUGGESTED ANSWER FROM REPUTABLE SOURCE
AVAILABLE YET
MIGUELS ANSWER: Yes, the obligation is extinguished by reason of dacion en
pago. There is dacion en pago when the debtor alienates property in favor of
the creditor, with the constn of the latter to satisfy monetary obligation. In
this case, Butch alienated his SUVs in favor of Hagibis Corporation and such
was credited as payment for the loan that he owes the corporation. It is
presumed that the loan is equivalent to the SUVs as Hagibis and Butch had
agreed to this arrangement already.

Bar Question (2016)

Novation
Jerico, the project owner, entered into a Construction Contract with Ivan for
the latter to construct his house. Jojo executed a Surety undertaking to

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guarantee the performance of the work by Ivan. Jerico and Ivan later entered
into a Memorandum of Agreement (MOA) revising the work schedule of Ivan
and the subcontractors. The MOA stated that all the stipulations of the original
contract not in conflict with said agreement shall remain valid and legally
effective. Jojo filed a suit to declare him relieved of his undertaking as a result
of the MOA because of the change in the work schedule. Jerico claims there is
no novation of the Construction Contract. Decide the case and explain.
SUGGESTED ANSWER: NO SUGGESTED ANSWER FROM REPUTABLE SOURCE
AVAILABLE YET
MIGUELS ANSWER: Jerico is correct. There is no novation. Novation exists
when there is a change in the object, condition or debtor or when the terms
of the old contract and the new contract are incompatible and incapable of
being reconciled. In this cae, the mere change in the work schedule does not
render the old contract incompatible with the new contract and does not
change the object of the contract which is still to construct Jericos house.

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