OBLIGATIONS AND CONTRACT

FINAL EXAM
March 2016 - 2017
INSTRUCTIONS

This questionnaire consists of twelve (12) items and contained in two (2) pages. Read each question
very carefully. Answer legibly, clearly and concisely. Start each number on a separate page; an answer to
a sub-question under the same number may be written continuously on the same and immediately
succeeding pages until completed. Do not repeat the question.

GOOD LUCK!!!

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 I.
For value received, P promised to deliver to J on or before April 15, 2017 a Mercedes Benz with Plate
No. 123 which P had just brought home for Germany, as well as a 2017 model 18” Sony television set.
Unfortunately, before the scheduled delivery date, the Mercedes Benz and the television set which P had
intended to deliver to J were destroyed by an accident fire.

Has the obligation of P been extinguished? Explain. (5 pts)

II.
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; (5 pts)

b) If the debtor promises to pay when he likes; (5 pts)

c) If the debtor promises to pay when he becomes a lawyer; (5 pts)

d) If the debtor promises to pay if his son, who is sick with cancer, does not die within one year. (5
pts)

III.
On due date, X, finding himself unable to pay Y his P500,000.00 obligation, proposed in a letter to Y
that he would deed over to Y his Mercedez Benz car, “to be applied to the amount which I owe you.” The
following week, X sent the car to Y with the proper deed of conveyance. It was accepted.

Was the arrangement a valid way of settling the obligation? Explain. (5 pts)

After the delivery of the car would Y have any further claim against X if the value of the car is found
to be less that the P500,000.00 obligation? Explain (5 pts)

IV.
A, B and C solidarity promised to pay D the amount of P3,000,000. Unfortunately, C became insolvent.
What recourse does D have against A and B? What are the rights of A and B as against each other?
(5 pts)

V.
X leased some automobile repair equipment to Y, who was opening his auto repair shop. The lease
agreement was executed on February 15, 2017. It stipulated that the period was one month only, at the
expiration of which Y was to return the equipment to X. The equipment was delivered on February 15, 2017.
On March 15 2017 X, in a telephone call, asked Y to return the leased property that the same day because
his truck broke down, Y was unable to comply. Early the next morning, the equipment was burned in an
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accidental fire that started in a nearby restaurant and gutted Y’s auto repair shop. X seeks to hold Y liable for
the value of the lost property plus damages on the ground that he did not return it as agreed upon. Is X’s
claim tenable? Explain. (5 pts)

VI.
X had a deposit in a savings account with Filipino Universal Bank in the amount of five million pesos
(P5,000,000.00). To buy a new car, she obtained a loan from the same bank in the amount of P1,200,000.00,
payable in twelve monthly instalments. X issued in favor of the bank post-dated checks, each in the amount
of P100,000.00, to cover the twelve monthly instalment payments. On the third, fourth and fifth months, the
corresponding checks bounced.
The bank then declared the whole obligation due, and proceeded to deduct the amount of one
million pesos (P1,000,000.00) from X’s deposit after notice to her that this is a form of compensation
allowed by law. Is the bank correct? Explain. (5 pts)

VII.
X lease his house with a telephone to Y. The lease contract provided that Y shall pay all electricity,
water and telephone services with a leased premises during the period of the lease. Six months later, Y
surreptitiously vacated the premises. He left behind unpaid telephone bills for overseas telephone calls
amounting to over P20,000,00. X refused to pay the said bills on the ground that Y had already substituted
him as the customer of the telephone company. The latter maintained that X remained as his customer as
far as their service contract was concerned, notwithstanding the lease contract between X and Y. Who is
correct X or the telephone company? Explain (5 pts)

VIII.
X offered to construct the house of Y 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 Y could make up his mind, X withdrew
his offer.
a) What is the effect of the withdrawal of X’s offer? (5 pts)
b) Will your Answer be the same if Y paid X P10,000,00 as consideration for that option? Explain. (5
pts)
IX.
A minor sold his land to X. When he became 22 years old, he became indebted to Y. To avoid paying
Y, the former minor decided to ratify the sale of the land. He then had no other property. May Y still rescind
the sale although at the time it was made he was not yet a creditor? (5 pts)

X.
Mrs. S borrowed P20,000 from PG, She and her 17-years old son, Mario, signed the promissory note
for the loan, which note did not say anything- about the capacity of signer. Mrs. S made partial payments little
by little. After seven (7) years she died leaving a balance of 10,000.00 on the note. PG demanded payment
from Mario who refused to pay. When sued for the amount, Mario raised the defense: that when he signed
the note he was still a minor. Should the defense be sustained? Why? (5 pts)

XI.
A has a son B; C has a daughter D. A, B, C, and D agree together that B will marry D. The agreement
is oral. If D later on refuses to marry B who has spent for the necessary wedding preparation, and A and B
bring an action against C and D, will the action prosper? (5 pts)

XII.
Juan and his sister Juana inherited from their mother two parcels of farmland with exactly the same
areas. For convenience, the Torrens certificates of title covering both lots were placed in Juan’s name alone.
In 2015, Juan sold to an innocent purchaser one parcel in its entirety without the knowledge and consent of
Juana, and wrongfully kept for himself the entire price paid.
a) What rights of action, if any, does Juana have against and/or the buyer? (5 pts)

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 b) Since the two lots have the same area, suppose Juana flies a complaint to have herself declared
sole owner of the entire remaining second lot, contending that her brother had forfeited his share thereof by
wrongfully disposing of her undivided share in the first lot. Will the suit prosper? (5 pts)

1984 No. 14

For value received, Pedro promised to deliver to Juan on or before August 15, 1984 a
Mercedes Benz with Plate No. 123 which he (Pedro) had just brought home for Germany, as well
as a 1984 18” Sony television set. Unfortunately, before the scheduled delivery date, the Mercedes
Benz and the television set which Pedro had intended to deliver to Juan were destroyed by an
accident fire.

Has the obligation of Pedro been extinguished? Explain.

2003 No.XIII
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. 5% pg.269

1986 No.9
On due date, Mayutang, finding himself unable to pay Makaragdag his P500,000.00
obligation, proposed in a letter to Makaragdag that he would deed over to Makaragdag his
Mercedez Benz car, “to be applied to the amount which I owe you.” The following week, Mayutang
sent the car to Makaragdag with the proper deed of conveyance. It was accepted.
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 Was the arrangement a valid way of settling the obligation? Explain.
After the delivery of the car would Makaragdag have any further claim against
Mayutang if the value of the car is found to be less that the P500,000.00 obligation? Explain pg.
274

07; Obligations; joint/solidary liability; solidary obligations

1984 No. 11

A, B and C solidarity promised to pay D the amount of P3, 000. Unfortunately, C became
insolvent.
What recourse does D have against A and B? What are the rights of A and B as against each
other?

07; Obligations; loss of the thing due

1986 No. 1:

Mr. Mekanico leased some automobile repair equipment to Mr. Masipag, who was opening
his auto repair shop. The lease agreement was executed on February 15, 1985. It stipulated that
the period was one month only, at the expiration of which Masipag was to return the equipment to
Mekanico. The equipment was delivered on February 15, 1985. On March 15 1985 Mekanico, in a
telephone call, asked Masipag to return the leased property that the same day. Because his truck
broke down, Masipag was unable to comply. Early the next morning, the equipment was burned in
an accidental fire that started in a nearby restaurant and gutted Masipag’s auto repair shop.
Mekanico seeks to hold Masipag liable for the value of the lost property plus damages on the ground
that he did not return it as agreed upon. Is Mecanico’s claim tenable? Explain.

Pg. 91. Extinguishment; Compensation (2009)

No.XV. Sarah had a deposit in a savings account with Filipino Universal Bank in the amount of five million
pesos (P5,000,000.00). To buy a new car, she obtained a loan from the same bank in the amount of
P1,200,000.00, payable in twelve monthly installments. Sarah issued in favor of the bank post-dated checks,
each in the amount of P100,000.00, to cover the twelve monthly installment payments. On the third, fourth
and fifth months, the corresponding checks bounced.
The bank then declared the whole obligation due, and proceeded to deduct the amount of one million pesos
(P1,000,000.00) from Sarah’s deposit after notice to her that this is a form of compensation allowed by law.
Is the bank correct? Explain. (4%)

Pg.82. Nature of Contracts; Privity of Contract (1996)

Baldomero lease his house with the telephone a Jose. The lease contract provided that Jose shall pay all
electricity, water and telephone services with a 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 20,000,00. 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

Pg.81. Contract of Option; Elements (2005)

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.
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 a.) What is the effect of the withdrawal of Marvin’s offer? (2%)
b.) Will your Answer be the same if Carlos paid Marvin P10,000,00 as consideration for that option?
Explain. (2%)
c.) Supposing that Carlos accepted the offer before Marvin could communicate his withdrawal thereof?
Discuss the legal consequences. (2%)

07; Contracts; voidable contracts

1979 No. X

Mrs. S borrowed P20,000 from PG, She and her 17-years old son, Mario, signed the
promissory note for the loan, which note did not say anything- about the capacity of signer. Mrs. S
made partial payments little by little. After seven (7) years she died leaving a balance of 10,000.00
on the note. PG demanded payment from Mario who refused to pay. When sued for the amount,
Mario raised the defense: that when he signed the note he was still a minor. Should the defense be
sustained? Why?

A minor sold his land to X. When he became 22 years old, he became indebted to Y. To avoid
paying Y, the former minor decided to ratify the sale of the land. He then had no other property. May
Y still rescind the sale although at the time it was made he was not yet a creditor? Art. 1396-1397
p. 771

FACTS: A has a son B; C has a daughter D. A, B, C, and D agree together that B will marry D. The
agreement is oral. Issue: If D later on refuses to marry B who has spent for the necessary wedding
preparation, and A and B bring an action against C and D, will the action prosper? Art.1403 p. 802

Pg.90. Implied trust (1998)

Juan and his sister Juana inherited from their mother two parcels of farmland with exactly the same areas.
For convenience, the Torrens certificates of title covering both lots were placed in Juan’s name alone. In
1996, Juan sold to an innocent purchaser one parcel in its entirety without the knowledge and consent of
Juana, and wrongfully kept for himself the entire price paid.
1. What rights of action, if any, does Juana have against and/or the buyer? (3% )
2. Sins the two lots have the same area, suppose Juana flies a complaint to have herself declared sole
owner of the entire remaining second lot, contending that her brother had forfeited his share thereof
by wrongfully disposing of her undivided share in the first lot. Will the suit prosper? (2%)

________________________________

2000 No.VII

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 a) 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? 3% pg. 274

1996 No.9
Sometime in 1955, Tomas donated a parcel of land to his stepdaughter Irene,
subject to the condition that she may not sell, transfer or cede the same for twenty years. Shortly
thereafter, he died. In 1965, because she needed money for medical expenses, Nene sold the
land to Conrado. The following year, Irene died, leaving as her sole heir a son by the name of
Armando. When Armando learned that the land which he expected to inherit had been sold by
Irene to Conrado, he filed an action against the latter for annulment of the sale, on the ground that
it violate the restriction imposed by Tomas. Conrado filed a motion to dismiss, on the ground that
Armando did not have the legal capacity to sue.
If you were the Judge, how will you rule on this motion to dismiss? Explain pg. 250

1979 No. IX
On the basis of a document entitled “Deed of Absolute Sale”, a certain lot and
building then, leased by its owner, PC, to JG with a monthly rental of P1,000.00, was sold to, and
thus registered in the latter’s name. Six years after the issuance of the title to JG, MC the sole heir
of PC who had just died brought an action for recovery of the property alleging in his complaint,
among others, that PC then very old and with weak eyesight was tricked by JG into signing the
Deed of Absolute Sale upon the fraudulent misrepresentation that said document was only a
renewal of the lease contract over the property; that the price stated in the document is only
P10,000 although the property was then worth about P50,000 JG moved to dismiss the action on
the ground of prescription. Should the motion be granted? Why? Pg. 250-251
07; Obligations; obligation to deliver a determinate thing; effect loss

Taxi driver D, driving recklessly, killed pedestrian P and his passenger Y. Discuss the source of the
obligation of D and of his employer to P and to Y, and the defense available to the employer. (1977)
(23)

A executed in favor of B a promissory note for P10,000, payable after 2 years, secured by a
mortgage on a certain building valued at P20,000. One year execution of the note, the mortgaged
building was totally destroyed by a fire of accidental origin. Can B demand from A the payment of
the value of the note immediately after the burning without waiting expiration of the term? Reasons.
(1932) (70)

 A owes B P20, 000 which became due and payable last October 1, 1983. on that date, A
offered B 10,000. The only money he then had, but B refused to accept the payment. A
thereafter met C, B’s 22-year-old son, to whom he gave the P10,000 with the request that he
turn the money over to B. the money was stolen while in C’s possession.
(a) Was B justified in refusing to accept the payment of A?
(b) May he still recover the full amount of his debt of P20,000? Why? (1983) (115)

Discuss the principle of the in pari delicto and enumerate five (5) instances in the civil code
which are exception to the principle.

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FACTS: A shipped his cargo in B’s vessel. B and C’s company entered into a contract for C’s
company to unload the cargo from the ship’s hold. In the lifting operations, A’s cargo was damaged.
Issue: May A successfully sue C’s company for damages? Art.1311 p.571

“A” and “B” entered into a verbal contract whereby “A” agreed to sell to “B” his only parcel of
land for 20,000, and “B” agreed to buy at the aforementioned price “B” went to the bank, withdrew
the necessary amount, and returned to “A” for the consummation of the contract. “A” however, had
changed his mind and refused to go through with the sale. Is the agreement valid? Will an action
by ‘B” against ‘A” for specific performance prosper? Reason. 253

A went to a store and offered to buy a certain watch for P 100,000. The seller said he was willing to
give it for P 120,000. Whereupon, A turned to go away because he did not want to pay that price.
The seller called him back and said he was willing to sell the watch for P 100,000. Is A allowed not
to buy said watch? Art. 1319 p. 602

FACTS: Serra offered to sell a Central either for cash, or on an installment basis, the balance to be
paid in three years. The total price was P 100,000. Zayco, to whom the Central was offered, wrote
to Serra stating among other things that he was giving P 100,000 or 1/10 of the price as down
payment, the balance to be paid in some other way. Issue: Was there a meeting of the minds? Art.
1319 p. 603

A agreed with B that A would be loaned P 10, 000, 000 by B. In the contract signed by A and B, it
was stated that A was selling his house to B for said amount. A signed the contract in the belief that
it was really a contract of loan. Who, if any, may ask for the reformation of the instrument if B had
acted fraudulently? Art. 1362 p. 693

FACTS: The Lichauco Corporation owed Noble Jose P 70, 000. The Corporation was involvent and
although the debt was not yet enforceable, the Corporation gave to Noble Jose a deed of sale to
one of its properties (the value of which was much greater than the debt) in payment for the debt.
At the same time, the Corporation paid off a certain Corcuera its debt of P 24, 000 by giving him a
piece of land. This latter debt was already due and demandable at the time payment was made.
Issue: Are the two transactions rescindable? Art. 1382 p. 744

C, husband of D, sold paraphemal property in her name without (D’s) consent. Was such sale
valid, void, voidable, rescissible , or unenforceable ? explain. 261

What is natural obligation? How is natural obligation distinguished from a civil obligation? Give an
three (3) example of a natural obligation. 265 266
07; Trust; express trust; prescription
1997 No. 13

On January 1 1980, Redentor and Remedies entered into an agreement by virtue of which the former
was to register a parcel of land in the name of Remedies under the explicit covenant to reconvey the land to
Remigio, son of Redentor, upon the son’s graduation from collage. In 1981, the land was registered in the
name of Remedies.

Redentor died a year later. In March 1983, Remigio graduated from collage. In February, Remigio
accidentally found a copy of the document so constituting Remedies as the trustee of the land. In May 1994,
Remigio filed a case against Remedies for the reconveyance of the land to him. Remedies, in her answer,
averred that the action already prescribed.
How should the matter be decided?

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2003 No.XIII
Are the following obligations valid, why, and if they are valid, when is the obligation
demandable in each case?
(e) If the debtor promises to pay as soon as he has the means to pay;

(f) If the debtor promises to pay when he likes;

(g) If the debtor promises to pay when he becomes a lawyer;

(h) If the debtor promises to pay if his son, who is sick with cancer, does not die within one
year. 5% pg.269

2000 No.VII
a) 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? 3% pg. 274

1986 No.9
On due date, Mayutang, finding himself unable to pay Makaragdag his P500,000.00
obligation, proposed in a letter to Makaragdag that he would deed over to Makaragdag his
Mercedez Benz car, “to be applied to the amount which I owe you.” The following week, Mayutang
sent the car to Makaragdag with the proper deed of conveyance. It was accepted.
Was the arrangement a valid way of settling the obligation? Explain.
After the delivery of the car would Makaragdag have any further claim against
Mayutang if the value of the car is found to be less that the P500,000.00 obligation? Explain pg.
274
1996 No.9
Sometime in 1955, Tomas donated a parcel of land to his stepdaughter Irene,
subject to the condition that she may not sell, transfer or cede the same for twenty years. Shortly
thereafter, he died. In 1965, because she needed money for medical expenses, Nene sold the
land to Conrado. The following year, Irene died, leaving as her sole heir a son by the name of
Armando. When Armando learned that the land which he expected to inherit had been sold by
Irene to Conrado, he filed an action against the latter for annulment of the sale, on the ground that
it violate the restriction imposed by Tomas. Conrado filed a motion to dismiss, on the ground that
Armando did not have the legal capacity to sue.
If you were the Judge, how will you rule on this motion to dismiss? Explain pg. 250

1979 No. IX
On the basis of a document entitled “Deed of Absolute Sale”, a certain lot and
building then, leased by its owner, PC, to JG with a monthly rental of P1,000.00, was sold to, and
thus registered in the latter’s name. Six years after the issuance of the title to JG, MC the sole heir
of PC who had just died brought an action for recovery of the property alleging in his complaint,
among others, that PC then very old and with weak eyesight was tricked by JG into signing the
Deed of Absolute Sale upon the fraudulent misrepresentation that said document was only a
renewal of the lease contract over the property; that the price stated in the document is only
P10,000 although the property was then worth about P50,000 JG moved to dismiss the action on
the ground of prescription. Should the motion be granted? Why? Pg. 250-251

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Pg. 83. Conditional Obligation (2003)
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 he has the mean 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. (5%)

Pg. 86. Extinguishment; Loss (1994)

Dino sued Ben for damages because the latter had failed to deliver the antique Mercedes Benz car Dino had
purchase from Ben which was by 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
delivered to Dino on January 1, 1994, a reckless truck driver had rammed into Mercedes Benz. The trial
court dismissed Dino’s complaint, saying Ben’s obligation had indeed, been extinguished by force majeure.
Is the trial correct?

Pg.90. Implied trust (1998)

Juan and his sister Juana inherited from their mother two parcels of farmland with exactly the same areas.
For convenience, the Torrens certificates of title covering both lots were placed in Juan’s name alone. In
1996, Juan sold to an innocent purchaser one parcel in its entirety without the knowledge and consent of
Juana, and wrongfully kept for himself the entire price paid.
3. What rights of action, if any, does Juana have against and/or the buyer? (3% )
4. Sins the two lots have the same area, suppose Juana flies a complaint to have herself declared sole
owner of the entire remaining second lot, contending that her brother had forfeited his share thereof
by wrongfully disposing of her undivided share in the first lot. Will the suit prosper? (2%)

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