MIDTERMS

Obligations and Contracts 18

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1. S sold to B a building , B promising to pay the unpaid balance of the price within interest and mortgaging the
property as security, subsequently , B sold the property to C, the latter agreeing to pay the balance and to respect
the mortgage. C made several payments to S. When nether B nor C made further payment, S brought action for
recovery of the remaining balance with interest and the foreclosure of mortgage. Is B released from his obligation
to S on the ground of substitution of C as the new debtor? Explain. (E.C. McCullough & CCo. vs. Velso and Serna, 43
Phil.1 [1022])
no novation of the person of the debtor
consent of the creditor is always required
original debtor is still held liable
2. Arleen (agent) received from Michelle (principal) two diamond rings to be sold by Arleen on commission. for
failing to return the rings or their cash value, Michelle sued Arleen for estafa. During the pending of the case,
Arleen executed a deed wherein she promised to pay the value of the rings in installments. Arleen made one
payment which Michelle accepted, but the balance was never paid Did the acceptance by Michelle of the partial
payment novate the original relation between the parties so as to obliterate the criminal liability of Arleen?
Explain.
(People vs Newy, 10 SCRA 244 [1964])
criminal liability
criminal case - plaintiff, the state
criminal liability cannot be obliterated by mere agreement of the parties
agreed party is the state
Michelle did not sell the diamond rings to Arleen
Arleen as agent is to sell the rings, if rings sold then obligation to deliver the proceeds of sale to the
principal, if cannot sell, then return the ring
failure to return the rings or sale then criminal case of estafa
during the pendency of the criminal case, can no longer agree to obliterate the liability
defense of the agent is there was no contract of agency, contract of sale between principal and agent,
bought the rings on credit, non payment of price only civi liability

3. A (stockholder) owes B (corporation) for the amounts A collected as treasurer of B. On the other hand B owes A
an amount representing overpayment by A of his shares of stocks. Is compensation proper in this case? (Brimo vs.
Goldenberg & Co., Inc,, 69 Phil. 502 [1940])
legal compensation
A and B are debtors and creditors from each other
stockholder and owes the corporation an amount, can corporation claim compensation of the shares of
the stockholder?
there is no debtor creditor relationship
you are just a part owner of the corporation
legal compensation cannot occur but conventional compensation can take place

4. Dante owes Carlos 200,000 which became due on January 10, 2013. ON that date, Dante offered Carlos 150,000,
the only money he then had, but Carlos refused to accept the payment, Dante, thereafter, met Jose, Carlos' 21

year old son, to whom he gave 150,000 with a request that he tun the money over to his father, Carlos. However,
the money was stolen while in Jose's possession.
a. Was Carlos justified in refusing to accept the tendered payment?
b. May Carlos still recover the full amount to 200,000 from Dante?
c. if in the above problem, what Dante offered to Carlos as payment in the due date is a check in the
amount of 200,000, can Carlos refuse to accept it?
a. yes, you cannot compel a creditor to accept payment that is not full, the creditor has the right to refuse
the acceptance of payment for justifiable reasons.
b. yes, Jose is not the proper party, son cannot claim because the creditor is still alive
who are able to receive payment?
creditor, successors in interest, any person authorized to receive the payment
c. Yes, payment should be in legal tender
money that debtor can compel a creditor to accept as payment
bills and coins issued by the central bank of the philippines
check extinguishes obligation when check is cashed in ART 1249 par 2
proof that check is fully funded
dation en pago - pre-existing contract of loan
- debtor instead of paying the amount, debtor gives a thing instead as payment
- governed by the law on sales

5. D owes C 100,000 guaranteed by G. C owes D 80,00, on the due date, D is insolvent. how much is the liability of
G?
20,000 only, guarantor can claim compensation because C owes D 80,000
what the creditor owes the debtor
guarantor can claim:
a. for whatever the creditor owes the debtor and what the creditor also owes him
if C also owes G 20,000 G is no longer liable to give for compensation
37:00
6. C was a creditor of D. THe first wife of C died and C married again, After the death of C, the children of C by his
first marriage, demand
payment should be to the children

7. D owes C 100,000. X is the guarantor of D. In another obligation, C owes 100,000. When C sues D for 100,000,
may D successfully put up the defense of compensation, after all C (his creditor) is indebted to X, his guarantor?
No, the parties are no principally bound to each other
compensation to take place the parties are debtors and creditors of each other

8. D owes C 100,000. X wrote C a letter stating that he would be the one to take care of D's debt as soon as X had
made shipment of furniture to Japan, X never made such shipment. X did not pay C. Is X liable to C?
No, condition did not materialize, no liability

9. Syvels had a loan with People's Bank and Trust Co. in the amount of 900,000 secured by a chattel mortgage.
Syvels failed to pay the loan and People's Bank and Trust Co. foreclosed the chattel mortgage. Syvels opposed the
foreclosure of the chattel mortgage in the ground that the obligation secured by the chattel mortgage sought to be
foreclosed was novated by the subsequent execution of a real estate mortgage as additional collateral to the
obligation secured by said chattel mortgage. is the contention of Syvels correct? Explain. (People's Bank and Trust
Co. vs Syvel's Inc. (164 SCRA 247))
novation requirements:
a. clear agreement of the parties
b. expressed,or if implied then 2 obligations are incompatible with each other
additional collateral obligation
there is no novation
there can still be foreclosure of the chattel mortgage

10. Petitioner spouses executer a Real Estate Mortgage n their property in favor of respondent BPI FSB to secure a
15,000,000 loan of Transbuilders Resources & Development Corporation. When the latter failed to pay within the
stipulated period of one year, the loan was restructured providing that the loan shall be pain in quarterly
installments at interest of 18% per annum. Petitioner averred that they were not informed about the restructuring
of the loan. Hence, they wrote BPI FSB requesting cancellation of they mortgage and the return of they title. They
claimed that the new loan novated the loan agreement and the at because the obligation under the mortgage. BPI
FSB refused to cancel the mortgage and instituted extrajudicial foreclosure proceedings against the petitioner. THe
latter filed the instant petition . Was there a novation of the mortgage loan contract? Explain. (Spouses Fancicsco
and Ruby Reyes vs. BPI Family Savings bank, Inc., et. al, G.R. No. 149840 - 41, March 31m 2006)
debtor transbuilder
spouses are mortgager
extension of a term is not a novation, does not extinguish the original obligation it is only a modification
no novation, real estate mortgage can still be enforced

11. A sugar centra obligated itself to construct a railroad to extend to the hacienda of B "whenever the contour of
the land, the curves,, and elevations permit the same.: It was later shown that while it was possible to construct
the railroad to B's hacienda, to do so would be very dangerous.
B instituted action against the sugar central for breach of contract to construct the railroad in question and to
recover damages arising from his inability to mill the cane planted on his hacienda, Decide the case. (Labayen vs.
Talisay-Silay Milling Co., 52 Phil 440 [1928])
loss of the thing due, also covers obligation to do
physical impossibility extinguishes the obligation
danger to a person's life complies with impossibility
not liable for damages

12. D borrowed money from C. As security, D mortgaged his land. Subsequently, D sold the land toC. What is the
effect of the said sale?
mortgage the property you are still the owner
can you still sell the property?
sale was made to the creditor
did not extinguish the loan obligation of C to D

only accessory obligation was extinguished

the mortgagee is now the owner of the property (merger as mortgage is concerned)

if D sold land to a third person, what is the effect?

C can ask for annotation
annotate the mortgage the title of the property
- whoever acquires the property will be bound by the mortgage

13. D insured his house with R, an insurance company. It is agreed that, if the house is destroyed or damaged, R
may either pay the damage or loss or "reinstate or rebuild the house." May R choose to rebuild the house? Explain.
alternative obligation
several prestations but only one is due
no right of choice then choice goes to the debtor
R is the debtor
creditor can make choice if it is agreed upon by the parties

14. B purchased from S two lots. On complaint of C, court annulled the sale and ordered the issuance of a new title
in favor of C. In the meantime, B sold the lots to D who filed a suit for specific performance due to the failure of B
to deliver the title and possession to D. The judgment in favor of D, however, could not be executed because of the
judgement in another civil case declaring the sale from S to B null and void, May D still bring an action for
rescission of the sale with damages? Explain. (Ayson-Simon vs. Adamos, 131 SCRA 439[1984])
contract of sale, buyer can demand specific performance
judgement not satisfies
remedies of buyer if seller fails to comply:
a. demand specific performance
b. rescind the contract plus damages
contract of sale is a reciprocal contract
B cannot comply with obligation to deliver
D can now ask for rescission with damages

15. A borrowed money from B, the debt to be paid in installments. There were several receipts, each of which
acknowledge the payment of a certain installment. B brought an action against A fro installments not covered by
receipts. A's defense was that he had paid the whole debt but that he could not show all the receipts for all the
installments because there were instances when in his dealings with the creditor, no receipt was issued in his
favor. Is A's testimony sufficient to establish or prove the fat that the whole debt had been paid? Explain.
presumption that entire obligation has been paid for the last installment
burden of proof is now on the creditor why he issued a receipt of the last installments

16. A tenant was being ousted by his landlord on the ground of bob-payment of rentals. the tenant's defense was
that the collector, who usually collected the rentals, did not appear and although he was willing to pay, still he was
waiting for said collector. Was the tenant justified? Explain
payment should be made at the domicile of the debtor

contract of lease, debtor is the tenant

default on the part of the debtor if there was demand on the due date
there was no demand because the collector did not go the the domicile of the debtor
tenant was justified

Obligations and Contracts 19 midterm answers

-------------------------------------------1. B
2. B
3. C
4. C
5. A
6. D
7. D
8. B
9. C
10. A
11. A
12. B
13. A
14. B
15. C
16. D
17. C
18. D
19. C
20. A
21. C
22. C
23. C
24. C
25. D
1:00
PRE-FINALS
Obligations and Contracts 29
---------------------------pre-fi
01. C
02. A
03. D
04. C
05. A
06. D
07. D
08. B
09. B
10. C
11. A

12. B
13. A
14. B
15. A
16. D
17. D
18. C
19. D
20. B
21. A
22. C
23. C
24. C
25. B or D

FINALS
Obligations and Contracts 34
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1. John borrowed from Jose P10,000 which amount Jose failed to collect when the same became due and
demandable in 1997. the said loan was evidenced by a promissory note. in 2011, hose demanded payment from
John for the said loa which the latter voluntarily paid. after a few months, being in need of money, John demanded
the return of the P10,000 on the ground that there was wrong payment, the debt having already prescribed. jose,
however, refused to return the amount paid. may john succeed in collecting if he sues Jose in court? Explain.
- written contract
- action based on a written instrument must be filed in a period of 10 years
- natural obligation
- voluntarily paid an obligation what has prescribed
- can no longer recover what has been paid
2. ariel purchased from ABC realty Corporation a parcel of land on installment basis payment within 2 years at the
rate of P10,000 per month. On the 6th month, he could no longer pay the balance, hence,he talked to Carlos, his
brother-in-law, to help him pay. Carlos agreed but with the condition that Ariel would sell one-half of the land to
him. They agreed and Ariel executed a deed of sale over 1/2 of said property subject to the condition that delivery
shall be made after title shall have been issued to Ariel. Title was issued to Ariel after full payment; hence, Carlos
demanded the delivery of 1/2 of the land. Ariel refused contending that the could not have sold ti when he was
not yer the owner. Is Ariel's contention correct? Why?
- estoppel
- alienates a property when which he was not yet the owner of the alienation but seller later on acquired
ownership to the property, title will be transferred by operation of law

3. S, the owner of a piece of property, executed a notarial act tending to show falsely that his brother B, was the
owner of the property mentioned in the document. The real title at the time the declaration was made was in S. In
creating this document, S, in collision with B, was merely laying the basis of a scheme to defeat the creditor of S.
Are S and his successors estopped from claiming said lot? Explain
- no estoppel
- B was a party to such a fraud

- can only apply estoppel if there is a person who relied on the allegation
4. if in #3 above, B sold the property to C, would your answer be the same? Explain.
- estoppel
- buyer C acted in good faith, then S is in estoppel
- another person relied on the declaration
5. S, a non-Christian, sold in 1928 a parcel of land to B without executive approval as required by Section 145 of the
Administrative Code. Despite the invalidity of the sale, S allowed B to enter, possess and enjoy the land in question
without protest, from 1928 to 1943, when S died. Cm the son, who succeeded S, remained inactive, without taking
any step to recover the property from 1943 to 1962, when suit was finally instituted in court. Will the suit prosper?
Explain ( Miguel vs Catalino, 26 SCRA 234[1968])
- estoppel by laches
- unreasonable delay in pursuing one's claim
1. conduct on the part of the defendant which gave rise to the cause of action to the plaintiff
2. delay in the execution or right
3. lack of knowledge
4. injury or prejudice to the buyer
- rule on stale demands

6. S, a patentee of a piece of public land, sold the same to B, in violation of the homestead law. C,D and E, children
and heirs of S, were still minors at the time of the void sale in 1932 and when they executed in 1946 a document
recognizing the sale made by their father who died in 1935 when C was still a minor and could not sign the
document. within 2-1/2 years later, after attaining the age of majority, they promptly repudiated the document
and filed suit for recovery of the land. will the action prosper? Explain.
- no estoppel by laches
- not an unreasonable delay
- did not have the opportunity to question the sale which was void
- even if there was a long period of time, cannot apply the estoppel by laches
7. A written contract of lease was made for seven years with the lessee binding himself to construct a building of
strong wooden materials on the leased premises, which would later become the property of the lessor at the end
of the lease. Instead of constructing a wooden structure
8. A forest concessionaire sold logs produced in his concession to

9. If a minor obtained a loan with a bank and the said contract of loan was annulled by the court, will the bank be
able to recover for the minor the proceeds of the said loan? Explain,
- return to the extent to the point where he benefited from the loan
- if no benefit then he is not compelled to return
10. X intimidated Y to enter into a contract for the exchange of their respective motorcycles. Subsequently Y was
able to have the said contract annulled by the court. Y, however, could not anymore return the motorcycle to X
because it was totally destroyed when Y joined a motorcycle race. Is Y's obligation extinguished? Explain.
- bound to return the value of the motorcycle because there was fault in his part

11. X, a deaf-mute who cannot read and write, purchased a car from Y. Subsequently , the guardian of X filed a
case to annul the cause of sale. the car, however, was destroyed during typhoon Ondoy. Will the action from
annulment prosper? Explain
- X is a deaf mute
- party can no longer return the thing lost
- not the fault of the party
- action still prosper