Oblicon 2010

OBLIGATIONS
Atty. Crisostomo A. Uribe

Obligations
1981-2005 Bar Examination Questions

10%
In General
Kinds of Obligations
40%
Specific Circumstances
affecting obligations
35% Remedies in case of

breach
Modes of Extinguishment
10% 5%
1989 Bar Exam Question No. 15(2)
How is a civil obligation distinguished from a

natural obligation?
Give an example of a natural obligation.

Essential Elements of Obligations
2007 Bar Exam Question No. V (10%)
What are “obligations without an agreement”?
Give five examples of situations giving rise to

this type of obligations?
Sources of Obligations
1992 Bar Exam Question No. 13
In fear of reprisals from lawless elements besieging his barangay, X

abandoned his fishpond, fled to Manila and left for Europe. Seeking that the fish
in the fishpond were ready for harvest, Y, who is in the business of managing
fishponds on a commission basis, took possession of the property, harvested
the fish and sold the entire harvest to Z.
Thereafter, Y borrowed money from W and used the money to buy new
supplies of fish fry and to prepare the fishpond for the next crop.
a) What is the juridical relation between X and Y during X’s

absence?
b) Upon the return of X to the barangay, what are the obligations of
Y to X as regards the contract with Z?
c) Upon X’s return, what are the obligations of X as regards Y’s
contract with W?
d) What legal effects will result if X expressly ratifies Y’s
management and what would be the obligations of X in favor of Y?
Explain all your answers.
Sources of Obligations
2004 Bar Exam Question No. V(A)
DPO went to a store to buy a pack of cigarettes

worth P225.00 only. He gave the vendor, RRA, a
P500-peso bill. The vendor gave him the pack plus
P375.00 change. Was there a discount, an
oversight, or an error in the amount given? What
would be DPO’s duty, if any, in case of an excess in
the amount of change given by the vendor? How is
this situational relationship between DPO and RRA
denominated? Explain.
Compliance with Obligations
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 from 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 accidental fire.
Has the obligation of Pedro been extinguished?

Explain.
Pure Obligations
G.R. No. L-29900 June 28, 1974
IN THE MATTER OF THE INTESTATE ESTATE OF

JUSTO PALANCA, Deceased,
GEORGE PAY, petitioner-appellant,

vs.
SEGUNDINA CHUA VDA. DE PALANCA, oppositor-appellee.
“For value received from time to time since 1947, we [jointly and severally promise
to] pay to Mr. [George Pay] at his office at the China Banking Corporation the sum
of [Twenty Six Thousand Nine Hundred Pesos] (P26,900.00), with interest thereon
at the rate of 12% per annum upon receipt by either of the undersigned of cash
payment from the Estate of the late Don Carlos Palanca or upon demand”. . .
Article 1179 of the Civil Code provides:
"Every obligation whose performance does not depend upon a future or uncertain
event, or upon a past event unknown to the parties, is demandable at once."
Pure/Conditional /Obligations with a Term
Are the following obligations valid, why, and if they

are valid, when is the obligation demandable in each
case?
 If the debtor promises to pay as soon as he has the

means to pay;
 If the debtor promises to pay when he likes;
 If the debtor promises to pay when he becomes a
lawyer;
 If the debtor promises to pay if his son, who is sick
with cancer, does not die within one year.
Classification/Kinds of Conditions
 According to acquisition or extinguishment of rights
 suspensive
 resolutory
 According to whether the fulfillment of condition is dependent upon parties or others
 potestative
 casual
 mixed
 According to divisibility of condition
 divisible
 indivisible
 According to plurality of conditions
 alternative or disjunctive
 conjunctive
 facultative
 According to whether it is an act or omission
 positive
 negative
 According to whether they are stated or merely inferred
 express
 implied
 According to whether they can be fulfilled or not
 possible
 impossible
Classification/Kinds of Terms
 As to influence / effect on obligation
 suspensive
 resolutory
 According to source
 legal
 voluntary
 judicial
 According to whether they are stated of merely inferred
 Express
 tacit
 According to the time determined
 Original period
 Period of grace
 According to certainty
 definite
 indefinite
Kinds of Obligations : Conditional Obligations
1988 Bar Exam Question No. 8(b)
Distinguish between the effects of suspensive

and resolutory conditions upon an obligation.
2000 Bar Exam Question No.15(b)
b) 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?
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 the 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? (2%)
(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? (3%)
Kinds of Obligations : Obligations with a Term
In a deed of sale of 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?
On January 1, 1983, A borrowed P10,000 from B

payable on December 1, 1983. As security therefore,
A pledged his car to B with an agreement that B could
use it. On June 30, 1983, A offered to pay the loan in
full and asked for the return of his car.
Can A compel B to accept the payment and to return

the car? Why?
A obtained from B a loan payable within a year. As

security for its repayment, A mortgaged his uninsured
house. Three months after the loan was given, A’s
house was gutted by an accidental fire. Thereupon, B
demanded immediate payment from A, who refused to
pay contending that the loan was for a one-year
period.
Is A’s contention valid? Explain.

Joint and Solidary Obligations
Define joint and solidary obligations.

2008 Bar Exam Question No. XV(b)
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
(“PN”) in favor of the bank, with his friend Recardo as cosignatory. 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 Recardo’s
property. Recardo’s opposed the foreclosure on the ground that he is only a
co-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,
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.
Can Recardo’s property be foreclosed to pay the full balance of the loan?
(2%)
A and B sold 1,000 sacks of rice to X and Y,

on X’s request, delivered them to him. X
resold the rice, without turning over any part
of it or its price to Y.
May Y compel A and B deliver what he

bought? If so, to what extent?
2001 Bar Exam Question No.7
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? (5%)
A, B and C solidarily promised to pay D the

amount of P3,000.00. 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?
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%)
2. To what extent, if at all, can Jojo be compelled by
Joey to contribute to such payment? (3%)
A, B, C, D and E made themselves solidarily 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.
 B is only 16 years old

 C has already been condoned by X.
 D is insolvent.
 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.
Obligations with a Penal Clause
The Betis Furniture Co. undertook to deliver to Mr. Bagongkasal

specified pieces of living room, dining room and bedroom
furniture, all mad of narra, for a price stated in the contract. The
agreement had a penal clause that any violation of the contract
would entitle the aggrieved party to damages in the amount of
P100,000.00. The furniture delivered by Betis was made, not a
narra, but of inferior wood.
In a suit to recover damages, Bagongkasal was able to prove
that the actual damages he sustained amounted to
P200,000.00. He demanded the amount plus the P100,000.00
penalty or total of P300,000.00. Betis, however, countered that
if it were liable for damages at all, the maximum award should
not exceed P100,000.00 as stated in the penal clause of the
contract.
Whose claim would you sustain? Why?
Obligation with a penal clause
Gobonseng v. Unibancard
G.R. No. 160026 December 10, 2007 AZCUNA, J.
“All charges made through the use of [the] card shall be paid by the
UNICARD holder and/or co-obligor within twenty (20) days from the date
of the said statement of account without the necessity of demand. These
charges or balance thereof remaining unpaid after this 20-day period shall
bear interest at the rate of 3% per month and a penalty equivalent to 5%
of the amount due for every month or a fraction of a month’s delay… In
case it is necessary to collect the account by or thru an attorney-at-law or
collection agency, the UNICARD holder and co-obligor shall pay 25% of
the amount due which shall in no case be less than P1,000.00, as
collection or attorney’s fees, in addition to costs and other litigation
expenses.”
Compliance with Obligation : Degree of Diligence Required
MERALCO v. Ramoy
G.R. No. 158911 March 4, 2008 AUSTRIA-MARTINEZ, J.
Issue: Whether or not MERALCO was justified in

cutting off service to respondents.
Delay
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 after.
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? (5%)
Delay
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 of
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 same day.
Because this truck broke down, Masipag was unable to
comply. Early the next morning, the equipment was burned in
an accidental fire that stated 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 Mekanico’s
claim tenable? Explain.
Compliance with Obligations : Fortuitous Event
FIL-ESTATE PROPERTIES v. GO
G.R. No. 165164 August 17, 2007 QUISUMBING, J.
Issue: Whether or not the Asian financial crisis in

1997 is a fortuitous event.
Compliance with Obligations :
Fortuitous Event : Robbery
SICAM v. JORGE
G.R. NO. 159617 August 8, 2007 AUSTRIA-MARTINEZ, J.
To constitute a fortuitous event, the following elements must concur:

(a) the cause of the unforeseen and unexpected occurrence or of the
failure of the debtor to comply with obligations must be
independent of human will;
(b) it must be impossible to foresee the event that constitutes the
caso fortuito or, if it can be foreseen, it must be impossible to
avoid;
(c) the occurrence must be such as to render it impossible for the
debtor to fulfill obligations in a normal manner; and,
(d) the obligor must be free from any participation in the aggravation
of the injury or loss.
Vicarious Liability of Employers
VIRGINIA REAL vs. SISENANDO H. BELO

G.R. NO. 146224 January 26, 2007 AUSTRIA-MARTINEZ, J.
Issue: Whether or not the fire that originated

from leaking fumes from the LPG stove and tank
installed at petitioner's fastfood stall is a
fortuitous event.
Remedies : Rescission
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 P100,000.00 in court, and filed an action for
rescission of the deed of conditional sale, plus damages.
Will the action prosper? Explain.
Remedies
Rescission
2008 Bar Exam Question No. XVIII
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 started
immediately, but AB Corp. later experience 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 45%
complete. 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 construction could not be finished on time, XY corp.
sent written notice canceling the contract, and requiring AB Corp. to
immediately vacate the premises.
Can the labor unrest be considered a fortuitous? (1%)
Can XY Corp. unilaterally and immediately cancel the contract? (2%)
Must AB Corp. return the 50% down payment? (2%)
Remedies
A bound himself to deliver to B a 21-inch 1983

model TV set, and the 13 cubic feet White
Westinghouse refrigerator, with Motor No. WERT-
385, which B saw in A’s store, and to repair B’s
piano. A did none of these things.
May the court compel A to deliver the TV set and

the refrigerator and repair the piano? Why? If not,
what relief may the court grant B? Why?
Modes of Extinguishment : Payment
Integrity of Prestations
A owes B P20,000 which became due and payable

last October 1, 1983. On that date, A offered B
P10,000 the only money he then had, but 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.
Was B justified in refusing to accept the payment of
A? May he still recover the full amount of his debt of
P20,000? Why?
Mr. Magaling obtained a judgment against Mr. Mayaman in the

amount of P500,000.00. A writ of execution was issued pursuant
to which various personal properties of Mayaman were levied
upon by the sheriff. An auction sale was scheduled.
Before the appointed day of the auction, Mayaman delivered to

the sheriff a cashier’s check of Far East Bank in the amount of
P200,000.00 and enough cash to cover the remainder of the total
amount due. Magaling refused to accept the check and asked
the sheriff to proceed with the auction sale.
Did Magaling have the right to refuse the payment of part of the
obligation with a cashier’s check? Explain.
“S”, an American resident of Manila, about to leave on a

vacation, sold his car to “B” for U.S.$2,000.00, the
payment to be made ten days after delivery to “X”, a third
party depositary agreed upon, who shall deliver the car
to “B” upon receipt by “X” of the purchase price. It was
stipulated that ownership is retained by “S” until delivery
of the car to “X”. Five days after delivery of the car to
“X”, it was destroyed in a fire which gutted the house of
“X”, without the fault of either “X” or “B”.
b) May seller “S” demand payment in U.S. dollar?

2008 Bar Exam Question No. XVII
Felipe borrowed $100 from Gustavo in 1998, when the Phil P-US$ exchange
rate was P56-US$1. On March 1, 2008, Felipe tendered to Gustavo a
cashier’s check in the amount of P4,135 in payment of his US$ 100debt,
based on the Phil P-US$ exchange rate at the time. Gustavo accepted the
check, but forgot to deposit it until Sept.12, 2008. His bank refused to accept
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.
Can Gustavo now raise the issue that the cashier’s check is not legal tender?
(2%)
Can Felipe validly refuse to pay Gustavo again? (2%)
Can Felipe compel Gustavo to receive US$100 instead? (1%)
Extinguishment of Obligations : Payment
SABEROLA v. SUAREZ
G.R. No. 151227 July 14, 2008 NACHURA, J.:
Issue: Who has the burden of proving that the

rate of pay given to the respondents is in
accordance with the minimum fixed by the law
and that he paid thirteenth month pay, service
incentive leave pay and other monetary claims?
Special Forms of Payment
1989 Bar Exam Question No. 10(a)
a) Under the Civil Code, what are the

different special forms of payments?
(2) What is dation in payment and how is it

distinguished from assignment of property?
Special Forms of Payment : Dation in Payment
2009 Bar Exam Question No. XI(d)
TRUE or FALSE. Answer TRUE if the statement is

true, or FALSE if the statement is false. Explain your
answer in not more than two (2) sentences. (5%)
(d) The renunciation by a co-owner of his undivided

share in the co-owned property in lieu of the
performance of his obligation to contribute to taxes
and expenses for the preservation of the property
constitutes dacion en pago.
Application of Payment
The debtor owes his creditor several debts, all of

them due, to with: (1) an unsecured debt; (2) a
debt secured with a mortgage of the debtor’s
property; (3) a debt bearing interest; (4) a debt in
which the debtor is solidarily liable with another.
Partial payment was made by the debtor. Assuming
that the debtor had not specified the debts to which
the payment should be applied and, on the other
hand, the creditor had not specified in the receipt he
issued the application of payment, state the order in
which the payment should be applied and your
reasons therefore.
Special Forms of Payment : Consignation
b) What are the special requisites of

consignation in order that it shall produce the
effect of payment?
Modes of Extinguishment of Obligations :
Special Form Of Payment : Consignation
SAN DIEGO v. ALZUL

G.R. No. 169501 June 8, 2007 VELASCO, JR., J.
Issue: Whether or not tender of payment will

extinguish an obligation.
Special Forms of Payment : Consignation
A sold to B a parcel of land with the right to

repurchase the same within three years. A tendered
the repurchase of price to B within the prescribed
period, but B refused to accept it. A then brought an
action in court for specific performance.
B contends that since A did not deposit the money
in court within the stipulated period for repurchase
and the period has now lapsed, A can no longer
repurchase the property. Is this contention correct?
Explain.
Loss of the thing due / Fortuitous Event
2002 Bar Question No. 17(1)
A van owned by Orlando and driven by Diego, while negotiating

a downhill slope of a city road, suddenly gained speed, obviously
beyond the authorized limit in the area, and bumped a car in front
of it, causing severed damage to the car and serious injuries to
its passengers. Orlando was not in the car at the time of the
incident. The car owner and the injured passengers sued
Orlando and Diego for damages caused by Diego’s negligence.
In their defense, Diego claims that the downhill slope caused the
van to gain speed and that, as he stepped on the brakes to
check the acceleration, the brakes locked, causing the van to go
even faster and eventually to hit the car in front of it. Orlando
and Diego contend that the sudden malfunction of the van’s
brake system is a fortuitous event and that, therefore, they are
exempt from any liability.
Is this contention tenable? Explain. (2%)
Modes of Extinguishment : Condonation
2000 Bar Question No. 7(a)
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%)
Modes of Extinguishment : Compensation
1998 Bar Question No. 14
1. Define compensation as a mode of extinguishing an

obligation, and distinguish it from payment. (2%)
2. X, who has a savings deposit with Y Bank in the sum of
P1,000,000.00, incurs a loan obligation with the said Bank in
the sum of P800,000.00 which has become due. When X
tries to withdraw his deposit, Y Bank allows only P200,000.00
to be withdrawn, less service charges, claiming that
compensation has extinguished its obligation under the
savings account to the concurrent amount of X’s debt. X
contends that compensation is improper when one of the
debts, as here, arises from a contract of deposit. Assuming
that the promissory note signed by X to evidence the loan
does not provide for compensation between said loan and his
savings deposit, who is correct? (3%)
2009 Bar Question 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%)
Modes of Extinguishment :
Legal Compensation
BANK OF THE PHILIPPINE ISLANDS v. COURT OF APPEALS
G.R. No. 136202 January 25, 2007 AZCUNA, J
Legal compensation under Article 1278 of the Civil Code may take place
"when all the requisites mentioned in Article 1279 are present," as
follows:
(1) That each one of the obligors be bound principally, and that he
be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due
are consumable, they be of the same kind, and also of the
same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy, commenced by third persons and communicated
in due time to the debtor.
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 (“PN”) in favor
of the bank, with his friend Recardo as cosignatory. 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 Recardo’s property. Recardo’s opposed
the foreclosure on the ground that he is only a co-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, 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.
Can XYZ Bank validly assert legal compensation? (2%)
2002 Bar Question No. 9
Stockton is a stockholder of Core Corp. He desires to sell his shares

in Core Corp. in vies of a court suit that Core Corp. has filed against
him for damages in the amount of P10 million, plus attorney’s fees of
P1 million, as a result of statements published by Stockton which
are allegedly defamatory because it was calculated to injure and
damage the corporation’s 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 P10
million. The response 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
attorney’s 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. It Stockton correct? Give reasons for your answer.
(5%)
“B” borrowed from “C” P1,000.00 payable in one

year. When “C” was in the province, “C’s” 17-year
old son borrowed P500.00 from “B” for his school
tuition. However, the son spent it instead
nightclubbing. When the debt to “C” fell due, “B”
tendered only P500.00, claiming compensation o on
the P500.00 borrowed by “C’s” son.
a) Is there legal compensation? Why?
b) Suppose the minor son actually used the money
for school tuition, would the answer be different?
Reasons.
Modes of Extinguishment : Novation
In 1978, Bobby borrowed P1,000,000.00 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?
JAPAN AIRLINES v. SIMANGAN

G.R. No. 170141 April 2008 REYES, R.T., J.
Active Subjective Novation
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 bill 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.

Objective Novation
1988 Bar Exam Question No. 11(a)
a) Suppose that under an obligation imposed by a

final judgment, the liability of the judgment debtor is
to pay the amount of P6,000.00 but both the
judgment debtor and the judgment creditor
subsequently entered into a contract reducing the
liability of the former to only P4,000.00. Is there an
implied novation which will have the effect of
extinguishing the judgment obligation and creating a
modified obligatory relations? Reasons.
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 (“PN”) in favor
of the bank, with his friend Recardo as cosignatory. 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 Recardo’s property. Recardo’s opposed
the foreclosure on the ground that he is only a co-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, 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.
Does Recardo have basis under the Civil Code for claiming that the original
contract was novated? (2%)
CONTRACTS
Contracts
25%
35% Governing Law/Jurisdiction
Fundamental
Principles/Characteristics
Formalities
Defective Contracts
5%
35%
Sources of Obligations : Contract
Kinds of Obligations : Joint & Solidary Obligations
JOSEPH SALUDAGA v. FEU

G.R. No. 179337 April 30, 2008 YNARES-SANTIAGO, J.
Issue: Whether or not the respondents can be

held liable under the student-school contract.
Fundamental Characteristics of Contracts
Autonomy of Contracts
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 the dollar.” Starting March 1,
2001, the lessor increased the rental to P2,000.00 a month, on
the ground of inflation 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? (5%)
Fundamental Characteristics of Contracts :
DAISY B. TIU v. PLATINUM PLANS PHIL

G.R. No. 163512 February 28, 2007 QUISUMBING, J.
NON INVOLVEMENT PROVISION – The EMPLOYEE

further undertakes that during his/her engagement with
EMPLOYER and in case of separation from the Company,
whether voluntary or for cause, he/she shall not, for the next
TWO (2) years thereafter, engage in or be involved with any
corporation, association or entity, whether directly or
indirectly, engaged in the same business or belonging to the
same pre-need industry as the EMPLOYER. Any breach of
the foregoing provision shall render the EMPLOYEE liable
to the EMPLOYER in the amount of One Hundred
Thousand Pesos (P100,000.00) for and as liquidated
damages.
1996 Bar Exam Question No.18
Alma was hired as a domestic helper in Hongkong by the Dragon

Services, Ltd., through its local agent. She executed a standard
employment contract designed by the Philippine Overseas
Workers Administration (POEA) for overseas Filipino workers. It
provided for her employment for one year at a salary of
US$1,000.00 a month. It was submitted to and approved by the
POEA. However, when she arrived in Hongkong, she was asked
to sign another contract by Dragon Services, Ltd. which reduced
her salary to only US$600.00 a month. Having no other choice,
Alma signed the contact but when she returned to the
Philippines, she demanded payment of the salary differential of
US$400.00 a month. Both Dragon Services, Ltd. and its local
agent claimed that the second contract is valid under the laws of
Hongkong, and therefore binding on Alma.
Is their claim correct? Explain.
Consensuality of Contracts :
Contract of Adhesion
METROPOLITAN BANK & TRUST COMPANY v. JIMMY GO

G.R. No. 155647 November 23, 2007 NACHURA, J
Issue: Whether or not the trust receipts are valid.

Mutuality of Contracts
A. The parties in contract of loan of money agreed that the yearly interest rate is
12% and it can be increased if there is a law that would authorize the increase
of interest rates. Suppose OB, the lender, would increase by 5% the rate of
interest to be paid by TY, the borrower, without a law authorizing such increase,
would OB’s action be just and valid? Why? Has TY a remedy against the
imposition of the rate increase? Explain. (5%)
B. DON, an American businessman, secured parental consent for the employment

of five minors to play certain roles in two movies he was producing at home in
Makati. They worked at odd hours of the day and night, but always
accompanied by parents or other adults. The producer paid the children talent
fees at rates better than adult wages.
But a social worker, DEB, reported to OSWF that these children often missed
going to school. They sometimes drank wine, aside from being exposed to
drugs. In some scenes, they were filmed naked or in revealing costumes. In
his defense, DON contended all these were part of artistic freedom and cultural
creativity. None of the parents complained, said DON. He also said they
signed a contract containing a waiver of their right to file any complaint in any
office or tribunal concerning the working conditions of their children acting in the
movies.
Is the waiver valid and binding? Why or why not? Explain. (5%)
Relativity of Contracts
Francis Albert, a citizen and resident of New Jersey U.S.A.,

under whose law he was still a minor, being only 20 years of age,
was hired by ABC Corporation of Manila to serve for two years
as its chief computer programmer. But after serving for only four
months, he resigned to join XYZ Corporation, which enticed him
by offering more advantageous terms. His first employer sues
him in Manila for damages arising from the breach of his contract
of employment. He sets up his minority as a defense and asks
for annulment of the contract on that ground. The plaintiff
disputes this by alleging that since the contract was executed in
the Philippines under whose law the age of majority is 18 years,
he was no longer a minor at the time of perfection of the contract.
Suppose XYZ Corporation is impleaded as co-defendant, what
would be the basis of its liability, if any? (2%)
Relativity of Contracts
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?
Classification of Contracts
2. Distinguish consensual from real

contracts and name at least four (4) kinds of
real contracts under the present law. (3%)
Stages of Contracts : Perfection
1988 Bar Exam Question No. 11(b)(1)
b) Merle offered to sell her automobile to Violy for

P60,000.00. After inspecting the automobile, Violy
offered to buy it for P50,000.00. 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.
Is there a perfected contract in this case? Why?
Essential Elements of Contracts
Consent of the Contracting Parties
Consent Status of the
Contract
I. No Consent Given
A. Fictitious Void
B. Simulated
1. Absolutely Simulated
2. Relatively Simulated
II. Consent was Given
A. By an incapacitated person
1. Absolute incapacity Void

a. without juridical capacity Voidable
b. without capacity to act Unenforceable
I) only 1 of the parties
II) both parties
2. Relative incapacity Void
B. By one with capacity
1. Vitiated Voidable
2. In the name of another person without the authority of the latter unless he has Unenforceable
the authority of the law
Contract of Option
2005 Bar Exam Question No. IX
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? (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%)
Contract of Option
1996 Bar Exam Question No.14(2)
Ubaldo is the owner of a building which has been leased by

Remigio for the past 20 years. Ubaldo has repeatedly assured
Remigio that if he should decide to sell the building he will give
Remigio the right of first refusal. On June 30, 1994, Ubaldo
informed Remigio that he was willing to sell the building for P5
Million. The following day, Remigio sent a letter to Ubaldo
offering to buy the building at P4.5 Million. Ubaldo did not reply.
One week later, Remigio received a letter from Santos informing
him that the building has been sold to him by Ubaldo for P5
Million, and that he will not renew Remigio’s lease when it
expires. Remigio filed an action against Ubaldo and Santos for
cancellation of the sale, and to compel Ubaldo to execute a deed
of absolute sale in his favor based on his right of first refusal.
2) If Ubaldo had given Remigio an option to purchase the
building instead of a right of first refusal, will your answer be the
same? Explain.
Voidable 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 an 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 year 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) 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.
Unenforceable Contracts
2009 Bar Exam Question No. I(c)(d)Part I
TRUE or FALSE. Answer TRUE if the

statement is true, or FALSE if the statement is
false. Explain your answer in not more than two
(2) sentences. (5%)
(c) An oral partnership is valid.

(d) An oral promise of guaranty is valid and
binding.
(2) “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 placed
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 an action to compel “Y” to deliver the unit.
Will such action prosper? Give your reasons
“A” and “B” entered into a verbal contract whereby “A”

agreed to sell to “B” his only parcel of land for
P20,000.00, 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.
1989 Bar Exam Question No. 15(a)(b)
a) Suppose that in an oral contract, which by its

terms is not to be performed within one year from the
execution thereof, one of the contracting parties has
already complied within the year with the obligations
imposed upon him by said contract, can the other
party avoid fulfillment of those incumbent upon him by
invoking the Stature of Frauds?
b) One-half of a parcel of land belonging to A and B
was sold by X to Y for the amount of P1,500.00. The
sale was executed verbally. One year later, A and B
sold the entire land to X. Is the sale executed verbally
by X to Y valid and binding? Reasons.
Void Contracts
2004 Bar Exam Question No. 2(A)(4)
Distinguish briefly but clearly between:

Inexistent contracts and annullable contracts.
Void Contracts
In 1950, the Bureau of Lands issued a Homestead

patent to A. Three years later, A sold the homestead
to B. A died in 1990, and his heirs filed an action to
recover the homestead from B on the ground that its
sale by their father to the latter is void under Section
118 of the Public Land Law. B contends, however,
that the heirs of A cannot recover the homestead from
him anymore because their action has prescribed and
that furthermore, A was in pari delicto. Decide. (5%)
Void Contracts
“M”, an unwed mother, gave her child for adoption to a

childless couple, “B-C”, for which “B-C” paid “M”
P20,000.00. In the civil register of births, the father was
listed as “father unknown.”
Two years later, after “B-C” learned to love the child as
their own and adoption proceedings commenced with
required publication, “F”, father of the child appeared to
oppose the adoption and to seek custody of the child. “M”
sided with “B-C” claiming that “F” had abandoned her when
he learned that she was pregnant and declaring that she
wanted “B-C” to keep the child.
Could “B-C” recover the P20,000.00 they had paid from
either “F” or “M”? Reasons.

Oblicon 2010

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Oblicon 2010

Uploaded by

Copyright:

Available Formats

OBLIGATIONS

Atty. Crisostomo A. Uribe

1981-2005 Bar Examination Questions

35% Remedies in case of

How is a civil obligation distinguished from a

Give an example of a natural obligation.

What are “obligations without an agreement”?

Give five examples of situations giving rise to

In fear of reprisals from lawless elements besieging his barangay, X

a) What is the juridical relation between X and Y during X’s

DPO went to a store to buy a pack of cigarettes

For value received, Pedro promised to deliver to

Has the obligation of Pedro been extinguished?

IN THE MATTER OF THE INTESTATE ESTATE OF

GEORGE PAY, petitioner-appellant,

Article 1179 of the Civil Code provides:

Are the following obligations valid, why, and if they

 If the debtor promises to pay as soon as he has the

Distinguish between the effects of suspensive

b) Pedro promised to give his grandson a

In 1997, Manuel bound himself to sell Eva a house and

(b) Assuming that it is Eva who is entitled to buy said

In a deed of sale of realty, it was stipulated that the buyer would

On January 1, 1983, A borrowed P10,000 from B

Can A compel B to accept the payment and to return

A obtained from B a loan payable within a year. As

Is A’s contention valid? Explain.

Define joint and solidary obligations.

A and B sold 1,000 sacks of rice to X and Y,

May Y compel A and B deliver what he

Four foreign medical students rented the apartment of

A, B and C solidarily promised to pay D the

What recourse does D have against A and

Joey, Jovy and Jojo are solidary debtors under a loan

1. How much, if any, may Joey be compelled to pay?

A, B, C, D and E made themselves solidarily indebted to X for

 B is only 16 years old

State the effect of each of the above defenses put up by A on

The Betis Furniture Co. undertook to deliver to Mr. Bagongkasal

Issue: Whether or not MERALCO was justified in

Kristina brought her diamond ring to a jewelry shop for

Mr. Mekanico leased some automobile repair equipment to

Issue: Whether or not the Asian financial crisis in

To constitute a fortuitous event, the following elements must concur:

VIRGINIA REAL vs. SISENANDO H. BELO

Issue: Whether or not the fire that originated

In December 1985, Salvador and the Star Semiconductor Company

A bound himself to deliver to B a 21-inch 1983

May the court compel A to deliver the TV set and

A owes B P20,000 which became due and payable

Mr. Magaling obtained a judgment against Mr. Mayaman in the

Before the appointed day of the auction, Mayaman delivered to

“S”, an American resident of Manila, about to leave on a

b) May seller “S” demand payment in U.S. dollar?

Issue: Who has the burden of proving that the

a) Under the Civil Code, what are the

(2) What is dation in payment and how is it

TRUE or FALSE. Answer TRUE if the statement is

(d) The renunciation by a co-owner of his undivided

The debtor owes his creditor several debts, all of

b) What are the special requisites of

SAN DIEGO v. ALZUL

Issue: Whether or not tender of payment will

A sold to B a parcel of land with the right to