MIDTERM QUIZZES

QUIZ # 1 - OBLIGATIONS
I.
A passenger of a bus was hurt because of the negligence
of the driver of the bus as well as the negligence of the
driver of another vehicle. Issue: Who should be liable and
what are the sources of their obligation? Discuss the
defense available to them. (5 pts)

II.
A and B were co-owners of a motor boat. In a written
instrument, B sold her half-share in the boat to A for
P300,000 which was to be paid in three equal
installments. It was agreed that incase of first default, A
must pay interests; and that in case of second default, B
gets back her half-share in the boat without the necessity
of reimbursing A for whatever A has already paid. After
paying two installments, A defaulted in the payment of
the third installment. Subsequently, a fortuitous event
destroyed the boat. B now instituted an action to recover
what has not yet been paid (the third installment) plus 6%
interest from default. A claim, however, that the loss of
the boat by a fortuitous event has excused him from the
obligation to pay the balance. Issue: Is he correct? (5 pts)
III.
“A” and “B” were very good friends. “A” borrowed P
1,000,000.00 from “B”. Because of their close
relationship, the promissory note executed by “A”
provided that he would pay the loan “whenever his
means permit”. Subsequently, “A” and “B” quarreled.
You’re now a lawyer and “B” ask you to collect the loan
because he is in dire need of money. What is your advice
to “B”? (5 pts)

IV.
A,B,C,D, and E made themselves solidarily indebted to X
for the amount of P500,00.00. When X demanded
payment from A, the latter refused to pay on the following
grounds:

a. B is only 16 years old;

b. C has already been condoned by X;
c. D is insolvent;
d. E was given by X an extension of 6 months without the
consent of the other co-debtors.

How much X can collect from A? (5 pts)

V.
On January 1, 2021, X borrowed P 100,000.00 from Y.
The principal debtor is X and Z served as guarantor. It
was promised that the entire debt shall be paid on
November 15, 2021. When the debt matured, T, a third
person, paid the entire debt of P 100,000.00 to Y. The
payment was made with the consent of X.

Discuss the possible remedy of T in order to protect his

right? (5 pts)
VI.
A owes B two debts, both of which are already due. The
first debt is secured by a mortgage, the second is not. A
tells B that the payment he is now making should be
applied to the second debt, instead of the first. B refuses
to accept such application on the ground that the first
debt is more burdensome to the debtor, and that,
therefore, payment must be applied to it first. Is B
correct? (5 pts)

VII.
A and B were co-owners of a piece of property worth
P1,000,000. For some repairs thereon, B paid P200, 000.
Because they were co-owners, A had to share in said
expenses, and so A owed B P100,000. A sold his share
in the property to C and B also sold his share in the
property to C. Later B brought this action to recover
P100,000 from A. A claimed that since C is now the
owner of the property, C owes himself, and therefore said
merger had extinguished his debt to B. Should A pay B?
(5 pts)

VIII.
A owes B P1,000, 000. B owes A in turn P200,000. Both
debts are already due. Later, B assigns the P1,000,000
credit to C, without the knowledge of A. This assignment
was made on November 1, 2021. On November 15,
2021, a P250,000 debt of B in favor of A matured. A
learned of the assignment on December 1, 2021. On
December 23, 2021, a P150,000 debt of B in favor of A
matured. Later C asks A to pay his debt. How much can
C successfully collect from A? (5 pts)

QUIZ # 2 (Contracts/ Natural Obligations/ Estoppel/ Trust)

I.
a) D lost in gambling and as payment, executed a
promissory note in favor of the winner C, C then assigned
the note to A, Issue: May A successfully recover from D?
(3 pts)

b) If D, the loser in gambling, had borrowed money from

a friend X thru a promissory note, said money to be used
to pay the winner C. Issue: Can X recover the amount
borrowed by D? (3 pts)

II.
a) A guardian of X sold X’s mansion to Y worth P120
million for P60 million. May the contract be rescinded? (3
pts)

b) X sold his mansion worth P120 million to Y for only

P60 million because X did not know the true value of the
house. May the contract of sale be rescinded? (3 pts)

III.
“A” in fraud of creditor, sold his house to “B”, who is in
bad faith, “B” in turn alienated it in favor of “C”, who the
later sold to “D”. Both “C” and “D” were also in bad faith.
The contract is rescinded but the house is destroyed,
Who, if any, are liable for damages? (3 pts)
IV.
A alleged that B promised to give him 300 square meters
of land in consideration of A’s services in a certain
transaction. B pleads in defense that since the promise
was not in writing, it is unenforceable. Is B’s contention
correct? (5 pts)

V.
X has a diamond ring. He allowed Y to assume apparent
ownership over the ring so that Y might sell the same.
Instead, Y pledge the ring with W to obtain a loan. The
money lent was later handed over to X. Later X attacks
the validity of the pledge claiming that under the law, the
pledge must be the owner thereof, and since Y in this
case acted without authority, the pledge is invalid. Is X
allowed to do this? (5 pts)

QUIZ # 3 - SALES AND BARTER

I.
a) What is the intention that parties should pursue or the
very essence of a contract of sale? (2.5 pts) 2.5 / 2.5

b) Discuss what is meant that a contract of sale as a

consensual contract? (2.5 pts) 2.5 / 2.5
II.
a) Spouses A and B had met an accident. X, the
daughter, thought that her parents were about to die. X
then sold the properties of her parents to Y. However,
spouses A and B eventually recovered. Was the sale
valid? (2.5 pts).

b) Suppose in the same facts above, only that X had

only sold the properties after the death of her parents.
Will your answer be the same? Explain. (2.5 pts)

III.
X, who was the former care giver of Y, has transferred
into his name the 3-hectare farm land owned by Y, who is
now deceased and without any descendant. Z, a brother
of Y, learned that the conveyance document of the
transfer indicated that the consideration of the sale of the
property was for “One Hundred Fifty Thousand Pesos,
Philippine Currency, including the services rendered,
being rendered, and to be rendered for my benefit”. The
market value of similarly situated properties are valued at
Php 500,000.00 per hectarage. Z now questions the
validity of the sale for grossly inadequacy of price. Decide
(5 pts)
IV.
S, owner of a 500-square meter land, offered to sell said
land to B, his friend who is long been interested to buy
the property. They had agreed the purchase price of Php
1,000,000.00 and that B would be given 15 days to raise
the amount. After making the agreement, they sealed it
through a bottle of Jack Daniels Blue Label and “pulutan”
worth Php 10,000.00. On a subsequent date, C came to
S and offered to buy the same property with on-the-spot
cash of Php 1,500,000.00 and had already prepared
documents readily to be signed. S decided to withdraw
his offer to B and agreed to sell the property to C. B
objected when the withdrawal was communicated to him,
positioned that they are already bound by their
agreement because he had already an option to buy
which was duly supported and accepted valuable
consideration. Is B’s contention tenable? (5 pts)

V.
During the pandemic lockdowns, people were fond of
exchanging items or personal properties. Some
exchanges were done with money consideration. Your
special someone came to you to seek legal advice as to
what law should govern the intention to exchange a BMW
S 1000 RR motorrad, valued at Php 1,895,000.00 with a
Toyota 1.8 Hybrid Corolla Cross, valued at Php
1,265,000.00, with additional consideration of Php
600,000.00. What advice would you give? (5 pts)

QUIZ # 4 - LEASE
I.
H leased a property registered to W, whom is his wife
and subject property was acquired through a donation by
W’s aunt.

a) Can a husband lease the paraphernal property of his

wife? (2.5 pts)
b) Can a third person be bound to a lease made by a
husband and wife to each other? (2.5 pts)
II.
A leased the property of B. However, B demised and his
properties are now managed by his heirs.

a) Is the lease contract extinguished upon death? (2.5

pts)
b) Are the heirs bound to such lease? (2.5 pts)

III.
A leased his property to B, C, and D for five (5) years.
Two (2) years before the expiration of the lease contract,
A sold the same property to X. Subsequently, X ordered
all the tenants to vacate within (3) days from notice
because X has other intentions for the use of said
property. The tenants refused and insisted that they will
do so when the term of their lease has expired. Are the
tenants correct? (5 pts)

IV.
In 2019, A leased an office building of B for five (5) years.
In 2021, due to financial crisis brought by the pandemic,
A subleased a portion of the office building to X. Is the
sublease contract valid? (5 pts)
V.
A leased his property to B. Subsequently, A sold the
same property to X. Is there automatic transfer of rights
of the lease? (5 pts)

QUIZ # 5 - PARTNERSHIP
I.
A and B executed a Memorandum of Agreement (MOA)
setting up a business venture. In the said MOA, the
pertinent provisions are:
● A shall be a partner with thirty percent (30%) share in
the existing businesses of B;
● The proceeds of the new business venture, after
deducting expenses, shall be used to pay the principal
amount of P500,000.00 and the interest, representing the
bank loan of B;
● The net profits, if any, after deducting the expenses
and payments of the principal and interest shall be
divided equally;
● B shall have free hand in running the business with
any interference from A, his agents, representatives, or
assigns, and should there be such interference, B’s
decision shall prevail with regards to the operation of the
business; and
● B shall submit monthly report in connection with the
business to A.
What is the contractual relationship between A and B? (5
pts.)
II.
A and B formed a partnership to operate a car repair
shop. A provided the capital while B contributed his labor
and industry. On one side of their shop, A opened and
operated a coffee shop, while on the other side, B put up
a car accessories store. May they engage in such
separate businesses? Why? (5 pts.)

III.
A, B and C are general partners in a merchandising firm.
Having contributed equal amounts to the capital, they
also agree on equal distribution of whatever net profit is
realized per fiscal period. After two years of operation,
however, C conveys her whole interest in the partnership
to D, without the knowledge and consent of A and B.

(a) Was the partnership dissolved? (2.5 pts)

(b) What are the rights of D, if any, should D desire to

participate in the management of the partnership and in
the distribution of net profits or losses? (2.5 pts)
IV.
A, B and C entered into a partnership under the firm
name “Malaybalay City Lumber”. Subsequently, upon
mutual agreement, A withdrew from the partnership and
the partnership was dissolved. However, the remaining
partners, B and C, did not terminate the business of
“Manila City Lumber” apparently without objection from A.
The withdrawal of A from the partnership was not
published in the newspapers. Could A be held liable for
any obligation or indebtedness B and C might incur while
doing business in the name of “Malaybalay City Lumber”
after his withdrawal from one partnership? Explain. (5
pts)

V.
A, B and C formed a business partnership for a term of
five (5) years. A subsequently assigned to D her interest
in the partnership. When B and C learned of the
assignment, they decided to dissolve the partnership
before the expiration of its term as they had an
unproductive business relationship with D in the past. On
the other hand, unaware of the move of B and C but
sensing their negative reaction to his acquisition of A's
interest, D simultaneously petitioned for the dissolution of
the partnership.

(a) Is the dissolution done by B and C without the

consent of A or D valid? Explain. (2.5 pts)

(b) Does D have any right to petition for the dissolution of

the partnership before the expiration of its specified term?
Explain. (2.5 pts)

QUIZ # 6 - AGENCY
I.
Sisters A and B executed a special power of attorney
(SPA) in favor of their brother C for the sale of a parcel of
land co-owned by the former. Subsequently, A died which
C has knowledge thereto of the death of his sister. C sold
the undivided shares of his sisters to X.

(a) What are the essential elements of a contract of

agency? (2 pts.)

(b) Was the sale valid? (3 pts.)

II.
A managed to secure indorsements without any public
bidding from the Department of Education (DedEd) for
the purchase of P10,000,000.00 worth of national flags
for all over the country. A then entered into a contract of
agency with X Corporation, a flag manufacturer. In such
agreement, A will be entitled to a commission. After its
first delivery, DepEd revoked A’s authority to represent it
with X Corporation. A demanded for his commission and
elaborated that he is entitled thereto for being a general
agent for DepEd. DedEd mana as they contended that A
was not their agent and does not have any authority as
the indorsement was secured without any public bidding.
Was DepEd correct? (5 pts.)
III.
PAGCOR, a Government-Owned and Controlled
Corporation, launched its Foreign Highroller Marketing
Program, which it aims to invite patron from foreign
countries to play at the dollar pit of designated PAGCOR-
operated casinos. ABS Corporation was one of the
international groups who availed the said program. A, a
foreign national, who was brought to the Philippines by
ABS Corporation, came to play for high stakes under said
program. He accumulated large winnings but when he
presented for encashment, PAGCOR refused to redeem
because under its rules, only PAGCOR players can
redeem winnings for encashment. Further, it has
classified A as a junket player for ABS Corporation and
that it should be ABS Corporation that would have made
an accounting for the winnings.

(a) What is agency by estoppel? (2 pts.)

(b) What are the elements must be shown that an agency

by estoppel was established? (3 pts.)

(c) Was there any agency that was established? (5 pts)

IV.
Distinguish Implied Agency as against Agency by
Estoppel. (5 pts)
V.
Can an agent appoint a sub-agent or a substitute? (2.5
pts)

What are the liabilities of the agent for his substitute? (2.5
pts)

FINAL TERM QUIZZES

QUIZ # 1 - LOAN, DEPOSIT, and GUARANTY
I.
A borrowed from B the amount of P500,000.00. However,
the agreement was not reduced in writing. When the debt
become due and demandable, B demanded A to pay the
amount of P600,000.00, which he said it includes the
interest of the money borrowed. A had no recourse but to
pay B the amount he demanded. A came to you to ask
for legal advice. What will be your advice? (5 pts)
II.
Discuss briefly the types of loan. (5 pts)

III.
When “Bagyong Odette” struck the Philippines, A and B
were in Cebu City to attend to business matters. As the
streets are becoming flooded, they decided to stay at
Regal Hotel in Cebu City. When A got off from his Toyota
Prius, he gave the car keys to a valet parking and the
attendant parked the vehicle in the parking area of a bank
which is beside the hotel. The hotel and the bank have an
agreement to allow the hotel the use of the parking lot of
the bank. However, in the morning, the management of
the hotel informed A and B that their vehicle was
carnapped. Who shall bear the loss of the car? (5 pts)
IV.
ABC Bank maintains safety deposit boxes and allows its
rental to its clients for a fee. X, whom a client and leased
one safety deposit of ABC Bank, keeps all his valuable
belongings in the safety deposit box. One day, a group of
men successfully made a bank heist, in which they
opened the bank’s vault and several safety deposit
boxes. One of which was the safety deposit box of X.
Could ABC Bank be held liable for the loss of the
valuables of X? (5 pts)

V.
As usurious interest rates have now become legally
inexistent and that parties may now legally agree on any
interest rate that may be charged on the loan. In what
instances can such agreed interest rates may still be
declared as usurious and void? (5 pts)

VI.
X Corporation surrendered its deposit certificates to ABC
Bank in order to secure a bank loan. Said deposit
certificates are not yet matured. When X Corporation
defaulted on the due repayment, ABC Bank prompt to
encash the deposit certificate. X Corporation questioned
such act as being a case of pactum commissorium.
However, the bank disagrees. Decide (5 pts)
VII.
A and B executed a Consortium Agreement to form a
Consortium, for the purpose of contracting with the
Philippine Government for the construction of a fishing
port network. The Project was awarded to the
Consortium. The DPWH, as owner, and the Consortium,
as contractor, entered into a Contract Agreement. In
accordance with the Consortium Agreement, "Consortium
Leader", A secured from the XYZ Bank a Letter of Credit
in favor of DPWH. Said Letter of Credit guaranteed the
faithful performance by the Consortium of its obligation
under the Construction Contract. Notably, the DPWH
made an advance payment for the Project to the
Consortium. For the release of its share in the advance
payment made by the DPWH, and also pursuant to the
Consortium Agreement, B secured from C Insurance a
bond in favor of A, to counter guarantee the amount of
advance payment B would receive from A, and another
Performance Bond, to guarantee completion by B of its
scope of work in the Project. The Project commenced.
However, several months thereafter, B ceased
performing its work in the Project after suffering business
reverses. A and B then executed a new Agreement
wherein A recognized the "Completed Portion of Work" of
B, and agreed to take over the unfinished portion of work
of B. However, A informed C Insurance about the
cessation of operations of B, and the failure of B to
perform its obligations in the Project and repay the
advance payment made by A. Consequently, A formally
demanded that C Insurance, as surety, pay A the
amounts covered by the Surety and Performance Bonds.
VIII.
A had applied a loan with MBTC Bank. As security for the
said loan, A asked his girlfriend, B, to sign a Continuing
Guaranty Agreement (CGA), which the latter had agreed
due to her affection with the former. The said CGA is an
express acceptance of the solidary liability of B to the
loan of A. Subsequently, A obtained the loan and had
absconded. When the loan had defaulted, MBTC Bank
proceeded directly against B. However, B refused to
make payment as she and A had already severed their
relationship when A absconded. Decide. (5 pts)
IX.
XYZ Corporation secured several loans BDO Universal
Bank with an aggregate amount of P100 million. The said
loans are evidenced by several promissory notes and are
also secured by mortgages of the properties owned by
XYZ Corporation and a Continuing Guaranty Agreement
by its principal stockholder, A. The loan of XYZ
Corporation defaulted and the bank subsequently made
extrajudicial foreclosure on the mortgages, which the
bank was also the sole bidder for P75 million.

a) Can the bank still sue A for the deficiency of P25

million? (2.5 pts)

b) In the same problem, if the bank opts to file an action

for collection against XYZ Corporation, can it afterwards
institute a real action to foreclose the mortgages? (2.5
pts)

X.
ABC Corporation executed a Guarantee Agreement for
the benefit of XYZ Corporation, which the latter obtained
a loan with BPI. XYZ Corporation, experiencing financial
instability, filed for voluntary rehabilitation of the
corporation and has defaulted from its obligation with
BPI. BPI made known of the act of XYZ Corporation, and
made claims against ABC Corporation. ABC Corporation
denied the claim and invoked that XYZ Corporation is the
principal debtor and its assets must be exhausted first
prior to proceeding against it? Is ABC Corporation
correct? (5 pts)

QUIZ # 2 - PLEDGE, MORTGAGE, ANTICHRESIS, EXTRA CONTRACTUA

I.
A, a young writer and is also a start-up businessman, is
engaged into novel writing and has copyrights of several
intellectual property. He intends to grow his novel writing
business and wants to borrow from the bank to have his
own brick-and-mortar store for him to display his written
novels. However, A has only deposit certificates and no
real estate property. He came to you to seek for any legal
advice for him to proceed with his intentions. What will be
your advice? (5 pts)

II.
X borrowed money from A. To assure his payment, X had
pledged his Ford Ecosport to A. Their transaction was
written and signed in a contract and was duly registered.
However, X had not delivered his Ford Ecosport to A. X’s
debt defaulted, then, A now wants to have in his
possession the said vehicle. X refused to give his vehicle
and argued that the pledge of the said vehicle was not
perfected and is null and void for the reason that the thing
pledged must be placed in the possession of the creditor
or of a third person by common agreement. Is X’s
contention tenable? (5 pts)
III.
A had lend P1,500,000.00 to X. Both A and X had agreed
that X will pledge his brand-new Isuzu MU-X, which was
valued at P1,200,000.00, in favor to A to secure payment
of said obligation. X failed to pay his obligation.
Subsequently, A foreclosed and alienated the vehicle of
X. However, A still demands the deficit amount of
P300,000.00 against X. X, however, argues that
foreclosure and alienation of the pledge completely
extinguishes the loan obligation and any stipulation
allowing the pledgee tor recover any deficiency is null
and void. Decide. (5 pts)

IV.
A borrowed money from B. As security for the loan, A
conveyed a Real Estate Mortgage in favor to B. A had
also allowed B to take over the possession and
enjoyment of the subject property. The subject property
contains high valued fruit bearing trees in which B had
then appropriate as his own the said fruits. Upon due
date of the borrowed money of A, B made demands its
payment but A failed to comply. Instead, A moved for an
action for the accounting of the fruits which B had
harvested in his land and apply it to his debt. Will his
action prosper? (5 pts)
V.
A, who is an OFW in Dubai, monthly sends $1,000.00 to
his wife, B, who is in Malaybalay City. The money
transfer that he sends monthly is done thru UBP Bank.
An isolated case occurred when one of the money
transfers made by A to send money to his wife, the
system of UBP Bank erroneously credited $10,000.00 to
the account. Is UBP Bank entitled to recover the
difference of the transaction? If yes, provide the
requisites or if no, provide for remedy. (5 pts)

VI.
A owns several townhouses in Valencia City, which
he had leased it out to tenants. He became suddenly ill
and was advised to leave for the United States for
immediate treatment. Due to its urgency of his travel, he
had left without having appointed anyone to manage his
townhouses and even staying there, there was no one
that was appointed for the management of his properties.
His treatment took five (5) years and the tenants has not
paid for the rent of the townhouses since A had left. B,
the best friend of A, took concern and had made
consideration that if he can collect the unpaid rentals, he
may enable it to be sent to A to ease his medical
expenses. With that, B, voluntarily initiated with himself
and without authority, took administration of the
properties of A.

a) Proceeding with his intention, is there any juridical

relation that has arisen between A and B? (1 pt.)

b) With B’s assumption to manage the properties of A,

what rights and obligation, if any, did B assumed? (4 pts.)

QUIZ # 3 - TORTS AND DAMAGES

I.
A’s commercial building was burned due to fire. Several
months later, the burned-out firewall had collapsed which
destroyed the shop of B, which was adjacent with A’s
property. At the time of the collapsed of said firewall, the
shop was occupied by B and his family. The mishap
caused injuries and even the death of one of B’s family
member. B filed an action for recovery of damages
against A. However, A contends that he had previously
warned B of the proximity of that accident and invokes
the doctrine of last clear chance. He further argues that B
only heeded A’s warning and vacated the shop, the
incident should not have occurred. Decide (5 pts)

II.
A, a pregnant woman was riding a bus regularly to go to
her work. On one of her regular routines going to work,
the bus she was riding happened to be involved in a
vehicular accident. Said incident caused the abortion of
her child. She then moved an action for claims for
indemnity of damages which she sustained and also for
the loss of her unborn child against the bus driver and the
bus company due to the gross negligence of the bus
driver. Will the action prosper? (5 pts)
III.
A and B are frequent travelers and were members of a
traveler club of X Airlines. On their trip from Hong Kong
going back to the Philippines, they took aboard with their
usual routine with X Airlines and bought Business Class
tickets. However, upon checking in, they were upgraded
to First Class because the Business Class was
overbooked. Both refused to transfer despite having
better seats and being served with food and beverages
for having First Class accommodation. Their refusal was
that they had other guests who were in Business Class
they should attend to. The attendant then informed them
that they will be offloaded if they will not avail of the offer
of the upgraded seats. Thus, they gave in but felt
humiliated, embarrassed and vexed for not being with
their companions. During the transfer of the luggage, A
suffered pain in his back. A and B demanded an apology
from the management of X Airlines as well as indemnity
payment. Is X Airlines liable for damages? (5 pts)

IV.
A Ford Raptor driven by A and was owned by B, who was
also inside the vehicle, was running at a high speed.
Approaching in at an intersection, it had not reduced its
speed and continuously running recklessly. Said vehicle
collided with a crossing Toyota Innova which was driven
and owned by X. X suffered multiple injuries
notwithstanding his car became a total wreck resulting
from such accident. X sued A and B for criminal
negligence damages against A and B. B interposed as a
defense that he exercised due diligence in hiring A as
driver and maintains his vehicle at top condition. Further,
he interposed that he was diligent and had always
reminded A to be always prudent. Can B be exempt from
liability? (5 pts.)
V.
A bought a Toyota Fortuner from Toyota Dealer in
Valencia City. A issued checks drawn against his current
account with ABC Bank. When the Toyota dealer
conducted credit investigation, they had found that A was
in good reputation and has sufficient source of income to
cover his purchase of their vehicle. The Toyota dealer
approved A’s purchase and had allowed him to
immediately drive and take home the Toyota Fortuner on
the assurance that his check is sufficiently funded.
However, when the Toyota dealer deposited A’s check, it
was dishonored on the ground that the account was
closed. Upon receiving the notice of dishonor, the Toyota
dealer moved for the recovery of the possession of the
vehicle against A. This has resulted from humiliation and
embarrassment of A. It was subsequently found that the
Bank’s system had erroneously lost the ledger of the
current account of A. It turned out that A’s account has
more than sufficient funding to cover the check. A sued
ABC Bank for quasi-delict. ABC Bank interposed that the
action cannot prosper because there was contractual
relationship between ABC Bank and A. Does ABC Bank
be held liable for quasi-delict? (5 pts)

VI.
XYZ Elementary School organized and held a field
trip for its Grade VI graduating class to a Zoo. For the
pupils to be able to join, the parents of had to sign a
piece of paper which indicates therein that, they are
allowing their child, who is a Grade VI pupil of their
elementary school, to join the school’s field trip. That they
will not file any claim against the school, the
administrator, or teacher in case anything would happen
to their child during the said field trip. A, a pupil of the
said school, was bitten by an animal during the said field
trip to the zoo. The parents of A sued the school for
damages. XYZ Elementary School presented the waiver
signed by A’s parents are their defense. Can XYZ
Elementary School be exempt from liability on the ground
that there was waiver of right to sue the school? (5 pts.)
VII.
A owns a pet iguana which he keeps in a man-made
pond enclosed by a fence situated in his residential lot.
When a typhoon hit their place, it had knocked down the
fence of the pond and the iguana crawled out of the gate
of A’s residence. X, a neighbor who was passing by,
started throwing stones at the iguana, drawing the iguana
to move toward him. X panicked and ran but tripped on
something and suffered a broken leg. X sued A for
damages for being the owner of the iguana. Can A be
held liable for damages? (5 pts.)

VIII.
A, a resident of Malaybalay City, sent through X Pera
Padala the amount of P20,000.00 to his daughter, B, for
the payment of her tuition fee. B went to X Pera Padala
branch but was informed that there was no money
remitted to her name. A inquired from X Pera Padala and
was informed that there was a computer glitch and the
money was credited to another person. A sued X Pera
Padala for damages. The trial court ruled that, among
others, awarded moral damages. X Pera Padala
appealed such award of moral damages. Is the trial court
correct in awarding moral? Explain.? (5 pts.)

MIDTERM EXAM
1.
In 2021, A bound himself to sell to B his house and lot
which is being leased by C. However, A made a condition
that he shall only sell it if B will pass the
2021/22_Best_Bar_Ever. B passed the said examination.

a) Suppose A had sold the same house and lot to

another person before B passed
the2021/22_Best_Bar_Ever, was such sale valid? Why?
(2.5 pts.)

b) Assume that B who became entitled to buy said

house and lot, was she entitled to the collect rentals
before she passed the 2021/22_Best_Bar_Ever? Why?
(2.5 pts.)
2.
A who maintains a deposit account with Philippine Bank
of Communications (PBCom) amounting to
P10,000,000.00. A availed for a loan with PBCom for
P8,000,000.00. The said loan became due and
demandable and when A wanted to withdraw his deposit
account, PBCom withheld his deposit and only allowed
P2,000,000.00 to be withdrawn, less service charges.
PBCom claims that there was compensation which has
extinguished its obligation under his loan account and
concurrent with his deposit account. However, A
contends that compensation was improper because
when one of the debts arises is from his contract of
deposit, which by nature, is not a debt. The promissory
note signed by A evidencing the loan did not provide for
compensation. Decide. (5 pts.)

3.
On February 1, 2022, A leased an office space in a
building for a period of five (5) years at a rental rate of
P10,000.00 per month. The said lease contract contained
a proviso that in case of inflation or devaluation of the
Philippine Peso, the monthly rental will automatically be
increased or decreased depending on the devaluation or
inflation of the peso to dollar conversion rate. A war broke
between Ukraine and Russia which caused large
fluctuation to commodities with the world market. The
lessor then increased the rentals to P15,000.00 per
month, on the ground that inflation proven by the fact that
the exchange rate of Philippine Peso to US Dollar had
increased from P45.00=$1.00 to P67.50=$1.00. A
refused to pay the increased rate. Was it correct to
increase the rate of rental fee?
4.
A was the President and General Manager of X
Corporation, and was also an officer of Y Corporation.
Both Corporations belong to Z Conglomerate. Z
Conglomerate assigned one of the vehicles to A, an Audi
E-tron Quattro. However, A sent a letter tendering his
resignation from all his positions with Z Conglomerate
with request for incentive compensation amounting to
P39,500,000.00. Z Conglomerate signed a letter-offer
addressed to A stating therein that A’s resignation had
been accepted and that the incentive compensation will
be for P27,500,000.00 and proposing that the vehicle,
valued at P12,000,000.00, will be transferred to A. Z
Conglomerate requires that if A agrees to the offer, he
has to affix his conformity on the space provided therefor
and the date at the bottom portion of such offer. Two
weeks has lapse and the said original copy of the letter
was not returned with A’s conformity and Z Conglomerate
had withdrawn its offer. A representative of the Z
Conglomerate, thereafter, wrote to A demanding the
return of the vehicle. However, A claims that he had
accepted the offer and refused to return the vehicle.

a) Was there valid acceptance by A of the letter offer of

Z Conglomerate? (2.5 pts)

b) Was there an effective withdrawal by Z Conglomerate

of the said letter offer? (2.5 pts)

5.
Distinguish briefly but clearly between an inexistent
contracts vs. annullable contracts. (5 pts.)
6.
In 2021, a number of contractors were engaged by the
DPWH, through Engineer A, to an emergency project
under the Build Build Build Program of the Philippine
Government for the Rehabilitation of the Cagayan de Oro
– Bukidnon – Davao Road Network Project. Contractor A
claimed that they had already accomplished works of two
(2) projects under said emergency project and filed its
money claim with the DPWH. Upon audit, the COA
returned the claims to DPWH with information that it has
the authority to disburse funds. However, DPWH failed to
act on the money claim which resulted to the withholding
of payment, despite the favorable report and certification
of project completion by Contract A. DPWH contends that
refusal to pay the contractor is that the contracts were
invalid due to non-compliance with legal requirements
and procedures for budgeting and that the contractors
themselves procured the contracts invalidly because
Engineer A lacks the authority to negotiate and sign in
behalf for DPWH. Further, it questions the contractor that
it did not enter into contract with clean hands.

a. Discuss briefly and clearly the Clean Hands Doctrine.

(1 pt.)

b. Is DPWH liable to pay the claims? (4 pts.)

7.
A, a trader from Malaybalay City, dealt business with X
Industries in Thailand for six (6) years. All through the
years, A accumulated indebtedness of P6,000,000.00
with X Industries. An agent of X Industries made
demands to A and paid X Industries a check for the
amount he owed. Upon deposit, the check was
dishonored for insufficiency of funds. X industries then
assigned the credit to Y Finance Corporation for
P5,000,000.00 which subsequently brough a collection
suit against A. A, however, then contends that Y Finance
Corporation cannot successfully collect against him
because Y Finance Corporation is not a real party in
interest and, thus, without legal capacity to sue and that
he had not agreed to a subrogation of creditor. Is A
correct? (5 pts)
8.
A, an owner of a parcel of land, sold the same to B.
However, their Deed of Sale was not registered with the
Land Registration Authority. A year later, the same
property was sold by A to C, who had succeeded to
cause registration of their Deed of Sale with the Land
Registration Authority. Who has the better right over the
parcel of land? Explain with legal basis. (5 pts).

9.
A leased portions of her 20,000 sq. m. lot to B, C, D, and
E for eight (8) years. Three (3) years before the
expiration of the lease contract, A sold the property to X
Realty and Development Corporation. The following
month, A and X Realty and Development Corporation
stopped accepting rental payments from all the lessees
because they wanted to terminate the lease contracts.
Due to the refusal of A to accept rental payments, the
lessees, filed a complaint for consignation of the rentals
before the Regional Trial Court (RTC) without notifying A.
Was the consignation valid? (5 pts)
10.
Spouses H and W wanted to sell their house. The house
was erected on the property registered to H which he
bought while he was still single. A, a prospective buyer
negotiated with W for the sale of the said property. They
had agreed on the fair price of P4,000,000.00. A sent a
letter confirming his intention to buy the said property.
Subsequently, Spouses X and Y offered the same house
to H at P4,500,000.00 and prepared the deed of sale. H
signed the deed of sale but W was not able to sign. W
refused to signed because she had previously negotiated
and agreed to sell the subject property to A. Is the sale
valid? (5 pts)

11.
A leased his property to B. Subsequently, A sold the
same property to X. Is there automatic transfer of rights
of the lease? (5 pts)
12.
Discuss what is Tacita Reconduccion (1pt.) and under
what circumstances would it arise (4 pts)

13.
With the opportunity provided by the Build Build Build
Program of the Government, A, B and C formed a
partnership for the purpose to contract with Government
for construction projects. One of its projects was for the
construction of a bridge that would connect another
access network the City of Malaybalay with the
Municipality of Impasug-ong. After its completion, it was
turned-over to the Government and the partnership was
dissolved. X, a supplier of their construction materials
which was used in said project, moved a collection suit
against A for the unpaid construction materials. A moved
for the dismissal of the collection suit contending that
their partnership has a separate juridical entity and
despite said dissolution of the partnership, he himself
cannot be held liable alone for the entire debt. If you were
to be the Judge, how will you decide? (5 pts)
14.
X, Y and Z formed a partnership to operate a construction
business. However, Z died and but the operations where
continued by X and Y without dissolving the partnership.
When expanding, the partnership incurred obligations
and its creditors are now demanding payment.

a) Who may be held liable? (2.5 pts.)

b) What are the recourse of its creditors? (2.5 pts.)

15.
X Realty Corporation, a real estate developer, acquired
the services of A as the exclusive agent for the sale of its
newly developed subdivisions. It was written in the
contract and duly notified A that he could not receive or
collect any payments from the buyers. Despite such
notice, A received and collected payments of his clients
and did not remit the same. Who shall bear loss of A’s
defalcation? (5 pts.)
16.
A, who was in the United States, phoned his brother, B,
authorizing him to sell his parcel of land in Malaybalay
City. A sent the title to B via courier service. Acting for his
brother, B executed a notarized deed of absolute sale of
the land to X after receiving payment. What is the status
of the sale? (5 pts.)
 RODRIGUEZ

3/5 The sources of obligation applicable under the given

facts are crime, quasi-contracts and quasi-delict.

Under culpa criminal, both drivers are directly and

primarily liable to the passenger while the owners of the
bus and the other vehicle are subsidiarily liable thereof.
The owners cannot relieve themselves of such liability by
proving diligence of a good father of a family.

Under culpa contractual, the owner of the bus is directly

and primarily liable to the passenger. He cannot relieve
himself of such liability by proving due diligence of a good
father of a family but the same may serve to mitigate his
liability.

Under culpa aquiliana, the driver and owner of the bus

are primarily liable to the passenger. The driver and
owner of the other vehicle are likewise liable to the
passenger. The owners may relieve themselves of such
liability by proving diligence of a good father of a family in
the selection and supervision of their drivers.

1/5 A is not correct for he must still pay B. The loss of the
boat by a fortuitous event is not an excuse for him to pay
his balance because as a general rule, the debtor cannot
be held liable for damages if the obligation is determinate
and only determinate thing can be destroyed by a
fortuitous event. Since the boat is a generic thing, it never
perishes. Thus, A’s obligation to pay the balance is not
extinguished by the loss of the boat due to a fortuitous
event.
5/5 Based from the given facts, the obligation of A to pay
B his loan of ₱ 1,000,000.00 whenever his means permit
contemplates an obligation which shall be deemed to be
one with a period. As the lawyer of B, I will bring an
action against A for the purpose of asking the court to fix
the duration of the term or period of payment. Once the
term or period of payment has been fixed and A defaults
in the payment thereof, I will pursue to bring an action for
collection of sum of money against A.

5/5 As regards B, A may avail of the minority of B as a

defense, but only for B’s share of P 100,000.00.

As regards C, A may avail of the condonation by X of C’s

share of P 100,000.00.

As regards D, A cannot interpose the insolvency of D as

a defense.

As regards E, A may avail of the extension of 6 months

given by X but only for E’s share of P 100,000.00.

Thus, X can collect P 200,000.00 from A.

5/5 T may proceed against X for reimbursement of ₱

100,000.00 which he paid to Y. Should X cannot pay T by
reason of insolvency, he can now proceed against the
guarantor Z. This is because when T paid the entire debt
of X to Y amounting to ₱ 100,000.00 with the consent X,
legal subrogation took place. As such, T is subrogated to
all the rights of Y, not only against X but even against the
guarantor Z.
 5/5 No, B is not correct. B should not refuse to accept
such application on the ground that the first debt is more
burdensome to the debtor. The New Civil Code provides
that whenever a debtor has various debts of the same
kind in favor of one and the same creditor, he has the
preference to which of the debts his payment may be
applied. Thus, A’s preference of applying his payment to
the second debt must be followed.

5/5 Yes, A should pay B the amount of P 100,000.00. A’s

claim that merger had extinguished his debt to B is not
correct since no merger took place under the given
circumstances. Although C became the owner of the
property owned by A and B, it does not mean that he also
acquired the debt of A to B upon the sale thereof. The
mere transfer to a third person of the rights belonging to
both the debtor and the creditor but not the credit as
against the debt does not result in merger.

5/5 Considering that B assigned his credit of ₱

1,000,000.00 to C on November 1, 2021 without the
knowledge of A, A may set up compensation of all the
credits of B prior to the assignment and also later ones
until he had knowledge thereof.

Thus, A may set up partial compensation of B’s debts

which matured prior to his knowledge of the assignment
on December 1, 2021, amounting to ₱ 450,000.00, that
is, the sum of ₱ 200,000.00 and ₱ 250,000.00 which
matured on November 15, 2021.

With respect to B’s debt of ₱ 150,000.00, A cannot set up

partial compensation considering that he already knew of
the assignment that took place on December 1, 2021
before the said debt matured on December 23, 2021.

Therefore, C can successfully collect ₱ 550,000.00 from

A.

gations/ Estoppel/ Trust)

2.5/2.5 a) The law provides that by the contract of sale,
one of the contracting parties obligates himself to transfer
the ownership and to deliver a determinate thing, and the
other to pay therefor a price certain in money or its
equivalent.

Thus, the very essence of a contract of sale is the

transfer of ownership in exchange for a price paid or
promised.

2.5/2.5 b) A contract of sale, as a consensual contract,

means that the sale is perfected by mere consent of the
parties. There is no particular form required for its validity.
Upon the perfection of the contract, that is, when there is
a meeting of minds between the parties on a definite
subject matter and a valid cause, the parties may
reciprocally demand performance thereof where the
vendee may compel the transfer of ownership of the
object of the sale and the vendor may require the vendee
to pay the thing sold.
1/2.5 a) Yes, the sale was valid. Under the law on sales,
the thing or object of the contract of sale must be 1)
within the commerce of men; 2) licit, that is, it must not be
contrary to law, morals, good customs, public order or
public policy; and 3) determinate. Further, the vendor
must have the right to transfer the ownership thereof at
the time it is delivered.

Based from the given facts, although X was not the

owner of the subject properties, the sale was still valid. It
is not necessary that X must be the owner thereof at the
time of the sale as it is sufficient that she has a right to
transfer the ownership thereof at the time it is delivered.

Moreover, while it is a fundamental rule of law that no

one can give what he has not or transfer a greater right to
another than he himself has, an exception to such rule is
where the seller subsequently acquires title.

Based from the given facts, when X sold the subject

properties of which at the time, he was not the owner
thereof, her subsequent acquisition of title being the
successor of her parents after their death validates her
previous conveyance. Therefore, the sale is valid.

1/2.5 b) While it is a fundamental rule of law that no one

can give w1/2.5an he himself has, an exception to such
rule is where the seller subsequently acquires title.

Based from the given facts, when X sold the subject

properties of which at the time, he was not the owner
5/5 B’s contention is tenable.

Under the law on sales, when the offeror has allowed the
offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by
communicating such withdrawal, except when the option
is founded upon consideration, as something paid or
promised.

An accepted unilateral promise to buy or sell a

determinate thing for a price certain is binding upon him if
the promise is supported by a consideration distinct from
the price.

Based from the given facts, the case of Jack Daniels Blue
Label and pulutan worth Php 10,000.00 was a
consideration to seal the agreement between S and B.
There was no showing that such consideration was
considered part of the purchase price. As such, the
unilateral withdrawal by S of the offer violated the option
contract between S and B.

5/5 The law provides that by the contract of barter or

exchange one of the parties binds himself to give one
thing in consideration of the other’s promise to give
another thing.

However, if the consideration of the contract consists

partly in money, and partly in another things, the
transaction shall be characterized by the manifest
intention of the parties. If such intention does not clearly
appear, it shall be considered a barter if the thing given
as a part of the consideration exceeds the amount of the
money or equivalent, otherwise, it is a sale.

Based from the given facts, the contract entered into

between the parties is one of barter since the intention of
the parties does not clearly appear, and the value of the
Toyota 1.8 Hybrid Corolla Cross or the property
consideration which is Php 1,265,000.00 is more than the
monetary consideration of Php 600,000.00. Hence, the
law on barter shall apply.
1/2.5 a) It depends.

The husband cannot lease the paraphernal property of

his wife in favor of another without the consent of the
wife. Should he lease the wife’s paraphernal property
without the wife’s consent, the contract is not effective
and may be annulled or cancelled by the Court.

However, the husband may lease the same if he has

been properly given by his wife the authority to administer
her paraphernal property.

1/2.5 b) No. The law prohibits the lease of property by a

husband and wife to each other in order to avoid
prejudice to third persons.

The law provides that the husband and the wife cannot
lease the property to each other except when a
separation of property was agreed upon in the marriage
settlements or when there has been a judicial separation
of property.

As such, third persons cannot be bound to a lease made

by a husband and wife to each other.
2/2.5 a) No. The law provides that the lease contract is
not terminated by the death of the lessor or the lessee,
rather it is generally transmissible to the heirs of the
lessor or lessee.

Based from the given facts, B’s death does not extinguish
his lease contract with A. It is transmitted to the heirs of B
considering that the lease contract involves property
rights.

2/2.5 b) Yes, the heirs are bound to such lease. The law
provides that in view of the fact that the lease contract is
transmitted to the heirs of the lessor or the lessee, the
death of party does not excuse non-performance of the
contract.

Based from the given facts, the rights and obligations

pass to the heirs of B who are bound to respect the
period of the lease because the lease is not terminated
by the death of the lessor or the lessee, rather it is
obligatory in the same manner upon the heirs of both
parties, unless the contrary is stipulated in the lease
contract.

5/5 Yes, the tenants are correct. X must respect the lease
contracts between B, C, and D. X, knowing the existence
of the lease contract between A, B, C, and D cannot be
considered an innocent purchaser for value. As such, the
sale thereof by A to X does not extinguish the lease
contract between A and the tenants.

5/5 Yes, the sublease contract is valid provided that there

is no express prohibition thereof. The law provides that in
the contract of lease, when there is no express
prohibition, the lessee may sublet the thing leased
without prejudice to his responsibility for the performance
of the contract toward the lessor. Thus, a lessee may
generally sublease the property in the absence of
express prohibition because the lessee remains a party
to the lease even if he has already created a sublease
thereon.

Based from the given facts, A may sublease a portion of

the office building to X in the absence of an express
prohibition in the his lease contract with B.
4/5 No. there is no automatic transfer of rights of the
lease. Should A decide to sell the leased premised to B,
A, as lessee, shall have the priority right to purchase the
same.

5/5 A contract of partnership exists between A and B.

The law provides that by the contract of partnership, two
or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention
of dividing the profits among themselves.

Considering that A and B bound themselves to

contribute money, property or industry to a common fund
with the intention of dividing the profits of the partnership
among themselves wherein A is entitled to 30% profit
while B is entitled to a 70% profit.

Based from the given facts, B has the free hand in

running the business with any interference from A, his
agents, representatives, or assigns, and should there be
such interference, B’s decision shall prevail with regards
to the operation of the business and B submits monthly
report in connection with the business to A. Hence, a
limited partnership exists between A and B wherein a
general partner and a limited partner forms the
partnership.
5/5 A, as a capitalist partner may open and operate a
coffee shop. However, the fact that B should devote his
full time in the operation of the car repair shop as he is an
industrialist partner, he cannot put up a car accessories
store.

The law provides that in the absence of an express

stipulation, a capitalist partner cannot engage for their
own account in any operation which is of the kind of
business in which the partnership is engaged. Moreover,
an industrialist partner cannot engage in business for
himself, unless the partnership expressly permits him to
do so.

Thus, in the absence of an express stipulation, A may

operate a coffee shop while B cannot put up a car
accessories store unless A permits him to do so.

2.5/2.5 a) No, the partnership was not dissolved. The

law provides that a conveyance by a partner of his whole
interest in the partnership does not itself dissolve the
partnership in the absence of an agreement.

2.5/2.5 b) D cannot interfere or participate in the

management of the partnership. However, he may
receive net profits to which C would have been entitled
thereto.
5/5 While A may be held liable under the doctrine of
estoppel, A cannot be held liable since there was no
proper notification or publication. Only B and C are liable
with respect to the parties themselves.

The law provides that a partner when the dissolution is by

the act of a partner, the termination of authority depends
on whether or not the partner had knowledge or notice of
dissolution. Thus, a partner continues to bind partnership
even after dissolution provided that the other party had
no knowledge or notice of the dissolution by means of an
advertisement in a newspaper of general circulation.

Since the withdrawal of A from the partnership was not

published in the newspapers, A cannot be held liable for
any obligation or indebtedness B and C might incur while
doing the business.

2.5/2.5 a) Yes, the dissolution done by B and C without

the consent of A or D is valid. The mere assignment did
not dissolve the partnership. A’s consent is not necessary
considering that he had already assigned his interest
thereto to D. Meanwhile, D’s consent is not necessary
because the assignment of A’s interest to D did not make
him a partner.

2.5/2.5 b) No, D has no right to petition for the dissolution

of the partnership because he does not have a legal
standing thereto, he being not a partner to the
partnership.
2/2 a) The essential elements of a contract of agency are:
1) consent of the parties, whether express or implied, to
establish the relationship; object which is the execution of
a juridical act in relation to third persons; 3) the agent
acts as a representative and not for himself; and 4) the
agent acts within the scope of his authority.

2/3 b) The sale is not valid. The law provides that no one
may contract in the name of another without being
authorized by the latter, or unless he has, by law a right
to represent him. A contract entered into in the name of
another by one who has no authority or legal
representation or has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly,
by the person on whose behalf it has been executed,
before it is revoked by the other contracting party.

Therefore, as far as X is concerned, the sale is

unenforceable considering that C knew of the death of his
sister, A, at the time of the sale although X can be
inferred that he was in good faith in contracting the sale
thereto.

3/5 No, DepEd was not correct. An agency existed

between DepEd and A. Such agency was one coupled
with an interest.

As a general rule, an agency is revocable at will by the

principal except if a bilateral contract depends upon it or if
it is a means of fulfilling an obligation already contracted.

DepEd cannot revoke at will A’s authority to represent it

with X Corporation. As such, A, as general agent for
DepEd, is entitled to his commission.
1/2 a) Agency by estoppel exists when one leads another
to believe that a certain person is his agent, when as a
matter of fact such is not true and the latter acts on such
misrepresentation. Moreover, the former cannot disclaim
liability for he has created an agency by estoppel.

3/3 b) The following are the elements that must be shown

that an agency by estoppel was established:

1. The principal manifested a representation of the

agent’s authority or knowingly allowed the agent to
assume such authority;

2. The third person, in good faith, relied upon such

representation; and

3. Relying upon such representation, such third person

has changed his position to his detriment.

4/5 c) No, there was no agency established. The basis for

agency is representation, that is, the agent acts for and
on behalf of the principal on matters within the scope of
his authority. There must be a mutual intent of the
principal and agent to have an actual intention to appoint,
on the part of the principal, and an intention to accept the
appointment, on the part of the agent.

Moreover, an agency by estoppel was established.

An agency by estoppel is established when one leads

another to believe that a certain person is his agent,
4/5 Implied Agency and Agency by Estoppel may be
distinguished in the following manner:

As to liability between principal and agent: In implied

agency, the agent is a true agent with rights and duties of
an agent; whereas, in agency by estoppel, if an act is
caused by the agent, he is not considered a true agent;
hence, he has no rights as such.

As to liability to third persons: In implied agency, the

principal is always liable and the agent is never
personally liable; whereas, in agency by estoppel, if an
act is caused by the principal, he is liable but only if the
third person acted on the misrepresentation; and if
caused by the agent alone, only the agent is liable.
 2.5/2.5 Yes, an agent can appoint a sub-agent or a
substitute. The law expressly provides that the agent may
appoint a substitute if the principal has not prohibited him
from doing so.

1/2.5 The agent shall be liable for the acts of his

substitute when he was not given the power to appoint
one and when he was given such power, but without
designating the person, and the person appointed was
notoriously incompetent or insolvent.

UARANTY
5/5 I would advice A that since his agreement with B was
not expressly stipulated and made into writing as to the
interest of the amount loaned, B shall be entitled to
P500,000.00 only. The P100,000.00 paid by A to B which
according to B constitutes the interest of the money
borrowed by A shall be returned to A. Failure to return
such amount constitutes overpayment and unjust
enrichment on the part B which the law condemns under
the principle of solution indebiti.
4/5 The New Civil Code provides that the following are
the types of loans:

1) Commodatum which is a contract where one of the

parties, called the bailor, delivers to another, called the
bailee, something not consumable so that the bailee may
use the same for a certain time and return it; and

2) Simple loan or mutuum which is a contract where one

of the parties, called the lender, delivers to another,
called the borrower, money or other consumable thing
subject ot the condition that the same amount of the
same kind and quantity shall be paid.

4/5 Regal Hotel shall bear the loss of the car.

The New Civil Code provides that the deposit of effects

made by travellers in hotels or inns constitutes necessary
deposit. As such, the hotels or inns shall be responsible
to the travellers as depositories.

It can be inferred from the given facts that a contract of

necessary deposit existed between Regal Hotel and A
and B considering that A and B deposited for safekeeping
their vehicle through the valet hotel attendant. Upon the
delivery of the car keys to the valet parking attendant, the
contract was perfected. Thus, Regal Hotel shall be liable
for the loss of the vehicle.
5/5 No, ABC Bank cannot be held liable for the loss of the
valuables of X.

The New Civil Code provides that if the depositary loses

a thing through force majeure, he shall deliver the thing to
the depositor. The contract depicted under the given facts
is not a deposit but a rental of a safety deposit box. As
such, ABC Bank shall not be held liable for the loss of the
valuables of X.

5/5 Jurisprudence provides that interest stipulated by the

contracting parties is valid however the Courts may
simply reduce unreasonable interests if the rate agreed
upon is iniquitous and unreasonable for the interest of
reason and equity. Thus, agreed interest rates may be
declared as usurious and void if it is iniquitous,
unconscionable, unreasonable, exorbitant and contrary to
morals.

1/5 There is no pactum commissorium under the given

facts.

The New Civil Code provides that fixed, savings, and

current bank deposits are governed by the provisions
concerning simple loan. Under the given facts, the
relationship between X Corporation and ABC Bank is not
one of a depositor and depository but one of a creditor
and debtor. As such, legal compensation shall take place.
Moreover, jurisprudence provides that it is not illegal for
the creditor to encash the deposit certificates to pay the
debtor’s overdue obligation if the security for the debt is
also money deposited in a bank.
5/5 No, the insurance is not correct. C Insurance, as
surety must pay A the amounts covered by the Surety
and Performance Bonds. C Insurance cannot deny on the
ground that Surety and Performance Bonds issued by
insurance companies were mere counter-guarantees.

5/5 In order for A to avail himself of the benefits of

excussion, he must set it up against MBTC Bank upon
the latter’s demand for payment, and point out to MBTC
Bank available property of B within the Philippines,
sufficient to cover the amount of the debt.

B still liable to pay the loan of A. Despite the designation

of the contract as a Continuing Guaranty Agreement, the
contract must be interpreted by their constitutive
elements and not by the name given by the parties. Since
B expressly agreed to be solidarily liable for the
obligation of A, the contract speaks of suretyship.
 2/2.5 a) Yes, the bank may still sue A for the deficiency of
P25 million.

It is provided under the New Civil Code that the guarantor

cannot be compelled to pay the creditor unless the latter
has exhausted all the property of the debtor, and has
resorted to all the legal remedies against the debtor.
Moreover, excussion shall not take place if it can be
presumed that an execution of the property of the
principal debtor would not result in the satisfaction of the
obligation.

Since the execution of the mortgaged property of XYZ

Corporation is not sufficient to satisfy its loan, A, as
guarantor may be sued in order to collect the deficient
P25 million.

0/2.5 b) Yes, the bank may institute a real action to

foreclose the mortgages in order to satisfy the unpaid
obligation of XYZ Corporation if the action for collection
will not prosper.

5/5 Yes, ABC Corporation is correct.

The New Civil Code provides that the guarantor cannot

be compelled to pay the creditor unless the latter has
exhausted all the property of the debtor and has resorted
to all the legal remedies against the debtor. However,
excussion shall not take place in case of insolvency of
the debtor.

Based from the given facts, considering that XYZ

Corporation is insolvent, excussion shall not take place.
Thus, the contention of ABC Corporation that the assets
of XYZ Corporation must be exhausted first prior to
proceeding against it is untenable. BPI may claim from
ABC Corporation, as guarantor of the loan of XYZ
Corporation, payment of its defaulted obligation.

ANTICHRESIS, EXTRA CONTRACTUAL OBLIGATION

4/5 I will advice A to enter into a contract of pledge with a
bank.

Under the law, incorporeal rights, such as deposit

certificates may also be pledged. The deposit certificates,
which serve as the instrument proving the right pledged,
shall be delivered to the creditor, or the bank.

Further, I will advise A to apply for a Personal Property

Security. Under the law, A is free to enter into any form of
security arrangements over movable property as long as
the security arrangement is consistent with the PPSA or
the PPSA Rules. Under the PPSA, a security interest
over personal property may be created by a security
agreement, an operating lease for not less than one year
or the sale of an account receivable unless otherwise
stipulated by A and the bank.

1/5 Yes, the contention of X is tenable.

The New Civil Code provides that in a contract of pledge,

the thing pledged must be placed in the possession of the
creditor by common agreement.

Unless the Ford Ecosport which was given as security by

way of pledge was delivered to and placed in the
possession of A as designated by their common
agreement, A acquires no right of the property because
pledge is merely a lien and possession is indispensable
to the right of a lien.
2/5 A is entitled to a deficiency judgment in a Chattel
Mortgage contract.

Under the New Civil Code, the sale of the thing pledged
shall extinguish the principal obligation, whether or not
the proceeds of the sale are equal to the amount of the
principal obligation.

However, the said provision does not apply under the

given facts but the Chattel Mortgage Law.

Under the Chattel Mortgage Law, if the price of the sale

of the thing mortgaged is less than the amount of the
principal obligation, an action may still be maintained by
the creditor against the debtor for the deficiency.

Applying the law under the given facts, since the price of
the sale of the Isuzu MU-X was less than the principal
obligation, A is entitled to a deficiency judgment.

5/5 Yes, A’s action will prosper.

It is well-settled that contracts of mortgage which is

coupled with the delivery of possession of the land to the
creditor, amount to a contract of antichresis.

By the contract of antichresis, the creditor acquires

the right to receive the fruits of an immovable of his
debtor, with the obligation to apply them to the payment
of the interest, if owing, and thereafter to the principal of
his credit.

Thus, applying the law under the given facts, A may

move for an action for the accounting of the fruits which B
had harvested in his land and apply it to his debt.
5/5 Yes, UBP Bank is entitled to recover the difference.

The New Civil Code provides that if something is

received when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to return
it arises.

The requisites for solution indebiti are: 1) there must be a

payment or delivery made by one person to another; 2)
the person who made the payment or delivery was under
no obligation to do so; and 3) the payment or delivery
was made by reason of a mistake.

By the doctrine of solution indebiti, no person shall enrich

himself at the expense of another. Thus, UBP Bank is
entitled to recover the difference of $9,000.00 to A.

1/1 a) Yes, the juridical relation is that of the quasi-

contract of negotiorum gestio. A is the owner and B is the
the officious manager or the gestor.

4/4 b) B is obliged to perform his duties with all the

diligence of a good father of a family, and pay the
damages which through his fault or negligence may be
suffered by A.

B is also liable for any fortuitous event if he undertakes

risky operations which A was not accustomed to; if he
has preferred his own interest to that of A; if he fails to
return the property or business after demand of A; and if
he assumed the management in bad faith.

Moreover, if B delegates another person all or some of

his duties, he shall be liable for the acts of the delegate,
without prejudice to the direct obligation of the latter
toward A.
4/5 A shall be held liable for damages.

The Civil Code provides that the proprietor of the building

or structure is responsible for the damages resulting from
its total or partial collapse, if it should be due to the lack
of necessary repairs.

Applying the said provision of law under the given facts,

B, therefore shall be entitled to damages from A.

Moreover, with regard to A’s defense relying on the

doctrine of last clear chance, the same is inapplicable
under the given case as cited under jurisprudence.

5/5 No, the action will not prosper.

A cannot recover actual damages in the form of

indemnity for the loss of her unborn child considering that
the unborn child cannot yet be considered a person
which the law allows indemnity only for the loss of life of
persons.

However, A may recover damages for the injuries she

suffered from the loss of the unborn child. A may recover
moral damages on account of mental anguish brought by
the loss of her unborn child. Moreover, exemplary
damages may also be recovered in absence of gross
negligence.
1/5 X Airlines is liable for damages considering that they
committed breach of contract when it upgraded A and B’s
tickets from Business Class to First Class.

X Airlines is liable for actual damages for the pecuniary

losses suffered by A and B as a result of the breach of
contract. Should it be proved that A’s back pain was
caused by the fault or negligence of the attendant, X
Airlines shall be liable for the injury sustained by A.

Moreover, in the absence of bad faith or fraud on the part

of X Airlines, they cannot be held liable for moral
damages.

However, A and B may recover moral damages based on

the provision of the Civil Code that any person who
willfully causes damage or injury to anther in a manner
that is contrary to morals, good customs or public policy
shall compensate the latter for the damage. Since A and
B were humiliated, embarrassed, and vexed when the
attendant informed to offload them should they refuse to
avail of the upgrade.

3/5 Under culpa criminal, the liability of A is direct and

primary while that of B is subsidiary. B cannot relieve
himself of liability by proving due diligence of a good
father of a family by the very nature of such obligation. As
such, B cannot exempt himself from liability.

Under culpa aquiliana, the liability of both A and B is

direct and primary. B may relieve himself of liability by
proving due diligence of a good father of a family in the
selection and supervision of A. B shall overcome the
presumption of negligence on his part in order to exempt
himself from liability.
5/5 Yes, ABC Bank can be held liable for quasi-delict.

The Civil Code provides that whoever by act or omission

causes damage to another, there being fault or
negligence, is obliged to pay for the damage done.
Jurisprudence likewise provides that the fiduciary nature
of banking requires high standards of integrity and
performance which necessitates them to treat the
accounts of its depositors with utmost care.

Based from the given facts, the ABC Bank was negligent
in losing the ledger of the current account of A. Because
of such, it caused damages brought about by the
dishonor of A’s check.

Thus, ABC Bank shall be liable for quasi-delict.

5/5 No, XYZ Elementary School cannot be exempt from

liability on the ground that there was waiver of right to sue
the school.

Despite the waiver signed by the parents of the

pupils, there was no valid waiver since in order for it to be
valid, there must be an existence of a right, legal capacity
of the person waiving the right, and the waiver must not
be contrary to law, morals, good customs, public order or
public policy or prejudicial to a third person with a right
recognized by law.

Under the given facts, the waiver is contrary to public

policy considering that it exonerates the school from
liability for future negligence which runs counter to what
the law mandates them to exercise even ordinary
diligence.
5/5 No. A cannot be held liable for damages.

The Civil Code provides that the possessor of an

animal is responsible for damages it may cause, although
it may escape or be lost; however, the responsibility shall
cease in case the damage arose from force majeure or
from the fault of the person who suffered such damage.

Based from the given facts, X was at fault when he

threw stones at the iguana. A is therefore not liable for
the injuries sustained by X.

5/5 No, the trial court erred in awarding moral damages.

The Civil Code provides that moral damages include

physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury.

On account of X Pera Padala’s failure to deliver the

amount of money sent by A to B, breach of contract
occurred. As cited by law and jurisprudence, in breach of
contract, moral damages may be recovered when the
defendant acted in bad faith or was guilty of gross
negligence or in wanton disregard of his contractual
obligation.

Thus, in the absence of any clear indication of bad

faith, fraud, or gross negligence on the part of X Pera
Padala, A cannot be awarded with moral damages.
Hence, the trial court erred in awarding the same.
1/2.5 a) Yes, the sale to C is valid.

The sale is one with a resolutory condition. As such, C

acquires the house and lot subject to the resolutory
condition that B passes 2021/22_Best_Bar_Ever. Thus,
upon B’s passing of the said examination, the rights of C
was terminated and B acquired ownership of the
property.

2/2.5 b) No. Assuming that B was entitled to the house

and lot, he is not entitled to the rentals thereof before he
passed the 2021/22_Best_Bar_Ever. Before the
happening of the suspensive condition, the fruits of the
thing and the interests therein are deemed to have been
mutually compensated. As the suspensive condition has
not been fulfilled, the obligation to sell does not arise.
5/5 PB Com is correct.

The law provides that legal compensation takes place

when the following requisites are present: (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; and (5) that over neither of them there be
any retention or controversy, commenced by third
persons and communicated in due time to the debtor.

Since a bank deposit is a contract of loan, depositor A is

the creditor and PB Com is the debtor. On the other
hand, A is the debtor of PB Com with respect to the loan.
As such, A and PB Com are mutually principal debtors
and creditors of each other. Meanwhile, both obligations
are due, demandable, and liquidated. Further, there is no
retention or controversy commenced by third persons
and communicated in due time to the debtor.

Applying the above-stated provision to the given facts,

legal compensation takes place. Therefore, PB Com may
withheld A’s bank deposit by way of legal compensation.

1/5 Yes.

Under the given facts, it is expressly stipulated in the

lease contract that in case of inflation or devaluation of
the Philippine Peso, the monthly rental will automatically
be increased or decreased depending on the devaluation
or inflation of the peso to dollar conversion rate, thus, the
increase of the rentals is reasonable and valid.
2/2.5 a) No, there was no valid acceptance.

The law provides that consent is manifested when there

is a meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract.
Moreover, to constitute a valid acceptance, there must be
an absolute offer which must be directed to the offeror. It
must be bound on intention and the offeror’s acceptance
must be communicated.
It can be deduced from the given facts that A failed to
return the original letter with his signature thereon. In the
absence an acceptance which must be absolute, no valid
acceptance took place.

2/2.5 b) Yes, there was an effective withdrawal by Z

Conglomerate.

Under the law on sales, when the offeror has allowed the
offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by
communicating such withdrawal, except when the option
is founded upon consideration, as something paid or
promised.

Thus, Z Conglomerate may withdraw its offer or

counteroffer prior to A’s acceptance. As such, was an
effective withdrawal by Z Conglomerate.

3/5 A void or inexistent contract is one which has no force

and effect from the beginning. It is as if it has never been
entered into and cannot be validated either by the
passage of time or by ratification.

On the other hand, a voidable or annullable contract is

one in which the essential requisites for validity are
present, but vitiated by want of capacity, error, violence,
intimidation, undue influence, or deceit.
1/1 a) The Clean Hands Doctrine provides that he who
comes to equity must come with clean hands. Parties to a
case who does not come to court with clean hands, that
is, bereft of fraud, fault, and good faith, cannot be allowed
to profit from their own wrongdoings.

4/4 b) Yes, DPWH is liable to pay the claims.

The contentions of DPWH that the contractors should not

be entitled to their claims since the contracts were invalid
due to non-compliance with legal requirements and
procedures for budgeting and that the contractors
themselves procured the contracts invalidly is not correct.

No person shall unjustly enrich himself at the expense of

another. Thus, the contractors who have completed their
services to the government are entitled to their claims for
the interest of substantial justice.

5/5 No, A is not correct.

The given facts depict assignment of credit and not

subrogation. Assignment of credit, as the process of
transferring rights of the assignor to the assignee, may be
done gratuitously or onerously which in effect constitutes
sale. Moreover, the debtor’s consent is not essential for
the validity of the assignment.

Thus, through the assignment of credit, Y Finance

Corporation acquired all the rights of X Industries
including the right to sue in his own name as the legal
assignee.
4/5 The New Civil Code provides that in cases of double
sale of real property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in
the Registry of Property.

Assuming that both B and C are innocent purchasers for

value, C has the better right over the parcel of land since
C was the first to register the Deed of Sale in good faith
with the Land Registration Authority.

However, should C acted in bad faith or should he knew

or have known of the prior sale of the parcel of land to B,
B has the better right over the same.

5/5 No, the consignation is not valid.

The New Civil Code provides that in order that the obligor
may be released by the consignation of the thing due, the
obligee must be notified thereof in order that the obligee
will be given the opportunity to accept the payment.

Although A was no longer the obligee considering that

the property was already sold to X Realty and
Development Corporation, the absence of a notice of the
consignation of the payment in court by lessees to X
Realty and Development Corporation, the same renders
the consignation not valid.
5/5 The sale is not valid.

The sale of a community property requires a written

consent of both spouses. The consent of H is already
insufficient and he failure and refusal of W to sign the
deed of sale signifies her opposition to the sale; hence,
negates valid consent. Therefore, the sale is not valid.

4/5 No. there is no automatic transfer of rights of the

lease. Should A decide to sell the leased premised to B,
A, as lessee, shall have the priority right to purchase the
same.
1/1 Tacita reconduccion means the tacit renewal of a
contract. A tacita reconduccion arises if an implied new
lease is established if at the end of the old contract, the
lessee should continue enjoying the thing leased for 15
days with the acquiescence of the lessor, provided that a
notice to the contract had not been previously given by
either party.

4/4 In order that an implied new lease is established, the

following requisites must concur: first, that the contract of
lease should have ended; second, that the lessee should
have continued enjoying the thing leased for 15 days;
third, that such continued enjoyment should be with the
acquiescence of the lessor; fourth, that a notice to the
contrary by either party should not have been previously
given; and fifth, that there should have been no express
contract entered into by the lessor and lessee after the
old contract had ended.

5/5 If I were a Judge, I will not dismiss the collection suit

against A.

A, as a general partner, is still liable of his pro rata share

in the partnership, that is, 1/3.

The termination of a particular undertaking specified in an

agreement does not extinguish obligations, more so, with
the dissolution of a partnership. On the dissolution, the
partnership is not terminated, but continues until the
winding up of partnership affairs is completed. Thus, A
shall be liable to X for the unpaid construction materials.
2.5/2.5 a) X and Y are liable.

The law provides that where the dissolution is caused by

death of a partner, each partner is liable to the co-
partners for his share of any liability created by any
partner acting for the partnership. Thus, when a partner
dies and the business is continued without any settlement
of accounts as between him or his estate, the surviving
partners are held liable for continuing the business.

Applying the said provision under the given facts, X and

Y may be held liable for continuing the operation of the
construction business despite the death of Z without
dissolving the partnership.

2.5/2.5 b) The creditors may file an action for the

collection of sum of money against the partnership at will
and in case of insufficient funds, the creditors may go
after the private properties of X and Y since the liability of
all partners shall be pro rata with all their property and
after all the partnership assets have been exhausted.

Moreover, the creditors may also sue the estate of Z.

Even if Z is already dead, his estate is not excused from
the liabilities of a partnership, but it should be only up to
the time he remained as a partner thereof. Meanwhile,
Z’s individual property shall be subjected first to the
payment of his separate debts.

2/5 The buyers shall bear the loss bear since they failed
to inquire into the authority of A. Generally, a person who
deals with an agent must inquire into the authority of such
agent.

The New Civil Code provides that in so far as third

persons are concerned, an act is deemed to have been
performed within the scope of the agent’s authority if
such act is within the terms of a written power of attorney,
even if the agent has exceeded the limits of his authority.

Applying the law under the given facts, if the buyers

inquired and were not informed by X Realty Corporation
as to the limits of A’s authority, X Realty shall bear the
loss.
4/5 The said is void. B should have been authorized by A
in writing to sell his parcel of land.

The law provides that no one may contract in the

name of another without being authorized by the latter, or
unless he has, by law a right to represent him.

Moreover, if the authority of the agent to sell a piece of

land is not in writing, the sale is void whatever may have
been the form it was entered into, whether in oral, private
instrument or public instrument.

Under the given facts, the deed of sale was notarized and
the authority of B was made orally. Such renders the sale
void.
 TUAZON

5/5
Answer:
Based on the facts provided, there are four solidarily
liable persons, to wit:
(1) The owner of the bus;
(2) The driver of the bus;
(3) The owner of another vehicle; and
(4) The driver of another vehicle.

For the bus owner and driver, the source of their

obligation is based on Contract considering that the bus
is a common carrier, they have pre-existing contract with
the passenger. While the source of obligation of owner
and driver of the other vehicle, is based on Quasi-delict.

In common carrier pre-existing contract exist between the

passenger and the bus owner and therefore, the bus
driver may be spared for culpa contractual however, the
bus driver may be held accountable for culpa aquiliania.
Considering that the obligation arises from breach of
contract, there is no defenses available to the bus owner
and driver. Thus, they are bound to indemnify the
passenger to the damages incurred.

The owner of the other vehicle may raise the defense of

due diligence in the selection and supervision of his
driver unless if the owner of the other vehicle is with the
driver at time of the collision and could have prevented
the collision should he exercise due diligence.

5/5
Answer:

No, A is incorrect. The contract entered between the

parties is a contract of sale, the obligation of A is to pay
the amount he indebted to B by reason of the sale. Thus,
the loss of the boat for whatever cause does not matter.
The obligation of A in the contract is to pay the money.
Therefore, B, the seller, has the right to demand payment
plus interest, as stated in the contract. And in case of
second default B, has the right of recission and may take
back her share without the need to reimburse A for
whatever A has already paid.
5/5
Answer:

Considering that the promissory note did not indicate

the time and date of which the obligation will due, I will
advice B to go to court and ask the court to fix the period
for payment. The law provides that when a debtor binds
himself to pay when his means permit, the obligation is
deemed to be with one period.

5/5
Answer:

X, can collect from A the whole amount of

P500,000.00. However, A may avail of the defenses
available to B, C, and E and may only pay X the amount
of P200,000.00 representing the share of A and D.

A may avail the defense of minority in B’s share since

minority is personal defense of B. C has already been
condoned by X, the condonation is only personal to C
thus it can be reduced from the liability of A. The
extension given to E by X is also personal to E and may
be used by A as defense and may be excused from
paying E’s share. The defense of insolvency D cannot be
invoked because of the principle of mutual guaranty
among solidary debtors. Thus, A may only pay
P200,000.00.

5/5
Answer:

Considering that the payment of T was made with

consent of X, T is entitled to two rights. (1) To demand
reimbursement from X of the total amount he paid to Y, P
100,000.00; and (2) T has been subrogated to all the
rights of Y. Thus, in case T fails to collect the
P100,000.00 form X, T may run after the Z, the
guarantor.
5/5
Answer:

NO, B is incorrect. With respect to application of

payments the preference of the debtor must be followed
regardless of whether the payment should be applied to
the less onerous obligation.

2/5
Answer:

Yes, A should pay B. In the facts provided, C bought

the shares of interest of A and B of the property. Thus, C
bought A’s interest in the property worth P500,000.00
and bought B’s interest in the property worth
P500,000.00. In such instance C purchase of the interest
did not include the payment of the expenses and the
purchase did not result in merger of obligation.

5/5
Answer:

Considering that A only learned the assignment on

December 1, 2021, C can successfully collect from A the
amount of P550,000. There was partial compensation on
the debts that have matured prior the knowledge of A of
the assignment. Thus, the partial compensation applies
to the P200,000 and P250,000.00. Considering that
already learned about the assignment before the maturity
of P150,000.00 he cannot set it up as partial
compensation.
Answer:
2.0/2.5
a) The very essence of a contract of sale is the transfer of
ownership of a thing for a price in money or it’s
equivalent.

2.0/2.5
B) The contract of sale is a consensual contract because
it can be perfected by mere consent.
Answer:
2.0/2.5
a) No, the sale is invalid. Jurisprudence provides that it is
essential for the vendor to be the owner of the property
sold for a person cannot dispose which does not belong
to them. Thus, in a given scenario, X as the daughter did
acquire any right or authority to dispose the properties of
her parents, nor she had gained possession by
succession as her parents are still alive.

2.0/2.5
b) No, my answer will not be the same. In this case,
succession took place, therefore X as the daughter
acquired the properties of her parents by operation of
law. She may now has the right to dispose the property
provided that it is not prejudicial to a third person

Answer:
3/5
Under the Civil Code, gross inadequacy of price does not
affect the contract of sale, therefore the sale is valid. The
sale cannot be considered as donation as there was
consideration in the amount of Php. 150,000.00 and
services that services that has been rendered, being
rendered and to be rendered.
Answer:
3/5
Yes, B’s contention is untenable. An accepted unilateral
promise to buy or sell a determinate thing for a price
certain is binding upon the promisor if the promise is
supported by consideration distinct from the price. In the
given case, the Jack Daniels Label and pulutan worth
Php 10,000.00 was not said to be part of the purchase
price, thus, S withdrawal of the offer violates the option
contract entered by S and B.

Answer:
2/5
I would advice my special someone that the law should
govern in this transaction is the law on sale. The law on
barter only applies if there is no other monetary
consideration. In the given case, the exchange of items
comes with a monetary consideration in the amount of
Php. 600,000. Thus, the contract of sale applies.
Answer:
2.5/2.5
a)No, under the civil code a husband and wife cannot
lease to each other their separate property. However, this
is subject to some exception, (1) If the separation of the
property was agreed upon in the marriage settlement and
(2) If there has been a judicial separation of the property
made under the provision of the Family Code.

2.5/2.5
b) No, under the civil code a husband and wife cannot
lease to each other their separate property. However, this
is subject to some exception, (1) If the separation of the
property was agreed upon in the marriage settlement and
(2) If there has been a judicial separation of the property
made under the provision of the Family Code.
Answer:

2.5/2.5
a) No, lease contract is not extinguished upon the death.
The Civil code provides that lease contract shall be
extinguished by expiration of the term; total loss or
destruction of the thing leased; Recission due to non-
performance of the obligation of the parties; transfer of
the property in good faith and lease not recorded in
registry; by resolution of the right of the lessor; or by the
will of the purchaser or transferee of the thing.

Lease contract is not in personal character and the

rights under the lease contract is transmissible to the
heirs.

2.5/2.5
b) Yes, the heirs are bound to the lease. The rights of the
lessor, upon his death, with respect to the lease is
transmissible to the heirs.

Answer:
2/5
No, the tenants are incorrect. For a third person to be
bound by the lease contract, in case of sale of the
property, the lease must be recorded in the registry and
that it is stipulated in the contract of sale.

Answer:
5/5
No, the tenants are incorrect. For a third person to be
bound by the lease contract, in case of sale of the
property, the lease must be recorded in the registry and
that it is stipulated in the contract of sale.
Answer:
2/5
Yes, the transfer of ownership of the thing leased
constitutes transfer of the rights over the property
including the rights of the lease. Unless, there was a
stipulation in the contract of sale to the contrary.

Answer:
4/5
The contractual relationship between A and B is that of
Partnership. As defined in the Civil Code, the contract of
partnership is when two or more persons bind
themselves to contribute money, property, or industry to a
common fund with the intention of dividing the profits
among themselves.

Under the law, for a partnership to exist there must be (1)

Intention to create partnership, (2) Contribution to a
common fund, and (3) Joint interest in dividing the profits
within themselves. All these requisites are shown in the
Memorandum of Agreement entered into by A and B.
Thus, A and B entered into a contract of partnership.
Answer:
5/5
Considering that A is a capitalist partner, he may
engage in the business of a coffee shop as it not in the
same kind of business the partnership is engaged in.

B, on the other hand, may not engage in any other

business unless the partnership allows him to do so. He
is an industrial partner, thus he has to devote himself full
time to the business of the partnership.

Answer:
2.5/2.5
a) No, the partnership is not dissolved. As provided for
in the Civil Code, in the absence of agreement,
conveyance by a partner of his whole interest in the
partnership does not dissolve the partnership.

2.5/2.5
b) Pursuant to the provisions of the Civil Code, D cannot
participate nor interfere in the management or
administration of the partnership. D may, however,
receive the net profits or bear the losses which C would
otherwise be entitled to receive.
Answer:
5/5
Yes, A may be held liable as he is estopped from
denying the liability as original partner of the partnership.
However, as to the partners themselves, only B and C
are liable considering that there was no proper
publication as to the withdrawal of A. Should a third
person collect payments from A in connection to the
partnership’s liability, A has the right to seek
reimbursement from B and C.

Answer:
2.5/2.5
a) Yes, the dissolution done by B and C without the
consent of A and D is valid. Pursuant to the provisions of
the Civil Code, A consent is not necessary for the
dissolution of the partnership as A has already assigned
his interest to D. Likewise, the assignment of A’s interest
to D over the partnership does not automatically make D
a partner. Therefore, consent of A and D is not necessary
for the dissolution of the partnership.

2.5/2.5
b)No, D has no right to petition for the dissolution of the
partnership before the expiration of the specified term.
The assignment of A’s interest to D does not
automatically make D a partner. D is not a partner to the
partnership, therefore he has no right to petition for the
dissolution of the partnership.
Answer:
1.5/2.0
a) For an agency to exist, there must be:

a) there is consent which may be express or implied, of

the parties to establish the relationship of agency;
b) the object is the execution of a juridical act in relation
to a third person; and
c) the agent acts as a representative and not for
himself; and lastly the agent that acts within the scope of
his authority.

3/3
b) No, the sale is void. The authority of C as an agent of
A was extinguished upon the death of A. As the law
provides, the death of the principal terminates the
agency.

Answer:
3/5
NO, DepEd is incorrect. Under the facts provided, an
agency by estoppel existed. Although the indorsements
was done without public bidding, X company was led to
believe that A is an agent of DepEd. Thus, DepEd cannot
disclaim the commission entitled to A for the sale of the
flags.
Answer:
1/2
a) An agency by estoppel is when one leads another to
believe that a certain person is his agent, when in truth
and in fact such is not true. Such person is estopped
from denying that the third person is its agent.

3/3
B)The following are requisites for an agency by estoppel
to be established:

1. The principal manifested a representation of the

agent’s authority or knowingly allowed the agent to
assume such authority;
2. The third person, in good faith, relied upon such
representation; and
3. Relying upon such representation, such third person
has changed his position to his detriment.

c) No, there was no agency that was established. There

is no implied agency nor agency by estoppel in this case
because PAGCOR did not hold out to the public as the
principal of ABS Corporation. PAGCOR’s actions did not
mislead the public into believing that an agency can be
present from the arrangement with A , nor did it hold out
ABS Corporation with any apparent authority to represent
it in any capacity.

4/5
Implied Agency is present when from the acts of the
principal, from his silence or lack of action, or his failure
to repudiate the agency, knowing that the other person is
acting on his behalf without authority.

An agency by estoppel, on the other hand, is when one

leads another to believe that a certain person is his
agent, when in truth and in fact such is not true. Such
person is estopped from denying that the third person is
its agent.
Answer:
2.5/2.5
a) Yes, an agent can appoint a sub-agent or a substitute.
It is provided for by law that the agent may appoint a
substitute if the principal has not prohibited him from
doing so.

1.0/2.5
B) When the agent was not given the power to appoint a
substitute, when he was given such power, but without
designating the person, and the person appointed was
notoriously incompetent or insolvent, the agent shall be
liable for the acts of his substitute.

4/5 Answer:

I will advise A to pay only the principal in the amount of

P500,000.00. Although the Civil Code provides that all
contracts involving sum of more than P500.00 must be in
writing, the same was only for convenience of the parties.
Thus, the agreement was valid although not in writing.

However, as to interest, the Civil Code also provides that

no interest shall be due unless it has been expressly
stipulated in writing. Thus, the payment of interest cannot
be compelled against A considering that there was no
written agreement to pay interest therefore interest
though existing is still not due and demandable.
5/5 Answer:

There are 2 types of loan, commodatum and mutuum or

simple loan.

Commodatum is a contract whereby one party delivers to

another something not consumable so that the latter may
use the same for certain time and return it. A contract of
commodatum is a gratuitous real contract and is purely
personal in nature.

Mutuum or simple loan, on the other hand, a contract

where one party delivers to another, money or other
consumable thing, upon the condition that the same
amount of the same kind and quality shall be paid. It is
not purely personal in character.

4/5 Answer:

The hotel shall bear the loss of the car. A and B entered
a contract of necessary deposit with the hotel when A
gave the car key to the valet. Generally, the depositary is
not liable in the event of loss. However, in the given facts,
the depositary hotel deposited the car the thing with a
third person by parking the same car to the bank parking
which falls in the exception in the general rule. Also, the
car was carnapped at the custody of the hotel, it raises a
presumption of fault in the part of the hotel.
1/5 Answer:

Yes, ABC Bank is liable for the loss of the valuables

of X. Considering that the contract of deposit in this
instance is onerous the degree of care is greater than
gratuitous deposits. The bank as depositary has the
obligation to keep the deposit safety, to return the thing to
the depositor, and since the deposit is onerous, bank has
the obligation to bear the expenses of the preservation of
the thing deposited. Although, generally, depository is not
liable in the event of loss, considering that the contract is
onerous, the bank should exert greater care of the
deposit.

5/5 Answer:

Jurisprudence provides that interest stipulated by the

contracting parties is valid however the Courts may
simply reduce unreasonable interests if the rate agreed
upon is iniquitous and unreasonable for the interest of
reason and equity.

3/5 X corporation is correct. In the given facts, the deposit

certificates are pledges to secure the payment of loan.
The bank is not allowed to appropriate himself the thing
pledge nor can he dispose the same nor can it alienate
the same to its name. It is a case of pactum
commissorium and such is prohibited by law.
5/5 Answer:

B is still liable to pay the said loan of A. Despite the

designation of the contract as a Continuing Guaranty
Agreement, the terms of the document prevail. B
expressly agreed to be solidarily liable for obligation of A.
The law provides that, if a person binds himself solidarity
with the principal debtor, the contract is called a
suretyship. A surety is under a direct and primary
obligation to the creditor and may be proceeded against
in case the principal debtor does not pay as he is an
insurer of the debt. Only a guarantor, an insurer of the
principal debtor's solvency, enjoys the benefit of
excussion.
 2.5/2.5 a) Answer:

NO, the bank can no longer sue A for the deficiency

of XYZ Corporation. The extrajudicial forcloseure of the
property already extinguishes the loan of XYZ
Corporation. A can only be liable if XYZ is considered
insolvent. Although there was a default, there was no
statement that XYZ Corporation has become insolvent.

0.5/2.5 b) Answer:

It depends. Should the same was paid at the time of

the collection case, the foreclosure will no longer prosper.

3/5 Answer:

ABC Corporation is correct. As a guarantor, ABC is

only liable when XYX Corporation cannot pay by reason
of insolvency. Considering that XYZ is still in the process
of rehabilitation, and that it is still the principal debtor, its
assets must be exhausted first prior to resorting to collect
from the guarantor ABC Corporation.

OBLIGATION
1/5 Answer:

I will advise A to apply for the Personal Property Security.

Under the law, a person is free to enter into any form of
security arrangements over movable property so long as
the said security arrangement is consistent with the
Personal Property Security Act (PPSA) or its rules.

1/5 Answer:

No, the X’s contention is untenable. the law says that it is

of the essence of the contract of pledge that when the
principal obligation becomes due, the things in which the
pledge consists may be alienated for the payment to the
creditor.
1/5 Answer:

X is correct. Based on the facts there was no stipulation

as to whe As provided for in the Civil Code, The sale of
the thing pledged shall extinguish the principal obligation,
whether or not the proceeds of the sale are equal to the
amount of the principal obligation, interest and expenses.
If the price of the sale is less, neither shall the creditor be
entitled to recover the deficiency, notwithstanding any
stipulation to the contrary. By electing to sell the articles
pledged, the creditor waived any other remedy, and must
abide by the result of the sale.

5/5 Answer:

X is correct. Based on the facts there was no stipulation

as to whe As provided for in the Civil Code, The sale of
the thing pledged shall extinguish the principal obligation,
whether or not the proceeds of the sale are equal to the
amount of the principal obligation, interest and expenses.
If the price of the sale is less, neither shall the creditor be
entitled to recover the deficiency, notwithstanding any
stipulation to the contrary. By electing to sell the articles
pledged, the creditor waived any other remedy, and must
abide by the result of the sale.
5/5 Answer:

Yes, the UBP Bank is entitled to recover the

difference of the transaction. The Civil Code provides that
in a quasi- contract solutio indebiti, if something is
received when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to return
it arises.

To establish the application of solutio indebiti in a given

situation, two conditions must concur:

(1) a payment is made when there exists no binding

relation between the payor who has no duty to pay, and
the person who received the payment, and
(2) the payment is made through mistake, and not
through liberality or some other cause.

The said requisites are present in the facts provided

above. Therefore, UBP is entitled to recover the
difference.

Answer:

1/1 a) Yes. The relationship of A and B in this instance is

one of Negotiorum gestio.

B voluntarily took charge of the agency or management

of the business or property of A without any power from
her A whose property was neglected. B is called the
gestor negotiorum or officious manager.

3/4 b) As the officious manager, B shall perform his

duties with the diligence of a good father of the family. He
shall likewise be liable for damages if which through his
fault or negligence A may have suffered damages in the
property or business under B’s management.
4/5 A’s contention is incorrect. A, the owner of the
building is responsible for the damages resulting from
collapse of the said firewall since the same was resulted
from the lack of necessary repairs. Jurisprudence
likewise provides that doctrine of last clear chance is not
applicable in this case. Therefore, B is entitled to
damages.

4/5 The action will prosper but only as to the damages

arising from the injuries sustained by the woman and
those damages that directly inflicted upon her. However,
she cannot recover damages in the form of indemnity for
the unborn child. This is because the unborn child is not
yet considered as a person. The law allows indemnity
over the loss of life of a person only. Thus, the claims of
the woman may be partially granted.
1/5 Yes, X Airline may be liable for Moral Damages only.
Moral damages for the humiliation and embarrassment
they felt after the attendant informed them that they will
be offloaded if they will not avail the upgraded seats.

As for actual damages, the same shall not be awarded

for A and B did not incur the same based on the facts
provided. Although X Airlines breached the contract
when it upgraded the booking of A and B despite their
objection, A and B did not acquire actual losses over the
breach. Likewise, the pain on the back of A cannot be
attributed as damages since it was not directly obtained
from the incident.

5/5 No, B may not be exempt from liability in this

instance. B the owner who was also in the vehicle at the
time of the incident can only be excused if by exercise of
due diligence, he could have prevented the injury.
However, B failed to show due diligence when he allowed
A to continuously run at a high speed in an intersection. B
cannot likewise invoke the defense of due diligence in
hiring A, this defense included due diligence in the
supervising the driver of which he obviously failed to
exercise, as stated in the facts.
5/5 Yes, ABC Bank may be held liable for quasi-delict.
Even if there exist a contractual relationship between A
and ABC Bank, the court provided in several
jurisprudence that the breach of contract may also be a
tort. The relationship between A and ABC Bank is one of
fiduciary that impose utmost diligence on the part of ABC
Bank in managing A’s accounts. The credit standing of A
was adversely affected by the bouncing of checks thus,
ABC Bank is liable for damages.

5/5 No, XYZ Elementary School may not be exempt from

liability on the ground that there was a valid waiver. The
waiver as stated in the facts provided is contrary to public
policy as it absolves the school from liability for future
negligence. Therefore, the waiver is not valid for being
contrary to public policy. Thus, XYZ Elementary School
cannot use the defense of having a valid waiver in this
instance.
5/5 No, A may not be held liable for damages. The Civil
Code provides that the possessor of an animal or
whoever make use of the same is responsible for the
damage it may cause although it may escape or loss.
Such responsibility shall cease in case the damage
arises from force majeure or from the fault of the person
who suffered damage. In the facts provided, the cause of
the broken leg of X is when he tripped himself on
something. Not because he was ran after or was bitten by
iguana but he tripped only by his own action.

1/5 Yes, the court is correct in awarding moral damages.

Provided that A showed evidences to prove that indeed
A’s suffered mental anguish and anxiety due to the error
made by X Pera Padala. The delayed receipt of the pera
padala for the tuition may add anxiety on the part of the
student who may have not allowed to take exams. Thus,
an award for moral damages is proper.
Answer:
4/5
A’s contention is untenable. The bank may apply
compensation as to the Loan of A against A’s deposit
considering that the same has become due and
demandable.

A bank deposit is a contract of loan, where the depositor

is the creditor and the bank the debtor. Since A is also
the debtor of the bank with respect to the loan, both are
mutually principal debtors and creditors of each other.
Both the loan and deposit are already due and
demandable and the same has been liquidated. All the
requisites for a valid compensation are present therefore
the bank may validly apply compensation in this instance.

Answer:
5/5
No, it is not yet proper to increase the rate of
the rental fee. Although there is a large fluctuation to the
commodities and that there was an increase in the value
of Philippine Peso against U.S. Dollar, there was no
Official Declaration of Extraordinary Inflation or Deflation
from the Banko Sentral ng Pilipinas.

For extraordinary inflation (or deflation) to

affect an obligation, the following requisites must be
proven: (a) that there was an official declaration of
extraordinary inflation or deflation from the Bangko
Sentral ng Pilipinas (BSP); (b) that the obligation was
contractual in nature; and (c) that the parties expressly
agreed to consider the effects of the extraordinary
inflation or deflation.
Answer:
2/2.5
No, there was no valid acceptance. In the given facts, A
failed to return the original letter with his signature stating
that he had communicated with Z Conglomerate. Such
failure did not justify the needed requisites for a valid
acceptance. Hence, there was no valid acceptance that
took place.

The jurisprudence provides that for a valid acceptance to

constitute, the following requisites must concur: a) there
must be an absolute offer, b) it must be directed to the
offeror, c) it must be bound on intention, and d) the
offeror’s acceptance must be communicated.

Answer:
2/2.5
Yes, there is an effective withdrawal by Z Conglomerate.
A party may withdraw its offer or counteroffer before the
other party accepts it because no agreement or contract
exists. Since no agreement or contract existed due to A’s
failure to accept, Z may withdraw its offer or counteroffer
prior to A’s acceptance.

Answer:
4/5
Inexistent Contracts are considered as not having been
entered into and, therefore, void ab initio. They do not
create any obligation and cannot be ratified or validated,
as there is no agreement to ratify or validate.

On the other hand, Annullable or Voidable Contracts are

valid until invalidated by the court but may be ratified. In
inexistent contracts, one or more requisites of a valid
contract are absent. In anullable contracts, all the
elements of a contract are present except that the
consent of one of the contracting parties was vitiated or
one of them has no capacity to give consent.
Answer:
1/1
Clean Hands Doctrine is based on the maxim that states
that “he who comes into equity must come with clean
hands”. It means that the person seeking relief into courts
must be in good faith.

Answer:
4/4
Yes, DPWH is liable. Jurisprudence provides that
payment for services done in favor of the government
despite having entered into through a void contract
cannot be avoided. The government thru DPWH cannot
be justified in non-payment of the contractors when it has
already benefited from the completion of the project. In
the interest of justice, contractors should be
compensated despite having entered into a void contract.

Answer:
5/5
No, A is incorrect. Based on the facts provided, it is
an assignment of credit and not subrogation. In an
assignment of credit, the consent of the debtor is not
required by law, but merely notice to him as the
assignment takes effect only from the time he has
knowledge thereof.

The effect of assignment of credit is the subrogation

of the rights of the original creditor to the assignee.
Therefore, the right of X industries to collect payment and
to sue before courts are transferred to Y Finance
Corporation by reason of the assignment of credit.
Answer:
4/5
It depends. C has the better right over the parcel of land if
C is an innocent purchaser for value. The Civil Code
provides that in cases of double sale of titled land, it is a
well-settled rule that the buyer who first registers the sale
in good faith acquires a better right to the land.

In the absence of evidence showing that C knew about

the previous sale to B or that C acted in bad faith, being
the first to register the sale, C has a clean title.

Should C knew of the previous sale, B has the better right

of the property for C acquired the title in bad faith.

Answer:
4/5
Yes, consignation is proper in this instance. The
lessor refused to accept the payment of rentals without
justifiable cause even after tender of payment.
Considering also that the contract of lease has not yet
expired, and the lease payment was already due. The
Civil Code provides that If the creditor to whom tender of
payment has been made refuses without just cause to
accept it, the debtor shall be released from responsibility
by the consignation of the thing or sum due.
Answer:
4/5
The sale is not valid. There is no statement in the
facts whether H and W have executed marriage
settlement prior to their marriage. Thus, Absolute
Community Property shall govern as to their property
relations. Although the land was bought by H while he is
still single, the same is part of the conjugal property. All
properties, whether acquired before or during the
marriage, are considered conjugal property under the
Family Code.

Under Absolute Community Property neither spouse can

sell or encumber property without the consent of the
other. Any sale or encumbrance made by one spouse
without the consent of the other shall be void although it
is considered as a continuing offer on the part of the
consenting spouse upon authority of the court or written
consent of the other spouse.

Answer:
5/5
No, there is no automatic transfer of rights of the lease.
Should A decide to sell the leased premised to B, A, as
lessee, shall have the priority right to purchase the same.
However, the transfer of A’s right a lessor to X is not
automatic.
Answer:
1/1
Tacita reconduccion refers to the right of the lessee to
continue enjoying the material or de facto possession of
the thing leased within a period of time fixed by law.
4/4
Tacita reconduccion will set in if it is shown that: (a) the
term of the original contract of lease has expired; (b) the
lessor has not given the lessee a notice to vacate; and (c)
the lessee continued enjoying the thing leased for fifteen
days with the acquiescence of the lessor.

Answer:
5/5
A’s contention is untenable, the case should not be
dismissed. A is still liable as a general partner for his pro
rata share of 1/3 in the partnership. The dissolution of a
partnership caused by the termination of the particular
undertaking specified in the agreement does not
extinguish obligations, which must be liquidated during
the winding up of the partnership affairs. Hence, A is still
liable with the unpaid construction materials to X.
Answer:
2.5/2.5
X and Y are liable. Under the law, Partnership shall be
dissolved if one of the partners dies. Considering that X
and Y did not dissolve the partnership after Z’s death,
they are both liable to the obligations incurred after Z’s
death.

Answer:
1.5/2.5
The creditors may collect payments from the partnership
but only as to the extent of X and Y’s share. Should the
partnership can no longer pay, creditors may run after the
personal property of either X and Y as both are generally
solidarily liable as partners in the Partnership.

Answer:
1/5
The clients shall bear the loss of A’s defalcation. As a
general rule, it is that a person dealing with an agent
must inquire into the authority of that agent. In the facts
provided, A acted more than what he is allowed, it is
specifically indicated in the contract between A and X
Realty that A could not receive payments. It is the duty of
the client to check the extent of authority of A as an agent
of X Realty Corporation. The clients shall bear the loss
and has the right to run after A for collection of the
unremitted payments.
Answer:
4/5
The said is void. It is required that a Special Power of
Attorney or a written Authorization executed by A
allowing B to sell A’s property on his behalf. Acts of
dominion requires Special Power of Attorney. In this
instance A did not execute Special Power of Attorney.
Thus, the sale is void.
 TALOTALO

In the given facts, the persons who are liable are the
owner of the bus, the driver of the bus, the owner of the
other vehicle, and the driver of the said other vehicle. In
this instance, each of them has solidary liability in the
said incident. The bus company has the liability that was
established in the contract. And with regards to the owner
and the driver of the other vehicle is solely based on a
quasi-delict. In the case of the bus driver, he may be
excused or exempt on the basis of culpa contractual for
the contract of common carriage is not on him but with
the bus company. He can use the defense that he
exercised ordinary diligence of a good father of a family
in performing his duty. On the contrary, the driver of the
other vehicle may be held liable for reckless imprudence
for neglectfully driving the vehicle. His basis of obligation
is an act or omission which is punishable by law.

A is not correct, A has still an obligation to pay B. B, as

the creditor had the right to demand for a specific
performance which is to demand for the payment and to
get back B’s share. In the issue on the loss of the boat it
is immaterial; this is because the obligation is generic
and will not be extinguished by the said fortuitous event
on losing the boat.
Yes, A should pay B, since in this case there was really
no merger that was happened. What had been vended to
C were the half shares of each of the co-owners. C did
not obtain the indebtedness of P100, 000 for the repairs,
henceforth there can be no merger with the locus to the
said debt.
a) No. A cannot recover from D, it is because the
promissory note that was executed is void. Just as the
winner cannot recover, and also cannot be the assignee.

b) If D the loser had borrowed money from X which is a

friend thru promissory note, the said money that has
been used to pay the winner, the said promissory note is
valid for it is not the result of gambling between D and X.
Hence, while a winner in gambling cannot recover, a
friend who lends the money can recover.

B is liable first. If B cannot pay, then C will be held liable.

If C cannot pay, the D will be liable. The law says that “if
there are two or more alienations, the first who acquired
shall be liable first, and so on consecutively.
No, X is not allowed to do this. His receipt of the sum for
which the pledge was made is an implied ratification of
the pledge. Thus, X is therefore, in estoppel.

a) The intention that the parties should pursue or the very

essence of a contract of sale is the transfer of ownership
in exchange for a price paid for or the promised. The law
provides that by the contract of sale one of the
contracting parties obligates himself to transfer the
ownership and to deliver a determinate thing, and the
other to pay therefor a price certain in money or its
equivalent.

b) It means that a contract of sale is classified as a

consensual contract, this happen when the sale is
perfected by mere consent. No particular form is required
for its validity. Upon perfection of the contract, the parties
may reciprocally demand performance, like for an instant
that the vendee may compel the transfer of ownership of
the object of the sale, and the vendor may oblige the
vendee to pay the object that has been sold.
b) Yes. The heirs are bound by contracts entered into by
their predecessors-in-interest except when the rights and
obligations arising therefrom are not transmissible by
their nature, stipulation or by the provision of law. The
rights and obligations pass to the heirs of the deceased
and the heir of the deceased lessor is bound to respect
the period of the lease. The same principle applies to the
option to renew the lease. As a general rule, covenants to
renew a lease are not personal but will run with the land.

Yes, the sublease contract is valid. The law provides that

when in the contract of lease of things there is no express
prohibition, the lessee may sublet the thing leased, in
whole or in part, without prejudice to his responsibility for
the performance of the contract toward the lessor.
A, as the capitalist partner, may engage or operate a
coffee shop it is because the said nature of the business
is not similar to the partnership they created. Conversely,
B may not engage in any other business unless the
partnership expressly permits B to do so. As stated in the
new civil code, an industrial partner has to devote his full
time to the business of the partnership.

a) No, the partnership was not dissolved. A conveyance

by a partner of his whole interest in a partnership does
not of itself dissolve the partnership in the absence of an
agreement. Thus, the said partnership was not dissolved.

b) D has no right to interfere or participate in the

management or administration of the partnership
business. D may, however, receive the net profits to
which C would have otherwise been entitled.
Yes. A may be held liable under the doctrine of estoppel.
But as regards to the liabilities incurred by B and C to a
third person, only B and C are liable. A cannot be held
liable since there was no proper notice or publication of
his withdrawal.

a) Yes the dissolution done by B and C is valid. As

provided in the new civil code, the dissolution by B and C
is valid and did not violate the contract of partnership
even though A and D did not consent thereto. The
consent of A is not necessary because he had already
assigned her interest to D. The consent of D is also not
necessary because the assignment to him of A’s interest
did not make him a partner to the said partnership.

b) No, D has no right to petition for dissolution of the

partnership because he does not have the standing of a
partner.
a) The essential elements of a contract of agency are as
follows:
a. there is consent which may be express or implied, of
the parties to establish the relationship of agency;
b. the object is the execution of a juridical act in relation
to a third person;
c. the agent acts as a representative and not for himself;
and lastly the agent that acts within the scope of his
authority.
b) The elements that must be shown that the agency by
estoppel was established are as follows; (1) consent by
the principal and the agent; (2) action by the agent on
behalf of the principal; and (3) control by the principal.
Yes. The agent may appoint a substitute if the principal
has not prohibited him from doing so, but he shall be
responsible for the acts of the said substitute. All acts of
the substitute appointed against the prohibition of the
principal shall be void.
Base on the given facts, the Regal hotel may be held
liable for the loss of the vehicle of the guest, this is
because when its valet parking attendant parked the
vehicle in the parking area of a bank which is beside the
hotel premises. The bank’s parking area became an
annex of the Regal hotel when the management of the
bank allows the hotel to park the vehicles there. The
contract of deposit was perfected when the guest
surrendered the keys to his vehicle to the parking
attendant and the Regal Hotel is under the obligation of
safely keeping and returning the said car. Hence, Regal
Hotel is liable for the loss of the car.
With respect to property deposited in a safety deposit box
by a client and of the ABC Bank, the said relation is a
contractual one, may by special contract define their
respective duties or provide for increasing or limiting the
liability of the deposit company, provided such contract is
not in violation of law or public policy. It must clearly
appear that there actually was such a special contract,
however, in order to vary the ordinary obligations implied
by law from the relationship of the parties; liability of the
deposit company will not be enlarged or restricted by
words of doubtful meaning. The company, in renting safe-
deposit boxes, cannot exempt itself from liability for loss
of the contents by its own fraud or negligence or that of
its agents or servants, and if a provision of the contract
may be construed as an attempt to do so, it will be held
ineffective for the purpose. Although it has been held that
the lessor of a safe-deposit box cannot limit its liability for
loss of the contents thereof through its own negligence,
the view has been taken that such a lessor may limits its
liability to some extent by agreement or stipulation.
Hence, ABC Bank may not be held liable for the said
incident because ABC Bank did not intent to happen such
bank heist.
In spite of the designation of the contract as a Continuing
Guaranty Agreement, the terms of the document prevail.
B expressly agreed to be solidarily liable for obligation of
A. The law provides that, if a person binds himself
solidarity with the principal debtor, the contract is called a
suretyship. A surety is under a direct and primary
obligation to the creditor and may be proceeded against
in case the principal debtor does not pay as he is an
insurer of the debt. Only a guarantor, an insurer of the
principal debtor's solvency, enjoys the benefit of
excussion. Hence, B is still liable to pay the said loan of
A.
Yes, the action of A will prosper. It is well-settled that
contracts of mortgage which is coupled with the delivery
of possession of the land to the creditor, amount to a
contract of antichresis. By the contract of antichresis, the
creditor acquires the right to receive the fruits of an
immovable of his debtor, with the obligation to apply them
to the payment of the interest, if owing, and thereafter to
the principal of his credit. Hence, A may move for an
action for the accounting of the fruits which B had
harvested in his land and apply it to his debt.
Yes, the UBP Bank is entitled to recover the difference of
the transaction. The law provides that in a quasi- contract
of the solutio indebiti, if something is received when there
is no right to demand it, and it was unduly delivered
through mistake, the obligation to return it arises. The
quasi-contract of solutio indebiti harks back to the ancient
principle that no one shall enrich himself unjustly at the
expense of another. In order to establish the application
of solutio indebiti in a given situation, two conditions must
concur: (1) a payment is made when there exists no
binding relation between the payor who has no duty to
pay, and the person who received the payment, and (2)
the payment is made through mistake, and not through
liberality or some other cause. The essential requisites of
solutio indebiti are present. Hence, UBP Bank is entitled
to recover the difference of the transaction.

a) Yes, there is a juridical relation between A and B. It

is a Negotiorum gestio. B voluntarily took charge of the
agency or management of the business or property of A
without any power from her A whose property was
neglected. B is called the gestor negotiorum or officious
manager.

b) The rights and obligation of B that he assumed is

that as the officious manager shall perform his duties with
all the diligence of a good father of a family, and pay the
damages which through his fault or negligence may be
suffered by the owner of the property or business under
management. The courts may, however, increase or
moderate the indemnity according to the circumstances
of each case. The law also states that, if the officious
manager delegates to another person all or some of his
duties, he shall be liable for the acts of the delegate,
without prejudice to the direct obligation of the latter
toward the owner of the business. The responsibility of
two or more officious managers shall be solidary, unless
management was assumed to save the thing or business
from imminent danger.
No, the action will not prosper. A cannot recover actual
damages in the form of indemnity for the loss of life of the
unborn child. This is because the unborn child is not yet
considered a person and the law allows indemnity only
for loss of life of person. A, however may recover
damages for the bodily injury she suffered from the loss
of the fetus which is considered part of her internal organ.
Since there is gross negligence on the part of the driver
an exemplary damages can also be recovered by A.
Hence, the action for the recovery of actual damage in
the form of indemnity for the loss of life of the unborn
child will not prosper.
No. B cannot be exempt from the liability. The law
provides that in motor vehicle mishaps the owner is
solidarily liable with his driver if the former who was in the
vehicle could have by the use of due diligence prevented
the misfortune. The negligence of the servant if known to
the master and susceptible of timely correction by him,
reflects his own negligence if he fails to correct it in order
to prevent injury or damage. Thus, B is liable on the
action of its driver.
Yes, ABC Bank may be held liable for quasi-delict. In the
given facts even if there is an existing contractual
relationship between A and ABC Bank, the action for
quasi-delict may prosper. It has consistently ruled that the
act that breaks the contract may also be a tort. There is a
fiduciary relationship between the bank and the
depositor, imposing utmost diligence in managing the
accounts of the depositor. The dishonor of the check
adversely affected the credit standing of A thus; A is
entitled also for the damages and ABC Bank be held
liable for quasi-delict.

No, XYZ Elementary School is not exempt from the

liability. In the given facts, there was no valid waiver. A
waiver to be valid must have three requisites; a.
existence of the right; b. legal capacity of the person
waiving the right and c. the waiver must not be contrary
to law, morals, good customs, public order or public
policy or prejudicial to a third person with a right
recognized by law. In the given facts, the waiver may be
considered contrary to public policy as it exonerates the
school from liability for future negligence. The waiver in
effect allows the school to not exercise even ordinary
diligence. Hence, XYZ Elementary School may be held
liable in the said incident.
No, A cannot be held liable for the damages. The law
provides that, if the possessor of an animal or whoever
may make use of the same is responsible for the damage
it may cause, although it may escape or be lost. This
responsibility shall cease only in case the damage should
come from force majeure or from the fault of the person
who has suffered damages. In the given facts, X was
throwing stones to the iguana and X was afraid that the
iguana will move towards him. X is the one who is
responsible for the incident. Hence, A cannot be held
liable for the damages.

No, the trial court is not correct in awarding moral

damages to A. The damages in this case are prayed for
based on the breach of contract committed by X Pera
Padala in failing to deliver the sum of money to B. The
law provides that, in a breach of contract, moral damages
may be recovered when the defendant acted in bad faith
or was guilty of gross negligence or in wanton disregard
of his contractual obligation. Hence, the trial court erred it
is decision in awarding A for moral damages.
REMERATA
 HERNANDEZ

No, A is incorrect. The obligation here is to deliver

money, a generic thing. Under the New Civil Code, an
obligation to deliver a generic thing cannot be
extinguished by a fortuitous event. The loss of the boat
due to a fortuitous event does not excuse him from
paying to B the last installment for his half-share in the
motorboat.
If I were B’s lawyer, I would advise him to bring an action
against A for the purpose of asking the court to fix the
duration of the term or period for payment. Under the law,
when the obligation does not set a period, the courts may
set a duration thereof. Once the court has fixed the term
or period, the obligation becomes demandable at the end
of such period. If the debtor defaults, only then can the
creditor bring an action for collection. B may only collect
the money owed to him after the expiration of the date set
by the court.

Since T’s payment was made with the consent of X, he

can ask X for the reimbursement of the whole amount of
the obligation. It is well settled that a person who pays for
another may demand what he has paid. If ever X cannot
pay, T may proceed against the guarantor Z because as
a rule, T is now subrogated to all the rights of Y.
Since T’s payment was made with the consent of X, he
can ask X for the reimbursement of the whole amount of
the obligation. It is well settled that a person who pays for
another may demand what he has paid. If ever X cannot
pay, T may proceed against the guarantor Z because as
a rule, T is now subrogated to all the rights of Y.

Yes. There was no merger when C bought A and B’s

shares. The rule on merger only applies when the
characters of the principal creditor and principal debtor
are merged into the same person. To be a valid merger
which extinguishes A’s debt, it is the characters of A and
B which should be merged.

C can collect from A a total of P550,000.00. Under the

law, a debtor may set up compensation as a defense for
all debts prior to his knowledge of an assignment. A can
set up the defense of partial compensation with the debts
amounting to P200,000.00 and P250,000.00. The two
debts matured and were compensable before he knew
about the assignment.
No. When a person has allowed to assume apparent
ownership over a personal property and he received the
sum for which a pledge has been constituted, he is
estopped to assail the validity of the pledge on the
ground that the other acted without authority.

a) The very essence of a contract of sale for the buyer is

the transfer of ownership of the thing owned by the seller.
For the seller it is the price paid by the buyer for the thing
owned by him.
Yes. When the offeror has allowed the offeree a certain
period to accept, the general rule is that the offer may be
withdrawn any time before acceptance by communicating
such withdrawal. But this rule does not apply when the
option is founded upon consideration as something paid
or promised. Since after making the agreement, they
sealed it through a bottle of Jack Daniels Blue Label and
“pulutan” worth Php 10,000.00, there is consideration
distinct from the purchase price. S is bound by the
agreement.
Yes. When there is no express prohibition in the contract
of lease of things, the lessee may partially or wholly
sublet the thing leased. This, however, is without
prejudice to the responsibility of the lessee under the
original contract of lease towards the lessor.
4/5 No. Generally, lease is a personal right. It is a real
right only when it is recorded the registry of property. The
purchaser may terminate the contract of lease when
there is absence of registration, express stipulation of the
parties, of actual knowledge of the purchaser regarding
the presence of the lease, Therefore, when the property
leased is sold to a third person there is no automatic
transfer of right of the lease.

4/5 The contractual relationship between A and B is a

contract of partnership. By the contract of partnership
two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the
intention of dividing the profits among themselves. They
had bound themselves to contribute to a common fund
their money and industry, dividing the profits on a 70-30
scheme.
A may engage in the separate business but B cannot. A,
as a capitalist partner in the car repair shop, may open
and operate a coffee shop as this kind of business is
different from the business the partnership is engaged in.
On the other hand, as an industrial partner, B cannot
engage in another business because he is expected to
devote all his time to the business partnership which is
the car repair shop. But, if it is expressly permitted that he
may engage in another business, he may do so.

a) No. Under the law, a conveyance by a partner of his

whole interest in the partnership does not of itself
dissolve the partnership. Knowledge and consent of A
and B is immaterial as the conveyance of C to D of her
whole interest in the partnership does not dissolve the
partnership. There are exclusive ways to dissolve a
partnership, conveyance of whole interest is not one of
them.

b) D cannot participate in the management of the

partnership nor in the administration of its affairs. Her
right is limited to receiving the net profits to which C
would have been entitled to.
4/5 Yes. Since there was no publication that A has
withdrawn from Malaybalay City Lumber, A is still liable
for any obligation and indebtedness of the partnership
with respect to third persons. This is of course no
prejudice to his right to seek reimbursement from A & B.

a) Yes. The consent of A is not needed since she already

assigned her interest to D. When A assigned his interests
to D, D did not become a partner. Hence, the consent of
D is also not needed.

b) No. When A assigned his interests to D, D did not

become a partner. He has no right to petition the
dissolution since he is not a partner to the partnership.
a) The essential elements of agency are:
(1) there is consent, express or implied of the parties to
establish the relationship;
(2) the object is the execution of a juridical act in relation
to a third person;
(3) the agents acts as a representative and not for
himself, and
(4) the agent acts within the scope of his authority.

b) No, the sale was invalid since the agency was

extinguished by the death of A. An act done by the agent
without knowledge of the death of the principal is valid
and shall be fully effective as regards to third persons.
Consequently, an act done with the knowledge of death
of the principal is invalid. C was fully aware of the death
of his sister A hence the sale made after A’s death was
no longer valid.
b) The following are the elements that must be shown
that an agency by estoppel was established:

1. The principal manifested a representation of the

agent’s authority or knowingly allowed the agent to
assume such authority;

2. The third person, in good faith, relied upon such

representation; and

3. Relying upon such representation, such third person

has changed his position to his detriment.

4/5 An implied agency is a true agency with obligations

and rights. Agency by estoppel is not really an agency. In
implied agency, where third persons deal with the agent,
the principal can always be held liable. In agency by
estoppel, that is not always the case. You can only hold
the principal liable in certain cases. If the agency was
made from the representation made by the alleged agent
without the knowledge of the alleged principal, only the
alleged agent is liable. Otherwise, if made by the alleged
principal, the alleged principal is liable.
Yes. Under the New Civil Code (NCC), an agent may
appoint a sub-agent or substitute if the principal has not
prohibited him to do so. If the agent is prohibited by the
principal and he does appoint one, any and all acts of the
sub-agent or substitute are considered void.
 DAGAWASAN

The negligent driver of the bus, the operator of the bus

and the negligent driver of another vehicle are all liable.
The liability of the negligent driver of the bus and the
negligent driver another vehicle can be based on delict
and quasi-delict. Their obligation can be based on delict
under Art 365 of the Revised Penal Code for reckless
imprudence and can also be liable for quasi-delict or
torts. The sources of obligation of the bus operator are
contract of common carrier and quasi-delict.

For the bus driver, his only defense is that he observed

extraordinary diligence in driving and the injury of the
passenger was not his fault. For the driver of another
vehicle, his defense is that he was not negligent in driving
and the injury of the passenger was not due to his fault.
For the bus operator, his defense for obligation arising
from contract is that he exercised due diligence in
selection of the bus driver and the bus was in good
running condition.

No, A is not correct. He is still liable to pay B the third

installment plus interest. Fortuitous event will only
extinguish obligation if the prestation that was lost was a
determinate thing. The loss of the boat due to fortuitous
event did not excuse him from the obligation to pay the
balance since the prestation of the obligation to A is not
the delivery of the boat but the payment of the amount of
the third installment. Nevertheless, person in default
cannot use fortuitous event as an excuse in the
obligation.
The words of the promissory note means that the
obligation of A is that with a period. Since the period for
the payment of obligation was not agreed by the parties
and dependent on the debtor, I will advise B to ask the
court to set the time within which A should pay his
obligation. If upon expiration of such period and no
payment was still made by A. I will seek action for
collection of sum of money from the court to compel A to
settle his promissory note.

X can collect from A only the amount of P200,000.00 and

after the expiration of the 6 months extension, he can
collect additional P100,000.00 from A. In a solidary
liability, the solidary debtor can raise as defense the
defenses available for the nature and circumstance of
their obligation, his personal defenses and the defenses
personal to his co-debtors to the extent of the value of
their proportionate share.

A can use the defense of minority of B not to pay B’s

share of P100,000.00 since his obligation is void. A can
also use the condonation of X on the share of C not to
pay C’s share of P100,000.00. A cannot however use
insolvency of co-debtor D as defense since insolvency
does not extinguish liability and co-debtors in solidary
obligation are obliged to pay for the insolvent debtor. A
cannot be compelled to pay the share of E which is
P100,000.00 before the expiration of the 6 months
extension.

The given facts showed that there is an active novation

since there a third person T was subrogated of the rights
of the original creditor Y. T has the right of
reimbursement from X for the P100,000.00 he has paid to
Y. To protect his right, T can demand payment from X. In
addition, by virtue of subrogation, T has all the rights
even against the guarantor thus he can demand
guarantor Z for the payment of P100,000.00 in case X will
not pay him.
No, creditor B is not correct. The law gives the debtor the
right to decide on the application of his payment. If debtor
A chooses to apply his payment on the second debt even
though it is the least onerous should be respected by the
creditor. The rule on the application of the payment to the
more burdensome debts when the debtor has multiple
debts which are due is only applicable when the debtor
has not expressed his intention on which among his
debts should the payment be applied first.

Yes, A should pay B. There was no merger of characters

of creditor and debtor in the personality of C. What was
transferred to C through the sale of the co-owned
property of A and B was only the real right over the
property in consideration of the purchase price. When B
sold his property to C, there was no assignment of his
credit of the P100,000.00 recoverable from A. Also, when
A sold the property to C, the purchase price received by
A includes the value of the repairs made. Hence A is still
liable to pay B and B has still the right to collect from A.

C can successfully collect from A only the amount of

P550,000.00 due to partial compensation. Compensation
exists by operation of law when the parties are both
principal creditors and debtors on each other for debts
that are both due and demandable and over which no
retention or controversy exist and was communicated to
the debtor.

Prior to the assignment of B of his credit to C, there was

already compensation with the two matured debts of A
and B, thus only P800,000 is collectible from A. After the
assignment but prior to notification to A, the
P250,000.000 debt of B in favor of A matured hence
another compensation by operation of law reduced the
collectible amount from A to P550,000.00. The
P150,000.00 debt did not qualify for compensation since
it became due only after the debtor was notified of the
assignment.
a) No, A cannot successfully recover from D since the
contract on which the promissory note came from is void
for being contrary to law. Contracts that are based on
illegal cause is void. A cannot recover from D on the
basis of the void contract.

b) Yes, X may successfully recover from D since the

elements of contract are present when they entered the
contract of loan of money. To be valid contract the object
of the contract must be legal. The object of the contract is
the money to be delivered by D to X in payment of the
amount he lent from X which is the cause of the contract.
Since the contract on which the promissory note was
based is valid, X can recover from D.

a) Yes, the contract may be rescinded. Contracts entered

by the guardian for the ward which cause lesion of more
than ¼ of the value of the object of the contract is
rescissible contract. Since X suffered lesion of 50% of the
value of the mansion, the contract of sale of mansion
entered by the guardian may be rescinded by X.

b) No, the contract of sale cannot be rescinded. Mistake

of the party as to the fact of the value of the object of the
contract will not result to a rescissible contract. With the
facts, X suffered lesion through his own mistake and this
does not allow him to rescind the contract.
4/5 No, the defense of B is not correct. Contracts are
valid in any form unless otherwise provided for by law.
The statute of frauds to be used as defense for
unenforceability of contract is only applicable to the
transactions specified in the New Civil Code. So far as
the real properties are concerned, only the sale of real
property or lease thereof for more than one year is
covered by the rule. The transaction of A and B is not a
sale of real property thus the contention of B that the
transaction is unenforceable is not correct. (4 pts only)

No. X is not allowed to attack the validity of the pledge for

the reason of estoppel and relativity of contract. There
was an express trust when X allowed Y to assume
apparent ownership of the ring in order to sell them. W
was in good faith in entering into a contract of pledge with
Y relying that the latter owns the ring. By reason of
estoppel, X is estopped to raise his ownership of the ring
against W since it was his intention to make it appear that
Y owns the ring. Also, X cannot attack validity of the
contract of pledge since he is not a privy in the contract
and has no cause of action against W who is in good
faith.
2/2.5 b) No, the answer will not be the same. The sale is
valid. After the death of her parents, the object of the
contract which are the properties inherited from her
parents are already determinate and existing and she
has the absolute free disposal of the thing.
Yes. A can sublet portion of the building to another during
the term of the lease even without the consent of the
owner B. However, if the lease contract stipulates
express prohibition on the sublease, then the sublease
contract is void.
4/5 A and B are partners in a contract of partnership. A
contract of partnership exists when two or more persons
bind themselves to contribute money, property or industry
to a common fund with the intention of dividing the profits
among themselves. In the facts given, A contributes 30%
to the existing businesses with the intention of dividing
the net profits equally between them. Also, since B shall
have a free hand in running the business, he is a
capitalist-industrial partner while A is a capitalist partner
in their contract of partnership. (4 pts only)
Different rules apply to A and B. Capitalist partner is
prohibited to enter into business of the same kind as that
of the business of the partnership. A is a capitalist partner
since A provided only capital in the car repair shop
partnership business. Thus, A may operate the
coffeeshop because it is not of the same kind with the
business of the partnership which is car repair shop.

The industrial partner is on the other hand is prohibited to

enter into separate business of any kind. B is an
industrial partner because his contribution is labor and
industry in the partnership thus, he may not engage with
any type of separate business including the car
accessories store.

a) No, the partnership was not dissolved. Conveyance of

a partner of his partnership interest is not a ground for
dissolution. After C conveyed her whole interest to D, she
as an assignor still remained a partner to the partnership
and the partnership was not dissolved for there was no
change in the relationship of partners.

b) D, as an assignee of the interest of C, has the right to

receive the share of the assignor in the profits of the
partnership but he has no right to participate in the
management of the partnership since mere conveyance
of the interest of C does not admit him as a partner to the
partnership.
No, A is not liable to the obligations after his withdrawal.
As a general rule, only the partners to the partnership are
liable for the obligations incurred by the partnership. After
the dissolution of the partnership, A was no longer a
partner thus cannot be held liable to the obligations
incurred by the continuing partners B and C.

But A may be made liable of partnership obligations to:

a. Creditors who had extended credit to the partnership

before the dissolution and were not informed and notified
of the dissolution, and

b. Creditors who although have not extended credit

before dissolution but have no knowledge of the
dissolution due to the lack of the publication in the
newspaper about the dissolution while they continued
using the old partnership name.

2/2.5 a) The dissolution done by B and C is valid but they

are liable for damages to A. Dissolution of partnership
before expiration of the term will not violate agreement if
decided by all the partners. Dissolution before the
expiration of the term by not all of the partners is in
violation of the partnership agreement and although valid,
requires for indemnity of damages.

2/2.5 b) No, D has no right to petition for the dissolution

before the 5 years have expired. An assignee a partner’s
interest in a partnership can only petition for dissolution
after the expiration of the partnership term, fulfillment of a
particular undertaking or when the partnership is
operating at will.
Yes. An agent can appoint a sub-agent or a substitute
unless the principal expressly prohibits the appointment
of a sub-agent or substitute.

2/2.5 If the agent was not prohibited to appoint a

substitute and the person he appointed was chosen by
the principal, the agent is not liable for his substitute.
Agent is only liable if the agent appoints a substitute
based on his own choice and the substitute was
notoriously insolvent. The agent is also liable for his
substitute if he was expressly prohibited to appoint a
substitute in which case the agent is liable to the third
party and to the principal for the acts of the substitute. (2
pts only)
a) Yes, the sale of the house to another person before B
pass the 2021/22_Best_Bar_Ever is valid but is subject to
the resolutory condition which is if B will pass the bar
examination.

As provided in the New Civil Code, in a contract of sale,

the object must be determinate and the seller must have
a right to transfer the property at the time of delivery.
Here, the obligation of A to sell to B his house is still
subject to a suspensive condition and pending the
happening of such condition, A is not bound to sell to B
and has the complete absolute dominion of his property.
On the part of the contract of sale with another person,
the passing of B in the bar examination only constitutes
resolutory condition that will extinguish the sale.

Thus, the contract of sale to another person is valid.

b) No, B is not entitled to collect the rentals before B pass

the 2021/22_Best_Bar_Ever.

According to the New Civil Code, the rights and

obligations in a contract subject to a suspensive condition
will rise only upon the happening of the condition. Also,
the ownership of a thing is only transferred upon delivery
which is either actual or constructive. Here, pending the
results of the bar examination, there was yet no delivery
thus the ownership of the house remained with the A who
is the prospective vendor. Only the owner of the property
has the rights over its fruits.
The compensation made by bank was proper.

Based on jurisprudence, compensation is allowed when

the loan of the depositor becomes due and demandable
since in a contract of deposit, the bank is the debtor while
the depositor is a creditor. According to the New Civil
Code, the compensation will take effect by operation of
law when two parties are both creditors and debtors of
each other and the debts they owe with one another are
both due and demandable. Here, the loan of A with
PBCom amounting to P8,000,000.00 is already due and
demandable while he has deposit with the same bank in
the amount of P10,000,000.00 that can be withdrawn at
anytime.

Thus, the argument of the bank that there should be

compensation is proper and A is only allowed to withdraw
P2,000,000.00.

4/5 The increase in the rate of rental fee to P15,000.00

due to the increase in Peso to US Dollar exchange rate is
not correct.

According to New Civil Code, contract is the governing

law between parties such that the stipulations agreed
upon are binding between them. Here, the stipulation
allowing automatic increase in the monthly rental due to
inflation is binding between the parties but the mere
increase of Peso to Dollar exchange rate does
necessarily mean inflation or devaluation of Peso without
formal advisory or determination by the government or
the Bangko Sentral ng Pilipinas. Currency exchange is
just one of the factors that may affect determination of the
existence of inflation.

Thus, increase in the rate of rental fee by the lessor from

P10,000.00 to P15,000.00 is not correct. (4 pts only)
According to the New Civil Code, the essential requisites
of contract are consent, object and cause. Inexistent
contracts are those contracts which not all of the
essential requisites of the contract are present. These
contracts created no right and obligation. No juridical tie
between parties was created. It can be attacked
collaterally. These contracts cannot be ratified and
cannot be cured. It is as if no contract was made.

Annullable contracts or voidable contracts on the other

hand are contracts that has all the essential requisites of
a contract but because of vices of consent, the consent of
the parties was vitiated. These contracts are valid but can
be annulled by action of any of the parties. These
contracts can be ratified by the parties whose consent
was vitiated in order to cure the defect. Voidable
contracts create rights and obligations. These contracts
cannot be attacked collaterally. Direct attack is necessary
for it to be annulled.
a) It requires the person to act in good faith. Clean hands
doctrine provides that only those with clean hands can
come to court to file action to enforce rights against
another.

b) Yes, the DPWH is liable to pay the claims.

According to the New Civil Code and agency by estoppel,

the principal manifested a representation of agent’s
authority or who allowed an agent to assume authority is
not allowed to subsequently deny the agent’s authority
after third persons in good faith relied on such authority.
Here, the contractor A that undertook the projects with
the DPWH relied on the apparent authority of Engineer A
to negotiate and sign contracts on behalf of DPWH. The
agency tolerated the construction, inspected its
completion and even forwarded to COA the documents of
the claims but only belatedly denied the authority of
Engineer A and non-compliance with procurement
requirements. DPWH is estopped to deny the obligation
under the contract.

Thus, DPWH as the principal in the contract is liable to

pay the claims of contractor A.
C has the better right over the parcel of land.

According to the rule on double sale of real property

under the New Civil Code, in case the seller sold the
same property to different persons, the first buyer to
register the sale in good faith with the Register of Deeds
has superior right. Here, the second buyer C was the first
to register the sale which gave him superior right over the
first buyer B who did not register their Deed of Sale.
There was also no showing of bad faith on the part of the
second buyer C.

Unless C is not in good faith, C is the owner of the parcel

of land.
4/5 No, the sale is not valid.

According to the Family Code, consent of the spouse is

necessary in the disposal of conjugal property. Here, the
refusal of the W to sign the deed of sale will not validate a
contract of sale. Consent of both H and W is necessary
for the sale of their house.

Thus, the sale of their house to Spouses X and Y is not

valid.

No, there is no automatic transfer of rights of the lease.

According to the New Civil Code, the lessee cannot

assign the lease without the consent of the lessor unless
expressly allowed in the contract of lease. In the same
manner, the lessor cannot assign the lease unless it was
expressly stated in the contract of lease or unless with
consent of the lessee. Although the delivery of property
sold to B will transfer its ownership, the lease rights will
not be automatically transferred unless it was stipulated
in lease contract or unless it was made with consent of
the lessee.
Tacita reconduccion or implied lease exists when the
lessee continues to enjoy the use of the property despite
expiration of lease term. The terms of the expired lease
contract is deemed revived and shall continue based on
the rules on the period of lease as provided in the New
Civil Code which shall depend on the manner of payment
whether daily, weekly, monthly or annually.

Implied lease exists when after the lease term has

already expired, the lessee continued to enjoy the
property for 15 days with the acquiescence of the lessor
and provided there was no demand to vacate made by
the lessor.

I will not dismiss the case.

Under the New Civil Code, the partnership and all the
partners are bound to the transactions validly entered into
by the partnership. The creditors can demand payment
from all of the partners while the partners are obliged to
the liability pro rata. Here, X, the supplier of the
partnership has the cause of action to file collection suit
to all of the partners to the extent of their pro rata share
of the liability. The separate juridical personality of the
partnership and the non-inclusion of the other partners in
the collections suit will not cause of the dismissal of the
action. As a partner, A is bound to 1/3 of the liability of
the partnership to supplier X.
a) Only the partners X and Y are liable.

Under the New Civil Code, the death of the partner

should result to dissolution of the partnership and only
the partners who continued the business will be liable to
creditors after the death of any partner. Here, since X and
Y continued the business despite the death of Z, they are
the only liable with the creditors.

b) The creditors should first demand the liability from the

partnership. If no payment will be made, they can go after
the X and Y. They cannot go after the estate of Z who is
already dead and no longer a partner when they
transacted with the continued partnership.
4/5 The Deed of sale of land of A by B to X is void.

Under the New Civil Code, in a contract of sale of real

property, the authority of the agent is required to be in
writing otherwise the sale is void. Here, the authority of B
to sell the land of A in Malaybalay City was only verbal
and was not made in writing.

Thus, the sale of land made by B as agent of A without

written authority is void. (4 pts only)
 TAGUPA

A is incorrect. The contract of sale has been perfected

the moment A and B has meeting of minds as to the
subject of the contract which is the one-half interest in the
boat of B and the price. Therefore, the interest of the boat
has already been delivered to A, what remains is the
obligation of A to pay to B the agreed price of the object.
Since the obligation of A to B is an obligation of payment
for a sum of money, the loss of boat due to a fortuitous
event did not extinguish the obligation of A.
The obligation of A and B is an obligation with a period,
whereby the period of payment is dependent on the will
of the obligor, A. The remedy of B therefore is to ask the
court to fix a period within which A will comply with the
obligation. If A did not comply during the period fixed by
the court, B may now seek from the court for: 1)
performance of the contract (payment of the obligation by
A) with indemnity for damages; 2) assignment of A’s
credits; 3) attachment of A’s properties except those not
subject for execution; or 4) rescission of contracts to
defraud B.

X can collect P100,000 from A which is A’s share of the

debt and another P100,000 which is D’s share of the debt
because the solvent solidary debtors will bear the share
of the debt of the insolvent solidary debtor in proportion to
their own share of debts. A can set up the defense which
is personally attributable to his co-debtor B, thus, A is
liable in accordance with the provisions for incapacitated
parties. X can no longer collect P100,000 from A which is
the share of C that he condoned. X also cannot collect as
of the moment the P100,000 from A which is the share of
E because he granted 6 months extention, thus, it is still
not due.
B is incorrect. As a general rule, the rights of application
of payment to debts rests with the debtor, who in this
case is A. Therefore, since A already signified that the
payment be applied to the second debt, the fact that the
first debt is more onerous is of no moment since
application of payment to the most onerous obligation
may only be resorted if the debtor did not state for what
obligation the payment is to be applied. Thus, B cannot
refuse to accept the payment for the second debt.

Yes, A should pay B. There is no merger or confusion of

the rights of creditor and debtor. In merger or confusion,
the person must be the creditor and debtor of himself for
one and the same obligation. In this instance, there is no
singularity of obligation. The obligation of A to reimburse
B for the repair expenses is different from the contract of
sale between B and C. Both A and C are indebted to B
for sum of money arising from different obligations. The
fact that B transferred his ownership interests to C
through the contract of sale did not extinguish the liability
of A to B for sum of money.
a) No, A may not recover from D because the contract of
D to pay C a sum of money arose from an illegal cause
which is gambling. Therefore, the contract is void and it
will not confer rights nor create obligation.

b) Yes, X may recover the amount from D. The contract

entered into by D and X is a simple contract of loan.
Therefore, X may recover the amount from D according
to the terms that they have agreed upon contained in the
promissory note. The fact that the money was given to C
as winner in the gambling is of no moment because the
motive of D will not affect the validity of his contract of
loan with X.
No, B’s contention is incorrect. The contract of A with B is
not among those contracts required by the Statute of
Frauds to be in writing to be enforceable. It is not a sale
of real property but a remuneratory contract for the
services rendered by A. Therefore, the general rule that a
contract does not require a particular form to be valid
applies in this situation. Hence, the contract of A and B is
enforceable although not in writing.

No. X will not be allowed to attack the validity of the

pledge on the ground that Y is not the owner of the ring
because X allowed Y to assume apparent ownership
over the ring. Such misrepresentation led W to believe
that Y is indeed the owner of the ring and acted upon it
by entering into a contract of pledge with Y. Thus, X is
estopped to contest the apparent ownership of Y to
invalidate the contract of pledge.

a) 1. The seller to transfer the ownership and deliver to

buyer the determinate thing which is the subject matter of
the contract

2. The buyer to pay to the seller the price certain in

money or its equivalent
Yes, the sublease contract is valid. A lessee has the right
to sublease the property without consent of the lessor but
it does not relieve the lessee from his obligations with the
lease contract. Moreover, the sublessee is bound to the
use and preservation of the property leased according to
the terms of the lease contract between the lessor and
the lessee.
A, a capitalist partner, may engage in a business which is
not the same in nature or industry with the business of
the partnership. Therefore, A is allowed to operate a
coffee shop since it is not in the same nature of business
with the business of the partnership.

B, on the other hand, is industrial partner. As such, he is

not allowed to engage in any business whether it is in the
same nature of business or industry with that of the
partnership. Hence, B cannot put up a car accessories
store.

a) No, the partnership is not dissolved by the mere

conveyance of a partner of his whole interest in the
partnership to another person without the consent of the
other partners. The partnership still subsists since there
is no change in the relationship as between the partners.

b) Since no consent of the other partners was procured

by C in the conveyance of his interests in the partnership
to D, D did not become a partner. He is merely an
assignee of C’s interests. As such, he has no right to
interfere in the management of the partnership’s
business. However, he has the right to receive the share
of net profits which C should have received as a partner.
a) Since the partnership between A, B and C is a
partnership with the term, the dissolution by B and C by
will is a contravention of the terms of the partnership
agreement. This will not, however, prevent the dissolution
of the partnership but B and C will be liable to the
remaining partner, A and to the partnership for damages.

b) No, D has no right to petition for the dissolution of the

partnership since he is merely an assignee.
a) By the contract of agency, one binds himself as an
agent to render some service or do something on behalf
of another who is the principal. As such, the following are
the elements of a contract of agency:
1. Consent – consent of the principal to be represented
and consent of the agent to act as a representative of the
principal
2. Object – which is to perform a juridical act with
respect to third persons
3. Cause – the agency may be with consideration or
gratuitous
4. The agent must contract in the name of the principal
5. The agent must act within his scope of authority
b) The elements of an agency by estoppel are as follows:
1. Acts or representations by the principal that a person is
his agent
2. There is no actual agency
3. The public to whom the principal made representations
relied on such representations such that they change
their positions to their detriment.
An agent may appoint a sub-agent or a substitute if there
is no prohibition in his contract of agency with the
principal.
a) Yes, the sale is valid. A unilateral promise to sell may
be withdrawn any time before the acceptance of the offer
if the promise is unsupported by a valuable
consideration. Since A’s promise to sell the house and lot
was not supported by a valuable consideration, he may
withdraw his offer anytime and may validly sell the lot to
another person.
a) No, there is no valid acceptance. The acceptance must
be in the form required by the offeror. In this case, Z
Conglomerate required that the acceptance of A be
manifested by affixing his conformity on the space
provided on the letter of offer. However, A did not do so.
Therefore, there is no valid acceptance.

b) Yes, there was an effective withdrawal of offer by Z

Conglomerate. An offer may be withdrawn any time
before the offeror knows of the acceptance of the offer. In
this case, Z Conglomerate was not notified of the
acceptance by A, therefore, Z Conglomerate may validly
withdraw his offer.

Both inexistent and annullable contracts are defective

contracts. Inexistent contracts are those which are void
due to lack of any of the essential elements constituting
the contract: consent, object, or cause. Thus, it cannot be
a source of an obligation nor it can create a right. Being
void and inexistent, it cannot be ratified nor be cleansed
from its defect because there is no contract to ratify.
Annullable contracts on the other hand are voidable
contracts which are valid until annulled. It has all the
elements of a contract but consent in the perfection of the
contract was vitiated through fraud, mistake, undue
influence, or other causes that vitiate consent. Being
valid, it can be a source of rights and obligations until
annulled by the person whose consent was vitiated. It
can also be ratified by the same, in such case, the
contract will be cleansed from its defects.
a) The Clean Hands Doctrine states that a person may
assert a claim against another if he has not taken part in
the wrongful act. Stated otherwise, one cannot validly
claim a right arising from a transaction where he is also at
fault.

b) DPWH can be held liable because the agency allowed

Engineer A to represent it although engineer A lacks the
authority to negotiate and sign in behalf for DPWH. By
such misrepresentation, it lead the contractors to believe
that Engineer A is an authorized representative of DPWH
thereby facilitating the execution of the construction
contracts. Hence, DPWH by its lack of action is estopped
to deny Engineer A’s authority and may be liable for the
claims of the contractors.
No. There is no automatic transfer of rights of the lease to
the purchaser of the property subject of a lease. In order
to bind the purchaser, it must be expressly stipulated in
the contract of sale or the purchaser must have
knowledge of the lease at the time he bought the
property.
Tacita Reconduccion is an implied new lease. An implied
new lease arises when after the expiration of the period
of the lease, the lessee is allowed to continue the lease
for more than 15 days. A new contract of lease is thereby
created not for the same period as the original contract of
lease but for an indefinite period in accordance with
Article 1687 but for the same terms and conditions of the
original contract of lease.
An agent is bound to render service pursuant to the
contract of agency within the scope of his authority and
powers as an agent. However, in case the agent does
acts which exceed his authority, it will not prejudice the
rights of third persons who was not notified as to the
scope of the agent’s authority and who transacted with
the agent in good faith. In this case, there is no showing
that the buyers were aware that in collecting payments, A
exceeded his authority. Being in good faith, X Realty
cannot go against the buyers for the payments they made
to A. Hence, X Realty, as principal, bears the loss but
without prejudice to his right of action against A.
CABUDOY
OTHERS
B is liable first. If he cannot pay, then C will be liable. If C
cannot pay, D will be liable. The law says that “if there
are two or more alienations, the first acquirer shall be
liable first, and so on successively.” (2nd paragraph, Art.
1388, Civil Code).
a) The very essence of a contract of sale is the transfer of
ownership in exchange for a price paid or promised. This
may be gleaned from Article 1458 of the Civil Code which
defines a contract of sale as follows:

Art. 1458. By the contract of sale one of the contracting

parties obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay therefor
a price certain in money or its equivalent. (Ace Foods
vs Micro Pacific, GR 200602)

b) Contract of sale is consensual contract since the sale

is perfected by mere consent.
a) The sale is not valid. Article 1347 states that no
contract may be entered into upon future inheritance
except in cases expressly authorized by law. The object
of the contract of sale must be licit and sale of future
inheritance is not allowed. There can be no valid sale.

b) May be mentioned:
(Art. 777. The rights to succession are transmitted from
the moment of the death of the decedent)

Gross inadequacy of price by itself will not result in a void

contract. Gross inadequacy of price does not even affect
the validity of a contract of sale, unless it signifies a
defect in the consent or that the parties actually intended
a donation or some other contract. Inadequacy of cause
will not invalidate a contract unless there has been fraud,
mistake or undue influence. ( acungan v. CA, et al., 595
Phil. 284, 292 (2008).)
a) Yes. He can lease the exclusive property, provided
that such property is an exclusive property of the spouse
and not under of conjugal property; that there is an
existing separation of property agreed upon during the
marriage settlements; or there has already been a judicial
separation of property.

b) Yes. A third person may be bound to such lease

provided that it will be recorded in the Registry of
Property and was constituted registration with proper
authority.
a) No. Death of a party will not extinguish the lease
agreement, because the rights are transmissible to heirs
and a lease itself is not personal in character.

b) Yes. Heirs are bound to the contract of lease unless

they shall otherwise negotiate another lease contract for
themselves.

Yes. X shall respect the lease contracts. The fact that the
said lease contracts were not registered and annotated
on the title to the property, X is not an innocent purchaser
for value. He supposed knew the existence of the lease
because the building was already occupied at the time he
bought it. As a buyer, it is his right to have checked and
known the status of the occupants before buying such
building.
No. It is a general rule that the lessee cannot assign the
lease without the consent of the lessor, vice versa.
Unless of course if there is an express stipulation.
a) In a contract of agency, the essential elements are as
follows:

a. The consent of the parties to establish relationship.

b. The object which is the execution juridical act in

relation to a third person

c. The agent acts as a representative and not for

himself

d. The agent acts within the scope of his authority. (Yu

Eng Cho v Pan American World Airways)

b) The court declared void in so far as half of the

proindiviso share of the deceased.

The law provides that no one may contract in the name of

another without being authorized by the latter or unless
he has by law a right to represent him. Otherwise, unless
it is ratified before it is revoked, the contract shall be
unenforceable.

In a relationship of agency, the principal authorizes the

agent to act in his behalf in transaction with third persons.
Essential the elements are: 1. Consent, express or
implied, of the parties in the relationship. 2. Object, the
execution of a juridical act in relation to a third person. 3.
The agent acts in representation and not for himself.
Agent acts within the scope of his authority.
a) Agency by estoppel is when one clothes another
apparent authority as his agent and holds him out to the
public as such, cannot be permitted to deny the authority
of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good
faith.

b) Three elements must be shown to establish an agency

by estoppel:

1. The principal manifested a representation of the

agent’s authority or knowingly allowed the agent to
assume such authority.

2. A third person in good faith relied upon such

representation.

3. Relying upon such representation, such third

person has changed his position to his detriment.

c) There is no implied agency in this case because

PAGCOR did not hold out to the public as the principal of
ABS Corporation. PAGCOR's actions did not mislead the
public into believing that an agency can be implied from
the arrangement with the junket operators, nor did it hold
out ABS Corporation with any apparent authority to
represent it in any capacity. The Junket Agreement was
merely a contract of lease of facilities and services in the
entire duration that petitioner played in Casino Filipino,
he was dealing only with ABS Corporation, and availing
of the privileges extended only to players brought in by