1. X, a dressmaker, accepted clothing materials from Karla to make two dresses for her.
On the day
X was supposed to deliver Karla's dresses, X called up Karla to say that she had an urgent matter
to attend to and will deliver them the next day. That night, however, a robber broke into her
shop and took everything including Karla's two dresses. X claims she is not liable to deliver
Karla's dresses or to pay for the clothing materials considering she herself was a victim of the
robbery which was a fortuitous event and over which she had no control. Do you agree? Why?
SUGGESTED ANSWER: No, I do not agree. The obligation involved in this case is an obligation to do, since
X’s obligation is to make dresses for Karla. Under Article 1167 of the Civil Code, if a person obliged to do
something fails to do it, the same shall be executed at his cost. Although X may not be compelled to
deliver the dresses to Karla, she may he held liable for the cost of having another person to make the
dresses for Karla, which including the cost of the materials.
MIGUEL’S ANSWER: No, I do not agree. Article 1167 of the Civil Code provides that if a person obliged to
do something fails to do it, the same shall be executed at his cost. In this case, X failed to do his
obligation of making the dresses of Karla, therefore the obligation must be executed at his cost.
Furthermore, X cannot use the defense of fortuitous event as X is already in delay, according to Article
1165 of the Civil Code, if the obligor delays, he shall be responsible for fortuitous event until he has
effected delivery.
2. Juancho, Don and Pedro borrowed P150,000 from their friend Cita to put up an internet cafe
orally promising to pay her the full amount after one year. Because of their lack of business
know-how, their business collapsed. Juancho and Don ended up penniless but Pedro was able to
borrow money and put up a restaurant which did well. Can Cita demand that Pedro pay the
entire obligation since he, together with the two others, promised to pay the amount in full
after one year? Defend your answer.
SUGGESTED ANSWER: No, Cita may not demand payment of the entire obligation from Pedro. The
concurrence of two or more creditors or of two or more debtors in one and the same obligation
does not imply that each one of the former has a right to demand, or that each one of the latter is
bound to render, entire compliance with the prestation. There is a solidary liability only when the
obligation expressly so states, or when the law or the nature of the obligation requires solidarity
(Art. 1207, Civil Code). In this case, there is no indication that they bound themselves solidarity to
pay Cita, nor does the law or nature of the obligation require solidarity. Hence, Juancho, Don and
Pedro’s obligation is joint, and Cita can only demand payment of 1/3 of the obligation from Pedro,
which is presumed to be his share in the obligation in the absence of stipulation to the contrary (Art.
1208, Civil Code).
MIGUEL’S ANSWER: No, Cita may not demand payment of the entire amount from just one of the
debtors. Solidary liability is never presumed. For the obligation to be considered solidary it must be
expressly specified in the agreement. There being no specification as to the nature of the liability of
the debtors, it is presumed that there be joint liability. Cita can therefore only demand an amount
that is in proportion to the debt of each of the co-debtor.
3. A, B and C borrowed P12,000 from X. This debt is evidenced by a promissory note wherein the
three bound themselves to pay the debt jointly and severally. However, according to the note, A
can be compelled to pay only on June 15, 1962, B can be compelled to pay only on June 15,
1964, while C can be compelled to pay only on June 15, 1966. On June 15, 1962, X made a
demand upon A to pay the entire indebtedness but the latter aid only P4,000. Subsequently,
because of A’s refusal to pay the balance, X brought an action against him for collection of the
amount. Will such an action prosper? Reasons.
For the present, the action will not prosper. It is of course true that the obligation here is solidary and
that its solidary character is not destroyed by the fact that the debtors are bound by different periods
for payment is expressly provided for in Art. 1211 of the Civil Code. However, in solidary obligations of
this type, the right of the creditor is limited to the recovery of the amount owed by the debtor whose
obligation has already matured, leaving in suspense his right to recover the shares corresponding to the
other debtors whose obligations have not yet matured. This restriction upon the creditor’s right does
not destroy the solidary character of the obligation, because ultimately, he can still compel one and the
same debtor, if that is his wish, to pay the entire obligation. Therefore, in the instant case, X shall have
to wait for June 15, 1964, when B’s obligation shall have matured, and for June 15, 1966, when C’s
obligation shall have matured. On June 15, 1966, he can collect P4,000 from either A or B. On June 15,
1966, he can again collect another P4,000 from either A or B or C.
MIGUEL’S ANSWER: The action of X will not prosper. The obligation of A, B and C is solidary, however
they are bound by different periods meaning the fulfillment of their obligation is imposed with an
agreement of a period on which their obligation will be demandable. The obligation being solidary, X
may require payment from any of the debtors, however as discussed it is subject to a period, making the
choices of X limited to the debtors from whom the obligation is due and demandable.
4. Suppose that under an obligation imposed by a final judgement, the liability of the judgement
debtor is to pay the amount of P6,000 but both the judgement debtor and the judgement
creditor subsequently entered into a contract reducing the liability of the former to only P4,000
is there and implied novation which will have the effect of extinguishing the judgement
obligation and creating a modified obligatory relation? Reasons.
SUGGESTED ANSWER: There is no implied novation in this case. We see no valid objection to the
judgement debtor and the judgement creditor in entering into an agreement regarding the monetary
obligation of the former under the judgement referred to. The payment by the judgement debtor of the
lesser amount of P4,000, accepted by the creditor without any protest or objection and acknowledged
by the latter as in full satisfaction of the money judgement, completely extinguished the judgement debt
and released the debtor from his pecuniary liability.
Novation results in two stipulations—one to extinguish an existing obligation, the other to substitute a
new one in its place. Fundamental it is that novation effects a substitution or modification of an
obligation by another or an extinguishment of one obligation by the creation of another. In the case at
hand, we fail to see what new or modified obligation arose out of the payment by judgement debtor of
the reduced amount of P4,000 to the creditor. Additionally, to sustain novation necessitates that the
same be so declared in unequivocal terms clearly and unmistakably shown by the express agreement of
the parties or by acts of equivalent import—or that there is complete and substantial incompatibility
between the two obligations.
MIGUEL’S ANSWER: There is no implied novation, what is present is a partial remission of P2,000. The
amount of P4,000 is still due and demandable. An implied novation is said to have occurred only if there
is no declaration that the old obligation is extinguished by the new one but the old and new obligations
are incompatible and cannot co-exist. In this case, the obligations are not incompatible, there is still a
debt due although the amount was reduced.
5. X was the owner of a 10,000 square meter property. X married Y and out of their union, A, B and
C were born. After the death of Y, X married Z and they begot as children, D, E and F. After the
death of X, the children of the first and second marriages executed and extrajudicial partition of
the aforestated property on May 1, 1970. D, E and F were given a one thousand square meter
portion of the property. They were minors at the time of the execution of the document. D was
17 years old, E was 14 and F was 12; and they were made to believe by A, B and C that unless
they sign the document they will not get any share. Z was not present then. In January 1974, D,E
and F filed an action in court to nullify the suit alleging they discovered the fraud only in 1973.
(a) Can the minority of D,E and F be a basis to nullify the partition? Explain your answer. (b) How
about fraud? Explain your answer.
SUGGESTED ANSWER: (a) Yes, minority can be a basis to nullify the partition because D, E and F were not
properly represented by their parents or guardians at the time they contracted the extra-judicial
partition.
(b) In the case of fraud, when through insidious words or machinations of one party the other is induced
to enter into the contract without which he would not have agreed to, the action still prosper because
under Art. 1391 of the Civil Code in case of fraud, the action for annulment may be brought within four
years from the discovery of the fraud.
MIGUEL’S ANSWER: (a) Yes, minority can be the basis of nullifying the partition. Minority is one of the
restrictions provided for in the Civil Code that limits a persons capacity to act or enter into certain
agreements. D,E, and F not being represented by parents or guardians can be the basis to nullify the
partition.
(b) If fraud was present, the action will also prosper as fraud is considered as a vitiation of consent,
which makes the contract voidable there being a lack of one of the essential requisites of a contract.
6. Dino sued Ben for damages because the latter had failed to deliver the antique Marcedes Benz
car Dino had purchased from Ben, which was—by agreement—due for delivery on December
31, 1993. Ben, in his answer to Dino's complaint, said Dino's claim has no basis for the suit,
because as the car was being driven to be delivered to Dino on January 1, 1994, a reckless truck
driver had rammed into the Mercedes Benz. The trial court dismissed Dino's complaint, saying
Ben's obligation had indeed, been extinguished by force majeure. Is the trial court correct?
SUGGESTED ANSWER: a) No. Article 1262, New Civil Code provides, "An obligation which consists in the
delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of
the debtor, and before he has incurred in delay. b) The judgment of the trial court is incorrect. Loss of
the thing due by fortuitous events or force majeure is a valid defense for a debtor only when the debtor
has not incurred delay. Extinguishment of liability for fortuitous event requires that the debtor has not
yet incurred any delay. In the present case, the debtor was in delay when the car was destroyed on
January 1, 1993 since it was due for delivery on December 31, 1993. (Art. 1262 Civil Code) c) It depends
whether or not Ben the seller, was already in default at the time of the accident because a demand for
him to deliver on due date was not complied with by him. That fact not having been given in the
problem, the trial court erred in dismissing Dino's complaint. Reason: There is default making him
responsible for fortuitous events including the assumption of risk or loss.
If on the other hand Ben was not in default as no demand has been sent to him prior to the accident,
then we must distinguish whether the price has been paid or not. If it has been paid, the suit for
damages should prosper but only to enable the buyer to recover the price paid. It should be noted that
Ben, the seller, must bear the loss on the principle of res perit domino. He cannot be held answerable
for damages as the loss of the car was not imputable to his fault or fraud. In any case, he can recover the
value of the car from the party whose negligence caused the accident. If no price has been paid at all,
the trial court acted correctly in dismissing the complaint.
MIGUEL’S ANSWER: The trial court is wrong. The defense of loss of the thing due to a fortuitous event
can only be used if the obligor is not yet in delay. In this case the car was due to be delivered on
December 31, 1993, Ben was already in delay when he lost the car due to the accident, he cannot
therefore use the defense loss due to fortuitous event.
7. Sometime in 1955, Tomas donated a parcel of land to his stepdaughter Irene, subject to the
condition that she may not sell, transfer or cede the same for twenty years. Shortly thereafter,
he died. In 1965, because she needed money for medical expenses, Nene sold the land to
Conrado. The following year, Irene died, leaving as her sole heir a son by the name of Armando.
When Armando learned that the land which he expected to inherit had been sold by Irene to
Conrado. he filed an action against the latter for annulment of the sale, on the ground that it
violated the restriction imposed by Tomas. Conrado filed a motion to dismiss, on the ground
that Armando did not have the legal capacity to sue. If you were the Judge, how will you rule on
this motion to dismiss? Explain.
As a judge, I will grant the motion to dismiss. Armando has no personality to bring the action for
annulment of the sale to Conrado. Only an aggrieved party to the contract may bring the action for
annulment thereof (Art. 1397,NCC). While Armando is heir and successor-in-interest of his mother
(Art. 1311, NCC), he [standing in place of his mother] has no personality to annul the contract. Both
are not aggrieved parties on account of their own violation of the condition of, or restriction on, their
ownership Imposed by the donation. Only the donor or his heirs would have the personality to bring an
action to revoke a donation for violation of a condition thereof or a restriction thereon. (Garrido u. CA,
236 SCRA 450).
Consequently, while the donor or his heirs were not parties to the sale, they have the right to annul
the contract of sale because their rights are prejudiced by one of the contracting parties thereof [DBP v.
CA, 96 SCRA 342; Teves vs. PHHC. 23 SCRA 1141.]. Since Armando is neither the donor nor heir of
the donor, he has no personality to bring the action for annulment.
• Alternative Answer:
As a judge, I will grant the motion to dismiss. Compliance with a condition imposed by a donor gives rise
to an action to revoke the donation under Art. 764, NCC. However, the right of action belongs to the
donor. Is transmissible to his heirs, and may be exercised against the donee’s heirs. Since Armando is an
heir of the donee, not of the donor, he has no legal capacity to sue for revocation of the donation.
Although he is not seeking such revocation but an annulment of the sale which his mother, the
donee, had executed in violation of the condition imposed by the donor, an action for annulment of a
contract may be brought only by those who are principally or subsidiarily obliged thereby (Art. 1397,
NCC). As an exception to the rule, it has been held that a person not so obliged may nevertheless
ask for annulment if he is prejudiced in his rights regarding one of the contracting parties (DBP us. CA.
96 SCRA 342 and other cases) and can show the detriment which would result to him from the
contract in which he had no intervention, (Teves vs. PHHC, 23 SCRA 1141).
Such detriment or prejudice cannot be shown by Armando. As a forced heir, Armando's interest In the
property was, at best, a mere expectancy. The sale of the land by his mother did not impair any vested
right. The fact remains that the premature sale made by his mother (premature because only half of
the period of the ban had elapsed) was not voidable at all, none of the vices of consent under Art. 139
of the NCC being present. Hence, the motion to dismiss should be granted.
8. Printado is engaged in the printing business. Suplico supplies printing paper to Printado
pursuant to an order agreement under which Suplico binds himself to deliver the same volume
of paper every month for a period of 18 months, with Printado in turn agreeing to pay within 60
days after each delivery. Suplico has been faithfully delivering under the order agreement for 10
months but thereafter stopped doing so, because Printado has not made any payment at all.
Printado has also a standing contract with publisher Publico for the printing of 10,000 volumes
of school textbooks. Suplico was aware of said printing contract. After printing 1,000 volumes,
Printado also fails to perform under its printing contract with Publico. Suplico sues Printado for
the value of the unpaid deliveries under their order agreement. At the same time Publico sues
Printado for damages for breach of contract with respect to their own printing agreement. In
the suit filed by Suplico, Printado counters that: (a) Suplico cannot demand payment for
deliveries made under their order agreement until Suplico has completed performance under
said contract; (b) Suplico should pay damages for breach of contract; and (c) with Publico should
be liable for Printado’s breach of his contract with Publico because the order agreement
between Suplico and Printado was for the benefit of Publico. Are the contentions of Printado
tenable? Explain your answers as to each contention.
• Suggested Answer:
No, the contentions of Printado are untenable. Printado having failed to pay for the printing paper
covered by the delivery invoices on time, Suplico has the right to cease making further delivery. And the
latter did not violate the order agreement (Integrated Packaging Corporation v. Court of Appeals, (333
SCRA 170, G.R. No. 115117, June 8, [2000]).
Suplico cannot be held liable for damages, for breach of contract, as it was not he who violated the
order agreement, but Printado. Suplico cannot be held liable for Printado’s breach of contract with
Publico. He is not a party to the agreement entered into by and between Printado and Publico. Theirs is
not a stipulation pour atrui. [Aforesaid] Such contracts do could not affect third persons like Suplico
because of the basic civil law principle of relativity of contracts which provides that contracts can only
bind the parties who entered into it, and it cannot favor or prejudice a third person, even if he is aware
of such contract and has acted with knowledge thereof. (Integrated Packaging Corporation v. CA, supra.)
9. O, a very popular movie star, was under contract with P Movie Productions to star exclusively in
the latter’s films for two years. O was prohibited by the contract to star in any fi lm produced by
another producer. X Film Co. induced O to break her contract with P Movie Productions by
giving her twice her salary. P Movie Productions sued X Film Co. for damages. X Film Co.
contended that it had a right to compete for the services of O and that her contract with P
Movie Productions was in restraint of trade and a restriction on her freedom of contract. Whose
contention would you sustain?
The contention of P Movie Productions should be sustained. According to the Civil Code, any third
person who induces another to violate his contract shall be liable for damages to the other contracting
party. In the law of torts, we call this “interference with contractual relation.’’ However, in order that it
will be actionable, it is necessary that the following requisites must concur: (a) the existence of a valid
contract; (b) knowledge on the part of the third person of the existence of such contract; and (c)
interference by the third person without legal justification or excuse. All of these requisites are present
in the case at bar.
The contention of X Film Co. that O’s contract with P Movie Productions was in restraint of trade and a
restriction of her freedom to contract, on the other hand, cannot be sustained. Well-established is the
rule that in order to determine whether or not an agreement of this nature constitutes an undue
restraint of trade, and therefore, is contrary to public policy, two tests are always applied. They are first,
is there a limitation as to time or place? And second, is the prohibition or restraint reasonably necessary
for the protection of the contracting parties? If the answer to both of these questions is in the
affirmative, then the prohibition or restraint is not contrary to public policy. It is crystal clear that the
agreement between O and P Movie Productions passes both tests.
(Note: The first paragraph of the above answer is based on Art. 1314 of the Civil Code and on Daywalt
vs. Agustinos Recoletos, 39 Phil. 587. The second paragraph, on the other hand, is based on Art. 1306 of
the Civil Code and on several cases, the most notable of which is Del Castillo vs. Richmond, 46 Phil. 697).
10. Mrs. S borrowed P20,000 from PG, She and her 19-year old son, Mario, signed the promissory
note for the loan, which note did not say anything- about the capacity of the signers. Mrs. S
made partial payments little by little. After seven (7) years she died leaving a balance of
P10,000.00 on the note. PG demanded payment from Mario who refused to pay. When sued
for the amount, Mario raised the defense: that when he signed the note he was still a minor.
Should the defense be sustained? Why?
SUUGESTED: The defense should be sustained. Mario cannot be bound by his signature in the
promissory note. It must be observed that the promissory note does not say anything about the
capacity of the signers. In other words, there is no active fraud or misrepresentation; there is merely
silence or constructive fraud or misrepresentation. It would have been different if the note says that
Mario is of age. The principle of estoppel would then apply. Mario would not be allowed to invoke the
defense of minority. The promissory note would then have all of the effects of a perfectly valid note.
Hence, as far as Mario's share in the obligation is concerned, the promissory note is voidable because
of minority or non-age. He cannot, however, be absolved entirely from monetary responsibility. Under
the Civil Code, even if his written contract is voidable because of minority he shall make restitution to
the extent that he may have been benefited by the money received by him (Art. 1399, Civil Code).
(Braganza vs. Villa Abrille, L-12471, April 13, 1959).
