OBLIGATIONS & CONTRACTS 1

SAMPLE PROBLEMS WITH SUGGESTED ANSWERS.

1. D is obliged to deliver 5 bags of powder soap to C 7 days from their agreement. On due date, D delivered 5
bags of powder soap mixed with chalk. What is the status of the agreement between D and C?
* The agreement is valid. The fraud was committed during the performance of the obligation and not
during the agreement of the parties. This is a case of incidental fraud (dolo incidente) not causal fraud (dolo
causante).

2. D is obliged to give C a specific watch, a specific ring or a specific bracelet. The parties agreed that C will
have the right to choose the thing which will be given to him. Before C could make his choice, the watch and
the ring are lost through D’s fault, successively. What is the right of C?
* C may choose the delivery to him of the bracelet, or the price of the watch or the price of the ring plus
damages.

3. A, B, C and D are obliged to give X, Y and Z P12,000. X may collect from A how much?
* P1,000. When the obligation is silent, it is presumed joint.

4. A, B, C and D, joint debtors are obliged to give X, Y, and Z, solidary creditors, P12,000. How much may X
collect from A?
* P 3,000. As a solidary creditor, X may collect the whole amount owed by the joint debtor A.

5. A, B, C and D, solidary debtors, are obliged to give X, Y and Z, joint creditors, P12,000. How much may X
collect from A?
* P4,000. As a joint debtor X is entitled only to his proportionate share, and A being a solidary debtor
may be required to pay the said amount.

6. A, B, C and D, solidary debtors, are obliged to give X, Y and Z, solidary creditors, P12,000. How much may
X collect from A?
* P12,000. X being a solidarity creditor may ask for the payment of the whole amount in behalf of his
co-creditors subject to a responsibility of X to give the latter their corresponding shares. Similarly, A as a
solidary debtor may be required to pay the whole amount of the obligation subject to reimbursement from his
co-debtors.

7. A and B are indebted to X and Y for P10,000. A and B share in the debt in the ratio of 1:3 while X and Y
share in the credit in the ratio of 2:3.

a. How much may X collect from A if the debtors are joint debtors, while the creditors are joint creditors?
* P1,000. The obligation is joint on both the debtor and creditor, therefore there are as many
debts (credits) as debtors (creditors).

COMPUTATION:
Proportionate Share of A:
¼ x P10,000 = P 2,500

Proportionate Share of B on A’s Proportionate Debt:

2/5 X P2,500= P 1,000
b. How much may X collect from A if there is active solidarity?
* P2,500(see computation above). The whole amount of the proportionate share of A could be
collected by X. As a solidary creditor, X may collect the whole amount of the obligation corresponding against
one or more debtors.

c. How much may X collect from A if there is passive solidarity?

* P4,000. Being a joint creditor, X can collect only his corresponding share in the credit. The full
amount could be collected to A, being a solidary debtor.
OBLIGATIONS & CONTRACTS 2

COMPUTATION:
Proportionate Share of X in the credit:
2/5 x P10,000 = P 4,000

d. How much may X collect from A if there is mixed solidarity?

P10,000. Since there is mixed solidarity the whole amount of obligation may be collected by any
of the solidary creditors against any of the solidary debtors.

8. A, B and C are solidary debtors of X, Y and Z, solidary creditors, in the amount of P2,700. X renounces the
whole obligation without the consent of Y and Z. The debtors accepted the renunciation. What is the legal
effect of the renunciation?
* The whole obligation is extinguished, however X shall be liable to the corresponding shares of the
other co-creditors as they have agreed upon.

9. A, B and C are solidary debtors of X in the amount of P3,000. X renounces the share of A and A accepts the
renunciation. Thereafter B becomes insolvent. What is the legal effect of the renunciation?
* A will be liable for P500, while C will be liable for P1,500 (P1,000 + P500). Since the remaining
obligation is P2,000 after the renunciation of A’s share, and thereafter B becomes insolvent, A and C would
have to absorb the debt corresponding to B in the amount of P1,000. This shall be divided equally by A and C.

10. A, B and C are solidary debtors of X in the amount of P30,000. C was insane at the time the obligation was
constituted. What is the legal effect?
* X may collect from either A or C P20,000. Art. 1222 provides that a solidary debtor may avail himself
of the partial defense of the insanity of C. Such defense is personal to C and would therefore affect only the
part of the debt to which C may be responsible.

11. A, B and C are obliged to deliver a specific horse to X, Y and Z. What would be the legal effect when C
cannot comply with his obligation?
*This is a case of a jointly-indivisible obligation. Assuming there was a valid demand made against all
the debtors and since C could not comply with his part of the obligation, the obligation is converted into a
monetary obligation to pay the value of the horse plus damages. (1224)

12. D borrowed P10,000 from C with G as guarantor. Subsequently, D paid C P 2,000. Unknown to D, T a third
person paid C P10,000 believing that D still owed C such amount. What is the legal effect of the payment by
T?
* T can recover P8,000 from D, the law provides that only the amount to which the creditor has
benefited could be reimbursed to the third person paying if the payment was without knowledge of the creditor.
If D cannot pay, T cannot go after G to collect. (1236)

13. D owes C P10,000. T offers to pay D’s obligation and tells D that D need not reimburse him. However, D
does not give his consent to T’s offer not to be reimbursed. C, nonetheless, accepts the payment from T. Was
the payment valid?
* The payment is valid insofar as C is concerned. The case is deemed to be a donation, however to be
constituted as such D’s consent is necessary. (1238)

14. D obtained a loan of P10,000 from C who was in his right mind at the time he granted the loan. On due
date, D paid his obligation of P10,000 to C who had since become insane. C lost P4,000 of the amount he
received and spent P6,000 for his food and other necessary expenses. Was the obligation extinguished?
* The obligation is extinguished up to P6,000 only. Payment of an obligation to an incapacitated person
shall be valid when the person has kept the thing delivered and only insofar as the payment has been
beneficial to him. (1241)

15. D owes C the following debts: P4,000 due on May 1; P4,000 due on May 8; P4,000 due on May 15; P4,000
due on May 22; P4,000 due on May 29; and P4,000 due on June 5. The debts represented the price of
OBLIGATIONS & CONTRACTS 3
magazines which were delivered to D on a weekly basis. Of the six debts, the one due on May 22 is secured
by a pledge of D’s ring. By agreement of the parties, C may demand payment even before the due date of the
debt. As of May 31, D had not paid any of the six debts. On May 31, D wanted to make payment but he had
only P4,000. How is the payment to be applied?
* Since no agreement as to which debts should be settled first and absent the fact that the creditor has
not issued any receipt applying the amount to any of the debts to which the debtor has not protested and there
was no cause of invalidating the same, and the period is for the benefit of the creditor then the P4,000 should
be applied to the one due on May 22 since it is most burdensome.

16. Refer to no. 15 Assuming that D did not designate the debt to be paid when he remitted the amount of
P4,000 to C on May 31. C issued a receipt for the payment he received from D but he did not also designate
the debt that was being paid. How would the payment be applied?
* The payment shall be applied to the debt due on May 22 since it is the most onerous.

17. D owes C the following debts: P200,000 due on June 1, 2008 secured by a car; P200,000 due on May 1,
2008 with 10% interest; P300,000 due on May 1,2008 with 8% interest; P300,000 due on May 1,2008 secured
by house and lot; P200,000 due on April 1,2008 and P300,000 due on March 1, 2008. By agreement of the
parties, C may demand payment even before the due date of the debt. Today is May 1, 2008 D had not paid
any of the six debts. D wanted to make payment but he had only P1,000,000. How is the payment to be
applied?
* the period is for the benefit of the creditor, the P1,000,000 should be applied as follows:

Since no agreement as to which debts should be settled first and absent the fact that the creditor has
not issued any receipt applying the amount to any of the debts to which the debtor has not protested and there
was no cause of invalidating the same, furthermore

Amount available P 1,000,000

Debt secured by house and lot 300,000

Balance 800,000

Debt with 10% Interest

Interest 10% x P 200,000= P20,000

Principal 200,000 220,000

Balance 580,000

Debt with 8% interest

Interest 8% x P 300,000= 24,000

Principal 300,000 324,000

Balance 256,000

****
The remaining P 256,000 shall be distributed proportionately to the debts that are due and demandable as
follows:

Remaining Debts: Ratio % Share (P256,000)

(a)Mar 1 P 300,000 3/5 (300/500) 60% P 153,600
(b)Apr 1 P 200,000 2/5 (200/500) 40% 102,400
500,000
OBLIGATIONS & CONTRACTS 4

18. Francis, husband and Mitch, wife are legally separated. By order of the court which decreed the legal
separation, Francis is obliged to give a monthly support of P20,000 to Mitch payable in advance within the first
five days of the month. Mitch owes Francis P20,000 by way of loan. On the other hand, Francis has not yet
given Mitch’s support for P20,000 for the preceding month and another P20,000 for the present month. All the
debts are due. Can compensation take place?
* Yes. If Mitch demands her support for the current month, Francis may claim compensation as regards
the loan that Mitch owes him.

19. D owes C P20,000 with G as Guarantor. C, on the other hand, owes D, P15,000. Both debts are already
due but D is insolvent. Can compensation take place?
* Yes. A guarantor can set up compensation as regards what the creditor may owe the principal debtor.
However, C may still collect from G P5,000.

20. D owes C P20,000 due on June 20. C owes D P14,000 due on June 15. On June 12, C assigned his right
to X. D consented to such assignment without any reservation of his right to the compensation. On June 20,
how much may X collect from D?
* P20,000. No compensation shall take place since there was no reservation of such right by D upon
the assignment of the credit. (1285 par 1)

21. D owes C P30,000 due on June 20. C owes D the following debts: P15,000 due on June 2; P4,000 due on
June 14; P6,000 due on June 16; and P3,000 due on June 18. On June 17, C assigned his right to X. C
notified D of the assignment but D did not give his consent thereto. How much may X collect from D on June
20?
* P5,000. Since the assignment, although with knowledge, is without consent of D therefore
compensation shall take place but only to the debts prior to the assignment. (1285 par 2)

22. Refer to no. 21. Assume the same facts except that when C made the assignment of his credit to X, C did
not notify D about it. It was only on June 20 when X went to D to collect that D learned of the assignment. How
much may X collect from D?
* P2,000. The assignment is without knowledge of D, therefore the latter may set up compensation of
all credits prior to the same and also later ones until he had knowledge of the assignment. (1285 par 3)

23. D owes C P50,000. Subsequently, D proposed to C that T will assume his (D’s) debt. C accepted the
proposal of D. On due date, T could not pay because of his insolvency which was in fact existing but was not
known to D or of public knowledge at the time that he delegated his debt. Can C hold D liable?
*C cannot hold D liable because his (D’s) obligation was extinguished when he was substituted by T.
(1295)

24. D obliged himself to give 10 grams of shabu to C. Later, the parties agreed that D would instead give to C
10 sacks of rice. Is the novation valid?
* Novation is void because the original obligation is void, therefore there is nothing to novate. Hence, C
cannot demand the delivery of 10 sacks of rice from D.

25. S sold his cabinet to B for P5,000. The parties gave their consent freely to the contract before its
perfection. After delivery of the cabinet to B and his payment of the price to S, B was informed by N, his
neighbour that B paid too much for the cabinet since he (N), knew of a similar item that is sold for a lower
amount. B now wants to set aside the contract because he believed he got a bad bargain. Decide.
* B may not set aside the contract based on the principle of Mutuality of Contract.

26. A and B entered into a joint venture contract whereby B agreed to put up a restaurant on the lot of A. N, A’s
neighbour who owned a lot across A’s lot, learned of the transaction between A and B. Anticipating that many
customers would patronize the restaurant, N decided to improve his vacant lot for parking. He incurred
P20,000 for a guardhouse and other improvements which he had not yet paid to his contractor. Later, however,
A and B mutually cancelled their earlier contract and entered into a new one whereby B agreed to put up the
OBLIGATIONS & CONTRACTS 5
restaurant on another lot belonging to A which was located about 100 meters from the original area. N learned
of the cancellation of the contract and decided that he would sue A and B for damages he allegedly sustained
by reason thereof. Decide.
* A is not entitled to sue A and B for the damages he sustained. This is not a case of a stipulation pour
autrui, where the parties in a contract deliberately conferred upon a third person a favor or benefit. The benefit
that would have been received by N from the contract between A and B was only incidental and did not give
him the right to recover damages.

27. D obtained a loan from C amounting to P200,000. To secure the loan, D mortgaged his lot. C registered the
mortgage with the Register of Deeds. Later, D sold the lot to X who was not aware that the lot was mortgaged.
On the due date of the loan, C demanded payment but D could not pay. Accordingly, C decided to foreclose
the mortgage on the lot. X, however opposed the foreclosure claiming that he was not bound by the mortgage
since he was not a party thereto. Decide.
* X was bound by the mortgage. Subsequent purchaser is bound by the mortgage registered in the
Register of Deeds even if he is not aware of it. The contract herein is one which creates real rights therefore
third persons who come into possession of the object of contract is bound thereby. (1312)
28. S sold his only horse to B for P30,000. The parties agreed that S shall deliver the horse one week from the
execution of their agreement. B, however, should pay the price immediately and in certified check. In the place
of S and B, it was the custom that anyone selling a horse should place a horseshoe on its feet. Is the seller
bound to place a horseshoe on the horse?
* S is obliged to place a horseshoe on the horse because the observance of custom or usage is a
consequence of entering into a contract. (1315)

29. On June 1, S offered to sell a specific generator set to B for P300,000. B sent his letter of acceptance to S
on June 8. On June 10, however, S became insolvent. On June 12, S received the letter of acceptance. Was
the contract perfected?
* The contract was not perfected because the insolvency of S occurred before he came to learn of the
acceptance of his offer. It is well settled rule that an offer becomes ineffective upon the insolvency of either
party before acceptance is conveyed. (1323)

30. P gave a special power of attorney to A to sell P’s house and lot for P2M. On May 7, A, pursuant to the
authority granted to him by P, offered to sell the house and lot to B at the price of P2M. B accepted the offer on
May 8 by sending a letter of acceptance to A on such date, which letter of acceptance was received by A on
May 10. On May 11, P died before A could inform him of B’s acceptance. Was the contract perfected?
* The contract was perfected on May 10 when A received the letter of acceptance. An offer made
through an agent is accepted from the time acceptance is communicated to him. (1322)

31. On May 1, S offered to sell his car for P500,000 to B who was interested in buying the same. In his letter to
B, S stated that he was giving B up to May 31 to decide whether to buy the car or not. On May 25, S personally
went to B to inform him that he was no longer willing to sell the car unless the price was increased to P600,000
because another buyer was interested in buying the car for the said amount of P600,000. May S validly
withdraw his offer?
*S may validly withdraw his offer to B and all that S needs to do is to inform B of such withdrawal. Such
withdrawal must be made before the lapse of the period of acceptance, unless there is an option founded upon
a consideration, as something paid or promised. (1324)

32. B purchased 100 pieces of notebook from S at P41.95. When B reached home, he discovered that the
invoice showed a total amount due of P4,915 instead of P4,195. Is the contract valid?
*The contract is valid. The mistake is a simple mistake of account and does not render the consent of
the parties vitiated. This shall only give rise to correction. Mistake to vitiate consent must refer to the substance
of the thing which is the object of the contract or to a principal condition which moved the parties to enter into a
contract (1331) *The excess P720.00 should be returned by B.*

33. D has been for more than 10 years the personal physician of P, a sickly man of 70 years. D talked to P
almost everyday in the course of giving medical service to P to convince P to donate his lot to D since D told
OBLIGATIONS & CONTRACTS 6
him that he was the only one who could take care of him. Because of the persistence of D, P finally signed the
deed of donation of the lot in D’s favor with all the formalities required by law. Is the deed of donation valid?
*The deed of donation is voidable on the ground of undue influence. (1337)

34. A, who knew that his ring was embellished with glass, told B that the embellishment was emerald. B, who
knew that his watch was gold-plated, told A that it was made of pure gold. Believing that A’s ring was
embellished with emerald and A, believing that B’s watch was made of pure gold, then entered into a contract
whereby they exchanged their respective articles. A week later, B discovered that the ring was adorned only
with an ordinary glass. Can B ask for annulment of the contract?
* Neither party can ask for annulment since both are guilty of fraud. The contract therefore is valid. In
order that a contract may be considered voidable and be annulled fraud must not be committed by both
parties. (1344)

35. S and B entered into a contract where they made it appear that S was selling his lot and building to B. The
truth, however was that S was donating his lot and building to B. What is the status of the contract?
* The contract is a relative simulated contract. Therefore the parties are bound by the contract of
donation, their true intention, since no third person is prejudiced and their purpose is not contrary to law, moral,
good customs, public order or public policy. (1346)

36. S and B orally entered into a contract whereby S sold his one-year production of mangoes to B for
P100,000. B gave a downpayment of P20,000 for which S issued a receipt. What is the status of the contract
between S and B?
* The contract is valid. Future things may be the object of contracts. (1347 par 1)

37. A died leaving properties estimated at P1M to his sons S and T. Subsequently, S sold through a private
instrument one-half of his inheritance to B for P300,000, although his share was still to be delivered. What is
the status of the contract?
*The contract is valid since the inheritance is an existing inheritance. (1347 par 2)

38. S sold his car to B for P100,000 so that he can have money to purchase shabu. B knew nothing of the
motive of S. Was the contract valid?
*The contract is valid because the illegal motive of S does not affect its validity. Motive is different from
the cause of the contract. (1351)

39. D and C entered into a contract wherein D agreed to give to C P50,000 within 30 days from the date of the
execution of their agreement, which however does not state the consideration received by D from C. What is
the status of the contract?
*The contract is valid because the cause is presumed to exist and is lawful unless the contrary is
proved by the debtor. (1354)

40. G, the guardian of M, a minor sold the fish harvested from the fishpond of M for P20,000. The fish, however
had a value of P30,000. What is the status of the sale?
*The sale is rescissible because M suffered the minimum amount of lesion required by law to make the
contract rescissible. (1/4 x 30,000= 7,500, the lesion is 10,000). (1381 par 1)

41. D owes the following creditors: X, P50,000; Y, P60,000; and Z, P90,000. He has assets valued at
P400,000. Subsequently, D donated, among his assets, a parcel of land valued at P250,000 to C. The
donation and acceptance were made in a public instrument. What is the status of the donation of the land
made by D to C?
* The donation is rescissible. It is presumed to have been made in fraud of creditors. The remaining
value of the assets after donation would be insufficient to cover the debts contracted by D before the donation.
(1387 par 1)

42. C filed a complaint in court against D to collect a money debt amounting to P500,000. After due hearing,
the court rendered judgment in favor of C. Shortly after the rendition of the judgment and before C has
OBLIGATIONS & CONTRACTS 7
collected D’s debt, D sold a parcel of land to X. Z, another creditor, learned of the sale made by D to X and
now files an action to rescind the sale. Who has a better right to rescind the sale of D to X?
*Both C and Z have a right to rescind the sale since the sale is presumed in fraud of creditors having
been made by the party against whom judgment has been rendered.(1387 par 2

43. R, the representative of A, an absentee sold the corn with a value of P30,000 and the palay with a value of
P50,000, harvested from A’s agricultural farm for a total price of P50,000. A, whose domicile was subsequently
known, was informed of the sale made by G. May A seek rescission?
*A may seek rescission of the total sale to recover the damages he suffered. (1381 par 2)

44. S, 17 ½ years old sold his bicycle to B, 24, for P12,000. The price is payable in 12 monthly instalments.
After reaching 18, S continued to collect the remaining six installments until the price was paid in full. Can S
annul the contract?
*S may no longer annul the contract. There was implied ratification when S upon reaching the age of
majority continued to collect the remaining instalments. (1393)

45. M, the manager of an electric company offered to by a one-square meter lot from S for P400. M showed S
his power of attorney executed by the electric company and duly signed by the board of directors. M informed
S that the lot would be the site of an electric post which the electric company would erect. S agreed to the
odder of M. M agreed to come back the following day to give the company check for the purchase price as well
as the written contract. When M returned to the place of S, S refused to sign the contract and accept the
check. S told M that at any rate, M or the electric company could not enforce the contract since it was not in
writing. Is S correct?
*The contract must be in writing for it to be enforceable against S. This is a sale of real property.

46. On June 1, 2005, B, a businessman, met by chance C, a building contractor at the lobby of a hotel. Over a
cup of coffee, B informed C that he would be needing the services of C for the construction of a three-storey
building that B was planning to put up beginning August 1, 2006. B added that he would be paying C the
amount of P4M for the construction. C agreed to B’s proposal. In the meantime, B gave C a check for
P500,000 representing the downpayment on the contract price. Except for the table napkin on which B made
some sketches of the building, no written contract was signed by the parties. On August 1, 2006, B called up C
to inform him that the construction would begin within the next two weeks. C told B that he would no longer
want to proceed with the contract and that he would be returning the downpayment. May B enforce the
contract?
*B may enforce the contract against C although there was no formal agreement signed by the parties
because C was deemed to have ratified the contract by his acceptance of the downpayment.

47. D was checking out of a hotel when he found out that he had lost his wallet. Since he had no money to pay
his bills, he texted G, a businessman friend to help him. Upon reading the text message, G texted M, the hotel
manager, who knew G since G was a frequent guest at the hotel whenever he visited the area. The text
message read: “Please let D leave. If he does not pay, I will be the one to pay.” No other information was
contained in the text message. Thereafter, D signed a promissory note in favor of the hotel. Is the promise of G
enforceable?
*If D cannot pay, M cannot enforce the promise of G since G’s promise is not the writing required by
law. (1403 2b)

48. S, insane, orally sold his radio to B, 17 years old for P400. When T, the mother of S learned about the sale,
she asked S to give to her the amount that he had received. S obediently gave the amount of P400 which his
mother used to buy their food. What is the status of the contract?
*The contract is voidable because the mother of S is deemed to have ratified the contract. (1407)

49. Francis promised to give P10,000 by way of support to Mitch, if Mitch agrees to live with Francis as his wife
without the benefit of marriage. Mitch because she truly loves Francis accepted his promise. After 6 months,
because Mitch was seen with Edgar, her ex-boyfriend, Francis left their home and never came back. Can Mitch
now still receive the support promised by Francis?
OBLIGATIONS & CONTRACTS 8
*The contract between Francis and Mitch is illegal and constitutes an offense, therefore it is void.
50. B, a law student informed O that he needed a bicycle which he would use in going to and from San Beda
College of Law-Alabang. O told B that he may get the bicycle in O’s room. Was there a perfected contract?
* Yes. The contract is one of commodatum, where one party loaned something to another. In this case,
the bicycle was loaned by O to B.