1Jerico, the project owner, entered into a Construction Contract with Ivan for the latter to construct his

house. Jojo
executed a Surety undertaking to guarantee the performance of the work by Ivan. Jerico and Ivan later entered into
a Memorandum of Agreement (MOA) revising the work schedule of Ivan and the subcontractors. The MOA stated
that all the stipulations of the original contract not in conflict with said agreement shall remain valid and legally
effective. Jojo filed a suit to declare him relieved of his undertaking as a result of the MOA because of the change in
the work schedule. Jerico claims there is no novation of the Construction Contract. Decide the case and explain.

SUGGESTED ANSWER: NO SUGGESTED ANSWER FROM REPUTABLE SOURCE AVAILABLE YET MIGUEL’S ANSWER:
Jerico is correct. There is no novation. Novation exists when there is a change in the object, condition or debtor or
when the terms of the old contract and the new contract are incompatible and incapable of being reconciled. In
this case, the mere change in the work schedule does not render the old contract incompatible with the new
contract and does not change the object of the contract which is still to construct Jerico’s house.

2 X and Y are partners in a shop offering portrait painting. Y provided the capital and the
marketing while X was the portrait artist. They accepted the PS0,000.00 payment of Kyla to do
her portrait but X passed away without being able to do it. Can Kyla demand that Y deliver the
portrait she had paid for because she was dealing the with business establishment and not with
the artist personally? Why or why not?

SUGGESTED ANSWER: a) No Kyla cannot demand that Y deliver the portrait. The death of X has the
effect of dissolving the partnership. (Article 1830, Civil Code) Also, while the obligation was
contracted by the partnership, it was X who was supposed to create the portrait for Kyla. Since X
died before creating the portrait, the obligation can no longer be complied because of impossibility
of performance. (Article 1266) In obligations to do, the debtor shall be released when the prestation
becomes legally or physically impossible without the debtor’s fault.

3 J.C. Construction (J.C.) bought steel bars from Matibay Steel Industries (MSI) which is owned by
Buddy Batungbacal. J.C. failed to pay the purchased materials worth P500,000.00 on due date.
J.C. persuaded its client Amoroso with whom it had receivables to pay its obligation to MSI.
Amoroso agreed and paid MSI the amount of P50,000.00. After two (2) other payments,
Amoroso stopped making further payments. Buddy filed a complaint for collection of the
balance of the obligation and damages against J.C. J.C. denied any liability claiming that its
obligation was extinguished by reason of novation which took place when MSI accepted partial
payments from Amoroso on its behalf. Was the obligation of J.C. Construction to MSI
extinguished by novation? Why? (4%)
SUGEGSTED ANSWER: No, the obligation of JC was not extinguished by novation. Novation may
either be objective or subjective. Subjective novation takes place by the substitution of debtor or
subrogation of a third person to the rights of the creditor. Novation by substituting a new debtor
may take place even without the knowledge or against the will of the original debtor but not
without the consent of the creditor. Moreover, novation must be expressed and it cannot be
implied and there must be an agreement that the old obligation is extinguished. In the case of
JC, it does not appear that MSI had agreed to release JC from the obligation. Hence, the
obligation of JC was not extinguished.

4. the amount of one million pesos (P1, 000,000.00) from Sarah’s deposit after notice to her that
this is a form of compensation allowed by law. Is the bank correct? Explain. (2009 BAR)

A: No,the bank is not correct. While the Bank is correct about the applicability of compensation,
it was not correct as to the amount compensated. A bank deposit is a contract of loan, where
the depositor is the creditor and the bank the debtor. Since Sarah is also the debtor of the bank
with respect to the loan, both are mutually principal debtors and creditors of each other. Both
obligation are due, demandable and liquidated but only up to the extent of P300, 000.00
(covering the unpaid third, fourth and fifth monthly installments). The entire one million was not
yet due because the loan has no acceleration clause in case of default. And since there is no
retention or controversy commenced by third person and communicated in due time to the
debtor, then all the requisites of legal compensation are present but only up to the amount of
P300, 000.00. The bank, therefore, may deduct P300,000.00 from Sarah’s bank deposit by way of
compensation.

5. Jackie, 16, inherited a townhouse. Because she wanted to study in an exclusive school, she
sold her townhouse by signing a Deed of Sale and turning over possession of the same to the
buyer. Whenthatthe buyer discovered she was still a minor, she promised to execute another
Deed of Sale when she turns 18. When Jackie turned 25 and was already working, she wanted to
annul the sale and return the buyer's money to recover her townhouse. Was the sale contract
void, voidable or valid? Can Jackie still recover the property? Explain. (4%)

SUGGESTED ANSWER:
The contract of sale was voidable on the ground that Jackie is incapable of giving consent at the
time of the execution of the sale. (Article 1390 and Article 1327) Jackie can no longer recover the
townhouse unit because if a contract is voidable on the ground of
minority, the action to annul it must be filed within four (4) years from attainment of the age of
majority. Since Jackie was already 25 years old, the action has clearly prescribed because she
should have filed it before she reached the age of 22. (Article 1391, Civil Code)

6.. payments. On the third, fourth and fifth months, the corresponZ, a gambler, wagered and lost
P2 Million in baccarat, a card game. He was pressured into signing aDeed of Absolute Sale in
favor of the winner covering a parcel of land with improvements worth P20Million. One month
later, the supposed vendee of the property demanded that he and his familyvacate the property
subject of the deed of sale. Was the deed of sale valid? What can Z do? (2015BAR)

Answer:
The sale is valid. Being pressured to sign the deed of sale is not equivalent to vitiation ofconsent
under Art. 1390(2). Mere pressure cannot constitute intimidation because for intimidation
toarise, the party must be compelled by a reasonable or well- grounded fear of an imminent &
gravedanger upon person & property of himself, spouse, ascendants or descendants. It also
cannot constituteundue influence or when a person takes improper advantage of his power over
will of another deprivinglatter of reasonable freedom of choice because there was no indication
that the winner has moralascendency or power over Z. However, Z can recover his losses from
the winner because the lawprovides that no action can be maintained by the winner for the
collection of what he has won in anygame of chance. But any loser in a game of chance may
recover his loss from the winner, with legalinterests from the time he paid the amount lost (Art.
2014)

7. A, B, and C entered into a partnership to operate a restaurant business. When the restaurant
had gonepast break-even stage and started to gamer considerable profits, C died. A and B
continued the businesswithout dissolving the partnership. They in fact opened a branch of the
restaurant, incurring obligationsin the process. Creditors started demanding for the payment of
their obligations. Who are liable for thesettlement of the partnership
’s obligations? Explain? (3%)
(2010 Bar Question)
SUGGESTED ANSWER:
The two remaining partners, A and B, are liable. When any partner dies and the business is
continued without anysettlement of accounts as between him or his estate, the surviving
partners are held liable for continuing thebusiness despite the death of C (Articles 1841, 1785,
par. 2, and 1833 of the New Civil Code)

8.
Esperanza and Caridad refused to do. Worst, Maria learned that the siblings sold the same
property to Manuel. This compelled Maria to file a complaint for the annulment of the sale with
specific performance and damages.

If you are the judge, how will you decide the case? (4%)

SUGGESTED ANSWER:

I will decide in favor of Maria but only as to the share of Fe, and dismiss the complaint with
respect to Esperanza and Caridad. The property in question is co-owned by Fe, Esperanza and
Caridad, since it has not yet been divided among them. Article 493 of the Civil Code provides
that each co-owner shall have full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assiga or mortgage it, provided that the effect of such
alienation or mortgage shall be limited to the portion which may be allotted to him in the
division upon the termination of the co-ownership. The sale by Fe to Maria would therefore be
binding on her 1/3 interest, but not on the 2/3 interest of Esperanza and Caridad because their
shares were not validly sold to Maria in the absence of a written authority to Fe to sell their
respective portions to Maria as required by Article 1874 of the Civil Code. Fe can only sell
whatever property right she has, i.e. 1/3 ideal portion or undivided interest in the 500 sq. m. lot.

The sale to Manuel is valid as to the 2/3 share of Esperanza and Caridad.