4. 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).

5. a) There is no legal compensation. Under the Civil Code, in order that there will be a valid and
effective compensation, it is essential that there must be two parties, who in their own right, are
principal creditors and principal debtors of eachother.

In the instant case, "C" cannot be considered as a party to the act of his 17- year old son in borrowing
P500.00 from "B ". Consequently, he did not become a principal debtor of "B"; neither did "B" become a
principal creditor of "C". Therefore, there can be no partial compensation of the P1 ,000,00 borrowed by
"B" from "C".

(Note: The above answer is based on Arts. 1278 and 1279, No. (1), of the Civil Code and on decided
cases.)

b) There would be no difference in any answer. There will still be no legal compensation. The fact that
"C's" son actually used the P500.00 for his school tuition did not make "C" a party to the contract
between his son and "B". Therefore, "C" is not the principal debtor of "B" and "B" is not the principal
creditor of "C" with respect to said amount

6. The action for specific performance should be dismissed on the ground that it is premature. It is clear
that the instant case falls within the purview of obligations with a term or period which must be judicially
fixed. Thus, "B", instead of bringing an action for specific performance, should bring an action asking the
court to determine the period within which "A" Corporation shall put up the artesian well
with tank. Once the court has fixed the period, once the court, let us say, has declared that the period is six
months, then that will become a part of the covenant between the contracting parties. It can no longer be
changed by them. If the
Corporation does not put up the artesian well with tank within the period fixed by the court, "B" can
then bring an action for specific performance.

7. In this case, according to the Civil Code, the debt, which is most onerous to the debtor, among those
due, shall be deemed satisfied.

Analyzing the four debts stated in the problem, the most onerous is No. 4, the second most onerous is
No. 2, the third most onerous is No. 3, and the last onerous is No. 1, Consequently, the payment should
be applied in that order. (Note: The above answer is based on Art. l254 of the Civil Code and on

decided cases and commentaries of recognized commentators.)

8. (1) Yes, there is a perfected contract because there is already a concurrence between the offer and
the acceptance with respect to the object and the cause which shall constitute the contract. Such
concurrence is manifested by the acceptance made by Merle of the offer made by Violy.

(2) I submit that the promise to pay made by Violy is not conditional, but with a term. The promise is to
pay the P50,000 upon arrival in this port of the steamer, Helena, not if the steamer Helena shall arrive in
this port. Hence, the promise is with regard to the date of arrival and not with regard to the fact of
arrival.

(3) Yes, Merle can compel Violy to pay the purchase price and to accept the automobile. She will,
however, have to wait for the date when the steamer, Helena, would have arrived were it not for the
shipwreck. After all, there is already a perfected contract.

9. There is no implied novation in this case. We see no valid objection to the judgment debtor and the
judgment creditor in entering into an agreement regarding the monetary obligation of the former under
the judgment referred to. The payment by the judgment 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 judgment, completely extinguished the judgment 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 judgment 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. (Sandico vs. Piguing, 42SCRA 322.)

10. (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.
(Articles 1327. 1391, Civil Code).

(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.

11. No. the action for specific performance filed by the buyer is premature under Art. 1197 of the Civil
Code. If a period has not been fixed although contemplated by the parties, the parties themselves
should fix that period, failing in which, the Court may be asked to fix it taking into consideration the
probable contemplation of the parties. Before the period is fixed, an action for specific performance is
premature.

12. Yes, the Able Construction. Inc. is entitled to the relief sought under Article 1267, Civil Code. The law
provides: "When the service has become so difficult as to be manifestly beyond the contemplation of
the parties, the obligor may also be released therefrom, in whole or in part."
13. As judge, 1 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.

14. The telephone company is correct because as far as it is concerned, the only person it contracted
with was Baldomero. The telephone company has no contract with Jose. Baldomero cannot substitute
Jose in his stead without the consent of the telephone company (Art. 1293, NCC). Baldomero is.
therefore, liable under the contract.

15. No, the action will not prosper. The action for rescission may be brought only by the aggrieved party
to the contract. Since it was Salvador who failed to comply with his conditional obligation, he is not the
aggrieved party who may file the action for rescission but the Star Semiconductor Company, The
company, however, is not opting to rescind the contract but has chosen to waive Salvador's compliance
with the condition which it can do under Art. 1545, NCC.

16. Y bank is correct. An. 1287, Civil Code, does not apply. All the requisites of Art. 1279, Civil Code are
present. In the case of Gullas vs. PNB [62 Phil. 519), the Supreme Court held: "The Civil Code contains
provisions regarding compensation (set off) and deposit. These portions of Philippine law provide that
compensation shall take place when two persons are reciprocally creditor and debtor of each other. In
this connection, it has been held that the relation existing between a depositor and a bank is that of
creditor and debtor, x x x As a general rule, a bank has a right of set off of the deposits in its hands for
the payment of any indebtedness to it on the part of a depositor." Hence, compensation took place
between the mutual obligations of X and Y bank.

17. a) Yes, the sale to the other person is valid as a sale with a resolutory condition because what
operates as a suspensive condition for Eva operates a resolutory condition for the buyer.

b) No, she is not entitled to the rentals collected by Manuel because at the time they accrued and were
collected, Eva was not yet the owner of the property.

18. It depends. If the notation "in full payment of the loan" was written by Arturo's father, there was an
implied condonation of the balance that discharges the obligation. In such case, the notation is an act of
the father from which condonation may be inferred. The condonation being implied, it need not comply
with the formalities of a donation to be effective. The defense of full payment will, therefore, be valid.

When, however, the notation was written by Arturo himself. It merely proves his intention in making
that payment but in no way does it bind his father (Yam v. CA, G.R No. 104726. 11 February 1999). In
such case, the notation was not the act of his father from which condonation may be inferred. There
being no condonation at all the defense of full payment will not be valid.
19. 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.)

20. a) A may avail the minority of B as a defense, but only for B’s share of P 10,000.00. A solidary debtor
may avail himself of any defense which personally belongs to a solidary co-debtor, but only as to the
share of that co-debtor.

b) A may avail of the condonation by X of C’s share of P 10,000.00. A solidary debtor may, in actions filed
by the creditor, avail himself of all defenses which are derived from the nature of the obligation and of
those which are personal to him or pertain to his own share. With respect to those which personally
belong to others, he may avail himself thereof only as regards that part of the debt for which the latter
are responsible. (Article 1222, NCC).

c) A may not interpose the defense of insolvency of D as a defense. Applying the principle of mutual
guaranty among solidary debtors, A guaranteed the payment of D’s share and of all the other co-
debtors. Hence, A cannot avail of the defense of D’s insolvency.

d) The extension of six (6) months given by X to E may be availed of by A as a partial defense but only for
the share of E, there is no novation of the obligation but only an act of liberality granted to E alone.