1. D owes C P3M due on October 30, 2016.

On September 15, 2016, knowing that he cannot pay his

obligation to C, D sold to B his only property in Makati for P3.5M. When C tried to collect D’s debt on due
date, D was already insolvent. Having been advised of the earlier sale of the Makati property made by D to
B, C now seeks to rescind the sale between D and B on the ground that the contract was executed by D to
escape the payment of his P3M debt to C. In the meantime, D received notice that he had inherited the
properties left by his childless aunt who had recently died on April 2. The inheritance amounted to P6M.
Will C’s action for rescission in the instant case prosper?

No. C’s action for rescission in the instant case will not prosper because C has not yet exhausted
other legal remedies to enforce his claim.
Under Article 1383 Civil Code, an action for rescission is only a subsidiary remedy. Thus, the
creditor must first exhaust all legal remedies before he resorts to rescission.
In this case, since D has still an existing property which he inherited from his childless aunt who
had recently died, C must first exhaust this property before resorting to rescission.
Thus, C’s action for rescission in the instant case will not prosper because D has still an existing
property that is leviable.

2. P sues D for the recovery of a diamond ring. Pending the proceedings in the case, D surreptitiously
sells the ring to B without informing B that the ring was the subject of a pending case. Thereafter, the court
rendered judgment in the case adjudicating ownership over the ring in favor of P. When P learned that the
ring had already been sold to B, P filed an action to rescind the contract of sale. Will P’s action prosper?

No. P’s action for rescission will not prosper because the object of the contract is already in the
possession of a third person who acted in good faith.
Under Article 1385 of the Civil Code, if the object of the contract is already in legal possession of a
third person who acted in good faith, the remedy of rescission can no longer be availed. The same
provision provides that an action for the indemnity of damages will act as mutual restitution.
In this case, since B was a buyer in good faith, P can no longer rescind the contract. However, P
may file for an action for damages against D as he had caused the sale of the ring which was under
litigation.
Thus, P’s action for rescission will not prosper because the object of the contract is already in the
possession of a third person who acted in good faith.

3. D owes C P1.5M payable on September 30, 2016. He owns a parcel of land valued at P2M. On
September 15, 2016, knowing that he cannot pay his obligation to C, D sold this land for P2M to his friend
B who was aware of D’s obligation and insolvency. On the due date, C demanded payment from D but the
latter is already insolvent. After a year, since D had no other properties with which to answer for his
obligation, C succeeded in having the contract of sale between D and B cancelled or rescinded. What are
now the obligations of D and B to each other?

D to B: P2M + legal interests; B to D: the parcel of land plus the fruits of the land

4. D is the owner of two parcels of land: one situated in Manila, and the other in Quezon City. On August
29, 2016, D borrowed from C the amount of P1M payable two months thereafter. On maturity date, D failed
to pay his debt to C. C then filed an action for collection, and asked the court to attach the land of D
situated in Manila. After the Manila property of D was attached by the court, D sold his land sited in Quezon
City to B. C now seeks to rescind the contract of sale between D and B on the ground that it is presumed to
be a fraudulent sale. D, however, counters by saying that there is no such presumption because after all
the Manila property which has been attached was not the one sold to B. Does D’s argument have legal
basis?

No. D’s argument does not have legal basis because a writ of attachment had already been issued
by the Court.
Under the Civil Code, in alienations by an onerous title, the attachment or decision by the court
need not refer to the property alienated in order that fraud may be presumed.
In this case, even if D alienated his land in Quezon City which was not the property attached by the
Court, the fact remains that D is a person to whom a writ of attachment is issued. While the writ of
attachment subsists against D, he is prohibited from alienating any of his properties.
Thus, the argument is untenable because of the writ of attachment issued by the Court.

5. To defraud his creditors, D sold his house to B who knew of D’s purpose. Later, C, one of the creditors,
sought to have the sale rescinded. Upon investigation, however, C found out that the house was burned to
ashes because of a falling meteorite from space. Since C could no longer collect his credit as D had no
other existing properties, C now demands from B payment of D’s debt plus damages. B, however, denies
liability. B asserts that aside from the fact that he was never a party to the contract between D and C, the
house which D sold to him (B) perished in a fortuitous event which was without fault on his part. Is B’s claim
justifiable?

No. B’s claim is untenable because he is a buyer in bad faith.

Under the Civil Code, if the object is in the possession of a third person who acted in bad faith, an
action for rescission will prosper and there must be mutual restitution of the benefits received by the
parties. The Civil Code also provides that if for any reason acquirer in bad faith cannot return the object of
the contract, he is entitled to pay the damages suffered by the injured party.

In this case, B, cannot invoke that the house perished due to a fortuitous event since he was a
buyer in bad faith. Even if the house was lost due to a fortuitous event, B cannot escape liability from C and
is obliged to pay the latter for damages.

Thus, B’s claim is untenable because he is a buyer in bad faith.

6. On January 15, 2012, M celebrated his 15th birthday. On this same day, G, the guardian of M, sold the
harvest of M’s farm to B. The harvest, which was valued at P400,000.00 was sold for P250,000.00. On
March 15, 2016, M filed an action for rescission of the contract of sale on the ground that he had thereby
suffered lesion by more than one-fourth of the value of the harvest from his farm. B opposed the action on
the ground that M’s action had already prescribed having been filed more than four years from the time the
contract was entered into. If you were the judge, will you dismiss M’s action for rescission on the ground of
prescription?

No. I will not dismiss M’s action for rescission because the right of M to file an action has not yet
prescribed.
 Under the Civil Code, the prescriptive period for an action for rescission in the case of a minor is
four years which would commence upon attaining the age of majority.

In this case, the right of action by M only commenced on January 15, 2015, M’s 18 th birthday.
When M filed for an action for rescission on March 15, 2016, he was still within the prescriptive period of
four years since the right of action of M did not began at the time that he executed the contract with G.

Thus, the right of action of M has not yet prescribed and the case will still prosper.

1. The spouses Betty and Armando, and Ben, are next-door neighbours in Bel-Air Makati. Both of them are
also owners of adjacent parcels of land in Bulacan. Ben was interested in building a garments factory, but
the area of his land was not sufficient for the plan. Hence, he convinced the spouses Betty and Armando to
sell to him their land, so that he may be able to push through with his business venture. The spouses,
however, refused to sell their land. On the evening of October 12, 2012, Ben visited the house of the
spouses and, with the point of a gun, compelled the spouses to sign a deed of sale selling their land to Ben.
Ben also threatened them that if they spoke about the incident to anyone, he will have the spouses killed by
a hitman. Because of this, the spouses kept silent about the incident. On June 30, 2015, Ben suffered from
a massive heart attack and died before he could be brought to the hospital. On October 15, 2016, the
spouses filed an action for annulment of the contract of sale grounded on intimidation. The heirs of Ben
moved to dismiss the spouses’ action on the ground that the same has already prescribed. Is this argument
of Ben’s heirs legally justified?

No. The argument of Ben’s heirs is not legally justified because the spouses’ action has not yet
prescribed.

Under the Civil Code, the four year prescriptive period for an action for annulment on the ground of
intimidation, violence and undue influence would only commence when the reason for the intimidation,
undue influence and violence had already ceased.

In this case, the action for annulment by the spouses only commenced on June 30, 2015, the day
when Ben died. When the spouses filed an action for annulment of the contract of sale on the ground of
intimidation, they were still within the four year prescriptive period provided by the law since it only
commenced on the day that Ben died and not on the day that they spouses executed the contract with Ben.

Thus, the spouses’ action for annulment has not yet prescribed.

2. On her sixteenth birthday, Mary bought a 250-square meter land from Joe for P3M. Three days after her
twentieth birthday, she sold the 250-square meter land to Jim for P4M. On her twenty-first birthday, Mary
filed an action to annul the contract of sale between her and Joe alleging that at the time of the sale she
was still a minor. She also pleaded that her action was filed within the four-year prescriptive period. Can
Mary’s action for annulment prosper?

No. Mary’s action for annulment will not prosper because she already ratified the contract entered
into by her with Joe.
 Under the Civil Code, ratification made by an innocent party extinguishes his right to annul the
contract.

In this case, the selling of Mary to Jim already constitutes an implied ratification of the contract she
entered with Joe. Mary can no longer invoke her right to annul the contract of sale on the ground of minority
since such right was already extinguished when she transferred the ownership of the 250-square meter
land to Jim.

Thus, an action for annulment will not prosper.

3. On September 20, 2010, Dencio borrowed P200,000.00 from Claro. Dencio and his 17 year-old son,
Solomon, solidarily signed the promissory note for the loan, which note did not mention anything about the
capacity of the signers. Dencio made partial payments little by little. On October 15, 2016, Dencio died
leaving a balance of P150,000.00 on the note. Claro now demands payment from Solomon who, however,
refused to pay. Solomon raises the defense that, at the time he signed the promissory note, he was still a
minor. Can Solomon be held liable under the note?

No. Solomon cannot be made liable under the note because he did not commit actual
misrepresentation of his age.

Under the Civil Code, the minor who did not commit actual misrepresentation to his age at the time
the contract was executed and only committed constructive misrepresentation cannot be made liable to the
contract. However, the Civil Code also provides that if the minor benefited from such object or amount he
will be obliged to return such to the extent to which he was benefited.

In this case, Solomon cannot be held liable since he did not disclosed in their contract his
incapacity at the time of the execution of the contract. Solomon only committed constructive
misrepresentation and cannot be bound by what is stipulated in the note thereby. Under the facts, Solomon
was also not benefited by such amount.

Thus, Solomon cannot be made liable under the note because he did not commit actual
misrepresentation of his age.

4. On May 15, 2016, Piolo sold a piece of land to his sixteen year-old nephew John. One month later, Piolo
died. On October 15, 2016, Donna, the only daughter of Piolo, then brought an action to annul the contract
of sale on the ground that John was still a minor and, therefore, without legal capacity to contract. Can the
contract be annulled?

No. Donna, the only daughter of Piolo cannot annul the contract on the ground of the minority of
John because she does not have the right to annul the contract.

Under Article 1397 of the Civil Code, persons who are capacitated cannot allege the contract on
the ground of the incapacity of the other contracting party.

In this case, even if Dona is the heir of Piolo, it is John who has the right to annul since he is the
minor. Donna does not have the right to annul the contract on the ground of the incapacity of John as
persons who are capacitated cannot allege the minority of those whom they contract. Even if it was Piolo
who sold the land to John, Donna as the heir of Piolo is bound by the contracts entered into by the
decedent.

Thus, Donna cannot annul the contract on the ground of the minority of John.

5. Sherwin, a minor, owns a farmland planted with rambutan. Sherwin sold this land to Benjo for P1.5M. Of
the P1.5M purchase price received from Benjo, Sherwin deposited the P1M at BPI. The remaining
P500,000.00, which Sherwin intended to invest in a fast food business, was among those stolen from their
house when they were robbed the night after Sherwin sold the farmland. A week after Sherwin celebrated
his 18th birthday, he filed an action for the annulment of the contract of sale of his farmland. After due
hearing, the court annulled the contract. What are now the rights and obligations of Sherwin and Benjo to
each other?

Benjo to Sherwin: farmland and fruits; Sherwin to Benjo: 1.5M plus interest

6. On October 2, 2015, Budoy pointed a gun at Simon and asked Simon to execute a contract of sale in
favor of Budoy. The contract of sale was supposed to transfer the ownership of Simon’s 950 square-meter
lot in Manila to Budoy. At the point of the gun, Simon executed the contract of sale and simultaneously
received from Budoy the purchase price therefor in the amount of P5M. Of the P5M received by Simon,
P4M was deposited to Simon’s account in Banco de Oro. The P1M, however, was completely burned to
ashes when Simon’s car turned turtle. Should Simon later on ask for the annulment of the contract of sale
on the ground of intimidation, is Simon obliged to restore to Budoy the entire P5M purchase price?

Yes. Simon is obliged to restore to Budoy the entire 5M purchase price because both parties are
capacitated at the time the contract was executed.

Under the Civil Code, the exception in which a contracting party will be obliged only to return the
amount to the extent that he was benefited only applies to incapacitated persons.

In this case, both Simon and Budoy are capacitated when they entered into the contract. The fact
that the purchase price of the contract is 5M, Budoy will be obliged to return such amount even if Simon
was only benefited up to the amount of 4m.

Thus, Simon is obliged to restore to Budoy the entire 5M purchase price.

7. In the problem above, Cresencio, who is a creditor of Simon learns of the contract of sale perfected on
October 2, 2015. It so happens that in a separate contract of loan, Simon is indebted to Cresencio in the
amount of P4M due on March 15, 2016. On March 15, 2016, since Simon was not able to pay his loan to
Cresencio, and did not have any other properties to pay off his obligation to Cresencio, Cresencio filed an
action to annul the contract of sale dated October 2, 2015 between Simon and Budoy. Is Cresencio allowed
to do so considering that he stands to be prejudiced by the said contract of sale between Simon and
Budoy?

Yes. Cresencio is allowed to do so because his rights are prejudiced due to the contract of sale
between Simon and Budoy
1. Dillon and Gene are best friends. Dillon then requested Gene to introduce him to Caitlyn who is an
officer in a lending company. Since Caitlyn and Gene were high school friends, Gene was able to convince
Caitlyn to lend Dillon P200,000.00. Gene assured Caitlyn that Dillon would pay on time. Gene also
promised Caitlyn that if Dillon does not pay, Gene will take care of Dillon’s obligation. On maturity date,
Dillon did not pay his obligation, and could no longer be found. Caitlyn was then forced to file an action
against Gene obliging him to pay the P200,000.00 as promised. Can Caitlyn compel Gene to pay Dillon’s
indebtedness?

2. Dionisia is the owner of a 2-hectare farmland in General Santos City. Dionisia orally authorized Manny to
sell her farmland to Fred. As instructed, Manny was able to sell the farmland to Fred for P7M. The sale,
however, was merely verbal. Is the sale valid? Is it enforceable?

3. Gabriel is the owner of a Toyota Altis car with plate no. ABC-123. Without informing his father, Michael
sold the car to Donito for P1.2M. Michael signed the “Deed of Sale” for and in behalf of his father. The
Deed of Sale was subsequently notarized. Can Donito demand delivery of the car from Gabriel?

4. In the preceding problem in No. 2, assume that the sale was executed in writing but not in a public
document. Is the sale valid? Is it enforceable?

5. Lionel leased to Cristina his Olympic cash register. It was orally agreed that the lease will cover the
period from October 15, 2014 to November 15, 2016. Cristina also agreed to pay a monthly rental of P500.
When October 15, 2014 came, Cristina learned that Lionel had already delivered and rented the cash
register to Madonna. Since Lionel refused to deliver the cash register, Cristina filed an action for specific
performance to compel Lionel to comply with their earlier agreement. If you are the judge, how will you
resolve Cristina’s case?

6. Mandy sold to Sandy a flashlight pen for P500.00. Their agreement was orally made. What is the status
of this agreement? Should Mandy refuse to deliver the flashlight pen, can Sandy compel him by means of
an action for specific performance filed in court?

7. Mimay and Mokmok are neighbors in Bulacan. Mimay, who was a preschool teacher, planned on initially
setting up a preschool class in her backyard. Mimay then entered into a contract with Mokmok. Mokmok
told and promised Mimay that he will not fence his property for three years to give Mimay sufficient space
for her preschool class. As consideration for the promise, Mimay agreed to pay Mokmok P150,000.00. A
week after the agreement, Mokmok began to fence his property in violation of his agreement with Mimay.
Mimay then comes to you for consultation asking if she can file an action to compel Mokmok not to push
through with the fencing in deference to their previous agreement. What advice will you give Mimay?

8. On January 15, 2016, Buddy sold a 250 square-meter lot to Sonia for P2M. It was orally agreed upon by
the parties that delivery of the lot, as well as full payment of the purchase price, was to be made on
February 20, 2016. On January 16, 2016, Buddy received from Sonia the amount of P200,000.00 as initial
downpayment. On February 20, 2016, Sonia offered to pay the remaining balance of the purchase price in
the amount of P1.8M. Buddy, however, refused to deliver the property. Buddy argues that the contract of
sale between him and Sonia was unenforceable having been orally made. Can Sonia enforce the contract
of sale, and compel Buddy to deliver the lot?
9. On June 30, 2016, Sharon promised Kiko that she will sell to him her Voltes-V collectible cards for only
P400.00 when she leaves for the U.S. on July 4, 2017. What is the status of this contract of sale between
Sharon and Kiko? Can Kiko, under this contract, compel Sharon to deliver the cards on July 4, 2017?

10. On October 2, 2016, Editha promised to sell to Joy a 250 square-meter lot for P450.00 only. Delivery of
the lot, as well as payment of the purchase price was to be made on January 15, 2017. Is this agreement
valid? Will an action by Joy against Editha for specific performance prosper?

11. Shielito orally sold to Bonito a 90 square-meter lot for P850,000.00. Is this sale valid? Can Bonito
compel Shielito to execute their agreement in writing so Bonito can bring it to a lawyer for notarization?

12. Trixie rented out to Iggy, in a public instrument, registered with the Registry of Property, Apartment No.
8 for three (3) years beginning January 1, 2014 until December 31, 2016. After the first year of the term of
the lease, Trixie sold the apartment to Dixie for P3M. The sale was orally made. Although there had been
as yet no attempts to register the sale, and to pay the purchase price for the apartment, Dixie informed Iggy
that rental payments should now be remitted to Dixie as new owner of the apartment. Is the sale between
Trixie and Dixie enforceable? Can Iggy refuse to pay his rentals to Dixie considering that the contract of
sale between Trixie and Dixie was orally made?

13. Eloy and Belen, both minors, verbally entered into a contract of sale of a 200 square-meter lot in
Bulacan for a contract price of P1.5 million. Later, when the guardians of both minors found out about the
sale, they impliedly ratified the contract. What is now the status of the parties’ contract of sale?

1. Jackie sold to Ryan a smuggled BMW car for P4.5M. Ryan made an initial payment of P2M. After the
car was delivered to Ryan, and despite repeated demands from Jackie, Ryan failed to pay the balance of
the purchase price in the amount of P2.5M. Jackie then filed an action in court for the collection of the
remaining balance. Will Jackie’s action for collection prosper?

2. Jess, who was married to Tess, donated to Melissa a parcel of land which was his paraphernal
property. The donation was made on October 2, 2009 on Melissa’s 17 th birthday, and subject to the
condition that Melissa would become his mistress. Melissa agreed and in fact became the mistress of Jess
for a period of more than five years, until before the death of Jess on November 8, 2015. The following
year, Tess also died. After the death of their parents, the children filed an action to recover the land from
Melissa alleging that the donation is void and inexistent because the cause of the contract is illegal and
immoral. Can the children recover the property from Melissa?

3. Angela promised to give Manny P300,000.00 if he will kill Barry. Angela gave Manny the P300,000.00
in advance. However, before Manny could kill Barry, Angela changed her mind and informed Manny that
she was withdrawing from the plan. As a result, Angela demanded from Manny the return of the
P300,000.00. Can Angela recover what she has paid to Manny?

4. Assume in the immediately preceeding number that Angela is only 17 years old, and Manny already
killed Barry before Angela changed her mind and informed Manny that she was withdrawing from the plan.
Will your answer to No. 3 be the same?