Quiz no.
4 Case: Greater Metropolitan Manila
1. If after demand the defaulting
mortgagor failed to surrender the
car to the mortgagee for the
foreclosure proceedings, the later
is justified seeking police
assistant to recover the same.
Answer: FALSE
A mortgagee may take steps to
recover the mortgaged property to
enable it to enforce or protect its
foreclosure right thereon. There is,
however, a well-defined procedure
for the recovery of possession of
mortgaged property: if a mortgagee
is unable to obtain possession of a
mortgaged property for its sale on
foreclosure, he must bring a civil
action either to recover such
possession as a preliminary step to
the sale, or to obtain judicial
foreclosure.
Case: Ernesto Uypitching, et al. v.
Ernesto Quiamco
2. A may unilaterally withdraw from
a perfected contract provided he
can return what he had already
received from the other party.
Answer: FALSE
From the moment of perfection, the
parties are bound not only to the
fulfillment of what has been
expressly stipulated but also to all
the consequences which, according
to their nature, may be in keeping
with good faith, usage, and law. The
contract has the force of law
between the parties and they are
expected to abide in good faith by
their respective contractual
commitments, not weasel out of
them. Just as nobody can be forced
to enter into a contract, in the same
manner, once a contract is entered
into, no party can renounce it
unilaterally or without the consent of
the other.
Solid Waste Management
Committee v. Jancom Environmental
Corporation
3. The principle of solution indebiti
applies in a claim for the issuance
of a tax credit certificate
representing a taxpayers
authorized input taxes (VAT) on
local purchases of goods and
services attributable to effectively
zero-rated sales.
Answer: FALSE
There is solutio indebiti when (1)
Payment is made when there exists
no binding relation between the
payor, who has no duty to pay, and
the person who received the
payment; and (2) Payment is made
through mistake, and not through
liberality or some other cause.
Though the principle of solutio
indebiti may be applicable to some
instances of claims for a refund, the
elements thereof are wanting in this
case. First, there exists a binding
relation between petitioner and the
CIR, the former being a taxpayer
obligated to pay VAT. Second, the
payment of input tax was not made
through mistake, since petitioner
was legally obligated to pay for that
liability. The entitlement to a refund
or credit of excess input tax is solely
based on the distinctive nature of
the VAT system. At the time of
payment of the input VAT, the
amount paid was correct and proper.
Case: CBK Power Company Limited
vs. Commissioner of Internal
Revenue
4. In a reciprocal obligation, the
delay of one cancels the effects of
delay of the other and they shall
stand as if no one is guilty of
delay.
Answer: TRUE
 Considering that both parties were in
delay and that their obligation was
reciprocal, performance thereof
must be simultaneous. The mutual
inaction of Cortes and the
Corporation therefore gave rise to a
compensatio morae or default on the
part of both parties because neither
has completed their part in their
reciprocal obligation. This mutual
delay of the parties cancels out the
effects of default such that it is as if
no one is guilty of delay.
Case: Cortes v. Court of Appeals
5. The failure of the banks
employees to credit the amount of
Php 34,000.00 to As account
resulting as it did in the dishonour
of his checks constitutes
actionable negligence in law.
Answer: TRUE
Article 1172 of the Civil Code
ordains that responsibility arising
from negligence in the performance
of an obligation is demandable. The
failure of the banks employees to
credit the amount of P34,000.00 to
respondents savings account,
resulting as it did in the dishonor of
respondents checks, constitutes
actionable negligence in law. From
another perspective, the negligence
of the bank constitutes a breach of
duty to its client. It is worthy of note
that the banking industry is
impressed with public interest. As
such, it must observe a high degree
of diligence and observe lofty
standards of integrity and
performance. By the nature of its
functions, a bank is under obligation
to treat the accounts of its
depositors with meticulous care and
always to have in mind the fiduciary
nature of its relationship with them.
Case: Prudential Bank v. Chonney
Lim
6. The Fiduciary nature of banking
requires banks to assume a
degree of diligence of a good
father of a family in handling the
money of a depositor.
Answer: FALSE
The diligence of required of banks is
more than that of a good father of a
family. The highest dgrees of
diligence is expected.
Case: PNB vs Chowking Food Corp
7. In an action based on culpa
contractual, a causal connection
between the delay in the
performance of his obligation and
the injury suffered buy the
aggrieved party must be proved.
Answer: FALSE
In culpa contractual, the mere proof
of the existence of the contract and
the failure of its compliance justify,
prima facie, a corresponding right of
relief.
Case: Radio Communication of the
Philippines vs. Alfonso Verchez, et al.
8. A credit card holder is liable to
pay the interests and surcharges
imposed by the bank for non-
payment of his obligations even if
he did not sign a formal
agreement because it is a natural
element of a contract on the ice of
credit cards.
Answer: FALSE
Absence of any proof that the terms
and conditions of the credit card use
has been shown to its client, and
failure to by respondent to show that
an application form or document
prior to the issuance of the credit
card has been submitted or signed
by the same, the client should not be
condemned to pay the interest and
charges provided under its terms
and conditions.
 Case: Crisostomo Alcaraz v. Court
of Appeals
9. A party in delay shall pay moral damages.
FALSE. Mere delay shall not entitle the
injured party to moral damages; there must
have been fraud or bad faith involved.
Basis:
Article 2220. Willful injury to property may
be a legal ground for awarding moral
damages if the court should find that, under
the circumstances, such damages are justly
due. The same rule applies to breaches of
contract where the defendant acted
fraudulently or in bad faith.
10. The doctrine of proximate cause is
applicable to a breach of contract.
FALSE. The doctrine only applies in actions
for quasi-delicts, not in actions involving
breach of contract.
Bases:
Sps. Guanio v. Makati Shangri-La Hotel. GR
No. 190601, February 7, 2011
Article 2179 (which is under the chapter on
Quasi-Delicts). When the plaintiffs own
negligence was the immediate and
proximate cause of his injury, he cannot
recover damages. But if his negligence was
only contributory, the immediate and
proximate cause of the injury being the
defendants lack of due care, the plaintiff
may recover damages, but the courts shall
mitigate the damages to be awarded.
Recall: Proximate cause is defined as that
cause, which, in natural and continuous
sequence, unbroken by any efficient
intervening cause, produces the injury, and
without which the result would not have
occurred.
11. The 1997 Asian Financial Crisis is a
fortuitous event under 1174 such that the
debtor is excused from the agreement?
(Hindi malinaw ang mismong question) pero
based sa Asian Financial Crisis
TRUE. The debtor could not have foreseen
the upcoming market bubble brought about
by the Asian Financial Crisis.
12. The shortage of supplies and cement
may be characterized as force majeure to
excuse a contractor from the delay of the
construction of a project.
FALSE. Force Majeure or a Fortuitous event
is characterized as independent of human
will and is unforeseeable, lack of materials
is dependent on the actions of the contract
and therefore cannot be used as an excuse.
13. An occupant of a parcel of land is liable
to pay an obligation in the form of rentals
even if there is an express
*grant/agreement onsuch land and no such
agreement to pay rentals exist.
FALSE, such agreement have the force of
law between the contracting parties.
14. A party in a reciprocal obligation who did
not make a formal demand cannot rescind
an obligation if the other party *shows
hiswillingness to pay one month after the
obligation became due.
FALSE. rescission may be had when one of
the parties in a reciprocal obligation does
not comply with what is incumbent upon
him.
15. A partner's false representation in
execution of the contract of partnership that
he has exclusive franchise in order to get a
big slice in net profit will give the other
contracting party the right to annul the
partnership agreemen
FALSE. Fraud in the execution of contract
gives only the right to recover damages but
not the right to annul the obligation as
opposed to fraud in the perfection of the
contract or dolo causante which gives the
other party the right to annul.
16. The non-fulfillment of suspensive
condition allows a party to rescind the same
under Art.1191 of Civil Code
FALSE. A suspensive condition is a
condition which may or may not happen in
which the obligation depends upom to exist,
before fulfillment of such condition the
obligee acquires a mere hope or
expectancy demand, the court may not grant him a new
term.
17. A partially unpaid seller may rescind the
sale for failure of the buyer to pay the
balance of the price and within the period 20. A contract to sell may be rescinded
agreed upon. upon failure to pay the agreed down
payment.
FALSE. Only when he has expressly
reserved the right to do so in case of default Suggested Answer: FALSE. Basis:
and provided that the default in payment is
Art.1191. The power
for an unreasonable time (Art. 1534)
to rescind obligations is implied in
reciprocal ones, in case one of the
obligors should not comply with what
"Article 1534. An unpaid seller having the
is incumbent upon him.A contract to
right of lien or having stopped the goods in
sell is not a contract of sale. Article
transitu, may rescind the transfer of title and
1191 applies only in reciprocal
resume the ownership in the goods, where
contracts. A contract to sell is not a
he expressly reserved the right to do so in
reciprocal contract. Under a
case the buyer should make default, or
contract to sell, the seller retains title
where the buyer has been in default in the
to the thing to be sold until the
payment of the price for an unreasonable
purchaser fully pays the agreed
time. The seller shall not thereafter be liable
purchase price. The full payment is a
to the buyer upon the contract of sale, but
positive suspensive condition, the
may recover from the buyer damages for
non - fulfilment of which is not a
any loss occasioned by the breach of the
breach of contract but merely an
contract.
event that prevents the seller from
conveying title to the purchaser. The
xxx"
non-payment of the purchase price
renders the contract to sell
18. The court may annul a contract on the
ineffective and without force and
ground that its object is a disastrous deal or
effect. Nevertheless, while rescission
an unwise investment.
does not apply in this case,
petitioners may cancel the contract
FALSE. The principle of autonomy of
to sell, their obligation not having
contract applies: the contracting parties may
arisen. (Darrel Cordero, et al. vs.
establish such stipulations etc, as the may
F.S. Management and Development
them convenient provided that they are not
Corporation G.R. No. 167213.
contrary to laws, etc (Art. 1306)
October 31, 2006)
*****************************21. A
Article 1306. The contracting parties may
surety companys liability under a
establish such stipulations, clauses, terms
performance bond is joint upon the
and conditions as they may deem
death of the principal debtor.
convenient, provided they are not contrary

to law, morals, good customs, public order,

or public policy.
Suggested Answer: FALSE.
Basis: JurisprudenceA surety
19. A Pacto De Recto Sale may be
companys liability under the
rescinded through a notarial act.
performance bond it issues is
solidary. The death of the principal
TRUE.
obligor does not, as a rule,
Art. 1592. In the sale of immovable property,
extinguish the obligation and the
even though it may have been stipulated
solidary nature of that liability. As a
that upon failure to pay the price at the time
general rule, the death of either the
agreed upon the rescission of the contract
creditor or the debtor does not
shall of right take place, the vendee may
extinguish the obligation. Obligations
pay, even after the expiration of the period,
are transmissible to the heirs, except
as long as no demand for rescission of the
when the transmission is prevented
contract has been made upon him either
by the law, the stipulations of the
judicially or by a notarial act. After the
parties, or the nature of the
 obligation. Only obligations that are
personal or are identified with the
persons themselves are
extinguished by death. (Stronghold
Insurance Company, Inc. v.
Republic-Asahi Glass Corporation
G.R. No. 147561. June 22, 2006)
22. Partial payment made by one of
the solidary debtors is enough to
extinguish the liability of all the
debtors.
Suggested Answer: FALSE.
Basis:
Art.1217. Payment
made by one of the solidary debtors
extinguishes the obligation.
When speaking of
payment that extinguishes an
obligation, the law refers to payment
in full. (DE LEON, The Law on
Obligations and Contracts (2011),
p.160) [hereinafter DE LEON,
Obligations and Contracts]
23. As a rule, the liability of
corporate officers and the
corporation for unpaid salaries of an
employee is solidary.Suggested
Answer: FALSE.Basis:
Art.1207. (Last
Sentence) ***There is a solidary
liability only when the obligation
expressly so states, when the law or
the nature of the obligation requires
solidarity. MAM Realty Development
Corporation v. NLRC on solidary
liability of corporate officers in labor
disputes, enlightens:
A corporation being a
juridical entity, may act only through
its directors, officers and employees.
Obligations incurred by them, acting
as such corporate agents are not
theirs but the direct accountabilities
of the corporation they represent.
True solidary liabilities may at times
be incurred but only when
exceptional circumstances warrant
such as, generally, in the following
cases:
1.When directors and
trustees or, in appropriate cases, the
officers of a corporation:
(a) vote for or assent
to patently unlawful acts of the
corporation;
(b)act in bad faith or
with gross negligence in directing
the corporate affairs. (Alba v.
Yupangco G.R. No. 188233)
24. Penalty charges of 1% per day
of delay is unconscionable even if
the principal obligation is only 100
pesos.Suggested Answer: TRUE
.Basis: Jurisprudence
The Court agrees with the
Court of Appeals in ruling that the 1%
penalty per day of delay is highly
unconscionable. Applying Article 1229 of the
Civil Code, courts shall equitably reduce the
penalty when the principal obligation has
been partly or irregularly complied with, or if
it is iniquitous or unconscionable. (First Fil-
Sin Lending Corporation v. Gloria D. Padillo
G.R. No. 160533. January 12, 2005)
25. The stipulated penalty charge of 8% per
annum and interest rates of 18% per annum
are unreasonable, inquitous and
unconscionable? No. It is a basic principle
in civil law that parties are bound by the
stipulations in the contracts voluntarily
entered into by them. Parties are free to
stipulate terms and conditions that they
deem convenient, provided these are not
contrary to law, morals, good customs,
public order, or public policy. (DBP v. Family
Foods Manufacturing Co. LTD.)
26. The court may reduce the stipulated
interest rate and penalty charge of 3% per
month to 1% per month or consider the
excessive interest and penalty charged not
imposed.
-Yes. Stipulated interest rates are illegal if
they are unconscionable and the Court is
allowed to temper interest rates when
necessary. In exercising this vested power
to determine what is iniquitous and
unconscionable, the Court must consider
the circumstances of each case. What may
be iniquitous and unconscionable in one
case, may be just in another.
27.A manager's check may be used for the
excercise of the right of redemption.
No. A manager's check is not a legal tender
and an offer of a check in payment of a debt
is not a valid tender of payment and may be
refused receipt by the obligee or creditors
(PAL v. CA Gr. l-49188, 1990)
28. There is extraordinary inflation if the
peso-dollar rate climbs to p60?
TRUE. In rel to Art 1250, if there is
extraordinary in/def value of the currency at
the time of the est of the obli shall be the
basis. Inflation is the decrease of the value
of PHP, deflation is the increase of value.
29. Debtors right to apply payment is
considered directory?
FALSE. Art 1252 gives the debtor the right
to choose which debt is to be paid, thus,
mandatory unless there is an express
stipulation to the contrary.
30. Exceptionally, the unjust refusal of a
creditor to accept payment is equivalent to
payment.
FALSE. ARTICLE 1256. If the
creditor to whom tender of payment has
been made refuses without just cause to
accept it, the debtor shall be released from
responsibility by the consignation of the
thing or sum due.
In short, a refusal without just cause
is not equivalent to payment; to have the
effect of payment and the consequent
extinguishment of the obligation to pay, the
law requires the companion acts of tender
of payment and consignation.
31. Failure to notify the creditor will render
the consignation void.
TRUE. The giving of notice to the
persons interested in the performance of the
obligation is mandatory. Failure to notify the
persons interested in the performance of the
obligation will render the consignation void.
In Ramos v. Sarao, the Court held that, "All
interested parties are to be notified of the
consignation. Compliance with [this
requisite] is mandatory. (Dalton v FGR
Realty and Development Corp., G.R. No.
172577, January 19, 2011)
32. Dacion en pago may result only to
partial payment.
FALSE. Dacion en pago is the
delivery and transmission of ownership of a
thing by the debtor to the creditor as an
accepted equivalent of the performance of
the obligation. It is a special mode of
payment where the debtor offers another
thing to the creditor, who accepts it as an
equivalent of the payment of an outstanding
debt. In its modern concept, what actually
takes place in dacion en pago is an
objective novation of the obligation where
the thing offered as an accepted equivalent
of the performance of an obligation is
considered as the object of the contract of
sale, while the debt is considered as the
purchase price. (D.B.T. Mar-Bay
Construction, Inc. v Ricardo Panes, G.R.
No. 167232, July 31, 2009)
33. The debtor in an obligation to give shall
also be released when the prestation
becomes legally or physically impossible.
FALSE. It is a fundamental rule that
contracts, once perfected, bind both
contracting parties, and obligations arising
therefrom have the force of law between the
parties and should be complied with in good
faith. But the law recognizes exceptions to
the principle of the obligatory force of
contracts. One exception is laid down in
Article 1266 of the Civil Code, which reads:
The debtor in obligations to do shall also be
released when the prestation becomes
legally or physically impossible without the
fault of the obligor. (Ayala Construction and
Development Corporation v. Philippine
Commercial International Bank, G.R. No.
153827, April 25, 2006)
34. The writing-off of a loan as a bad debt is
condonation.
False. This Court rules that writing-
off a loan does not equate to a condonation
or release of a debt by the creditor. Write-off
is not one of the legal grounds for
extinguishing an obligation under the civil
code. It is not a compromise of liability.
Neither is it a condonation, since in
condonation gratuity on the part of the
obligee and acceptance by the obligor are
required. In making the write-off, only the
creditor takes action by removing the
uncollectible account from its books even
without the approval or participation of the
debtor. (Ruben Reyna v. COA , G.R. No.
167219; February 8, 2011)
35. In compensation, the rights of creditors
or obligations of debtors need not spring
from one contract.
TRUE. Compensation, be it legal or
conventional, requires confluence in the
parties of the characters of mutual debtors
and creditors, although their rights as such
creditors or their obligations as such debtors
need not spring from one and the same
contract or transaction. (Spouses Ramon
Nisce vs. Equitable PCI Bank Inc. G.R. No.
167434 February 19, 2007)
36. There can be compensation for the
amount of expenses due to a possessor in
bad faith as against rentals due from him to
the lawful possessor.
TRUE. The amount of reimbursable
or refundable expenses due to a possessor
in bad faith under Articles 443 and
546 can be compensated under
Article 1278 which reads: Compensation
shall take place when two persons, in
their own right, are creditors and debtors
of each other. (Aloria vs. Clemente, G.R.
No. 165644 . February 28, 2006)
*Art. 443. He who receives the fruits has the
obligation to pay the expenses made by a
third person in their production, gathering,
and preservation.
Art. 546. Necessary expenses shall be
refunded to every possessor; but only the
possessor in good faith may retain the thing
until he has been reimbursed therefor.
Useful expenses shall be refunded only to
the possessor in good faith with the same
right of retention, the person who has
defeated him in the possession having the
option of refunding the amount of the
expenses or of paying the increase in value
which the thing may have acquired by
reason thereof. (453a)
37. There is compensation between debt
and a claim. FALSE. For compensation to
take place, a distinction must be made
between debt and a mere claim. A debt is a
claim which has been formally passed upon
by the highest authority to which it can in
law be submitted nad has been declared a
debt. A claim is a debt embryo. It is a mere
evidence of a debt. (EGV Realty
Development vs CA)
38. There is no novation when the
creditor reconstructs the loan and the
debtor issues a promissory note for the
same.
Answer:
FALSE. It depends on the case
reconstruction of the loan if it is extended or
shortened
Basis:
When an easement of right way is one of
the principal conditions of a contract, and
the duration of said easement is specified,
the reduction of said period in a
subsequent contract, wherein the same
obligation is one of the principal conditions,
constitutes a novation and to that extent
extinguishes the former contractual
obligation.(KABANKALAN SUGAR CO.,
INC. PACHECO, G.R. No. L-33654
December 29, 1930)
There exist no incompatibility between the
old and the new obligation as will be
demonstrated in the resolution of the last
point, and for the present we will merely
reiterate the legal doctrine that an obligation
to pay a sum of money is not novated in
a new instrument wherein the old is
ratified, by changing only the term of
payment and adding other obligations
not incompatible with the old one.
(INCHAUSTI & CO.vs.GREGORIO YULO,
G.R. No. L-7721, March 25, 1914)
(Please note Juarado question no. 184
page 802)
39. Stipulated adjustments in the
contract price arising from changes in
project design results to novation.
Answer:
FALSE. it merely modifies the contract.
Basis:
We have carefully gone over the records of
this case and are convinced that the
redesign of the podium structure and the
reduction in the contract price merely
modified the contract. (GAMMON
PHILIPPINES, INC., vs. METRO RAIL
TRANSIT DEVELOPMENT
CORPORATION, G.R. No. 144792, January
31, 2006)
40. The acceptance of a new check in
replacement of a previous one is a
novation.
Answer:
FALSE. There is no incompatibility.
Basis:
Respondents acceptance of the Solid Bank
check, which replaced the dishonored
Prudential Bank check, did not result to
novation as there was no express
agreement to establish that petitioner was
already discharged from his liability to pay.
Moreover, respondents acceptance of the
Solid Bank check did not result to any
incompatibility, since the two checks
Prudential and Solid Bank checks were
precisely for the purpose of paying the
amount of P214,000.00, i.e., the credit
obtained from the purchase of the 300 bags
of rice from respondent. Indeed, there was
no substantial change in the object or
principal condition of the obligation of
petitioner as the indorser of the check to
pay the amount of P214,000.00.
(SALAZAR vs. J.Y. BROTHERS
MARKETING CORPORATION, G.R. No.
171998, October 20, 2010)
41. A subsequent agreement to receive
shares of stocks instead of money as
consideration of a contract is novation.
Answer:
TRUE. There is incompatibility between the
share of stocks and money as
consideration.
Basis:
The Court of Appeals noted that the
incompatibility in the terms of the MOA and
the DAC clearly signified the intention of the
parties to have the MOA novated by
subsequent agreement and have the
properties conveyed to the Asset Pool in
exchange for PMRDC shares to be issued
to Demetrio. (HERNANDEZ, JR., vs. HOME
INSURANCE AND GUARANTY
CORPORATION, PROJECT MOVERS
REALTY AND DEVELOPMENT
CORPORATION, G.R. No. 171165,
February 14, 2011)
42. The right arising from lease may be
transmitted to the heirs of the lessee.
Answer:
TRUE.
Basis:
Art. 1311. Contracts take effect only
between the parties, their assigns and heirs,
except in case where the rights and
obligations arising from the contract are not
transmissible by their nature, or by
stipulation or by provision of law. The heir is
not liable beyond the value of the property
he received from the decedent.
A lease contract is not essentially personal
in character. Thus, the rights and
obligations therein are transmissible to the
heirs. The general rule, therefore, is that
heirs are bound by contracts entered into by
their predecessors-in-interest except when
the rights and obligations arising therefrom
are not transmissible by (1) their nature, (2)
stipulation or (3) provision of law. (Inocencio
vs. Hospicio San Jose, G.R. No. 201787,
September 25, 2013)
43. The principle of autonomy of
contracts is not absolute.
Answer:
TRUE. The NCC provides that it must not
be contrary to law.
Basis:
Art. 1306 --- "provided they are not contrary
to law"
44. A escalation clause granting the
creditor the power to impose an
increased rate of interest without a
written notice from the debtor is void.
Answer:
TRUE. must be consensual to both parties.
Basis:
Art. 1308 principle of mutuality of contracts -
the fulfilment of the contract cannot be left
to the will of one of the parties.
It is now settled that an escalation clause is
void where the creditor unilaterally
determines and imposes an increase in the
stipulated rate of interest without the
express conformity of the debtor. (Sps.
Juico vs china banking corporation G.R. No.
187678, April 10, 2013)
 physical infirmities. It is only when such age
or infirmities impair the mental faculties to
such extent as to prevent one from properly,
intelligently, and fairly protecting her
property rights, is she considered
45. An undertaking in a joint affidavit may incapacitated. (Francisco Landicho vs.
result to a contractual obligation. Felix Sia)
TRUE. Contracts are obligatory no matter 49. A statement of a false cause in the
what their forms may be, whenever the contract to conceal the real agreement
essential requisites for their validity are makes the contract void.
present. In determining whether a document FALSE. If the parties state a false cause in
is an affidavit or a contract, the Court looks the contract to conceal their real agreement,
beyond the title of the document, since the such a contract is relatively simulated. Here,
denomination or title given by the parties in the parties real agreement binds them but
their document is not conclusive of the the agreement though relatively simulated is
nature of its contents. In the construction or enforceable. (Heirs of Balite vs. Lim)
interpretation of an instrument, the intention
of the parties is primordial and is to be
pursued. If the terms of the document are
clear and leave no doubt on the intention of 50. A waiver of hereditary rights executed by
the contracting parties, the literal meaning X in favor of his brother taking care of their
of its stipulations shall control. If the words sick father is valid.
appear to be contrary to the parties' evident FALSE. Pursuant to Art 1347 of the CC, no
intention, the latter shall prevail over the contract may be entered into upon a future
former. A simple reading of the terms of the inheritance except in cases authorized by
Joint Affidavit of Undertaking readily law. A contract may be classified as a
discloses that it contains stipulations contract upon a future inheritance under
characteristic of a contract. (Rodolfo G. 2nd par of Art1347 where the ff requisites
Cruz and Esperanza Ibias v. Atty. Delfin concur: 1. That the succession has not yet
Gruspe) been opened 2. The object of the contract
46. Generally, the effects of failure to pay forms part of the inheritance 3. The
consideration are the same as lack of promissor has, with respect to the object, an
consideration. expectancy of a right which is purely
FALSE. Failure to pay the consideration hereditary in nature. (Atty. Ferrer vs Sps.
results in a right to demand the fulfillment or Diaz GR 165300)
cancellation of the obligation under an
existing contract, while lack of consideration
prevents the existence of a valid contract.
Where there was no price or consideration
for the sale and in fact had not received any
consideration for the said sale, it is null and
void ab initio for lack of consideration.
(Spouses Azaro M. Zulueta and Perla
Sucayan-Zulueta v. Jose Wong, et al.)
47. An option in a lease agreement allowing
the lessee to buy the property without
stating the period for its exercise is valid.
FALSE. No. An option contract is a
preparatory contract in which one party
grants to the other, for a fixed period and
under specified conditions, the power to
decide Whether to enter into a principal
contract. (Navotas Industrial Corporation V.
Cruz, et al.)
48. Old age and illiteracy incapacitates a
person to execute a contract.
FALSE. It has been held that [a] person is
not incapacitated to contract merely
because of advanced years or by reason of