2014 OBLIGATIONS AND CONTRACTS BAR EXAM QUESTIONS

AND SUGGESTED ANSWERS

Dorotea leased portions of her 2,000 sq.m lot to Monet, Kathy,

Celai and Ruth for five (5) years. Two (2) years before the
expiration of the lease contract, Dorotea sold the property to PM
Realty and Development Corporation. The following month,
Dorotea and PM Realty stopped accepting rental payments from
all the lessees because they wanted to terminate the lease
contracts. Due to the refusal of Dorotea to accept rental
payments, the lessees, Ruth et al., filed a complaint for
consignation of the rentals before the Regional Trial Court (RTC)
of Manila without notifying Dorotea. Is the consignation valid?
SUGGESTED ANSWER: The consignation is not valid. Article 1257 of the
Civil Code provides that in order that the consignation of the thing due
may release the obligor, it must first be announced to the persons
interested in the fulfillment of the obligation. Moreover, Article 1258 of
the same code provides that consignation having been made, the
interested parties shall also be notified thereof. In this case Dorotea, an
interested party was not notified of the consignation. The consignation is
therefore not valid for non-compliance with Article 1257.
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 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. 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?
SUGGESTED ANSWER: No, the obligation of J.C. Construction to MSI was
not extinguished by novation. Under Article 1292 of the Civil Code, in
order that an obligation may be extinguished by another which substitute
the same, it is imperative that it be so declared in unequivocal terms, or
that the old and the new obligation be on every point incompatible with
each other. Novation by substitution of debtor requires the consent of the
creditor as provided in Article 1923 of the Civil Code. This requirement is
not present as in this case. In Magdalena Estates Inc. v Rodriguez it was
ruled that the mere fact that the creditor received payment from a third
person does not constitute novation and does not extinguish the
obligation of the original debtor. Since there was no novation, the
obligation of the original debtor is not extinguished. Thus the obligation of
J.C. Construction to MSI subsists.