Oblicon-samplex.docx

Obligations and Contracts (Samplex) I. Dino sued Ben for damages because the latter had failed to deliver the antique Mercedes Benz car Dino purchased from Ben, which was – by agreement – due for delivery on December 31, 1993. Ben, in his answer to Dino's complaint, said Dino's claim has no basis for the suit, because as the car was being driven to be delivered to Dino on January 1, 1994, a reckless truck driver had rammed into the Mercedes Benz. The trial court dismissed Dino's complaint, saying Ben's obligation had indeed, been extinguished by force majeure. Is the trial court correct? 

The trial court is not correct in dismissing Dino’s complaint. Under Article 1165, if the obligor delays, he shall be responsible for any fortuitous event until he has effected the delivery. In this case, since Ben was already in delay when the accident happened, he is not relieved from responsibility.

II. In 1960, the Bureau of Lands issued a Homestead patent to Elias Palos. Under the Public Land Law, any sale or conveyance made involving said Homestead is void. Three years later, Elias Palos sold homestead to Enrico Fernando. Elias Palos died on March 15, 1990, and his heirs filed an action to recover the homestead from Enrico Fernando on the ground that its sale by their father to the latter is void under Section 118 of the Public Land Law. Enrico Fernando Contented, however, that the heirs of Elias Palos cannot recover the homestead from him anymore because: a) their action has already prescribed. b) Elias Palos was in pari delicto and c) the heirs are guilty of laches. Decide with Reasons. III. Totoy Bato, a citizen and resident of New Jersey, U.S.A., under whose law he was still a minor being only 20 years of age, was hired by ZTE Corporation of Manila to serve for 2 years as its chief computer programmer. However, after serving only one (1) year, he resigned from ZTE Corporation because he was enticed by GMA/FG Corp, by offering more advantageous terms. ZTE Corporation sued him and GMA/FG Corp. in Manila for damages arising from the breach of his contract of employment. He interposed his minority as a defense and asked for annulment of the contract on that ground. ZTE Corporation disputed this by alleging that since the contract was executed in the Philippines under whose law the age of majority is 18 years, he was no longer a minor at the time of perfection of the conract. 1. Will the suit against Totoy Bato prosper? 

Yes. Article 15.

2. Will the suit against GMA/FG Corp prosper and what would be the basis of its liability? 

Di ko alam anghirap gagu.

IV. Laida and Miggy entered into a lease contract over MONTE Building on February 1, 2005 where Miggy is expressly granted a right of first refusal should the lessor, Laida, decide to sell both the land

1

and building. However, on March 30, 2007, Laida sold the property to Mackoy who knew about the lease and in fact agreed to respect it. Thereafter, being informed of the new lessor, Miggy made a demand and subsequently,filed an action against both the lessor-seller, Laida and the buyer. Mackoy a) to rescind the sale and b) to compel the specific performance of his right of first refusal in the sense that the lessor should be ordered to execute a deed of absolute sale in favor of the lessee at the same price. The defendants contended that the plaintiff can neither ask rescission of the sale nor compel specific performance of a right of first refusal. Decide the case.  

Question: rescission of sale nga ba demand ni Miggy? Or rescission of lease contract? O sige kung sale man: Miggy is correct in filing an action for the rescission of sale and compelling the specific performance from Laida. Under Article 1191, the injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. Since the rescission of Laida’s sale to Mackoy is an incident to the action for specific performance, the court should order specific performance by Laida.

V. In two separate documents signed by him, Miguel Tonto “obligated” himself each to Glow Labandera and to Perlie Estrada, thus “To Glow my true love, I obligate myself to give you my one and only horse when I feel I like it.” -and“To Perlie, my true sweetheart, I obligate myself to pay you the P500,000.00 I owe you when I feel like it.” Months passed but Miguel never bothered to make good his promises. Glow and Perlie came to consult you on whether or not they could recover on the basis of the foregoing settings. What would your legal advice be to Glow? To Perlie? 



As to Glow Labandera: the obligation to deliver the horse is void, since the condition is potestative, whose fulfillment depends solely upon the will of the debtor. Under Article 1182, when the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. As to Perlie Estrada: The obligation of Miguel to pay Ph500,000.00 still subsists, even though the condition is void. While it is provided in the case of Glow that conditions whose performance depend solely on the will of the debtor are void, this rule is not absolute. In the case of Perlie, although the condition is void because of its potestative character, the obligation itself is not affected since it refers to a pre-existing indebtedness. The remedy of Perlie, therefore, is to go to the court and ask for the fixing of the period. Under Article 1197, the courts shall fix the duration of the period when it depends upon the will of the debtor.

VI. a) Suppose that under an obligation imposed by a final judgment, the liability of the judgment debtor is to pay the amount of P6,000.00 but both the judgment and debtor and the judgment creditor subsequently entered into a contract reducing the liability of the former to only P4,000.00. Is

2

there an implied novation which will have the effect of extinguishing the judgment obligation and creating a modified obligatory relation? Reasons. 

No implied novation. Nasa Jurado Reviewer to. Pages 801-802. Heehee tamad sorry.

a. How is civil obligation distinguished from natural obligation? Give an example of natural obligation. 

Bahala na you.

VII. Beauty La Fea offered to sell her BMW to Regina Bilog for P600,000.00 After inspecting the car, Regina Bilog offered to buy it for P500,000.00. This offer was accepted by Beauty La Fea. The next day, Beauty offered to deliver the car, but Regina, being short of funds, secured postponement of the delivery, promising to pay the price “upon arrival of the steamer, Ogle da Pogi”. The steamer however never arrived because it was wrecked by a typhoon and sank somewhere off the coast of Samar. (1) Can Beauty compel Regina to pay the purchase price? Why? (2) Is the promise to pay made by Regina conditional or with a term? Why? 



No. Regina cannot be compelled to pay the purchase price. Under Article 1169, in reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to compy in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. In the case at bar, while Beauty was ready to comply with her obligation, she has not yet delivered the car, hence, since this is a reciprocal obligation, she may not compel Regina yet to pay the purchase price. (Di ko sure to, sorry.) The promise of Regina to pay is conditional. Under Article 1181, in conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition.

VIII. Ian and Asha met on the plane to Cebu, Ian offered Asha to stay in his resort in Bohol. Asha was som impressed with the place that she hinted a desire to lease the same. On march 5, 2007, Ian emailed Asha offering to lease the resort. Asha opened her e-mail on March 6, 2007 but only sent the telegram of acceptance on March 8, 2007. On, March 7, Ian had a change of heart and withdrew his offer. Asha read the e-mail right after sending the telegram to Ian. Was the Contract perfected. 

Oy contracts na to!

IX. Ismael is married to Marta. In 1999, Ismael met Tisay, a 17 year old GRO and went crazy rabid with desire. Ismael donated to Tisay a house and lot which he and Marta previously occupied with their 3 children. The donation was, of course, subject to the condition that Tisay becomes Ismael's mistress. Tisay accepted the donation but demanded to have a condominium unit as their love nest. In 2006, Ismael died of a heart attack. Marta and her 3 children went back to the house donated to Tisay and decided to live there. Tisay goes to you for advice. 

Eh?

X. I promised to give (10) points if you can state the Bedan prayer before class. (a) What kind of obligation is this? (b) Can you compel me to comply with my obligation?  This is an obligation with a suspensive condition. Under Article 1181, in conditional obligations, the

3

acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. In this case, the condition that I can state the Bedan prayer before class is a future and uncertain event. The birth or effectivity o the obligation is suspended until the happening or fulfilment of the event which constitutes the condition. SAN BEDA COLLEGE OF LAW PRAYER BEFORE CLASS LET US PRAY MERCIFUL FATHER, SOURCE OF ALL WISDOM AND KNOWLEDGE, YOU NEVER CEASE TO LOVE AND CARE FOR US DESPITE OUR FAILINGS, IN YOUR GREAT LOVE FOR US, YOU SENT YOUR ONLY BEGOTTEN SON TO LEAD US OUT OF DARKNESS INTO THE FULLNESS OF YOUR LIGHT. SEND FORTH YOUR SPIRIT TO GUIDE OUR HEARTS AND MINDS, AND TO BE WITH US NOW AS WE DISCUSS OUR LESSONS, SO THAT WE MAY DISCOVER WHAT IS TRUE AND JUST. WE ASK THIS THROUGH JESUS CHRIST OUR LORD. AMEN.



Since I have already been able to fulfil the condition, I may now compel you to give me 10 points, as promised. :p

XI. Dyosa and Adonis entered into a contract of loan in March 15, 2002 where Dyosa borrowed from Adonis the amount of US$25,000.00 when the exchange rate is P55.00 to US$1.00 payable in Philippine Peso on or before December 31, 2007, when the exchange rate is P31.00 to US$1.00. Kulas executed a surety to secure the loan on December 20, 2007. The Bangko Sentral ng Pilipinas declared that there is an unusual deflation in the value of the peso. On January 25, 2008, Kulas tendered to Adonis the amount of P820,000.00 plus interest in the form of cashier’s check. Adonis refused to accept such payment because of the following reasons: o The amount to be paid should be P1,375,000.00, excluding interest o The payment should be in cash o He is not compelled to accept payment from Kulas because he is not the debtor Decide with reasons(20 pts) 



Adonis is correct in demanding the amount of P1,375,000.00, excluding interest. As provided by Article 1250 of the Civil Code, in case of an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary. In this case, since an unusual deflation has been declared by the Bangko Sentral ng Pilipinas, it is proper for Adonis to have demanded his receivable valued at the time of the establishment of the obligation. Hence, Dyosa should pay the amount of P1,375,000.00, excluding interest. The refusal of Adonis to accept the payment because it was not in cash was untenable. As a general rule, the delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired (Article 1249). The exception in this case is the

4



Central Bank Act, Section 63, where it is provided that a Cashier’s Check is deemed as cash. This is because a Cashier’s Check is a certification that a check which has been cleared and credited to the account of the creditor shall be equivalent to a delivery to the creditor in cash in an amount equal to the amount credited to his account. In this case, however, while Adonis was incorrect in not accepting the payment of Kulas because it was not in cash, his refusal to accept the same is justified because it is only a partial payment. Under Article 1248, unless there is an express stipulation to that effect, the creditor cannot be compelled partially to receive the prestations in which the obligation consists. The third contention of Adonis is also without merit. As provided in Article 1236 of the Civil Code, the creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Kulas, as a surety, is not considered as a third person within the meaning of the law. He is considered as a person who has an interest in the fulfillment of the obligation because as a surety, he is bound to perform the prestation in case of default by Dyosa.

XII. Magulang bought 2 diamond earrings from Masiba valued at P200,000.00 which he can sell at 20% margin. Since they are good friends it was agreed that Magulang will pay “whenever” his means permit him otherwise he has to return the same. Magulang was able to sell said pieces of jewelry in two (2) equal installments on July 25, 2008. In the evening of August 2, 2008, Magulang offered Masiba P100,000.00, the only money he had collected, but Masiba refused to accept the payment. While walking home from the residence of Magulang, two men, armed with bread knives, snatched the purse and ran away. On the following week, magulang offered Masiba P80,000.00, the 2nd installment less his commission. However Masiba refused the payment also because it’s not the full payment . Thereafter Magulang met Maluho, Masiba’s wife, to whom he gave the P80,000.00 with the request that she turn the money over to Masiba, Maluho did not turn over said money but instead used it to buy plane tickets to Nigeria for her and Masiba so they can visit Maluho’s parents. Following a quarrel, Masiba made a demand upon Magulang to pay the amount of P180,000.00 or return the pieces of jewelry. Magulang interposed the following defenses: o That the first P100,000.00 was lost due to fortuitous event o The P80,000.00 was paid already o He cannot be faulted because it is Masiba who refused to accept his payment, and that o His obligation to pay is not yet due because no period has been agreed upon Decide whether the above defenses are tenable (25 points) 





The 1st contention of Magulang is untenable. Under Article 1263, in an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation. It is wellsettled that where an obligation consists in the payment of money, the failure of the debtor to effect the delivery even by a reason of a fortuitous event shall not relieve him of his liability. The 2nd claim of Magulang is correct. According to the second paragraph of Article 1241, payment made to a third person shall also be valid insofar as it has redounded to the benefit of the creditor. In this case, since the money spent by Masiba’s wife to buy plane tickets to Nigeria so they can visit his parents clearly redounded to the benefit of Masiba, the payment of Magulang amounting to Ph80,000.00 was valid. The 3rd contention of Magulang is untenable. Under Article 1256, the debtor shall be released from responsibility by the consignation of the thing or sum due if the creditor to whom tender of payment has been made refuses without just cause to accept it. In this case, while it is true that Masiba did not have any just cause in refusing to accept Magulang’s payment, Magulang has failed to consign the sum

5



due to a proper judicial authority. Under Article 1257, the consignation shall be ineffectual if it is not made strictly in consonance with the provisions which regulate payment. Hence, there is no valid consignation and Magulang is not relieved from his liability. The 4th contention of Magulang is correct. As provided in Article 1280 in relation to Article 1297, when the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period. Hence, the remedy of the Masiba is to ask the court to fix the period thereof. After the court has fixed the period, Masiba may then demand payment from Magulang upon the expiration of the fixed period.

XIII. Tango, Tinga, Tenga are solidary debtors under a loan obligation of P300,000.00 which has fallen due. Taptap, the creditor has condoned Tenga’s entire share in the debt. Since Tinga has become insolvent, Taptap makes a demand on Tango to pay the debt. How much, if any, Tango may be compelled to pay and to what extent, if at all, can Tenga be compelled by Tango to contribute to such payment? 



Tango may be compelled to pay the amount of Ph200,000.00, representing his and Tinga’s share in the obligation. Under Article 1216, the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. Since the share of Tenga was entirely condoned by Taptap, the obligation to pay Ph300,000.00 was converted into an obligation to pay the sum of Ph200,000.00. Tenga may be compelled to contribute Ph50,000.00, which is half of Tinga’s share in the obligation. Under Article 1219, the remission made by the creditor of the share which affects one of the solidary debtors does not release the latter from his responsibility towards the co-debtors, in case the debt had been totally paid by anyone of them before the remission was effected. Hence, Tenga is still liable for half of Tinga’s share in the obligation.

XIV. Guapo delivered his car valued at P300,000.00 to Pogi to be sold on 5% commission upon agreement that if the car is unsold, Pogi shall return the car to Guapo. During the onslaught of typhoon Milenyo, Pogi uses the car to go to a hotel. While the car is parked by the side street near Manila Motel, the car was carnapped. Because of poor visibility and raging floods, the carnappers hit a tree and leaves the car a total wreck. Pogi claims fortuitous event to absolve him from any obligation. Discuss. 



Tango may be compelled to pay the amount of Ph200,000.00, representing his and Tinga’s share in the obligation. Under Article 1216, the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. Since the share of Tenga was entirely condoned by Taptap, the obligation to pay Ph300,000.00 was converted into an obligation to pay the sum of Ph200,000.00. Tenga may be compelled to contribute Ph50,000.00, which is half of Tinga’s share in the obligation. Under Article 1219, the remission made by the creditor of the share which affects one of the solidary debtors does not release the latter from his responsibility towards the co-debtors, in case the debt had been totally paid by anyone of them before the remission was effected. Hence, Tenga is still liable for half of Tinga’s share in the obligation.

(a) May the debtor withdraw the thing consigned? Discuss (7.5pts) 

This question calls for a qualified answer. Under Article 1260, the debtor may only withdraw the thing or the sum deposited before the creditor has accepted the consignation, or before a judicial declaration that the consignation has been properly made. After the creditor has accepted the consignation, or after a judicial declaration that the consignation has been properly made, the debtor may not withdraw the thing consigned anymore.

6

(b) When does loss or destruction of the thing result to extinguishment of the obligation? (7.5 pts) 

Under Article 1262, an obligation which consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed without the fault of the debtor, and before he has incurred in delay.

XV. Bob, the builder entered into a crontract with Mr. Bean to build the latter’s house for P1,000.00. The contract provides that if Mr. Bean fails to pay the amount on December 25, 2006, he shall pay a surcharge of 10% for every day of default until full settlement of his oblgation. Mr. Bean did not pay on time. Bob the builder went to Court to recover the amount plus the penalties and damages. The Kangaroo Court decided in favor of Bob, awarded surcharges and additional 6% per annum as penalty. Mr. Bean asks you (a) if the Kangaroo Court is correct and (b) what are the three (3) purpose of a penalty clause  

As to the daily surcharge of 10%, it is clear that Kangaroo Court is not correct in holding Mr. Bean liable for such, the penalty being unconscionable and iniquitous. On the other hand, Kangaroo Court is correct in holding Mr. Bean liable for the additional penalty of 6% per annum. Under Article 1226, the penalty takes the place of interest only if there is no stipulation to the contrary, and even then damages may still be collected if the obligor refuses to pay the penalty or is guilty of fraud. In the case at bar, not only is there an express stipulation to pay damages in addition to the penalty, but defendant has failed to pay his obligation as well as the penalty. The imposition of the interest is, therefore, justified.

 Purposes of penalty: 1. Función coercitiva o de garantia – to insure the performance of the obligation 2. Función liquidatoria – to liquidate the amount of damages to be awarded to the injured party in case of breach of the principal obligation 3. Función estrictamente penal – in certain exceptional cases, to punish the obligor in case of breach of the principal obligation

XVI. Tango, Tinga, and Tenga executed a promissory note binding themselves to pay 1.5 millio pesos to Miguel and Laida. Miguel has condoned Tenga's entire share in the debt. Tinga has become insolvent. (a) Can Miguel and Laida proceed against Tango alone for the payment of the entire obligation? Why? (b) Can Miguel alone proceed against the debtors? Why? (c) Can Tango be compelled to pay the entire obligation? (d) Can Tenga be compelled to pay the entire obligation? XVII. Cascasero drives for UBER taxi, owned and operated by Mr. Richie. He picked up passenger Sexy who was on her way to work. Cascasero could not keep his eye away from the rearview mirror that he did not see Malas crossing. The taxi hit Malas and fell over Nagtahan Bridge landed on the kariton of Dugyot. Sexy and Malas are killed and the Kariton destroyed. Is Cascasero liable? What about Mr. Richie? Support your answers with legal basis.

7

XVIII. Christian delivered his car valued at P500,000 to Miggy to be sold on 5% commission upon agreement that if the car is unsold, Miggy shall return the car to Christian on November 15, 2014. During the onslaught of typhoon Ruby. Miggy uses the car to go to Manila Hotel. While the car is parked by the side street near Manila Hotel, the car was car napped. Because of poor visibility and raging floods, the car nappers hit a tree and leaves the car a total wreck. Miggy claims fortuitous event to absolve him from any obligation. Discuss. SAME AS IN GUAPO CASE. XIX. Laklak and Toma are childhood friends and drinking buddies. During their group's Christmas party on December 16, 2014, Laklak borrowed money from Toma so he can treat the latter to more drinks. As proof of his debt, Laklak wrote a short promissory note promising to pay the debt within (1) month and gave it to Toma. The note is now with Laklak. What is the status of Laklak's obligation to Toma?  Laklak’s obligation is presumed to be renounced by Toma. Under Article 1272 in relation to Article 1271, whenever the private document in which the debt appears is found in the possession of the debtor, it shall be presumed that the creditor delivered it voluntarily, unless the contrary is proved. Hence, the delivery of a private document evidencing a credit, made voluntarily by the creditor to the debtor, implies the renunciation of the action which the former had against the latter.

XX. Perdie borrowed from Don Pepot the amount of P150,000.00 payable on June 20,2007. When Don Pepot was in Aruba, Don Pepot's 18 year old son, Pidel borrowed P130,000.00 from Perdie for his school tuition. However, the son spent it instead on internet gaming. When the debt of Don Pepot fell due, Perdie tendered only P20,000.00, claiming compensation on the P120,000.00 borrowed by Pidel. Is there legal compensation? Why? Suppose Pidel actually used the money for school tuition, would the answer be different? Assuming that Don Pepot also owes Perdie P100,000.00 but Don Pepot assigns his credit to Parrah, what are the effects of such assignment to Perdie's right to set up compensation. 

 

There is no legal compensation. Under Article 1278 in relation to Article 1279, compensation shall take place when two persons, in their own right, are creditors and debtors of each other. In order that compensation may be proper, it is necessary, among other requirements, that each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other. In this case, Pidel is not a party to the obligation of Perdie to Don Pepot. Hence, there is no legal compensation. No, my answer would not be different. Again, as stated above, Pidel is not the principal creditor of Perdie, hence, no legal compensation may prosper with regard to the obligation of Perdie to Don Pepot. This question calls for a qualified answer. Under Article 1285, if the assignment was made with the consent of Perdie, Perdie cannot set up against the Parrah the compensation which would have pertained to against the Don Pepot. On the other hand, if the assignment is without the knowledge of the debtor, he may set up compensation of the credit prior to the assignment.

XXI. Ruth and Barbara entered in to a contract of loan in March 15, 2002, where Ruth borrowed from Barbara the amount of US $25,000.00, when the exchange rate is P55.00 to US$1.oo, payable in Philippine peso on or before December 31, 2007, when the exchange rate is P41.00 to US$1.oo. Fritz executed a surety to secure the loan. On December 20, 2007, The Bangko Sentral ng Pilipinas declared that there is an unusual deflation in the value of peso. On January 25, 2008, Fritz tendered to Barbara

8

the amount of P820,000.00 plus interest in the form of cashier's check. Ruth refused too accept such payment because of the following reasons: 1. The amount should be P1,375,000.00, excluding interest. 2. The payment should be in cash 3. She is not compelled to accept any payment from Fritz because he is not the debtor. Decide with reasons. SAME AS IN ADONIS CASE. XXII. Sergio, because of his love to Marimar, bound himself to deliver to Marimar a 42 inch LCD TV 2007 model and the 20 cubic feet 4 door LG stainless refrigerator, with Motor No. LG-2007-5678, which he saw in Fulgoso's store, and to repair Marimar's grand piano. Sergio did none of these things. Discuss whether Sergio can be compelled to deliver the LCD TV and refrigerator and repair the piano. What reliefs may the court grant Marimar? Suppose the object of the obligation to give is lost or destroyed through fortuitous event, can the obligor be compelled to comply with his obligation and be held liable for damages?  

Article 1165. Articles 1262-1263.

XXIII. Emerald and Sapphire and Ruby executed a promissory note binding themselves to pay P300,000.00 to Sarah, Maja and Rica. The note is now due and demandable. (a) Can the creditors proceed against Emerald alone for payment of the entire obligation? Why? (b) Can Sarah alone proceed against Emerald, Sapphire and Ruby for payment of the entire obligation? Why? (c) Suppose that Sarah alone proceeds against Emerald alobe for payment, how much can she collect? Why? (d) Suppose that Ruby is insolvent, can Emerald and Sapphire be held liable for her share in the obligation? Why? (e) Suppose that the obligation was about to prescribe, but Sarah wrote a letter to Emerald demanding for payment of the entire debt, will this have the effect of interrupting the running of the period of prescription?  No. Article 1207/1208.  No. Article 1207/1208.   

Ph1,000.00. Article 1208. No. Article 1208. No as to the shares of Sapphire and Ruby. Principle of mutual agency not applicable in joint obligations.

XXIV. When does a debtor incur delay?  Article 1169 Distinguish proximate cause from contributing negligence? -END-

9