OBLIGATIONS AND CONTRACTS

TERM 3, SY 2019 - 2020

TOPIC 5:OBLIGATION
INSTRUCTIONS: Read Articles 1187 - 1198 of the Civil Code and answer the questions below. (25 pts)
Explain the legal concepts, as applicable, in your own understanding. You may cite the law (article
number that applies) as you wish, but “copy and paste” answers will not be accepted.

Submit on May 6, 2020. File name must be SURNAME Seatwork 5

1. On January 1, S agreed to sell his property to B for P500,000 provided that B will win the bidding
of a project. On December 15, B won the bidding for the particular project.
a. If S sold the land to C on December 1, who has a better right to the land? (1pt)
Before December 15, C has the right and acquired the property subject to a
resolutory condition of B winning the bid of the particular project while works as suspensive
condition for B. So before the fulfillment of the condition C has a right to the property but
upon B’s winning the bid, the rights of C shall be terminated and B has a better right to the
land.

b. If S sold the land to C on December 1 and B sold the land to D on December 10, who has
a better right to the land? (1pt)
C has a better right to the land since B has no right to sell the land to D on
December 10 since the condition hasn’t been fulfilled making the transaction invalid. B is not
entitled to the ownership before he won the bidding project
c. What is this type of condition called? (1pt)
Suspensive condition
2. Juan obliges himself to give his car to Pedro if the latter wins the Los Baños Race. Pedro won the
race.
a. The car was lost without Juan’s fault on the day prior to the Los Baños Race, is Juan’s
obligation to Pedro extinguished or not? Explain (2 pts)
Since the loss happened on the day prior to the Los Banos Race, and the
loss was due to a fortuitous event, the obligation of Juan to give his car to Pedro is
extinguished.

b. The car was lost on the day prior to the Los Baños Race because Juan burned the car. Is
the obligation to Pedro extinguished or not? What will be the liability of Juan to Pedro,
if any? (2 pts)
No, because it was lost and burned because of Juan’s negligence, he shall be
liable and obliged to pay damages.

c. A motorcycle driver accidentally scratched the car of Juan, which is parked in his parking
slot. In effect, the value of the car diminished by 10%. Who must shoulder the cost of
devaluation of the car? 2pts)
Since the accident/devaluation of the scratched car wasn’t Juan’s fault, the
cost of devaluation of the car must be shouldered by Pedro.
d. Juan crashed the car into a tree a few days prior to the race. The value of the car
diminished by 20%. What are the options of Pedro? (2pts)
Since the loss was Juan’s fault, Pedro may choose to rescind or cancel the
obligation with indemnity for damages, or have it fulfilled, but still with indemnity for
damages

3. When does a breach of obligation occur? (1 pt)

When a party failed to comply with an existing obligation or the
obligation is not fulfilled, or is partly or irregularly complied without legal reason or excuse to perform.

4. X enters into a contract of sale with Y for a car. In the contract, X agrees to deliver to Y the
vehicle on January 1 at Y’s house and Y agrees to pay X the sum of P500,000 upon delivery. X fails
to deliver the car to Y. What are the legal remedies of Y? (2 pts)
Y can file an action for the rescission with indemnity for damages, or have
it fulfilled, but still with payment for damages.

5. In the same case as no. 4, if X delivers the car to Y and Y fails to pay the sum agreed upon, can X
refuse to transfer the ownership of the car to Y even if it is not stipulated in their contract?
Explain. (2 pts)
X can’t refuse to transfer the ownership of the car to Y even if it is not
stipulated in the contract unless the contract of sale be voided. The failure to pay the
sum agreed upon creates a right to demand the fulfillment of the obligation.
 OBLIGATIONS AND CONTRACTS
TERM 3, SY 2019 - 2020

6. In not more than 10 words, what is the effect of rescission? (2pts)

Restore relationship of parties before the contract by unmaking (undoing) it. (the
contract)

7. What is the general rule if both parties have committed a breach of the obligation and it cannot
be determined which of the parties infracted first? (1pt)
The contract shall be considered extinguished and cannot be imposed. They also
have to suffer their damages while the court won’t provide remedy to either of the parties.

8. A entered into an agreement with B where A will give B P1,000 on February 30. Is this obligation
valid? Explain. (2 pts)
No because there is no February 30 which makes it an impossible condition
which makes the condition void, Since the obligor knows the condition cannot be
fulfilled, the obligation will not be complied with.

9. A borrowed money from B and A promised to pay B in 30 days. B needed money badly on the
15th day. Can B demand the payment from A on the 15 th day? Explain (2 pts)
No because the general rule is that the obligation can’t be demanded before
the said period agreed by the two parties since it is presumed that the agreed date is for
the benefit of both parties.

10. A borrowed P500 million from B to be paid in 10 years ending on Dec. 31, 2030. On the first year,
B realizes that the assets of A are significantly less to cover all A’s liabilities. Can B demand the
immediate payment of the money from A? (2pts)
Yes, because this is an exception to the general rule since A becomes insolvent
(assets is less than liabilities) and B is unable to pay his debts as they mature, unless he gives a
sufficient guaranty or security for such debts.