The National Teachers College

School of Business
Long Quiz
Obligations and Contracts
Atty. Albert Rosario

Name: TEOPE, Wince C. Score: __________

Year/Section: 1-2 BSBAFM Date: April 8, 2020
______________________________________________________________________________
Direction: Read the question carefully and answer with basis. (5 points per item)

A, is engaged in the business of repair and retail. In the course of his business he incurred the
following obligations:

1. A entered into a contract of supply of electrical devices and appliances with the
Partnership B, C, D, and F.
2. A entered into a contract with E for supply of electronic parts, E is to deliver the said
electronic parts. Said contract has a stipulation for a penalty clause, a stipulation allowing
payment to be made by a third person, who is G, and a stipulation for waiver of deficient
deliveries and rescission on the instance of A or E.
3. A has pending deliveries with H, I, and J which are all due and demandable.

a. If G paid the deficiency of E. How can the same be valid? Why?

According to Article 1236 of the Civil Code, the payment made by G is valid because
the stipulation in the contract of A and E said so. The stipulation stated that G is a third
person who is allowed to pay in the said contract and it was agreed upon by both parties.

b. If G elected K to pay without the knowledge but with the permission of E, is K’s
payment valid? Why?

G, who is a third person in the contract, elected K to pay in which is considered a

novation via substitution, as stated in the Article 1291 of the Civil Code, however K’s
payment is invalid because novation is not presumed and should be in an unequivocal terms
and agreed upon by both parties, the principal debtor and the principal creditor, as stated in
the Article 1292 of the Civil Code.

According to Article 1293 of the Civil Code, a novation via substitution will be valid
even if without the knowledge of the principal debtor, but it should be with the consent of the
principal creditor.

c. E was not able to deliver to A, 6 of his contracted deliveries. Can A sue for rescission?
Why? Why not? Can he sue for damages even if there is a penalty clause? Why? Why
not?

A can sue for rescission for the breach of obligation made by E, but the Article 1191
of the Civil Code will not be applicable because rescission is stipulated in the contract of A
and E. Furthermore, A can only sue for damages in the penal clause, not in the principal

Page 1 of 3
 obligation, because as stated in the stipulation in the contract that there is a penal clause and a
waiver for deficient deliveries and rescission on the instance of A or E that is agreed upon by
both parties. According to Article 1226 of the Civil Code, penal clauses are only accessory
obligations that give pressure for the performance of the principal obligation.

d. A was to deliver to H the following:

i. Android phone motherboard for cellphones, about 28 units.
ii. USB ports for internet televisions, about 30 units.
iii. Touch screen panel for automatic washing machine, about 15 units.

All are due demandable.

a. Can H choose which items to be given preference for A’s payment? Why? Why not?

H cannot choose in which prestation to be fulfilled by A because it is the right of

A, as a debtor in an alternative obligation, to choose in which prestation he/she will
fulfill, as stated in the Article 1200 of the Civil Code.

If H will be given the choice in which prestation A will fulfill, the obligation will
cease to be an alternative obligation from the day when the selection has been
communicated to the debtor, as stated in the Article 1205 of the Civil Code.

b. Can H sue for damages for delay in case A delivered the USB ports instead of the
android mother board for cellphones? Why? Why not?

H cannot sue for damages for delay after A, the debtor, fulfilled a prestation in an
alternative obligation. It is not the fault of the debtor to fulfill one prestation over the
other prestation because according to Article 1200 of the Civil Code, it is the right of the
debtor to choose in which prestation he/she will perform. In the nature of an alternative
obligation, the right of choice is given to the debtor, unless expressly given and
communicated to the creditor, as stated in the Article 1205 of the Civil Code.

c. If A performed one part of the obligation and a part of another, is the payment
valid? Why? Why not?

According to Article 1248 of the Civil Code, payment made by A is invalid

because partial payment does not extinguish an obligation unless it is stipulated in the
contract.

e. G asked for waiver for unperformed deliveries, also asked for unperformed future
deliveries. Which of G’s request is valid? Why? Why not?
Neither of G’s requests are valid because in the contract agreed upon by A and E, it is
stipulated that G is only a third person allowed to pay therefore G has no right to asked for a
waiver because he/she is neither a principal creditor nor principal debtor.

Page 2 of 3
f. A was not able to deliver the parts and appliances which he contracted with B, C, D,
and F. Can C sue for rescission? Why? Why not?

According to Article 1191 of the Civil Code, C can sue for rescission even in a
reciprocal obligation because A did not perform his obligation to Partnership B, C, D, and F.
Furthermore, C can sue A for rescission even if B, D, and F are his/her co-creditors because
there are all in a partnership which means that they are in a one legal entity.

In a partnership, there is a so-called mutual agency wherein it is the right of all

partners to represent the partnership and have the authority to bind it to mutual contracts and
agreements.

g. A was able to secure a waiver from B of about 20% of the items to be delivered for a
consideration. Can A use the waiver as a defense? Why? Why not?

A can use the waiver as a defense because it is granted by B who is in a partnership

with C, D, and F. According to Article 1248 of the Civil Code, partial performance of an
obligation is valid only if it is stipulated in the contract. Furthermore, the obligation of A to
Partnership B, C, D, and F is an indivisible obligation because A’s obligation is to deliver
generic things which are susceptible of partial performance as stated in the Article 1225 of
the Civil Code.

h. F bought the participations of C and B, while A was able to acquire the interest of B in
the partnership. Can A demand compensation for his obligation as a defense? Why?
Why not?

Article 1278. Compensation shall take place when two persons, in their own right, are
creditors and debtors of each other.

A cannot demand for compensation

Page 3 of 3