LAW 1 – MIDTERM EXAMINATION

2ND SEMESTER SY 2021-2022

DUE DATE: MONDAY, 18 APRIL 2022, 9:00 A.M.

PART 1. Definition of terms. What is this?

Sample:
Q: It is a kind of obligation where the object of the obligation is capable of partial fulfilment.
A: Divisible obligation

1. It is an accessory undertaking attached to an obligation to assume greater liability in case of breach, or if obligation is
not fulfilled or is partly or irregularly complied with. Its purposes are (a) to deter breach and (b) to punish the debtor
for violation of the obligation.

- Penal Clause
2. It is a kind of obligation where fulfillment is not subject to any condition or period; the performance of the obligation
is immediately demandable.
- Pure and Conditional obligation
3. It is a kind of obligation where various prestations or conduct are due but the performance of one of them is
sufficient.
- Alternative obligation
4. It is a kind of obligation where the whole obligation is to be paid or fulfilled proportionately by the different debtors
and/or is to be demanded proportionately by the different creditors.
- Joint obligation
5. This takes place when there’s total or partial extinguishment of the obligation and a new substitute obligation is
created.
- Novation

PART 2. Please answer the questions below.

1. Four foreign medical students rented the fully furnished apartment of Thelma for a fixed period of one year. The lease
contract between the students and Thelma provides that the rent should be paid monthly, and that the students shall
be liable to Thelma for any damage to the apartment, the furniture and appliances in it.

After six months, the four students abandoned the leased premises without prior notice to Thelma; they simply left
the key to the apartment, together with a note apologizing to Thelma for their sudden departure.

When Thelma entered the apartment, she discovered that it was trashed—the walls had graffiti, and the furniture
and appliances were damaged beyond repair. Thelma later found out that three of the students returned to their
home country while one student, Claire, transferred to a boarding house.

Thelma demanded that Claire pay the following: (a) the rentals for the unexpired portion of the rental period, i.e. the
rent for the last six months, (b) the costs to replace the broken furniture and appliances, and (c) the costs to repair of
the damage caused to the apartment.

Q1.1. Is Thelma entitled to the rent for the unexpired period of the lease, i.e. for the last 6 months of the lease?
Why? Please explain and cite the Civil Code provision/s or the Supreme Court decision/s that support your
position. (5 points)
 Thelma is entitled to the rent for the last six months of the lease even if the set date for payment is not yet for
six months because the four students attempted to abscond, or run away from their obligation by either leaving
the country or transferring to a boarding house without prior notice. Art. 1198. The debtor shall lose every right
to make use of the period: (5) When the debtor attempts to abscond.

Q1.2. Is Thelma entitled to recover the repair and replacement costs? Why? Please explain and cite the Civil Code
provision/s or the Supreme Court decision/s that support your position. (5 points)
- Yes as the part where it says “the students shall be liable to Thelma for any damage to the apartment,
the furniture and appliances in it.” in the contract serves as a penal clause. The students were in
breach of the obligation in their misbehavior of caring for the apartment. 6. In addition to penalty,
creditor may recover damages and interest: a. When agreed upon by the parties; b. When the obligor
refuses to pay the penalty, in which case the creditor may recover legal interest thereon; c. When the
obligor is guilty of fraud in the fulfillment of the obligation, in which case the creditor may recover
damages caused by the fraud.
-

Q1.3. Does Thelma have the right to demand that Claire pay in full, for all of Thelma’s demands? Why? What kind
of obligation did the students incur? Please explain and cite the applicable legal provision/s of the Civil Code or
the Supreme Court decision/s that support your position. (5 points)
- Thelma does not have the right to demand that Claire pay for the other 3 students’ share in damages
and rent as the students incurred a joint obligation. Thelma can only demand Claire’s proportionate
share. Article 1207. The concurrence of two or more creditors or of two or more debtors in one and the
same obligation does not imply that each one of the former has a right to demand, or that each one of
the latter is bound to render, entire compliance with the prestation. There is a solidary liability only when
the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.
(1137a)

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2. Dina and Ronald entered into a written contract which states that Dina would give Ronald 3% commission if Ronald
sells Dina’s house and lot for P10 Million within three months. Within the said period, Ronald was able to find a buyer,
Carl, who submitted a signed Letter of Intent, i.e. a letter wherein he signified his intent to purchase the
property for P10 Million. Carl also paid a reservation fee in the amount of P20,000.00. Ronald then gave the
reservation fee and the Letter of Intent to Dina.

Dina then transacted directly with Carl and offered to sell to him the property for P9.85 Million; Carl, or course,
agreed and the property was thus sold at the reduced price. Ronald demanded the 3% commission from Dina since
he was the one who found the buyer but Dina insisted that he wasn’t entitled to the commission because the
property was sold for less than P10 Million.

Q.2.1 What kind of obligation did Dina incur? Please explain. (2.5 points)

- Dina incurred a Conditional- Suspensive condition kind of obligation as their agreement stated that the
obligation would only be demandable until a condition (Ronald selling Dina’s house) is fulfilled.
 Q2.2. Who is correct, Dina or Ronald? Please explain, and cite the applicable Civil Code provision/s or the
Supreme Court decision/s that support your position. (5 points)

Ronald is correct in this situation as Dina, being the obligor, voluntarily prevents the condition from being
fulfilled by changing the price of the house from what was agreed upon. ​ART. 1186. The condition shall be
deemed fulfilled when the obligor voluntarily prevents its fulfillment. Therefore, Dina’s condition is
considered fulfilled and she is obligated to pay Ronald his share of commission.

3. Martha obtained a P10 Million loan from her friend Jenny to help start Martha’s restaurant business. They agreed that
the loan would be due for payment on December 20, 2023 By December 2021, however, Martha’s restaurant
business had already failed. Jenny then discovered that Martha had sold all her assets, such as her house and lot,
vehicles, and even assets related to the restaurant business. Jenny also found out that Martha and her family bought
one-way flight tickets with the intent to permanently reside abroad. On March 31, 2022, Jenny demanded that
Martha immediately pay the loan. Martha refused to pay on the ground that the loan’s due date is on December 20,
2023 and so the loan was not yet due and demandable.

Q.1. What kind of obligation did Martha incur? Please explain. (2.5 points)

- Martha incurred an obligation with a period as the loan would only be due for payment on December 20,2023.
There is a period designated for the fulfillment of an obligation.

Q2. Who is correct, Martha or Jenny? Does Jenny have the right to demand the payment of the loan even before
the loan’s due date? Please explain and cite the applicable Civil Code provision/s or the Supreme Court decision/s
that support your position. (5 points)

Jenny has the right to demand the payment of the loan even before on the agreed upon date as Martha has
become insolvent. Her business failing and her having sold her all her assets is proof that her liabilities exceed her
assets. Martha also has not given a guaranty or security which leads Jenny to believe that she will not be able to
fulfill her obligation. Art. 1198 of the Civil Code. 1. When after the obligation has been contracted, debtor
becomes insolvent, unless he gives a guaranty or security for the debt

4. Peter leased his condominium unit to Andrew at a monthly rental of P20,000.00, due every first of the month. On
March 5, 2022, Peter bought from Andrew a laptop for P20,000.00, which they agreed should be paid on April 25,
2022. Peter received the laptop on March 10, 2022. On April 1, 2022, Andrew refused to pay the rent for the condo
unit, because according to him, Peter also owes Andrew P20,000.00 and their monetary obligations to each other
therefore cancel out each other. Peter, however, insists that Andrew should still pay the rent.

Q4.1 Who is correct, Peter or Andrew? Please explain and cite the applicable Civil Code provision/s or the
Supreme Court decision/s that support your position. (5 points)

- Andrew is correct as legal compensation automatically takes place for the month of April, for which
they both owe each other P20,000. Although, Peter is also correct as they both incurred obligations
with different periods, which he can insist on following through. Andrew cannot force Peter to agree to
legal compensation if they do not both agree on forgoing the periods of payment.
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