OBLIGATIONS AND CONTRACTS

July 31, 2018

Prelim Exam
Atty. Bernice Piñol

Instructions: Answer logically and concisely. Mind the margins. Insert the
questionnaire in your test booklet after answering. God bless!

I.
Distinguish PERSONAL RIGHT from REAL RIGHT. (10%)

II.
What are RECIPROCAL OBLIGATIONS according to Philippine
Jurisprudence? Give atleast three (3) examples. (5%)

III.
Cardo entered into a contract with BBB Corporation for the repair of Cardo’s
Kiln Drive Motor as evidenced by Purchase Order Nos. 17136-37 with the
following terms and conditions:

i. Total Price: Php 197, 450.00

ii. Delivery Date: August 29, 2017 or six (6) weeks from receipt
of order and down payment.
iii. Penalty: One half of one percent of the total cost or Nine
Hundred Eighty Seven Pesos and Twenty Five centavos
(Php 987.25) per day of delay.

However, after three months, the BBB Corporation was not able to repair
the Kiln Drive Motor of Cardo. After several demands which fell on deaf ears,
Cardo decided to file a case against BBB Corporation and its Vice President,
Tod Erickson. The trial court found the respondents liable for damages on the
ground of breach of contract and held that:

“Having breached the contract entered with petitioner,

respondents BBB Corporation and Tod Erickson are liable for
damages pursuant to Articles 1167, 1170, and 2201 of the Civil
Code.”

Tod Erickson filed an appeal with the Court of Appeals and argued that
he cannot be held liable for the damages and penalties. Cardo contended
however that Erickson is also liable because even though there was no
substantial proof that he was in bad faith, he is jointly and severally liable for
the breach of obligation for being the Vice President of the company in charge
of repairs.

a) Will the appeal of Erickson prosper? (5%)

b)Can Cardo claim for damages and penalties at the same time? Or are they
mutually exclusive? (5%)

IV.
What are the obligations of a debtor who is bound to deliver a generic
thing? (6%)

V.
Are the following obligations valid? Why? And if they are valid, when is
the obligation demandable in each case? (2% each)

a) If the debtor promises to pay as soon as he has the means to pay;

b) If the debtor promises to pay when he likes;
c) If the debtor promises to pay when he becomes a doctor;
d) If the debtor promises to pay if his son, who is sick with dengue, does
not die within one year.

VI.

Distinguish DELICT from QUASI-DELICT (7%)

VII.
Distinguish prescription from laches. (8%)

VIII.
In 2011, Manuel bound himself to sell Eva a house and lot which is
being rented by another person, if Eva passes the 2016 bar examinations.
Luckily for Eva, she passed said examinations.

Since Eva is entitled to buy said house and lot, is she entitled to the
rentals collected by Manuel before she passed the 2016 bar examinations?
Why? (5%)

IX.
D is obliged to deliver 5 bags of powder soap to C, 7 days from their
agreement. However, on due date, D delivered 5 out of the 7 bags of powder
soap mixed with chalk. What is the status of the agreement between D and C?
(5%)

X.

X bought a land from Y, paying him in cash. Since they were friends,
they did not execute any document of sale. After 7 years, the heirs of X asked Y
to execute a Deed of Absolute Sale to formalize the verbal sale to their father.
Unwilling to do so, X’s heirs filed an action for specific performance against Y.
Will their action prosper? (10%)
 XI.

The Bureau of Fire Protection (BFP) published an invitation to bid for its
acquisition of 5 brand new fire truck units. Lopez Corp. secured the contract
with BFP, with a contract price of P3,000,000.00 per truck.

The contract awarded to Lopez Corp. stipulated that it was to deliver to

the BFP the brand fire trucks within 30 days from receipt of a purchase order.
A further stipulation stated that in case of failure to deliver the trucks on the
date specified, the supplier agrees to pay penalty at the rate of .15% of the total
contract price for each day of delay.

The BFP furnished Lopez with a purchase order dated Jan. 1, 2018.
Lopez failed to deliver the trucks within 30 days, as it had committed, which
prompted the BFP to make formal demands on the former. As Lopez still failed
to comply, the BFP filed a Complaint for rescission of contract and damages.

In its defense, Lopez contended that if the BFP asks for the rescission of
the contract, which will thereby be declared void ab initio, then a stipulation for
liquidated damages or penalty contained in that very same contract cannot
anymore be given force and effect.

a) Is BFP entitled to damages even if the contract is rescinded? (6%)

b) What is the essence of Rescission? (6%)

XII.

When is demand not necessary in order that delay may exist? (6%)

XIII.
In two separate documents signed by him, Charlie Poot “obligated”
himself each to Ariana and to Katy, thus –

“To Ariana, my true love, I obligate myself to give you my one and only
car when I feel like it.” – and –

“To Katy, my true sweetheart, I obligate myself to pay you the P500.00 I
owe you when I feel like it.”

Months passed but Charlie never bothered to make good his promises.
Ariana and Katy 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 (a)
Ariana, (b) Katy? (4% each)