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QUIZ NO. 2 - OBLIGATIONS AND CONTRACTS

Question No. 1: Chloe promised to give Carlos her car if Carlos wins the Olympic game. Prior to
the game, the car is destroyed by a fortuitous event, without any fault at all on the part of Chloe.
Carlos wins the game. What is the obligation of Chloe to Carlos? Can Carlos demand specific
performance to Chloe?

Answers:

1. In the case at bar, Chloe no longer has the obligation to deliver to Carlos her car. Under
Article 1174 of the Civil Code, the general rule is that, the debtor or obligor without fault, is not
held liable for the loss or damage of a thing due a fortuitous event unless provided by law or the
contract. In the given case, the conditional obligation being suspensive would be extinguished at
the time the car was destroyed, considering that it was lost without fault of the debtor. Hence, the
obligation of Chloe to Carlos was extinguished prior to the fulfillment of the condition of
winning the Olympic game.

2. No, Carlos cannot demand the fulfillment of the delivery of Chloe’s car. Under the rule on
obligations of the Civil code, general rule is, a loss or damage of a determinate thing without the
fault of the debtor or obligor would render the obligation extinguished on the ground that the
determinate thing can no longer be recovered.

In the case at bar, the conditional obligation to deliver the determinate thing is hereby
extinguished at the time of the destruction of the car. Hence, Carlos cannot demand specific
performance after winning the Olympic game.

Question No. 2: A gave B a parcel of land on the condition that B will never marry. A month
later, B married C. What happens to A’s obligation?

Answer:

A’s obligation is extinguished. Under Article 1181 of the Civil Code, it states that “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”
in which case the above question applies.

In the case at bar, the conditional obligation is resolutory in nature, given that A gave B a
parcel of land on the condition that the latter will never marry. However, the marriage of B to C
a month after constitutes a ground for the extinguishment and loss of the rights acquired for the
parcel of land given by A since B did not satisfy the condition of not having to marry ever.
Hence, the parcel of land shall be returned to A, and B shall be relieved of every right to the
property thereof.

Question No. 3: A and B were co-owners of a motor boat. In a written instrument, B sold her
half-share in the boat to A for 4,500.00 which was to be paid in three equal installments. It was
agreed that in the case of first default, A must pay interests; and that in case of second default, B
gets back her half-share in the boat without the necessity of reimbursing A for whatever A has
already paid. After paying two installments, A defaulted in the payment of the third installment.
Subsequently, a fortuitous event destroyed the boat. B now instituted and action to recover what
has not yet been paid (the third installment) plus 6% interest from default. A claims however,
that the loss of the boat by fortuitous event has excused him from the obligation to pay the
balance. Is A correct?

Answer:

No, A is incorrect in his argument. Under Article 1191 of the Civil Code, the power to
rescind obligations is implied in reciprocal ones in case the obligor should not comply with what
is incumbent upon him. The remedies for the creditor or injured party under this article is vested
with the choice between the demand of fulfillment with damages and rescission of the obligation.

In the given case, B choose fulfillment of the obligation with damages in case A failed to
comply with what has been stipulated in their contract on the day of the obligation’s constitution.
Further, based on the given facts, the motor boat is a generic thing that can be replaced with the
same unit in case of its loss or deterioration due to a fortuitous event or other modes. A is hereby
still compelled to pay in cash to B the remaining balance because cash in itself cannot be
considered a determinate thing. Thus, A is still bound to fulfill his obligation of paying the
remaining balance.

Question No. 4: A owes B Php 1,000,000.00 demandable on December 31, 2025. In December
2024, A becomes insolvent. B demanded payment from A. Is A obligated to pay the Php
1,000,000.00 in December 2025.

Answer:

Yes, A is obligated to pay the amount of Php 1,000,000.00 to B on December 31, 2025.
However, as stipulated under Article 1198 of the Civil code, there are certain grounds or
measures in which a debtor such as A can lose his right to make use of a period based on the
facts and circumstances attendant to the case.

In the given case, upon the declaration of A that he was insolvent prior to the demandable
period for fulfillment of the obligation, would render the obligation outright demandable unless
otherwise A provides a guaranty or security for such payment. Hence, B is correct in demanding
payment from A for his obligation cannot be extinguished in the case of insolvency.

Question No. 5: D is obliged to give C, at D’s option, either Object No. 1, Object No. 2, or
Object No. 3.

a. If all objects were lost through D’s fault, what is the remedy available to C? Why?

Answer:

Under Article 1204 of the Civil Code, the creditor shall have a right to indemnity for
damages when, through the fault of the debtor, all the things which are alternatively the object of
the obligation have been lost, or the compliance of the obligation has become impossible applies
to this case.
 In the case at bar, the lost of all the things due to D’s fault being the debtor, the choice by
the creditor shall fall upon the price of the last thing lost with indemnity to damages which in this
case is Object No. 3. Upon the lost of the prestations based in the order of 1, 2 and 3, the value of
the 3rd prestation, Object No. 3 shall be the determining factor of the value to be given to the
creditor on top of damages.

b. If Objects Nos. 1 and 2 were destroyed by fortuitous event, and later Object No. 3 is destroyed
by D’s fault, would D be liable? Why?

Answer:

Yes, D is held liable for the loss of Object No. 3. Enumerated under Article 1204 of the
Civil code, if thing was lost through a fortuitous event, the debtor shall deliver the obligation that
the creditor chooses from among the remainder, or that which remains if only one subsists.

In the given case, the destruction of Objects Nos. 1 and 2, leaving Object No. 3 made the
obligation no longer alternative but rather simple. D should be compelled to deliver the last
object among the options however, due to his fault, the object was destroyed. Hence, D should be
liable for the loss of the thing specifically Object No. 3 with damages.

c. If instead, Objects Nos. 1 and 2 were destroyed by D’s own fault, and later Object No. 3 is lost
by a fortuitous event, should D be held liable? Why?

Answer:

No, D should not be held liable for destroying Objects Nos. 1 and 2. Under Article 1204
of the Civil code, the creditor shall have a right to indemnity for damages when, through the fault
of the debtor, all the things which are alternatively the object of the obligation have been lost, or
the compliance of the obligation has become impossible applies to this case.

In the case given, D having all the right to choose being the debtor, he had the right to
destroy Objects Nos. 1 and 2 since he was free not to select them. This would specify his choice
that among the prestations, the last object being Object No. 3 is what he intended to give the
creditor constituting a simple obligation. The loss however of Object No. 3 due to a fortuitous
event, would not render him liable because as the law provides, the obligation is without fault of
the debtor and is hereby extinguished. Hence, D is held not liable for he only specified his choice
among the alternatives and shall communicate the matter to C to insure transparency and
fairness.

Question No. 6: A and B are joint debtors of C, D, E, and F, solidary creditors to the amount of P
1,000,000.00. How much C can recover from A?

Answer:

Under Article 1207 of the Civil code, C being a solidary creditor can recover the whole
amount of the liability however, given that A is a joint debtor, C can only recover the amount of
P 500,000.00 from A.
Question No. 7: In 2020, A, B, and C bound themselves in solidum to give X P 300,000.00
subject to the following stipulations: A to pay in 2021; B, if he passes the Bar; C, in 2023.

a. In 2021, how much can X demand from A?

Answer:

X can demand the payment of Php 100,000.00 from A. Under Article 1211 of the Civil
code, a solidary obligation may exist even though debtors are not bound by the same terms and
conditions.

In the given case, X has the right of the whole obligation however, divided among the
debtors A, B, and C thus, the amount of P 100,000.00 shall be demandable to each subject to
their distinct periods and conditions. Since in 2021, the payment of A is due, he can only demand
the P 100,000.00 thereof.

b. Suppose X instead made a demand on C in 2021, how much can he collect from C?

Answer:

Supposedly X demands the payment of C in 2021, he cannot collect the amount

Question No. 8: A, B, C are jointly liable to give a particular car worth P 1.2 million in favor of
D, E, F, and G. A is insolvent and the debtors, therefore cannot purchase the car to give to the
creditors. D and E have renounced their rights. The debtors are not in default. How much can
each of the creditors get from each of the debtors?

Answer:

This case is embraced in the provision of Article 1209 of the Civil code, wherein it
involves the fulfillment of a liability where its division is not treated as possible. Based on the
facts of the case, the joint and indivisible obligation cannot be fulfilled since the car can no
longer be given, thus, it is converted into an obligation to give indemnity for damages. Since the
obligation is joint, the debtors are proportionately held liable. It is best to divide the liabilities of
each of the parties involved into the following:

1. B and C alongside with A being joint debtors are held liable for the deliverance of the car to
the creditors. However, due to A being insolvent, his co-debtors cannot demand him payment of
the obligation. Further, the obligation of P 1.2 million shall be divided among the three (3) in
which each debtor is held liable for P 400,000.00 each;

2. The creditors are bound to receive the amounts out of the joint monetary obligation from the
debtors. In reference to the total amount a debtor is obligated to give to a creditor which is P
400,000.00, it will be divided among the four (4) creditors which will result to a P 100,000.00
credit for each creditor by each debtor. However, due to the renouncement of D and E, they can
no longer claim their credits. However, F and G’s right to the liability owed to them are still in
force. Further, as to A’s monetary liability, F and G can demand from A because money is no
longer indivisible therefore, the creditors can go after all the debtors individually.