Question:

Juneel promised to give a car to Gloria. The contract carried a penal clause that in case
of non-compliance Juneel would have to pay a penalty of P 50,000.00.

A. If Juneel was not able to deliver to Gloria the car, how much would he pay?

B. Suppose Juneel only paid Gloria P 10,000.00 and presented evidences that Gloria
should be indemnified up to that amount only, is Juneel's contention correct?

C. If Gloria filed a case against Juneel which awards her of damages worth P 50,000.00,
how much sum of money will she receive?

D. If Juneel promised to deliver a Ford car but instead delivers a Honda Civic car in
fraudulent pretenses, is Juneel still liable for damages? Explain.

E. If the car was suppose to be delivered on May 10 but was instead delivered on May
22, can Gloria demand the fulfillment of the penal clause?
ANSWER:
A. Juneel would pay P 50,000 in accordance to the penal clause that is attached to it.

B. No. Gloria cannot recover more than what is stipulated even if Juneel proves that she
should only get P 10,000.00.

C. Unless it is stipulated in the contract, Gloria can recover damages on top of the penalty. A
total of P 100,000.00 she would be able to recover.

D. Yes. If Juneel is guilty of fraud, he is liable for damages because the law says so. (Article
1226)

E. No, Gloria cannot demand fulfillment of the obligation and the satisfaction of the penalty
at the same time unless expressly stipulated in the contract. (Art. 1227)
In 1983 PHILCREDIT extended loans to Rivett-Strom Machineries, Inc. (RIVETTT-
STROM), consisting of US$10 Million for the cost of machineries imported and
directly paid by PHTLCREDIT, and 5 Million in cash payable in installments over a
period of ten (10) years on the basis of the value thereof computed at the rate
of exchange of the U.S. dollar vis-à-vis the Philippine peso at the time of
payment.
RIVETT-STROM made payments on both loans which if based on the rate of
exchange in 1983 would have fully settled the loans.
PHILCREDIT contends that the payments on both loans should be based on the
rate of exchange existing at the time of payment, which rate of exchange has
been consistently increasing, and for which reason there would still be a
considerable balance on each loan. Is the contention of PHILCREDIT correct?
Discuss fully.
ANSWER:

As regards the loan consisting of dollars, the contention of PHILCREDIT

is correct. It has to be paid in Philippine currency computed on the
basis of the exchange rate at the TIME OF PAYMENT of each
installment, as held in Article 1249. As regards the P5 Million loan in
Philippine pesos, PHILCREDIT is wrong. The payment thereof cannot be
measured by the peso-dollar exchange rate. That will be violative of the
Uniform Currency Act (RA, 529] which prohibits the payment of an
obligation which, although to be paid in Philippine currency, is
measured by a foreign currency. (Palanca v. CA, 238 SCRA 593).
Juneel owes LM lending company of P20,000.00. Kat, Juneel's wife,
paid the P 20,000.00.

A. If Juneel permitted such payment of his wife, how much could Kat
recover from Juneel?

B. If Kat only paid P 10,000.00 without Juneel's consent, can Kat be

subrogated? Can she be reimbursed and by how much?

C. If Kat does not intend to be reimbursed, is it considered a donation?

A. P 20,000 plus subrogation of the rights of the
creditor. Article 1236

B. Only P 10,000.00 without subrogation

C. No, it should be with the consent of Juneel,

otherwise, Kat can still recover from Kat. (Article
1238
Question:

Is the acceptance by a creditor of a

partial payment an abandonment of its
demand for full payment?
Answer:
No. When creditors receive partial payment, they are not ipso
facto deemed to have abandoned their prior demand for full
payment. To imply that creditors accept partial payment as
complete performance of their obligation, their acceptance
must be made under circumstances that indicate their
intention to consider the performance complete and to
renounce their claim arising from the defect.
Note: While Article 1248 of the Civil Code states that creditors
cannot be compelled to accept partial payments, it does not
prohibit them from accepting such payments. (Selegna
Management and Development Corp. v. UCPB, G.R. No.
165662, May 30, 2006)
Debbie is indebted to Charlie in the amount of P 10,000.00. On the
date of the maturity payment was made by Debbie to Tilly.

A. Is Debbie still liable to Charlie?

Debbie is liable to Charlie but must prove the
delivery to Charlie. Payment also by a third
person is also valid as it has redounded to the
benefit of the creditor.

(Article 1241)
Lito obtained a loan of P 1,000,000.00 from Ferdie, payable
within a year. To secure payment, Lito executed a chattel
mortgage on a 200 sq meter piece of property.

Lito's failure to pay led to the extra-judicial foreclosure of the

mortgaged real property. Within a year from foreclosure, Lito
tendered a manager's check to Ferdie to redeem the property.
Ferdie refused to accept payment on the ground that he
wanted the payment in cash. The check does not qualify as
legal tender and does not include the interest payment.
Answer:

Fredie's refusal is justified. A check, whether a manager's

check or ordinary check is not a legal tender, and an offer of a
check in payment of a debt is not a valid tender of payment
and may be refused receipt by the obligee or the creditors.
Mere delivery of checks does not discharge the obligation
under a judgment. A check shall produce the effect of
payment only when they have been cashed or when through
the fault of the creditor, they have been impaired.
Q: Lopez obtained a loan in the amount of P20,000.00 from
the Prudential Bank. He executed a surety bond in which he,
as principal, and PHILAMGEN as surety, bound themselves
jointly and severally for the payment of the sum. He also
executed a deed of assignment of 4,000 shares of the Baguio
Military Institution in favor of PHILAMGEN. Is the stock
assignment made by Lopez dation in payment or pledge?
Answer:
The stock assignment constitutes a pledge and not a dacion en pago.
Dation in payment is the delivery and transmission of ownership of a
thing by the debtor to the creditor as an accepted equivalent of the
performance of the obligation. Lopez’s loan has not yet matured
when he "alienated" his 4,000 shares of stock to Philamgen. Lopez's
obligation would arise only when he would default in the payment of
the principal obligation which is the loan and Philamgen had to pay
for it. Since it is contrary to the nature and concept of dation in
payment, the same could not have been constituted when the stock
assignment was executed. In case of doubt as to whether a
transaction is a pledge or a dation in payment, the presumption is in
favor of pledge, the latter being the lesser transmission of rights and
interests. (Lopez v. CA,G.R. No. L‐33157, June
 QUESTION:
Cebu Asiancars Inc., with the conformity of the lessor, used the
leased premises as a collateral to secure payment of a loan which
Asiancars may obtain from any bank, provided that the proceeds of
the loan shall be used solely for the construction of a building
which, upon the termination of the lease or the voluntary
surrender of the leased premises before the expiration of the
contract, shall automatically become the property of the lessor.
Meeting financial difficulties and incurring an outstanding balance
on the loan, Asiancars conveyed ownership of the building on the
leased premises to MBTC, by way of "dacion en pago."Is the dacion
en pago by Asiancars in favor of MBTC valid?
 ANSWER:
Yes. MBTC was a purchaser in good faith. MBTC had no knowledge
of the stipulation in the lease contract. Although the same lease
was registered and duly annotated, MBTC was charged with
constructive knowledge only of the fact of lease of the land and not
of the specific provision stipulating transfer of ownership of the
building to the Jaymes upon termination of the lease. While the
alienation was in violation of the stipulation in the lease contract
between the Jaymes and Asiancars, MBTC’s own rights could not be
prejudiced by Asiancars’ actions unknown to MBTC. Thus, the
transfer of the building in favor of MBTC was valid and binding.
QUESTION:
Debbie borrowed from Charlie P 10,000.00 payable
after five years. On the maturity of the obligation, the
value of P 10,000.00 increased to P 15,000.00 because
of deflation. How much should Debbie pay?
ANSWER:
Debbie should pay P 15,000.00 because in this case the
basis of payment shall be equivalent value of the
currency today to that fve years ago.
QUESTION:
When they were in Manila, Sheera obliged herself to deliver a Honda
Civic to Brenda. Brenda lived in Batangas while Sheera lived in Laguna.

A. Where should the car be delivered?

B. If the car was a generic thing, where should the car be delivered?
ANSWER:
When they were in Manila, Sheera obliged herself to deliver a Honda
Civic to Brenda. Brenda lived in Batangas while Sheera lived in Laguna.

A. The car should be delivered in Manila since the contract was

perfected there.

B. Brenda will have to go to Laguna, where Sheera lives, to get her car.
Brenda will incur the expense of going to Laguna as it is where the
domicile of Sheera.