OBLIGATIONS AND CONTRACT

Assignment/Seatwork:
Instructions: The following are essay type of questions. Answer completely but briefly. If the
question is answerable by yes or no, indicate clearly before explaining. Use the provisions of the
Articles. This is your first graded written recitation. Submission is due on the next meeting. Each
question is for 10 points each. Zero points equivalent to zero. Copying answers from your fellow
classmates will be dealt with severely. Good luck!

Article 1187
1. Pursuant to Article 1187 of the Civil Code, sometime 2023, A promised to B that he will
donate his land with Banana Plantation to B once he graduates. In 2025, B graduated
from Maryhill College. A donated the land to B in 2025. When is the land considered
donated to B?

- Under Article 1187 of the Civil Code, the effects of a conditional obligation to give
once the condition has been fulfilled shall retroact to the day of the constitution of the
obligation. In this case, A promised to donate the land in 2023, subject to the
condition that B graduates. Since B fulfilled the condition in 2025, the donation is
considered to have taken effect retroactively from the same year, 2025.

2. Supposed that the property from 2023 until the donation in 2025 yielded banana fruits in
an amount of P500, 000.00. Is B entitled to collect the P500, 000.00 from A?

- No. Under the same provision of Article 1187 above, which includes the Retroactive
effects as to fruits and interests, in a unilateral obligation, the debtor receives nothing
from the creditor; thus, the fruits and interests belong to the debtor. Upon the
fulfilment of the condition, A, the debtor, has to donate the land, but he has the right
to keep all the fruits he received during the pendency of the condition, which is from
the year 2023 to 2025, until B graduates.
Article 1188
1. The employees of ABC Corporation have been regularly contributing to their pension
fund which began sometime 1995. Sometime 2024, ABC Corporation decided to invest
P50, 000,000.00 which is 80% of the pension fund to online sabong as the officers of the
Corporation believed that such investment will get higher earnings. Supposed that the
employees of ABC Corporation decided to file a case for the cancellation of the
investment contract because it carries the high risk of losing their precious pension fund
to gambling, can the employees file such a case under Article 1188 of the Civil Code?

- Yes. Under Article 1188 of the Civil Code of the Philippines, the creditor may, before
the fulfilment of the condition, bring the appropriate actions for the preservation of
his right. In this case, the employees’ pension fund is meant for their own benefits,
thus they can exercise their rights and take legal action in preventing significant
losses from gambling.

2. Supposed ABC Corporation argued that not all employees are entitled to the pension fund
warranting the dismissal of the case, is this correct?

- No. Given that not all employees are not entitled to the pension fund, those who are
entitled still have the right to protect it and have legal authority to act upon what
endanger their financial security. ABC Corporation is obligated to manage the fund in
the best interest of its beneficiaries rather than put it at risk.

Article 1189
1. A, the father of B bought a brand new red Toyota Vios with plate number 123ABC as
a Christmas gift for B last December 2024. To ensure that B would not be distracted and
would finish his studies at Maryhill, A imposed the condition that the car would remain
under A's care until B graduates.
a.) Supposed that the said car was lost due to a flood, is A liable to B for damages?
- No. Under Article 1189 of the Civil Code of the Philippines, which includes the
Rules in case of loss, deterioration, or improvement of the thing during pendency
of suspensive condition, A is not liable for damages or loss of the car due to a
fortuitous event, unless negligence on his part is present.
b.) Supposed that the car was lost to the flood because it was parked by A near a river
which is known for being flooded often during rainy season, is A liable to B for
damages?
 - Yes. Under Article 1170 of the Civil Code of the Philippines, those who act
negligently in fulfilling an obligation are liable for damages. Since A had the car
under his care, parking the car near a known flood-prone area is an act of
negligence, making him liable for damages.
c.) Supposed in 2025 B finally graduates. When A gave the car to B, B noticed that the
tires and the battery became worn and needed replacement. Who is bound to pay for the
expense of replacing the tires and battery?
- B must pay for the expenses. Under Article 1189 of the Civil Code of the
Philippines, which includes the Rules in case of loss, deterioration, or
improvement of the thing during pendency of suspensive condition, A is not liable
for the natural deterioration of the car if there is no negligence present. Since B
fulfilled the condition by graduating, A’s custody of the car extinguishes, which
makes B the new owner who is now responsible for the cost of replacing the tires
and battery of the car.
d.) Supposed that in 2025, when the car is given to B and B sees that the car suffered
dents and scratches because of improper parking by A, is A liable for the repairs?
- Yes. Since negligence is present in A’s part, under the same provision above, the
creditor (B) may choose between the cancellation of the obligation and its
fulfilment, both with damages.
e.) Supposed that before the graduation of B, the plate number of the Toyota Car was
randomly selected and won a raffle from Toyota for 4 sets of brand-new mags and tires
worth P300, 000.00. Who is entitled to claim the brand-new mags and tires?
- B is entitled to claim it. Under Article 1187, the effects of a conditional
obligation retroact to the moment it was constituted. Since the car was already a
gift to B in 2024, ownership is considered his upon fulfilling the condition, his
graduation. While under Article 1189, any improvements or benefits that naturally
arise shall become of the creditor. Although A had custody of the car, it was
meant for safe keeping not ownership. Thus, any benefits derived from the car,
including the raffle prize, rightfully belongs to B.
f.) Supposed that prior to the graduation of B, A purchased brand new suspension and
interior for the Toyota Car. When B graduates, is A entitled to claim reimbursement for
his expenses for the new suspension and interior of the car?
- No. Under the same provision of Article 1189, if A made the improvements at
his own expense while B was yet to graduate, he is not entitled to demand
reimbursement. Since A had the right to use and maintain the car as a
usufructuary, he also voluntarily made the purchases. However, once B fulfilled
 the condition and became the rightful owner, A’s usufruct to the car is
extinguished, which he can no longer claim repayment for the upgrade of the car.

Article 1191
1. Under Article 1191, what are the 2 options available to the injured party in case the
debtor fails to comply with his or her obligation?

a. Action for specific performance (fulfillment) of the obligation with damages;

or
b. Action for rescission of the obligation also with damages.

2. When does the option of rescission becomes the only option?

- Rescission becomes the only option when the fulfillment of an obligation

becomes impossible due to circumstances. In which the creditor can no longer
demand for compliance from the debtor.

3. Among the options, when can the creditor claim damages?

- Under the provisions of Article 1191, regardless of whether the creditor

chooses fulfillment or rescission, they are entitled to damages for the breach
of contract. If the creditor demands fulfillment of an obligation, they are
entitled to damages for any non-compliance or delay by the debtor. Even if the
creditor chooses rescission, they can still claim damages as compensation for
losses caused by the debtor’s failure to fulfil their obligation.