OBLIGATIONS AND CONTRACTS SEATWORK

1. Baldomero leased his house with a telephone to Jose. The lease contract provided
that Jose shall pay for all electricity, water and telephone services in the leased
premises during the period of the lease. Six m onths later. Jose surreptitiously vacated
the premises. He left behind unpaid telephone bills for overseas telephone calls
amounting to over P20,000.00. Baldomero refused to pay the said bills on the ground
that Jose had already substituted him as the customer of the telephone company. The
latter maintained that Baldomero remained as his customer as far as their service
contract was concerned, notwithstanding the lease contract between Baldomero and
Jose. Who is correct, Baldomero or the telephone company? Explain. (10 pts.)

2. In December 1985, Salvador and the Star Semiconductor Company (SSC)

executed a Deed of Conditional Sale wherein the former agreed to sell his 2,000
square meter lot in Cainta, Rizal, to the latter for the price of P1,000,000.00, payable
P100,000.00 down, and the balance 60 days after the squatters in the property have
been removed. If the squatters are not removed within six months, the P100,000.00
down payment shall be returned by the vendor to the vendee. Salvador filed ejectment
suits against the squatters, but in spite of the decisions in his favor, the squatters still
would not leave. In August, 1986, Salvador offered to return the P100,000.00 down
payment to the vendee, on the ground that he is unable to remove the squatters on the
property. SSC refused to accept the money and demanded that Salvador execute a
deed of absolute sale of the property in its favor, at which time it will pay the balance
of the price. Incidentally, the value of the land had doubled by that time. Salvador
consigned the P 100,000.00 in court, and filed an action for rescission of the deed of
conditional sale, plus damages. Will the action prosper? Explain. (10 pts.)

3. Printado is engaged in the printing business. Suplico supplies printing paper to

Printado pursuant to an order agreement under which Suplico binds himself to deliver
the same volume of paper every month for a period of 18 months, with Printado in
turn agreeing to pay within 60 days after each delivery. Suplico has been faithfully
delivering under the order agreement for 10 months but thereafter stopped doing so,
because Printado has not made any payment at all. Printado has also a standing
contract with publisher Publico for the printing of 10,000 volumes of school
textbooks. Suplico was aware of said printing contract. After printing 1,000 volumes,
Printado also fails to perform under its printing contract with Publico. Suplico sues
Printado for the value of the unpaid deliveries under their order agreement. At the
same time Publico sues Printado for damages for breach of contract with respect to
their own printing agreement. In the suit filed by Suplico, Printado counters that:
(a) Suplico cannot demand payment for deliveries made under their order agreement
until Suplico has completed performance under said contract;
(b) Suplico should pay damages for breach of contract; and
(c) with Publico should be liable for Printado’s breach of his contract with Publico
because the order agreement between Suplico and Printado was for the benefit of
Publico. Are the contentions of Printado tenable?

Explain your answers as to each contention. (15 pts.)

4. Marvin offered to construct the house of Carlos for a very reasonable price of
P900,000.00, giving the latter 10 days within which to accept or reject the offer. On
the fifth day, before Carlos could make up his mind, Marvin withdrew his offer.

a) What is the effect of the withdrawal of Marvin's offer?

b.) Will your answer be the same if Carlos paid Marvin P10,000.00 as consideration
for that option? Explain.
c.) Supposing that Carlos accepted the offer before Marvin could communicate his
withdrawal thereof? Discuss the legal consequences. (15 pts.)

5. Roland, a basketball star, was under contract for one year to play-for-play
exclusively for Lady Love, Inc. However, even before the basketball season could
open, he was offered a more attractive pay plus fringes benefits by Sweet Taste, Inc.
Roland accepted the offer and transferred to Sweet Taste. Lady Love sues Roland and
Sweet Taste for breach of contract. Defendants claim that the restriction to play for
Lady Love alone is void, hence, unenforceable, as it constitutes an undue interference
with the right of Roland
to enter into contracts and the impairment of his freedom to
play and enjoy basketball. Can Roland be bound by the contract he entered into with
Lady Love or can he disregard the same? Is he liable at all? How about Sweet Taste?
Is it liable to Lady Love? (10 pts.)

6. X, who has a savings deposit with Y Bank in the sum of P1,000,000.00 incurs a
loan obligation with the said Bank in the sum of P800.000.00 which has become due.
When X tries to withdraw his deposit, Y Bank allows only P200.000.00 to be
withdrawn, less service charges, claiming that compensation has extinguished its
obligation under the savings account to the concurrent amount of X's debt. X contends
that compensation is improper when one of the debts, as here, arises from a contract
of deposit. Assuming that the promissory note signed by X to evidence the loan does
not provide for compensation between said loan and his savings deposit, who is
correct? (10 pts.)