LEGAL ASPECTS OF BUSINESS

Atty. Jericho B. del Puerto

6/26/2014 9:46 PM . All Rights Reserved. Page 1 of 7
LAW ON OBLIGATIONS
Worksheet 1

NAME: _________________________________ (SURNAME, FIRST NAME)
Instructions: Please responsively answer the following questions. Kindly make sure to cite your legal
basis, which may be a provision of law, rules, or jurisprudence (check the footnotes of the book drafts
for reference). Each item carries twenty (20) points each.
When answering, follow this format: (I) answer the Issue, (R) cite the applicable Rule, (A) then Apply
the rule to the problem, and (C) make a Conclusion. Thus, your answers should not exceed six (6)
short sentences. Keep this in mind as this is how you will answer also in the exams.
Afterwards, please convert this word document (.docx) to pdf by clicking Save As and thereafter
choosing PDF. You are reminded to keep a copy of this worksheet to serve as your reviewer/notes for
the exams. Late or failure to submit merits an automatic score of 80.
Deadline: 21 June 2014, 12:00 midnight

SAMPLE
On his 55
th
birthday, a senior vice-president and prospective (next-in-line) president of a
multinational corporation invited the senior officers of the corporation for lunch. They went
to a five star hotel and dined therein. After their sumptuous meal, the senior vice-president
paid via credit card. However, when the card was swiped, it did not permit any transaction.
Sensing there was a problem, the guests started to feel uneasy and uncomfortable especially
when other customers of the restaurant started looking at them. To avoid any further
inconvenience, the president of the corporation took out his credit card and asked the
waiter to use it. He told everyone that it was his gift to the senior vice-president. The
presidents credit card worked and the bill was paid. Later on, when the senior vice-
president asked his bank regarding his credit card, he was informed that there was a
technical difficulty around the time it was swiped. Does the vice-president have an action for
breach of contractual obligations against the bank considering that the meal was paid for by
the president? Explain.

Answer: Yes, the vice-president has an action for breach of contractual obligations against the bank.
In Osmundo Canlas v. Court of Appeals, banks are required to observe diligence more than that of a
good father of a family. By failing to inform the vice-president of the technical difficulty, the bank
failed to observe the required diligence. Hence, the bank may be held liable for breach of
contractual obligations.
LEGAL ASPECTS OF BUSINESS
Atty. Jericho B. del Puerto

6/26/2014 9:46 PM . All Rights Reserved. Page 2 of 7
1. On her 30
th
birthday, Veronica went to an amusement park with sole intent of riding
and conquering the buffalo ride (a contraption simulating a rodeo ride). The ride was
cushioned within a 5 meter diameter. In her teenage years, she was traumatized
when she suffered injuries after riding it. To face her fears, she rode it again after
almost 10 years from the last incident. When the buffalo ride started, she held on for
a few minutes and thereafter she was thrown off hitting the ground. Unfazed, she
rode again. This time, when she was thrown off, she hit the floor head first breaking
her neck. She was immediately rushed to the hospital and underwent surgery. She
incurred a total cost of Php5 Million for expenses. May Veronica file a lawsuit against
the amusement park to recover damages she spent for expenses? Explain.

Answer:



LEGAL ASPECTS OF BUSINESS
Atty. Jericho B. del Puerto

6/26/2014 9:46 PM . All Rights Reserved. Page 3 of 7
2. Power Printing is a publishing company. When it applied for a Php30 Million loan
from a bank in order to buy new printing machines, it mortgaged its building where
old printing machines reproduce books, magazines, etc. Unable to pay, and after
defaulting, the bank initiated a collection suit and obtained a favorable judgment
foreclosing the mortgage over the building. Subsequently, the court sheriff sold the
building, including the old printing machines, to a third party. Power Printing
protested the sale claiming that the mortgage covered only the building. Is Power
Printing correct? Explain.

Answer:






LEGAL ASPECTS OF BUSINESS
Atty. Jericho B. del Puerto

6/26/2014 9:46 PM . All Rights Reserved. Page 4 of 7

LEGAL ASPECTS OF BUSINESS
Atty. Jericho B. del Puerto

6/26/2014 9:46 PM . All Rights Reserved. Page 5 of 7
3. After 25 years of being with a BPO Multinational Company, Jason Cruz was finally
promoted as president. Throughout the years, he was given shares of the corporation
as part of his compensation. With his length of service, he realized that he had
already 51% ownership of the corporation. When the company entered into a
contract for high-end computer servers worth Php50 Million, the supplier required
Jason to execute a Continuing Surety wherein he will bound himself to be solidarily
liable. Due to global economic downturn, the company incurred huge and substantial
losses such that it was unable to pay its P25 Million outstanding obligation.
Consequently, the supplier sent a demand letter against Mr. Cruz to recover the
remaining balance. Shocked, Mr. Cruz adamantly refused to pay claiming that he
cannot be made liable as the company has a separate and distinct personality such
that its obligations cannot be transferred to its shareholders or officers. Is Mr. Cruz
correct? Explain.

Answer:




LEGAL ASPECTS OF BUSINESS
Atty. Jericho B. del Puerto

6/26/2014 9:46 PM . All Rights Reserved. Page 6 of 7
4. Shaina is a real estate agent working for Dream Builder Real Estate, which is a
domestic corporation engaged in developing condominiums. During her 3 years stay
with the company, she made advances amounting to Php50,000.00. Thus, when she
resigned from the firm, her last pay only amounted to Php5,000.00 as her advances
were loans with the company were deducted. Shocked, and hoping to use the
Php55,000.00 to pay for her auto loan and credit card loan, she sent a demand letter
to her previous firm asking for the total amount claiming that the corporation had no
right to deduct her last pay. Is Shaina correct? Explain.

Answer:




LEGAL ASPECTS OF BUSINESS
Atty. Jericho B. del Puerto

6/26/2014 9:46 PM . All Rights Reserved. Page 7 of 7
5. Max Software entered into a contract with Sophia Construction. The software
company obligated itself to deliver an engineering program to be used by the
construction firm for a big project development by January 2015. Thus, it was
expressly agreed upon that the software program had to be delivered on/before
December 25, 2014. On/before the due date, the software company forwarded the
software program which was 85% complete informing the construction company that
for all intents and purposes the application may be used for the big project
development. The software company was unable to complete the program since the
chief software engineer in charge of the project died a month before the deadline.
The construction firm refused to accept the engineering program. As a result, and to
avoid liability, the software firm was constrained to initiate a complaint against the
construction firm to compel the latter to accept the software and release the software
firm from its liability. Does the software firm have any ground for its complaint?
Explain.

Answer: