Coursework 4: Reaction Paper for
Group 2
ALTERADO, Bryant A.
ECE70/B2
School of Electrical, Electronics and Computer Engineering, Mapua University
Intramuros, Manila, Philippines
bryant.alterado6@gmail.com
Abstract – This paper is about my reaction to the following
topics discussed by Group 2. The following topics were:
Obligations with a Penal Clause, XYZ case for Ethics,
Payments or Performance, Loss of the Thing Due,
Condonation or Remission of Debt, Confusion or Merger of
Rights and Compensation. Next part of this paper also
contains problems from the case analysis from the book
“Obligations and Contracts 2014” by Hector S. De Leon,
Hector M. De Leon, Jr.
I. INTRODUCTION
Group 2 started their reporting with at Section 6:
Obligations with a Penal Clause. The next topic discussed
by their group was about Ethics which was XYZ Case.
Preceding topics were: Chapter 4, Section 1: Payment or
Performance, Chapter 4 Section 2: Loss of the Thing Due,
Chapter 4 Section 3&4: Condonation or Remission of Debt
and Confusion or Merger of Rights and lastly, Chapter 4
Section 5: Compensation. After that Problems were tackled
for the Case analysis.
II. Problems
1. X promises to deliver to Y a specific horse. Their contract
contains a penal clause that in case of non-fulfillment, X
shall pay a penalty of P10,000. X wants to just pay that
penalty instead of delivering the horse. Has Y the right to
refuse to accept the penalty in lieu of the horse?
2. In the same problem, X was able to show that Y did not
suffer damage by A’s violation of his obligation. Can Y
still enforce the penalty?
3. X the supervisor, informed Y the technician that the
computer system crashed due to a power surge. After
sometime, Y reported back to X that repairs can be made
for P20,000. X reported the same to the Chief Finance
Officer who then instructed Y to dig up all the
underground and building cabling before the insurance
adjustor appears. P500,000 could then be claimed from
the insurance company. Y refused.
When later Z – the newly hired manager and X’s boss,
heard about it he congratulated Y for his integrity. Y
said that it doesn’t matter because X earlier instructed
him to do it. There is no confidential mechanism in
place for reporting wrong-doings internally, and no
legal protection for whistle blowers. The company is
also losing business and have to refund some of its
customers. There are rumors this is not the first time
the company made spurious insurance claims. Assume
you are Z, an ECE engineer. What are your possible
courses of action, citing consequences for each one.
Classify if deontological and teleological and explain.
What will you do, and why?
4. D (debtor) owes C (creditor) P10,000 with G as
guarantor. On the due date of the obligation, T, a third
person, offered to pay the obligation of D. Can C
legally refuse to accept the payment? How about an
offer of payment from G?
5. M (maker) issued a promissory note for P10,000 in
favor of P (payee) who lost the note which was found
by T who demands payment from M. M did not know
that the note was lost by P. Is M justified in paying T?
6. X obliged himself to deliver a specific thing to Y on a
certain date. The thing was lost by X without his fault
and before he has incurred in delay. Does it mean that
X is already exempt from liability?
7. Suppose in the preceding problem, the thing was lost
through the fault of Z, a third person. State the effect
of the loss as far as X, Y, and Z are concerned.
8. A, B, and C are jointly liable to D in the amount of
P15000. Subsequently, D assigned his credit to C in
consideration for goods sold by C to D. Give the effect
of the assignment.
9. A, B, and C are solidarily liable to D in the amount of
P15000. Subsequently, D assigned his credit to C in
consideration for goods sold by C to D. Give the effect
 of the assignment.
10. D borrowed P50,000 as character loan (no security) from
a bank. Despite demands for payment after the loan fell
due, D did not pay the bank. D has a savings deposit of
P40,000 with the bank. Has the bank the right to apply
the deposit to the payment of D’s debt?
11. D borrowed P50,000 as character loan (no security) from
a bank. Despite demands for payment after the loan fell
due, D did not pay the bank. D has a savings deposit of
P40,000 with the bank. Has the bank the right to apply
the deposit to the payment of D’s debt?
wherein the characteristics/qualities of creditor and debtor
are merged in the same person. An obligation is
extinguished if the debtor also becomes the creditor since
one cannot claim against himself. For the last topic which
is Compensation, I learned that Total or partial
compensation applies to all kinds of compensation this is
based from Art. 1281 which states that Compensation may
be total or partial when two debts are of the same amount,
there is a total compensation.

III. Reaction

After a series of discussions of the topics and

analysis of the problem cases we were able to gain
knowledge on the following topics which are:
Obligations with a Penal Clause, XYZ case for Ethics,
Payments or Performance, Loss of the Thing Due,
Condonation or Remission of Debt, Confusion or Merger
of Rights and Compensation.

The second group really did a good job in terms of

the discussion of the topics since they have explained the
articles one by one as well as for the articles pertaining to
the problems from the case analysis. Aside from that, to
better understand the case analysis part, our Instructor
also helped us in answering the problems and he even
explained further the articles used for the case analysis.

All in all, the presentation was good. After the

discussion, for Obligation with a Penal Clause, I learned
that the creditor can recover the damages when so
stipulated by parties, when the obligor refuses to pay the
penalty, and when the obligor is guilty of fraud in the
fulfillment of the obligation (Art 1226), in which case the
creditor may recover damages caused by such fraud. For
Payment or Performance, I learned that payment means
not only the delivery of money but also the performance,
in any other manner, of an obligation. Therefore,
payment and performance are the same. For Loss of the
Thing Due, it is a mode of extinguishment of obligation
wherein the determinate thing is lost or destroyed without
the fault of the debtor, and before he has incurred in
delay. Furthermore, the thing is lost when it perishes,
disappears, or goes out of commerce in which such thing
no longer exists and cannot be received. I also learned
that condonation or remission of debt is a mode of
extinguishment of obligation wherein the creditor
gratuitously renounced his right against the debtor with
the latter’s acceptance. For Confusion or Merger of
Rights, it’s also a mode of extinguishment of obligation