[Discuss/answer the question below. Or see Civil Law Instructions; Civil Law Instructions; Civil Law Essay Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10; Civil Law Multiple Choice Questions: 1, 2, 3, 4, 5, 7, 8, 9 and 10; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]
Gary is a tobacco trader and also a lending investor. He sold tobacco leaves to Homer for delivery within a month, although the period for delivery was not guaranteed. Despite Gary’s efforts to deliver on time, transportation problems and government red tape hindered his efforts and he could only deliver after 30 days. Homer refused to accept the late delivery and to pay on the ground that the agreed term had not been complied with.
As lending investor, Gary granted a P1,000,000 loan to Isaac to be paid within two years from execution of the contract. As security for the loan, Isaac promised to deliver to Gary his Toyota Innova within seven (7) days, but Isaac failed to do so. Gary was thus compelled to demand payment for the loan before the end of the agreed two-year term.
VI.(1) Was Homer justified in refusing to accept the tobacco leaves? (1%)
(A) Yes. Homer was justified in refusing to accept the tobacco leaves. The delivery was to be made within a month. Gary’s promise of delivery on a “best effort” basis made the delivery uncertain. The term, therefore, was ambiguous.
(B) No. Homer was not justified in refusing to accept the tobacco leaves. He consented to the terms and conditions of the sale and must abide by it. Obligations arising from contract have the force of law between the contracting parties.
(C) Yes. Homer was justified in his refusal to accept the delivery. The contract contemplates an obligation with a term. Since the delivery was made after 30 days, contrary to the terms agreed upon, Gary could not insist that Homer accept the tobacco leaves.
(D) No. Homer was not justified in refusing to accept the tobacco leaves. There was no term in the contract but a mixed condition. The fulfillment of the condition did not depend purely on Gary’s will but on other factors, e.g., the shipping company and the government. Homer should comply with his obligation.
VI(2) Can Gary compel Isaac to pay his loan even before the end of the two-year period? (1%)
(A) Yes, Gary can compel Isaac to immediately pay the loan. Non?compliance with the promised guaranty or security renders the obligation immediately demandable. Isaac lost his right to make use of the period.
(B) Yes, Gary can compel Isaac to immediately pay the loan. The delivery of
the Toyota Innova is a condition for the loan.Isaac’s failure to deliver the car violated the condition upon which the loan was granted. It is but fair for Gary to demand immediate payment.
(C) No, Gary cannot compel Isaac to immediately pay the loan.The delivery of the car as security for the loan is an accessory contract; the principal contract is still the P1,000,000 loan. Thus, Isaac can still make use of the period.
(D) No, Gary cannot compel Isaac to immediately pay the loan. Equity dictates that Gary should have granted a reasonable extension of time for Isaac to deliver his Toyota Innova. It would be unfair and burdensome for Isaac to pay the P1,000,000 simply because the promised security was not delivered.