Obligations and Contracts Case Digest


Saludaga V.S. Far Eastern University
553 SCRA 741

I. Facts:
It is the obligation of any college institution to provide a safe and secure environment for every student. As for the students, they have the obligation to give back the respect for their respective colleges and to excel and do well with the institution’s goals. Far Eastern University failed to comply with their obligation when a student of theirs, whose name is Joseph Saludaga was shot inside the campus by their security guard named Alejandro Rosete. The victim petitioned a case against FEU and Edilberto C. De Jesus, president of FEU. The University also failed to check the qualifications of the security guards hired through Galaxy, the third party which hires security guards for the university. From there, there are also complaints for Galaxy being the first employers of Rosete. It is also said that the safety of the university should not only be within the hands of the security guards. Damages are taken by Saludaga by surprised including physical and moral damages obtained from the said accidental shooting by Rosete who claimed that it was an accident.

II. Issues:
Whether Far Eastern University failed to comply with their obligation in implementing a safe and secure learning environment.

III. Held:
The court dismissed the the petitioner’s complaints for Edilberto C. De Jesus as well as the counterclaims of the respondents. The Regional Trial Court of Manila found FEU to be liable for the damages and a breach of their obligation to the petitioner. FEU was ordered to pay actual damage of 35,298.25, plus 6%interest per annum from the filing of the case until the finality of decision. After the execution, the rate shall be 12& per annum until its satisfaction. FEU was ordered to pay temperate damages in the amount of P20,000.00. Moral damage for P100,000.00, attorney’s fees and litigation expense for 50,000.00
Galaxy was and its presidents were ordered to jointly and severely pay the respondent FEU damages equivalent to the amount awarded to Saludaga.

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Figures of Speech or Idioms


Idioms or figures of speech are combination of words whose meaning cannot be determined by examination of the meanings of the words that make it up. Or, to put it another way, an idiom uses a number of words to represent a single object, person or concept. Unless you recognize when an idiom is being used you can easily misunderstand the meaning of a text.

Figures of Comparison
– The likening of one thing to another (usually translated using the English words “like” or “as”.

Metaphor – An implied comparison between two objects without the use of “like” or “as”.

Idioms of Overstatement
– An exaggeration to make or reinforce a point.

Hendiadys – The combination of two or three things to express the same meaning.

Idioms of Understatement
– Stating one thing while meaning the exact opposite. When used to taunt and ridicule irony is called sarcasm.

Litotes or Meiosis – A phrase that understates or lessens one thing in order to magnify another.

Euphemism – The substitution of a cultured or less offensive term for a harsh one.

Antithesis – A direct contrast in which two sets if figures are set in opposition to one another.

Idioms Involving Omission
– A grammatically incomplete expression that requires the reader to add concepts in order to finish the thought. Most of there omissions are already supplied by the translators of our Bibles.
Idioms of Association or Relationship
– The substitution of a noun for another closely associated noun. The substituted noun derives its meaning in the context its is used by the association produced in the readers mind.

Synecdoche – A figure of speech in which the part stands for the whole or the whole for the part.

Eponymy – is a sub-division of synecdoche in which an individual stands for the whole nation.

Merismus – is a combination of parts of the whole to express totality.

Idioms Stressing the Personal Dimension
– The representation of an object or concept as if it were a person.

Apostrophe – A development of personification in which the writer addresses the object or concept that he has personified.

Retail Plan Sample


1.0 Executive Summary

Asian Heritage Clothing will be start-up retail men’s, women’s, and children’s clothing store specializing in unique clothing that recognizes different fashionable trends of Asians. The store is a one stop shop, it includes everything about fashion – any kind of clothing’s, bags, accessories, and many more. This excludes family health insurance but talking about fashion clothing, Asian Heritage Will be a great deal. This store is a local market and will serve both youth and adults. Our intent is to provide the community with unique clothing they would normally purchase according to their culture.

We would be the first and only Asian owned apparel store here in our country. Our intentions are to obtain 80% market share and become a central hub of shopping activity for the local population as well others who enjoy wearing Asian trendy apparel. There are no other Asian urban wear stores located within 20 miles of the location selected for this store.

1.1 Objectives

  • Establish a unique clothing retail business in the city
  • Create jobs
  • Provide quality clothing and customer service at a reasonable price
  • Achieve the largest market share in the city for Asian urban wear
  • Be an active and vocal member of the community, and to provide continual reinvestment through participation in community activities and financial contributions
  • Achieve a profit within the first year
  • Continually and consistently increase total number of customers per year
  • Increase average length of customer relationships and decrease customer turnover

1.2 Mission

Asian Heritage Clothing Store is a retail clothing store specializing in unique clothing and accessories describing each Asian culture. We encourage customers to be experimental with new clothing styles. Our mission is to understand what our customers’ needs and hopes are after buying urban wear clothing.

Asian Heritage Clothing will maintain financial balance while delivering a quality product to our customers. We will make our clothing accessible throughout our community by way of establishing a retail location, fashion shows, and events. We will make a profit and generate cash. We will provide a rewarding work environment and fair compensation to our employees; ultimately provide excellent value to our customers, and a fair return to our owners.

1.3 Keys to Success

In order to succeed in the Asian wear apparel industry, Asian Heritage Clothing must:

  • Advertise and promote in areas that our target customer base will learn about our store.
  • Maintain enough money on hand each month to pay the cash obligations the following month.
  • Identify and eliminate deficiencies or surpluses in cash.
  • Alter business financial plans to provide more cash if deficiencies are found.
  • Invest any revealed excess cash in an accessible, interest bearing, low-risk account such as a savings account or short-term basis.
  • Eliminate credit and terms to customers, not credit card sales.
  • Clearly understand the Asian wear market, distribution costs and competition, and continually adjust accordingly.
  • Continuously review our inventory and sales and adjust our inventory levels accordingly.
  • Keep enough cash, as needed cushion for security, on hand to cover expenses.
  • Reduce accountant expenses by producing our own summary statistics and projections via accounting software.
  • Provide customers with top notch personalized customer service in an atmosphere of southern hospitality.

2.0 Company Summary

The business will be named “Asian Heritage Clothing Store.” This is to identify the store with the different fashion trends of Asians, where most of the store’s inventory will be purchased.

Asian Heritage Clothing Store’s primary goal is to find customers and keep them coming back.

Asian Heritage is designed to help customers change their look and/or stick with their Asian culture and traditions without buying an entirely new wardrobe. We will cater to the person wanting to build a new wardrobe by purchasing clothing and accessory pieces to add to clothing they already have.

Customers will rely on the business they purchase pieces from to give them continuous help and personal opinions. Theirs is a business that repeats and it will be easy to establish a strong clientele.

Customers will save money from having to buy a complete outfit by just purchasing pieces. They will also enjoy shopping in stores that are well inventoried and serviced-minded, such as Asian Heritage Clothing.

Asian Heritage will set the pace for Asian urban fashion for all seasons. Last year’s outfit will be accessorized to be this year’s outfit. People like to buy clothing pieces and accessories to continue wearing clothing that would be out-of-date otherwise.

Asian Heritage Clothing will also cater to all types of customers and for all occasions other than routine shopping. Examples: Wives buying gifts for their husbands, friends buying gifts for their friends, etc. Asian Heritage Clothing’s store will be a source of wearable gifts.

Retail profits can be as high as 65-85 percent on clothing and accessory pieces. The sales and profit margins in a specialty clothing and accessory store are higher than the average retail store. We have the opportunity to profit successfully.

The urban clothing market is the most exciting, fastest growing market for consumers. They will always look for unique clothing pieces and they will not hesitate to buy them.

2.1 Company Ownership

Asian Heritage Clothing is organized as a partnership among the four partners of Robles, Nabong, de los Santos and Logronio. Each of them will hold 25 percent ownership. They will handle all administrative and managerial duties.

2.2 Start-Up Summary

Asian Heritage Clothing’s incorporation costs are listed below. The company will start with three months inventory on hand for apparel and accessories as this are the main revenue generator. The majority of the company’s assets will reside in inventory. The details are included in the following chart and table. It is planned to start the business in the month of December because this is the Christmas seasonal month in which retail store are known to have high sales. Once established, business volume may be somewhat cyclical for that reason.

Successful operation and building a loyal customer base will allow Asian Heritage Clothing to be self sufficient and profitable in year two.


Start-up Expenses

Php 18,000

Grand Opening Event


Telephone & Utilities (3 months)




Business Insurance


Advertising & Promotion


Store Fixtures/Decorations


Computer/Cash Register


Signage (Including Permits)


Organizational Dues & Subscriptions


Business/Office Supplies




Total Start-up Expenses


Start-up Funding Plan
Personal Investment

Php 4,000,000



Total Investment


Short-term Liabilities
Unpaid Expenses

Php              0

Short-term Loans


Interest-free Short-term Loans


Subtotal Short-term Liabilities


Long-term Liabilities


Total Liabilities


Loss at Start-up


Total Capital


Total Capital and Liabilities




2.3 Company Locations and Facilities

Asian Heritage Clothing Store will be located at Makati. The store is approximately 2500 square feet. It contains four dressing rooms and a unisex restroom. Parking space is available in front of the store with additional spaces in the rear for overflow. There are a variety of businesses in the area that include coffee shops, restaurants, and a bake shop. This variety of businesses creates a constant flow of traffic during most business hours.

While a clothing retail store is not unique in itself, this business will have one-of-a-kind items and provide personal one-on-one attention to customers after hours when needed. Customers can buy sweaters, dress slacks, dress shirts, coats, jogging suits, jean outfits, children’s’ items, catalog items, and more. The store hours will be 7 days a week. Store hours will be from 10 A.M. to 10 P.M., Monday through Saturday, and 11:00 A.M. to 8:00 P.M. on Sundays.

We will have two full-time employees. The wages for these employees will be Php 20.00 per hour. We will not be offering benefits for the first couple of years. Employees will do the cleaning of the building.

3.0 Products

Asian Heritage Clothing wants to give the Asian a modern fashionable trend in every consumer. The main targets of A.H.C are those Asians who want to feel the comfort with modern styles that can satisfy their needs and wants on terms of fashionable clothing. Our selection deals on every kind of clothes for men and women. We will be purchasing through sales representatives and manufacturers in a variety of sizes, colors and style to fit our target market base. Our quality is our main objective to convince our consumers to buy in our store.

Our Store will be open on those consumers who want to suggest or say something about our products. In this method it will help us to identify what the consumer wants.

3.1 Product description

Asian Heritage Clothing’s brand will fall in our main objective is to satisfy the consumers with our quality with fashionable style for Asians.

Some of the labels we will carry are listed below:

–       Sunny Get Up by People r People

–       Ragged Jeans by Jeans and Co.

–       Trendy accessories by Abubut

–       Modernized Native clothes by Rico Designs

–       Asia’s Sophisticated Things by One Asia

3.2 Competitive Comparison

Asian Heritage Clothing has a number of advantages that will allow us to build our brand identity, add value to our merchandise and build a loyal customer base while standing apart from our competitors.

  • We will Open several stores in different malls in Metro Manila..
  • The ‘Asian Heritage Card’ will entitle customers to a 15% discount after ten purchases.
  • We will offer clothing to fit plus-size women and big and tall men.
  • We will create a sense of culture and bonding with the community by offering products to be participated by Asians.
  • Our location is central to our target customer base.
  • We will maintain a detailed record on each customer, logging addresses, their purchases, size, and brand for customer follow-up and in-house promotional purposes.

3.3 Sales Literature

Asian Heritage Clothing will use a targeted advertising and sales program to generate publicity and build a customer base.

  • Gift certificate that will be distributed in some malls. And also some fun activities that awaits you there.
  • First 100 customers that will enter the shop will be given a 10% discount if they buy something. .
  • 3000 Asian heritage Card holder will be given in special gift if they purchased 7 times.

3.4 Sourcing

We will shop for our merchandise as outlined below

  • With manufacturers who have a regional representative and showroom located at the Mary Jane Market Center, we will place our weekly and monthly reorders with them and review new products. For all other brands we will work directly with the manufacturer and utilize product catalogs and line sheets.
  • A Fashion Show and for new stylish accessories, the largest regional show for Asian wear and new accessories featuring the latest collections of all brands with regional representatives. All orders will be placed for Fall lines not previously viewed and placement orders for Holiday 2009 and spring 2010 will begin.

3.5 Technology

Our business plan will be generated and reviewed on a bi-annual basis using the most updated version of Business Plan Pro from Palo Alto Software and reviewed quarterly to ensure all financial goals and objectives are being reached. Palo Alto’s companion software, Marketing Plan Pro, will allow us to make the most of our limited marketing budget by focusing our communications on our target markets and enhancing our marketing knowledge.

3.6 Future Products

As we achieve and exceed our sales and profitability goals, Asian Heritage Clothing will add Asian boots to the product line and our own personal in-house label of clothing that will include Asian Heritage Jeans for women and men. We will expand our line of brands with those that have been repeatedly requested by our customers. An e-commerce website will also be created to increase our distribution channels and expand our customer base to a national level.

4.0 Market Analysis Summary

The primary Target of Asian Heritage Clothing will be local citizens living in Metro Manila. As we are situated in the heart of their residential community we believe they will make up the largest percentage of our customer base.

The secondary target customers are the foreign community of Asians living or staying in the area. Visiting foreigners from other Asian countries are growing rapidly and may seem to be a good chance to have something of their liking.

The last target customer of Asian Heritage is listed as other. As popularity about the store increases we expect to see an assortment of curiosity seekers, and local residents from the community as well as seasonal purchasers during different seasons.

4.1 Market Segmentation

A good number of consumers’ population is concentrated heavily in Manila city therefore leading to the highest concentration of our customer base.

The last area of potential customers is labeled as “other.” Because Asian Heritage Clothing offers a variety of Asian wear clothes along with accessories and gifts we feel that we will attract many curious shoppers. Our ambience and customer service will make them repeat customers.

4.2 Target Market Segment Strategy

The goal of Asian Heritage Clothing is to give the Asian the quality that they want in terms of clothing that can really satisfy the fashion trends of Asians.

4.2.1 Market needs

There are several important needs in the Asian Clothes business that are being either underserved or not met at all. Asian Heritage Clothing plans to meet and service those needs.

  • AHC will provide a large assortment of sizes to compliment the various body shapes and sizes of the community. This is a size segment that is missing throughout the larger Asian Clothing retailers in the city.
  • Focus and attention to customer’s personal preferences and customer retention will be given high priority. Because of the high rate of employee turnover at major mass retailers, customer service and personal detail has been lost.

4.2.2 Market Trends

Many of People around the world appreciate the beauty and the quality of Asian culture. It is Popular on its designs and how beautiful it was made. It is very stylish like the Asians prefer it.

Asian Heritage makes a big impact to the different Asian. They help the people to survive in a very native way into stylish and fabulous clothes.

4.2.3. Market Growth

The Market Growth of The economy in Manila really say that it increase and the reason is the Asian Heritage Clothing that really do extremely well in selling the excellent clothes to the Asian consumer. Several Job opportunities were given to those people who want to have a job.

4.2.4. Industry Analysis

  • Small Specialty Stores – They have the Products but they only have limited of stocks that can sell. It is small store and sometimes it was only place in markets.
  • Large Multi-owned Asian Heritage RetailersThese large stores mass market and sell to hardcore enthusiasts as well as the local tourists and those who purchase only during rodeo season.

4.2.3. Main Competitors

Main Competitors of Asian Heritage Clothing are also in the Clothing Industry that is near in our stores.

One of the most competitors near in our store:

  • HUMAN – It is a popular brand when it comes to the guy and ladies. They have many stocks that you can choice. Their main target also is like with us, The Good Quality with a fashionable ascent.
  • FOLDED and HUNG – they offer wide selection of clothing which is ideal for the fashion sense of our neighboring Asian countries

5.0 Strategy and Implementation Summary

Asian Heritage Clothing’s goal is to provide apparel to the under served market of the Asian residing in the Philippines community. The major Asian apparel retailers have left a hole in this market by not providing a larger assortment of sizes and designs for the different taste of Asians.

Our intention is to gain 80% of this market share by focusing on our niche positioning, neighborhood location, brand that we sell, culture hospitality and special promotions.
5.1 Competitive Edge

  • The Asian Heritage Shopper Card which allows the customer a 15% discount after ten purchases.
  • Our location in the community will offer closer access to our target customer base.
  • We will offer plus sizes for women and big and tall sizes for men.

5.2 Marketing Strategy

Our marketing strategy will focus heavily on sales promotion, niche positioning in the market and customer service with loyalty and retention in sales.

  • The marketing budget will not exceed 5% of our gross annual sales.
  • Our promotions will always stay in tune with our company objectives and mission statement.

5.2.1 Positioning Statement

For the more full-bodied individual seeking Asian apparel, Asian Heritage Clothing will offer name brand Asian wear in a larger assortment of styles and sizes that aren’t always readily available in the mass Asian apparel retailers.
5.2.2 Pricing Strategy

Asian Heritage Clothing will maintain a flexible pricing strategy. We base the product lines that we carry on their reputation and quality as Asian wear apparel. Most of our lines come with a suggested retail price that we will follow. We will also utilize the standard practice of keystoning as well.
5.2.3 Promotion Strategy

Asian Heritage Clothing will follow an aggressive yet creative promotional plan. This will allow us to focus directly on our target customer while still being conservative with our advertising dollars.

  • A press release kit will be sent to all major media outlets in Manila and Makati highlighting the grand opening of the first Filipino owned Asian wear apparel retailer in the city. This kit will include a press release, pictures of the interior space, color postcard/flyer, and a business card.
  • 5,000 4×5 color flyers/postcards will be distributed throughout the city at local malls, universities, colleges, parks, and bars.
  • Spot radio advertisements on two local FM radio stations, Nu 107.5, Magic 89.9.
  • A direct mail program that will further focus on and target the top 50% customer base with special in-house sales and promotions.

5.2.4 Distribution Strategy

Our retail location will be the foundation of building our customer base. We will also manage a direct mail program that will focus on our top 50% customers spotlighting any in-house sales and promotions.
5.2.5 Marketing Programs

Our marketing programs will consist of the distribution of 5,000 color flyers two weeks prior to our grand opening event.
5.3 Sales Strategy

  • We will utilize the Retail ICE POS software with every sales transaction. With each purchase the software will record and maintain in its database the customer’s name, address and purchases. This information will be used with our direct mailing program to focus on our top 50% of customers.
  • We will offer a 14 day return/exchange policy to build trust with our customers and maintain retention and loyalty.

6.0 Management Summary

Employees will be encouraged to work within their creative, physical, and intellectual boundaries. All duties will be divided and delegated according to strengths and weaknesses. At Asian Heritage we will expect a high degree of customer service skills and personality as this is essential to our success.

Mary An Nabong will assess the productivity and perform informal employees evaluations of all employees every six months. These bi-annual evaluations are conducive to the continued growth of our small business.

6.1 Organizational Structure

Asian Heritage Clothing is a small business and therefore requires a simple organizational structure. Mary An Nabong will act as a general manager. All decisions are made in-line with the company objectives. Employee tasks are delegated based upon their level of expertise, creativity, strengths and weaknesses.

6.2 Management Team

Mary An Nabong, co-owner and general manager will be responsible for all administrative functions, purchasing, inventory control, and promotions. She will also act as a part-time sales representative. She has spent over 10 years in accounting, finance and operations management. She has extensive background in purchasing, inventory control, and marketing.

6.3 Personnel Plan

The personnel plan is included in the following table below. There will be one full-time employee and two part-time employees working 20-30 hours per week. The full-time employee will be paid at a rate of $10.00 per hour and the two part-time employees will be paid at a rate of $8.00 per hour. All employee’s will benefit from a one day paid holiday on their respective birthdays and one week of paid vacation after twelve months of employment.

At this time medical benefits will not be offered to employees. As profits increase in the future medical benefits will be offered to all employees.


Personnel Plan

FY 2008         FY 2009         FY 2010

Owner                                    P516,375       P568,035       P624,825

Full-time postion                  P918,000       P1,009,800    P1,110,780

Part-time position                 P550,800       P605,880       P666,450

Total People                                      3                      3                      3

Total Payroll                          P1,985,975    P2,183,715    P2,402,055

7.0 Financial Plan

The growth of Asian Heritage Clothing will be moderate and the cash balance will always be positive. Being a retail environment we will not be selling on credit. We will accept cash, checks, and all major credit cards. TeleCheck Services will be used as the check guaranty system to help reduce the percentage of loss on bad checks. Marketing and advertising will remain at or below 5% of sales. We will continue to reinvest residual profits into company expansion, and personnel.
7.1 Important Assumptions

Asian Heritage does not sell on credit nor do we offer layaways at this time. We accept cash and checks, Visa, MasterCard, Discover and American Express. All sales paid via credit cards will be deposited in our business checking account within 48 hours. Our business checking account will be with Banco de Oro. They have reported the interest rate as those listed below.

Macroeconomic Theory Table


MICROeconomics MACROeconomics
Household Income
Business Firm’s Revenue
National Income
Individual Price
Prices of Goods and Services
Aggregate Price
Demand for Labor Total Employment
Productivity Total Aggregate Price

The Accounting Cycle


1. Gather the Documents

2. Analyze and Record

3. Post to the Ledger

4. Prepare a Trial Balance

5. Prepare a Worksheet for Adjustments & Financial Statements

6. Prepare the Financial Statements

7. Journalize & Post the Adjusting Entries

8. Journalize & Post the Closing Entries

9. Prepare the Post Closing Balance

10. Journalize and Post the Reversing Entries

The Empire

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