Академический Документы
Профессиональный Документы
Культура Документы
PRE-MIDTERMS PRELIMINARY Obligation- moral or legal; distinguish based on basis of consequence for non-compliance o Moral obligation- in case of non-compliance, there will be no sanctions imposed at least from civil law authorities; only answerable to your conscience; you cannot be sued on the basis of this o Legal obligation- there are legal sanctions for noncompliance such as being sued in court; aggrieved party can always go to court to compel you to perform obligation; you are answerable to the court o Natural obligation- the middle ground; obligation which at the outset is not a source of a legal right, but in case the obligor voluntarily complies with the obligation, it authorizes the retention of what has been voluntarily delivered Example: debt is due and demandable now. If creditor collects the debt within 10 years from now, that is a legal obligation because within that period, you can be sued for compliance. But if creditor fails to collect within that period and allow that to lapse (prescription period lapses), like he collect 15 years from now, debtor cannot be held liable anymore under the law because the debt has prescribed. Next scenario: Debtor knows that he is no longer liable, and he still voluntarily complies with the obligation/pays the debt. Later he decides to file a case to recover the debt he paid since he alleges he was not already required to pay, he cannot recover anymore. He cannot recover what he voluntarily paid. Natural obligation is given partial legal recognition. The court may order that you cannot recover what you voluntarily delivered. Unlike natural obligation, the obligor can be sued in court even from the start if it is established the obligation was not complied with. It is a source of right from the very start. Moral obligation is not a source of legal right. There is little law involved in natural obligations: only a part of the Civil Code Not applicable when debtor does not know there is something demandable from him. It must be voluntary. If not, may be a quasi-contract. Sanctions that may be imposed on non-complying party in the obligation- among many is damages; if you violate a contract you are required to pay the payment known as damages; other sanctions: specific performance (you can be under pain of contempt), contract can be declared without force and effect plus damages always when there is a right, there is an obligation, there is corresponding duty to comply with the obligation, then there will be damages as sanction for noncompliance Kinds of obligations under 1156: 3 kinds, to give, to do, not to do Elements of obligations: the obligee/creditor, obligor/debtor, juridical tie (contract, law such as obligation arising from law on taxation), object/prestation SOURCES OF OBLIGATIONS: law, contracts, quasi-delict, quasi-contracts, acts & omissions punished by law 1. Law- imposed by law itself. It must be categorical/clear enough as to create no doubt on the obligation Example: no law requiring owners of big malls to provide free parking; law imposing taxes; also the case of Mangonon on support 2. Contracts- source of an obligation because when one agrees to a contract, he is binding himself to do/give something; meeting of the minds between two persons where one binds himself with respect to the other to render some service 3. Quasi-contract it is similar to a contract; but here, the law only presumes there is a contract (but there really is no contract) Types: a)negotiorum gestio- unauthorized management but certain benefits go to one of the parties. The one benefitted has obligation to reimburse. Example: spending funeral expenses for someone who is not a relative; but he has right to be reimbursed by the persons responsible b) Solutio indebiti- obligation to return what has been mistakenly delivered. Example: you forgot to return change 4. Delict- acts or omissions punished by law; made punishable by the RPC; source of the liability is crime; one criminally liable is also civilly liable but there are crimes where there is no civil liability, e.g. rebellion, sedition sanction/criminal liability: imprisonment
Compiled by MFLH Exclusive for EH401
Purely civil obligation- defined in 1156, juridical necessity to give, to do or not to do Juridical necessity- in case of noncompliance, there is a legal sanction
Page 1
Page 2
CLASSIFICATION OF OBLIGATIONS Primary Classification o Pure not subject to any condition; demandable at once o Conditional there are conditions attached to the obligation; demandability depends on condition; future and uncertain event
Page 3
Duties of the obligor if his obligation is to deliver a determinate thing: To deliver the thing itself To preserve or take care of the thing due To deliver the fruits of the thing o Natural fruits, civil fruits such as rentals of a building To deliver its accessions and accessories o Example of accession: the fruits of trees on a land to be delivered (which is the principal) o A house is an industrial accession so it must be delivered also along with the land (principal) to exclude a house, it must be specified in the contract. If contract is silent, a thing is deemed included o Accessions can be natural & industrial To answer for damages in case of non-fulfillment or breach (Basic) Remedies in case of breach: Compel obligor to comply with obligation Debtor can be liable for damages
Duty if obligation is to deliver indeterminate/Generic Deliver the thing itself o Guide: Art 1246, creditor cannot demand a thing of superior quality neither can debtor deliver a thing of inferior quality o Loss of thing here will not absolve obligor In an obligation to do, in case of non-compliance, obligor cannot be forced to comply because this will violate constitutional right against involuntary servitude. However, there is still liability If something is done poorly or not in accordance with the contract, it can be undone at his expense. Always remember damages; damages can be given in either case
Page 4
*Attorneys fees does not belong to the lawyer; it belongs to client DIFFERENCE RESCISSION BETWEEN CANCELLATION AND
Rescission as if the contract did not exist, no legal effects no basis for claims, e.g. no basis on claiming rentals in arrears because contract of lease was already rescinded; cannot claim for rentals for months before breach of contract because contract here is not recognized Cancellation giving partial effects to the contract; legal effects before the violation are recognized, only effects after that are not recognized If contract of lease is only cancelled, contract only ceases to exist after demand is made; there is basis for claiming rentals in arrears because you just asked the contract to be partially void for the months following the breach
MODES OF BREACH OF CONTRACT 1. FRAUD Can be a mode of committing Estafa; done through swindling Kinds of Fraud: Fraud in the Performance of obligation this is the fraud referred to in 1170; presupposes there is already obligation arising from contract; nothing wrong in securing consent; contract is perfectly fine Remedy: Damages (and even criminal liabilities) Fraud in the Execution/ Creation/ Birth of Contract the fraud here is to secure consent/ so other party may enter into contract with you; no contract yet; makes contract voidable; can be causal or incidental fraud; affects existence of contract Remedy: Annulment of contract
Woodhouse vs Halili
Page 5
2. NEGLIGENCE Omission of that diligence which is required by the nature of obligation and corresponds with the circumstances of the persons, time and place. Failed to exercise the prudence demanded by the circumstances Difference: Source of liability here from negligence is contract; in quasi-delict, source of negligence is not contract but the quasi-delict 2 kinds of negligence: o Negligence in Quasi-Delict/culpa aquiliana: there is no contract that binds the parties & negligence happens Defense of good father available All damages attributable to the incident may be asked; relief is broader; includes everything such as actual, moral, exemplary damages o Negligence in the performance of an obligation/ contractual negligence/culpa contractual: there is a contract here but the negligence is the same negligence in culpa aquiliana Defense of good father is not available here Damages grounded only on the natural and probable; can include actual damages e.g. loss of earning capacity Sarmiento vs Spouses Cabrido Case of negligence on the part of a jeweler in dismounting diamond from a ring Negligence here is culpa contractual, because there was a contract; negligence arising from contract; damage suit from culpa contractual Duty of plaintiff to prove negligence; show industry standard in how to dismount diamond Case of culpa contractual Plaintiff contended that the agency was a common carrier; significance of this lies in the degree of diligence required Common Carrier business engaged with the public in transporting goods to a specific destination; extraordinary diligence is necessary (periodic maintenance, seminars, etc.) Travel Agency not a common carrier; only diligence of a good father (basta mudagan lang ang sakyanan!)
3 types of Stipulations with regard to negligence (Contractual only) which are illegal not liable for any negligence under any circumstance limiting the amount that may be recovered contract of adhesion if the conditions are too onerous which leave the contracting party with no choice *when asked if contract of adhesion is valid or not make a qualification (if the contract is onerous or with choice)
3. DELAY 2Kinds of Delay Ordinary Delay failure to perform an obligation on time Legal Delay failure to perform an obligation on time which failure, constitutes a breach of obligation; need to prove that there was demand
General Rule: There must be a demand. No demand, no delay. Exceptions: Time is of the essence time is the controlling motive o the debtor knows what the obligation is for and time is a factor o example: a wedding gown not delivered on time When the law so provides/ When the obligation so provides o example of law expressly stating: law on taxation setting date of payment o example of obligation expressly stating: there is a specific: without need of prior demand o not enough that you put date/deadline; there must be without need of prior demand. If no such phrase, debtor can only be in ordinary delay When demand would be useless o Fortuitous event
Crisostomo vs CA
Page 6
RECIPROCAL OBLIGATION in 1169 Neither party incurs delay when the other is not ready to comply with what is incumbent upon him Both can be in delay here (compensation morae): How to show readiness (in complying with his corresponding obligation) file for specific performance o Need not literally bring money to the court to show that you are ready to comply with your obligation; just state on the record that you are ready
Who can be guilty of delay? Debtor (discussed above) Creditor o Fails to accept the performance of the obligation Remedy: (1) tender of payment then (2) consign the money in court Purpose: To be absolved from the obligation Consequence if you will not follow is that you will keep paying interest Managers Check is not legal tender o creditor is justified not to accept something that is not a legal tender No payment in full o Payment must be made in full.
BP22 when the check bounced the debtor can inform the creditor no delay yet delay only after the creditor demands debtor has 5 days
Ejectment can only be had if there is a failure to pay after the demand within the period given (Cetus Case) If there is payment within the period, there is no cause of action If payment is still given after the period given - invalid
Page 7
2. Subsidiary Remedies cant be immediately availed of Scenario: there is a writ of execution issued by the court, executed by the sheriff, debtor has no assets to satisfy judgment, subsidiary remedies can now be availed by filing in court
Page 8
Parks vs Province of Tarlac -effects of conditions; donation immediately took effect so you had to first revoke it before you can sell it Rights of the Creditor in an Obligation with SUSPENSIVE CONDITION (and condition has not yet happened) *1188 *Example: I will give this piece of land to you but you must pass first Obli Con *cannot ask to execute deed of sale since condition did not happen yet *are you going to wait first to pass Oblicon before you exercise any right? answer is 1188: To bring appropriate actions for the preservation of his rights (while condition is not yet fulfilled) *What is this right to preserve? How should this be done? o go to court to prevent the alienation or concealment of the property of the debtor
Page 9
Page 10
Page 11
*Is it necessary that for rescission to be effective, it always has to be in pursuance of a judicial order? General Rule: need declaratory judgment; cannot take law into your own hands Exception: in case there is a violation, one party is entitled to extrajudicially rescind if it is provided for in their contract, except if the defendant questions the extrajudicial rescission then the Court will have to determine There is nothing in the law that prevents the parties from agreeing that they can extrajudicially rescind the contract RESCISSION OF A CONTRACT IS NOT NECESSARY IF THE CONTRACT PROVIDES THAT IT MAY BE REVOKED AND CANCELLED FOR VIOLATION OF ANY OF ITS TERMS AND CONDITIONS -What is effect of extrajudicial rescission? Justified by SC that there is nothing in law that prevents; but refutation is that this is giving other party the power to take law into his own hands; SC held this as valid -What are probable grounds that questioning party may raise before the court? Party may question and say yes that is admitted that rescission may be exercised but not here because degree of noncompliance is not substantial enough. And it is not automatic that rescission will be done; it is not ministerial. The right of revolting party is to ask Court to fix period for compliance. If court allows this, court is not sustaining rescission. Debtor was prevented by fortuitous event There was no demand, or demand was defective Maceda Law: if you have already paid at least two years installments, you are entitled to 30 days per year that you havent paid before rescission can be made -RISK INVOLVED IN EXTRAJUDICIAL RESCISSION : if you are second buyer and contract has been extrajudicially rescinded (seller may be justified in selling again property). Then here you are as a prospective buyer then the first questioned the rescission. What if Court sustains the objection of the first buyer, the risk is on part of second buyer. Other risk which pertains to seller is that he might be liable for damages because rescission may be improperly exercised. -It is true that extrajudicial rescission is valid, but this can be a problem. But it is always better, like contract of lease, if you want to be justified in retaking possession, there must always be an express
Page 12
Right of creditor while period does not arrive yet -preservation of rights (see above) When can creditor demand for the fulfillment of the obligation even when the period has not yet arrived/expired? (1198) Debtor shall lose every right to make use of the period: Creditor is justified in filing case in court after the obligation has been contracted, he became insolvent o there is a proceeding for declaration of insolvency; resorted to by shrewd debtors; prove you really are insolvent and a court declaration is made absolving you from debt o BUT HERE, insolvency does not need prior court declaration when he does not furnish to the creditor the guaranties and securities in his own acts, he has impaired said guaranties or securities after their establishment and when through a fortuitous even they disappear o unless he can give new ones equally satisfactory debtor violates any undertaking, in consideration of which the creditor agreed to the period debtor attempts to abscond *How about if creditor wants to enforce compliance but period did not arrive yet. Is there a way to stop creditor from enforcing early? Furnish guaranties, securities; but there is still possibility that creditor asks for additional securities -ikaw for example nai nangutang nimo, you can always demand for security to ensure compliance with debt. If he cannot comply, obligation will be enforced Mortgage Real Estate Mortgage -if your mortgage your property, you can still sell property. If in the mortgage, there is stipulation that property cannot be sold, that is illegal
Page 13
There is already a choice AFTER SUBSTITUTION if item 1 is lost with or without the fault of debtor, he is not liable for its loss since his obligation is to deliver item 2 if item 2 is lost through a fortuitous event, the obligation of debtor is extinguished if item two is lost through the fault of debtor, debtor is liable for damages JOINT AND SOLIDARY OBLIGATIONS Solidary Obligation each one of the debtor is bound to render and or each one of the creditors has a right to demand entire compliance with the prestation What is the requirement for it to be Solidary? It must be stipulated in the contract that it is Solidary, by the law, and by its nature Contract words: o Jointly and/or Severally o Severally o Solidaria o In solidum o Solidarily o Together and/or separately o Individually and/or collectively o Juntos o suparadamente o I promise to pay Joint Obligation the whole obligation is to be paid or fulfilled proportionately by the different debtors and / or is to be demanded proportionately by the different creditors each to his own as many credits as there are creditors and as many debts as there are debtors the default in the stipulation of the contract joint obligation We promise *Solidary Creditor and Joint Debtor (p227) *Surety vs Guarantor *Solidary debtors one for all, all for one -if joint or solidary, there are two or more parties involved.
Page 14
3.
4.
Important rules: 1. Solidarity is not presumed. In absence of specific stipulation in agreement, you cannot presume that debtor is solidarilly liable. You can only be solidary debtor when provided by law, stipulation, or nature of obligation provides otherwise -What are instances by law which impose solidary liability? Tort/Culpa Aquiliana between for example operator and driver; co-perpetrators of felonies (conspiracy) -Terms: joint is joint but joint and several is solidary 2. Solidary creditor cannot assign his rights without consent of the others
Page 15
5. 6.
7.
Page 16
Page 17
2.
*Payment shall be made to creditor, successors (heirs) or authorized persons (with special power of attorney, attorney-in-fact) -take note of principle that presence of descendants excludes ascendants. If there are no children, then go to parents, if there are none, then collateral relatives until 2 nd cousin (Atty G. not sure) -no relatives, state inherits -if creditor becomes insane and you have not yet paid, pay to the guardian -institute petition for guardianship and court will appoint guardian -in case of parents representing the minor children, they are legal guardians; there is no need for a court appointment; what is needed is to file a verified petition for approval of a bond; summary proceeding
Page 18
Debtor cannot compel creditor to receive a different one even though it is more valuable (1244) Exceptions: 1. Dation in payment -payment of a thing other than money; property is alienated -payment in kind other than money 2. debt to equity -you have debt and you are stock holder *Law says that Dation in payment is subject to law on sales -What if ang imong gihatag na parcel of land as payment was in fact previously mortgaged or was already sold to another person, although there was no transfer of ownership? In so far as debtor is concerned, did transfer extinguish obligation? -What is the effect if there is a violation of warranty against eviction vis a vis extinguishment? What is sanction? Does it invalidate the sale? -YES it extinguishes the obligation but without prejudice to seller being liable for damages. In the real scenario, erase the effects of dation in payment so you will return to square one or rescind the dation in payment since this is a contract of sale SO DILI NI NATO IMEMORIZE ANG LIBRO. WA MANI SA LIBRO? NAA DHA? WALA. MAO NA PAMINAW MOG MAAYO Article 1246: When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, the creditor cannot demand a thing of superior quality. -We now allow transactions in foreign currency, but problem is what is the rate? There is ruling that it should be rate at time of payment Place of payment -examine first the contract whether there is stipulation of payment -BE CAREFUL: ayaw pasagad ingon na mao ni rules. In Oblicon, we are governed by what is agreed by the parties. Law comes into play only when parties do not agree on a specific matter. This should be the attitude Why are there special forms of payment? Because they are governed by special rules. APPLICATION OF PAYMENTS 1. there are several debts
Page 19
Page 20
PRE-FINALS
CONTRACTS 1305: A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service Requisites: 1318Consent, Object certain which is the subject matter of the contract, Cause of the obligation which is established Elements: Essential, Natural and Accidental Essential- those without which there can be no contract; necessary and indispensable; subdivided into common, special and extraordinary. -If any essential element is absent, can file an action to declare inexistence of contract; no contract -only 3 essential elements that matter: consent, object, consideration -defective consent--- this is voidable; have it declared annulled -absence of consent--- cause of action is declaration of inexistence of contract Natural- derived from the nature of the contract, not expressly stated in the contract -example: warranty against hidden defects. Not stated in the contract but just because it is not stated doesnt mean you dont have right. They are deemed to exist in the contract -Parole Evidence Rules: every agreement, terms of condition, stipulation you agree is reduced into writing; if not expressly stated, they are deemed not agreed upon. Exception to this are natural elements like warranty against eviction, hidden defects, and the law which is deemed incorporated into the contract Accidental- exist only when the parties provide for them; needs to be stipulated for it to be binding, unlike natural elements -parole evidence rule applies here Example: contract of lease over a parcel of land and allows the lessee to build a building there -from the text of the contract, there is nothing there that provides ownership of building after termination of contract, so there is now problem on who will be owner of building after -apply principle that accessory follows principal? NO. Article 415 of the Civil Code on Property places a building as a real property itself independent of the land. -so we now have an element not agreed upon. So how should this be solved? Resolution should be in accordance with law on property; there would be two owners now. Owner of the land is not necessarily owner of building. The basis is that under Article 415, building is treated as property separate and distinct from the land. The principle that accessory follows the principal
Page 21
Exceptions to relativity 1. not transmissible by nature: purely personal obligations; obligations to do; example singer imong papa lain sad kayu ug ikaw mupuli 2. stipulation or provision by law: contract of agency -your father is attorney in fact and father died, you cannot assume as an attorney in fact contract of partnership -you pool your resources together for business purposes -vs. corporation: if stockholder dies, his heir replaces him. In partnership, his heirs cannot step into his shoes 3. Parties agree on something but object is to benefit a third person; stipulation pour atrui 1311: If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person -GR: not a party, cannot ask for enforcement; exc. this third person even if not a party has legal right to ask for enforcement -before filing for enforcement, communicate acceptance to obligor -Required: third person must communicate his acceptance. Form of acceptance may be implied or express; not even required that it be in writing. -Unlike in donation where acceptance should always be express, it can be implied in pour atrui. In donation, there are only two parties. In pour atrui, there is a third party. In both, acceptance must be
Page 22
Page 23
Page 24
Page 25
Page 26
3. Undue Influence 1337: There is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice. The following circumstances shall be considered: the confidential, family, spiritual and other relations between the parties, or the fact that the person alleged to have been unduly influenced was suffering from mental weakness or was ignorant or in financial distress Financial distress example: employee separated but was forced by employer to sign that he will not engage in similar job for 5 years. But the person also has other expenses
Page 27
4. Fraud Fraud in the performance of an obligation vs. fraud in securing the consent of a party Fraud in the performance: initially, the contract is valid; no vice of consent but there is fraud because what was delivered Is not the one agreed upon; fraud in 1176 Fraud in securing the consent -1335: There is fraud, when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to -Specific example: insurance contract; you wanted a health insurance but since you are sick, you ask your friend to submit his medical certificate; but then you die, the insurance company then was defrauded; had insurance company knew of your real medical condition, three would have been no insurance contract (p.446 Jurado) Fraud is not just bad judgment or negligence; there is malice here. It connotes a dishonest a dishonest purpose or there is conscious doing of a wrong Fraud in securing consent has two kinds: dolo incidente and dolo causante (do not equate dolo incidente with fraud in the performance of obligation) -Woodhouse vs Halili: manufacture of softdrinks and the other contended that there is fraud because the other represented that he is a grantee of a franchise; the other said that he did not represent but merely said he will secure franchise -SC said: this is not dolo causante kind of fraud (which is the one required) because even without the representation, the contract will proceed. But the others share in the partnership profits should be reduced because he was not the one who gave effort to secure the franchise -Geraldez vs CA: fraud here was dolo causante Situations which do not vitiate/not fraudulent a. 1340: usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent
Page 28
OBJECT OF CONTRACTS (1:03:00) What may be the object of contracts 1. All things not outside the commerce of man 2. All rights not intransmissible 3. All services not contrary to law, morals, good customs, public policy Requisite: must be determinate as to its kind What may not be the object of contracts 1. Future inheritance, except when authorized by law Exceptions: marriage settlement, partitions inter vivos 1080 2. Impossible things/services What does Outside the commerce of man mean : cannot be appropriated or capable of being owned State can own properties which are capable of being appropriated, so are we saying state properties can be within commerce of man? Aside from not being capable of appropriation, such objects are not capable of being objects of commercial transactions Regalian doctrine: all properties which are not titled are owned by the state including lands you currently possess but not titled in your name. Ownership of minerals, seashore, forest; they can be appropriated not by private individuals but only by the state Future things: no contract involving future inheritance; your right is only inchoate But other future things can be object of contract like furniture or contracts involving sale of things that would still be manufactured, like made to order Current laws allow contracts to be entered into by the state and some private investors like roads, highway Why is it every time we go to Baguio we pay toll fees? That is a public highway but why do we pay private people? We have law called Build Operate Transfer (BOT law). Not all projects can be funded by public funds, so we invite private investors. We have to give them time to operate the facility and allow them to recover expenses. After some time, it will be turned over to the state, like the NAIA. It is public facility, but it is object of contract because there is a special law. It is not really just because it is outside commerce of man, it cannot be an object. It can be when there is a law
Page 29
Page 30
Page 31
-examples: sale of a parcel of land -we meet at a coffee shop. We agree on object, price, is this perfected contract? YES -taken out of statute of frauds as long as you pay even small amount, already executed contract; or you have it in writing -but before an actual transfer be made in your favor, you must execute a public document/ a duly notarized deed of sale signed by the seller and have it registered in register of deeds so that once it is already registered, it is binding as against 3rd persons (RECORDING #3 & 4) -agreement you had is valid, but cannot be registered -what if dili muexecute public document imo kasabot, unsaon mana nimo? File a case where relief you ask is to compel the person to execute the deed of sale duly notarized - Article 1357. If the law requires a document or other special form, as in the acts and contracts enumerated in the following article, the contracting parties may compel each other to observe that form, once the contract has been perfected. This right may be exercised simultaneously with the action upon the contract. -if person does not voluntarily comply, there are other remedies: court may just direct clerk of court to draft the deed of sale in favor of plaintiff (validity and registrability are different concepts) -but before the right in 1357 be availed of, the contract must be perfected, valid and enforceable under statute of frauds: can you compel me to execute a deed of donation if there was nothing in writing? No, it was invalid/void contract must be enforceable: sale must be in writing to be enforceable, so
REFORMATION OF INSTRUMENTS (9:00) implies correction; make the instrument reflect what the parties agreed Article 1359. When, there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed. Requisites: 1. Meeting of the minds upon the contract 2. True intention of the parties is not expressed in the instrument 3. Failure of the instrument to express the true agreement is due to mistake, fraud, inequitable conduct, or accident Reformation of instrument is a remedy, but this remedy presupposes that there is meeting of the minds, but the problem is that the written instrument does not reflect what they agreed Example: what parties agreed is mortgage only (Prenda), but then the other party wrote that it was a sale with right to repurchase. Mortgage does not transfer ownership, unlike sale. Right to repurchase is only Consuelo de bobo.
Page 32
Page 33
DEFECTIVE CONTRACTS
RESCISSIBLE CONTRACTS (RECORDING #5, 3:20) Least defective contract Article 1381. The following contracts are rescissible: (1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (5) All other contracts specially declared by law to be subject to rescission. ---example of number 5: partition among heirs where one was deprived of his share by more than , the partition agreement may be rescinded. the remedy here is to file an action for rescission contrast this with rescission in reciprocal contracts (1191) in the former civil code, it was referred in 1191 as resolution, not rescission TAKE NOTE: distinguish rescission in 1191 vs rescission here: they are based on different grounds -rescission in 1191 is noncompliance; rescission in 1380 is predicated upon economic damage -in 1191, rescission can only be asked by party to a contract; whereas rescission in 1380 may be asked for even rd by a 3 person; e.g. a creditor who was defrauded, may not be a party to the contract but since he is prejudiced ha can ask the contract entered into by his debtor be rescinded.
Page 34
3. Those undertaken in fraud of creditors when the latter cannot in any manner collect the claims due them Ex. Accion pauliana Contract entered into by a debtor in fraud of creditors is prima facie valid but if the creditor can show that they are entered into in fraud of his rights, that is the only time they may be declared rescinded So how do you prove transfer is made in fraud of creditors? Would it suffice to show that pending the case against the debtor, transfer was made? Is it enough? NO before you can ask setting aside of contract on ground that it was entered into in fraud of creditors, it must be established that there was no other means by which claim of creditor can be satisfied kay kung naa lain paagi, contract is perfectly valid to help us determine what fraudulent transfers are, law gives us what we term as BADGES OF FRAUD, but do not take these simply a) fact that cause or consideration of the conveyance is fictitious or inadequate -case of Oria vs McMicking: SC here said that if your theory is that there was contract in fraud of creditors, you can prove through the badges of fraud b) transfer made by debtor after suit has been begun and while it is pending against him However, this by itself is not conclusive. Just because there is case against you, does not mean you cannot deal with your property. That will be height of injustice if you are stopped from selling your property. When there is writ of attachment issued against you and annotated at back of title, does not mean you cannot sell property. Injunction is different, this means you are prohibited. But if attachment lang, you are not prohibited from selling. Theres room for a stupid buyer to buy your property despite a writ of attachment. Naa man pud buyer na mutake advantage na dugay mahuman ang kaso. Paliton niya, recover niya iyang expense plus profit. Ig human sa kaso pildi ka. Uli rapud niya. Ka recover naman siya But of course, ordinary individuals will not normally buy property with writ of attachment annotated therein. Because you will be bound in whatever result of the decision c) a sale on credit by an insolvent debtor insolvent naka, nagpa utang pa jud ka! Clear badge of fraud but sometimes this is explainable
Page 35
Page 36