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MOTO-Q NOTES

Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Q: If it was made beyond the prescriptive
period, may it be considered a civil
20% Midterm
obligation?
30% quizzes and recitations
A: Yes. If prescriptive
period was
50% finals
interrupted or if no written demand was
made. Only if demanded within the
Digest Sales; starting with Sanchez v.
prescriptive period may it be due and
Rigos
demandable.
- 2 quizzes in oblicon
- Certification that the digest is
Q: Is consent one of the essential elements
complete and is in your own
of obligations?
handwriting - from 2 classmates
A: NO. It is true only with contracts.
- - cases penned by justice Azcuna
- 2 quizzes
Essential elements of obligation:

I. OBLIGATIONS

OBLICON Tolentino
Sales Baviera
Partnership Bautista
Common Law general and ordinary law of
a country/ community; unwritten law
founded on memorial usage and natural
justice and reason.
Passive solidarity not always one debtor;
may/
may
have
2
or
more
debtors/creditors.
When the fulfillment of the condition
depends upon the sole will of the debtor,
the conditional obligation shall be void
this is true only in resolutory conditions.

1. Active Subject creditor/obligee


Q: Is any kind of person subject to
obligation?
A: Yes. Not only Natural persons but
also juridical entities/persons.
2. Prestation to give, to do, or not to
do.
Q: Is it a thing?
A: No. It is the particular conduct of the
debtor.
3
-

Juridical tie vinculum juris


that which binds the parties.

Alternative obligations simple when


choice has already been communicated! If
not communicated there is no consent.

Q: When can there be a tie? What


creates a tie?
A: when there is an existence of the
source of obligation.

Facultative obligations
always with the creditor?

Sources of Obligation:

is

the

choice

Art. 1157. Obligations arise from:


Obligations:

(1) Law;

Art. 1156. An obligation is a juridical


necessity to give, to do or not to do. (n)
-

it is a civil obligation because of the


phrase juridical necessity.

Q: Does a creditor have a right under


natural obligations?
A: Yes
Q: Suppose a promissory note was made:
1/2/93

(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by
law; and
(5) Quasi-delicts. (1089a)
QUASI CONTRACTS:
Kinds:

I promise to pay B P1M


A

Is it civil or natural?
A: It may be civil or natural. Civil-within 10
years prescriptive period; natural-beyond
ten years.

1.Nominate:
a.) solutio indebiti
b.) Negotiorum gestio
2. Innominate Articles 2164-2175

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


SECTION 3. - Other Quasi-Contracts
Art. 2172. The right of every possessor in
good faith to reimbursement for necessary
Art. 2164. When, without the knowledge of
and useful expenses is governed by Article
the person obliged to give support, it is
546.
given by a stranger, the latter shall have a
right to claim the same from the former,
Art. 2173. When a third person, without the
unless it appears that he gave it out of
knowledge of the debtor, pays the debt, the
piety and without intention of being repaid.
rights of the former are governed by
(1894a)
Articles 1236 and 1237.
Art. 2165. When funeral expenses are
borne by a third person, without the
knowledge of those relatives who were
obliged to give support to the deceased,
said relatives shall reimburse the third
person,
should
the
latter
claim
reimbursement. (1894a)
Art. 2166. When the person obliged to
support an orphan, or an insane or other
indigent person unjustly refuses to give
support to the latter, any third person may
furnish support to the needy individual,
with right of reimbursement from the
person obliged to give support. The
provisions of this article apply when the
father or mother of a child under eighteen
years of age unjustly refuses to support
him.
Art. 2167. When through an accident or
other cause a person is injured or becomes
seriously ill, and he is treated or helped
while he is not in a condition to give
consent to a contract, he shall be liable to
pay for the services of the physician or
other person aiding him, unless the service
has been rendered out of pure generosity.
Art. 2168. When during a fire, flood, storm,
or other calamity, property is saved from
destruction by another person without the
knowledge of the owner, the latter is bound
to pay the former just compensation.
Art. 2169. When the government, upon the
failure of any person to comply with health
or safety regulations concerning property,
undertakes to do the necessary work, even
over his objection, he shall be liable to pay
the expenses.
Art. 2170. When by accident or other
fortuitous event, movables separately
pertaining to two or more persons are
commingled or confused, the rules on coownership shall be applicable.
Art. 2171. The rights and obligations of the
finder of lost personal property shall be
governed by Articles 719 and 720.

Art. 2174. When in a small community a


nationality of the inhabitants of age decide
upon a measure for protection against
lawlessness, fire, flood, storm or other
calamity, any one who objects to the plan
and refuses to contribute to the expenses
but is benefited by the project as executed
shall be liable to pay his share of said
expenses.
Art. 2175. Any person who is constrained
to pay the taxes of another shall be entitled
to reimbursement from the latter.

certain
lawful,
unilateral act must concur.

For
negotiorum
gestio- there must be abandonment.
BAR EXAM QUESTION:
A bought a pack of cigar worth P225.00. He
paid P375.00. What relationship was
created?
A: Quasi contract; solutio indebiti
Q: A had a fishpond. Lawless events forced
to go to Manila and then Europe. B, who
has in the business of buying and selling
fish, realized that it was harvest time,
harvested the fish and sold them to X. B
borrowed money from Y in order to buy the
fingerlings.
a. What Juridical relationship
created between A and B?

was

A: Negotiorum gestio
b. What juridical relationship was
created by A with respect to B and
X?
A: to remit the sale of fish sold to X
c. A with respect to B and Y?
A: A must pay the loan to B because it
was for the benefit of A.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


d. If A ratified the acts of B, what will
A: No. the proximate cause was the bulk of
happen?
watermelon. It was dimly lighted. There is
negligence considering the person, time
and place.
A: A shall be indebted to B
Q: Is innominate quasi contract exclusive?

Gutierrez v. Gutierrez (56 Phil 177)

A: No. Acts or omissions punishable by


law.-> crimes and delicts.

- there were 5 defendants. 3 were held


liable. The mother and child were not held
liable.

to the RPC.

felony is limited only

Requisites for it to arise:


There must be a conviction. Proof beyond
reasonable doubt.
Q: Is there a crime where there is no civil
liability?
A: Justifying Circumstances.

Q: A obliged himself the following to B: a.


to give a refrigerator, model 123; b. an 18
inch TV set; c. fix piano of B. A failed to
perform any. What are the remedies?
A: Determine first the nature of the thing
to be delivered whether determinate or
indeterminate:
a.
b.

QUASI DELICT:
Quasi-delict = culpa aquiliana
- it is not culpa extra contractual or torts.
Culpa extra contractual includes:
1. contractual
2. Extra contractual includes other
sources under 1157.
Pineda would say that torts is not quasidelict because torts include malicious and
negligent acts.

c.

determinate/specific(ref)- specific
performance plus damages.
Generic (TV) to have another
person perform at the expense of
the debtor.
Service
(to
do)

damages;involuntary servitude.

Generic depends on the purpose and


circumstances.
July 7, 2007 (7/7/07)
Compliance of Obligation; specific obligation
of the debtor; different kinds of obligation
joint solidary.
July 10 and 28 -make up class

Atty. Uribe does not agree with him. Torts


is the same as quasi delict.

Compliance determine the kind of


obligation; determine the purpose.

Art. 2177. Responsibility for fault or


negligence under the preceding article is
entirely separate and distinct from the civil
liability arising from negligence under the
Penal Code. But the plaintiff cannot recover
damages twice for the same act or
omission of the defendant. (n)

BAR EXAM QUESTION:

Cangco v. Manila Railroad (18 Phil 768)


Q: What were the defendant's defenses?
A: plaintiff was negligent; defendant
exercised due diligence in selecting its
employees. (not a good defense. It is
raised only in quasi delict.MRRs liability
was based on contract of carriage.)

There was an obligation on the part of A to


deliver mangoes on july 1, 2006, 6 months
after agreement with B. One month before
delivery, A sold to the fruit to X. Can B
recover the fruits from X?
A: No. B has no real rights over the fruits
since it was not delivered to him.
KINDS OF OBLIGATIONS AS TO
PERFECTION AND EXTINGUISHMENT:
Q: promissory note:
1/2/93

Q: Was it the negligence of Cangco?


BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


2. Not later than
3. within ___ mos.
A
What kind of obligation?
Q: A borrowed from B P1M, payable at the
end of the year. August 1, creditor
A: Pure Obligation
demanded a mortgage constituted on the

even if suspensive or
house of A. No mortgage was delivered. On
postestative condition, the debtor may be
Aug.16, can creditor demand? When?
compelled if there is a pre existing
condition.
A: When he loses the right to make use of
Impossible Conditions:
the period. If debtor has promised, in this
case the debtor did not promise anything.
If with a term shall annul condition
If without a term it is void
Q: If insolvent, will he lose his right?
If negative impossible valid condition
I promise to pay B P1M

Art. 1187. The effects of a conditional


obligation to give, once the condition has
been fulfilled, shall retroact to the day of
the
constitution
of
the
obligation.
Nevertheless, when the obligation imposes
reciprocal prestations upon the parties, the
fruits and interests during the pendency of
the condition shall be deemed to have been
mutually compensated. If the obligation is
unilateral, the debtor shall appropriate the
fruits and interests received, unless from
the nature and circumstances of the
obligation it should be inferred that the
intention of the person constituting the
same was different.
Reciprocal sale
Unilateral donation
Q: A obliged himself to B to deliver a thing
on September 2005, after they agreed in
January 2003. A however delivered it to C
in April of 2003. Who has a better right?
What about C?
A: B has a better right. C will have a better
right if he acted in good faith.
* with regard to improvements, if
voluntarily made by the debtor, no other
right than usufructuary.
BAR EXAM QUESTION:
Q: A borrowed P1M from B payable at the
end of the year; A delivered a car as
stipulated, B may use the car. On August 1,
A offered to pay P1M, can B be compelled
to accept P1M?
A: It depends on whose benefit the term
was constituted. If for the benefit of both
parties, there may be no compulsion. If for
the benefit of the debtor, creditor may be
compelled to accept.
Instances for the benefit of the debtor:
1. on or before

A: No, if he furnishes a guaranty which is


acceptable to the creditor.
Q: How will he be insolvent?
A: by giving one or more of his property.
Q: What if he has no assets?
A: third person may guarantee.
Art. 1198. The debtor shall lose every right
to make use of the period:
(1) When after the obligation has been
contracted, he becomes insolvent, unless
he gives a guaranty or security for the
debt;
(2) When he does not furnish to the
creditor the guaranties or securities which
he has promised;
(3) When by his own acts he has impaired
said guaranties or securities after their
establishment, and when through a
fortuitous event they disappear, unless he
immediately gives new ones equally
satisfactory;
(4) When the debtor violates any
undertaking, in consideration of which the
creditor agreed to the period;
(5) When the debtor attempts to abscond.
(1129a)

Lim v. People (133 SCRA 333)


-> merely an agent; 1197 is not applicable.
Period as soon as sold
Millares v. Hernando (151 SCRA 484)
-> 1197 is not applicable.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Art. 1197. If the obligation does not fix a
disappeared, or that of the service which
period, but from its nature and the
last became impossible.
circumstances it can be inferred that a
period was intended, the courts may fix the
Damages other than the value of the last
duration thereof.
thing or service may also be awarded.
(1135a)
The courts shall also fix the duration of the
period when it depends upon the will of the
Art. 1205. When the choice has been
debtor.
expressly given to the creditor, the
obligation shall cease to be alternative from
In every case, the courts shall determine
the day when the selection has been
such
period
as
may
under
the
communicated to the debtor.
circumstances
have
been
probably
contemplated by the parties. Once fixed by
Until then the responsibility of the debtor
the courts, the period cannot be changed
shall be governed by the following rules:
by them. (1128a)
AS TO PLURALITY OF PRESTATION:
SECTION 3. - Alternative Obligations
Art. 1199. A person alternatively bound by
different
prestations
shall
completely
perform one of them.
The creditor cannot be compelled to receive
part of one and part of the other
undertaking. (1131)
Art. 1200. The right of choice belongs to
the debtor, unless it has been expressly
granted to the creditor.
The debtor shall have no right to choose
those prestations which are impossible,
unlawful or which could not have been the
object of the obligation. (1132)
Art. 1201. The choice shall produce no
effect except from the time it has been
communicated. (1133)
Art. 1202. The debtor shall lose the right of
choice when among the prestations
whereby he is alternatively bound, only one
is practicable. (1134)
Art. 1203. If through the creditor's acts the
debtor cannot make a choice according to
the terms of the obligation, the latter may
rescind the contract with damages. (n)
Art. 1204. The creditor shall have a right to
indemnity for damages when, through the
fault of the debtor, all the things which are
alternatively the object of the obligation
have been lost, or the compliance of the
obligation has become impossible.
The indemnity shall be fixed taking as a
basis the value of the last thing which

(1) If one of the things is lost


through a fortuitous event, he shall
perform the obligation by delivering
that which the creditor should
choose from among the remainder,
or that which remains if only one
subsists;
(2) If the loss of one of the things
occurs through the fault of the
debtor, the creditor may claim any of
those subsisting, or the price of that
which, through the fault of the
former, has disappeared, with a right
to damages;
(3) If all the things are lost through
the fault of the debtor, the choice by
the creditor shall fall upon the price
of any one of them, also with
indemnity for damages.
The same rules shall be applied to
obligations to do or not to do in case one,
some or all of the prestations should
become impossible. (1136a)
Art. 1206. When only one prestation has
been agreed upon, but the obligor may
render
another
in
substitution,
the
obligation is called facultative.
The loss or deterioration of the thing
intended as a substitute, through the
negligence of the obligor, does not render
him liable. But once the substitution has
been made, the obligor is liable for the loss
of the substitute on account of his delay,
negligence
or
fraud.
(n)

a.) alternative
b.) facultative
c.) conjunctive 2 or more prestations
which shall be complied with.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


In Facultative: involves 2 or more
prestations but only one is due.
I promise to __,__,and ___ (conjunctive)
- if one is lost, depends if there was a
communication.
I promise to __,__,or ___ (alternative)
Example:

In conjunctive and facultative, no choice is


made.

Tolentino: if debtor destroys


substitute, it doesnt matter.

In alternative, choice is with debtor unless:

Q: What if debtor refuses to make a


choice?

Art. 1205. When the choice has been


expressly given to the creditor, the
obligation shall cease to be alternative from
the day when the selection has been
communicated to the debtor.
* choice must be communicated. (relevant
if one of the prestation was lost)
1. if fault of debtor after communication
debtor is liable.
2. if loss happened before communication
due to fortuitous event debtor may still
choose from the remaining.
IF FAULT WAS DUE TO ONE OF THE
PARTIES; MAKE A DISTINCTION, WHO HAS
AT FAULT AND WHO HAS THE CHOICE:

A: Creditor
alternative.
Final exams/
asked)

file

an

action

in

midterms

(might

be

the

the

In July 1, 2003, A and B entered into


an agreement. When it fell due, B
failed to fulfill and was in delay. (Sir
said that he is not in delay, because
there was no demand.)
Q: When can debtor make a choice of
the substitution?
A: He can make a choice even before it
becomes due and demandable.

1. Choice of debtor; fault of creditor.

Facultative vs. Penal clause


should be non-compliance.)

(there

- debtor may choose from those remaining


or debtor may opt to rescind the obligation.

AS TO THE RIGHTS AND OBLIGATION


OF MULTIPLE PARTIES:

2. Choice of creditor; fault of debtor.

SECTION 4. - Joint and Solidary Obligations

- creditor may opt to choose from those


remaining or that value of which was lost
plus damages.

Art. 1207. The concurrence of two or more


creditors or of two or more debtors in one
and the same obligation does not imply
that each one of the former has a right to
demand, or that each one of the latter is
bound to render, entire compliance with the
prestation. There is a solidary liability only
when the obligation expressly so states, or
when the law or the nature of the
obligation requires solidarity. (1137a)

Example:
Choice of debtor, first prestations were lost
due to his fault, only one is left and yet was
lost through fortuitous event.
- debtor cant be held liable.

1. if debtor: value of last prestation


plus damages.

Art. 1208. If from the law, or the nature or


the wording of the obligations to which the
preceding article refers the contrary does
not appear, the credit or debt shall be
presumed to be divided into as many
shares as there are creditors or debtors,
the credits or debts being considered
distinct from one another, subject to the
Rules of Court governing the multiplicity of
suits. (1138a)

2. if creditors choice: anything of those


lost plus damages.

Art. 1209. If the division is impossible, the


right of the creditors may be prejudiced

In alternative, if all prestations were lost


due to the fault of the debtor?
depends on who has the right to
choose:

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


only by their collective acts, and the debt
the payment already made. If the payment
can be enforced only by proceeding against
is made before the debt is due, no interest
all the debtors. If one of the latter should
for the intervening period may be
be insolvent, the others shall not be liable
demanded.
for his share. (1139)
When one of the solidary debtors cannot,
Art. 1210. The indivisibility of an obligation
because of his insolvency, reimburse his
does not necessarily give rise to solidarity.
share to the debtor paying the obligation,
Nor does solidarity of itself imply
such share shall be borne by all his coindivisibility. (n)
debtors, in proportion to the debt of each.
(1145a)
Art. 1211. Solidarity may exist although the
creditors and the debtors may not be
Art. 1218. Payment by a solidary debtor
bound in the same manner and by the
shall not entitle him to reimbursement from
same periods and conditions. (1140)
his co-debtors if such payment is made
after the obligation has prescribed or
become illegal. (n)
Art. 1212. Each one of the solidary
creditors may do whatever may be useful
to the others, but not anything which may
Art. 1219. The remission made by the
be prejudicial to the latter. (1141a)
creditor of the share which affects one of
the solidary debtors does not release the
latter from his responsibility towards the
Art. 1213. A solidary creditor cannot assign
co-debtors, in case the debt had been
his rights without the consent of the others.
totally paid by anyone of them before the
(n)
remission was effected. (1146a)
Art. 1214. The debtor may pay any one of
the solidary creditors; but if any demand,
judicial or extrajudicial, has been made by
one of them, payment should be made to
him. (1142a)
Art.
1215.
Novation,
compensation,
confusion or remission of the debt, made
by any of the solidary creditors or with any
of the solidary debtors, shall extinguish the
obligation, without prejudice to the
provisions of Article 1219.
The creditor who may have executed any of
these acts, as well as he who collects the
debt, shall be liable to the others for the
share in the obligation corresponding to
them. (1143)
Art. 1216. The creditor may proceed
against any one of the solidary debtors or
some or all of them simultaneously. The
demand made against one of them shall
not be an obstacle to those which may
subsequently be directed against the
others, so long as the debt has not been
fully collected. (1144a)
Art. 1217. Payment made by one of the
solidary
debtors
extinguishes
the
obligation. If two or more solidary debtors
offer to pay, the creditor may choose which
offer to accept.
He who made the payment may claim from
his co-debtors only the share which
corresponds to each, with the interest for

Art. 1220. The remission of the whole


obligation, obtained by one of the solidary
debtors,
does
not
entitle
him
to
reimbursement from his co-debtors. (n)
Art. 1221. If the thing has been lost or if
the prestation has become impossible
without the fault of the solidary debtors,
the obligation shall be extinguished.
If there was fault on the part of any one of
them, all shall be responsible to the
creditor, for the price and the payment of
damages and interest, without prejudice to
their action against the guilty or negligent
debtor.
If through a fortuitous event, the thing is
lost or the performance has become
impossible after one of the solidary debtors
has incurred in delay through the judicial or
extrajudicial demand upon him by the
creditor, the provisions of the preceding
paragraph shall apply. (1147a)
Art. 1222. A solidary debtor may, in actions
filed by the creditor, avail himself of all
defenses which are derived from the nature
of the obligation and of those which are
personal to him, or pertain to his own
share. With respect to those which
personally belong to the others, he may
avail himself thereof only as regards that
part of the debt for which the latter are
responsible.
(1148a)

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


money or property of a third person
and the money or property so
received is misapplied by any
partner while it is in the custody of
In the exams if A, B and C are debtors and
the partnership. (n)
X and Y are creditors, and it speaks of
solidarity, presume solidarity on both sides.
Art. 1824. All partners are liable solidarily
with
the
partnership
for
everything
chargeable to the partnership under Articles
1822 and 1823. (n)
BAR EXAM QUESTION:
1. Joint obligation
2. Solidary obligation

Q: A and B obliged themselves to deliver


1thousand pesos worth of specific sacks of
rice to X and Y. What is the type of
obligation?

NATURE OF THE OBLIGATION WHICH


REQUIRES SOLIDARITY:
Example:
1.

A: It is a joint obligation unless there is a


stipulation; the law requires it; the nature
of the obligation requires it.
Q: B delivered entire 1 thousand pesos to
X, can Y compel B to deliver?

human

Art. 2194. The responsibility of two or more


persons who are liable for quasi-delict is
solidary.
2.

A: Yes. Because the obligation is joint.


Solidary:

Liability
arising
from
relations. (torts-2194)

Decisions of the Supreme Court


which became final.

Liwanag v. WCC

1. Joint and several.


2. jointly and severally.

Computations:

Ronquillo v. CA (132 SCRA 274)

Joint obligations

individually and jointly,


collectively and distinctively.

P120

respectively,

In promissory note: I promise to pay A and


B (solidary).

We promise to pay. (solidary)

If simple We joint

-> X may demand P60

Solidary liability examples:

If X demands from A, A is to pay only P20.

LAW

Mixed Solidarity

Solution
indebiti,
crimes,
negotiorum
gestio. In agency read b.solidary on the on
the outline, 1823-1824-> tortuous act of
one of the parties.

X may demand 120 from any of them.

Art. 1823. The partnership is bound to


make good the loss:

A: If joint- X with respect to A can demand


45;

What if there was an agreement? A = ; B


= ; C =1/4; X = ; Y =

(1) Where one partner acting within


the scope of his apparent authority
receives money or property of a
third person and misapplies it; and

Q: If mixed:

(2) Where the partnership in the


course of its business receives

Passive solidarity:

A: X= 90; Y = 30; X may demand P22.50


from A.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


No agreement debtors are solidarily
Q: If after condonation C was already
bound. X may demand 60 from A.
insolvent, how much can B recover from A?
If there is an agreement: X may demand
from A- 45, B and C- 22.50.
Active Solidarity:

A: Having paid 80, B shall recover 20, even


if remitted, it does not exempt if one is
insolvent.
EFFECT OF DISMISSAL OF ACTION

Creditor solidarily bound. X can demand


from A = 40; if Y receives 40, he should
give 20 to X.
If there is an agreement: X may demand 45
from A and Y may demand 15 from A.

Q: X and Y filed a case against A, however


it was dismissed. Y filed a case again. Will
his action prosper?
A: it depends if joint or solidary.

In a joint obligation if A paid the whole 120,


he cannot claim reimbursement from B and
C unless he proves that they have been
benefited. There was payment to the wrong
party.

Q: If joint: If reason is prescription, Y still


files, may it prosper?

Solidary:

Q: If the ground is subject to different


conditions?

Q: A demanded payment from X, can Y still


collect?
A: No. the payment of
extinguishes the obligation.

one

A: Yes. The debts are separate and distinct


in joint. Action shall not inure to X.

debtor

Q: In joint, C became insolvent, how much


can X demand from A?
A: Still P20. Insolvency shall not increase
the debt of joint debtors.
Q: if X remitted entire obligation in favor of
A, can Y still collect from B and C?
A: Yes.
Q: If solidary, C became insolvent, how
much can X demand?
A: 120. The share of 1 solidary debtor shall
be shouldered by other solidary debtors.

Q: If A was compelled to pay X, how much


can A recover?
A: From B=P60
REMISSION IN SOLIDARY:
Q: X condones share of A and demanded
payment from B. How much can B pay?
A: P80

A: Yes. The debts are separate and distinct


in joint. Action shall not inure to X.

Q: If ground is minority. May it prosper?


A: No, it is an absolute defense.
Q: If dismissed because contract is void,
will it prosper?
A: No.
Q: if solidary?
A: No. The demand of one creditor inures to
the benefit of other creditors.
BAR EXAMINATION QUESTION:
Q: Four medical students rented an
apartment. They agreed for the payment of
utilities. Before the lease contract ended, 3
of the 4 went back to their country. They
have unpaid telephone bills worth 100k, can
the one left pay only P25?
A: Yes. It is presumed to be a joint
obligation as provided in Article 1207.
Art. 1207. The concurrence of two or more
creditors or of two or more debtors in one
and the same obligation does not imply
that each one of the former has a right to
demand, or that each one of the latter is
bound to render, entire compliance with the
prestation. There is a solidary liability only
when the obligation expressly so states, or

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

MOTO-Q NOTES
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Atty. Crisostomo Uribe

Notes in Civil Law Review 2


when the law or the nature of the
damages, there being no stipulation to the
obligation requires solidarity. (1137a)
contrary, shall be the payment of the
interest agreed upon, and in the absence of
stipulation, the legal interest, which is six
DISJUNCTIVE
per cent per annum. (1108)
1. A will pay P120 either to X or Y
2. A or B will pay X

Bachrach v. Espiritu 52 PHIL 346

Q: If X demands payment, A paid Y, can X


still demand payment from A? Who has the
right to choose?

Facts: There was a sale of 2 trucks with


interest of 12% for the unpaid portion and
a penalty of 25%.

A: Depends on the agreement.

Held: Parties expressly stipulated the


payment of interest hence liable, the
penalty was reduced to 10% because there
was partial performance; usurious.

Q: What if there is no agreement?


A: Tolentino- should be treated like solidary.
Payment should be made to the solidary
creditor who demanded first.
* Sir does not agree! Rules on alternative
obligation should govern because under the
law solidarity is not presumed hence
disjunctive is not one of it.
NEXT MEETING TUESDAY!

BAR EXAM QUESTION:


Q: Corporation promised to deliver furniture
set to A. they agreed that in case of non
compliance, a penalty of 100 thousand
pesos must be paid.
The corporation
delivered furniture set which is different,
instead of Narra. Buyer is asking for 300
thousand pesos as damages and 100
thousand for the penalty. Is this claim
tenable?
A: UP Law Center: It is not tenable. The
penalty is the substitute for damages.
Alternative answer: Yes, he may claim for
damages
because
there
was
fraud
committed.

provides

Q: May the aggrieved party be able to


compel the other party to pay penalty plus
performance?
A: The general rule is they may not,
however if it is clearly granted, they may.
Illustration: A construction of a building
which has a penalty of 10 thousand pesos
per day if not completed on the agreed day,
plus performance was agreed upon.

July 24, 2007

PENAL CLAUSE
liability.

* no need to present proof of damages as


long as there is breach of the obligation.

for

greater

Robes-Francisco v. CFI 86 SCRA 59


The supreme court ruled that the 4%
stipulation is not a penal clause. Even
without such stipulation, corporation is still
liable to pay 6% based on Article 2209.
Art. 2209. If the obligation consists in the
payment of a sum of money, and the
debtor incurs in delay, the indemnity for

Q: Debtor offered his car instead of paying


the penalty. May a debtor compel creditor
to accept penalty instead of car.
A: General rule: No; Exception: Unless
expressly reserved.
Q: If the principal is void, will it follow that
the accessory is void?
A: General Rule: Yes
Exception: if the basis is the nullity of the
obligation there can be a penalty.
Example:Foreigners
who
contracted
Filipinos usually penalty is provided in case
contract is declared void. In this case the
nullity of the principal does not affect the
penalty.
BREACH OF OBLIGATION:
Q: Who can be held liable?
A: Those who are enumerated in Article
1170; hence, anyone.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

10

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Art. 1170. Those who in the performance of
- depends on the circumstances, time
their obligations are guilty of fraud,
and place.
negligence, or delay, and those who in any
- Degree of diligence: that of a good
manner contravene the tenor thereof, are
father of a family unless the law or
liable for damages. (1101)
the stipulations provide otherwise.
FRAUD:

Q: May a waiver of future negligence be


considered void.

1. Fraud in contract art. 1338


Art. 1338. 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. (1269)
2. Causal fraud dolo causante in
contracts; voidable.
3. Incidental fraud dolo incidente
Art. 1170. Those who in the performance of
their obligations are guilty of fraud,
negligence, or delay, and those who in any
manner contravene the tenor thereof, are
liable for damages. (1101)
- if obligation is monetary in character for
example, P1M, it is interest by way of
damages.
Compensatory
damages
stipulated in writing.

expressly

Q: Is article 1170 by way of dolo?


A: No. Better term is bad faith or malice.
The phrase in any manner covers not only
fraud but also negligence and delay.
WAIVER of future fraud is void:
-

consider the dated when waiver was


made, and date when the fraudulent
act happened.

A: Yes. Gross negligence is equivalent to


fraud.
Telefast v. Castro 158 SCRA 445
The negligence in this case was considered
gross in character.
DELAY:
Mora;
time.
-

non-fulfillment

with

respect

to

no delay in obligation not to do.


(obviously!)

Effects of delay:
1. If determinate thing to deliver, there
was a fortuitous event the obligor
is still liable.
BAR EXAM QUESTION:
Q: A and B entered into a lease agreement
over certain machineries. B was to open a
car repair shop. On February 15, they
agreed that the machineries will be leased
for one month. On March 15, the lessor
demanded return of the machineries.
Because the truck of B had a problem, the
machineries were not returned. Is B liable?
A: No, B is not liable. There were only 28
days. An agreement of 1 month is 30 days.

NEGLIGENCE (memorize)

*As a rule there has to be a demand.

Art. 1173. The fault or negligence of the


obligor consists in the omission of that
diligence which is required by the nature of
the obligation and corresponds with the
circumstances of the persons, of the time
and of the place. When negligence shows
bad faith, the provisions of Articles 1171
and 2201, paragraph 2, shall apply.

*Demand need not be in writing; It is


different from demand to interrupt the
prescriptive period.

If the law or contract does not state the


diligence which is to be observed in the
performance, that which is expected of a
good father of a family shall be required.
(1104a)

Art. 1169. Those obliged to deliver or to do


something incur in delay from the time the
obligee judicially or extrajudicially demands
from them the fulfillment of their
obligation.
However, the demand by the creditor shall
not be necessary in order that delay may
exist:

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MOTO-Q NOTES
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Atty. Crisostomo Uribe

Notes in Civil Law Review 2


(1) When the obligation or the law
- it is the happening of a fortuitous
expressly so declare; or
event. It applies to any kind of
obligation.
(2) When from the nature and the
circumstances of the obligation it
In obligation to give, Article 1262 applies:
appears that the designation of the
time when the thing is to be
Art. 1262. An obligation which consists in
delivered or the service is to be
the delivery of a determinate thing shall be
rendered was a controlling motive
extinguished if it should be lost or
for the
establishment
of the
destroyed without the fault of the debtor,
contract; or
and before he has incurred in delay.
(3) When demand would be useless,
as when the obligor has rendered it
beyond his power to perform.

tax,

When by law or stipulation, the obligor is


liable even for fortuitous events, the loss of
the thing does not extinguish the
obligation, and he shall be responsible for
damages. The same rule applies when the
nature of the obligation requires the
assumption of risk. (1182a)

controlling

In Article 1165, even if obligation became


impossible due to Fortuitous event, debtor
is still liable.

In 1169 no demand is needed.


1. by law
agency.
2. Stipulation

eg.

Payment

3. When period is the


motive. Ex. Wedding.

of

4. Demand would be useless due to the


of the debtor.
In reciprocal obligations, neither party
incurs in delay if the other does not comply
or is not ready to comply in a proper
manner with what is incumbent upon him.
From the moment one of the parties fulfills
his obligation, delay by the other begins.
(1100a)
Reciprocal obligations:
- arise from the same transaction.
Example: Contract of sale.
1169 should apply only if both are already
due and demandable upon establishment or
at the same time.
Agcaoili v. GSIS 165 SCRA 1
-

if both in delay, no right of recission.

Art. 1174. Except in cases expressly


specified by the law, or when it is otherwise
declared by stipulation, or when the nature
of the obligation requires the assumption of
risk, no person shall be responsible for
those events which could not be foreseen,
or which, though foreseen, were inevitable.
(1105a)

Art. 1165. When what is to be delivered is


a determinate thing, the creditor, in
addition to the right granted him by Article
1170, may compel the debtor to make the
delivery.
If the thing is indeterminate or generic, he
may ask that the obligation be complied
with at the expense of the debtor.
If the obligor delays, or has promised to
deliver the same thing to two or more
persons who do not have the same
interest, he shall be responsible for any
fortuitous event until he has effected the
delivery. (1096)
-

promise to deliver to two or more


persons, the debtor is still liable. In
Napocor v. CA (161 SCRA 344), to
be excused there should be no
concurring negligence.

BAR EXAM QUESTION:


Q: A ring was delivered to a jewelry shop
for cleaning. After a week, the ring was not
yet cleaned. Thereafter, the ring was lost
due to robbery. Is the jewelry shop liable?
A: Yes. Before the fortuitous event, the
jewelry shop was already in delay.
REMEDIES FOR BREACH:
A. Extra judicial principal remedy,
expressly granted by law. - 1191. It can be

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

12

MOTO-Q NOTES
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Atty. Crisostomo Uribe

Notes in Civil Law Review 2


invoked aside from other remedy. Art.1381
Q: Why is there a need to file a rescission
is only a subsidiary remedy.
with the courts when it can be
extrajudicial?
Art. 1191. The power to rescind obligations
is implied in reciprocal ones, in case one of
A: Because a party cannot take the law in
the obligors should not comply with what is
his own hands especially if there is
incumbent upon him.
recovery needed.
The injured party may choose between the
fulfillment and the rescission of the
obligation, with the payment of damages in
either case. He may also seek rescission,
even after he has chosen fulfillment, if the
latter should become impossible.
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice
to the rights of third persons who have
acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage
Law. (1124)
Art. 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. (1291a)
If court declared the act as rescissory, it
will retroact from the time notice was given
to the other party.

UP v. de los Angeles (35 SCRA 102)


- there can be unilateral decision provided
it is agreed upon.
BAR EXAMINATION QUESTION
Q: A sold a parcel of land to B for P1M, B
paid 100 thousand as down payment.
Vendor will be liable for eviction of
squatters, balance to be paid 30 days after
eviction, if squatters are still there for 6
months buyer should return the money.
During the 6th month period, the price of
the land was doubled. Seller offered to
return the 100 thousand pesos. Buyer
refused and offered to pay the balance and
asked seller to sign. Seller filed an action
for rescission. Is the action proper?
A: No. The seller was not the aggrieved
party. Rescission as a remedy maybe
invoked only by the aggrieved party.
UFC v. CA (33 SCRA 1)
1. Only those who have complied with
their obligation or at least ready to
comply.
2. Violation
must
be
substantial/fundamental in character.
There was no showing that Mafran had
exhausted all the remedies available.
SC: rescission is under 1191 not 1381.
Q: If obligation becomes impossible, what
is the remedy?
A: Rescission. If already rescinded, he can
no longer demand for the fulfillment.
Magdalena Estate v. Myrick (71 Phil 344)
Myrick was able to recover because there
was no stipulation as to forfeiture.
Other extrajudicial remedies:
Rights of unpaid seller:

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MOTO-Q NOTES
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Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Art. 1526. Subject to the provisions of this
2. accion subrogatoria creditor may be
Title, notwithstanding that the ownership in
subrogated to the right of the debtor as to
the goods may have passed to the buyer,
3rd persons.
the unpaid seller of goods, as such, has:
- pertains to obligation to give; monetary
(1) A lien on the goods or right to
obligation. It does not pertain to purely
retain them for the price while he is
personal right. Example: acts of agency.
in possession of them;
Q: What is the extent of liability?
(2) In case of the insolvency of the
buyer, a right of stopping the goods
A: 2236, applies to present and future
in transitu after he has parted with
property.
the possession of them;
(3) A right of resale as limited by
this Title;
(4) A right to rescind the sale as
likewise limited by this Title.
Where the ownership in the goods has not
passed to the buyer, the unpaid seller has,
in addition to his other remedies a right of
withholding
delivery
similar
to
and
coextensive with his rights of lien and
stoppage in transitu where the ownership
has passed to the buyer. (n)

Art. 2236. The debtor is liable with all his


property, present and future, for the
fulfillment of his obligations, subject to the
exemptions provided by law. (1911a)
-

If a person is judicially declared to


be insolvent, when he inherits, the
future property is exempt.

Family Home: May be a subject for tax


nonpayment, creditors for construction,
claim of laborers and mortgagee. (Rules of
Court rule 39, sec.13)

B. Judicial Remedies:
a.)
Principal
performance

remedies

Q: In obligation to
performance allowed?

do,

is

specific
substitute

MODES OF EXTINGUISHMENT Article


1231
Art. 1231. Obligations are extinguished:
(1) By payment or performance:
(2) By the loss of the thing due:

A: It depends. If personal qualification was


stipulated.

(3) By the condonation or remission


of the debt;

If no specific performance, it amounts to


involuntary servitude.

(4) By the confusion or merger of


the rights of creditor and debtor;

Q: If obligation was to do and obligation


was poorly done.

(5) By compensation;

A: Art. 1167. If a person obliged to do


something fails to do it, the same shall be
executed at his cost.
This same rule shall be observed if he does
it in contravention of the tenor of the
obligation. Furthermore, it may be decreed
that what has been poorly done be undone.
(1098)
b.) Subsidiary remedies
1. accion pauliana to be discussed in
rescissible contracts.

(6) By novation.
Other
causes
of
extinguishment
of
obligations, such as annulment, rescission,
fulfillment of a resolutory condition, and
prescription, are governed elsewhere in this
Code. (1156a)
-

It presupposes that there is an


existing valid obligation.

Recission principal remedy is under article


1191.
Art. 1191. The power to rescind obligations
is implied in reciprocal ones, in case one of

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

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MOTO-Q NOTES
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Atty. Crisostomo Uribe

Notes in Civil Law Review 2


the obligors should not comply with what is
Q: What about renunciation by the creditor?
incumbent upon him.
A: Not necessarily. If it is gratuitous, it
The injured party may choose between the
would fall under condonation/remission. If
fulfillment and the rescission of the
for a consideration, it falls under novation.
obligation, with the payment of damages in
either case. He may also seek rescission,
Q: Compromise?
even after he has chosen fulfillment, if the
latter should become impossible.
A: It may. But it would fall under one of
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice
to the rights of third persons who have
acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage
Law. (1124)
Extinctive prescription conversion of civil
to natural.
Q: Are thes modes exclusive?
A: No! In Saura v. DBP, there was a mutual
dissent. This also considered as a mode.
The Supreme Court said that there was a
perfected consensual contract of loan.
(mutuum)

those mentioned by law; common result


reduction of obligation which falls under
condonation; if it would fall under a totally
new obligation, it is novation.
1. PAYMENT
-

synonymous with performance.

May apply to all kinds of obligation.

Rules:
a.) As to person who pays.
b.) As to whom payment is made.
c.) Prestation in obligation.
d.) Date, time and place.
a.) person who pays.

Q: Aside from it, what are the other


modes?

A: Death - To the extent of personal


obligation to do. It does not extinguish
property rights. Eg. Agency death of an
agent; Partnership death of a partner.

Should be called payor, not only


debtor, because third persons may
pay.

Not every person under the NCC can


compel a person to pay except those
who have an interest and those who
by virtue of stipulation.

Q: Fulfillment of resolutory condition in


1231 pertains to?
A: Happening of a resolutory condition.
-

will of one of the parties in contracts


as a general rule does not extinguish
obligation.
Exception: contracts involving trust
and confidence. Partnership without
prejudice to the possible liability of
partner causing dissolution.

Q: Is happening of a fortuitous event a


mode of extinguishment?

Eg. A is indebted to B. X is a 3rd person.


Q: Who are those who have interest?
A: Joint debtors have interest in the
fulfillment of the entire obligation, those
who are subsidiary liable. (guarantors,
mortgagors, pledgors.)
Q: If a third person pays, if he has interest,
what happens?
A: Subrogation.

A: Fortuitous events are not modes of


extinguishment. Only results to loss of the
thing due.

Insolvency per se is not a mode of


extinguishment, there must be a
judicial declaration.

If X is a guarantor, Y is a mortgagor
who secured debt, Y pays, he shall
be subrogated to the rights of B and
can exercise right of a creditor.
if X pays B, obligation of A to B is
extinguished
but
accessory
obligations are not extinguished. It

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

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MOTO-Q NOTES
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Atty. Crisostomo Uribe

Notes in Civil Law Review 2


subsists that is why X can still
- Payor must have the capacity to alienate
foreclose the mortgage.
the thing or has free disposal.
Q: A is indebted to B. X pays 100 thousand
to B for As debt. Does A have a right to
recover from A and can he have a right of
foreclosure?

b.) as to the person to whom payment is


made.
- called payee; normally the creditor.

A: It depends. If A consented, he has the


right.
Q: If before X pays, A partially paid 20
thousand, X paid entire 100 thousand, how
much can Y ask for reimbursement?

CASE: Araas v. Tutaan


-

A: Only 80 thousand, that which redounded


to the benefit of A.
Q: If X pays without the knowledge of A,
can he compel A to pay?
A: No. He is not subrogated to the rights of
B, hence he cannot foreclose the mortgage.
consented means debtor failed to object
at a reasonable time.
Q: X had agreement
knowledge of A, can
payment made?

with B without
he recover the

A: As long as payment was without


knowledge, third person shall not be
subrogated to the rights of the creditor.
(1236-1237)

creditor does not have to be a party.


A creditor may be any person who
has the right to compel the
performance.

Eg. A is indebted to B. But the real payment


should be given to Y; even if A pays B, Y
can still compel A to pay.
-

there is also payment to a person


authorize to receive payment; the
law may provide. Eg. Payment to a
sheriff,
executors
and
administrators.

Q: May payment to
extinguish obligation?

wrong

person

A: Gen. rule: No! Except: 1. if payment


redounded to the benefit of B. Otherwise,
obligation is not extinguished.
Q: Who has the burden to prove?

Art. 1236. The creditor is not bound to


accept payment or performance by a third
person who has no interest in the
fulfillment of the obligation, unless there is
a stipulation to the contrary.

A: No need to prove if: 1. it was ratified by


the creditor; 2. principle of estoppel; 3. if
the person to whom payment made
acquired rights of creditor after the
payment.

Whoever pays for another may demand


from the debtor what he has paid, except
that if he paid without the knowledge or
against the will of the debtor, he can
recover only insofar as the payment has
been beneficial to the debtor. (1158a)

Q: Are there any more exceptions?

Art. 1237. Whoever pays on behalf of the


debtor without the knowledge or against
the will of the latter, cannot compel the
creditor to subrogate him in his rights, such
as those arising from a mortgage,
guaranty, or penalty. (1159a)
Q: X paid B without any intention of being
reimbursed. What if X demanded the return
after one week?

A: Yes. If payment was made in good faith


to a person in possession of the credit, not
a mere possession of the instrument.
Q: X (in possession of PN) demanded
payment from A when the promissory note
became due and demandable, A paid x in
good faith.
A: Obligation is extinguished.
Q: A is indebted to B. However, B dies and
is survived by Y. Even if A paid Y, can it be
invalidated?

A: Indirect Donation. As far as payment, it


is valid and binding.
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Atty. Crisostomo Uribe

Notes in Civil Law Review 2


A: Yes. If the payment was not made in
Art. 1249. The payment of debts in money
good faith, such as when there is a pending
shall be made in the currency stipulated,
action to declare Y incapacitated.
and if it is not possible to deliver such
currency, then in the currency which is
legal tender in the Philippines.
Q: A is indebted to B. B assigned the credit
to X. May it extinguish the assignment?
The delivery of promissory notes payable to
order, or bills of exchange or other
A: Yes.
mercantile documents shall produce the
effect of payment only when they have
c.)Prestation in obligation
been cashed, or when through the fault of
the creditor they have been impaired.
- identity of the obligation; consider the
purpose.
In the meantime, the action derived from
the original obligation shall be held in the
General Rule: A partial performance is nonabeyance. (1170)
compliance.
Q: If check is stale, will the obligation be
extinguished?

Except:
1. The parties expressly stipulate. Subject to different terms integrity
of the prestation. Rescission is not a
remedy if there is substantial
performance.

A obligated himself to deliver 100 sacks to


B for 1000 pesos. He only delivered 95.
Q: How much can he recover?
or

value

Q: When is payment thru check extinguish


obligation?
A: When it is encashed or through fault of
the debtor when it had been impaired.

Case: JM Tuason v. Javier

A: Amount
damages.

A: No.

delivered,

less

As to kind of obligation:
Q: A is obliged to B. He paid Japanese yen.
Is it valid?
A: Yes. RA 8183. Payment may be made in
any currency as long as stipulated. Before:
RA 529-payment not in Philippine currency
is prohibited.
Q: Can creditor be compelled to accept
check?
A: No. As stated in New pacific timber v.
Seeris. Creditor may refuse to accept
check.
Before: If Manager or Cashiers check, it is
deemed as cash.
Q: If partly check and partly cash?
A: Creditor may refuse. Except if stipulated.
In Article 1249, it is extinguished if
encashed.

Q: B owes A 1M in 1968. A claimed that in


1968, the value of 1M is only 500k
compared to the present because of
devaluation, hence he claimed 2M base on
Art.1250.
Art. 1250. In case an extraordinary
inflation or deflation of the currency
stipulated should supervene, the value of
the currency at the time of the
establishment of the obligation shall be the
basis of payment, unless there is an
agreement to the contrary. (n)
Is his contention correct?
A: No. As decided in the Philippine Pipe
Foundry case, the supreme court said as
far as Philippine experience is concerned,
there has never been an extraordinary
inflation as experienced by Germany in
1920-1923. Art.1250 may only be invoked
if the source is a contract. In Velasco v.
Meralco, Article 1250 may not be invoked
because the source is a quasi delict.
d.)date, time, place
Determinate place where obligation was
constituted.
Generic domicile of the debtor.
SPECIAL FORMS OF PAYMENT

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

17

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


1. Payment by Cession and decion en
As to effect
pago.
payment:
Art. 1255. The debtor may cede or assign
his property to his creditors in payment of
his debts. This cession, unless there is
stipulation to the contrary, shall only
release the debtor from responsibility for
the net proceeds of the thing assigned. The
agreements which, on the effect of the
cession, are made between the debtor and
his creditors shall be governed by special
laws.
(1175a)

conventional assignment
requires consent of both parties.
CASE: Filinvest v. Philippine Acetylene
-

no dation en pago, the delivery of


the case was not consented to.
Filinvest was only an agent; there
was no transfer of ownership.

Dacion en pago
As to transfer of
ownership:
The
delivery
results
to
the
transfer
of
ownership, same
is
true
with
application
of
payment.

Cession

No
transfer
of
ownership,
creditor only given
the power to sell.

of

General
rule:
Extinguished only
as to the extent of
value delivered.
Exception: unless
stipulated
upon
that
anything
delivered
shall
extend the entire
obligation.General
Rule: governed by
law on sales only if
the pre- existing
obligation
is
in
money.

General
Rule:
Extinguish only as
to the extent of
the proceeds of
the
sale
of
creditor.
Exception: Unless
there is an express
agreement.

Art. 1245. Dation


in
payment,
whereby property
is alienated to the
creditor
in
satisfaction of a
debt in money,
shall be governed
by the law of
sales. (n)

Q: If A is to deliver a carabao, but instead


gave a refrigerator. Is it dacion en pago on
sale?
A: No. It is novation. The pre-existing
obligation is not in money.
CASE: Citizens Surety v. CA
-

no dation en pago if at the time of


the
transaction
there
is
no
obligation.
All transactions were executed
within one day. The indemnity
agreement that they will be liable
upon default on payment of surety
bond, hence no obligation yet on
that day.
SC: Dation en pago may pertain to
delivery of rights/things.

2. Application of payments:
Problem: X is the creditor. A owes him,
100k, 50k, 20k and 10k.

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18

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


4. Tender
of
payment
and
consignation:
1. debtor ha the right to designate to which
payment is to be applied.
- tender of payment alone shall never
extinguish the obligation.
a.) no partial payment.
- Actual offering of the amount or
thing.
b.) to that which is due and demandable,
except if payment was made for the benefit
of the debtor.
1256 the only one scenario when tender
of payment should be made, when creditor
refuses to accept without just cause.
c.) If the debt is interest bearing.
Rules:

2.) if debtor fails to designate, the creditor


may designate.
3.) if both failed to designate:
Note: provision for application of payment
is not applicable here.
3. that which is most onerous.
4. Proportionate application (provided,
it is of the same nature and burden)
if the debts are of different
amounts.

Art. 1256. If the creditor to whom tender of


payment has been made refuses without
just cause to accept it, the debtor shall be
released
from
responsibility
by
the
consignation of the thing or sum due.
Consignation alone shall produce the same
effect in the following cases:
(1) When the creditor is absent or
unknown, or does not appear at the
place of payment;

Q: How do we determine what is the most


onerous?

(2) When he is incapacitated to


receive the payment at the time it is
due;

A: There is no hard and fast rule. We must


consider factors and circumstances.

(3) When, without just cause, he


refuses to give a receipt;

3. Payment by cession:

(4) When two or more persons claim


the same right to collect;

1255:
voluntary
assignment
consent of the creditor.

requires

Art. 1255. The debtor may cede or assign


his property to his creditors in payment of
his debts. This cession, unless there is
stipulation to the contrary, shall only
release the debtor from responsibility for
the net proceeds of the thing assigned. The
agreements which, on the effect of the
cession, are made between the debtor and
his creditors shall be governed by special
laws.
(1175a)

Q: How will the proceeds of the sale be


applied?
A: 1. based on stipulation. 2. without
agreement; rules in concurrence and
preference of credits shall be applied.
-

debtor must deliver his property to


creditor.
Resorted to by debtor who is
experiencing financial difficulty.

(5) When the title of the obligation


has been lost. (1176a)
CASE: Soco v. Militante:
Q: When may Tender of payment be made
judicial?
A: No. Tender of payment by its nature is
extra judicial.
Illustration:
Q: There was a sale with right to
repurchase. Seller a retro refuses to accept
money, an action was filed. Plaintiff said
that he is not obliged because there is no
tender of payment required. Is his
contention correct?
A: Yes. No tender of payment is required.
No consignation is required in sale with
right to repurchase.
Q: Is notice required by consignation?

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

19

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Q: To deliver shabu? Is the obligation
extinguished?
Q: 2nd notice after consignation is required?
A: No. This is not a valid obligation
therefore no extinguishment.
A: Yes. Required but it does not need to
come from the debtor, it is in the form of
summons.
Q: If the thing is lost, who has the burden
to prove?
Soco v. militante 2 notices per amount
due.
A: depends on who is in possession of the
thing at the time of the loss. However, this
rule is not absolute when the loss occurred
Q: When will obligation be extinguished?
during the happening of a calamity, like
typhoon.
A: When creditor accepted, even if debtor
A: Yes.

refuses, may extinguish after consignation,


it retroacts from the time of delivery.

Q: The obligation was due in January, 1998.


There was a tender of payment in January
1, 2000 but was refused. In January 2,
2004, there was consignation. In January 2,
2007 there was a court ruling. Is the debtor
liable to pay interest?
A: Yes. If from January 1998 he was
already in delay, up to consignation if court
ruled to be valid. If the consignation was
ruled by the court to be invalid, the interest
must be from January 1998 till court ruled.
According to Sir: however, mora accipiendi.delay of the creditor to accept. Debtor may
release himself from the obligation by the
consignation of the thing.
Q: Can debtor withdraw the consignated
money?
A: Yes. If the withdrawal is made before
acceptance of creditor and before court
ruled on the consignation.
-

if creditor accepted and court ruled,


no withdrawal. If no ruling yet, it
may be withdrawn if creditor
accepted.
Revival without consent of accessory
creditor is released.

LOSS

Read: Art 1265 and Art 1262.


Art. 1265. Whenever the thing is lost in the
possession of the debtor, it shall be
presumed that the loss was due to his fault,
unless there is proof to the contrary, and
without prejudice to the provisions of
article 1165. This presumption does not
apply in case of earthquake, flood, storm,
or other natural calamity. (1183a)
Art. 1262. An obligation which consists in
the delivery of a determinate thing shall be
extinguished if it should be lost or
destroyed without the fault of the debtor,
and before he has incurred in delay.
When by law or stipulation, the obligor is
liable even for fortuitous events, the loss of
the thing does not extinguish the
obligation, and he shall be responsible for
damages. The same rule applies when the
nature of the obligation requires the
assumption of risk. (1182a)
Q: In an agreement between A and B for
construction of house, proceeds shall be
equally distributed from the sale. B didnt
give his share in the house because of the
high price of materials. A filed an action.
May court grant the action?
A: Yes. Because the event of increase of
price is foreseen. 1267 is not applicable.

CASE: Occea v. Jacobsen

When not valid?


-

when it goes out of commerce.


Prohibited by law.

Impossibility of performance.

court cant change agreement of the


parties.

1267 only difficulty not impossibility.


Art. 1267. When the service has become so
difficult as to be manifestly beyond the
contemplation of the parties, the obligor

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

20

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


may also be released therefrom, in whole
Q: If evidence of interest is found in
or in part. (n)
debtors possession, is there necessarily
condonation?
1264 depends on the intention of the
parties.
A: No, may be through other modes, like
payment.
Art. 1264. The courts shall determine
whether, under the circumstances, the
Q: A is the creditor of 100k to B. X, a third
partial loss of the object of the obligation is
party, pledged his car to B. May the pledged
so important as to extinguish the
car be used as condonation?
obligation. (n)
A: Determine first the status of X. Whether
CONDONATION OR REMISSION
he is the owner or for what the pledge is
for.
donation of a credit
Then state the accessory v. principal. Not X.
Because A and B are the parties in the
1272 refers to private document only .
principal obligation; there is only a
If public document, it needs many copies.
presumption of X on part of the accessory
obligation of the pledge.
Art. 1270. Condonation or remission is
essentially gratuitous, and requires the
acceptance by the obligor. It may be made
expressly or impliedly.
One and the other kind shall be subject to
the
rules
which
govern
inofficious
donations. Express condonation shall,
furthermore, comply with the forms of
donation. (1187)

CONFUSION OR MERGER OF RIGHTS


Art. 1275. The obligation is extinguished
from the time the characters of creditor
and debtor are merged in the same person.
(1192a)

Art. 1271. The delivery of a private


document evidencing a credit, made
voluntarily by the creditor to the debtor,
implies the renunciation of the action which
the former had against the latter.

Q: May it be made through agreement of


parties?

If in order to nullify this waiver it should be


claimed to be inofficious, the debtor and his
heirs may uphold it by proving that the
delivery of the document was made in
virtue of payment of the debt. (1188)

Q: By operation of law, can there be


confusion?

Art. 1272. Whenever the private document


in which the debt appears is found in the
possession of the debtor, it shall be
presumed that the creditor delivered it
voluntarily, unless the contrary is proved.
(1189)

Q: debtor died, creditor is an heir, can


confusion take place?

Q: X owes A 1M, he lends the same amount


to A. Is there condonation?
A: Maybe,
remitted.

if

payment

of

interest

is

Q: If evidence of interest is found in debtor


X? Is it condonation?
A: No.

A: May be. It depends upon the intention.


Ex. Merger of rights of a corporation.

A: By succession, creditor died, debtor is


son or daughter.

A: there can be, when there is acceptance.


Q: A is indebted to B. The debt is secured
by a mortgage by M on B. Can there be a
confusion of B and M?
A: No.
Q: If there is an agreement?
A: No. It will be subrogation. If B assigned
his rights to M, but still obligation is not
extinguished.
Q:
Will
confusion
extinguishment?

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

result

in

total

21

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


A: No. In cases of joint obligations, in 1277.
Q: In compensation, how many debts are
involved?
Art. 1277. Confusion does not extinguish a
joint obligation except as regards the share
A: 2 or more debts.
corresponding to the creditor or debtor in
whom the two characters concur. (1194)
Q: Which debts will be extinguished?

COMPENSATION
Q: If 2 or ore persons are debtors and
creditors, will there be compensation?
A: No, the requirements must be complied
with. Art. 1279
Art. 1279. In order that compensation may
be proper, it is necessary:
(1) That each one of the obligors be
bound principally, and that he be at
the same time a principal creditor of
the other;
(2) That both debts consist in a sum
of money, or if the things due are
consumable, they be of the same
kind, and also of the same quality if
the latter has been stated;

A: Less onerous amount.


Q: A owes B the following, 50k, 100k, 75k,
225k, 100k. B owes A 100k. How many of
the debts will be totally extinguished?
A: 2 debts of A and debt of B.
Q: A paid 100k to B. A has the following
debts to B; 50k, 25k, 10k. How many debts
are extinguished?
A: 3 debts
compensation
balance.

are extinguished. Partial


because there is still a

Q: How many kinds of compensation are


there?
A: 4: legal,
judicial.

conventional,

facultative,

(3) That the two debts be due;

Q: In some books, there


facultative is removed, why?

(4) That they be liquidated and


demandable;

A: It is a modification only of conventional.

(5) That over neither of them there


be any retention or controversy,
commenced by third persons and
communicated in due time to the
debtor. (1196)
Q: In compensation, is it a reciprocal
obligation?
A: Not necessarily.
Q: When is it a reciprocal obligation?
A: Reciprocal obligations arise from a single
transaction; contract of sale.
Q: What about legal compensation? Will it
take place in reciprocal obligations?
A: Not necessarily. In reciprocal obligations,
there can be none.
Q: In partial compensation, is debt totally
extinguished?
A: No. Extinguished as to at least one debt.

Q: What are
compensation?

the

are

other

three;

names

of

must

be

A: set off or counterclaim.


Q: Not really the same because?
A: Set-off and counterclaim
invoked in courts of law.
Q:
What
distinguishes
conventional?

legal

from

A: As to requirements, not the same. In


legal, all requirements should be present, in
conventional, not necessary that all
requirements are present. i.e. different
amounts or objects; one debt is not yet
due.
Q: Give an example of facultative.
A: Support. Invoked by the one who claims
for support.
Q: A opened a checking account with a
bank, he borrowed money with the same

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

22

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


bank. A failed to pay, Bank invoked
CASE: International Corp. Bank v. IAC
compensation. A said that his checking
account is depositum. Is his claim tenable?
Facts: Villanueva applied a loan from ICB
for 50M. Only 1M was delivered by the
A: No. In a checking account, the bank is
bank. The loan was secured by a mortgage,
the creditor, A is a debtor governed by
which is 110 M asset. Villanueva deposited
mutuum, hence compensation cant take
1M to ICB. He invoked compensation.
place.
SC: Since there was a question on the
Q: When is there a deposit?
foreclosure sale, there was no legal
compensation.
A: If the delivery is only for safe keeping.
CASE: Solinap v. del Rosario
Q: Other kind of facultative.
Facts: The lessee did not pay rentals. He
invoked that the lessor had made
A: In case of commodatum, bailor can
advancements.
invoke. In a civil case/penal, invoke by
injured party.
SC: No legal compensation because alleged
debt were being questioned in the estate
CASE: PNB v. Acero
proceedings.
PNB invoked: No legal compensation, the
credit line was used, lawyer of PNB claimed
that credit line was shown to Acero.
-

you dont prove a fact by showing it


to the other party.

Q: A is indebted to B with G as guarantor.


Can G invoke compensation?

no legal compensation if debts arise


from depositum, commodatum, civil
liability arising from crime.

Q: A is the creditor of B worth 100k secured


by a mortgage. B gave 50k. If there is a
partial compensation, will the mortgage be
extinguished?

A: No. they are not debtors and creditors to


each other. The law requires that they are
principally bound.

A: Not necessarily. It depends which debt is


most onerous.

CASE: Sycip V. CA

A: Yes. Mortgage will be extinguished.

SC: debtors and creditors should be


debtors and creditors in their own rights.

Q: B is indebted to A for 100k which is


interest bearing. B gave 50 k to A. Will
there be payment of interest even after
payment of compensation?

CASE: Francia v. IAC


SC: There is no compensation when Francia
paid real property tax to the LG of Pasay.
The national government was the one who
expropriated.
-

compensation takes place if debt


became due at the same time.

Q: Monetary
contracts?

debts

must

arise

from

A: Depends. If there is total compensation,


no interest will be paid. If partial, depends
on whose debt is bigger.
Q:
Will
partial
compensation
extinguished by prescription?

be

A: Yes. Partial compensation does not toll


the running of the period.
ASSIGNMENT OF THE CREDIT

A: Not necessarily. Eg. Attorneys fees


Q: Are all monetary debts
compensation?

Q: If there is total compensation, will the


mortgage be extinguished?

subject

to

Q: On January 1, 2002, A owes B 100k. B


assigned the credit to C on June 1, 2002.
Can C demand payment from A?

A: No. Custom duties. (Francia v. IAC)


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23

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


A: Determine when the assignment was
2. extinctive.
made; if made after both obligation was
due and demandable, there will already be
3. modificatory.
compensation.
Q: What if A paid B 50k in May 1, 2002?
How much can C claim?
A: 50k. He must ask B for the other 50k.
Q: In the same case, the debt is
demandable on May 1, 2002. The credit
was assigned to on March 1, 2002. May D
validly demand it on the same date?
A: No. The obligation is not yet due.
Q: A owes B 100k due and demandable on
May 1, 2003. B assigned it to X on April 1,
2003. A made the following payments to B:
20k-March 1, 2003; 30K-June 1, 2003; 40kdecemeber 1, 2003. On May 1, 2003, how
much may X validly demand?
A: It depends: If A had knowledge of
assignment of X and he consented with
reservation, X may claim 90k, if he
consented without reservation, 100k. If it
was without knowledge of A, X may claim
10k.

NOVATION
I.
II.
III.

Subjective/Personal
Objective/Real
Mixed

Art. 1291. Obligations may be modified by:


(1) Changing their object or
principal conditions;
(2) Substituting the person of the
debtor;
(3) Subrogating a third person in
the rights of the creditor. (1203.)
I. Subjective:
A. Active third person is subrogated in the
rights of the creditor.
B. Passive substitution of the person of
the debtor.
* other classifications:
1. express or implied.

Eg. Prescription
Q: In ACTIVE SUBJECTIVE, operative word
is subrogated. When does this happen?
A: 1. by agreement (express);
2. art. 1302 legal subrogation.
a. Third Party pays creditor without consent
of debtor.
b. TP who has an interest pays creditor with
or without consent of debtor.
c. Creditor of debtor pays creditor of the
same debtor.
Art. 1302. It is presumed that there is legal
subrogation:
(1) When a creditor pays another
creditor who is preferred, even
without the debtor's knowledge;
(2) When a third person, not
interested in the obligation, pays
with the express or tacit approval of
the debtor;
(3)
When,
even
without
the
knowledge of the debtor, a person
interested in the fulfillment of the
obligation pays, without prejudice to
the effects of confusion as to the
latter's share. (1210a)
Q: In PASSIVE SUBJECTIVE, operative word
is substitution. When does this happen?
A: 1. Expromission substitution was made
without knowledge or against will of original
debtor.
2. delegacion substitution was made
with knowledge of debtor.
Q: A is indebted to B. A mortgaged to B his
property worth 100k. B is indebted to C,
100k also. If A does not pay, can C
foreclose the mortgage?
A: No. He was not subrogated.
DELEGACION

there
is
already
subrogation, therefore, C may foreclose the
mortgage.

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24

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


if there is already
There was a lease contract entered into for
5 years. Another contract was entered into
novation
through
for 10 years. The contention is that the 2 nd
delegacion,
no
agreement is void, therefore novation is
consent of original
void.
debtor is void.
If
payment
consented to by A,
CASE: Ronquillo v. CA
no
novation,
subrogation. (1236Facts: The obligation was due in 1952, In
1237)
1967, debtor acknowledge debt and
promised to pay. Since it is now
Art. 1236. The creditor is not bound to
transformed to a natural obligation, will the
accept payment or performance by a third
action for novation prosper?
person who has no interest in the
fulfillment of the obligation, unless there is
SC: Even natural obligations may be
a stipulation to the contrary.
subject of novation.

Whoever pays for another may demand


from the debtor what he has paid, except
that if he paid without the knowledge or
against the will of the debtor, he can
recover only insofar as the payment has
been beneficial to the debtor. (1158a)
Art. 1237. Whoever pays on behalf of the
debtor without the knowledge or against
the will of the latter, cannot compel the
creditor to subrogate him in his rights, such
as those arising from a mortgage,
guaranty, or penalty. (1159a)

Q: X is the creditor of A, B and C for 10M.


After 3 months, C paid 10M to X without
the knowledge of A and B. After 6 months A
and B paid 7M to X. May A and B recover
the 7M from X?
A: if voluntarily given, the creditor can
retain.
According to sir: It is actually a payment by
mistake therefore solution indebiti.

Effect of Insolvency of new debtor:


-

If C becomes insolvent after


substitution, A is no longer liable.
If C was already insolvent at the
time of substitution, A cant be held
liable if no knowledge except if he
acted in Bad Faith or such insolvency
is of public knowledge.

A. Change in object no problem, eg.


Money to celphone (art.1245)
Art. 1245. Dation in
property is alienated
satisfaction of a debt
governed by the law of

II. CONTRACTS
-

II. Objective

payment, whereby
to the creditor in
in money, shall be
sales. (n)

B. Change in principal obligation:


a. express
b. implied
* if 2 obligations cant stand together, there
is novation, there is incompatibility.
* there was novation in FOA and the Villar
case.

In
natural
obligations,
payor
knows he cant be
compelled to pay but
nonetheless pays.

while all contracts are agreements,


not all agreements are contracts.

Prohibited:
-

Auto contracts a person contracts


himself.
article 1491.

Art. 1491. The following persons cannot


acquire by purchase, even at a public or
judicial auction, either in person or through
the mediation of another:
(1) The guardian, the property of
the person or persons who may be
under his guardianship;
(2) Agents, the property whose
administration or sale may have
been entrusted to them, unless the

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

25

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


consent of the principal has been
Example:
given;
a. for agent to waive accounting.
(3) Executors and administrators,
the property of the estate under
b. pactum commisorium
administration;
(4) Public officers and employees,
the property of the State or of any
subdivision thereof, or of any
government-owned or controlled
corporation,
or institution,
the
administration of which has been
intrusted to them; this provision
shall
apply
to
judges
and
government experts who, in any
manner whatsoever, take part in the
sale;
(5) Justices, judges, prosecuting
attorneys, clerks of superior and
inferior courts, and other officers
and employees connected with the
administration
of
justice,
the
property and rights in litigation or
levied upon an execution before the
court within whose jurisdiction or
territory
they
exercise
their
respective functions; this prohibition
includes the act of acquiring by
assignment and shall apply to
lawyers,
with
respect
to
the
property and rights which may be
the object of any litigation in which
they may take part by virtue of their
profession.
(6) Any others specially disqualified
by law. (1459a)

c. partnership, exclusive partner


sharing profits pactum aliena

from

mortgage pactum aliendro

d. Public policy:
CASE: Cui v. Arellano
-

scholarship in law school must not


be contrary to public policy.

CASE: Saura v. Sandico


-

Escalation clause ex. Construction


contracts. Creditor has right to
demand a higher compensation
upon the happening of a
contingency. Ex. Contract of loan
(interest).
Acceleration clause stipulation
whereby in an obligation to pay on
installment, balance shall
automatically become due and
demandable when debtor fails to
pay.

Q: Will an escalation clause be valid when


there is no descalation clause?

Natural implied warranties.

A: It is relevant only in contracts of loan;


only effect of circular issued by the Central
Bank provided the escalation clause only
happens once a year.

Essential Consent, Object, Consideration

2. Consensuality:

Accidental

(compensatory)

Art. 1306. The contracting parties may


establish such stipulations, clauses, terms
and conditions as they may deem
convenient, provided they are not contrary
to law, morals, good customs, public order,
or public policy. (1255a)

ELEMENTS OF A CONTRACT:

payment

of

interest.

CHARACTERISTICS:
1. Autonomy freedom of contract/liberty
of contract.

CASE: Republic v. PLDT

Art. 1306. The contracting parties may


establish such stipulations, clauses, terms
and conditions as they may deem
convenient, provided they are not contrary
to law, morals, good customs, public order,
or public policy. (1255a)

Validity of contracts of adhesion:

Void waiver:

CASE: Ong Yu v. CA

to compel PLDT to enter into interconnection agreements is actually


expropriation.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

26

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


plaintiff bought ticket from PAL,
have clearly and deliberately conferred a
favor upon a third person. (1257a)
eventually he lost his baggage. In
the ticket it contained a waiver of a
right.
General rule: Contracts take effect only
between parties, their assigns and heirs.
SC: waiver of a right in a contract of
adhesion are not considered gladly by
Exceptions:
the Supreme Court.
-

3. Mutuality:
compliance.

goes to validity and

1. creation of real rights


Q: A mortgaged his land
to B and eventually A
sold it to C. Can C be
bound by the mortgage?

Art. 1308. The contract must bind both


contracting
parties;
its
validity
or
compliance cannot be left to the will of one
of them. (1256a)
termination by mere notice valid.

A: Yes.
2. Interference by a third party.

4.Obligatory:
Art. 1315. Contracts are perfected by mere
consent, and from that moment the parties
are bound not only to the fulfillment of
what has been expressly stipulated but also
to all the consequences which, according to
their nature, may be in keeping with good
faith, usage and law. (1258)
Q: When is a contract obligatory?
A: Upon perfection of the contract.

Art. 1314. Any third person who induces


another to violate his contract shall be
liable for damages to the other contracting
party. (n)
Requisites:
-

existence of a valid contract


knowledge of contract by
persons

interference
by
third
persons
without legal justification or excuse.

Q: When is a contract perfected?


A: It depends if it is consensual
(concurrence between the offer and
acceptance), real (like deposit, pledge,
commodatum
requires
delivery),
formal/solemn
(requires
compliance
with certain formalities prescribed by
law).

third

Q:
A
has
a
contract
with
GMA.
Subsequently, A entered a contract with
ABS-CBN. A was in bad faith. May ABS CBN
be liable?
A: No. To be liable there must be malice
impugned. Third Party liability does not
impugn liability of debtor who violated.

5. Relativity:

3. Contracts in fraud of creditors:

Art. 1311. Contracts take effect only


between the parties, their assigns and
heirs, except in case where the rights and
obligations arising from the contract are
not transmissible by their nature, or by
stipulation or by provision of law. The heir
is not liable beyond the value of the
property he received from the decedent.

Q: A is the debtor of B. A sold his property


to C. May B rescind the contract between A
and C?

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

A: Yes.
4. Stipulation pour atrui stipulation in
favor of third persons. It is not the main
agreement.
CASE: Kaufman v. PNB
CASE: Florentino v. Encarnacion
-

acceptance may be implied.

CASE: Bonifacio bros. v. Mira

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

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MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

enforcement of insurance.

Notes in Civil Law Review 2


now no distinction, NCC governs

CLASSIFICATION OF CONTRACTS:
A: Degree of Dependence
1) principal (agency, partnership)
2) accessory (Real Estate Mortgage,
Chattel
Morgtage,
Pledge,
Antichresis)
example: crop loan scenario

B. As to Perfection
1) Real (Pledge, Commodatum,
Mutuum. Deposit)
2) Formal (antichresis; donation)
C. Purpose
D. As to cause
1) onerous
2) pure beneficience
a) gratuitous
b) lucrative
liberality id the consideration
3) remuneratory
seller (payment); buyer
(deliver)
E. Risk of Fulfillment
1) Aleatory
sale of hope emptio spei
risk of fulfillment
insurance
life annuity
2) commutative
F. Name and Designation
1) Nominate
2) innominate
G. As to subject matter
1) Things
2) Right
3) Services
PAQIII/Oct2007

III. SALES
- there must be an agreement to transfer
ownership.
Q: A sold goods to B for purpose of resale,
Y bought goods from X for personal
consumption. What law shall govern this
contract?
A: NCC and Code of Commerce,
A-B commercial sale
Y-X civil sale

Characteristics:
1. principal
2. bilateral-imposes obligations on two
parties
3. nominate
4. onerous- always! otherwise donation
5. commutative- emptio spei
Subject matter:
things and rights, service is not included
As to object:
a. movable
b. immoxable
Concepts involve:
a) Recto Law- personal prop by
installment
b) Maceda- immovable
c) double sale
d) Statute of Frauds
Q: As to WON tangible/intangible?
A: corporeal (things); incorporeal
(rights)
Q: relevant as to what concept?
A: delivery
Q: As to validity?
A: void, unenforceable, rescissible, voidable
Q: 1458 2nd par: provides for?
A: absolute/conditional sale:
In an absolute sale there is an automatic
transfer of ownership while in conditional
sale, there is a reservation of ownership.
Art. 1458. By the contract of sale one of
the contracting parties obligates himself to
transfer the ownership and to deliver a
determinate thing, and the other to pay
therefor a price certain in money or its
equivalent.
A contract of sale may be absolute or
conditional. (1445a)

Q: Conditional sale vs. contract to sell


A: In conditional sale, ownership depends
on the happening of condition and it take
place by operation of law. In contract to
sell, ownership passes after full payment
passes. There is no automatic transfer,
buyer have right to ask execute final deed.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

28

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Q: A delivered receipt to B as partial
Buyer- acquisition of ownership over
payment to my car, received by D, balance
the thing.
payable at the end of the month, signed by
3. Object
A.
Is this contract pertaining to a
Contracts which are void: Absolutely
contract to sell?
simulated contract (parties voluntarily
entered)
A: NO, there is already transfer of
ex. To defraud creditors, wife hide property
ownership, there was no reservation as to
from husband, buyer go abroad.
ownership.
relatively simulated- why? To reduce tax
dacion en pago vs. contract of sale
liability, circumvent law on legitime
dacion en pago is a mode of extinguishing
obli, it is a pecial form of payment; while
SPECIFIC PERSONS PROHIBITED TO
contract of sale is a source of obli.
ENTER INTO SALE
Guardian- absolute
Q: Kobe & companion B is to buy shoes,
Agent- administration/sale
Bshoes to be delivered, upon payment,
Kobe ordered a particular shoe.
Q: A inherited property from father to
transfer property; executor to pay 700k,
A: Kobe- contract of piece of work
status?
B- contract of sale
contract for a piece of work under
A: valid; Assignment of rights which A can
(Aticle1467) is also called Massachusetts
validly sell, not part of the estate under Ys
Rule
administration.
Art. 1467. A contract for the delivery at a
certain price of an article which the vendor
in the ordinary course of his business
manufactures or procures for the general
market, whether the same is on hand at
the time or not, is a contract of sale, but if
the goods are to be manufactured specially
for the customer and upon his special
order, and not for the general market, it is
a contract for a piece of work. (n)

Q: A to deliver his car to B, B to give A his


watch plus money, 100k. What law should
govern?
A: 1st. depends on manifest intention of
parties.
Barter = value of thing given as a part of
consideration > money/its equivalent; if
value of watch >100k
Sale- if same value
Q: A granted B exclusive right (right to sell
within a specific area) to sell maong pants
to Isabela, before B could sell, his store was
burned, can B be compelled to pay?
A: contract of sale bec. There is a
stipulation. B is a distributor/dealer 99.99%
Quiroga vs. Parsons- will supply the bed
and pay price within a certain period. No
obli to remit the price, no stipulation.
ELEMENTS OF SALE:
1. Consent
2. Price- consideration as to whom?
The seller.

Q: a sued B for recovery of a parcel of land,


hired lawyer, one year after filing, entered
into a contract of sale with B involving the
land.
A: not valid. object of sale is subject to
litigation-actually depends. WON the case is
still pending.
Q: 1491 status of contracts
A:GR: voidable
Except: agents- subject to ratification
Par.1,2,3 voidable- can be ratified
private interests is involved.
4,5,6 void
1,2,3 can be ratified because after lapse of
incapacity, another contract maybe entered
into Rubias VS. Materia
Wolfgang vs. Martinez
Art. 1491. The following persons cannot
acquire by purchase, even at a public or
judicial auction, either in person or through
the mediation of another:
(1) The guardian, the property of
the person or persons who may be
under his guardianship;
(2) Agents, the property whose
administration or sale may have
been entrusted to them, unless the
consent of the principal has been
given;

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

29

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


(3) Executors and administrators,
the seller had, unless the owner of the
the property of the estate under
goods is by his conduct precluded from
administration;
denying the seller's authority to sell.
(4) Public officers and employees,
the property of the State or of any
subdivision thereof, or of any
government-owned or controlled
corporation,
or institution,
the
administration of which has been
intrusted to them; this provision
shall
apply
to
judges
and
government experts who, in any
manner whatsoever, take part in the
sale;
(5) Justices, judges, prosecuting
attorneys, clerks of superior and
inferior courts, and other officers
and employees connected with the
administration
of
justice,
the
property and rights in litigation or
levied upon an execution before the
court within whose jurisdiction or
territory
they
exercise
their
respective functions; this prohibition
includes the act of acquiring by
assignment and shall apply to
lawyers,
with
respect
to
the
property and rights which may be
the object of any litigation in which
they may take part by virtue of their
profession.
(6) Any others specially disqualified
by law. (1459a)

Q: If both parties are capacitated to give


consent, contract of sale valid?
A: not necessarily because consent of one
might had been vitiated.

Nothing in this Title, however, shall affect:


(1) The provisions of any factors'
act, recording laws, or any other
provision of law enabling the
apparent owner of goods to dispose
of them as if he were the true owner
thereof;
(2) The validity of any contract of
sale under statutory power of sale
or under the order of a court of
competent jurisdiction;
(3) Purchases made in a merchant's
store, or in fairs, or markets, in
accordance with the Code of
Commerce and special laws. (n)

Q: contract of sale involving alien.


A: depends; if private agricultural, if he is
seller, valid. If he is the buyer, GR: NO.
XPN: former natural born citizen.
Q: All matters could be a valid subject
matter of sale.
A: every matter that can be a subject
matter of contracts in general can be
subject matter of sale (service, things, and
rights). Service CAN NOT BE A SUBJECT
MATTER OF SALE
Q: For rights to be a valid subject matter. of
sale, what are the requirements?
for rights- conclusively presumed to be
valid

Q: A person sold a thing to another in


representation of another person without
authority, status?

A: must be transmissible

A: unenforceable

A: assignment of rights

Q: can it be valid?

Q: if deed of assignment

A: Yes, in case of statutory power to sell


1505; officious manager, executor notary
public (where pledgor can go to NP to have
the thing sold).

A: sale? Not necessarily, if gratuitousdonation, maybe dation in payment, or a


security arrangement.

Art. 1505. Subject to the provisions of this


Title, where goods are sold by a person
who is not the owner thereof, and who
does not sell them under authority or with
the consent of the owner, the buyer
acquires no better title to the goods than

Q: Sale of the right, known as?

Q: rights arising from contracts


A: rights and obligations arising from
contracts are transmissible
XPN: NATURE, STIP, LAW (right in specific
partnership property)

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

30

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Q: As to things to be valid subject matter?
Q: agreement A-B specific car, price is 500k
yen.
A:
determinate,
capable
of
being
determinate
A: valid, if so stipulated, 1458 in money
example: buying a car in the casa outside
commerce of man, corpse
Art. 1458. By the contract of sale one of
Q: Agreement between A&B, A sell palay
the contracting parties obligates himself to
that will be harvested this November.
transfer the ownership and to deliver a
Q: Status of sale
determinate thing, and the other to pay
therefor a price certain in money or its
A: sale is valid.
equivalent.
Q: if no palay is harvested, A is liable

Q: if not in money, valid?

A: GR: Yes, liable, if he was at FAULT,


except if reason was a FE

A: its equivalent

Q: sale of a sweepstakes ticket status?

Q: can seller compel of lapad?

A: depends, if winning ticket not void

A: stipulated, RA8183 (currency stipulated)


repealed RA 529 (only in philippine
currency)

Q: A sold B land with right of repurchase


within one year, 3rd month sold to C. what if
on the 6th month, A offered to repurchase
land status of sale
A: Sale maybe valid. 1465
1. things (ownership over the thing) subject
to a resolutory condition may be the object
of the contract of sale.
2. validity of contract requires Consent,
Price, Object, the fact that it is present,
sale is valid

Q: why RA 529-because of dollar reserves


problem
A: at that time, RA 8183, our dollar
reserves improved
Q: sell specific car, amount of two academic
load, 2 semesters status, valid?

Art. 1465. Things subject to a resolutory


condition may be the object of the contract
of sale. (n)

A: No!
Gross inadequacy of price=lesion
-does not invalidate contract of sale
-guardian ,more than of value,
contract of absentee

Q: Who will have a better right?

Q: A & B-price fixed by 3rd person

A: GR: A EXCEPT: C was a buyer in GF, no


knowledge of right of repurchase and right
to repurchase WAS NOT ANNOTATED

A: void if 3rd person refuse/unwilling to fix


the price
Q: one peso as value of car

Q: when is a sale of right perfected?

A: maybe donation/vitiation of consent

A: upon meeting of the minds, consensual


contract

Q: parties to option agreement

Q: does it bind 3rd person?


A: No, unless in writing (public instrument)
Q: if in public instrument, binding already?
A: only requirement in real property
Q: deed of sale, no price mentioned, valid?
A: sale maybe valid.

A: promisor, promissee; offeror;offeree


optioner,optionee
earnest money depends if perfected as to
object,price
SOF-goes only to enforceability not validity
of sale!
1487=1356

Art. 1487. The expenses for the execution


and registration of the sale shall be borne
by the vendor, unless there is a stipulation
to the contrary. (1455a)

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

31

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Art. 1356. Contracts shall be obligatory, in
if option contract perfected, optionee
whatever form they may have been
nay file for damages in case of
entered into, provided all the essential
breach
requisites for their validity are present.
option money- separated & distinct
However, when the law requires that a
from the price
contract be in some form in order that it
Q: May a person sell something he does
may be valid or enforceable, or that a
not own?
contract be proved in a certain way, that
requirement is absolute and indispensable.
A: As to validity, Yes! Sale will always be
In such cases, the right of the parties
valid even if not owned; ownership of
stated in the following article cannot be
the thing has nothing to do with validity
exercised. (1278a)
Q: What do you call a sale where a
person may sell something he does not
Q: sale of ballpen 2k worth,valid?
own?
Enforceable?
A: Statutory Power to sell- 1505
A: value worth price, if sold to<400
1358- not a requirement for the validity
Q: When should the seller has the right
of contract
to sell?
- only goes to the enforceability
A: At the time ownership is to pass
If seller has no right to sell, buyer
Art. 1358. The following must appear in a
acquires no better right
public document:
SCENARIOS WHEN SELLER HAS NO
RIGHT TO SELL BUT OWNERSHIP IS
(1) Acts and contracts which have
TRANSFERRED TO THE BUYER
for their object the creation,
transmission,
modification
or
1) ESTOPPEL
extinguishment of real rights over
a) equitable estoppel/estoppel in
immovable property; sales of real
pais
property or of an interest therein a
-led 3rd person to believe
governed by Articles 1403, No. 2,
b)
estoppel
by
deed-technical
and 1405;
estoppel
-Art.1434
(2) The cession, repudiation or
renunciation of hereditary rights or
Q: Who is estopped?
of those of the conjugal partnership
of gains;
A: the owner,that the seller has no
authority to sell
(3) The power to administer
property, or any other power which
has for its object an act appearing
or which should appear in a public
document, or should prejudice a
third person;
(4) The cession of actions or rights
proceeding from an act appearing in
a public document.
All other contracts where the amount
involved exceeds five hundred pesos must
appear in writing, even a private one. But
sales of goods, chattels or things in action
are governed by Articles, 1403, No. 2 and
1405. (1280a)
OPTION

founded upon a consideration-no


withdrawal allowed

c) estoppel by record-also technical


estoppel
-estafa,owner testified that he is not
the owner to free the accused (said
authorized even not)
2)MERCHANT STORE + GF
*
unlawful
&
stolen-with
reimbursement- Art.559
* not unlawful- no recoveryArt.1505
Art. 1505. Subject to the provisions of this
Title, where goods are sold by a person
who is not the owner thereof, and who
does not sell them under authority or with
the consent of the owner, the buyer
acquires no better title to the goods than
the seller had, unless the owner of the

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

32

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


goods is by his conduct precluded from
A: Quasi-tradition-what is delivered is a
denying the seller's authority to sell.
right -1501
Nothing in this Title, however, shall affect:
(1) The provisions of any factors'
act, recording laws, or any other
provision of law enabling the
apparent owner of goods to dispose
of them as if he were the true owner
thereof;
(2) The validity of any contract of
sale under statutory power of sale
or under the order of a court of
competent jurisdiction;
(3) Purchases made in a merchant's
store, or in fairs, or markets, in
accordance with the Code of
Commerce and special laws. (n)

2)
GF

SALE BY AN APPARENT OWNER +

recording laws-land registration


decree (now involves forgery)
b)
factor acts(old term for agency)
sale made by agents
c)
any other law- ex.goods covered
by NDT incase of bearer document when
negotiated
a)

Art. 559. The possession of movable


property acquired in good faith is
equivalent to a title. Nevertheless, one who
has lost any movable or has been
unlawfully deprived thereof may recover it
from the person in possession of the same.
If the possessor of a movable lost or which
the owner has been unlawfully deprived,
has acquired it in good faith at a public
sale, the owner cannot obtain its return
without reimbursing the price paid therefor.
(464a)
Art. 1501. With respect to incorporeal
property, the provisions of the first
paragraph of article 1498 shall govern. In
any other case wherein said provisions are
not applicable, the placing of the titles of
ownership in the possession of the vendee
or the use by the vendee of his rights, with
the vendor's consent, shall be understood
as a delivery. (1464)
Q: Public instrument, signed by notary,
ownership passes?
A: No,because
appear

contrary

intention

may

Q: If bought from merchant store, is it


possible to recover?

CASE:MAPALO VS. MAPALO

A: Yes, if buyer is in BF

Q: If at the time of the signing, buyer has


no knowledge of defect of title of seller?

Q: In GF,can owner recover?


A: Yes +reimbursement

A: May not be considered in GF bec. GF


should exist up to the full payment

CASE:SunBros.vs.Velasco(refrigerator)

Q: When can seller have possession if thing


not lost/stolen?

*Buyer cannot recover if thing was not


lost/stolen
Q: lady owned a painting w/c was stolen
from her, owner of house bought from
gallery auction, can she recover?
A: Yes even w/o reimbursement public sale
gallery auction
Q: lady owned a necklace w/c was stolen
can the lady recover?
A: Yes, Art. 559
Q: If delivery of certificate of ownership
there is transfer of ownership-ex: TCT, OCT

A: If he acts as a depositary
Q: When can there be a
ownership even w/o delivery?

transfer

of

A: None! Ownership is transferred only


upon delivery
Q: How many kinds of delivery are there?
A:

Two kinds
1) Actual/Physical
2)Constructive
a) symbolica
b) tradition brevi mano
c) longa mano
d) constitutum
possesorium

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

33

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


e) formal delivery
Q: When can buyer bears loss?
* there should be delivery= contract
+ possession delivery of public
A: If buyer is in delay
instrument=formal delivery
*RES PERIT DOMINO
XPN: 1) stipulation of reservation of
Q: Delivery where seller still in possession?
ownership
2) security
title-ownership
was
A: constitutum possessorium
retained only for purposes of
Symbolica- key to the place where
security
goods are located
-buyer bears the lost
Longa Manu- why cant be delivered?
-may only be depository
Lawyers Cooperative Case
DOUBLE SALE
INSTANCES WHERE SELLER STILL THE
OWNER DESPITE DELIVERY
a)
conditional sale- ownership
passess
upon
fulfillment
of
condition bec. Ownership was
reserved
b)
sale/trial approval returnownership is transferred already
but the buyer may revert title back
to the seller
c)
sale on installment- not
necessarily depends on stipulation
1502(2)- Read instances when
buyer deem to have accepted
goods

Art. 1502. When goods are delivered to the


buyer "on sale or return" to give the buyer
an option to return the goods instead of
paying the price, the ownership passes to
the buyer of delivery, but he may revest
the ownership in the seller by returning or
tendering the goods within the time fixed in
the contract, or, if no time has been fixed,
within a reasonable time. (n)

Q: lapse of 12 hrs. will it be reasonable


time as acceptance?
A: Yes, depending on the circumstances
i.e. perishable goods
Q: Contract to sell, when does ownership
pass?

Q: A sold to B, A sold the same thing to C


who took possession
A: depends on who registered it in GF. One
must be in GF at the time of the possession
Q: if both A&B did not take possession, did
not register, is it possible for B to have a
better right?
A: if A was in BF; Immovable:
Registration of deed of sale in GF
Q: A 1st registered w/ knowledge of 2nd
sale?
A: A has a better right, no knowledge of
defect at the time of sale
Q:A 1st register w/ knowledge of 1st sale?
A: 2nd buyer has better right
Q: no possession, can 2nd buyer have a
right? Such as when A sold to B who leased
same land to A while A sold the same land
to C.
Who has a better right?
A: B has a better right. B 1 st took
possession, B deemed to be in legal
possession
Q: A sold land to B (took possession)
A--------C (judgment CR sold;
Buyer, registered w/o knowledge
of 1st sale

A: Upon full payment?when?


-execution of final deed of sale

Can B have a better right?

Q: if thing is lost/destroyed, who is liable?

A: Yes, if land is unregistered land, 1544


does not apply

A: First to consider if due to FE, who is at


FAULT
GR: if who is at fault, liable

Art. 1544. If the same thing should have


been sold to different vendees, the
ownership shall be transferred to the
person who may have first taken
possession thereof in good faith, if it should
be movable property.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

34

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Should it be immovable property, the
A: Buyer may accept
ownership shall belong to the person
contract price
acquiring it who in good faith first recorded
it in the Registry of Property.
Q: if only 93 sq.m.
Should there be no inscription, the
ownership shall pertain to the person who
in good faith was first in the possession;
and, in the absence thereof, to the person
who presents the oldest title, provided
there
is
good
faith.
(1473)

Q: Delivery to common carrier=delivery to


buyer?
A: depends on stipulation & reservation of
ownership by seller
Q: As to bill of lading, no delivery to buyer
when?
A: on the face of bill of lading deliverable
to the seller

A: accept 8, reject excess


Q: if less?
A: if agreed to partial delivery, may be
compelled to accept
Q: if to deliver 8, only delivered 7 dozens &
never delivered 1 dozen
A: WON at the time he accepted 7 dozens
buyer knows that seller will not deliver
balance
If knows- contract rate
Does not know- FMV
Q: To deliver 1 sack durado, wagwag, when
is the sale void?
A: When what is to be
indivisible, buyer may reject

delivered

is

Q: Call seller demand increase in price of


sale of land?
A: If lump sum-No!
If per unit measure- Yes!
Q: Price 1K-100 sq.m.area delivered is
greater

payment

of

A: Remedies of buyer
a)
may accept, proportional reduction
b)
specific performance
c)
damages
less than 1/10 rescission is not a remedy
Rescission- remedy if buyer could prove
that he would not have bought land if less
than
Q: Is it possible for buyer to have the right
to rescind if 100 sq.m. was delivered
A: Yes if land is inferior quality or if value is
less than 1/10 of the value
Q: Bound to deliver upon perfection of sale
A: Not necessarily
1. stip as to period
2. no
payment
purchase price

Q: delivery to the common carrier-delivery


to buyer? When?
A: if bill is not retained by seller
Q: delivered 10 dozens, 8 dozens was only
delivered

of

Q: If parties agreeddelivery after 5 days;


is he obliged to make deliver? When not
obliged?
A: not obliged to deliver if buyer does not
pay yet
Not yet obliged-when the buyer loses the
right to make use of the period 1198
if buyer became insolvent?-if he delivers a
security
PLACE OF DELIVERY
1) stipulation
2) place fixed by usage of trade
3) depends on nature of object
determinate-where thing is located at time
of perfection
generic- sellers place
USAGE OF TRADE
F.O.B.-free on board-seller shall only be
liable to shoulder expenses up to port of
origin
C.I.F.-cost insurance freight
-delivery already taken place at port
of origin
F.O.B.-port of origin(Mla)
-port of destination(Cebu)
these shipping arrangements are only
presumptions, parties may still stipulate
manner & payment SC
OBLIGATION TO WARRANT

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

35

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Caveat emptor- not adopted by
4) act imputable to the seller after the sale
Phil.Law;
(non-payment
of
taxes,
De Leon bec. Of implied warranties.
double sale
in the case of the 2nd buyer)
BAR QUESTION:

Q: How about if somebody was already


occupying the land, acquired it by
acquisitive prescription, buyer did not visit
land, can he hold seller for breach of
warranty?

Q:sale of parcel of land for IM, down


payment Php 100, bal.to be paid after
squatters will be evicted, if within 6
mos.,squatters still there,seller shall return
100k,
in
6
mos.,value
of
land
doubled,squatters still there, seller offered
to
return
Php100k
buyer
did
not
accept,seller refuse to execute final deed of
sale,seller filed for rescission.
A: 1)NO! seller is not the aggrieved party
2)(1545) buyer given option to refuse
to proceed with contract
3) waive the happening of condition &
proceed with the contract
*mere opinion not breach of warranty
unless given by expert.
*if warranty is as to title,fitness &
characters,
mere opinion= express warranty
ex. Fertilizers to yield better harvest
guarantee warranty
Art. 1545. Where the obligation of either
party to a contract of sale is subject to any
condition which is not performed, such
party may refuse to proceed with the
contract or he may waive performance of
the condition. If the other party has
promised that the condition should happen
or be performed, such first mentioned
party may also treat the nonperformance
of the condition as a breach of warranty.

A: No!
VENDORS
LIABILITY
EVICTION (see TABLE 1)

IN

CASE

Waiver intencionada
waiver made by buyer if he already knew
of the defect of the thing.
Waiver consciente
waiver made by buyer where both buyer &
seller knew that there was no defect on the
thing sold.
VENDORS LIABILITY IN CASE OF
EVICTION
TABLE 1
Extent
liability
vendor

of
of

If
vendor
in bad
faith.

If there is waiver
Vendor
faith

in

If there is no waiver

good

concient
e

intenci
onada

Vendee
in
Good
faith

Vendee in
bad faith

1) Value of
the thing at
the time of
the
eviction

YES

YES

NO

YES

YES

IMPLIED WARRANTY
a) warranty against hidden
defects
b) warranty in case of eviction
c) warranty of quality as to quality,
fitness

2) income
or fruits

YES

NO

NO

YES

YES

3) cost of
suit

YES

NO

NO

YES

YES

WARRANTY IN CASE OF EVICTION

4)expense
s of
contract

YES

NO

NO

YES

YES

5)
damages
and
interest

YES

NO

NO

NO

YES

Q: is it required for buyer to be deprive?


A: also includes peaceful possession
Q: is it possible if buyer is not deprived of
ownership but deprived of possession?
A: Yes, in case of Contract of Lease
REQUIREMENTS:
1)
there should be a final judgment in
favor of 3rd person
-seller must be summoned,impleaded
2) based on a right prior to the sale
3) no valid waiver in the form of waiver
intencionada

OF

Warranty Against Hidden Defects


1) thing is already defective at the time
of sell
2) he would not have bought if he
knew/bought for less than the Php
Q: can buyer not hold seller liable for
hidden defects?

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

36

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


died with contagious disease, he can
recover.

A: Yes if buyer was an expert

Q: What if the thing which is defective was


lost?
A: XPN to 1174,vendor liable even through
FE
EXTENT OF LIABILITY OF THE VENDOR IN
CASE OF LOSS OF THE THING WITH
HIDDEN DEFECTS (SEE TABLE 2)
THE DEFECT

CAUSE OF LOSS: FE
OR FAULT OF
VENDEE

VENDOR
IS IN
BAD
FAITH

VENDOR
IS IN GF

VENDOR
IS IN
BAD
FAITH

VENDOR
IS IN
GOOD
FAITH

1) RETURN
PRICE

YES

YES

NO

NO

2)
PRICE/VALUE
AT THE TIME
OF LOSS

NO

NO

YES

YES

3) REFUND
OF
EXPENSES
OF
CONTRACT

YES

YES

NO

NO

4) DAMAGES

YES

NO

YES

NO

5) ONLY
INTEREST

NO

YES

NO

NO

Q: Is it possible for vendor not liable for


anything?
A: Yes, if vendor was not aware of the
defect if the return price is less than the
value of the thing at the time of loss.
SALE OF ANIMALS WITH DEFECT
Redhibitory- when even after the sale it
cannot be seen even by expert
Q: If 10 birds,1 defective, can be rescind?
A: GR: No.
XPN: if buyer could prove that he would
not have bought if he had known of the
defect-- presumption if bought in pairs
Q: If animal died 10 days after sale?
A: No, can recover if died within 3 days
for a disease existing at the time of sale.If

NON-APPARENT ENCUMBRANCE
Ex. Encumbrance on a Road
requirements1) non-apparent
2) not known to the buyer
Q: If knowledge of buyer can he hold
seller liable?
A: Yes, if it was annotated in the title
Remedy: rescission/damages
Rescission- invoke within 1 yr. from
date of contract
Q: If he filed damages 1 yr.& 6 mos, can
the case prosper?
A: It depends on when was the discovery,
damages should be filed within 1 yr. from
discovery
Q: If animals bought from fairs, auctions,
no warranty at all?
A: Not necessarily, only there is no
warranty as to hidden defects; there is
still warranty as to title & warranty
against eviction
2nd hand sale- as is where is basis
Q: Is it correct to say that there is no IW
in judicial/ execution sale?
A: No! there is still warranty by express
provision of law- warranty as to title even
to judgment debtor except if he was
exempted fr. Such liability by order of the
court.
There are people who cannot be
liable for warranties, not sale
without warranty/
Ex.: sheriff

RIGHTS AND OBLIGATIONS OF VENDEE


Q: If he received
acceptance?

the

goods,

means

A: not necessarily, receive is only


preliminary to acceptance, subject to
inspection
Q: If buyer accepted, is seller discharged
of his warranty?
A: No.
XPN: 1) stipulation
2) buyer failed to give notice of such
breach within reasonable time

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

37

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


MACEDA
LAW
RA
6652
REALTY
Q: If goods already at the warehouse of
INSTALLMENT BUYER ACT
buyer, informed seller of refusal, fire broke
only applies to residential realty
out, can seller be liable?

not applicable to commercial &


industrial sale on installment= sale on
A: It depends whether there has a just
credit
cause for refusal. If no just cause,
sale on credit not necessarily sale or
ownership is transferred to buyer, RES
installment-maybe on a straight term basis
PERIT DOMINO

even only one instrument is paid,


already covered by MACEDA LAW
As to Price
60 days grace period without interest
-payment to be made at place of delivery
if he paid at least 2 yrs.-entitled to CASH
SURRENDER VALUE-50% paid by buyer,
Q: 1/1/03 delivery----------1/1/04 buyer
only up to 90%
paid
Grace Period-claimed only once every 5
yrs.
A: can buyer be held to pay %?
there must be a delivery to the
NO.
buyer of cash surrender value not a
mere notice
XPN:
REMEDIES FOR BREACH OF WARRANTY
1)
stipulation
1) UNPAID SELLER 1526
2)
thing delivered produces fruits
a. withhold goods
3)
if buyer was already in default after
b. stoppage in transit
Extra J demand
c. resale
(needed if there was stipulation as to
d. rescind
payment of price)
GR: the following remedies are

contact of sale results to reciprocal


alternative except for letter a and b.
obligation
MACEDA LAW
Q: right of inspection, absolute?
Q: A sold a house for 10M---downpayment
A: No, no law providing for such
of 3M was given while remaining 7M will be
Buyer has no right to inspection
paid in 60 equal monthly installment
preliminary to acceptance
defaulted
47th,49th,
offered
to
pay
Ex.: delivery of mining co. of coal
to
arrears.Seller cancel the sale,Cancellation
NAPOCOR
Valid?
BAR EXAM QUESTION:
Q: 1/1/03-----7/1/03 (delivery of mango
plantation)
8/1/03 (delivered)
seller sold fruits to X between the period
7/1/03- 8/1/03
Can buyer recover the fruits from X?
A: 1537 only applies if both parties are
already obliged, not applicable if there is a
stip as to delivery 11647/1/03------5/1/03 Buyer entitled to fruits
but 2nd par. 1164 not yet delivered so,
remedy is for damages

A: No. Paid for at least 2 yrs. He is entitled


to 1 mo.for every year.
Facts: 46 installments 3 days=90 days
grace period. A is within the grace period to
update account.
Q: if seller only paid 80% can he invoke
1526?
A: Yes!
Art. 1526. Subject to the provisions of this
Title, notwithstanding that the ownership in
the goods may have passed to the buyer,
the unpaid seller of goods, as such, has:

Art. 1537. The vendor is bound to deliver


the thing sold and its accessions and
accessories in the condition in which they
were upon the perfection of the contract.

(1) A lien on the goods or right to


retain them for the price while he is
in possession of them;

All the fruits shall pertain to the vendee


from the day on which the contract was
perfected. (1468a)

(2) In case of the insolvency of the


buyer, a right of stopping the goods
in transitu after he has parted with
the possession of them;

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

38

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


(3) A right of resale as limited by
involve, if by stipulation seller reserves
this Title;
right to resale
(4) A right to rescind the sale as
likewise limited by this Title.

Q: if seller failed to give notice to resale,


valid?
If no notice as to date, time & place

Where the ownership in the goods has not


passed to the buyer, the unpaid seller has,
in addition to his other remedies a right of
withholding
delivery
similar
to
and
coextensive with his rights of lien and
stoppage in transitu where the ownership
has passed to the buyer. (n)

A: notice not necessary as to validity of


resale. These notice are valid only if seller
use the ground that buyer has been in
default for immeasurable length of time.
2nd notice is relevant whether the sale is a
GF sale.

Q: If buyer paid seller a check, can 1526 be


invoke?

Q: Buyer has unpaid Php 100,000, seller


sold goods for 70,000 can he recover 30k
from buyer?

A: Yes if check was dishonored not through


the fault of the seller

A: Yes. As long as the sale is a GF sale

Q: Remedies exclusive?

Q: What if goods sold for Php 150,000, who


is entitled to 50k?

A: No! he nay file action for specific


performance/ damages
Q: Even if ownership had passed to the
buyer, may seller invoke 1526?
A: Yes! Ex. Constructive delivery
POSSESSORY LIEN- right to withhold the
goods
lien if goods already delivered
the buyer & seller not yet paid
not required that buyer be insolvent
seller will not lose lien over the goods
--requiring the buyer to pay
STOPPAGE IN TRANSIT
---seller must have parted possession
---buyer is insolvent
---goods are in transit
How exercised? By mere notice to
common carrier
if goods are covered by NDT,NDT
should be surrendered to common
carrier
in order for the goods to be no
longer in transit, buyer should have
obtained it lawfully
Q: S-------------B
Has possessory lien, Does C
S loses his lien if B sold it to C?

A: seller shall not be responsible to the


buyer for whatever profit he may have
obtained
Q: If from 100k, 50k was paid by buyer,
remaining goods sold for 100k, who is
entitled?
A: seller! Is there unjust enrichment? No, it
was the buyer who was really at fault
Q: If the buyer already acquired ownership
should seller rescind 1st?
A: No. he can automatically resale as ruled
by SC Katigbak vs.CA
RIGHT TO RESCIND
---same requirements in resale except for
perishable goods
RECTO LAW 1484
Art. 1484. In a contract of sale of personal
property the price of which is payable in
installments, the vendor may exercise any
of the following remedies:
(1)
Exact
fulfillment
of
the
obligation, should the vendee fail to
pay;

A: No. Unless he consented; if B sold the


goods to C covered by NDT & was sold by B
to C through negotiation & C bought it in GF

(2) Cancel the sale, should the


vendee's failure to pay cover two or
more installments;

RESALE
---seller must still have the goods
---maybe exercised if buyer is in default for
unreasonable time; if perishable goods are

(3) Foreclose the chattel mortgage


on the thing sold, if one has been
constituted, should the vendee's
failure to pay cover two or more
installments. In this case, he shall

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

39

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


have no further action against the
Q: A bought car, seller required real estate
purchaser to recover any unpaid
mortgage aside from the chattel mortgage
balance of the price. Any agreement
covering the car. Seller foreclose mortgage
to the contrary shall be void. (1454on the car, despite foreclosure there is still
A-a)
a deficiency. May S, foreclose the real
estate mortgage?
Q: What are this recto law & maceda law
in connection with installment?

A: No! 1484 applicable

A: Recto law- sale & movable property on


installment
1) EXACT
FULFILLMENT/SPECIFIC
PERFORMANCE
2) CANCELLATION
3) FORECLOSURE
(alternative in character)

REMEDY OF BUYER
1)
action for specific performancedeterminate
substitute performance-generic
thing
2)
action for damage
3)
rescission (1191)- if there was a
substantial breach

Q:
Sale of jewelry,10M, 100k,(10 yrs.
Equal installment),buyer defaulted, 3rd
installment

MODES OF EXTINGUISHMENT

A: exact fulfillment is the remedy


Q: after 1 month S filed action for recovery
of balance?
A: As a rule no, only 100k is due. XPN if
theres an acceleration clause

1) 1236 IN GENERAL- ORDINARY


MODE
2) RESCISSION-those provided
a law on sales-special modes
3) EXTRA SPECIAL-REDEMTION
REDEMPTION
1) CONVENTIONAL-available
only if there was an agreement of
repurchase

Q: defaulted 3rd installment, and so with 7 th,


can cancellation of sale be involve?

Q: Who has this right?

A: No! cancellation to be involve 2/more


consecutive installment is defaulted

A: Seller, owners previous to the seller,


assignee,heirs, creditors of seller

Q: If 3rd,4th, defaulted, cancellation, is


seller compelled to return all amount?

BAR QUESTION: S (debtotr) sold land to B


with right of repurchase for 50K

A: No! he may retain reasonable amt. for


the use of the thing

Q: If seller offered 200k, can buyer refuse?

Q: Is it possible for S to retain everything?


A: Yes,if there is forfeiture clause
Q: Is it possible even if there is forfeiture,
S is not able to retain everything?
A: Yes if amt. is unconscionable
Q: A bought brand new BMV, 5M
installment
basis.
A
mortgaged
his
jewelries worth 5M to secure fulfillment
S foreclose.deficiency of 1M, can seller
recover 1M from buyer?
A: Yes! Bec. The very thing bought is not
the thing mortgaged. For 1484 to apply. It
should be the thing bought w/c is
mortgaged.
BAR QUESTION:

A: Yes! Bec. Seller is responsible also for


the useful & necessary expenses
Q: On 1/1/02 sold mango plantation 4/
1/02 supposed delivery but was only
delivered on 10/1/06. if there were fruits
between the period it should had been
delivered, Can seller be compelled to pay
entire 100k?
A: It depends if there were fruits at the
time of the sale, determine if buyer paid
the fruits at the time of sale, when it
comes to repurchase seller should also pay.
Q: If no fruits at the time of sale, at the
time of repurchase there were fruits.
A: 75k value of fruits should be divided
into proportion counted unto the last
anniversary date
BAR EXAM QUESTION:

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

40

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


considered as interest which shall be
Q: A sold to B land w/ right of repurchase,
subject to the usury laws. (n)
no fix period as to repurchase when
should it be? If A failed to repurchase,
Q: Why would the CR have
what will you suggest to your client?
Dr signed a sale w/ right of repurchase than
4 yrs, ownership of the thing delivered to
a mortgage?
buyer- not absolute ownership-subject to
resolutory condition of proper exercise of
A: to avoid pactum commissorium
right of repurchase
Q: Against whom should right of repurchase

if seller a retro failed,ownership of


be exercise?
buyer becomes absolute? If movable? Yes.
Immovable? Yes!
A: Anyone who derive the title from buyer a
retro
FILE ACTION FOR CONSOLIDATION OF
TITLE NEEDED
Q: X with right to purchase
----Consolidation of title needed. Yes with
Q:
respect to immovable, necessary for buyer
A
B
to be able to register the prop in his own
name
C
D
D sold to X his lot with right of
Q: If expiration of date of repurchase, can
repurchase, can X compel D to
no longer recover?
repurchase entire land?
A: GR: No
A: No! it might be an equitable mortgage;
XPN: If the thing is essentially an
file for reformation (read 1602 for
inadmissible thing
ex. Bungalow
presumptions)
house, painting w/c is immovable by
destination
2) LEGALArt. 1602. The contract shall be presumed
a) co-owners- any prop
to be an equitable mortgage, in any of the
b) of adjacent lnd-immovable
following cases:
Q: Co-owners
(1) When the price of a sale with
right to repurchase is unusually
inadequate;
(2) When the vendor remains in
possession as lessee or otherwise;
(3) When upon or after the
expiration of the right to repurchase
another instrument extending the
period of redemption or granting a
new period is executed;
(4) When the purchaser retains for
himself a part of the purchase price;
(5) When the vendor binds himself
to pay the taxes on the thing sold;

A
C

B
D
D donated his land to X, Can co
owners redeem?

A: No! for redemption to exist; onerous


title
Q:
Same table, D sold the land to B,
can their be a right of redemption?
A: No! should be sold to other person for
redemption to arise
CASE: 3 bros. had mother title cancelled
RD registered still in their names instead of
one TCT each, despite actual partition one
of bro. sold, can the two redeem?

(6) In any other case where it may


be fairly inferred that the real
intention of the parties is that the
transaction
shall
secure
the
payment
of
a
debt
or
the
performance of any other obligation.

A: As adjacent owner,Yes! But cant claim


as co-owner

In any of the foregoing cases, any money,


fruits, or other benefit to be received by the
vendee as rent or otherwise shall be

A: 350k only! Contrary to public policy case


of Doromal

Q: If only 350k is stated in deed of sale,


actual payment is 1M, purchase price
should be?

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

41

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Q: If 1M is stated in deed of sale, 350k
interest how much can co-owner be
A: NO. It is a special kind of deposit.
compelled to pay in order to redeem?
The lessee has no control over the
object.
A: 1M
Characteristics
Q: 2 sisters, A& B, A sold her interest to X(2006) w/o B knowing.
CASE DimaculanganB paid real property tax & knew of the
In lease of things, a death of the party
sale, informed X right of redemption, can
does not extinguish the contract of lease.
he still redeem?
It is essentially onerous.
Consensual, Nominate, Bilateral
A: When will the 30 days run? 30 days fr.
Actual knowledge
CASE:BagtasQ: A-X (buyer) informed B of the sale, coowner did not react; buyer wanted prop.
Be annotated at RD, RD send another
notice to co-owner (deadma!)
After more than a year, buyer filed for
partition, co-owner received summons, filed
for redemption-prosper?
A: Yes! Notice in writing given by vendor
not vendee,not RD
Alternative answer: No! bec. She already
received notices, the 30 day period should
have already run
DOROMAL VS. CA notice should be w/ deed
of sale!
TGMOct2007

Spouses,
guardians
and
those
enumerated under Article 1490 and 1491
cannot enter into a lease contract with each
other.
Art. 1490. The husband and the wife
cannot sell property to each other, except:
(1) When a separation of property
was agreed upon in the marriage
settlements; or

IV.LEASE

Kinds of Lease
1. things- consensual contract; onerous
2. work or service
Household service- Labor
Employment contract- Labor
Contract for a piece of work- Civil
Contract of Carriage- Commercial
3. Right
COMMODATUM

LEASE

Essentially
gratuitous

For
a
price
certain; onerous

Q: What is the nature of the contract in


the boundary system?

The 2nd bull was not turned over due to


a fortuitous event- crossfire during the era
of the Huks. Is it a contract of
commodatum by which the government
bears the loss?
SC-This is a Lease.
Bagtas has to pay a certain
breeding fee.

A: It is contract for the Lease of


Service. Employment contract which
requires the elements of an employeremployee relationship.

Q: Is the lease of a safety deposit box,


considered lease of things?

(2) When there has been a judicial


separation or property under Article
191. (1458a)
Art. 1491. The following persons cannot
acquire by purchase, even at a public or
judicial auction, either in person or through
the mediation of another:
(1) The guardian, the property of
the person or persons who may be
under his guardianship;
(2) Agents, the property whose
administration or sale may have
been entrusted to them, unless the
consent of the principal has been
given;
(3) Executors and administrators,
the property of the estate under
administration;
(4) Public officers and employees,
the property of the State or of any
subdivision thereof, or of any
government-owned or controlled

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

42

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


corporation,
or institution,
the
Q: A leased a cockpit to B. During the
administration of which has been
pendency of the lease, the cockpit
intrusted to them; this provision
collapsed. Who is liable for the collapse?
shall
apply
to
judges
and
government experts who, in any
A: Lessor. His is the duty to repair, unless
manner whatsoever, take part in the
theres a stipulation to the contrary.
sale;
CASE:Gonzales v. Mateo(5) Justices, judges, prosecuting
attorneys, clerks of superior and
Lessee is liable because he
inferior courts, and other officers
agreed to repair.
and employees connected with the
administration
of
justice,
the
BAR EXAM QUESTION:
property and rights in litigation or
levied upon an execution before the
Q: A leased a parcel of land to B for 10
court within whose jurisdiction or
years. There was an agreement to extend
territory
they
exercise
their
the Lease and its binding. B put up a 2respective functions; this prohibition
storey building. Upon expiration of the
includes the act of acquiring by
Lease, B failed to renew the Lease. A filed
assignment and shall apply to
an ejectment suit against B. B contended
lawyers,
with
respect
to
the
that he is a builder in good faith thus
property and rights which may be
reimbursement of the expenses.
the object of any litigation in which
they may take part by virtue of their
A: Builder in good faith cant be invoked.
profession.
Lessee cant build in the concept of an
owner.
He
is
neither
entitled
to
reimbursement.
The
option
is
with
the
(6) Any others specially disqualified
lessor if he opts to retain amount paid by
by law. (1459a)
the lessee or remove the improvements
though causing damages. Damages must
As to Formalities
not be necessary, though.

Q: A appointed B as his agent. A


withholds no power against B granting
the latter a Power of Attorney. B entered
into 3 contracts
1) Contract of lease of parcel of land
for 4 years and a rental of
60,000php annually.
2) Contract of lease of a parcel of land
with a rental on a monthly basis of
3,000php.
3) Contract of sale of a parcel of land
for 3x the value of the land.
What is the status of these contracts?

A: 1) Unenforceable. What is authorized of


B is an act of administration. SPA is
needed.
2) Valid and Binding. Rental of an
immovable without a fixed period, the same
period as payment of rentals; It is an act of
administration only.
3) Void. Authorization of the agent is
not in writing.
CASE Donald Dee- Documentary
formalism
is
not
an
element
employment.
BAR EXAM QUESTION:

Q: Is chapel a useful improvement?


A: Yes.
Q: There was a lease over a fishpond for 5
yrs. The rental for next year will be reduced
to . However, the harvest was only due
to the rebels. The lessee contended that the
lease period is extended for 10 yrs now.
Will there be a reduction?
A: None. The right of reduction can only be
invoked if failure to harvest was due to an
extraordinary fortuitous event such as war,
fire, pestilence. It does not include the
intrusion of lawless elements, flood, and
typhoon.
reduction can be allowed only in cases
where B harvested less than one half and
that it should had been due to fortuitous
event
lawless element is not a fortuitous event
Q: Will there be an extension?

in

A: None. Lease is suspended during the


fortuitous event. He can claim not to pay
the monthly rental.
Fortuitous event is not a reasonable
ground for extension but only for

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

43

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


suspension of payment of lease during that
period
Q: May the lessee
consent of the lessor?

sublease

with

the

A: Yes. As long as it is not prohibited from


subleasing. Assignment of lease is valid if
with the consent of the lessor. In sublease,
it is valid although absent consent of the
lessor provided it is not prohibited.
CASE:Manlapac v. SalazarA leased his fishpond to B till the end of
June 1, 1947. During the existence of the
contract, B contracted with C, the latter to
have the rights in the fishpond. The
contract between B and C was made
without As consent. The heirs of A
contended that the contract is void because
it is only an assignment.
SCThe lease agreement constitutes as
an assignment only if the lessee absolutely
transferred all his rights to 3rd persons,
dissociating himself in the lease. The 3 rd
person becomes the new lessee.
there should be absolute transfer

Termination of Lease

Q: A constructed a building for 5M and


leased it to B. B will be the lessee for 10
years for 100,000/month. After completion
of the construction, B will become the
owner thereof. On the 5 th year, the entire
building was burned. A constructed another
building. Before completion, B gave notice
to A that he will continue the lease. Can A
refuse B as lessee?
A: Yes. With the original building destroyed
by a fortuitous event, the lease contract is
extinguished,
since
there
is
total
destruction.

CASE: Frezel vs. Mariano

There was a construction contract (labor


and materials). Frezel as the supplier. A
took over the construction of the building.
C demanded payment from A. Is C, the
owner, liable for the unpaid amount? The
claims of C are as follows:
Theres no privity between A and C. B is an
agent.
SCTheres no agency because As
extent of control over B goes only into the
result and not the manner, therefore, it is
to be considered as a contract for a piece of
work.
C can recover from A
SCOnly to the extent of the unpaid
amount by B to C.

Death of the lessee does not extinguish


the lease. Except is there is a stipulation
to the contrary.

BAR EXAM QUESTION:


Q: A entered into a lease contract with B for
3 years. There was a stipulation in the
contract that B will have the option to buy
the parcel of land leased by him. However,
B failed to exercise the option as stipulated
in the contract. B still continued paying the
rentals and A continues to receive the
same. B, now, exercised the option. A
refused to sell the land to B. Can A be
compelled to sell the land?
A: There was a renewal of the lease known
as IMPLIED NEW LEASE.
Q: Does B have the right to exercise the
option?

A: No. Only the terms and conditions


In 1952, A lease to B a house, in
GERMANE to the Lease contract is deemed
1967 B transferred his rights to C.
renewed. Otherwise, it is not renewed. If
Will the transfer be valid and
payment be on an annual basis in the
binding against A, the lessor?
original contract, the same period and
A: It depends
oninthe
Might
be asked
thenature
finals!of the
manner of payment will also be adopted in
transfer if it was assignment or
the renewed contract. NOTE ARTICLE 1670.
sublease.
SC: If the transfer of rights is
absolute, where lessee cease to be
lessee, then the transfer is not
bindind on the lessor however if
BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO
44
lessee reserves reversionary interest
no matter how small, it would be
binding on the lessor

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Art. 1670. If at the end of the contract the
Extent of control by the Extent of control by the
lessee should continue enjoying the thing
Principal over the agent is Principal over the agent is
leased
for
fifteen
days
with
the
with
the
Result
and with the Result only.
Manner.
acquiescence of the lessor, and unless a
notice to the contrary by either party has
previously been given, it is understood that
AGENCY vs. NEGOTIORUM GESTIO
there is an implied new lease, not for the
period of the original contract, but for the
time established in Articles 1682 and 1687.
By agreement
By law
The other terms of the original contract
shall be revived. (1566a)
AGENCY vs GUARDIANSHIP

Pvt/101707

Person represented must


be capacitated

V. AGENCY
Q: baptismal proxy, agency?
A: No. political and social relations are not
included
Agency refers only to juridical act
- BOUND himself to another
>objective : execution of juridical act
extinguish legal relationship such as
payment
-

there must be consent


agency includes instrumentality as
government instrumentality.

CASE:Quiroga V. Parsons
exclusive right to sell is an exclusive
agency.

Person represented
incapacitated

is

AGENCY vs PARTNERSHIP
Termination may be by the
will of either party

Principal- revocation

Agent- withdrawal

It has a separate juridical


entity

KINDS of AGECY:
I. Actual
II. Apparent/Ostensible
III. Agency by estoppel
I. ACTUAL AGENCY
Mack vs. Cams (?)

Nature of AGENCY vs.

SALE

Consensual
Nominal
May be Gratuitous
*burden: principal
*presumption:
compensation

Essentially Onerous

X is clothed with full authority to manage


restaurant of Y (owner). X purchased some
items from Z. X was indebted to Z. Ys
defense is that X was not authorized to
purchase. However, X led other people to
believe that X has authority such as signing
as agent.
SC-Estoppel lies. Y is liable.

for

II. APPARENT/OSTENSIBLE
Preparatory contract
-a means by which other
contracts may enter into.
Based on
confidence

trust

Rallos vs. Yangco

and

Theres no transfer of
ownership
but
only
transfer of possession.

Ownership passes upon


delivery.

AGENCY vs. CONTRACT FOR A PIECE OF


WORK

A sent a letter to B authorizing C to buy


abaca/copra.
B
transacted
with
C.
Consequently, from Jan. 2, the purchases
remained unpaid. B complained to A. A
contended that before Jan. 2 he revoked
the authorization from C. Therefore,
transactions hereafter are not binding upon
A.
SC-Invoked Article 1873. Revocation is
immaterial. Cs transaction has full force
and effect in exercising authority until
rescission. If C is specially informed of the

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

45

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


revocation of the authorization, B shall also
Q: Mere silence of agent deem accepted
be informed in the same manner as C.
agency?
- JBL REYES: If B had actual knowledge of
A: not necessarily
the revocation, he cannot hold A liable as it
If parties are in the same place, no
would amount to Bad Faith.
problem, stipulation on the SPA governs
Q: if not in the same place such as when
using the telegram, if did not reply deem
Q: What if A actually caused a notice of
accepted?
publication?
A: It depends on the nature of the
A: Can still be liable pursuant to Article
business, if the task is also within the
1873
nature of the agency, yes.
Q: A authorized B to sell land of A in
Art. 1873. If a person specially informs
Baguio, did not do anything, Is B an agent?
another or states by public advertisement
A: No.
that he has given a power of attorney to a
Q: How about if A gave the letter to B and
third person, the latter thereby becomes a
B accepted?
duly authorized agent, in the former case
A: There is an implied agency
with respect to the person who received the
special information, and in the latter case
As to consideration or compensation
with regard to any person.
Onerous- presumption is for
consideration.
The power shall continue to be in full force
Gratuitous- liability is mitigated
until the notice is rescinded in the same
in the part of the agent.
manner in which it was given. (n)

Classifications of Actual Agency


as to manner of creation
express consent of both parties
given
implied
CASE: Dela Pena vs. HidalgoAfter the authorization was executed, the
agent appointed a substitute. The
principal did nothing to repudiate
such appointment.
SC-There is an Implied agency by the
principals silence or inaction. The
principal is deemed to have
accepted the new agency.
Agent
-

When the agent is authorized to sell a


parcel of land and he just stared at the
ceiling, he is NOT deemed to have given
his consent. However, if the agent
accepted a special power of attorney
and he did nothing, it depends upon the
kind of business as to consider it as an
implied agency, with the agent giving
his consent. If the principal and agent
are engaged in the same business,
there is an implied agency whereby the
agent is deemed to have given his
consent.

BAR EXAM QUESTION:


Contract of Agency as to scope of authority
1. Acts of administration
2. Acts of strict dominion
Q: In the sale of Rolex, the agent has no
SPA, with the act bind the principal?
A: No. Any act of strict dominion requires
an SPA.
As to form:
1. Oral
2.Writing
1. Oral
2.Writing
2.Writing
Q: Why is the form of agency peculiar?
A: Because it involves two contracts, the
agency itself and the contract to be
contracted by the agent.

Q: Principal was in the hospital and executed a


GPA with the following:
contact of lease of a parcel of land with a
term
contract of lease with no agreement as
to term and payment
contract of sale for a three times higher
than the land
A: Discuss the status: Depends on the power
given, GPA was only given
unenforceable if not in a public instrument
valid and binding if merely acts of administration
sale is void under 1874 ; SELLING IS AN ACT
OF STRICT DOMINION

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

46

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


3 and 4 are the TWIN REQTS.
How to know whether it is within or in
excess of authority?
Q : A is represented by B. There is a lease
for 5 years and such lease was not put into
Consider the SPA.
writing.
CASE: Linan
A: First, determine the object. If it is
personal, SPA is not required. If it is an
- Whether or not the agent is authorized
immovable, it depends on Bs capacity in
to sell a parcel of land.
the contract of Lease.
Justice Perfecto: under the SPA, he has no
Q: 3rd person is the lessee and the principal
authority. Good faith is not within the
is the lessor, SPA is needed. However, if the
scope.
principal is the lessee, authority of A must
be in writing in order for it to bind B?
Rely on the provisions of law- the authority
to manage the restaurant includes the
A: Not necessarily. For lease to be in writing
authority to buy the equipments.
or not, the provisions on Statute of Frauds
must find application.
Art. 1882. The limits of the agent's
authority shall not be considered exceeded
BAR EXAMINATION QUESTION
should it have been performed in a manner
more advantageous to the principal than
Q: The deceased principal authorized the
that specified by him. (1715)
agent to dispose of his land. The heirs of
the principal, however, sold the 12 hectares
to B. The agent sold the same land to C.
Article 1882- Considered within if it
Who has the better right?
is to the advantage of
the Principal.

A: It depends on the authority of the agent.


If it is not in writing, the contract of sale is
void. Thus, C has a better right.

CASE:Insular Drug-

Q: If it is in writing, the authority of the


agent is extinguished. B has a better right?

The agents authority to collect money does


not include encashing or endorsing of
check.

A: Not necessarily. If the agent has no


knowledge of the death of the principal and
C is in good faith, C being the 1st registrant,
therefore, C has a better right.
Notarization or recording in
instrument is not a requirement.

public

CASE:JimenezX mailed a letter to Y giving him the


authority to sell a parcel of land. So Y sold
the same to a third person. The letter is
sufficient to bind X.
In a SPA, the only requirement must be in
writing , need not be notarized

Municipality of Ilo-ilo vs. Evangelista


The authority to hire a lawyer includes
authority to pay said lawyer.
If the agents authority to borrow
money and mortgage, he cannot use
it to satisfy his own debts.
Q: A authorized B to borrow money from
any bank, agent borrowed money in his
name to buy land, defaulted, can bank go
after the principal
A: No. Third person may have recourse
against principal except if it was property of
principal which was involve

Essential Elements
1.
2.
3.
4.

consent of the parties


object
act within the scope
act in representation of principal
3 and 4 are not necessary to the validity
of the contract but these are the
obligations of the agent. Absence of
these, Agency remains valid.

Q: SPA may be oral?


A: NO! It is a written authorization as the
following provision provides:
1871 delivers
1872 transmit
1900
1902 presentation

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

47

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Art. 1871. Between persons who are
result in loss or damage to the principal.
present, the acceptance of the agency may
(n)
also be implied if the principal delivers his
power of attorney to the agent and the
latter receives it without any objection. (n)
Liability of Agents to 3rd persons:
Personally bound himself
Art. 1872. Between persons who are
Acted negligently
absent, the acceptance of the agency
Acted outside the scope of his
cannot be implied from the silence of the
authority
agent, except:
Even
if the agent acted
outside
the
scope
of
his
authority, the agent is NOT liable
(1) When the principal transmits his
if:
power of attorney to the agent, who
The principal ratified the
receives it without any objection;
agents acts
The 3rd person was informed
(2) When the principal entrusts to him by
by the agent that he acted
letter or telegram a power of attorney with
outside
respect to the business in which he is
The 3rd person was aware
habitually engaged as an agent, and he did
thereof
not reply to the letter or telegram. (n)
Art. 1900. So far as third persons are
concerned, an act is deemed to have been
performed within the scope of the agent's
authority, if such act is within the terms of
the power of attorney, as written, even if
the agent has in fact exceeded the limits of
his authority according to an understanding
between the principal and the agent. (n)
Art. 1902. A third person with whom the
agent wishes to contract on behalf of the
principal may require the presentation of
the power of attorney, or the instructions
as regards the agency. Private or secret
orders and instructions of the principal do
not prejudice third persons who have relied
upon the power of attorney or instructions
shown them. (n)
Rights and Obligations of the Agent
His main obligation is to CARRY OUT
THE AGENCY.
If the principal died
GR: The agency is extinguished.
EXC: If it will endanger the Agency,
the latter shall be continued
Ex: X sold the car to Y with the
breaks in a defective condition and
without the principals knowledge, Y
bought the car. Therefore, the
principal incurred loss/damage.
(Art. 1888- An agent shall not carry
out an agency if its execution would
manifestly result in loss or damage
to the principal.)

Art. 1888. An agent shall not carry out an


agency if its execution would manifestly

CASE:Domingo vs. DomingoWhatever commission is received by the


agent as a consequence of his agency,
albeit the absence of knowledge of the
principal of the agreement between the 3 rd
person and the agent, the latter shall give
to the principal whatever he received.
The agent is not the insurer of the
principals success in business.
GR: The agent cannot sell the goods on
credit.
EXC: Without consent of the principal,
the sale is not void but the principal holds
him liable as sale in cash basis.
Q: When can agent be held liable?
A: When he bound himself.
Exception:
1. When the principal ratified
2. When 3rd person informed that
agent is acting beyond the scope of
his authority
3. When agent informed 3rd person
such as when he promise to secure
ratification and was not able to
Case Law
Q: P authorized A too sell his house and A
introduced prospective buyer. The buyer
gave him 1K. P terminated the authority of
the agent and the agent went to RD and
found out that a sale was consummated. A
demanded commission, can the case
prosper?
SC: No. Failure of agent to deliver to
principal even not owing to him the 1k
given by the buyer constitute a forfeiture of
agents right to commission

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

48

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Case Law:
- The perpetrators need not be convicted
Q: Agent to collect P800 he was able to
of robbery.
collect only P500 and deducted 20% as
commission.
- For a fortuitous event to be a valid
SC: The act of the agent constitutes estafa.
defense, there must be no concurrent
event.
BAR EXAM QUESTION:
- However, if it happened today, Agent is
Q:
A authorized B to sell property in
considered to be negligent. If it
Cebu, B appointed a subagent. Can B
happened in the 60s, the agent is not
appoint a subagent?
liable.
UPLAW Center:
- The SC held that the agent is liable
A: Yes, under 1892 if it was not prohibited.
because theres negligence.
Sir said with due respect to the UP law
Center, the answer is erroneous.
On Death
Subagent does not take the relationship
Effect of death of the agent
of B as agent; assistant agent
It
will
absolutely
extinguish the agency. If the
Art. 1892. The agent may appoint a
agency is for the benefit of a
substitute if the principal has not prohibited
3rd person, the agency will
him from doing so; but he shall be
continue to be in full force
responsible for the acts of the substitute:
and effect despite the death
(1) When he was not given the
of the principal.
power to appoint one;
Effect of death of the principal
If without knowledge and the
(2) When he was given such power,
agent is in good faith, the
but without designating the person,
agency is extinguished but
and the person appointed was
the act of registration in good
notoriously
incompetent
or
faith even after the death of
insolvent.
the principal is valid as the
law says so.
All acts of the substitute appointed against
On Revocation
the prohibition of the principal shall be
May be made anytime; at will
void. (1721)
Q: If theres a period, will the
Substitute kapalit niya Article 1892 shall
revocation before the stipulated
apply
period hold the principal liable?
if principal was informed of the substitute
Article 1892 shall not apply
A: NO.
Modes of Extinguishment (EDWARD)
E- expiration of the period
D- death
W- withdrawal
A- accomplishment
R- revocation
D- dissolution of entity
not exclusive, Article 1231 also applies
Other modes may apply to agency.
BAR EXAM QUESTION
Q: X authorized Y to sell a pendant with
diamond. The pendant was robbed. X sued
Y. Ys defense is robbery.
A: Austria Case
-

Robbery is a fortuitous event.

CASE:Barreto
Agency is based on trust and confidence
therefore, the principal can revoke anytime.
P can only be held liable for damages if he
acted in bad faith.
CASE: Collongco
A authorized B to sell the land for 100M. B
did not remit the 100M. What was agreed
was that B will be the agent of A in
subdividing the land and constituting the
house. The proceeds will go to A as
payment. The authority granted was for 10
yrs. On the 5th yr., A revoked the authority
given to B. Was the revocation valid?
SC: NO. The agency is was coupled with
interest and as such, it cannot be validly
revoked after the interest ceases; means of
fulfilling interest must be different from

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

49

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


the commissioner given; very interest that
ANSWER: A under the facts can engage in such
an agent is claiming should be stated at the
services since he is only a capitalist partner. As to
B, since he is an industrial partner, he is
SPA without prejudice to his liability if
prohibited from engaging in any kind of business
revocation was done in bad faith
without the consent of the other partners.
Pvt/101707
Partnership may be constituted in any other
form. Article 1172

VI. PARTNERSHIP
BAR EXAM:
A used all his savings to put up a
restaurant, B gave A 4k as financial assistance in
exchange of 20% profits, 22 years after B filed
action demanding profits. A denied and invoked
prescription.
A: UP Law Center Contract of Partneship exists
because they contributed to a common fund plus
there was a stipulation as to profit.
Sir said, no contract of partnership exists. There
was no agreement to contribute to a common
fund, only financial assistance.
Q: Partnership vs. Co-ownership
A: Contract of partnership is created by mere
agreement while co-ownership is created by
operation of law.
Essential Element:
object is to engage in a lawful activity
General Partnership and Limited
Partnership (relevant only in Limited
Partnership)
Q: Can the spouses enter into a limited
partnership and engage in real estate business
A: Yes, prohibition is only on universal partnership
Q: Can two corporations organize a general
partnership, can a corporation enter into a
partnership?
A: No! Corporation and partnership may organize
a joint venture but they cannot enter into
partnership contract
Sir said that Corporation can enter into a
contract of partnership if there was an express
grant of power in its articles of incorporation.
(Tecson vs. Bolaos)
Q: What is the effect of illegality of contract? Can
a partner recover what he had given if cause was
illegal?
A: Yes, because it will result in unjust enrichment.
Q; How about if both was in pari delicto?
A: If there was repudiation before there was any
damage, the court is in its discretion to allow
recovery
BAR QUESTION: A and B put up a car repair
shop. A contributed money while B contributed his
services. A likewise put up a coffee shop on the
left side of the car repair shop. B likewise
engaged in another business of his own. Are they
legally allowed to venture into such businesses?

Q: How about 3rd person who contracted with


Partnership with unlawful object, can recover?
A: Yes, as long as no knowledge of the illegality

When one or more parties contribute an


immoveable
If there is no inventory VOID;
If there is an inventory, but not put in

writing

If such partnership is not put into public


instrument -> it will not affect the validity
of the partnership agreement, though it
may affect the greater efficacy or the
enforceability of the contract.
Case: Hernandez v. Angeles

Form is not necessary for the validity, maybe


necessary for enforceability
ENTITY THEORY/LEGAL PERSON THEORY
means that a partnership has a juridical
personality separate and distinct from the partners

A general partner can be an industrial


partner.
Can a partner be both capitalist and
industrial partner at the same time? YES
Can a limited partner be both an industrial
and a capitalist partner at the same time?
NO
CLASSIFICATION OF PARTNERSHIP:
I. As to Object:
a) present property
b) profits
II. a) General all general partners
b) Limited one or more general and one
or more limited partner; a limited
partner (has no right to partake in
the management
Commercial Partnership governed by Code
of Commerce
III. As to term:
a) maybe for a particular undertaking
(Ortega vs. CA)
Admission of a new partner
If given a question concerning the
liability of a newly-admitted partner for
a partnership obligation, ask, when
was the partnership obligation
incurred? Was it incurred PRIOR TO /
AFTER the new partners admission
to the partnership?

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

50

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


Q: ABC partnership admitted D as new partner.

Interest in partnership = pertains


The ABC partnership incurred the following
to the share in profits and surplus.
liabilities. ABC- 100; X- 30K, A- 50k. What is the
liability of D as a new partner? If A is a managing
partner.
Sharing of the Partners in the Profits and in
A: GR: up to capital contribution only unless he
the Losses
bound himself to be solidarily liable
NOTA BENE: application of proportionate

if there is a STIPULATION (except when


sharing:
there is a stipulation where one or more of
a) if A is a general partner
the parties shall be excluded from the
b) both debts are due and
profits, the stipulation shall be VOID)
demandable

if there is NO STIPULATION , sharing


c) receipt was given in the
shall be in proportion to the capital
name of the partnership
contributions.
d) payment should be applied

What about the Industrial Partner? =>


to the most onerous
give him the value of his service; the
LIMITED PARTNER IS LIABLE WHEN:
balance of which should be distributes to
a) he participated in the management
the capitalist partners in proportion to their
b) if surname appears in the partnership
capital contributions.
name except;
a) already existing surname
b) if also the surname of a general
partnership
BAR QUESTION: A, B, and C entered into a
c) if at the same time general or
partnership. Agreed to Php360 share profits
limited partner
equally. C assigned his interest in the partnership
to X. Therefore, X demanded share in the profits
Article 1892 subagent is not equivalent to
and management. Are these demands of X legally
substitute
justifiable?
in having a substitute, must be with the
knowledge of the principal. (De la Pea vs.
ANSWER: As to the management, an assignee
Hidalgo)
cannot participate in the management, not even
right to access As to the share in the profits, an
assignee has the right to receive the profits the
Proportional Application of Debts:
assignor would have received. As to interest, a
partner may assign however limited only to the

One obtaining is a managing partner;


receipt of such amount and nothing more.

Both debts are due and demandable;


Therefore, to receive PHp 120k (360/3)

If the partner receipted the amount in


the name of the partnership

estoppel

agency
BAR QUESTION: W (industrial partner), X

If the debt is more onerous


(industrial partner), Y (P 50 K) and Z (P 20 K)
entered into a partnership agreement. W and X
Property Rights of a Partner
will act as managing partners. Thereafter, two
persons were appointed:. W and X appointed

see the 3 major classification


the SECRETARY, one of the two persons
of the property rights of
appointed. Y and Z however opposed such
partners
appointment. The ACCOUNTANT, the other

plus right to formal


person named, was appointed by W and Z,
accounting
whose appointment was however opposed by

plus the right to the access of


X and Y. Whose appointment will bind the
partnership book
Partnership?

Rights in specific partnership


property = a partner is co-owner
with his partners of specific
partnership property; see 1811 =
co-ownership sui generis.
Cf. co-ownership in partnership
law and co-ownership in property
law. In the former, a co-owner
may sell his share even without
the knowledge and consent of the
other co-owners, whereas, in
partnership law, such would not
be allowed.

ANSWER: The secretarys appointment will bind


the partnership. As to the accountant, it should be
resolved as to the partnership having the
controlling interest, such controlling interest being
dependent on the aggregate capital contributions
of those who appointed vis--vis those who
opposed.

MANAGEMENT ARRANGEMENTS
One managing partner
Solidary management

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

51

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


As to stipulation, if it excludes a partner,
stipulation is void not the partnership.
Share in the Losses:
1. determine agreement
Q: if one partner is excluded valid?
RIGHTS/ OBLIGATIONS OF PARTNERS
A: depends: if capitalist, stipulation is void; if
industrial partner was excluded valid among

To make good his promise to


partners but void as to third persons. Article
contribute MONEY PROPERTY
1816
INDUSTRY
2. if no stipulation to losses, use stipulation on the

If money = equally, unless there is a


sharing of profits
stipulation
3. no stipulation at all = share in their capital

If in default, he is a debtor of the


contribution
partnership plus interest plus damages (i=
12%)
LIABILITY AS TO:

If property = ask what was actually


Contractual Obiligation = joint
contributed. Was it the property itself or
Joint and solidarily 1822 & 1823 tortious/
the use of such property. If property itself
wrongful acts of partners
=> transfer ownership plus obligation to
warrant in case of eviction. If thing was
Q: Bought set of SCRA in the account of the
lost before delivery, the partner bears the
partnership, can partnership be liable?
loss, RES PERIT DOMINO. See
A: It depends if the act is for the apparent carrying
Exceptions (1) FUNGIBLE (2) FOR SALE
of the usual business of partnership.
(3) WITH APPRAISAL.
Q: Can partnership be liable even if not related to

Partnership bears the loss if possession is


the business?
with partnership already.
A: Yes, if such party was not authorized

If services, SPECIFIC PERFORMANCE

Joint Management
Partner as Agent

WOULD NOT LIE. Remedy is to demand


the value of service plus damages
incurred by partnership
PROPERTY RIGHTS:
1) specific partnership property a partners is a
co-owner as to his co-parners not
partnership;l
co-ownership is sui generis
2) interest
3) participate
Q: Can a creditor of a co-owner levy such interest
of a co-owner in a partnership land
A: Yes, but he cannot do so if indebted to
partnership
Q: W and X are managing partners, Y-50k, Z-20k.
W and X were appointed as secretary by 2
persons, opposed to by Y and Z; accountant
appointed by W and Z but opposed by X and Y
A: In the 1st case, YZ has no right to oppose. In
the second case, controlling partners shall prevail
based on capital contribution. Appointment shall
not be valid having opposed by Y who has
controlling interest. This case is called subsidiary
management

DISSOLUTION:
change in relation where partner ceases to be
associated in carrying on the business of
partnership
marriage of partners not a ground
Entry of a new Partner

General Rule: It will dissolve the


partnership

Exceptions:
a) act is necessary to wing up
partnership affairs
b)
CAUSES OF DISSOLUTION
1) extrajudicial
a) voluntary No. 1 & 2 of Article 1830
b) involuntary No. 3-7
2) judicial Article 1831
Q: A B C assigned whole interest to X against the
will of A & B and decided to dissolve the
partnership, X filed for a dissolution, which
dissolution will be valid?
A: That made by A & B is valid. X was mere
assignee, no legal interest to file dissolution for
he is not by law a partner.

FIDUCIARY OBLIGATIONS; Honesty and Good


faith starts during the negotiation stage. Obligation
would continue not only up to dissolution but also
until termination.

DEATH OF A PARTNER:
if general, partnership is not extinguished if biz
nis continued or not stated due to unanimous
consent.

REMEDIES OF A NON-DEFAULTING PARTNER

EFFECT of DISSOLUTION:
termination of authority of partners.

Specific performance
Dissolution
RESCISSION IS NOT A REMEDY

AS TO DISTRIBUTION:

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

52

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe


Notes in Civil Law Review 2

VII. CREDIT
TRANSACTIONS
LIABILITY OF
SUBSTITUTE

NOT GIVEN POWER TO APPOINT

All acts of the


substitute
appointed
against
the
prohibition
of
the
principal
shall be void

LIABLE
if
substitute acted
outside
the
scope
of
authority
or
there is bad
faith
or
negligence on
the part of the
substitute

NOT LIABLE if the


substitute
acted
within the scope of
authorization
representation
of
the principal and
acted
with
due
diligence and in
good faith

the agent is not an


insurer
of
the
success
of
the
business of the
principal

not the same as bailment


not all credit transactions are
bailment
in bailment, there has to be a
delivery (deposit, loan, mutuum,
commodatum)
in some credit transactions,
delivery is not necessary
(guaranty, mortgage)
sale may be a credit transaction
of the sale is on credit
not all credit transactions are
contracts (judicial deposits, legal
deposits)

EFFECTS OF APPOINMENT OF
SUBSTITUTE/LIABILITY IN DAMAGE TO
PRINCIPAL

GIVEN POWER TO APPOINT


Designated

Not
liable
unless
he
knew
that
the
designated
person
is
notoriously
incompetent
or
already
insolvent

Not designated

Agent shall be
responsible for the
acts of the substitute if
substitute is
notoriously
incompetent or
insolvent

Not liable as
agent shall NOT
be responsible
for the acts of the
substitute if the
substitute is
notoriously
incompetent or
insolvent

Loan
consider first the kind
whether mutuum or
commodatum
mutuum or simple loan- the
agreement between the
parties to constitute a loan is
already a binding agreement,
however, unless it is delivered
there is no perfected contract
of loan yet.
If the contract of loan is not
yet perfected, cannot be
revoked
In mutuum, if without
express stipulation, contract
is compensatory
case: Rep vs Bagtas

case: Soccoro- What is the effect of a


declaration that the interest is
unconscionable? Still liable to pay
interest but at the legal rate
in a contract of commodatum, the bailor
need not be the owner because there is
no transfer of ownership
in mutuum, lender has to be the owner
precarium, a special form of
commodatum wherein the bailor may
demand the thing at will (1947)
RA 8183 all monetary obligations shall
be settled in Philippine currency which is
the legal tender. However, parties may
agree that the obligation be settled in

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

53

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe

Notes in Civil Law Review 2


other currencies

continuing guaranty Art.


thing pledged must be delivered to the
2053
creditor unlike in chattel mortgage and

the only parties in


real estate mortgage
guaranty are the creditor and the debtor

sub guarantor- benefit of


excussion
Deposit

co-guarantor- benefit of
essentially gratuitous, unless stipulated
division
otherwise

guarantor- insures the


irregular deposits- a depositary has the
solvency of the debtor
right to use the thing

surety- insures the


in deposit, object cannot refer to future
solvency of the debt
thing because it requires delivery

characteristics

Pledge/ Mortgage

a) principal
b) real
c) gratuitous or onerous

kinds of deposit
a) judicial
b) extra-judicial

i. Conventional / voluntary
ii. Necessary
iii. Legal
Guaranty
covered by the Statute of

Frauds
1. Personal- personal commitment to
answer for the debt, default of
another
2. Real guarantor delivers collateral
a. pledge
b. chattel mortgage
c. real estate mortgage
d. antichresis

All are accessory


contracts
PLEDGE

A pledge or
mortgage cannot
exist without a
valid obligation

free disposition means that


the mortgagor should be capacitated
pledge may be perfected
even if delivery is merely constructive
liability of the pledgor or
mortgagor is only up to the value of the
pledged/ mortgaged property. Nawala na
sa kanya yung property, kaya tama na
yun unless expressly stipulated
otherwise
creditor cannot recover if
property is covered by
Recto Law

no right of redemption in
chattel mortgage and
pledge

TABLE 1

Real Article 1316,


Article 2093)
But a promise to
constitute a pledge
gives rise to a
personal action
between the parties;
public interest.

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

Unilateral

54

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe


Notes in Civil Law Review 2

Nevertheless,
a
pledgor
or
mortgagor maybe
constituted
to
guarantee
the
performance of a
voidable/
unenforceable
contract.
It may guarantee a
natural obligation

CHATTEL
MORTGAGE

REAL ESTATE
MORTGAGE
maybe
foreclosed even if
only written in a
private instrument

ANTICHRESIS

Solemn or Formal
(De leon)
CM Registration is
indepensable. If not
recorded, binding on
the parties.
Promise to constitute
mortgage.
Affidavit of GF to binf
3rd parties. If not
executed, mortgage
may still bind third
persons if the latter
had knowledge of the
promise to constitute
mortgage

unilateral

Solemn. (Vitug)
Must be recorded, if
not binding to
parties.
promise
personal/action

A conditional
obligation may
also be secured.

Solemn.
Amount of principal
and interest must be
in writing, if not void.

BILATERAL

TABLE 2

KINDS

RIGHT TO USE

RIGHT TO
APPROPRIATE
(PACTUM
COMMISORIUM)

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

INDIVISIBILITY

55

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe


Notes in Civil Law Review 2

PLEDGE

CHATTEL
MORTGAGE

REAL ESTATE
MORTGAGE

ANTICHRESIS

NONE, unless
1. authorized
2. necessary for
the
preservation of
the thing

Not applicable unless


stipulated

Not applicable unless


stipulated

Only right to receive


fruits unless
stipulated.

Creditor cannot
appropriate. Any
stipulation to the
contrary is null and
void.
However, in pledge,
if at the first
auction the thing
sold, a 2nd one with
the same
formalities shall be
held, but there is
no sale either.
Creditor may
appropriate but the
shall acquit the
entire claim.
Encashment of a
deposit certificate
given as security.
not postdated
check (Chua vs.
CA, Sept. 26,
1989)

BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO

Pledgor or Mortgagor
is indivisible,
eventhough debt may
be divided among the
successors-in-interest
of the debtor/
creditor.
EXCEPT:
Where several things
are given in a pledge
or mortgage, each
one of them
guarantees only a
determinate portion
of the credit.
Right of
Extinguishment.
Indivisibility is not
affected by the fact
that the debtors are
not solidarily liable.

56

TABLE 3: RIGHTS OF MORTGAGOR

KINDS

PLEDGE

RIGHT TO
BID

Article 2112 The


creditor to whom
the credit has not
been satisfied in
due time pledged
may proceed before
a NP. X x x

YES.
Provided he
is the not
the only
bidder.
Article 2113

1. Judicial
Foreclosure
Sec.13 Article 1508
CHATTEL
MORTGAGE

REAL ESTATE
MORTGAGE

RIGHT TO
RECOVER
DEFICIENCY

RIGHT OF SALE/
FORECLOSURE

2. Extrajudicial
Foreclosure Sec. 14
Article 1508

1. Judicial (Rule 68
of the Rules of
Court)
2. Extrajudicial
Foreclosure Act.
3135

SPECIFIC
PERFORMANCE

VOLUNTARY:
None even if
theres
stipulation.
Article 2112,
Article 2115

YES, but
pledged deemed
abandoned.

LEGAL: YES

YES. Except
on
installment.

YES, but chattel


mortgage
deemed
abandoned.

YES. Rules of
Court on
Foreclosure.

YES, but
security deemed
abandoned.

ANTICHRESI
S

KINDS

PLEDGE

RIGHT TO
ALIENATE

RIGHT TO
BID

ARTICLE 2097
YES!
ARTICLE 2108

YES
ARTICLE
2113

RIGHT T
RECOVE
EXCES

VOLUNTA
NONE
ARTICLE 2
LEGAL: Y
ARTICLE 2

CHATTEL
MORTGAGE

REAL ESTATE
MORTGAGE

ANTICHRESIS

Sale valid and


buyer may
acquire
ownership but
if not
consented to
by mortgagee,
mortgagor is
criminally
liable. (Art. 319
RPC)

Article 2130 A
stipulation
forbidding the
owner from
alienating the
immovable
mortgaged
shall be void.

Same as
above, Article
2130.

TABLE 4: RIGHTS OF PLEDGOR

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe notes


Civil Law Review 2
VII. TORTS

To God be the glory

there is no need for a pre-existing contract


Q: Why file for action for quasi-delict?
A: Claim for moral damages which has
many grounds
Essential Elements:
I. Act or Omission there being
fault/negligence
negligent act, even acts punished by law
Dulay vs. CA
Quasi-delict is not limited to negligent acts,
even a malicious or intentional act may be
the basis of a quasi delict.
Article 2177
acts punished by law maybe the basis, the
only exception is that there be no double
recovery
Q: May an action for quasi-delict subsist with
a criminal case?
A: Yes, they are distinct from each other

Q: Driver in a acquitted in a criminal case,


heirs filed civil case for quasi-delict, may
action prosper?
A: Yes, in quasi delict mere preponderance
of evi is enough
II. DAMAGES
any hurt or harm inflicted
Q: What will be the degree of diligence
required?
A: That of a good father of a family or that
which the law provides
Extraordinary common carrier, doctors,
banks
Q: Who has the burden of proof?
A: plaintiff
III. CAUSAL CONNECTION BETWEEN ACT
OR OMISSION AND DAMAGE

- end-

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59
Bogs Quitain; Tere Morales; Paulette Tongcua; Tino Occiano; Budz Occiano