RFBT - MEMORIZATION OF CONCEPTS Flashcards

Question

T or F Generally, the SHORTENING of the term of a contract results to an IMPLIED NOVATION especially if there is a significant shortening of term of contract which is the principal condition of the contract.

Answer 1

False, unless the change will show that the new contract is clearly incompatible with the old contract so that both contracts cannot exist together.

Answer 2

MARCO 1. ) Mutuality of contracts - contract must bind both parties, its validity/compliance cannot be left to the will of one of them. 2. ) Autonomy or Liberty of contract or freedom to stipulate, provided they are not contrary to law, morals, good customs, public order or policy. 3. ) Relativity or Privity of contracts - contracts take effect only between the parties, their assigns, and heirs, except where those rights and obligations are intransmissible by: a. ) law b. ) stipulation c. ) nature 4. ) Consensuality of contracts - contracts are generally perfected by mere consent (except for some contracts which requires delivery (Real contracts) or to be in a certain form (Formal/Solemn contracts). 5. ) Obligatory force of contract and compliance in good faith - Obligations arising from contracts shall have the force of law between the contracting parties and should be complied with in good faith. The parties are bound to fulfill what has been expressly stipulated and all the consequences which according to their nature, may be keeping with good faith, usage, and law.

Answer 3

A stipulation in a contract that clearly and deliberately confers a favor upon a third person, who may demand its fulfillment provided he has communicated his acceptance to the obligor before its revocation. The 3rd person can sue on the contract even though he is not a party thereto. The requisites for it to be valid are: a. There must be a stipulation in favor of a 3rd person b. The stipulation should be a part, not the whole of the contract c. The contracting parties must have clearly and deliberately conferred favor upon a 3rd person and not a mere incidental benefit of interest d. The favorable stipulation should not be conditioned or compensated by any kind of obligation whatsoever e. The 3rd person must have communicated his acceptance to the obligor before its revocation f. One of the contracting parties does not bear the legal representation or authorization of the 3rd party.

Answer 4

1. ) Those entered into by guardians whenever the ward whom they represent suffer lesion by more than 1/4th of the value of the things which are the object thereof. 2. ) Those agreed to in representation of absentees, if the latter suffered lesion by more than 1/4th of the value of the things which are the object thereof. 3. ) Those undertaken in fraud of creditors when the latter cannot in any manner collect the claims due them. (ACCION PAULIANA) 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.

Answer 5

Statute of Frauds is a statute designed to prevent the commission of fraud by requiring certain contracts to be in writing and be subscribed by the party charged. IT APPLIES ONLY TO WHOLLY EXECUTORY CONTRACTS.

Answer 6

1. ) Agreement that by its terms is not to be performed within a year from making thereof. 2. ) A special promise to answer for the debt, default, or miscarriage of another. (Aka GUARANTY) 3. ) An agreement in consideration of marriage, other than mutual promise to marry. 4. ) Sale of goods, chattel, or things in action at a price not less than P500.00. (Does not apply if there is down-payment) 5. ) An agreement for the leasing of a real property or of an interest therein for more than one year. 6. ) Sales of real properties. 7. ) A representation as to the credit of a third person.

Answer 7

1. ) Public Documents a. ) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property. (Deed of real estate mortgage and its cancellation must be in a public instrument.) b. ) The cession, repudiation or renunciation of hereditary rights or of those conjugal partnership of gains. c. ) 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. d. ) The cession of actions or rights proceeding from an act appearing in a public document. 2. ) Other contracts where the amount involved exceeds 500, except for sale of goods chattels and other things for 500, since this is for enforceability.

Answer 8

FORMALITIES REQUIRED FOR VALIDITY: 1. Donations of real property which require a PUBLIC INSTRUMENT. 2. Donations of personal property which exceeds 5000 which REQUIRES THAT THE DONATION BE WRITTEN 3. Stipulation to pay interest on loans or for the use of money WHICH MUST BE IN WRITING 4. Sale or transfer of large cattle which requires that it be in a public instrument, registered and that there should be a certificate of transfer 5. Contribution of real property in a partnership, which requires that there be an inventory attached to a public instrument 6. Negotiable instruments must be made strictly in the form provided for in the NIL in order to be considered negotiable 7. Contract of marriage must have all solemnities required by the Family Code 8. Principal and interest of secured contract of loan must be specified in writing 9. Agreement or stipulation to pay interest in contract of loan must be in writing in order for such agreement to be valid. 10. Contract of Chattel Mortgage requires it to be registered with Chattel Mortgage registry to be valid 11. Contract of partnership to which real properties or real rights are contributed must be in a public instrument, with an inventory of real property attached thereto, for the contract of partnership to be valid. 12. Sale of a piece of land by the agent in the name of the principal, the authority of the agent to sell the land must be in writing for the contract sale of such land to be valid 13. Sale of community or conjugal property by one of the spouse, there must be authority by the other spouse to the selling spouse.

Answer 9

Cause is the reason why a party enters into a contract. | The cause of S is the payment of 50k, while that of B is the delivery of the car.

Answer 10

1. If the terms of a contract are clear and have no doubt upon the intention of the contracting parties, the literal meaning of the stipulations shall control 2. If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former, and in order to judge their intentions, their contemporaneous and subsequent acts shall be principally considered 3. However, the general terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree. (If S sells "all the grains" in his warehouse to B, such term shall not include the grains that do not belong to B) 4. If the stipulation of any contract should admit of several meanings, it shall be understood as bearing that import which is most adequate to render it effectual. (S has 2 cars, one he absolutely owns and the other in dispute. He sells a car to B without indicating which. The sale shall be deemed to be on the 1st car) 5. The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly. 6. Words which may have different significations shall be understood in that which is most keeping with the nature and object of the contract. 7. The usage or customs of the place shall be borne in mind in the interpretation of the contract and shall fill the omission of stipulations which are ordinarily established 8. The interpretation of obscure words or stipulations in a contract shall not favor a party who caused the obscurity Rules when it is absolutely impossible to settle doubts under the preceding rules 1. When the doubts refer to incidental circumstances of a gratuitous contract, the least transmission of rights and interest shall prevail (C gave his bike to D, but it cannot be inferred whether it was donation or mere commodatum. It shall be interpreted as commodatum since it transmits the least rights) 2. If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interests ( D obtained from C a loan of 500k which bears interest of 1% monthly. It cannot be determined from the instrument whether it is payable in 2 or 3 years. It shall be deemed as 3 years since both parties will have more benefit 3. If the doubts are cast upon the principal object of the contract in such a way that it cannot be known what may have been the intention of the parties, the contract shall be null and void. (S has several cars. He sold one car to B but it cannot be determined which one. The sale is void.)

Answer 11

CONTRACTS THAT MAY NOT BE ASSAILED BY 3RD PERSONS 1. PERFECTLY VALID CONTRACT 2. VOIDABLE CONTRACTS 3. UNENFORCEABLE CONTRACTS CONTRACTS THAT MAY BE ASSAILED BY 3RD PERSONS AFFECTED BY IT 1. RESCISSIBLE CONTRACTS 2. VOID CONTRACTS

Answer 12

1. Rescissible - valid and binding until rescinded 2. Voidable - valid and binding until annulled 3. Unenforceable - valid but unenforceable by court action 4. Void - Invalid

Answer 13

1. Rescissible - Action for rescission 2. Voidable - action for annulment 3. Unenforceable - None 4. Void - Action for declaration of nullity

Answer 14

Cognitive - follows that the acceptance takes effect from the time the offerer knew or has the knowledge of the acceptance of the offeree Manifestation - Follows that the acceptance will take effect once it is manifested by the offeree We abide by the COGNITION THEORY. Art 1319 states that "Acceptance made by letter or telegram does not bind the offerer except from the time it came to his knowledge. The contract, in such case, is presumed to have been entered into in the place where the offer was made.

Answer 15

1. Juridical Capacity - fitness to be the subject of legal relations which is inherent in every natural person and is lost only through death. A contract becomes void when a party is juridically incapacitated. 2. Capacity to act / Legal Capacity - Power to do acts with legal effect which is acquired and may be lost a. Absolute incapacity - party cannot give consent in any contract with anyone in whatever capacity over anything. A contract becomes VOIDABLE when a party is absolutely incapacitated. b. Relative incapacity - person may be prohibited from entering into specific contracts

Answer 16

The parties shall become CO-OWNERS of the mass, or simply, the excess belongs to the seller. Example: S sells to B 200 sacks of corn from a mass stored in S' warehouse. The mass actually consisted of 300 sacks of corn, thus they will co-own the mass to the extent of 2/3 for B and 1/3 for S.

Answer 17

The buyer becomes the OWNER OF THE WHOLE MASS, with the SELLER BEING BOUND TO MAKE GOOD ON THE DEFICIENCY, unless a contrary intent appears.

Answer 18

Recto Law is the remedy of vendors in the case of INSTALLMENT SALES OF PERSONAL PROPERTY and CONTRACTS PURPORTING TO BE LEASES OF PERSONAL PROPERTY WITH OPTION TO BUY, when the lessor has deprived lessee of possession/enjoyment of the thing.

Answer 19

1. ) Exact fulfillment of obligation should vendee fail to pay, regardless of the number of installments defaulted. 2. ) If the vendee fails to pay TWO OR MORE INSTALLMENTS, vendor may, at his option avail the first remedy or do EITHER of the following: a.) CANCEL THE SALE - vendor returns to vendee sums received minus reasonable rent, but they may stipulate the sums not be returned provided such stipulation is not unconscionable. b.) FORECLOSE THE CHATTEL MORTGAGE ON THING SOLD IF ONE HAS BEEN CONSTITUTED - in this case, vendor shall have no further action against the vendee; any stipulation against the contrary is VOID. NOTE: IT MUST BE A CHATTEL MORTGAGE.

Answer 20

a. S can only exact fulfillment of the obligation which is demand payment of the installment defaulted only, UNLESS there is an acceleration clause wherein the whole shall become due upon default of the payment of an installment) b. Not yet, because such remedies are available only when the default of B is 2 or more installments. c. All remedies are now available to him under Recto Law and he must only pick one, which are: 1. Exact fulfillment of the obligation 2. Cancel the sale and S must return the sums received from B minus reasonable rent, unless their stipulations provide otherwise 3. Foreclose the chattel mortgage on the car, after which S shall no longer have an action against B, even if there is a deficiency.

Answer 21

1. In cases of sale on straight-term 2. If the security foreclosed is other than the chattel mortgage constituted on the thing sold 3. In case of sale on execution of judgment in favor of seller.

Answer 22

Yes, since this is a sale on a straight term

Answer 23

a. Yes because the prohibition of recovery of deficiency applies only when the chattel mortgage foreclosed was on the thing sold (car). b. No. The act of S foreclosing the chattel mortgage of the piano is the first remedy, which is exacting fulfillment of the obligation. The three remedies available under the Recto Law are ALTERNATIVE, therefore by choosing the first alternative, he cannot foreclose the chattel mortgage on the car anymore.

Answer 24

Yes, because the prohibition to recover the deficiency applies only if S had the chattel mortgage on the car foreclosed. The prohibition does not apply if the thing is sold in an EXECUTION SALE.

Answer 25

1.) If actual area is LESS than that stated in contract: a.) Ask for proportionate reduction in price IF LACK IN AREA IS LESS THAN 1/10th OF THAT STATED IN THE CONTRACT, unless vendee would not have bought the thing had he known of its smaller area. b.) Rescind the sale if the lack in area is not less than 1/10th of area stated. 2.) If the actual area is more than that stated in the contract: a.) Accept the area stated and reject the rest b.) Accept the whole area and pay at the contract rate. 3.) If the area is the same, but a part of the immovable is not of the quality specified in the contract: a.) Ask for a proportionate reduction of price if inferior value of the thing does not exceed 1/10th of the price agreed upon, unless the buyer would not have bought the thing had he known of its inferior quality. b.) Rescind the sale if the inferior value of the thing exceeds 1/10th of the price agreed upon.

Answer 26

1. ) Vendor is bound to deliver all that is included within the boundaries stated in the contract although there be a greater or lesser area stated in the contract. 2. ) Vendee shall pay the lump sum stipulated w/ no changes in price even though the area is lesser/greater. 3. ) Buyer's remedies if the vendor does not deliver the area within the boundaries stated in the contract: a. ) Reduction in price b. ) Rescission

Answer 27

a. B may EITHER ask a proportionate reduction in the price, since the lack in area is LESS THAN 1/10TH of that stated in the contract (150sqm vs 100sqm lacking) for 1,400,000, OR he may rescind the sale if he would not have bought the lot had he known of its smaller area. b. B may ask for rescission of the contract since what is lacking is more than 1/10th of the agreed area. (150sqm vs 200sqm lacking) c. B may accept the area at the contract rate (1,600,000) OR accept only 1,500sqm and reject the excess 100sqm d. B may EITHER ask for a proportionate reduction of the price for 10000 (Total to be paid is 1,490,000) since the inferior value of 50 (1k-950) does not exceed 1/10th of the price agreed upon, OR he may rescind the sale if he would not have bought the lot had he known of the inferior value. e. B may ask for rescission of the contract.

Answer 28

a. None. S will have to deliver the lot, and B will pay the lump sum of 1.5M b. None. S will have to deliver the lot, and B will pay the lump sum of 1.5M c. B may either RESCIND THE CONTRACT, or ASK FOR A PROPORTIONATE REDUCTION OF PRICE.

Answer 29

1. ) If the cause of the loss is the defect and the vendor was AWARE of it, he shall be obliged to: - return the price - refund expenses of contract - PAY DAMAGES 2. ) If the cause of the loss is the defect and the vendor was NOT AWARE of it, he shall be obliged to: - return the price - refund expenses of the contract - PAY INTEREST THEREON 3. ) If the cause of loss is a fortuitous event or fault of the vendee and the vendor was AWARE of the defect he shall be obliged to: - return the price paid less value of thing at time of loss. - PAY DAMAGES 4. ) If the cause of loss is a fortuitous event or fault of the vendee and the vendor was NOT AWARE of the defect he shall be obliged to: - return the price paid less value of the thing at time of loss.

Answer 30

Buyer may: 1.) Reject the goods, since buyer cannot be compelled to accept partial payment. 2.) Accept the goods at contract rate.

Answer 31

Maceda Law, known as "Realty Installment Buyer Act", has the objective of protecting buyers of real estate on installment payments against onerous and oppressive conditions. It covers sale or financing of real estate on installment payments including RESIDENTIAL CONDOMINIUM AND APARTMENTS, (excluding commercial and industrial lots) where the BUYER HAS PAID AT LEAST TWO YEARS OF INSTALLMENTS.

Answer 32

1.) Grace period to pay installment in case of default a.) If at least 2 years of installment had been paid at the time of the default 1.) To pay without additional interest the unpaid installments due within total grace period earned which is fixed at the rate of: 1 month grace period for every 1 year of installment paid, which is exercisable ONLY ONCE EVERY 5 YEARS. b.) If the contract is cancelled, entitled to a refund of the cash surrender value equivalent to 50% of the total payments made, and after 5 years of installments, an additional 5% every year but not to exceed 90% of total payments made. CANCELLATION SHALL TAKE PLACE ONLY AFTER 30 DAYS FROM THE RECEIPT BY BUYER OF THE NOTICE OF CANCELLATION AND UPON FULL PAYMENT OF THE CASH SURRENDER VALUE. DOWNPAYMENTS, OPTIONS AND DEPOSITS SHALL BE INCLUDED IN THE COMPUTATION. 2.) IF LESS THAN 2 YEARS OF INSTALLMENT HAD BEEN PAID: Buyer shall be given a grace period of not more than 60 days from the date the installment became due to pay. Cancellation takes place if the buyer fails to pay the installment due upon the expiration of the grace period 30 days from the receipt by buyer of notice of cancellation or demand for rescission. Buyer shall have additional rights such as to: a.) sell rights to another by notarial act b.) Assign rights to another by notarial act c.) Reinstate the contract by updating the account d.) To pay in advance any installment or full unpaid balance w/o interest. e.) To ask for annotation of full payment.

Answer 33

1.) IF BETWEEN PARTIES Any form as long as there is ACTUAL DELIVERY of the object. 2.) AS REGARDS 3RD PERSONS The pledge must be in A PUBLIC INSTRUMENT showing a DESCRIPTION OF THE THING PLEDGED and DATE OF PLEDGE to take effect against 3rd persons.

Answer 34

1.) Indirect Causes - When the debtor pays the creditor 2. ) Direct Causes a. ) Return by the pledgee of the thing pledged to pledgor/owner b. ) Renunciation or abandonment IN WRITING by the pledgee. Acceptance by pledgor not necessary, and in the meantime the pledgee becomes a depositary upon the renunciation. c. ) Sale of the thing pledged - sale must be by PUBLIC AUCTION, through a NOTARY PUBLIC, with NOTICE TO DEBTOR AND OWNER OF THING d. ) Appropriation of the thing pledged, in case thing is not sold in 1st and 2nd auction. In this case, creditor must give an acquittance for his entire claim.

Answer 35

1.) If PROCEEDS OF SALE EXCEED AMOUNT OF DEBT Conventional - Excess belongs to the creditor, unless there is a stipulation that it shall belong to debtor. Legal - Excess belongs to debtor. 2.) If AMOUNT OF DEBT EXCEEDS PROCEEDS OF SALE Conventional - Creditor cannot recover deficiency Legal - Creditor can recover deficiency.

Answer 36

AS TO PARTIES - The real mortgage may be in any form since it is a consensual contract. It is binding between the parties even if NOT REGISTERED W/ REGISTRY OF PROPERTY. However it must be in a public instrument for the CONVENIENCE OF THE PARTIES. AS TO 3RD PERSONS - To be binding against 3rd persons, it must be recorded in the Registry of Property.

Answer 37

Yes, even without the consent of the 1st mortgagee, unless there is a stipulation that consent of the 1st mortgagee is required.

Answer 38

1. ) Judicial foreclosure - made through filing a petition in court if defendant fails to pay in time, the property shall be sold. a. ) Excess of proceeds over debt is returned to the mortgagor. b. ) Creditor can go after the debtor if proceeds are deficient. 2.) Extra-judicial foreclosure - Occurs when there is a stipulation may be foreclosed extra-judicially or when extra-judicial foreclosure sale is made under SPECIAL POWER OF ATTORNEY. a. ) Excess of proceeds over debt is returned to the mortgagor. b. ) Creditor can go after the debtor if proceeds are deficient.

Answer 39

1. ) Equity of redemption - Right of the mortgagor to redeem the mortgaged property after his default in the performance of his obligation but BEFORE the property is sold. a. JUDICIAL FORECLOSURE - Mortgagor is given NOT LESS THAN 90 DAYS to pay the mortgage debt before the property is sold b. EXTRA-JUDICIAL FORECLOSURE - Mortgagor may avail himself of this right after default but before the sale of property 2. ) Right of redemption - refers to the right of the mortgagor to repurchase the property within a certain period AFTER it was sold for the payment of the mortgage debt. a. JUDICIAL FORECLOSURE - Mortgagor may redeem the property AFTER THE SALE but before confirmation of the court of the sale. After the sale is confirmed by the court, the right of redemption is no longer available, except those granted by banks under General Banking Act b. EXTRA-JUDICIAL FORECLOSURE - Mortgagor has ONE YEAR FROM THE DATE OF REGISTRATION OF THE SALE TO REDEEM THE PROPERTY.

Answer 40

1. ) Between parties - must recorded in the Chattel Mortgage Register of the province where the mortgagor resides and also of the province where the property is located if it is different from the residence of the mortgagor. 2. ) As to 3rd persons - An affidavit of good faith must be appended to the Deed of Chattel Mortgage and recorded therewith in the Chattel Mortgage Register.

Answer 41

Pledge - the thing pledged may be appropriated ONLY IF THE THING PLEDGED IS NOT SOLD AT TWO PUBLIC AUCTIONS. The pledgee is required to give an acquittance for his entire claim, meaning he cannot recover the deficiency anymore. Mortgage - mortgaged property ARE NEVER APPROPRIATED.

Answer 42

No, since this is covered by Recto Law, chattel mortgage on personal property acquired in INSTALLMENTS.

Answer 43

b. X is not bound by the pledge of D to C To be binding with 3rd persons, the pledge must be in a public instrument describing the thing pledged and must be dated.

Answer 44

Elements: a. CONSENT, express or implied, of the parties to establish the relationship b. OBJECT, which is the execution of a juridical act in relation to a 3rd person c. The agent ACTS AS A REPRESENTATIVE AND NOT FOR HIMSELF d. The agent ACTS WITHIN THE SCOPE OF HIS AUTHORITY.

Answer 45

The contract of agency is VOIDABLE at the instance of the principal. Contracts entered into by the agent where the principal is incapacitated is LIKEWISE VOIDABLE because the real party to such contract is incapacitated, the agent merely being an extension of the personality of the principal.

Answer 46

The CONTRACT OF AGENCY IS VOIDABLE if the agent is incapable of giving consent. While the CONTRACT ENTERED INTO BY THE AGENT IN BEHALF OF THE PRINCIPAL is really that of the principal and WHICH WILL BE VALID AS LONG AS THE PRINCIPAL IS NOT INCAPACITATED, THE CONTRACT OF AGENCY ITSELF IS VOIDABLE because one of the parties is incapable of giving consent. (Note difference between Contract of Agency vs Contracts entered into by the agent) 1. If the principal is incapacitated while the agent is capacitated, both the contract of agency and contracts entered into by the agent become VOIDABLE 2. If the principal is capacitated while the agent is incapacitated, so long as the agent has some mental capacity, the contract of agency is voidable while contracts entered into by the agent are valid.

Answer 47

False, Legal capacity IS NOT REQUIRED for the validity of the agent's acts which are considered those of the principal since the agent is merely an extension of the personality of the principal. THE AGENT, HOWEVER, NEEDS TO POSSESS SOME MENTAL CAPACITY.

Answer 48

It is a written instrument given by a principal to his agent authorizing the latter to perform specified acts in behalf of the former, which acts, when performed, shall have a binding effect on the principal, which could either be GENERAL OR SPECIAL.

Answer 49

1. BY SPECIAL INFORMATION - done usually through communication addressed to specified persons. The person appointed who will be considered a duly authorized agent with respect to the person who received the special information. If the announcement of the appointment was by special information, the announcement of revocation of appointment shall also be made by special information. 2. BY PUBLIC ADVERTISEMENT - Person appointed will be considered as an agent with regards to any person If the announcement of the appointment was by public announcement, the announcement of revocation of appointment shall also be made by public advertisement.

Answer 50

1. The agent must act within the scope of his authority | 2. The agent must act in behalf of his principal

Answer 51

1. The principal has no right of action against the person with whom the agent has contracted 2. The person with whom the agent has contracted has no right of action against the principal 3. The agent is the one directly bound in favor with whom he has contracted as if the transaction were his own, EXCEPT WHEN THE CONTRACT INVOLVES THINGS BELONGING TO THE PRINCIPAL, in which case the principal shall have a right of action against the 3rd person, and the 3rd person against the principal. Examples: P authorizes A to borrow money from a bank, but does so in his own name and not of P. The loan is a contract between A and bank. P and the bank shall have no right against each other. P authorizes A to sell P's car. A sells the car in his own name and delivers it to B. P shall have a right of action against B and B against P since the contract involves a thing belonging to the principal.

Answer 52

The act becomes unenforceable against the principal or the person in whose name the contract was entered into unless the latter ratifies the same, while the agent becomes liable to 3rd persons with whom he contracted. Example: A was authorized by P to sell P's car for at least 100,000 cash. A, however sold it to B but on credit. B cannot enforce the sale against P unless P ratifies the contract. A alone will be liable to B. But if the 3rd person knew of the agent's lack of authority and the agent did not undertake to get the principal's ratification, the agent shall not be liable to 3rd persons.

Answer 53

The act is deemed to be that of the agent himself or of the person acting without authority. The act is generally valid between the agent and the 3rd person. Accordingly, if the agent or such person cannot perform his part of the contract, he shall be liable thereon in his personal capacity.

Answer 54

GENERAL RULE: Each agent is liable only for his own acts or omissions. If they are all at fault their liability shall be joint. Exception - their liability shall be solidary if the same has been agreed-upon. In this case, each of the agent shall be responsible for the following: a. For the non-fulfillment of the agency b. For the fault/negligence of his fellow agents except when the latter acted beyond the scope of their authority.

Answer 55

GENERAL RULE: The agent who acts as such shall not be liable to the party with whom he contracts Exceptions: The agent shall be personally liable when: a. He expressly binds himself b. He exceeds the limit of his authority without giving such party sufficient notice of his powers.

Answer 56

``` Follow the rules on immovables: Order of priority: 1. First registrant in good faith 2. First possessor in good faith 3. OLDEST TITLE ```

Answer 57

Follow the rules on movables: Order of priority: 1. First possessor in good faith 2. OLDEST TITLE

Answer 58

a. The principal may demand from him in cash b. The commission agent shall be entitled to any interest or benefit which may result from such sale Example: P gives general power of attorney to A to sell P's goods for 10,000 cash for a commission. A sells the goods to B for 11,000 on credit without authority from P. In this case, P may demand the whole 10,000 from A, but A shall be entitled to collect the 11,000, with the 1000 as benefit to A. If P ratifies the sale on credit, A must account the whole 11,000 to P.

Answer 59

There is a prima facie authority in an INCOMPLETE BUT DELIVERED INSTRUMENT to: 1. ) Fill up the blanks 2. ) Fill up the instrument for any amount` If it is filled up beyond authority given and the holder is: 1.) Holder in due course - he may PROCEED AGAINST ALL THE PARTIES INCLUDING THE MAKER 2.) Holder NOT in due course - He may PROCEED AGAINST GUILTY PARTY AND SUBSEQUENT PARTIES ONLY. This is because IN THE HANDS OF A HOLDER NOT IN DUE COURSE, "WANT OF AUTHORITY TO COMPLETE THE INSTRUMENT" is a personal defense. R signs a check leaving it blank as to amount and payee, then giving it to S, authorizing him to fill it up for PHP 10,000. S goes beyond his authority and fill it up for PHP 12,000. He then indorses it to A, A to B, B to C, C to H. To whom can H proceed against if he is a: 1.) Holder in due course? 2.) Holder NOT in due course? INCOMPLETE BUT DELIVERED INSTRUMENT If H is a HIDC, H can proceed against all the parties. If H is not a HIDC, H can proceed only against the guilty parties and those subsequent to the guilty party, thus, S A B and C.

Answer 60

The instrument shall NOT BE VALID IN THE HANDS OF ANY HOLDER, as against any person whose signature was placed thereon before delivery. It is enforceable only against the guilty party (who stole the incomplete and undelivered instrument) and parties subsequent to him. R signs a check leaving it blank as to amount and payee. S steals it and fills it up with him as payee for PHP 50,000. He then indorses it to A, A to B, B to C, C to H. To whom can H proceed against if he is a: 1. ) Holder in due course? 2. ) Holder NOT in due course? In both cases, H cannot proceed against R since "want of an incomplete instrument" is a real defense. Here H can only proceed against S,A,B, and C.

Answer 61

The instrument shall be enforceable against all the parties, except when it is held by someone who is not a HIDC, in which case he cannot proceed against the maker, since "want of delivery of a COMPLETE instrument" is a personal defense. If the holder is a: 1.) Holder in due course - he may PROCEED AGAINST ALL THE PARTIES INCLUDING THE MAKER 2.) Holder NOT in due course - He may PROCEED AGAINST GUILTY PARTY AND SUBSEQUENT PARTIES ONLY. This is because IN THE HANDS OF A HOLDER NOT IN DUE COURSE, "WANT OF DELIVERY OF A COMPLETE THE INSTRUMENT" is a personal defense.

Answer 62

Interest runs from the date of the instrument, if there is not, the date the instrument was issued.

Answer 63

The date of time it was issued.

Answer 64

The holder may treat it as either bill or note at his option.

Answer 65

The person signing shall be deemed an indorser.

Answer 66

Procuration is the act of appointing another as one's agent/attorney. A signature by procuration operates as a notice that the agent has but a limited authority to sign, and the principal is bound only in case the agent in so signing ACTED WITHIN THE ACTUAL LIMITS OF HIS AUTHORITY.

Answer 67

1. He must be AUTHORIZED 2. He must add words to his signature DESCRIBING HIMSELF AS AN AGENT 3. He must DISCLOSE HIS PRINCIPAL 4. He must ACT WITHIN THE SCOPE OF HIS AUTHORITY

Answer 68

H can collect from all the parties EXCEPT A. NO HOLDER CAN COLLECT FROM A MINOR BECAUSE MINORITY IS A REAL DEFENSE.

Answer 69

H can collect from all the parties EXCEPT P. NO HOLDER CAN COLLECT FROM A MINOR BECAUSE MINORITY IS A REAL DEFENSE.

Answer 70

H can collect from all the parties EXCEPT M. NO HOLDER CAN COLLECT FROM A MINOR BECAUSE MINORITY IS A REAL DEFENSE.

Answer 71

1.) The signature that is FORGED OR MADE WITHOUT AUTHORITY IS WHOLLY INOPERATIVE except when: a. The forged signature is not necessary to the title of the holder. b. ) By the acts/silence/inaction/negligence of a party, they are ESTOPPED FROM SETTING UP THE DEFENSE OF FORGERY. c. ) The acceptor, indorser, or those who negotiate an instrument, warrant that among other matters the instrument is genuine and in all respects what it purports to be.

Answer 72

You need to look closely and identify what case of forgery is in question. 1. ) Forgery of maker's signature in a promissory note PAYABLE TO ORDER. 2. ) Forgery of an indorsement in a promissory note PAYABLE TO ORDER. 3. ) Forgery of maker's signature in a promissory note PAYABLE TO BEARER. 4. ) Forgery of an indorsement in a promissory note PAYABLE TO BEARER. 5. ) Forgery of the drawer's signature 6. ) Forgery of an indorser's signature in a bill of exchange

Answer 73

This is an instance of FORGERY OF INDORSER'S SIGNATURE IN A PROMISSORY NOTE PAYABLE TO ORDER. a. H, whether HIDC or not, cannot hold M,P,A liable because IN AN ORDER INSTRUMENT, PROPER INDORSEMENT IS NECESSARY FOR ITS NEGOTIATION. H however may claim from B,C,D. He can also hold F criminally and civilly liable for the forgery.

Answer 74

This is an instance of FORGERY OF MAKER'S SIGNATURE IN A PROMISSORY NOTE PAYABLE TO BEARER. H, whether a HIDC or not, cannot go after M because the forged signature is wholly inoperative as to him. H can hold P criminally liable for forging M's signature. H can hold C liable on his warranty as a person negotiating by mere delivery. H CANNOT HOLD A AND B LIABLE SINCE THE LIABILITY OF A PERSON NEGOTIATING BY MERE DELIVERY IS ONLY TO THE IMMEDIATE TRANSFEREE.

Answer 75

This is an instance of FORGERY OF AN INDORSEMENT IN A PROMISSORY NOTE PAYABLE TO BEARER. - H can collect from M,P,A if he is a HIDC. - H cannot collect from M,P,A if he is not a HIDC, because of "want of delivery of a complete instrument" - H can hold F criminally and civilly liable - H can collect from B,C,D.

Answer 76

This is an instance of FORGERY OF MAKER'S SIGNATURE IN A PROMISSORY NOTE PAYABLE TO ORDER. a. H can hold all parties liable except M. In addition, H can hold P criminally liable for forgery. b. M will become liable on the note because of his assent/negligence to examine the instrument.

Answer 77

This is an instance of FORGERY OF DRAWER'S SIGNATURE. - H can collect from W, because by accepting the bill, W admitted the genuineness of R's signature. - Any of the parties mentioned can hold P civilly and criminally liable for the forgery - W cannot debit the account of R because the signature of R is wholly inoperative against him, besides W owes R the contractual duty of knowing R's signature - Should W dishonor the bill, H can go after A,B,C who purported that the instrument is genuine in all material respects

Answer 78

This is an instance of FORGERY OF INDORSER'S SIGNATURE IN A BILL OF EXCHANGE. R, drawer - Drawer is not liable on the check because it drew the check payable to the order of P. It did not authorize W to pay the check to any other person than P or his order W bank, Drawee - Drawee is liable to the drawer for the amount of check it charged because it violated the instructions of the drawer. However, he can recover from from C bank against whom it may hold liable under the warranties of an indorser. P, Payee - P can demand payment from R because he has not been paid of his claim. He however cannot be liable on the check since his signature was forged. C bank - C is liable to W F, forger is liable criminally and civilly.

Answer 79

1. ) If M has no defenses against P, H can collect the full amount of PHP 10,000 from M. However, he has to give the PHP 2,000 to P. 2. ) If M has a personal defense against P, H can only collect PHP 8,000 from M. 3. ) If M has a real defense, H cannot collect anything from M.

Answer 80

There is want/absence of consideration if no consideration was intended to pass, such as when a fake ring was given for a promissory note. This is a PERSONAL DEFENSE, AVAILABLE ONLY AGAINST THOSE WHO ARE NOT HOLDERS IN DUE COURSE.

Answer 81

There is a failure of consideration if there is an inability to have the consideration performed or given. This is a PERSONAL DEFENSE, AVAILABLE ONLY AGAINST THOSE WHO ARE NOT HOLDERS IN DUE COURSE.

Answer 82

There is partial failure of consideration when the consideration is not completely or only partially performed. This is a PERSONAL DEFENSE, AVAILABLE ONLY AGAINST THOSE WHO ARE NOT HOLDERS IN DUE COURSE.

Answer 83

a. H can collect the whole amount from M since he is a HIDC. | b. H can only collect PHP 7,000 from M since M can set up the defense PARTIAL FAILURE OF CONSIDERATION.

Answer 84

An accommodation party is one who has signed the instrument as maker, drawer, acceptor or indorser WITHOUT RECEIVING VALUE therefor, AND FOR THE PURPOSE OF LENDING HIS NAME TO SOME OTHER PERSON. It has the following requisites: a. He signs the instrument as maker/drawer/acceptor/indorser b. He does not receive value by virtue of the instrument c. He signs the instrument for the purpose of lending his name to some other person

Answer 85

1.) By assignment - assignee acquires no greater right than that of the assignor 2. ) By operation of law - transfer without assignment or negotiation, either by: a. ) Death of holder which transfers it to his estate b. ) Bankruptcy of holder, where title vests in assignee or trustee 3. ) By negotiation - transfer of negotiable instrument from one person to another a. If payable to order, indorsement completed by delivery b. If payable to bearer, either 1. Mere delivery 2. Indorsement completed by delivery

Answer 86

This is not a valid indorsement. However, it is valid IF Y has paid X PHP 3,000. X can then indorse the balance of PHP 7,000 to A.

Answer 87

No, the transfer to two persons renders the indorsement invalid. This is to prevent multiplicity of suits.

Answer 88

Yes. Should they wish to negotiate the instrument further, both of them must indorse it together, unless one of them is authorized to indorse for both of them.

Answer 89

SBRQC 1. ) Special indorsement 2. ) Blank indorsement 3. ) Restrictive indorsement 4. ) Qualified indorsement 5. ) Conditional indorsement

Answer 90

Yes. The mere absence of words implying the power to negotiate does not make an indorsement restrictive. "Pay to the order of X" has the same effect as "Pay to X"

Answer 91

Every negotiation is deemed prima facie to have been effected BEFORE THE INSTRUMENT WAS OVERDUE

Answer 92

Every negotiation is deemed prima facie to have been effected at the PLACE WHERE THE INSTRUMENT IS DATED.

Answer 93

It constitutes the indorser a mere assignor of the title to the instrument. "Pay to the order of X WITHOUT RECOURSE/INDORSER NOT HOLDEN/AT THE INDORSEE'S RISK." This means that the qualified indorser IS NOT LIABLE IF THE HOLDER CANNOT COLLECT BECAUSE OF: A. INSOLVENCY OF PRIOR PARTIES B. INSTRUMENT IS INVALID C. NO VALUABLE CONSIDERATION WAS GIVEN He is still liable on his warranties under Sec 65: (a) That the instrument is genuine and in all respects what it purports to be; (b) That he has a good title to it; (c) That all prior parties had capacity to contract; (d) That he has no knowledge of any fact which would impair the validity of the instrument or render it valueless. But when the negotiation is by delivery only, the warranty extends in favor of no holder other than the immediate transferee.

Answer 94

It specifies the person to whom or to whose order the instrument is to be payable. "Pay to X PHP 1,000 sgd Y" The indorsement of the indorsee is necessary for the further negotiation of the instrument if it is an order instrument.

Answer 95

It specifies no indorsee. if the instrument is an order instrument, the instrument becomes a bearer instrument if indorsed blank and may be negotiated by mere delivery. "Pay to X PHP 1,000 sgd Y" at the back is "---blank--- sgd X"

Answer 96

It is an indorsement that either a.) Prohibits further negotiation - "Pay to X ONLY" b.) Constitutes the indorsee the agent of the indorser (AGENCY TYPE) "Pay to X for collection" "Pay to X for collection and deposit" "Pay to X for collection only" c.) Vests title in the indorsee in trust for or to the use (TRUST TYPE) of some other person "Pay to X in trust/ for the use of/ Y"

Answer 97

It is an indorsement subject to the happening of a condition. Party required to pay may disregard the condition and make payment to the indorsee. In that case, the indorsee is still bound by the condition of his indorsee

Answer 98

1. ) For order instruments a. ) Indorsements following a blank indorsement 2.) For bearer instruments a.) Holder may strike out any indorsement, whether special or blank. Effect of striking out: 1. ) Indorser whose indorsement is struck out is relieved from his liability on the instrument 2. ) All subsequent indorsers are likewise relieved from their liability.

Answer 99

AA can strike out his indorsement to BB and those subsequent to it. He cannot strike those subsequent indorsements individually without striking his indorsement to BB. He cannot strike out PP's indorsement since it is necessary to his title.

Answer 100

No, since B C D and E are INTERVENING PARTIES. As long as A is the holder, they have a temporary defense. If A indorses it to another person named F, F can go after the intervening parties.

Answer 101

A HIDC is a holder who has taken the instrument under the following conditions: 1. ) That it is complete and regular upon its face 2. ) That he became the holder of it BEFORE IT WAS OVERDUE, and without notice that it had been previously dishonored, if such was the fact 3. ) That he took it in good faith and for value 4. ) That at the time it was negotiated to him, he had NO NOTICE OF INFIRMITY in the instrument or defect in title of the person negotiating it. Absent one of the conditions above, holder does not become a HIDC.

Answer 102

It is incomplete and/or irregular when it has unfilled blanks or it is wanting in any material particular such as: 1. ) Name of payee 2. ) Name of drawee 3. ) Amount of the instrument 4. ) Without date of maturity 5. ) Has material alterations

Answer 103

Personal/equitable defense refer to acts or circumstances leading to the issuance of the instrument. They are available only against that person or subsequent holder who stands in privity with him. The following are examples of personal defenses: 1. ) Insertion of a wrong date 2. ) Want of authority to complete instrument 3. ) Want of delivery of complete instrument 4. ) Absence or failure of consideration 5. ) Acquisition of instrument/signature by fraud/duress/force/fear. 6. ) Negotiation in breach of faith 7. ) Fraud in inducement

Answer 104

Real defenses are those that attach to the instrument itself and can be used as reasons against payment to any holder, even a HIDC. Some examples include: 1. Want of delivery of an incomplete instrument 2. Forgery 3. Minority 4. Fraud in fact 5. Discharge at or after maturity 6. Illegality of contract 7. Duress amounting to forgery.

Answer 105

Only statement 1 is correct. Once a bearer instrument always a bearer instrument.

Answer 106

1. ) To sue on the instrument in his own name 2. ) To receive payment of the instrument, and if the payment is in due course, the instrument is discharged. 3. ) To hold the instrument free from any defect of title of prior parties and free from defenses available to the parties among themselves. 4. ) To enforce payment of the instrument for the full amount thereof against all parties liable thereon.

Answer 107

1. ) To sue on the instrument in his own name 2. ) To receive payment of the instrument, and if the payment is in due course, the instrument is discharged. 3. ) To hold the instrument but is subject to the same defenses as if were non-negotiable. 4. ) To have all the rights of a holder in due course if he derives his title through such HIDC and he himself is not a party to any fraud or illegality affecting the instrument.

Answer 108

Yes, because Apollo Q derived his title from Jehovah, a HIDC, and Apollo Q himself was not a party to the fraud employed by Buddha. Therefore, Apollo Q shall have all the rights of a HIDC even though he knew of the fraud.

Answer 109

Primarily liable: 1. ) Maker of a promissory note. 2. ) Acceptor of a bill of exchange 3. ) Certifier of a check Secondarily liable: 1. ) Indorser of a bill of exchange or promissory note 2. ) Drawer of a bill of exchange 3. ) Persons negotiating by mere delivery of bill of exchange or promissory note

Answer 110

1. ) He admits the existence of the payee and his then capacity to indorse 2. ) He engages to pay the instrument according to the tenor of his acceptance 3.) He admits a.) The existence of the drawer b.) The genuineness of the drawer's signature c.) The capacity and authority of the drawer to draw the instrument.

Answer 111

1.) He admits the existence of the payee and his then capacity to indorse. 2. ) He engages that on presentment, the bill will be accepted or paid or both and that if it is dishonored, he shall pay the bill to the holder/subsequent indorsee when the following conditions are present: a. ) The bill is presented to the drawee for acceptance or for payment b. ) The drawee dishonors the bill either by non-payment or non-acceptance c. ) The proceedings on dishonor have been duly taken, such as giving to him a notice of dishonor, and protest and notice of protest in case of a foreign bill of exchange.

Answer 112

1. ) He warrants that the instrument is genuine and in all material respects what it purports to be. 2. ) He warrants that he has good title to it. 3. ) He warrants that all prior parties had capacity to contract. 4. ) He warrants that he has no knowledge of any fact which would impair the validity of the instrument or render it valueless.

Answer 113

The warranties of a qualified indorser extend to all subsequent parties even if they are a HIDC or not.

Answer 114

1. ) He warrants that the instrument is genuine and in all material respects what it purports to be. 2. ) He warrants that he has good title to it. 3. ) He warrants that all prior parties had capacity to contract. 4. ) He warrants that he has no knowledge of any fact which would impair the validity of the instrument or render it valueless. 5. ) His warranty extends in favor of NO HOLDER OTHER THAN THE IMMEDIATE TRANSFEREE.

Answer 115

1. ) He warrants that the instrument is genuine and in all material respects what it purports to be. 2. ) He warrants that he has good title to it. 3. ) He warrants that all prior parties had capacity to contract. 4. ) He warrants that the instrument is valid and subsisting 5. ) He engages that on due presentment, the bill will be accepted or paid or both and that in case of dishonor, he shall pay the bill to the holder or to any subsequent indorsee who may be compelled to pay it to the holder when the following conditions are present: a. ) The bill is presented to the drawee for acceptance or for payment b. ) The drawee dishonors the bill either by non-payment or non-acceptance c. ) The proceedings on dishonor have been duly taken, such as giving to him a notice of dishonor, and protest and notice of protest in case of a foreign bill of exchange.

Answer 116

1. ) To subsequent holders 2. ) Persons who derive their titles from HIDC 3. ) Immediate transferees although they are not HIDC

Answer 117

H can only collect from P and B, since A is a qualified indorser.

Answer 118

An irregular or anomalous indorser is one who is not otherwise a party to an instrument who places his signature in blank before delivery. His liabilities include: a. ) Liability to the payee and subsequent parties b. ) Liability to parties subsequent to maker or drawer. Example: M makes a note payable to the order of P. X indorses the note in blank before its delivery to P. Thereafter, P indorses the note to A, A to B, and B to H. X is liable to P, A, B and H, but is not liable to M. The same is true if M makes a note payable to his order, or makes a note payable to bearer.

Answer 119

Presentment for payment is the production of a bill of exchange to the drawee or acceptor for payment, or of a promissory note to the party liable for payment of the same.

Answer 120

Yes it is necessary, except for: a. Drawer, when he has no right to expect or require that the drawee/acceptor will pay the instrument b. Indorser, where the instrument was made or accepted for his accommodation and he has no reason to expect that the instrument will be paid if presented.

Answer 121

Presentment must be made on the date fixed WITHOUT GRACE, unless delay in presentment for payment is excused when caused by circumstances beyond control. Presentment must be made AT A REASONABLE HOUR ON A BUSINESS DAY. Promissory notes must be presented for payment within A REASONABLE TIME AFTER ISSUANCE Bill of exchanges must be presented for payment WITHIN A REASONABLE TIME AFTER THE LAST NEGOTIATION.

Answer 122

If Saturday: a. On a succeeding business day b. Before 12:00 noon of that Saturday provided that it is not a holiday If Sunday, it must be presented on the next business day.

Answer 123

Notice of dishonor means bringing either orally or in writing, to the knowledge of the drawer or indorsers of an instrument the fact that a specified negotiable instrument, upon proper proceedings taken, has not been accepted or has not been paid, and that the party notified is expected to pay it. Its purpose is to enable the party to be charged to preserve and protect his rights against prior parties.

Answer 124

1. ) Non-acceptance of the instrument | 2. ) Non-payment of the instrument

Answer 125

Against party primarily liable - NOT NECESSARY, since he is the one who dishonored the instrument. Against parties secondarily liable - Necessary to make them liable, EXCEPT WHEN a.) There is a waiver of notice of dishonor b.) When notice is dispensed with c.) As regards the indorser when: - the drawee is a fictitious person or person not having the capacity to contract, and indorser was not aware of that fact - Where indorser is the person to whom the instrument is presented - Where the instrument was made or accepted for his accommodation d.) When notice of dishonor by non-acceptance was previously given e.) As regards a HIDC without notice

Answer 126

H need not give a notice of dishonor because all the parties are bound by it SINCE THE WAIVER OF NOTICE OF DISHONOR IS EMBODIED IN THE INSTRUMENT.

Answer 127

H must give a notice of dishonor to P, B, and C. Notice is not needed for A since he waived it. The same is only applicable to A.

Answer 128

It means that after reasonable diligence, notice of dishonor cannot be given or does not reach the parties sought to be charged, because of circumstances beyond control.

Answer 129

The drawer or indorsers to whom such notice of dishonor is not given is DISCHARGED.

Answer 130

1. H can give notice to P/A/B/C/D 2. Yes 3. Yes 4. Yes 5. Yes, any of A,B,C,D can give notice of dishonor, but only to those prior to him, and provided H has given them a notice. So, A can only give notice to P, B to A and P, C to P,A,B, and D to P,A,B,C. 6. Yes 7. C cannot give notice to D. D then will be discharged. 8. Notice to P inures to the benefit of A,B,C,D. Notice to A inures to the benefit of B,C,D.

Answer 131

Estafa is done by POSTDATING/ISSUING A CHECK IN PAYMENT OF AN OBLIGATION when the offender HAS NO FUNDS IN THE BANK, OR HIS FUNDS DEPOSITED ARE NOT SUFFICIENT TO COVER THE AMOUNT OF THE CHECK. The failure of the drawer to deposit the necessary amount WITHIN THREE (3) DAYS FROM RECEIPT OF NOTICE OF DISHONOR FROM THE BANK/PAYEE SHALL BE PRIMA FACIE EVIDENCE OF DECEIT.

Answer 132

1. ) Postdating/issuing a check in payment of an obligation CONTRACTED AT THE TIME THE CHECK WAS ISSUED. 2. ) Lack of funds to cover amount 3. ) Damage to the payee

Answer 133

1. ) Making or drawing and issuing any check to apply on account FOR VALUE, KNOWING AT THE TIME OF ISSUE THAT HE DOES NOT HAVE SUFFICIENT FUNDS WITH DRAWEE FOR PAYMENT, which is subsequently dishonored by drawee bank. 2. ) Having sufficient funds in or credit with the drawee bank shall fail to keep sufficient funds or maintain a credit to cover the full amount of the check if presented for payment within a period of NINETY (90) DAYS from the date appearing thereon for which reason it is dishonored by the bank.

Answer 134

The persons who actually signed the check.

Answer 135

- Imprisonment of 30 days to 1 year OR - Fine of not less than the amount on check but not more than double the amount on check, which shall not exceed PHP 200,000 OR - both, at court's discretion

Answer 136

Estafa involves DECEIT AND DAMAGE in POSTDATING/ISSUING CHECK IN PAYMENT OF OBLIGATION. Violation of BP 22 does not involve deceit and damage, what is punished is the act of issuance of checks without sufficient funds because it damages the banking system, trade, commerce, and public order.

Answer 137

B and C, the parties SUBSEQUENT to A, are also discharged from liability. P is not discharged.

Answer 138

1.) Instrument is NOT DISCHARGED 2.) Party paying is remitted to his former rights against prior parties 3.) He may strike out his own and subsequent indorsements. 4.) He may renegotiate the instrument except when a.) Where it is payable to the order of a 3rd person and has been paid by the drawer b.) Where it was made or accepted for accommodation and has been paid by the party accommodated.

Answer 139

Holder is NOT HIDC - the instrument is avoided except as against: a. ) The party who made/authorized the alteration b. ) subsequent indorsers HIDC - the instrument is not avoided.

Answer 140

1. ) Not HIDC - H can enforce payment against P,A,B,C for 40,000. H cannot enforce payment against M on BOTH THE ALTERED AND ORIGINAL TENOR of the instrument since it is avoided as against M. 2. ) HIDC - H can enforce payment against P,A,B,C for 40,000, and PHP 10,000 against M.

Answer 141

Spoliation is an alteration made by a stranger to the instrument.

Answer 142

Acceptance is the signification by the drawee of his assent to the order of the drawer. It has the following kinds: 1. ) Actual 2. ) Constructive 3. ) General 4. ) Qualified

Answer 143

Actual acceptance must BE IN WRITING and: - it must be signed by the drawee - must not express that payment will be in other forms other than money - There must be delivery/notification of acceptance.

Answer 144

There is constructive acceptance when drawee - destroys the bill - REFUSES WITHIN 24 HOURS after deliver to return the bill accepted

Answer 145

General acceptance is an acceptance to pay at a particular place.

Answer 146

1 - General acceptance | 2 - Qualified acceptance

Answer 147

Qualified acceptance varies the effect of the bill drawn - Conditional - Partial - Local - Qualified as to time

Answer 148

1.) The holder may refuse to take a qualified acceptance. If he does not obtain an unqualified acceptance, he may treat the instrument as dishonored by nonacceptance.

Answer 149

Presentment for acceptance is required in the following cases 1. ) Where the bill is PAYABLE AFTER SIGHT or when PRESENTMENT IS NECESSARY TO FIX MATURITY OF THE INSTRUMENT 2. ) Where the bill EXPRESSLY STIPULATES THAT IT SHALL BE PRESENTED FOR ACCEPTANCE 3. ) Where the bill is drawn PAYABLE ELSEWHERE THAT AT THE RESIDENCE OR PLACE OF BUSINESS OF THE DRAWEE

Answer 150

Protest is a formal written statement made by a notary public at the request of a holder of bill of exchange stating that he has demanded acceptance or payment of the bill and that it has been refused by the drawee or acceptor for dishonor, whereupon the NOTARY PUBLIC PROTESTS AGAINST ALL PARTIES TO SUCH INSTRUMENT AND DECLARES THAT THEY WILL BE HELD RESPONSIBLE FOR ALL LOSS/DAMAGE ARISING FROM THE DISHONOR OF THE BILL. It is required only for FOREIGN BILLS, or when A BILL IS ACCEPTED FOR HONOR OR IT IS DISHONORED BY THE ACCEPTOR FOR HONOR.

Answer 151

Acceptance for honor is an acceptance made by a person WHO IS NOT A PARTY TO THE BILL after the bill has been protested for non-acceptance. It is made by: 1.) It must be in writing 2.) It must indicate that it is an acceptance for honor 3.) It must be signed by the acceptor for honor. "Accepted for the honor of X sgd Y"

Answer 152

Striking two parallel lines on the top left corner of the cheque is called Crossing of Cheques. This symbol simply means that cheques can only be deposited directly into a bank account and can't be immediately encashed over the counter in any branch of a bank.

Answer 153

Act 2031 or the Negotiable Instruments Law, enacted on Feb 3, 1911, published on Mar 4, 1911 and took effect on June 2, 1911.

Answer 154

If such a place of payment is not specified, it does not render the instrument non-negotiable. 1. Address of the person to make payment if stated in the instrument 2. Payer's usual place of business or residence 3. Wherever payer may be found

Answer 155

1. If H is a HIDC, he can enforce payment against any prior parties because a valid delivery by all parties prior to him including M is conclusively presumed. 2. If H is not a HIDC, he cannot enforce payment against M only. For M, the non-fulfillment of the condition of the loan approval is a valid defense against H. H can go after P, A, B and C.

Answer 156

1. If H is a HIDC, he can enforce payment against any prior parties because a valid delivery by all parties prior to him including M is conclusively presumed. 2. If H is not a HIDC, he cannot enforce payment against M only. For M, the delivery was for safekeeping, which is a valid defense against H. H can go after P, A, B and C.

Answer 157

Facultative indorsement. "notice of dishonor waived"

Answer 158

True. Sec. 131 - Referee in case of need.

Answer 159

b. II and III Qualified indorser IS NOT LIABLE IF THE HOLDER CANNOT COLLECT BECAUSE OF: A. INSOLVENCY OF PRIOR PARTIES B. INSTRUMENT IS INVALID C. NO VALUABLE CONSIDERATION WAS GIVEN If P is a minor, he will still be liable to H If A's signature was forged, C can still be liable to H.

Answer 160

GR: A holder who derives his title through a holder in due course has all the rights of such former holder in respect of all parties prior to the latter EXCEPTION: If he himself is a party to any fraud or illegality affecting the instrument Example: M issued a promissory note to P and authorized the latter to fill up 1000, but P inserted 5000. P indorsed to A, A to B, B to C. A B C had no knowledge that the instrument was filled up in excess of the authority given. C issued it to X who had knowledge. Here, X can enforce payment on M since X derived the instrument from a HIDC, even though he knew of the defect. He derived title from a HIDC and has all the rights of the same.

Answer 161

False, partial negotiation is not valid, except when it has been paid in part and what is negotiated is the residue.

Answer 162

1. To prove violation of BP 22 for conviction - Proof beyond reasonable doubt 2. To prove civil damages - preponderance of evidence 3. To sue or file a case of BP 22 - probable cause or prima facie evidence

Answer 163

A partnership contract may be constituted in any form, except as follows: 1.) Where IMMOVABLE PROPERTIES are contributed: a.) The partnership contract must be IN A PUBLIC INSTRUMENT b.) An inventory of the said property must be made, SIGNED BY THE PARTIES AND ATTACHED TO THE PUBLIC INSTRUMENT. If a and b above are not complied with, the partnership is VOID AND HAS NO JURIDICAL PERSONALITY. 2. ) Where the capital of partnership is P3,000.00 or more. a. ) The partnership must be in a public instrument b. ) Registered with SEC If a and b are not complied with, it is still VALID and has JURIDICAL PERSONALITY and the liability to 3rd persons are not affected. 3.) If LIMITED PARTNERSHIP a.) Certificate signed under oath by parties concerned and recorded with SEC is required. Noncompliance will render it a general partnership?

Answer 164

Yes. Under BP 68, corporations cannot enter into partnerships, but UNDER THE REVISED CORPORATION CODE, CORPORATIONS CAN NOW ENTER INTO PARTNERSHIPS IN THE FORM OF JOINT VENTURES.

Answer 165

It is a partnership in which all the partners contribute all the property which actually belonged to them to the common fund, with the intention of dividing the same among themselves, as well as the profits which they acquire therewith. EVERYTHING IS INCLUDED except: 1.) Property acquired by each partner AFTER THE PARTNERSHIP FORMATION UNLESS STIPULATED. 2.) Property received by INHERITANCE, LEGACY, OR DONATION after partnership formation.

Answer 166

It comprises all that the partners may acquire by their work or industry during the existence of the partnership. It comprises: a. ) Profits obtained by partners by their work or industry during the existence of the partnership, EXCLUDING those profits w/o exertion of efforts such as those acquired by chance/lucrative title. b. ) USUFRUCT of property belonging to each partner at the time of the constitution of the partnership. Ownership of the property shall continue to pertain exclusively to each partner. c. ) The profits and fruits of A and B. d. ) Profits and fruits IF STIPULATED from property acquired AFTER partnership formation.

Answer 167

One who is actually NOT A PARTNER but who may be liable as such to 3rd persons. (Partner by estoppel)

Answer 168

One who is active and known to the public as a partner.

Answer 169

One whose connection to the partnership is kept from the public.

Answer 170

One who has no voice in the management of the business though he shares in the profits and losses. He does not take active part in the business but may be known as partner by 3rd persons.

Answer 171

One who does not participate in the management of the partnership and is not known to the public as a partner.

Answer 172

The designation is VOID because it cannot be entrusted to one of the partners.

Answer 173

1.) Scope of authority - managing partner may execute all acts of administration despite the opposition of his partners UNLESS HE ACTS IN BAD FAITH. 2. ) Revocation of appointment of managing partner a. ) W/ lawful cause - appointment can be revoked by the vote of the partners owning the controlling interest. b.) W/o lawful cause - appointment can be revoked ONLY WITH THE CONSENT OF ALL PARTNERS INCLUDING THE MANAGING PARTNER because such revocation would be a novation to the terms thereof.

Answer 174

1. ) Scope of authority - he may execute all acts of administration but in case of OPPOSITION BY OTHER PARTNERS, the PARTNERS OWNING CONTROLLING INTEREST may resort to voting for his removal as manager. 2. ) Revocation of his appointment as managing partner - he may be removed with or without just cause by the vote of the partners owning controlling interest.

Answer 175

A.) When there is a specification of their duties - Each managing partner shall perform only the duties specified in his appointment. B.) When there is no specification of their duties - a.) Scope of authority - each one may separately execute all acts of administration. b.) Rules in case of opposition of other managers - 1.) Decision of majority of managing partners shall prevail 2.) In case of tie among managers, the decision of the managing partners owning the controlling interest shall prevail C.) When there is a stipulation that none of the managing partners shall act without the consent of the others - CONCURRENCE OF ALL of them shall be necessary for the validity of the acts. In case of absence or disability of one of the managing partners, the disability/absence cannot be alleged, thus the other managing partners are NOT AUTHORIZED UNLESS THERE IS IMMINENT DANGER/ IRREPARABLE INJURY TO THE PARTNERSHIP.

Answer 176

No, unless it has been expressly permitted by the partnership. If he has engaged in business without being permitted, the capitalist partners may EITHER: a. ) exclude him from partnership with right to damages b. ) avail themselves of the benefits obtained from the business he engaged in with right to damages.

Answer 177

1. ) Businesses different from the partnership business 2. ) Businesses the same with the partnership business, provided there is a STIPULATION allowing him to engage in that business.

Answer 178

1. ) He shall bring to the common fund any profits accruing to him from his transaction AND 2. ) He shall personally BEAR ALL THE LOSSES.

Answer 179

Pro-rata among general partners

Answer 180

As to obligations EXISTING AT THE TIME OF HIS ADMISSION - new partner is liable but only to the extent of his contribution EXCEPT if there is a stipulation to the contrary. As to obligations after his admission - liable with other partners pro rata with their separate property.

Answer 181

1. ) If the authorized partner issues a receipt for the partnership, payment shall be applied to partnership credit. 2. ) If the authorized partner issues his own receipt, payment shall be applied to the two credits PROPORTIONATELY. This does NOT APPLY when: a.) Debt owed to a partner is NOT AUTHORIZED to receive payment. b.) Debt to the partnership is NOT YET DUE c.) The debt owed to the partner authorized is MORE ONEROUS and the debtor exercises his right to apply.

Answer 182

The partnership shall be SOLIDARILY LIABLE with all the partners when: 1. ) Loss/injury is caused to 3rd persons by the wrongful act or omission of any partner acting IN THE ORDINARY COURSE OF BUSINESS of the partnership WITH AUTHORITY of his co-partners. 2. ) Where a partner acting within the scope of his authority receives money/property of a 3rd person and misapplies it. 3. ) Where the partnership in the ORDINARY COURSE OF BUSINESS receives money/property and is misapplied by any partner while it is in the custody of the partnership.

Answer 183

Partnership is bound when: 1.) Partner is authorized to act for the partnership, even if not in the ordinary course of business. 2.) If partner is NOT authorized to act for the partnership, the partner is bound if: a.) The act is apparently carrying on in the usual way of partnership business, AND b.) The 3rd person has no knowledge of partner's lack of authority. When partnership is not bound: 1. ) Even though the act is not in the usual way of business and the partner is not authorized, but the 3rd person has knowledge of such lack of authority. 2. ) When the partner is not authorized to act and the act is not in the usual way of partnership business.

Answer 184

Effect: The conveyance passes title to the transferee. When the partnership may recover: a. ) Act is not in the usual way of partnership business (not engaged in real estate) b. ) 3rd person has knowledge of the lack of authority. When partnership may NOT recover: When the grantee has conveyed to a HOLDER FOR VALUE without knowledge that the partner in making conveyance has exceeded his authority.

Answer 185

Effect: The conveyance passes title to the transferee. When the partnership may recover: a. ) Act is not in the usual way of partnership business (not engaged in real estate) b. ) 3rd person has knowledge of the lack of authority. When partnership may NOT recover: When the grantee has conveyed to a HOLDER FOR VALUE without knowledge that the partner in making conveyance has exceeded his authority.

Answer 186

Effect: Transferee does not become the owner of the real property. However, EQUITABLE INTEREST passes to him if: 1. ) The act is in the usual way of partnership business 2. ) The 3rd person has no knowledge of partner's lack of authority.

Answer 187

Effect: Transferee does not become the owner of the real property. However, EQUITABLE INTEREST passes to him if: 1. ) The act is in the usual way of partnership business 2. ) The 3rd person has no knowledge of partner's lack of authority.

Answer 188

Conveyance passes all rights in the property.

Answer 189

1. ) By the termination of the definite term or particular undertaking specified in the agreement 2. ) By express will of any partner or all the partners 3. ) By expulsion of any partner from the business 4. ) When any event makes it unlawful for the business to carry on 5. ) Loss BEFORE OR AFTER the delivery of property where the PARTNER CONTRIBUTED ONLY ITS USE OR ENJOYMENT 6. ) Loss BEFORE THE DELIVERY OF SPECIFIC THING which a partner promised to contribute 7. ) Death of a partner 8. ) Insolvency of a partner/partnership 9. ) Civil interdiction of any partner 10. ) By decree of court in the following cases: a. ) application by a partner or his legal representative whenever a partner becomes - INSANE -INCAPABLE OF PERFORMING HIS PART IN PARTNERSHIP CONTRACT -GUILTY OF CONDUCT AFFECTING PARTNERSHIP BUSINESS -PARTNER BREACHES PARTNERSHIP AGREEMENT -PARTNERSHIP CAN ONLY BE CARRIED ON AT A LOSS.

Answer 190

When the cause of the dissolution is: 1. ) NOT by the act/insolvency/death of a partner 2. ) Act of the partner and the partner who entered into the new transaction had knowledge of the dissolution 3. ) Insolvency/death of a partner and the partner who entered into the new transaction had notice or knowledge of such insolvency/death.

Answer 191

1. ) When the act is necessary for winding up of partnership affairs. 2. ) When the act is necessary to complete transactions begun before dissolution. 3. ) In case of a new transaction or business in the following cases: a. ) If the other party to the transaction EXTENDED CREDIT to the partnership BEFORE DISSOLUTION and he had no knowledge or notice of dissolution. MERE PUBLICATION IS NOT NOTICE TO HIM. He can only be bound by the dissolution if: 1. ) He has read the publication 2. ) Had knowledge of the dissolution b.) If the other party to the transaction had NOT EXTENDED CREDIT BEFORE DISSOLUTION, but had nevertheless known of the partnership before dissolution. (This part is confusing. read page 684 again) 4. ) Where although the partner has no authority to wind up affairs, the other party to the transaction is one who: a. ) Had extended credit to the partnership before dissolution and he had no knowledge and he had no notice or knowledge of the partner's lack of authority. b. ) One who had not so extended credit before dissolution and having no notice or knowledge of the partner's lack of authority.

Answer 192

1. Those owing to creditors including limited partners, except those to limited partners on account of their contributions and general partners. 2. Those owing to limited partners by way of their share in the profits and other compensation by way of income 3. Those owing to limited partners in respect to the capital of their contributions 4. Those owing to general partners other than for capital or for profits 5. Those owing to general partners in respect of profits 6. Those owing to general partners in respect of capital

Answer 193

D. Insanity of a partner By decree of court in the following cases: a.) application by a partner or his legal representative whenever a partner becomes INSANE Needs court decree

Answer 194

From the moment SEC issues the Certificate of Registration

Answer 195

1. Partner has been declared insane in judicial proceeding 2. Partner becomes in any way incapable of performing his part in the partnership contract 3. Partner is guilty of such conduct as tend to affect prejudicially the carrying on of business 4. Partnership can only be carried at a loss 5. Other circumstances that render a dissolution equitable

Answer 196

1. After the termination of the specified term or particular undertaking 2. At any time if the partnership was a partnership at will when the interest was assigned or when the charging order was issued

Answer 197

Rescissible

Answer 198

The day prior to the date on which the vote was taken excluding any appreciation or depreciation in anticipation of such corporate action.

Answer 199

Culpa aquiliana

Answer 200

Accion reinvidicatoria if the thing is still with the creditor.

Answer 201

Always the debtor.

Answer 202

The intention of the parties.

Answer 203

1. Oral contract - 6 YEARS 2. Written contract - 10 YEARS 3. Quasi-delict - 4 YEARS 4. Tort - 4 YEARS 5. Quasi-contract - 6 YEARS 6. Law/judgment of courts - 10 YEARS 7. Oral defamation/forcible entry/unlawful detainer - 1 YEAR 8. Recovery of movable property - 8 YEARS 9. Real action for recovery of immovable - 30 YEARS 10. Other actions not provided for by Civil Code or Special Laws - 5 YEARS