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Flashcards in RFBT - MEMORIZATION OF CONCEPTS Deck (232)
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1
Q

What are the steps/requirements for tender of payment and consignation to extinguish obligation?

A
  1. ) There must be a valid tender of payment.
  2. ) The creditor refuses without just cause to receive the payment.
  3. ) The persons interested in the fulfillment of the obligation must be notified by the debtor of his intention to deposit the sum or thing due with the judicial authorities. (THIS NOTICE IS MANDATORY. WITHOUT IT CONSIGNATION IS VOID)
  4. ) The sum or thing is deposited to judicial authorities.
  5. ) The persons interested in the fulfillment of the obligation must be notified AGAIN by the debtor stating that consignation has been made. (THIS NOTICE IS MANDATORY. WITHOUT IT CONSIGNATION IS VOID)
2
Q

May the debtor withdraw the thing that was consigned? What are the steps?

A

Yes.
If it was BEFORE acceptance of the creditor of consignation or before the declaration of the judge that consignation has properly been made (CONSENT OF CREDITOR NOT NEEDED):

  1. ) Obligation shall remain in force..
  2. ) Co debtors, sureties, guarantors are not released.

If AFTER acceptance of the creditor of consignation or the after declaration of the judge that consignation has properly been made (CONSENT OF CREDITOR NEEDED)

  1. ) The obligation shall be revived
  2. ) Creditor will lose every preference which he may have had over the thing
  3. ) Guarantors, co-debtors and sureties are released unless they consented.
3
Q

What are the rules in case of loss of things or impossibility of service in alternate obligations before a choice is communicated and the right of choice belongs to the debtor?

A
  1. If only one or some are lost through a fortuitous event or through debtor’s fault, the debtor may deliver any of the remainder or that which remains if only one subsists.
  2. If all are lost through fortuitous event, the obligation is extinguished.
  3. If all are lost through the debtor’s fault, he shall pay the value of the last thing that was lost plus damages
  4. If all except one are lost through the debtor’s fault and the last remaining item is subsequently lost through fortuitous events, the obligation is extinguished.
  5. If all except one are lost through fortuitous event and the remaining item is subsequently lost through the debtor’s fault, the debtor shall pay damages.
4
Q

What are the rules in case of loss of things or impossibility of service in alternate obligations before a choice is communicated and the right of choice belongs to the creditor?

A
  1. If only one or some are lost through a fortuitous event, the debtor shall deliver that which the creditor should choose among the remainder, or that which remains if only one subsists.
  2. If all are lost through fortuitous event, the obligations shall be extinguished.
  3. If only one or some are lost through the debtor’s fault, the creditor may claim any of those subsisting, or the price of any of those which were lost through the debtor’s fault plus damages.
  4. If all are lost through the debtor’s fault, the creditor may claim the price of any of them plus damages.
5
Q

Discuss the rules on periods provided in Article 13 of the Civil Code.

A
  1. ONE YEAR IS 365 DAYS. If there are two or more years, it shall be computed as 365 * number of years
  2. ONE MONTH MEANS 30 DAYS, unless the name of the month is particularized. (March-31 days, April-30days)
  3. IF THERE IS A LEAP YEAR, DISTINGUISH THE FEB 29TH DAY.
  4. ONE DAY MEANS 24 HOURS.
  5. NIGHT MEANS SUNSET TO SUNRISE

A. If the act to be performed within the period arises from a CONTRACTUAL RELATIONSHIP, the act will become due and demandable notwithstanding the fact that the last day falls on a Sunday or holiday.

B. If the act to be performed within the period is prescribed or allowed by:
1. The Rules of Court
2. By an order of the court
3. Any other applicable statute
then the SUNDAY OR HOLIDAY WILL NOT BE CONSIDERED AS THE LAST DAY. THE LAST DAY WILL AUTOMATICALLY BE THE NEXT WORKING DAY. HERE THE PERIOD IS EXTENDED.

6
Q

During the pendency of a SUSPENSIVE CONDITION, the debtor paid by mistake a sum of money. What is the remedy of the debtor before the fulfillment of the condition?

a. Debtor can recover the money and interest even if the creditor acted in good faith
b. Debtor can recover the money but with interest only if the creditor acted in bad faith.
c. Debtor can recover the money without interest even if the creditor acted in bad faith
d. The debtor can only recover the money without interest if the creditor acted in good faith

A

b. Debtor can recover the money but with interest only if the creditor acted in bad faith.

COMPARE WITH NEXT NUMBER

7
Q

During the pendency of a SUSPENSIVE PERIOD, the debtor paid by mistake a sum of money. What is the remedy of the debtor before the fulfillment of the condition?

a. Debtor can recover the money and interest whether the creditor was in bad or good faith.
b. Debtor can recover the money but with interest only if the creditor acted in bad faith.
c. Debtor can recover the money without interest even if the creditor acted in bad faith
d. The debtor can only recover the money without interest if the creditor acted in good faith

A

a. Debtor can recover the money and interest whether the creditor was in bad or good faith.

Payment by mistake subject to:
Suspensive condition - money plus INTEREST ONLY IF CREDITOR ACTED IN BAD FAITH.
Suspensive period - money plus INTEREST WHETHER OR NOT CREDITOR WAS IN BAD OR GOOD FAITH

8
Q

What are the kinds of negligence? Explain each.

A

Contractual negligence (Culpa Contractual) - Negligence in the performance of a contract. MASTER-SERVANT RULE APPLIES.

Civil Negligence (Tort/Quasi-delict/Culpa extra-contractual/Culpa Aquiliana) Acts or omissions that cause damage to another, there being no contractual relation between parties.

Criminal Negligence (Culpa Criminal) Negligence that results in commission of a crime.

Passenger may sue owner for contractual negligence plus criminal negligence on the driver.

Pedestrian may sue driver for civil and criminal negligence. He may also sue the owner for civil negligence.

9
Q

Explain Joint Indivisible Obligations.

A

It is an obligation where the debtors or creditors are jointly bound but the prestation is indivisible.

  1. ) Creditors must act collectively in making the demand, unless one is specifically authorized to act for the others. A demand made by one or some of them will have no effect.
  2. ) Demand must be made against all debtors since compliance is possible only when they act together.
  3. ) The right of creditors may be prejudiced only by their collective acts.
  4. ) If one of the debtors does not comply with his undertaking, the obligation is converted into a monetary obligation to pay damages. The debtors who were ready to comply shall not contribute to the indemnity beyond his/her share.
10
Q

A,B, and C are jointly indebted to deliver a specific car to X,Y,Z worth 900000. Explain what happens.

A

XYZ must make a demand against ABC.

If A does not comply, B and C each owes 300000, but A must pay 300000 plus damages.

If A is insolvent, B and C will not absorb A’s share.

If X renounces his share, Y and Z are entitled to receive 200000 each from the debtors.

11
Q

What is the formula for the amount to be paid in cases of extraordinary inflation or deflation?

A

A = (B/C) x B

Wherein:
A = new amount to be paid
B = Old amount
C = value of the amount at date of maturity.

FOR THIS TO BE APPLICABLE, THERE MUST BE AN OFFICIAL PRONOUNCEMENT MADE BY COMPETENT AUTHORITIES.

12
Q

D owes C 20000 due on March 15, C owes D 8000 on March 10. On March 12, C assigned his right to T with D’s consent. What happens next? What must D do so that he can claim compensation?

A

On March 15, T can collect 20000 from D, but D can collect 8000 from C.

D must RESERVE HIS RIGHT TO THE COMPENSATION WHEN HE CONSENTED TO THE ASSIGNMENT. This would mean that on March 15, T can collect only 12000 from D.

13
Q

D owes C 20000 due on March 15. C owes D 8000 on March 1, 3000 on March 8, and 5000 on March 14. On March 12 C assigned his credit right to T with notice to D but D did not give his consent to the assignment. What happens next?

A

T may collect 9000 only from D because D can set up compensation with respect to the debts due before the assignment.

IF THE DEBTOR WAS NOTIFIED OF THE ASSIGNMENT BUT HE DID NOT CONSENT, DEBTOR MAY SET UP COMPENSATION OF DEBTS MATURING BEFORE THE ASSIGNMENT, BUT NOT OF SUBSEQUENT ONES.

14
Q

D owes C 20000 on March 25. C owes D 8000 on March 1, 3000 on March 8, 5000 on March 14, and 2000 on March 31. On March 12, C assigned his right to T without knowledge of D. D learned of the assignment on March 16. How much can T collect from D on March 25?

A

T can collect 4000, 20000 less the debts due before D learned of the assignment.

15
Q

D owes C 50,000. To defraud C, D sells his only property to B.

  1. May C ask the court to rescind the sale supposing B knew about D’s intent to defraud?
  2. May C ask the court to rescind the sale supposing B did not know about D’s intent to defraud and was a buyer in good faith?
A
  1. Yes. Accion Pauliana.

2. No, since he was a buyer in good faith.

16
Q

T or F
A period that depends upon the will of the debtor shall annul the obligation while a condition that depends upon the will of the debtor authorizes the court to fix its duration.

A

False. A condition that depends upon the will of the debtor shall annul the obligation (VOID) while a period that depends upon the will of the debtor authorizes the court to fix its duration.

17
Q

A, 25yo, B, 26yo, and C, 17yo are solidary debtors of X in the amount of 9000. How much may X collect from A?

A

6000

18
Q

T or F

Every person criminally liable is also civilly liable.

A

True.

19
Q

Explain the rules on the place of payment of the obligation.

A

Article 1251. Payment shall be made in the place designated in the obligation.
There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made wherever the thing might be at the moment the obligation was constituted.
If silent and the undertaking is to deliver a generic thing, the place of payment shall be the DOMICILE OF THE DEBTOR.
In any other case the place of payment shall be the domicile of the debtor.
If the debtor changes his domicile in bad faith or after he has incurred in delay, the additional expenses shall be borne by him.

20
Q

Differentiate domicile and residence.

A

Domicile is the place of a person’s habitual residence; the place where he has his true fixed permanent home and to which place he, whenever he is absent, has the intention of returning.

Residence is only an element of domicile, and simply requires the bodily presence of the inhabitant.

21
Q

What is the nature of the responsibility or liability of 2 or more officious managers in a negotiorum gestio?

A

Generally, they shall be solidary liable UNLESS the management was assumed to save the thing or business from imminent danger, which makes their liability joint only.

22
Q

What is the nature of responsibility or liability of 2 or more payees when there has been payment of what is not yet due?

a. Solidary
b. Joint
c. Pro-rata
d. subsidiary

A

A. solidary

23
Q

When will a person who accepts an undue payment of money be liable for interest?

a. When he receives the payment in bad faith
b. When he receives the payment in good faith
c. Either A or B
d. Neither A nor B

A

a. When he receives the payment in bad faith

ART 2159

Iba ito sa suspensive condition and period.

24
Q

What are the rules in application of payment in case the debtor does not exercise his right to application of payment?

A
  1. If the debt produces interest, payment shall be made on the interest first before the principal
  2. When the payment cannot be applied in accordance with preceding rules, or if the application cannot be inferred, the debt which is most onerous or burdensome to the debtor among those due shall be deemed to have been satisfied
  3. If the debts are of the same nature and burden, the payment shall be applied to all of them proportionately.
25
Q

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.

A

True.

26
Q

T or F

Generally, the EXTENSION of the term of a contract results to an IMPLIED NOVATION.

A

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

27
Q

What are the basic principles of contract?

A

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.
28
Q

What is stipulation pour atrui? What are the requisites of a valid stipulation pur autrui?

A

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.

29
Q

What are specific instances of rescissible contracts?

A
  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.
30
Q

What is Statute of Frauds?

A

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.

31
Q

What are the contracts that MUST BE IN WRITING, otherwise they are unenforceable as mentioned in the Statute of Frauds?

A
  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.
32
Q

What are specific instances wherein contracts need to be in writing for CONVENIENCE of parties?

A
  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.

33
Q

What are the contracts that must follow a certain form for it to be valid?

A

FORMALITIES REQUIRED FOR VALIDITY:
1. Donations of real property which require a PUBLIC INSTRUMENT.

  1. Donations of personal property which exceeds 5000 which REQUIRES THAT THE DONATION BE WRITTEN
  2. Stipulation to pay interest on loans or for the use of money WHICH MUST BE IN WRITING
  3. 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
  4. Contribution of real property in a partnership, which requires that there be an inventory attached to a public instrument
  5. Negotiable instruments must be made strictly in the form provided for in the NIL in order to be considered negotiable
  6. Contract of marriage must have all solemnities required by the Family Code
  7. Principal and interest of secured contract of loan must be specified in writing
  8. Agreement or stipulation to pay interest in contract of loan must be in writing in order for such agreement to be valid.
  9. Contract of Chattel Mortgage requires it to be registered with Chattel Mortgage registry to be valid
  10. 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.
  11. 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
  12. Sale of community or conjugal property by one of the spouse, there must be authority by the other spouse to the selling spouse.
34
Q

S sold his car to B for 50k. What is the cause of S and B in entering into the contract of sale?

A

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.

35
Q

What are the rules on the interpretation of contracts?

A
  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.)
36
Q

What kinds of contract may and may not be assailed by 3rd persons?

A

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
37
Q

Distinguish the validity of defective contracts.

A
  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
38
Q

Distinguish the legal remedies of injured parties in defective contracts.

A
  1. Rescissible - Action for rescission
  2. Voidable - action for annulment
  3. Unenforceable - None
  4. Void - Action for declaration of nullity
39
Q

Differentiate the Cognition and Manifestation theory.

A

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.

40
Q

What are the kinds of capacity to enter into a contract?

A
  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
41
Q

What is the rule when quantity of the mass is more than the quantity sold?

A

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.

42
Q

What is the rule when the quantity of the mass is less than the quantity sold?

A

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.

43
Q

What is Recto Law?

A

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.

44
Q

What are the remedies of the vendor in installment sales of personal property and remedies of the lessor of personal properties with option to buy under Recto Law?

A
  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.

45
Q

S sold his only car to B for 100,000 payable in 10 equal monthly installments of 10,000. As security, B executed a chattel mortgage on the car.

a. After paying the first 3 installments, B defaulted on the 4th. What is S’s remedy?
b. In connection with (A) above, may S cancel the sale or foreclose the cattle mortgage on the car?
c. Suppose B defaulted on the 4th and 5th installments, what are S’s remedies?

A

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.

46
Q

In Recto Law, when may deficiency be recovered?

A
  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.
47
Q

S sold his only ring to B for 50,000, with DP of 30,000 and the balance payable at month’s end. As security, B executed a chattel mortgage on the ring. B defaulted on the payment of the balance. S foreclose the chattel mortgage on the ring, but only 15,000 was realized in the foreclosure sale. May S proceed against B as to the deficiency of 5,000?

A

Yes, since this is a sale on a straight term

48
Q

S sold his only car to B for 100,000 payable in 10 equal monthly payments of 10,000. As security, B executed a chattel mortgage on the car, and another on his piano. B defaulted on the 3rd, 4th and 5th installments. As a consequence, S foreclosed the chattel mortgage on the piano which was sold for 75,000.

a. May S recover the deficiency of 5000?
b. May S foreclose the chattel mortgage on the car?

A

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.

49
Q

S sold his only car to B for 100,000 payable in 10 equal monthly payments of 10,000. As security, B executed a chattel mortgage on the car. B defaulted on the 3rd, 4th and 5th installments. As a consequence, S brought court action against B to recover the balance. The court rendered judgment in favor of S and against B who was ordered to pay. Since B had no other property except the car, S moved for the attachment of the car and its sale to satisfy the judgment. At the execution sale, the car was sold only for a net amount of 75,000. May S recover the 5000 deficiency?

A

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.

50
Q

What are the rules on sale of real estate AT A CERTAIN PRICE PER UNIT, when the actual area mentioned is more or less than the area specified in the contract?

A

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.

51
Q

What are the rules on sale of real estate for a LUMP SUM and not at a certain rate for a unit of measurement/ but instead describing the boundaries?

A
  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
52
Q

S sold a lot to B comprising of 1500sqm at the rate of 1000PHP/SQM.

a. Suppose the actual area was only 1400sqm, what are the rights of B?
b. Suppose the actual area was only 1300sqm, what are the rights of B?
c. Suppose the actual area was 1600sqm, what are the rights of B?
d. Suppose the actual area was 1500sqm, but 200sqm of the 1500sqm was of inferior quality, which should only cost 950php/sqm, what are B’s rights?
e. Suppose the actual area was 1500sqm, but 200sqm of the 1500sqm was of inferior quality, which should only cost 800php/sqm, what are B’s rights?

A

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.

53
Q

S sold to B a lot for a LUMP SUM of 1.5M. Aside from mentioning the boundaries of the lot, the deed of sale states that the area is 1,500sqm.

a. Suppose the lot area was actually only 1,400 sqm, what is the remedy of B?
b. Suppose the area was actually 1,600sqm, what is the remedy of B?
c. Suppose the area was actually 1,600sqm, but S only wants to deliver the 1,500 agreed upon lot, what is the right of B?

A

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.

54
Q

What are the rules in case of loss of the thing with hidden defects?

A
  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.
55
Q

What are the rules when the quantity delivered is less than what was agreed upon?

A

Buyer may:
1.) Reject the goods, since buyer cannot be compelled to accept partial payment.

2.) Accept the goods at contract rate.

56
Q

What is Maceda Law?

A

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.

57
Q

What are the rights of the buyer under Maceda Law?

A

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.

58
Q

What should be the form of pledges?

A

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.

59
Q

How are pledges extinguished?

A

1.) Indirect Causes - When the debtor pays the creditor

  1. ) 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.

60
Q

Differentiate conventional and legal pledge.

A

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.

61
Q

What form is needed for a real mortgage?

A

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.

62
Q

May the owner of the thing execute a second mortgage on it?

A

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

63
Q

What are the kinds of foreclosure? (Chattel and Real)

A
  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.

64
Q

What are the kinds of redemption?

A
  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

  1. ) 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.

65
Q

What is the form required for chattel mortgages?

A
  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.
66
Q

When is appropriation allowed in pledge and mortgage?

A

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.

67
Q

B bought a car from C for 360,000, with 30,000 as a downpayment and the balance in installments over 3 years, the car secured by a chattel mortgage. B was unable to pay the 4th and succeeding installments and as a result, C foreclosed the mortgage. The total payments made by B was only 100,000. May C recover the deficiency?

A

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

68
Q

D obtained a loan of 5000 from C. The obligation is secured by a pledge of D’s ring which he delivered to C, with both the loan and pledge in a private instrument. While the loan was outstanding, D sold the ring to X in a public instrument, with X unaware of the pledge. Before X could obtain actual delivery of the ring, he learned that D pledged the ring to C and that C was selling the ring in a public sale because of D’s default.

a. X is bound by the pledge of D to C
b. X is not bound by the pledge of D to C
c. C can sell the ring to satisfy his claim
d. X did not acquire ownership of the ring from D

A

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.

69
Q

What are the elements of a contract of agency?

A

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.

70
Q

What happens if the principal in a contract of agency is incapacitated?

A

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.

71
Q

What happens if the agent in a contract of agency is incapacitated?

A

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.
72
Q

T or F

Legal capacity is required for the validity of an agent’s acts.

A

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.

73
Q

What is the concept of power of attorney?

A

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.

74
Q

What are the kinds of announcement of appointment of an agent and revocation of appointment of agent?

A
  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.

  1. 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.

75
Q

What are the basic principles of agency?

A
  1. The agent must act within the scope of his authority

2. The agent must act in behalf of his principal

76
Q

What are the effects if the agent acts within the scope of his authority but in his own behalf?

A
  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.

77
Q

What are the effects if the agent acts in excess of his authority and in the principal’s behalf?

A

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.

78
Q

What are the effects when the agent acts in excess of his authority and does so in his own behalf?

A

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.

79
Q

Explain the rules on the liability if two or more agents have been appointed simultaneously.

A

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.

80
Q

Explain the agent’s liability if he contracts in the name of the principal.

A

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.

81
Q

The principal tasked the agent to sell his house. Principal found a buyer and sold it to X, while the agent sold the house to Y. The agent and principal did not know of each others sale. Who among X or Y has a better right to the house?

A
Follow the rules on immovables:
Order of priority:
1. First registrant in good faith
2. First possessor in good faith
3. OLDEST TITLE
82
Q

The principal tasked the agent to sell his car. Principal found a buyer and sold it to X, while the agent sold the car to Y. The agent and principal did not know of each others sale. Who among X or Y has a better right to the car?

A

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

83
Q

What are the effects if the commission agent sells on credit without the principal’s consent?

A

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.

84
Q

What is the effect of an incomplete but delivered instrument? What happens if it is filled up beyond the authority given?

A

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.

85
Q

What is the effect of an incomplete and undelivered instrument? To whom is it enforceable?

A

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.

86
Q

What is the effect of a complete and undelivered instrument?

A

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.

87
Q

If the instrument provides for an interest but it does not specify a date when interest is to run, when should the interest run?

A

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

88
Q

If the instrument is not dated, it will be dated as of?

A

The date of time it was issued.

89
Q

What happens when an instrument is so ambiguous that there is doubt whether it is a bill or a note?

A

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

90
Q

What happens when a signature is placed upon the instrument and it is not clear as to what capacity the person intended to sign?

A

The person signing shall be deemed an indorser.

91
Q

What does Procuration mean?

A

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.

92
Q

What are the requisites for an agent not to be liable when he signs on behalf of his principal?

A
  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
93
Q

M makes a promissory note payable to the order of P. P issues the same to A, a minor. A then indorses to B, B to C, and C to H.

From whom may H collect?

A

H can collect from all the parties EXCEPT A.

NO HOLDER CAN COLLECT FROM A MINOR BECAUSE MINORITY IS A REAL DEFENSE.

94
Q

M makes a promissory note payable to the order of P, a minor. P issues the same to A. A then indorses to B, B to C, and C to H.

From whom may H collect?

A

H can collect from all the parties EXCEPT P.

NO HOLDER CAN COLLECT FROM A MINOR BECAUSE MINORITY IS A REAL DEFENSE.

95
Q

M, a minor, makes a promissory note payable to the order of P. P issues the same to A. A then indorses to B, B to C, and C to H.

From whom may H collect?

A

H can collect from all the parties EXCEPT M.

NO HOLDER CAN COLLECT FROM A MINOR BECAUSE MINORITY IS A REAL DEFENSE.

96
Q

What is the effect of forgery?

A

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.

97
Q

What are the cases of forgery?

A

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
98
Q

M makes a note payable to the order of P. P then indorses the note to A. The note is stolen from A by F who then negotiates the same to B by forging A’s signature. B indorses the note to C, C to D, and D to H.
a.) From whom can H claim?

A

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.

99
Q

P makes a promissory note payable to bearer by placing the name and forging the signature of M as maker. Thereafter P delivers the note to A, A to B, B to C, and C to H. From whom can H claim?

A

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.

100
Q

M makes a promissory note payable to bearer and delivers it to P. P indorses it to A. The note is then stolen from A by F who indorses the note to C, C to D, and D to H. From whom can H claim?

A

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.
101
Q

P makes a promissory note payable to his own order placing the name of M and forging M’s signature. P then indorses the note to A, A to B, B to C, and C to H.

a. ) From whom can H claim?
b. ) Suppose before accepting the note from C, H asked M if the signature was really his to which M replied positively. What is its effect on the forgery?

A

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.

102
Q

P executes a bill of exchange payable to his own order placing thereon the name of R as drawer and forging R’s signature. He presents the bill to W, drawee, who accepts the same. Thereafter, P indorses the bill to A, A to B, B to C, and C to H. From whom can H claim?

A

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
103
Q

R, drawer, executes a bill of exchange payable to the order of P, payee, with W bank as drawee. F stole the instrument from P, and forged P’s signature then indorsed it C bank, which accepted it and credited F’s account. C bank indorsed it to W bank which paid it. W bank then charged the amount to R’s account. What are the rights and liabilities of the parties?

A

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.

104
Q

M issues a promissory note payable to the order of P for PHP 10,000. P indorses the note to H to secure P’s debt of PHP 8,000. H is a holder for value to the extent of his lien of PHP 8,000. At maturity how much can H claim from M?

A
  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.
105
Q

What is want/absence of consideration?

A

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.

106
Q

What is failure of consideration?

A

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.

107
Q

What is partial failure of consideration?

A

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.

108
Q

M issued a promissory note payable to the order of P for PHP 10,000 for merchandise he purchased from P. However P only delivered PHP 7,000 worth of products to M. Subsequently P indorsed the note to A, A to B, B to C and C to H. How much can H collect if he is:

a. ) HIDC
b. ) Not HIDC?

A

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.

109
Q

What is an accommodation party? What are its requisites?

A

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

110
Q

What are the modes of transfer of negotiable instruments?

A

1.) By assignment - assignee acquires no greater right than that of the assignor

  1. ) 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
  2. ) 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
  3. Mere delivery
  4. Indorsement completed by delivery
111
Q

“Pay to the order of X, PHP 10,000 sgd Y”
at the back of the note, it says
“Pay to A PHP 7,000”

Is this a valid indorsement? When can it be a valid indorsement?

A

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.

112
Q

“Pay to X PHP 7000 and to Y PHP 3000”

Is this a valid indorsement?

A

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

113
Q

“Pay to X and Y PHP 10,000”

Is this a valid indorsement?

A

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.

114
Q

What are the kinds of indorsement?

A

SBRQC

  1. ) Special indorsement
  2. ) Blank indorsement
  3. ) Restrictive indorsement
  4. ) Qualified indorsement
  5. ) Conditional indorsement
115
Q

“Pay to X PHP 1,000 sgd Y” Is this instrument negotiable?

A

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”

116
Q

What is the prima facie presumption of law regarding the time of indorsement where an instrument does not bear date after maturity of the instrument?

A

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

117
Q

What is the prima facie presumption of law regarding the place of indorsement in the absence of contrary evidence?

A

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

118
Q

What is a qualified indorsement? What effect does a qualified indorsement have? (words such as without recourse/indorser not holden/ at the indorsee’s risk)

A

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.

119
Q

What is a special indorsement?

A

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.

120
Q

What is a blank indorsement?

A

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”

121
Q

What is a restrictive indorsement?

A

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”

122
Q

What is a conditional indorsement?

A

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

123
Q

When can indorsements be struck out? What is the effect of striking out an indorsement?

A
  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.
124
Q

MM issues a promissory note payable to the ORDER of PP. With AA as holder, the back of the note shows the following:

"Pay to AA sgd PP"
"Pay to BB sgd AA "
"Pay to CC sgd BB "
"Pay to DD sgd CC "
"Pay to EE sgd DD "
"Pay to AA sgd EE"

What indorsements can AA strike out?

A

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.

125
Q

M executes a promissory note payable to the order of P. P indorses the note to A, A to B, B to C, C to D, D to E, and E back to A. Can A enforce payment against B,C,D and E?

A

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.

126
Q

What is a holder in due course? What is not a holder in due course?

A

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.

127
Q

When is an instrument INCOMPLETE and IRREGULAR upon its face, thus making the holder not a HIDC?

A

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
128
Q

What is a personal/equitable defense? What are examples of personal defenses?

A

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
129
Q

What is real/legal/absolute defense? What are some examples?

A

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.
130
Q

S1: An instrument originally payable to ORDER may be converted into a BEARER instrument.

S2: An instrument originally payable to BEARER may be converted into an ORDER instrument.

Which statements are correct?

A

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

131
Q

What are the rights of a Holder in due course?

A
  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.
132
Q

What are the rights of a Holder NOT in due course?

A
  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.
133
Q

Buddha induced Vishnu by fraud to issue a promissory note payable to the order of Buddha but without Buddha giving valuable consideration to Vishnu. Thereafter Buddha indorsed the note to Jehovah, who had no notice of Buddha’s defective title, hence, Jehovah is a HIDC. Thereafter Jehovah negotiated the note to Apollo Q, who knew of Buddha’s defective title but had no participation in the inducement made by Buddha. May Apollo Q collect from Vishnu?

A

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.

134
Q

In negotiable instruments, who are the parties primarily liable? Who are the parties secondarily liable?

A

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
135
Q

What are the liabilities of an acceptor?

A
  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.

136
Q

What are the liabilities of a drawer?

A

1.) He admits the existence of the payee and his then capacity to indorse.

  1. ) 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.
137
Q

What are the liabilities of a qualified indorser?

A
  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.
138
Q

What happens if subsequent parties acquire title from a qualified indorsement?

A

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

139
Q

What are the liabilities of a person negotiating by mere delivery?

A
  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.
140
Q

What are the liabilities of a general indorser?

A
  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.
141
Q

To whom does warranties of a general indorser extend?

A
  1. ) To subsequent holders
  2. ) Persons who derive their titles from HIDC
  3. ) Immediate transferees although they are not HIDC
142
Q

M is the maker and P is the payee of an order instrument. H is the holder. The back of the promissory note shows the ff:

“Pay to A sgd P”
“Pay to B without recourse sgd A”
“Pay to H sgd B”

H presents the note to M for payment but M is insolvent. P,A,B were not aware of the insolvency. Can H collect from P,A,B?

A

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

143
Q

What is an irregular or anomalous indorser? What are his liabilities?

A

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.

144
Q

What is Presentment for Payment?

A

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.

145
Q

Is presentment for payment necessary against the party primarily liable?

A

No.

146
Q

Is presentment for payment necessary against the party secondarily liable?

A

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.

147
Q

What constitutes a sufficient presentment?

A

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.

148
Q

If a day falls on a Saturday, what are the options of the holder who wants to present an instrument? If its a Sunday?

A

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.

149
Q

What is a notice of dishonor?

A

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.

150
Q

What are the grounds for giving the notice of dishonor?

A
  1. ) Non-acceptance of the instrument

2. ) Non-payment of the instrument

151
Q

When is giving notice of dishonor necessary?

A

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

152
Q

R draws a bill of exchange in favor of P as follows:

“Pay to P or order PHP 50,000. Notice of dishonor waived sgd R To: W”

The bill is indorsed by P to A, A to B, B to C and C to H. H presents it to W for acceptance but W dishonors it. To whom must H give a notice of dishonor?

A

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.

153
Q

R draws a bill of exchange in favor of P as follows:

“Pay to P or order PHP 50,000 sgd R To: W”

The bill is indorsed by P to A, A to B, B to C and C to H. At the back of the note is the following:

“Pay to A sgd P”
“Pay to B, notice of dishonor waived sgd A”
“Pay to C sgd B”
Pay to H, sgd C”

H presents it to W for acceptance but W dishonors it. To whom must H give a notice of dishonor?

A

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.

154
Q

What does it mean when notice of dishonor is dispensed with?

A

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.

155
Q

What is the effect of failing to give notice of dishonor?

A

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

156
Q

M makes a promissory note payable to the order of P. P indorses the note to A, A to B, B to C, C to D, and D to H, holder. H presents the note to M for payment but M dishonors it.

  1. ) To whom can H give a notice of dishonor?
  2. ) Can S, a stranger give notice in behalf of H?
  3. ) Can S, as an agent of H, give notice in his own name?
  4. ) Can S, as an agent of H, give notice in behalf of H?
  5. ) Can A/B/C/D give notice of dishonor? Who can give notice to whom?
  6. ) Can T, a stranger, give notice on behalf of A,B,C,D?
  7. ) What is the effect if H gives notice only to C?
  8. ) H notifies P,A,B,C. To whom does benefit inure to?
A
  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.
157
Q

What is estafa?

A

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.

158
Q

What are the elements of estafa?

A
  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
159
Q

What are the acts punished under BP 22 or Bouncing Checks Law?

A
  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.
160
Q

In cases of checks drawn by corporations, who will be liable in cases of violations BP 22?

A

The persons who actually signed the check.

161
Q

What is the penalty for violation of BP 22?

A
  • 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
162
Q

Differentiate Estafa and violation of BP 22.

A

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.

163
Q

M issues a promissory note payable to order of P. P indorses the note to A, A to B, B to C, and C to H. H renounces his right against A. What is the effect of the renunciation as regards the liability of P, B and C?

A

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

164
Q

What are the effects when payment is made by a party secondarily liable?

A

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.

165
Q

What are the effects of material alteration?

A

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.

166
Q

M makes a note payable to the order of P for PHP 10,000. P alters the amount to PHP 40,000 then indorses it to A, A to B, B to C, and C to H. Against whom may H enforce payment if H is a

  1. ) Not HIDC
  2. ) HIDC
A
  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.
167
Q

What is spoliation?

A

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

168
Q

What is acceptance?

A

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
169
Q

What is an actual acceptance? What are its requisites?

A

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.
170
Q

Is an oral acceptance binding upon the drawee?

A

No.

171
Q

What is constructive acceptance?

A

There is constructive acceptance when drawee

  • destroys the bill
  • REFUSES WITHIN 24 HOURS after deliver to return the bill accepted
172
Q

What is general acceptance?

A

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

173
Q

1 - “Payable at PNB Jacinto”
1 - “Payable at PNB Jacinto ONLY”

What kind of acceptances are these?

A

1 - General acceptance

2 - Qualified acceptance

174
Q

What is qualified acceptance?

A

Qualified acceptance varies the effect of the bill drawn

  • Conditional
  • Partial
  • Local
  • Qualified as to time
175
Q

What are the rights of the holder as to qualified acceptances?

A

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.

176
Q

When is presentment for acceptance required?

A

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
177
Q

What is Protest?

A

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.

178
Q

What is an Acceptance for Honor?

A

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”

179
Q

What does a check with two diagonal line on its upper left portion mean?

A

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.

180
Q

What law governs negotiable instruments?

A

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

181
Q

Give the order of priority where the place where the negotiable instrument is to be paid is not specified.

A

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
182
Q

M makes a note payable to the order of P. He delivers the note to P with the instruction that P should keep the same until M has obtained the proceeds of his loan from the bank. P, however, disregards the instruction of M and indorsed the note to A, A to B, B to C, and C to H. A, B and C have no knowledge of the defective title. What are the rights of H if he is a:

  1. HIDC
  2. Not HIDC
A
  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.
183
Q

M makes a note payable to the order of P. He delivers the note to P with the instruction that P should keep the same for safekeeping. P, however, disregards the instruction of M and indorsed the note to A, A to B, B to C, and C to H. A, B and C have no knowledge of the defective title. What are the rights of H if he is a:

  1. HIDC
  2. Not HIDC
A
  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.
184
Q

It is an indorsement where the indorser waives the benefit of any law intended for his protection is known as?

A

Facultative indorsement. “notice of dishonor waived”

185
Q

T or F
The drawer of a bill and any indorser may insert thereon the name of a person to whom the holder may resort in case of need; that is to say, in case the bill is dishonored by non-acceptance or non-payment. Such a person is called a referee in case of need. It is in the option of the holder to resort to the referee in case of need or not as he may see fit.

A

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

186
Q

M, maker, P, payee of a note payable to the order of P. The back of the note contains an indorsement of P to A, A to B, B to C, C to F, and D to H, a HIDC. Assume the following independent facts:
I. M is insolvent
II. P is a minor
III. A’s signature was forged

If C were a QUALIFIED INDORSER, which of the foregoing independent facts will not affect his liability (he will still be liable) although he was not aware of them?

a. I and II
b. II and III
c. I and III
d. all of the them

A

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.

187
Q

What is the Shelter Rule?

A

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.

188
Q

T or F
In case an instrument payable to order is merely delivered without indorsement, the transferee acquires the right to compel transferor to indorse the instrument to the former.

A

True

189
Q

T or F

When the instrument has been paid in part, it may be indorsed as to the residue.

A

True.

190
Q

T or F
An indorsement which purports to transfer to the indorsee a part only of the amount payable, or which purports to transfer the instrument to two or more indorsees severally is a valid negotiation of the instrument.

A

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

191
Q

What kind of evidence is required for proving violation of BP 22?

A
  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
192
Q

What are the required form of a partnership contract?

A

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.

  1. ) 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?

193
Q

Are corporations allowed to enter into partnership agreements?

A

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.

194
Q

What is a universal partnership of all present property?

A

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.

195
Q

What is a universal partnership of profits?

A

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.

196
Q

What is a nominal partner?

A

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

197
Q

What is an ostensible partner?

A

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

198
Q

What is a secret partner?

A

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

199
Q

What is a silent partner?

A

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.

200
Q

What is a dormant partner?

A

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

201
Q

What happens when the profits and losses distribution is entrusted to one of the partners?

A

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

202
Q

What are the rules of management when a partner has been appointed in the ARTICLES OF PARTNERSHIP?

A

1.) Scope of authority - managing partner may execute all acts of administration despite the opposition of his partners UNLESS HE ACTS IN BAD FAITH.

  1. ) 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.

203
Q

What are the rules of management when a partner has been appointed AFTER PARTNERSHIP FORMATION?

A
  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.
204
Q

What are the rules of management when two or more partners have been appointed as managers?

A

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.

205
Q

May an industrial partner engage in business for himself? What are the effects if he does?

A

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.

206
Q

What kinds of business may a capitalist partner engage in?

A
  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.
207
Q

What is the effect if a capitalist partner engages in the same business as the partnership without stipulation allowing him?

A
  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.
208
Q

What are the rules of partnership liabilities to third person?

A

Pro-rata among general partners

209
Q

What is the liability of a newly-admitted partner for obligations of the partnership?

A

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.

210
Q

Explain the application of payment when a person owes separate demandable debts to the partnership and to the partner AUTHORIZED TO RECEIVE PAYMENT.

A
  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.

211
Q

What are the obligations of the partnership for the wrongful acts of partner/s?

A

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.
212
Q

When is a partnership liable to 3rd persons for the acts of its partners?

A

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.
213
Q

What happens when title to real property in the NAME OF THE PARTNERSHIP is conveyed by a partner in the name of the partnership WITHOUT AUTHORITY?

A

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.

214
Q

What happens when title to real property IN THE NAME OF ONE OR MORE BUT NOT ALL PARTNERS is conveyed by a partner in the name of the partnership WITHOUT AUTHORITY?

A

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.

215
Q

What happens when title to real property is in the name of the partnership and the conveyance is executed by a partner IN HIS OWN NAME WITHOUT AUTHORITY?

A

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.
216
Q

What happens when title to real property is IN THE NAME OF ONE OR MORE BUT NOT ALL PARTNERS and the conveyance is executed by a partner IN HIS OWN NAME WITHOUT AUTHORITY?

A

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.
217
Q

What happens when title to real property is IN THE NAME OF THE PARTNERSHIP and the conveyance is executed by ALL PARTNERS?

A

Conveyance passes all rights in the property.

218
Q

What are the causes of dissolution?

A
  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.
219
Q

When is the authority of a partner to enter into NEW TRANSACTIONS TERMINATED among the partners?

A

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.
220
Q

When does the act of a partner after dissolution bind the partnership?

A
  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)

  1. ) 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.
221
Q

What is the order of payment of liabilities of a dissolved limited partnership?

A
  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
222
Q

Which of the following will not cause the automatic dissolution of a general partnership?

a. Death of a partner
b. Insolvency of a partner
c. When the partnership becomes unlawful
d. Insanity of a partner

A

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

223
Q

In the absence of partnership agreement, when shall juridical personality of the partnership begin?

A

From the moment SEC issues the Certificate of Registration

224
Q

What are the instances wherein a general partnership may be dissolved by a decree of court upon application by a partner also known as the NON AUTOMATIC CAUSES OF DISSOLUTION?

A
  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
225
Q

What are the instances wherein the partnership may be dissolved by a decree of court upon the application of the assignee or purchaser of a partner’s interest?

A
  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
226
Q

What is the status of the contract of security when a limited partner who has made a loan to the partnership receive or hold as collateral security any partnership property for his claim to the partnership?

A

Rescissible

227
Q

What is the valuation date for the determination of FV in the exercise of appraisal right?

A

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

228
Q

In what type of culpa or negligence will the defense of exercise of good father of the family in the selection his employees by the employer be a tenable defense?

A

Culpa aquiliana

229
Q

During the pendency of the suspensive condition, the debtor has delivered a determinate thing by mistake, what is the debtor’s remedy?

A

Accion reinvidicatoria if the thing is still with the creditor.

230
Q

In a facultative obligation, to whom shall the right of choice belong?

A

Always the debtor.

231
Q

If there is conflict between the evident intention of the parties and the words of the contract, which shall prevail?

A

The intention of the parties.

232
Q

Give the prescriptive period for civil actions based on the following:

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