RFBT - MEMORIZATION OF CONCEPTS Flashcards
What are the steps/requirements for tender of payment and consignation to extinguish obligation?
- ) There must be a valid tender of payment.
- ) The creditor refuses without just cause to receive the payment.
- ) 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)
- ) The sum or thing is deposited to judicial authorities.
- ) 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)
May the debtor withdraw the thing that was consigned? What are the steps?
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):
- ) Obligation shall remain in force..
- ) 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)
- ) The obligation shall be revived
- ) Creditor will lose every preference which he may have had over the thing
- ) Guarantors, co-debtors and sureties are released unless they consented.
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?
- 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.
- If all are lost through fortuitous event, the obligation is extinguished.
- If all are lost through the debtor’s fault, he shall pay the value of the last thing that was lost plus damages
- 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.
- 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.
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?
- 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.
- If all are lost through fortuitous event, the obligations shall be extinguished.
- 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.
- If all are lost through the debtor’s fault, the creditor may claim the price of any of them plus damages.
Discuss the rules on periods provided in Article 13 of the Civil Code.
- ONE YEAR IS 365 DAYS. If there are two or more years, it shall be computed as 365 * number of years
- ONE MONTH MEANS 30 DAYS, unless the name of the month is particularized. (March-31 days, April-30days)
- IF THERE IS A LEAP YEAR, DISTINGUISH THE FEB 29TH DAY.
- ONE DAY MEANS 24 HOURS.
- 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.
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
b. Debtor can recover the money but with interest only if the creditor acted in bad faith.
COMPARE WITH NEXT NUMBER
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. 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
What are the kinds of negligence? Explain each.
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.
Explain Joint Indivisible Obligations.
It is an obligation where the debtors or creditors are jointly bound but the prestation is indivisible.
- ) 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.
- ) Demand must be made against all debtors since compliance is possible only when they act together.
- ) The right of creditors may be prejudiced only by their collective acts.
- ) 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.
A,B, and C are jointly indebted to deliver a specific car to X,Y,Z worth 900000. Explain what happens.
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.
What is the formula for the amount to be paid in cases of extraordinary inflation or deflation?
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.
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?
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.
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?
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.
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?
T can collect 4000, 20000 less the debts due before D learned of the assignment.
D owes C 50,000. To defraud C, D sells his only property to B.
- May C ask the court to rescind the sale supposing B knew about D’s intent to defraud?
- 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?
- Yes. Accion Pauliana.
2. No, since he was a buyer in good faith.
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.
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.
A, 25yo, B, 26yo, and C, 17yo are solidary debtors of X in the amount of 9000. How much may X collect from A?
6000
T or F
Every person criminally liable is also civilly liable.
True.
Explain the rules on the place of payment of the obligation.
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.
Differentiate domicile and residence.
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.
What is the nature of the responsibility or liability of 2 or more officious managers in a negotiorum gestio?
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.
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. solidary
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. When he receives the payment in bad faith
ART 2159
Iba ito sa suspensive condition and period.
What are the rules in application of payment in case the debtor does not exercise his right to application of payment?
- If the debt produces interest, payment shall be made on the interest first before the principal
- 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
- If the debts are of the same nature and burden, the payment shall be applied to all of them proportionately.
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.
True.
T or F
Generally, the EXTENSION of the term of a contract results to an IMPLIED NOVATION.
False, unless the change will show that the new contract is clearly incompatible with the old contract so that both contracts cannot exist together.
What are the basic principles of contract?
MARCO
- ) Mutuality of contracts - contract must bind both parties, its validity/compliance cannot be left to the will of one of them.
- ) Autonomy or Liberty of contract or freedom to stipulate, provided they are not contrary to law, morals, good customs, public order or policy.
- ) 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 - ) 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).
- ) 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.
What is stipulation pour atrui? What are the requisites of a valid stipulation pur autrui?
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.
What are specific instances of rescissible contracts?
- ) 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.
- ) 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.
- ) Those undertaken in fraud of creditors when the latter cannot in any manner collect the claims due them. (ACCION PAULIANA)
- ) 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.
- ) All other contracts specially declared by law to be subject to rescission.
What is Statute of Frauds?
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.
What are the contracts that MUST BE IN WRITING, otherwise they are unenforceable as mentioned in the Statute of Frauds?
- ) Agreement that by its terms is not to be performed within a year from making thereof.
- ) A special promise to answer for the debt, default, or miscarriage of another. (Aka GUARANTY)
- ) An agreement in consideration of marriage, other than mutual promise to marry.
- ) Sale of goods, chattel, or things in action at a price not less than P500.00. (Does not apply if there is down-payment)
- ) An agreement for the leasing of a real property or of an interest therein for more than one year.
- ) Sales of real properties.
- ) A representation as to the credit of a third person.
What are specific instances wherein contracts need to be in writing for CONVENIENCE of parties?
- ) 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.
What are the contracts that must follow a certain form for it to be valid?
FORMALITIES REQUIRED FOR VALIDITY:
1. Donations of real property which require a PUBLIC INSTRUMENT.
- Donations of personal property which exceeds 5000 which REQUIRES THAT THE DONATION BE WRITTEN
- Stipulation to pay interest on loans or for the use of money WHICH MUST BE IN WRITING
- 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
- Contribution of real property in a partnership, which requires that there be an inventory attached to a public instrument
- Negotiable instruments must be made strictly in the form provided for in the NIL in order to be considered negotiable
- Contract of marriage must have all solemnities required by the Family Code
- Principal and interest of secured contract of loan must be specified in writing
- Agreement or stipulation to pay interest in contract of loan must be in writing in order for such agreement to be valid.
- Contract of Chattel Mortgage requires it to be registered with Chattel Mortgage registry to be valid
- 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.
- 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
- Sale of community or conjugal property by one of the spouse, there must be authority by the other spouse to the selling spouse.
S sold his car to B for 50k. What is the cause of S and B in entering into the contract of sale?
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.
What are the rules on the interpretation of contracts?
- 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
- 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
- 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) - 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)
- 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.
- Words which may have different significations shall be understood in that which is most keeping with the nature and object of the contract.
- 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
- 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
- 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)
- 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
- 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.)
What kinds of contract may and may not be assailed by 3rd persons?
CONTRACTS THAT MAY NOT BE ASSAILED BY 3RD PERSONS
- PERFECTLY VALID CONTRACT
- VOIDABLE CONTRACTS
- UNENFORCEABLE CONTRACTS
CONTRACTS THAT MAY BE ASSAILED BY 3RD PERSONS AFFECTED BY IT
- RESCISSIBLE CONTRACTS
- VOID CONTRACTS
Distinguish the validity of defective contracts.
- Rescissible - valid and binding until rescinded
- Voidable - valid and binding until annulled
- Unenforceable - valid but unenforceable by court action
- Void - Invalid
Distinguish the legal remedies of injured parties in defective contracts.
- Rescissible - Action for rescission
- Voidable - action for annulment
- Unenforceable - None
- Void - Action for declaration of nullity
Differentiate the Cognition and Manifestation theory.
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.
What are the kinds of capacity to enter into a contract?
- 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.
- 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
What is the rule when quantity of the mass is more than the quantity sold?
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.
What is the rule when the quantity of the mass is less than the quantity sold?
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.
What is Recto Law?
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.
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?
- ) Exact fulfillment of obligation should vendee fail to pay, regardless of the number of installments defaulted.
- ) 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.
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. 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.
In Recto Law, when may deficiency be recovered?
- In cases of sale on straight-term
- If the security foreclosed is other than the chattel mortgage constituted on the thing sold
- In case of sale on execution of judgment in favor of seller.
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?
Yes, since this is a sale on a straight term
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. 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.
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?
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.
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?
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.
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?
- ) 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.
- ) Vendee shall pay the lump sum stipulated w/ no changes in price even though the area is lesser/greater.
- ) Buyer’s remedies if the vendor does not deliver the area within the boundaries stated in the contract:
a. ) Reduction in price
b. ) Rescission
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. 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.
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. 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.
What are the rules in case of loss of the thing with hidden defects?
- ) 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 - ) 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 - ) 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 - ) 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.
What are the rules when the quantity delivered is less than what was agreed upon?
Buyer may:
1.) Reject the goods, since buyer cannot be compelled to accept partial payment.
2.) Accept the goods at contract rate.
What is Maceda Law?
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.
What are the rights of the buyer under Maceda Law?
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.
What should be the form of pledges?
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.
How are pledges extinguished?
1.) Indirect Causes - When the debtor pays the creditor
- ) 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.
Differentiate conventional and legal pledge.
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.
What form is needed for a real mortgage?
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.
May the owner of the thing execute a second mortgage on it?
Yes, even without the consent of the 1st mortgagee, unless there is a stipulation that consent of the 1st mortgagee is required.
What are the kinds of foreclosure? (Chattel and Real)
- ) 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.
What are the kinds of redemption?
- ) 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
- ) 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.
What is the form required for chattel mortgages?
- ) 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.
- ) 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.
When is appropriation allowed in pledge and mortgage?
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.
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?
No, since this is covered by Recto Law, chattel mortgage on personal property acquired in INSTALLMENTS.
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
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.
What are the elements of a contract of agency?
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.
What happens if the principal in a contract of agency is incapacitated?
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.
What happens if the agent in a contract of agency is incapacitated?
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)
- If the principal is incapacitated while the agent is capacitated, both the contract of agency and contracts entered into by the agent become VOIDABLE
- 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.
T or F
Legal capacity is required for the validity of an agent’s acts.
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.
What is the concept of power of attorney?
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.
What are the kinds of announcement of appointment of an agent and revocation of appointment of agent?
- 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.
- 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.
What are the basic principles of agency?
- The agent must act within the scope of his authority
2. The agent must act in behalf of his principal
What are the effects if the agent acts within the scope of his authority but in his own behalf?
- The principal has no right of action against the person with whom the agent has contracted
- The person with whom the agent has contracted has no right of action against the principal
- 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.
What are the effects if the agent acts in excess of his authority and in the principal’s behalf?
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.
What are the effects when the agent acts in excess of his authority and does so in his own behalf?
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.
Explain the rules on the liability if two or more agents have been appointed simultaneously.
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.
Explain the agent’s liability if he contracts in the name of the principal.
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.
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?
Follow the rules on immovables: Order of priority: 1. First registrant in good faith 2. First possessor in good faith 3. OLDEST TITLE
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?
Follow the rules on movables:
Order of priority:
1. First possessor in good faith
2. OLDEST TITLE
What are the effects if the commission agent sells on credit without the principal’s consent?
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.
What is the effect of an incomplete but delivered instrument? What happens if it is filled up beyond the authority given?
There is a prima facie authority in an INCOMPLETE BUT DELIVERED INSTRUMENT to:
- ) Fill up the blanks
- ) 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.
What is the effect of an incomplete and undelivered instrument? To whom is it enforceable?
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:
- ) Holder in due course?
- ) 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.
What is the effect of a complete and undelivered instrument?
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.
If the instrument provides for an interest but it does not specify a date when interest is to run, when should the interest run?
Interest runs from the date of the instrument, if there is not, the date the instrument was issued.
If the instrument is not dated, it will be dated as of?
The date of time it was issued.
What happens when an instrument is so ambiguous that there is doubt whether it is a bill or a note?
The holder may treat it as either bill or note at his option.
What happens when a signature is placed upon the instrument and it is not clear as to what capacity the person intended to sign?
The person signing shall be deemed an indorser.
What does Procuration mean?
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.
What are the requisites for an agent not to be liable when he signs on behalf of his principal?
- He must be AUTHORIZED
- He must add words to his signature DESCRIBING HIMSELF AS AN AGENT
- He must DISCLOSE HIS PRINCIPAL
- He must ACT WITHIN THE SCOPE OF HIS AUTHORITY
