week 12-13 Flashcards
(142 cards)
1
Q
what are UNENFORCEABLE CONTRACTS
A
Those which cannot be enforced by a proper action in court, unless they are ratified, because, either they are entered into without or in excess of authority or they do not comply with the statute of frauds or both of the contracting parties do not possess the required legal capacity.
2
Q
CHARACTERISTICS of UNENFORCEABLE CONTRACTS
A
A. Valid but cannot be enforced by a proper action in court
B. Can be ratified
C. Cannot be assailed by third persons
3
Q
can 3rd persons to a voidable contract bring an action to annul the same?
A
no, Strangers to a voidable contract cannot bring an action to annul the same, neither can they assail a contract because of its unenforceability (NCC 1397)
The benefit of the Statute can only be claimed or waived by one who is a party or privy to the oral contract, not by a stranger.
4
Q
UNENFORCEABLE VS RESCISSIBLE
A
- An unenforceable contract cannot be enforced by a proper action in court, while a rescissible contract can be enforced, unless it is rescinded.
- The causes for the unenforceable character of the former are different from the causes for the rescissible character of the latter.
- An unenforceable contract is susceptible of ratification, while a rescissible contract is not.
- An unenforceable contract cannot be assailed by third persons, while a rescissible contract may be assailed by third persons who are prejudiced.
5
Q
UNENFORCEABLE VS VOIDABLE
A
- An unenforceable contract cannot be enforced by a proper action in court, while a voidable contract can be enforced, unless it is annulled.
- The causes for the unenforceable character of the former are different from the causes for the voidable character of the latter.
6
Q
UNAUTHORIZED CONTRACTS (NCC 1404)
A
Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers
7
Q
what are STATUTE OF FRAUDS?
A
Statutes which require certain classes of contracts to be in writing.
8
Q
Parol Evidence rule
A
extrinsic evidence cannot be used to vary the terms of a written contract
9
Q
Examples of statute of frauds
A
- An agreement that by its terms is not to be performed within a year from the making thereof;
- A special promise to answer for the debt, default, or miscarriage of another;
- An agreement made in consideration of marriage, other than a mutual promise to marry;
- An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;
- An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein;
- A representation as to the credit of a third person
10
Q
Where the marriage is a mere incident, and not the end to be attained by the agreement, is it deemed to be the consideration?
A
Where there is some other consideration sufficient to support the oral agreement, in addition to marriage, such agreement is not covered by the Statute and oral evidence is admissible to prove the same.
Donations propter nuptias
Antenuptial agreements
11
Q
If a document existed before, does it still fall under Statute of Frauds?
A
no
12
Q
does the Statute of Frauds apply only to executory contracts?
A
yes
13
Q
unenforceable contracts How Ratified (NCC 1405)
A
There are two ways to waive this defense:
1. Timely failure to object to the presentation of oral evidence to prove the oral agreement.
2. Acceptance of benefits under them.
14
Q
Confirmation
A
term used to designate the act by which a voidable contract was cured of its vice or defect.
15
Q
Ratification
A
used exclusively to designate the act by which a contract entered into by a person in behalf of another without or in excess of authority is cured of its defect.
16
Q
Recognition or acknowledgment
A
refers to an act whereby a defect of proof is cured, such as when an oral contract is put in writing, or when a private instrument is converted into a public instrument.
17
Q
Modes of satisfaction of the Statute of frauds
A
- Giving of a note or memorandum;
must be complete in itself and cannot rest partly in writing and partly in parol, and it must contain
a. the names of the parties,
b. the terms and conditions of the contract, and
c. a description of the property sufficient to render it capable of identification.
d. it must be signed by the person charged or by his agent duly authorized in writing. - acceptance and receipt of part of the goods (or things in action) sold; and
- payment at the time some part of the purchase price.
18
Q
Effect of Statute of Frauds where contract is divisible/indivisible.
A
If the sales are separate/divisible
Each sale for a price below the statutory limit is not affected by the Statute.
If the transaction is one entire sale and the price amounts to or exceeds P500.00
The Statute applies, though separate chattels are sold, and though delivery is to be made in installments, and though the price of each chattel is estimated separately.
19
Q
VOID CONTRACTS
A
One which has no force and effect from the very beginning, as if it had never been entered into, and which cannot be validated either by time or ratification.
20
Q
those where all of the requisites of a contract are present, but the cause, object or purpose is contrary to law, morals, good customs, public order or public policy, or contract itself is prohibited or declared void by law.
A
VOID CONTRACTS
21
Q
When the act constitutes a criminal offense (NCC 1411)
Those where both parties are guilty (in pari delicto);
A
- they shall have no action against each other.
- Both shall be prosecuted.
- The effects or the instruments of the crime (things or price of the contract) shall be confiscated in favor of the government (RPC).
22
Q
Those where only one is guilty and the other is innocent.
A
- The guilty party will be prosecuted.
2.The instrument of the crime (or object of the contract) will be confiscated (as in the case of government property illegally sold). - The innocent one may claim what he has given (like the price he paid for the government property).
- if he has not yet given anything, he shall not be bound to comply with his promise.
23
Q
can a guilty party recover what he has given?
A
Guilty party is barred from recovering what he has given to the other party by reason of the contract. The law deems it more repugnant that a party should invoke his own guilt as a reason for relief from a situation which he had deliberately entered.
Innocent party, however, may demand for the return of what he has given.
24
Q
effect where only one is guilty or at fault
A
The guilty party cannot recover what he has given by reason of the contract, or ask for the fulfillment of what had been promised him.
The party not at fault may demand the return of what he has given, without any obligation to comply with his promise.
25
effect when both parties not guilty
Restoration of what was given by each of them to the other
Declaration of nullity operates to restore things to the state and condition in which they were found before the execution of a void contract. (DBP v CA)
26
IN PARI DELICTO RULE (NCC 1411-1412)
GENERAL RULE
When the defect of a void contract consists in the illegality of the cause or object of the contract, and both of the parties are at fault or in pari delicto, the law refuses them every remedy and leaves them where they are.
27
IN PARI DELICTO RULE (NCC 1411-1412) Not applicable to:
A contract where one party, a minor, is much less guilty than another, who is of age.
A case where the government is involved for the government is not estopped by the neglect of its officers.
A contract of sale, where on account of a breach of warranty due to a double sale of the same property, damages are suffered — in a case like this the governing articles would be NCC 1495, 1547, and 1555 on the law of Sales.
Where a superior public policy intervenes. Thus, even if a homestead owner sells it within the prohibited period and with presumed knowledge that it is illegal, still the owner or his heir may sue for its recovery, for the purpose of the law is to grant land to said owner or his heir.
In case of void contracts which are simulated to circumvent a law.
28
IN PARI DELICTO RULE (NCC 1411-1412) EXCEPTIONS
Cases where recovery can be made even if the parties be in pari delicto.
1. if the purpose has not yet been accomplished.
2. or if damage has not been caused any third person.
Also applies if the parties are not equally guilty, and where public policy would be advanced by allowing the suit for relief.
29
When the Code speaks of “interest paid in excess of that allowed by the usury law,’’ WHAT DOES it MEAN?
it means the whole usurious interest.
Thus, if the loan is P1,000.00, with interest of 20% per annum or P200 per year, and the borrower paid P200, the whole P200 is the usurious interest. The only change effected, therefore, by NCC 1413 of the Civil Code is not to provide for the recovery of the interest paid in excess of that allowed by law, which the Usury Law already provided for, but to add that the same can be recovered “with interest thereon from the date of payment.”
30
When does the law allow recovery by one of the parties even though both of them have acted contrary to law?
1. The contract is for an illegal purpose;
2. The contract is repudiated before the purpose has been accomplished or before any damage has been caused to a third person; and
3. The court considers that public interest will be served by allowing recovery.
31
When the contract is illegal and one of the parties is incapable of giving consent (NCC 1415), can Recovery be allowed?
Recovery can be allowed if one of the parties is incapacitated and the interest of justice so demands.
It is not necessary that the illegal purpose has not been accomplished or that no damage has been caused to a third person.
Minor or incapacitated person can recover.
32
difference of illegal and prohibited contracts
Illegal per se contracts are those forbidden because of public interest.
Merely prohibited contracts are those forbidden because of private interests.
Here recovery is permitted, provided that:
1. the contract is not illegal per se,
2. the prohibition is designed for the protection of the plaintiff,and
3. public policy would be enhanced by allowing the recovery.
33
may a person paying in excess of the maximum price recover the excess?
yes. Purpose of the Article: To curb the evils of profiteering.
A statute fixing the maximum price of any article or commodity is usually known as the ceiling law. It can also be determined by authority of law, as by Executive Order of the President.
34
When a contract is agreed upon by which a laborer accepts a lower wage (1419), can he still recover the deficiency ?
yes, If an employee or worker receives less than the minimum wage rate, he can still recover the deficiency with legal interest and the employer shall be criminally liable.
Minimum Wage — No Waiver of Right
35
are Contracts divisible? General Rule
Contracts are divisible or separable (severability clauses in contract). Cause is divisible.
36
Outside the commerce of man (NCC 1347)
All kinds of things and interests whose alienation or free exchange is restricted by law or stipulation, which the party cannot modify at will.
Common things like the air or the sea, sacred things, res nullius, and property belonging to the public domain;
Those made such by special prohibitions established by law, such as poisonous substances, drugs, arms, explosives, and contrabands
37
Absolute impossibility vs Relative impossibility
Absolute impossibility (objectively impossible; no one can do it) - arises from the very nature or essence of the act or service itself, renders the contract void.
Relative impossibility (subjectively impossible; particular debtor cannot do it) - arises from the circumstances or qualifications of the obligor rendering him incapable of executing the act or service, allowing the perfection of the contract, although the fulfillment is hardly probable.
38
If the doubt refers to the principal object of the contract and such doubt cannot be resolved, thereby leaving the intention of the parties unknown, the contract shall be ??
null and void.
Gratuitous contract - Least transmission of rights
Onerous contract - Greatest reciprocity of interests
An equitable mortgage - “in case of doubt, a contract purporting to be a sale with a right to repurchase shall be construed as an equitable mortgage” (NCC 1603) - least transmission of rights.
39
Where the illegality of the contract proceeds from an express prohibition or declaration by law, and not from any intrinsic illegality, the contract is not illegal per se.
Future inheritance (NCC 1347)
Sale between husband and wife except when there is a separation of property. (NCC 1490)
Purchase by persons who are specially disqualified by law (like guardians, agents, executors, administrators, public officers and employees, judges, lawyers, etc.) because of their position or relation with the person or property under their care. (NCC 1491)
Compromise agreement with respect to the civil status of persons, validity of a marriage or a legal separation, any ground for legal separation, future support, the jurisdiction of courts, or future legitime (NCC 2035)
Sale of lands acquired under free patent or homestead provisions within five (5) years after the date of issuance of the patent or grant. (Sec. 118, C.A. No. 141 [Public Land Act], as amended)
Contract as the direct result of a previous illegal contract. (NCC 1422)
based on the requisites of a valid novation.
For example, a contract of repurchase is dependent on the validity of the contract of SALE.
A testamentary provision in favor of a disqualified person, even though made under the guise of an onerous contract, or made through an intermediary, shall be void. (NCC 1031)
Any stipulation that household service is without compensation shall be void. (NCC 1689)
Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void except moderate gifts which the spouses may give each other on the occasion of any family rejoicing.
Under the Constitution (Sec. 14, Art. VI.), members of Congress are prohibited from being financially interested, directly or indirectly, in any contract with the government or any subdivision or instrumentality thereof.
40
what are INEXISTENT CONTRACTS
Those where one or some or all of those requisites which are essential for the validity of a contract are absolutely lacking, such as those which are absolutely simulated or fictitious, or those where the cause or object did not exist at the time of the transaction.
principle of pari delicto is not applicable
does not produce any effect whatsoever.
41
effect of absolutely simulated contracts
The contract is void for utter lack of consent.
42
effect of relatively simulated contracts
The hidden or intended contract is generally binding.
43
what is Simulation of a contract
the act of deliberately deceiving others, by feigning or pretending by agreement, the appearance of a contract which is either non-existent or concealed or is different from that which was really executed.
44
what is Absolute simulation
when the contract does not really exist and the parties do not intend to be bound at all.
45
what is Relative simulation
when the contract entered into by the parties is different from their true agreement or the parties state a false cause in the contract to conceal their real agreement.
46
ACTION OR DEFENSE FOR THE DECLARATION OF THE INEXISTENCE OF A CONTRACT
Not necessary especially if the contract is still in its executory stage.
May be set up as a defense in case the contract has been fulfilled already and the other party sought to enforce the void contract.
May be sought by the innocent or less guilty party in order to recover what has been given by virtue of the void contract.
Nobody can take the law into his own hands.
Defense of illegality, inexistence, or absolute nullity is only available to third persons whose interests are directly affected.
47
when do void contracts prescribe?
No prescription period (NCC 1410)
Because of the fact that the defect of void or inexistent contracts is of a more or less permanent character, mere lapse of time cannot give efficacy to such contracts.
48
accion reivindicatoria
any person may invoke the inexistence of the contract whenever juridical effects founded thereon are asserted against him.
49
what are NATURAL OBLIGATIONS
Those based on equity and natural law, which do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, authorize the retention of what has been delivered or rendered by reason thereof.
50
Reasons for Regulation of Natural Obligations — The Code Commission
“In all the specific cases of natural obligation recognized by the new Civil Code, there is a moral but not a legal duty to perform or pay, but the person thus performing or paying feels that in good conscience he should comply with his undertaking which is based on moral grounds. Why should the law permit him to change his mind and recover what he has delivered or paid? Is it not wiser and more just that the law should compel him to abide by his honor and conscience? Equity, morality, natural justice — these are, after all, the abiding foundations of all positive law. A broad policy justifies a legal principle that would encourage persons to fulfill their moral obligations."
51
VOLUNTARY FULFILLMENT means
Means that the debtor complied with the same even if he knew that he could not have been legally forced to do so.
Thus, payment through a coercive process of the writ of execution issued at the instance and insistence of the prevailing party, is not considered voluntary, and the provisions of the law on natural obligations cannot be applied thereto. (Manila Surety & Fidelity Co. v. Lim, 1959)
52
Undue Payment Distinguished from Natural Obligation
If I pay a debt that has prescribed —
not knowing it has prescribed —I can recover on the ground of undue payment.
knowing it has prescribed — I cannot recover for this would be a case of a natural obligation.
53
can the obligor who voluntarily performs the contract recover what he has delivered or the value of the service he has rendered?
no, By virtue of extinctive prescription, a right or property has been lost.
54
When the debtor later voluntarily reimburses the third person, can the obligor recover what he has paid?
no, When without the knowledge or against the will of the debtor, a third person pays a debt which the obligor is not legally bound to pay because the action thereon has prescribed (NCC 1425)
Here the third person pays:
without the knowledge (of the debtor);
or against the will (of the debtor).
55
is there a right to demand the thing or price thus returned, notwithstanding the fact that he has not been benefited thereby? minor
no, When a minor between eighteen and twenty-one years of age who has entered into a contract without the consent of the parent or guardian, after the annulment of the contract voluntarily returns the whole thing or price received (NCC 1426)
When a contract is annulled, a minor is not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him. (NCC 1399) However, should he voluntarily return the thing or price received although he has not been benefited thereby, he cannot recover what he has returned.
The law considers that at such age, a minor has already a conscious idea of what is morally just or unjust.
56
When a minor between eighteen and twenty-one years of age, who has entered into a contract without the consent of the parent or guardian, voluntarily pays a sum of money or delivers a fungible thing in fulfillment of the obligation (NCC 1427) is There right to recover the same?
no, There shall be no right to recover the same from the obligee who has spent or consumed it in good faith.
Generally, annulment requires mutual restitution (NCC 1398). Here, the obligee who has spent or consumed the object in good faith is not required to restore.
Good faith of the obligee must be present at the time of spending or consuming.
Note that the majority age today is 18. And “fungible” here really means “consumable.’’
It may also apply to things that are non-consumable when they have been lost without fault of the obligee or in case of alienation by him to a third person who did not act in bad faith. The obligee shall be liable for damages if he is guilty of fault or bad faith at the time of spending or consumption.
57
When, after an action to enforce a civil obligation has failed and the defendant voluntarily performs the obligation (NCC 1428), can he demand the return of what he has delivered or the payment of the value of the service he has rendered?
He cannot demand the return of what he has delivered or the payment of the value of the service he has rendered.
This article contemplates a situation where a debtor, who has failed to pay his obligation, is sued by the creditor and instead of losing the case, he has won it. If, notwithstanding this fact, the debtor voluntarily performs his obligation, he cannot demand the return of what he has delivered or the payment of the value of the service he has rendered. He must be deemed to have considered it his moral duty to fulfill his obligation.
58
When a testate or intestate heir voluntarily pays a debt of the decedent exceeding the value of the property which he received by will or by the law of intestacy from the estate of the deceased (NCC 1429), is the payment valid?
yes, The payment is valid and cannot be rescinded by the payer.
Heirs inherit obligations only to the extent of the value of the inheritance.
A dies, leaving an estate of P10,000,000 and debts amounting to P15,000,000. His heir here is not expected to make up for the difference, but if he does so voluntarily, then he cannot recover said difference. After all, one does have a moral duty to see to it that the dead relative’s or friend’s obligations in life are all carried out. Here, the heir is not really required by law to shoulder the deficit, but since he does so voluntarily, he cannot now back out.
59
When a will is declared void because it has not been executed in accordance with the formalities required by law, but one of the intestate heirs, after the settlement of the debts of the deceased, pays a legacy in compliance with a clause in the defective will (NCC 1430), is the payment effective?
The payment is effective and irrevocable.
60
what is Legacy
the act of disposition by the testator in separating from the inheritance for definite purposes, things, rights, or a definite portion of his property. It may be viewed also as that same portion, or those things or special rights, which the testator separates from his inheritance for a definite purpose.
The purpose of a legacy is to reward friends, servants and others for services they have rendered, to give alms, etc.
If the will is void, the legacy would also be void and the deceased is considered to have died without a will.
If however, the intestate heirs give the legacy, they cannot get it back now, provided that the debts of the deceased have been settled.
61
Difference between Natural and Civil Obligation (NCC 1423)
1. Natural obligations are based on equity and natural law, while civil obligations are based on positive law;
2. Natural obligations are not enforceable by court action, while civil obligations are enforceable by court action.
62
Difference between Natural and moral Obligation
In natural obligations there is a juridical tie between the parties which is not enforceable by court action, while in moral obligations there is no juridical tie whatsoever.
Voluntary fulfillment of natural obligations by the obligor produces legal effects which the courts will recognize and protect, while voluntary fulfillment of moral obligations, on the other hand, does not produce any legal effect which courts will recognize and protect.
Moral obligation - out of compassion, commiseration, sympathy.
Moral obligations may be converted into civil obligations.
Example: Acknowledgment of a prescribed debt.
63
CONVERSION TO CIVIL OBLIGATION a. by novation
As a general rule if the debt has already prescribed, can it be recovered?
no. in the case at bar, there was a novation by the parties, whereby Villarroel agreed to assume the fulfillment of the obligation. As a prescribed debt constitutes a moral or natural obligation as such, it can be the cause or consideration for a new obligation in novation. Prescription must be set up as a defense by the debtor in the complaint against him if he does not want to be bound anymore under the obligation. Otherwise, the obligation shall continue to subsist. The failure to put up prescription as a defense is equivalent to waiver.
There was already a novation when Villarroel agreed to resume the obligation of his mother in law. Hence, he can no longer put up prescription as a defense.
64
CONVERSION TO CIVIL OBLIGATION b. by ratification
In principle, a natural obligation cannot be guaranteed, because the liability of the guarantor presupposes that there must be prior exhaustion of the property of the principal debtor, and that the guarantor after paying can recover from the principal debtor and both of this cannot be legally done when the obligation is natural.
What really happens is that the guaranty of the natural obligation changes its character. When a debtor offers a guarantor for his natural obligation, he impliedly accepts the coercive remedies to enforce the guaranty and therefore, the transformation of the natural into a civil obligation.
65
CONVERSION TO CIVIL OBLIGATION
does partial payment of a natural obligation make it civil?
Partial payment of a natural obligation does not make it civil; the part paid cannot be recovered but payment of the balance cannot be enforced
66
CONVERSION TO CIVIL OBLIGATION Exception
If the natural obligation is one that is subject to ratification or confirmation, the partial payment converts it into a civil obligation, unless it is contrary to law, morals or public order. This principle will apply to those which are natural obligations because of prescription or lack of proper formalities.
67
what is ESTOPPEL
A bar which precludes a person from denying or asserting anything to the contrary of that which has, in contemplation of law, been established as the truth.
68
estoppel renders a fact what?
Renders a fact conclusive and the person estopped can no longer prove a contrary fact or present evidence to the contrary.
Designed to aid positive law and not to supplant.
69
ESTOPPEL ELEMENTS
1. Admission or representation
2. Relied upon by the other person
The doctrine of estoppel has its origin in equity, and is based on moral rights and natural justice. Its applicability to any particular case depends to a very large extent upon the special circumstances of the case.
A condition or state by virtue of which an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon.
If facts are alleged as constituting estoppel, they must be expressly pleaded.
Its purpose is to forbid one to speak against his own act, representations, or commitments to the injury of one who has relied on them. It concludes the truth in order to prevent fraud and falsehood and imposes silence on a party only when in conscience and honesty he should not be allowed to speak.
Under the doctrine, when one of two innocent persons, each guiltless of any intentional or moral wrong, must suffer a loss, it must be borne by one whose erroneous conduct either by commission or omission, was the cause of the injury.
70
Reasons for Inclusion of a Chapter on Estoppel — The Code Commission
The reason for the inclusion of a separate chapter in the New Civil Code on estoppel, according to the Code Commission, is that the principle of estoppel, which is an important branch of American law, will afford solutions to many questions which are not foreseen in our legislation. It is, of course, true that under the old Code there are some articles whose underlying principle is that of estoppel; but the fact that it does not definitely recognize estoppel as a separate and distinct branch of our legal system has not at all helped in the solution of these problem
71
are the principles of estoppel only suppletory?
yes. Insofar as they are not in conflict with the provisions of existing laws. Implementing Article 1431 in Section 2(a) of Rule 131 of the Rules of Court which provides: “Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act, or omission, be permitted to falsify it.’’
By its incorporation in the Civil Code, estoppel in our jurisdiction has become an equitable defense that is both substantive and remedial. Its successful invocation can, therefore, bar a right and not merely its equitable enforcement.
72
difference Waiver and Estoppel
Waiver and estoppel are frequently used as convertible terms. The doctrine of waiver belongs to the family of, is of the nature of, is based on, estoppel. The essence of waiver is estoppel, and where there is no estoppel, there is no waiver. This is especially true where the waiver relied upon is constructive or implied from the conduct of a party. Thus, when it is asserted that a “party is in estoppel,” this is the same as saying that said party had made a waiver.
73
can Estoppel be predicated on an illegal act?
no
74
is the principle of estoppel applicable in probate proceedings relative to the question of testamentary capacity of a person?
no.
75
does the doctrine of estoppel apply against the government suing in its capacity as sovereign or asserting government rights?
no, the State or government is never estopped by the mistakes or errors, negligence or omission on the part of its officials or agents
76
can estoppel be applied as against a municipal corporation to validate a contract which it has no power to make?
no, and this is true although it has accepted the benefits thereof, for to apply the doctrine in such a case would be to enable it to do indirectly what it cannot do directly
77
Estoppel and Ratification distinction
Ratification - substance of ratification is confirmation after conduct, a party is bound because he intended to be, does not rest upon prejudice
78
TECHNICAL ESTOPPEL
I. by record
By virtue of which a party and his privies are precluded from denying the truth of matters set forth in a record whether judicial or legislative.
79
Estoppel by judgment
by virtue of which the party to a case is precluded from denying the facts adjudicated by a court of competent jurisdiction. It must not, however, be confused with res judicata. Estoppel by judgment bars the parties from raising any question that might have been put in issue and decided in the previous litigation, whereas res judicata makes a judgment conclusive between the same parties as to the matter directly adjudged.
80
TECHNICAL ESTOPPEL by deed (NCC 1433)
The rule promotes the judicious policy of making formal documents final and conclusive of their contents.
By virtue of which a party to a deed and his privies are precluded from asserting as against the other party and his privies any right or title in derogation of the deed, or from denying any material fact asserted therein.
There must be a written instrument.
A void deed, however, will not work, and may not be the basis of an estoppel.
Written instrument may also be in the form of a bond or a mortgage.
81
EQUITABLE ESTOPPEL OR ESTOPPEL IN PAIS (NCC 1433)
It arises when one, by his acts, representations or admissions, or by his silence when he ought to speak out, intentionally or thru culpable negligence, induces another to believe certain facts to exist, and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts.
82
Equitable estoppel is distinguished from technical estoppel in that
it arises out of the acts or conduct of the party estopped and not from a record or deed. While technical estoppels are regulated by well-settled rules and admit of certain application, it would be difficult to prescribe a rule of universal application in regard to what are called estoppels in pais, depending as they do on the particular circumstances of the case.
83
EQUITABLE ESTOPPEL OR ESTOPPEL IN PAIS (NCC 1433)
As related to the party to be estopped
conduct which amounts to a false representation or concealment of material facts, or at least which is calculated to convey the impression that the facts are otherwise than, and inconsistent with those which the party subsequently attempts to assert;
the intention or at least the expectation, that such conduct shall be acted upon, or influence, the other party or other persons; and
knowledge, actual or constructive, of the real facts.
84
EQUITABLE ESTOPPEL OR ESTOPPEL IN PAIS (NCC 1433) As related to the party claiming the estoppel
1. ignorance or lack of knowledge and of the means of knowledge of the truth as to the facts in question;
2. reliance in good faith, upon the conduct or statement of the party to be estopped; and
3. action or inaction based thereon of such a character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.
1. by conduct or by acceptance of benefits
2. by representation or concealment
3. by silence
4. by omission
5. by laches (unreasonable delay in suing)
85
Estoppel by acceptance of benefits
Refers to
a type of estoppel in pais which arises when a party by accepting benefits derived from a certain act or transaction, intentionally or through culpable negligence induces another to believe certain facts to exist and such other relies and acts on such belief, as a consequence of which he would be prejudiced if the former is permitted to deny the existence of such facts.
A good example of this type of estoppel would be that which is contemplated in NCC 1438.
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Estoppel by silence or inaction by a party means
who has a right and opportunity to speak or act as well as a duty to do so under the circumstances, intentionally or through culpable negligence.
A good example of this type of estoppel would be that which is contemplated in NCC 1437.
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does innocent silence or inaction work in estoppel?
no. Mere innocent silence or inaction will not work an estoppel. There must be some element of turpitude or negligence connected with silence or inaction by which the other party is misled to his injury. In other words, to give rise to estoppel by silence or inaction, there must be a right and an opportunity to speak and in addition, an obligation or duty to do so.
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5. Estoppel by laches
Laches, in a general sense, is
failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier.
It is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.
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is Estoppel by laches like equitable estoppel?
It is, therefore, a type of equitable estoppel which arises when a party, knowing his rights as against another, takes no step or delays in enforcing them until the condition of the latter, who has no knowledge or notice that the former would assert such rights, has become so changed that he cannot without injury or prejudice, be restored to his former state.
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Estoppel by laches based upon
grounds of public policy which requires, for the peace of society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere question of time but is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted.
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Elements of laches
1. conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is made and for which the complaint seeks a remedy;
2. delay in asserting the complainant’s rights, the complainant having had knowledge or notice, of the defendant’s conduct and having been afforded an opportunity to institute a suit;
a. knowledge of defendant’s action;
b. opportunity to sue defendant after obtaining such knowledge; and
c. delay in the filing of such suit.
3. lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and
4. injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held to be barred.
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Laches vs Prescription
Laches is concerned with the effect of delay; prescription is concerned with the fact of delay.
Laches is principally a question of inequity of permitting a claim to be enforced, this inequity being founded on some changes in the condition of the property or the relation of the parties; prescription is a question or matter of time;
Laches is not statutory, whereas prescription is statutory.
Laches applies in equity, whereas prescription applies at law.
Laches is not based on fixed time, whereas prescription is based on fixed time.
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may a party renege on his promises after the other had complied with the former’s conditions, under the rule of promissory estoppel?
no. The doctrine is by no means new, although the name has been adopted only in comparatively recent years. According to this doctrine, an estoppel may arise from the making of a promise even though without consideration, if it was intended that the promise should be relied upon and, in fact, it was relied upon, and if a refusal to enforce it would be virtually to sanction the perpetration of fraud or would result in injustice to another. In this respect, the reliance of the promisee is generally by action or forbearance on his part.
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whats the exception to the general rule that a promise of future conduct does not constitute an estoppel.
The doctrine of promissory estoppel
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volenti non fit injuria (consent to injury) -
one may not change his position and profit from his own wrongdoing when he has caused another to suffer a detriment by relying on his former promises or representations.
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Estoppel arising from a promise made without consideration
ELEMENTS
1. promise reasonably expected to induce action or forbearance;
2. such promise did in fact induce such action or forbearance; and
3. the party suffered detriment as a result.
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Diligence required in estoppel
One who claims the benefit of an estoppel on the ground that he has been misled by the representation of another must not have been misled by his own want of reasonable care.
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the doctrine of estoppel does not extend in favor of those who are :
charged with notice of the true facts, or of facts and circumstances which through due diligence, could have disclosed those true facts in connection with which the representation was made, and if he fails to do so or intentionally closes his eyes to the ascertainment of the ultimate truth, he cannot later on be heard to say that he was led to believe what has been represented to him.
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Equitable estoppel distinguished from ratification
1. The substance of ratification is confirmation after conduct, while that of estoppel is the inducement to another to act to his prejudice;
2. In ratification, a party is bound because he intended to be, while in estoppel, he is bound notwithstanding that there was no such intention because the other party will be prejudiced and defrauded by his conduct unless the law treats him as legally bound; and
3. Ratification does not rest upon prejudice, while estoppel is applied if the other party would be unjustly prejudiced.
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PERSONS BOUND (NCC 1439) estoppel
An estoppel operates only on the parties to the transaction out of which it arises and their privies notwithstanding that the latter are not personally liable on the covenants creating the estoppel.An estoppel operates only on the parties to the transaction out of which it arises and their privies notwithstanding that the latter are not personally liable on the covenants creating the estoppel.
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are 3rd persons bound in estoppel?
no, a stranger to a transaction is neither bound by, nor in a position to take advantage of, an estoppel arising therefrom. Third persons cannot raise estoppel to a contract.
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an essential element of estoppel;
Mutuality. estoppel must bind both parties or neither is bound.
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is the govt estopped by the mistake or error on the part of its officials or agents.
no
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Under the doctrine of estoppel by deed, can a person who sells property to which he did not have title deny the validity of the sale, if he should later acquire valid title thereto in his own name?
no, The sale is validated when the vendor becomes the owner of the property.
In such case, title is recognized in the vendee by operation of law (NCC 712), because the vendor’s subsequent acquisition of the thing sold or alienated would have the effect of making his conveyance valid thru estoppel by deed. The purchaser is also deemed a purchaser in good faith.
In this kind of estoppel, prejudice is not essential. (Vda. de Cruz v. Ilagan)
Jose sold in his own name Brigitte’s car to Gina. He also delivered the car to Gina. If later on Brigitte donates the car to Jose, ownership over the same passes to Gina, not by tradition or delivery, but by operation of law.
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Estoppel against agent who sells for another. (NCC 1435)
Under this article, can the person who acted as agent or representative of another in the sale or alienation of a thing, question the validity of the transfer and claim title to the thing sold or alienated as against the buyer or grantee?
no, This is estoppel created in a representative capacity. In this kind of estoppel, prejudice is also not essential.
Amalia, in representation of Romeo, sells to Juanito a car. Amalia cannot afterwards allege that she was really the owner of the car, and that, therefore, the sale is not valid.
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Estoppel against tenant or bailee. (NCC 1436)
will A tenant will be heard to dispute his landlord’s title?
no, Under the Rules of Court, conclusive presumptions include: "b. The tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation of landlord and tenant between them." (Sec. 3-b, Rule 131, Rules of Court)
Similarly, a bailee in commodatum (NCC 1933), depositum (NCC 1962), or pledge (NCC 2093) is estopped to assert title to the thing received as against the bailor.
It is enough for the landlord to prove the existence of the lease contract, for the presumption to apply.
Exception -
If the alleged tenant does not admit expressly or implicitly the existence of the lease contract (such as when the landlord did not attach or plead in his complaint the contract of lease), the presumption does not apply. (Andres v. Judge Soriano)
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Estoppel against owner of immovable. (NCC 1437)
The title to land or real property may pass by an equitable estoppel which is effectual to take the title to land from one person and vest it in another where justice requires that such action be done.
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by intentional misrepresentation, misleading conduct, or wrongful concealment, may a person preclude himself from asserting his legal title to land or from enforcing an encumbrance on, or maintaining an interest in, real estate?
yes. 1. There must be fraudulent representation or wrongful concealment of facts known to the party estopped;
2. The party precluded must intend that the other should act upon the facts as misrepresented;
3. The party misled must have been unaware of the true facts; and
4. The party defrauded must have acted in accordance with the misrepresentation.
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Estoppel by acceptance of benefits. (NCC 1437)
Estoppel is frequently based upon the acceptance and retention by one having knowledge or notice of the facts, of benefits from a transaction, contract, instrument regulation, or statute which he might have rejected or contested.
It has been said that the case is referable, when no fraud, either actual or constructive, is involved to the principles of ratification (NCC 1317, 1403-1, 1405) rather than to those of estoppel. The result produced, however, is clearly the same, and the distinction is not usually made. Such estoppel precludes one who accepts the benefits from repudiating the accompanying or resulting obligation, and may operate to prevent a party from profiting by his own wrong.
Even if there are no benefits, estoppel would also apply if the “agent” was given apparent authority, and the other party was misled into giving him credit.
A has a diamond ring. He allowed B to assume apparent ownership over the ring so that B might sell the same. Instead, B pledged the ring with C to obtain a loan. The money lent was later handed over to A. A's receipt of the sum for which the pledge was made is an implied ratification of the pledge and A is, therefore, in estoppel.
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what is trust
the legal relationship between one person having an equitable ownership in a certain property and another person owning the legal title to such property.
It is a fiduciary relationship concerning property which obliges the person holding it to deal with the property for the benefit of another.
Created by law or by agreement.
Where the legal title is held by one, and the equitable title or beneficial title is held by another.
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ELEMENTS OF A TRUST
1. Parties to the trust
2. The trust property or the trust estate or the subject matter of the trust
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The object of the trust
Known as the trust res.
The trust res must consist of property, actually in existence, in which the trustor has a transferable interest or title, although as a rule, it consists of any kind of transferable property, either realty or personalty, including undivided, future, or contingent interest therein
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Trust Distinguished from Guardianship or Executorship
In a trust, the trustee or holder has legal title to the property; a guardian, administrator, or executor does not.
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Trust Distinguished from a Stipulation Pour Autrui
A trust may exist because of a legal provision or because of an agreement; a stipulation pour autrui can arise only in the case of contracts.
A trust refers to specific property; a stipulation pour autrui refers to specific property or to other things.
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PARTIES (NCC 1440) to a trust
A. Trustor
B. Trustee
C. Beneficiary or cestui que trust
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A. Trustor
establishes the trust
has the legal title
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B. Trustee
holds the property in trust for the benefit of another
to whom the property is conveyed and manages property
cannot claim ownership of the property
generally actions to enforce express trusts are imprescriptible
Except
When the trustee repudiates the trust
trustee claims ownership over the property
acts management is by virtue of ownership
Action for reconveyance will no longer be imprescriptible
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C. Beneficiary or cestui que trust
the person for whose benefit the trust has been created
has the beneficial rights or ownership; entitled to fruits
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kinds of trust
A. EXPRESS TRUSTS
B. IMPLIED TRUSTS
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A. EXPRESS TRUSTS
Created by the parties, or by the intention of the trustor (NCC 1441)
usually contractual
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A. EXPRESS TRUSTS I. Proof required (NCC 1443)
No express trusts concerning an immovable or any interest therein may be proved by parol evidence.
Statute of Frauds
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A. EXPRESS TRUSTS II. Form (NCC 1444)
No particular words are required for the creation of an express trust
It being sufficient that a trust is clearly intended.
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A. EXPRESS TRUSTS III. Want of trustee (NCC 1445)
No trust shall fail because the trustee appointed declines the designation
Unless the contrary should appear in the instrument constituting the trust.
Remedy is appointment of new trustee according to stipulation or by the Court
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A. EXPRESS TRUSTS IV. Acceptance by the beneficiary (NCC 1446)
Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous condition upon the beneficiary, his acceptance shall be presumed, if there is no proof to the contrary.
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Implied trusts are
those which, without being expressed, are deducible from the nature of the transaction as matters of intent, or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties.
by operation of law
may be proved by oral evidence - should be clear and convincing
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I. Resulting trust
A trust raised by implication of law and presumed always to have been contemplated by the parties
The intention as to which is to be found in the nature of their transaction, but not expressed in the deed or instrument of conveyance.
Law presumes intent of parties due to the nature of their transaction.
Examples of resulting trusts are found in NCC 1448 to 1455
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II. Constructive trust
A trust not created by any words, either expressly or impliedly evincing a direct intention to create a trust, but by the construction of equity in order to satisfy the demands of justice.
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Constructive trust arises by
It does not arise by agreement or intention but by operation of law.
Arises from fraud, mistake, duress, breach of fiduciary duty, undue influence
No intention by parties at all to create a trust; but court declares trust in the interest of equity.
If a person obtains legal title to property by fraud or concealment, courts of equity will impress upon the title a so-called constructive trust in favor of the defrauded party.
A constructive trust is not a trust in the technical sense. (NCC 1456)
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Express trusts How established (NCC 1441)
Created by the intention of the trustor or of the parties.
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Implied trusts How established (NCC 1441)
Come into being by operation of law.
Implied trusts may be either resulting or constructive.
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trust How proved (NCC 1457)
Where a trust is to be established by oral proof, the testimony supporting it must be sufficiently strong to prove the right of the alleged beneficiary with as much certainty as if a document proving the trust were shown.
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can parol evidence be used to prove an express trust concerning realty?
no, In order to establish a trust in real property by parol evidence, the proof should be as fully convincing as if the act giving rise to the trust obligation were proven by an authentic document.
Such a trust cannot be established upon testimony consisting in large part of insecure surmises based on ancient hearsay. A trust cannot be established, contrary to the recitals of a Torrens title, upon vague and inconclusive proof.
Enumeration of the cases of implied trust does not exclude others established by the general law of trust. But the limitation laid down in NCC 1442 shall be applicable.
Trustworthy oral evidence is required to prove an implied trust because oral evidence can be easily fabricated.
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When property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property (NCC 1448)
There is an
There is an implied trust.
The former is the trustee, while the latter is the beneficiary.
Law assumes payor is the beneficiary and owner is trustee.
However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child.
134
When a donation is made to a person but it appears that although the legal estate is transmitted to the donee, he nevertheless is either to have no beneficial interest or only a part thereof (NCC 1449)
There is
There is also an implied trust in favor of the donor as beneficiary.
135
if the price of a sale of property is loaned or paid by one person for the benefit of another and the conveyance is made to the lender or payor to secure the payment of the debt (NCC 1450)
A trust arises
A trust arises by operation of law in favor of the person to whom the money is loaned or for whom it is paid.
The latter may redeem the property and compel a conveyance thereof to him.
Law presumed that the beneficiary is the debtor
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When land passes by succession to any person and he causes the legal title to be put in the name of another (NCC 1451)
A trust is
A trust is established by implication of law for the benefit of the true owner.
Land is inherited by a person but legal title is put under the name of another.
Trust is implied in favor of the heir.
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If two or more persons agree to purchase property and by common consent the legal title is taken in the name of one of them for the benefit of all (NCC 1452)
A trust is
A trust is created by force of law in favor of the others in proportion to the interest of each.
Trust is implied in favor of the co-owner
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When property is conveyed to a person in reliance upon his declared intention to hold it for, or transfer it to another or the grantor (NCC 1453)
There is
There is an implied trust in favor of the person whose benefit is contemplated.
Trust implied in favor of the transferor or intended beneficiary
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If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee (NCC 1454) there is
A trust by virtue of law is established.
If the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of the property to him.
Trust in favor of the obligor.
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When any trustee, guardian or other person holding a fiduciary relationship uses trust funds for the purchase of property and causes the conveyance to be made to him or to a third person (NCC 1455) there is
A trust is established by operation of law in favor of the person to whom the funds belong.
Implied trust in favor of the owner of the trust fund.
Profits are held in favor of the owner of the trust fund.
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Property acquired through mistake or fraud (NCC 1456)
The person obtaining it is, by force of law, considered a trustee of
an implied trust for the benefit of the person from whom the property comes.
Real owner may file action for reconveyance and enforce the constructive trust
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PRESCRIPTIVE PERIOD trust
Express - none unless repudiated
Implied - 10 years
The ten-year prescriptive period begins to run from the date of registration of the deed or the date of the issuance of the certificate of title over the property.
Exception
If the person claiming to be the owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe.
