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OBLIGATIONS
Obligation- juricilcal necessity to give, to do, or not to do
Obligation is broader than contracts
Contracts is only o ne source of obligation
Five sources of Obligations:
a. Law
b. Contract
c. Quasi-Contr.tct
d. Delict
e. Quasi-Dehcts
LAW
What do we refer as law?
Laws that cr\!ates
obligations and
contract. Civil Code
does not creare
obligations and
contract.
We are nor talking
about general law but
rather specific laws (e.g
dury to pay rax; duty to
support) where the law
provides for your
obligation. General law
only provides
concepts(e.g.
requirements) but does
not create obligaoons.
CONTRACTS
DELICTS
criminally hable is
civilly liable
What is it compnsed of?
Due to the offended
party. resritution, etc.
Nugwd
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li Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does nor change like shifting shadows."
Caroline Ton, Jessamyn Uy & James L:gan
Q UASI-CONTRACTS
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RPC.
Obligauon is you have to
pay
T wo kin ds ofquasi-contrac t:
a. Negotoriwn gestio- one
party undertakes to
admini!.ter or rake care of
proper)' of another. Your
unilateral act in here is the
cakmg care of the property
It came from your own
volition. This pertains to
emergency Situations. An
act of kindness.
There is no obligation for
you to do this but you did
it anyway. So where is the
oblJgation? Once he
decided to t:&e care of the
he is OBLIGED
to
care of it until the
emergency ceases.
of the owner1 there is
an obligaoon created. The
OBUGATION IS TO
COMPENSATE
b. Solution indebiti payment by mistake. You
thought you were obliged
to pay it but in fact you are
not obliged:Or you have
21Page
"Every good ond perfect gift i5 from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligan
A source of obligation is an exclusive list. lf not coming from this one, then you do not have any
obligation.
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Juridical Necessity
Meaning, it is mandatory. Once an obligation is created from these 5 sources, someone has to
comply! Ths is complete m itself
Three phrases to do, not to do, and co give are what we c:ill PRESTATIONS.
a Obhgaoon to give
\Vhat arc rou requLred to do m here?
To deliver, real or personal
b. Obligation to do or not do
\\7hat are you reqwred to do?
Service, to do or to refrrun
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a. Legal.
b. Moral
3IPage
NEvery good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
a. Take caft ofit with due diligen ce ofa good father ofa family
Illustration:
Perfection
Condition
Delivery
Today the obligation is created. Then there is gap where the property is exposed from periL
Then the day you have to deliver. So this obligation is accual.ly to take .into account this
interregnum. This is the guarantee that you will be able to deliver.
What happens when your obligation is subject to a condition?
Your obligacion starts only from the tir:::le the condition is fulfilled
Diligence required
o Diligence. of a good father of a fatnily- that which is reqnired by the nature of the
obligation and corresponds with the circumstances of person, time, and place,
Exception: when the law o r contractprovides for a different standard of care
(e.g. common carrier- requires extraordinary care)
b. D eli ver fruits
The fruits earned from the property fro m the perfection of the obligation?
If the obligation is PURE -then you are obliged to deliver the fruits from the time you are
obliged to make delivery- all the fruits earned from the time you are supposed to deliver must
b e delivered, he was already the owner &om the time the contract was perfected.
If the obligation is CONDITIQNAL (suspensive), refer to Article 1187.
,,1oc'(\s
If the obligation is reciprocal - the fruits are murually compensated
If the obligation is unilateral - the debtor shall appropriate the fruits:
debtor does not need to ._;. de.liverr .: .
lf the obligation is with a PERIOD, no equivalent of article 1187.
CRC: 2 views
1
a. One group: obligation to deliver arises orily from the arrivel of ath term, then the
obligation starts only from the arrival o f l period - therefore, to delivery all the fruits
b. Second group: obligatio n to deliver starts from day 1 (where the contract was
perfected)
CRC: in both cases, you cannot apply article 1187. You still have to deliver fruits
lf the obligation is RESOLUT<j)RY, deliver immediately.
When Creditor is entitled to the Fruits
o l;xample: A is obliged to give B on March 3, 201 1, a particular parcel ofland. (Before
D ec.)?_he has_!lo rigi}ty.rhatsoever ?ver the fruits) . After March 3, 2011 , the ctdlror
is entttled (as of right) to the fruits . But if the fruits and the land are actually or
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"Ever; good and perfect gift is from above, coming down from the Father of the heavenly lights, who
doP.s not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligan
o
o
o
constructively dehvered only ou March 15,2011, B becomes owner of said fru its and
land only from said date. Between March 3 and 15, B had only personal right
(enforceable against A); after March 15, he Pas a real right over the properoes.
Personal Right- power demandable by one person of another - to give, to do. or nor
to do.
Real Rightpower over a specific thing (e.g. right of ownerslup or posscss10n)
and is binding on the whole world.
In the case above mentioned, before the land is del.tvered, the proper remedy ot the
buyer (since he ts not yet the owner) is to compel specific performance and debvery.
and not an accion reinvmdicatoria.
c. Deliver Accessions
Accessories- those joined to or included w1tb the p1incipal for the latter's better use, perfection,
enjoyment (e.g., the keys to a house, the dishes in a restaurant).
o They are attached to the property but this can be separated without any damage
O nly for embellishment or ornamentation.
1\ccessions - additions to or improvements upon a thing. These Accessions are attached, cannot
be removed without causing damage to the principal. These become part of the principal, so rhe
owner of the principal property gets the accessions.
o Example: obligation to deliver a car, it ha4momo steering wheel,
1pod dock etc.
Do you have to deliver these wtth the accessories?
GR: once you sajd you will deliver this ca.c, you have to deliver
everything. "But of course, you can s cipulate othetw1se.
If the object ts generic, then genus does not pensh. So you don't actually have these Lh.ree added
obligations.
Breach - failed to deliver or perform the prestacion
Remedies of the CREDITOR in case there is a Breach of Obligation:
To Do
To Give
Specific
Specific performance
- Right to compel the
obligor to deliver or
to perform his
obligation
"
Substitute Performance
blu,..W-k
Damages
"
Generic
"
"
...J
"
(no prohibition
provided in the
law; but It is not
:LI effccove
remedy)
"
(except: purdy
personal/
prohibited by
the agyeement)
"
Not to Do
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S IPage
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligon
I Rcsolucion/Cancellaoon I
Can you choose all of the above?
No. But you are not limited tO one. You cannot have not more than 2. The only remedy that
!...
Once you have asked for S.P, the coum have srud you can go to the resolution of the 1,omract.
H owever, if your first option is resolution, then you can no longer take it back and ask for spec1fic
performance (or shift to other remedies).
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When is It available:
o There must be a substanual breach (Php 99.00 was paid out of the Php 100.00 debt)when the breach is sughr, can you sull ask for resolution? General rule
Exct!pt
when time is of the rucnce
This remedy even without a sripulaoon in reciprucal obhgaoom
It ts a remedy when all other fail.
These remedies need no t be stipulated by the parocs. even 1f there is nothing agreed upon, these
are LEG,-\L RElviEDIES provided by law. However, this is qualified by tht.> fact that the parces
are free to stipulate anything in the conuact because for example they have s opulateJ for
arburatlon then of course they have to undergo arbttration ftrsr.
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Cases:
First two cases: you can have oncelL1oon only when the breach IS
of the essence, no matter how slight the breach ts you can bring this action.
IS
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HEvery good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows.''
Caroline Tan, Jessamyn Uy & James Ligon
Ji is it a resolutory condition, such as the K of sale, then an obligation has already been perfected so
you can resolve or cancel the obligation
Racquel and Unlad: ;!_not interchange resciSSIOn Aroclc 1380 and Article 1191 The latter should bt"
Ltrmed as resolution/ cancellation
RESCISSION
{tNtlts.tJ.
RESOLUTION
Obh,....
Article 1191
Breach -you have valid obligatio n as well
BREACH
What is breach?
There is breach if you do not comply with tht: oblJ.gation exactly in the manner and Stipulations
agreed upon
4 Sources o f Breach
1
a Dolo b. Culpa ..; f\/C' H7"'t.c.
c. Default
d. Contravention of the Terms
71 Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
,
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
,;
DEFAULT
a A brench or non-performance in point in
orne
b. But look ar the reason why the debtor
failed to perform
If Dolo/Culpa -liable
If not (e.g. fortuitous event) - not hable
CULPA (negligence)
a. ll1ere is no deliberate intention to cause
damage
b. uability due co negligence may be
reduced in certain cases
c. Waiver of an action to enforce liability
due to furore culpa may in a certain sense
be allowed.
CONTRAVENTI ON OF TER.l\ttS
a. You do nor comply with the terms and
conditions
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Basis
j
He is liable because.> he
is AWARE that he has
an obligation and yet
deliberatelY fails to
cX;mply with it
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Extent of
Liabifjty
CULPA
People who are in the
lruddle of the road; they
are liable but nor so much
as compared to Dolo
Person is not aware but
he is punished because he
FAILED TO
lt,J.
Fortuitous Event
No liabU.Hy
Two kinds:
a. Could not have
foreseen
b Foreseen but
unavaoicl.ablc
Not liable
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3 Kinds of CULPA
CULPA CO!'rrRAcruAL
CULPA AQUlLIANA
CuLPA CRIMINAL
8IPage
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
N egligcm Act
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LIABILITY).
USURY LAW
Usury - exaction of excessive interest.
Not abolished but merely suspended.
1he WHOLE INTEREST that is USURIOUS is voided, not only the excess interest
1NST ALLMENTS
Please see Art. 1176
:\n. 1176 is merely a rebuttable presumption not a conclusive presumption.
r:or par 2, Art 11 76 to apply, 1t 1s not enough that the receipt for the msralmenr paid be dated,
n must also specify that the receipt is for payment of a particular installement due.
NEvery good ond perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligon
Entry
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FRUJTJ
Fulfllmen\ of the Condmon
Dehvery
Remember you can always 1mpose any condiuon, except It should not be ILLEGAL. Il\Uv0R.\L,
and tlvfPOSSlBLE
You can mixed these two (suspensive/resolutory) with the followUlg:
a. Potescstive - depends upon the will of one of the parties
a.. Potestative on the part of the DEBTOR
i. If also suspensive- BOTH the condirion and the obligauon are VOID
ii. If resolutory - Valid
b. Potestative on the part of the CREDITOR -VALID
b. Casu3/- depends on chance o r the will of a third person
c. Mixed - depends partly on the Vv-ill of one of the parties and partly on chance or v..-ill of a
thud person
FORTUITOUS EVENT
Somethmg beyond the debtor's 'vtll
It is an act of God that no one has control of
If u ss a FE, then your liability is 0. Because this is something which you have nor foreseen o r
foreseen but unavoidable
Exceptions:
1. By sopuhtion or contract
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Ira g e
NEvery good and perfecc gift is from above, coming down from the Father of the heavenly lights, who
does noc change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
2.
3.
4.
5.
6.
7.
R equisites: (IFIN)
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a. Independent of the will of the debtor- something he has not control of, an act of god or
nature, it can involve acciden ts like ftre, catastrophy, war, rebellion, sedition
b. Could not have been Foreseen or foreseen bur ur.avoided
c. An event which render you I lvfPOSSIBLE to perform- difficult-j ts not an excuse, it is the
imposs1bilicy of perf01mance that excuses you from performing your obugaoon- 1f it can
still be perform even tn the uunost difficulty, you a.re not
d. No contributory NEGLIGENCE
Cases:
\Vhere parries have inststed that they were supposed co be excused from perfoarung theJr obugauon
because of martial law, the courts said that this should not be considered as a fortuitouse event
unless of course this is very direct say for example you have to deliver a thing to a company which
was already escheated by Marcos.
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I 2 YRS FE I
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Delwer i@ars, therl..lJ'ears in between a 6rc has prevented you from detivenng your product,
the court said that one you have to
the cause
the
So if the two-year perioj IS
because of fortuitou5 event, you do not extend your obligation for another two yeru; because in this
1"\No years you were excused from"ji';'Qliry because again it is a fortuitous event
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lliPag e
"Every good and perfect gift isfrom above; coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligan
.,
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B. Negative condition- (if you do om commit an illegal act, that nothing must happen)- the
condition will be deemed as not having been agreed upon by the paroes. The condition lS
treated as not written. Why? Because the condition is superfluous. Everybody is expected
not to do immo:aJ things. llus wJil be as if you h3vc entered Into a PURE obligaoon.
On the assumption that your condition does not fall within the three aforementioned limitations,
then tbe condinon must be fulfilled.
Example: to pass the bar. But what if the person keeps on failing the bar, how long should you wait?
GR: if the parries have nor agreed to fix the date as to when it should be fulfilled, then you have
to wait, subJeCt to the rules on prescription (well one may argue there is no runrung of
prescription yet because there is n o obligation yet)
Exception: if It ts obvious that you will not be able to pass. Now we JUSt have 5 years to do HI
Article 1185
CRC: 1 would reaUy understMd this provision to mean that it IS not that the condition is fulfilled
but the debtor is already released according to 1nrent:ion of the paroes and the narure of the
obugation. It is wrong to say ''deemed to be fulfilled" because by thi!> we wtll mean the.re wac;
obligation. In other words, if the tnteotion of the paroes is not to walt fotever, then the court
should take this into considcnwon.
Period for
A. Positive form
I will give you Php 1M if the ticle will be issued before Dccembe:- 31,2011.
What happens if before the said date, condition is fulfilled? Obligation anses at the wne of
fulfilment, not on the agreed penod.
lf the period arrives and the condition has not been fulfilled - debtor is released from the
obligation. Except: when the creditor prevents the fulfilment of the condition or it becomes
indubitable that the condition will not happen
{t ;hir.
B. Negative
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'Every good and perfect gift is from ubove, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy P.t James Ligon
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Period
from a Condition
Podod
Condition
1.31Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lighcs, who
does not change like shifting shadows."
Coraline Tan, Jessamyn Uy & James Ligon
Unc<::mun Event
one party?
Y cs, and Iusually
It is granted for the benefit of rhe debtor. This means he can compel the
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creditor to accept his payment before the arrival of the pen?d but tl. cannot be
ro
Ray before the arrival of the E;?,eriocl
If it is given to
then the cred.Jtor is enotled to demand collection befgrc:, the arrival
of the perio.d but he cannot be compelled to acceet payment before the arrival of !Jle period
By stipulation, it is possible granting the penod to the creditor, but this is not normal.
to
Why? This is just to be f:ur that when you do not furnish the secunty, then you'U lose
your period as well. In here, you cannot accept t.he creditor to accept other -;ecunry than
I Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligan
(;
fr JJ/? {DII
&, ft I
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ttcr
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Retroactive Effecr
,(C) delivery
,.
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ab.. Condioon is fulfuled, effccti\,ty: nme condi tion is fulfilled but retroacts to the date when rht:
obligation is entered
you have rights but accruing only upon the cond.ioon)
So UJ between A and B, vou mr.y have these protecnve actJons:
Bond, escrow, etc
Sometlung the paraes may agree to. not forced by law
c. If the debtor ddivers in (A), what is the effect? Recover acrual payment and mtercsr
thJs
is payment by mistake (soluoon indebiti gives the payor the right to recover with interest)
dus is of cou.rse jf he discovers the mistake before the happening of the condition.
But what 1f he knew of the mistake after the condition has already been fulfilled?
YOU DO NOT H.AVE THE RIGHT TO ASK FOR TI-lE RETURN OF THE
PRINCrP r\L, you can recover for the tncerest for the period before tht> happenmg of
the period.
I f the debtor knew mat payment was not yet due- he cannot recover what has been
paid. This is true whether the creditor is in good faith o r bad faith, since the
important thing is the knowledge of the debtor (Implied Waiver).
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I P age
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows. "
Coraline Ton, Jessamyn Uy & James Ligon
[n un.i.iateral obi.Jgauons - debtor gets the fruits .tnd mterests, unless there ts contr tn
lntenr
In reciprocal obLg:mons - the fruits and Interests dunng the pendency of tht:
condition shall be deemed to compensate each other.
b. Prescription -you start c-ounting from the time the condition wok effect
Is tlus the same rule .if we talk about those 'Wth a Period?
You already have an obligation from DAY 1, that is why tough you may ask for protective acts
but tht: debtor is already obligation Period is merely a SUSPENSION of the obligation to fulG.I.
Hence, retroactivity is acmally N I A
For prescription though, same rule applies. You count only upon the happerung of the penod
(suspenstve)
For the fruHS, well since your oblJgatJon arises from DAY I if it is a period.
CRC: Caguioa group: since we do not have equiva.lent of Article 1187 for .geriods, fruits
fwm day 1 up to the date the period anses belong to the creditor.
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Paras gro_!P: since you cannot rea.lly bring an action before the amval of the
period:""then techrucally you do not have rights OYet the fruits before the arrival of the
penod as well.
(.
This onlv appLes to those OBLIGATIONS TO GIVF SPECIFIC PROPERTIES Bt:cause it you
talk about gcnenc propertJes, res perit domino
In those to Jo or not ro do, nothing can be lust. Duh. Also for retroacovity, it is up to the court if
they will allow this
LOSS
a. Total loss
Depends:
Fault of debtor
Debtor pay damages
No specipc perfonnance
because it is one of a
kind. No subsrirute
performance as well.
Resolution I cancellation?
There is nothmg more
ro cancel. (! I >tf
Fault of Creditor
Debtor is released.
No obligaaon
created in the first
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DETERIORATE
Fault of debtor:
Creditor's option:
a. Specific
perfoonance +
damages
b. Resolution/ cancell
at.ion + damages
Fault of creditor
Debtor delivers the prope1('
111 its status. Tapos!
{,Fortuitous event
U1
IMPROVED
-+
Caused by
debtor:
Usfrucuary
rights- can he
get payment for
the
tmprovemen ts?
No. He can
remove if it can
be removed .
Caused by rhc
creditor:
Not entitled to
any expenses for
1mprovement.
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"Every good and perfect gift Is from above, coming down from the Father of the heavenly lights, who
;Joes not chonge like shifting shadows."
/
- Caroline Ton, Jessamyn Uy & James Ligan
-+
place
Fortuitous event
Obliganon is
extinguished
-+
Bv narurc
Inures
to the
cr#fl/,.
of the
credltor
You apply the same rule in resolurorx condiuon (m case the debtor fails ro rerum the property
the happening of the resolutory condition)
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DEFAULT/ MORA
General Rule: Demand is needed
Pure obligation- make a demand to place the debtor in default
Conditional/obligation \"1th a period- you still need to make a demand make the debtor in
default
There are people who are suggesting that if it 1s a monetary obligation, no need for demand CRC
does not agree. The rule JS that the sigrufic:lllce of the happeiUng of period is that this thl emir
lime that the credaor can make :1 dem:cnc.l Othc.:I"'VlSe. it 15 prcmarurc
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MULTIPLE OBLIGATIONS
II\
. &Wt,
t;l-
ahvays
dcmanJ
bli\
Muluplc Obligaoons
a. Multiple parries -Joint and soildary obligations
b. Multiple prestations
Alternative -is
where out of rl-)e two or more prestations which may be given,
only one is due
ConJunctiveif all the conditions must be performed
.
Facultative- only one prestation has been agreed upon (prtnopal prest.-uion) but the
obligor may renderanother m substituoon
ALTERNATIVE OBLIGATIONS
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Effect ofLoss
. d orruno
Db
' Ch.
e tors
o1ce - spec1(iJC property smce res pem
One/Some
Debtors Fault
a. \Vhen hr destroys one
of the several
prestations, then the
debtor i..c; just makmg
his choice - choose
a.
All
Crednor to receive
damages - what is the
value? Based on the last
one
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"Every good and perfect gift is from above, comfng dawn from the Father of the heavenly lights, who
does nat change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligan
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Crcdiror1s Fault
FortuitOus Event
:i.
a.
Resoluoon + Damages
based on the cho1cc of
the debtor
Obligation 1s
extinguished
2. Poss1ble combinations
If you destroy everything then the last one ts lost due to FE, then rou do not have any
ob!Jgation already. The debtcr has aheady chosen bv desrro',1ng other presratJons and cotwt:rrcd
H mro a simple obugation
A - bst due ro FE
B - lose due ro credltor's fault (at thts poim. debtor can choose between the two opoons 'ls
menooned above)
C Qast item) - destroyed by the debtor Qost due to debtor's fault) - t t means that the debtor has
chosen resoluoon/cancellation (not liable for the loss)
3
Creditor's Choice
Debtor's F:wft
a.
b
Fortuitous Event
a.
FACULTAT!VEOBUGAT/ON
One/Some
Choose from the
remaining
Damages- Value of
the thing destroyed by
the debtor
Can choose from the
remaining
Choose from
remrumng
a.
All
Damages based on
whatever his cho1ce
a.
Obligation 1"
extinguished
a. Obligaoon i:,
ex ting01sh<>d
i
A
1l1c nulliry of the principal caroes with lt the nullity of the accessones or substitute
IS
Effect ofLoss
i ..
a. Loss of Substitute GR: Does not affect the principal prestation. Debtor cao still deliver prinopal prestation
Except: if debtor chooses substitute and communicates to creditor and the credttor does
something w/c results in loss of subst.
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"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Cora/me Ton, Jessamyn Uy & James Ligon
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Consider it as an alternative obligation because it creates more :coproetry of rights
To be facultaove
intention must be cle u- by prO\ision of l:lw
""
Excepoon: Solidary Obl.igauons -the active and passtve
must comply '">ith the whole
' .
E.xpresslv sopulated
Bv law (e.g obligaoons arismg from
bailees in commodarum)
UstOf words such as JOint and severally
( the use of the word sever".J.ly in the Philipp1nes, tt mean:- ::.olidary)
lnwvtdually, collccrivc:fY. separately, disuncnvely, "I" \Vlth a lot of st&T:!atures = aU
\\7hen the nature of the obligation reqwres liability to be solidary
of
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"Every good and perfect gift is from above, coming dawn from the Father of tile heavenly lights. who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligan
--
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If
of Lhe debtors has passed away, can rhe creditor still go against A (the one who clied)?
Ye!.> 'fhe creditor's nght should not be frustrared by the mere fact that A died You can still
collect from the cst:lte.
I" the two yeat per1od limitauon apply so ::ts w when c'.ln you tile a cl:um on the estate as proviJcd tn
Rules of Court?
Yes
If you fail to present a claim, chen you can always claJm agamst other debtors. Take note that the
argument that since you failed to 5.1e your claim then you are already barred from collecting does not
hold water. You can always go after the livin2 debtqrs. That rule wherein you are already barred
from collecong ts applicable of course if you only ha\'C one debtor- So if there are other debtors,
then you have 10 years to collect 1f It is written_
I
IS
If you go after B (another debror), are there defences whtch can be mvoked bv B?
We have ,___
personal and real defences
..
211 Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
J.c.
Tlf'
Caroline Ton, Jessamyn Uy & James Ligon
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o Excepti9ns
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he has the obligation to reimburse the other creditors
Except If condorung creditor has consent of all other creditors,
Condoning creditor has NO more duty to reimburse the other
2. Assignment of
- GR: consent of all is
(can be given later)
- o Exception: assignment of shares to another solidacy p-editor
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= to
the paJing
o Remedy: Recover from the creditor: follow rules on natural obligation & soJutio indebiti
-if he KNOWS that debt already presccibed 7 narural obligation- NO recovery
Exception: NO reimbursement:
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''Every good and perfect gift is from above, coming down from the Father of the heavenly
does not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligan
.. '
2,
If
age
who
Kinds of Defences
1. Complete Defense- denved from the narure of the obligation: you don't need to pay anything
Examples: lack of consideration; absolute simulation; illegal consideration;
extinguishment of the obligation; non-fulfilment of the suspensive condition; statute of
frauds
2. Personal Defense to the Debtor Sued- Complete deft>nse (generally)
Vitiated Consent -Complete Defense
Incapacity to give consent- Complete Defense
Non-fulfilment of condition imposed regarding Ius share- Partial Defense
Non-arrival of the rc.rm regarding his share- Partial Defense
3. Personal to Others -Partial Defense regarding share others involved
If one of debtors IS uwoki.ng a personal defense (personal to hunself) you CANNOT be made to
pay. Example you are saymg your signarure 1s forged. Unbke when It is invoked bv another debtor,
be may be liable to pay less the debtor's share that has a personal dt:fense.
Subrogaoon - the debtor who paid DOES NOT STEP INTO THE SHOES OF THE
CREDITOR
'.
i,
on
I erences b etween a so lid1ary d e b tor an d a suret
Solid:uy Debtor
principal party in me contract
cnn be made to pay the whole amount of the
obligatJon (can you bind _yourself less? No)
collects from othec debtors and cmoot collect
the full amount (of course minus his share)
Extension of time will not release the solidary
Surety
not a pnncipal party
can bind himself for less
collects the entire amount agreed upon
NEvery good ond perfect gift is from above, coming down from the Father of che heavenly lights, wf"
does noc change fike shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
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Solidarity
Indivisibility
Refers to natUJ::e of obligaoon
May exist even if there IS only one debtor and
only one creditor
The fault of one is not the fault of the others
';jl
but we
performance
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Penalty Clause
Coercive means to obtain from the debtor compliance from the debtor
An accessory undertaking to assume greater Liability in case of breach
No need to prove the amount of damages -have to pay the supulated penalty
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the penalty
the place of mdemnity for damages and the payment of Interest
Exceptions:
o
sopulacion - to the effect that damages or interest may still be recovered,
despite the presence of the penalty clause
o Debtor refuses to p ay the penalty imposed in the obligation
The penalty will earn interest from the date of demand
o Debtor is guilty o f fraud or dolo in the fulfilment of the obligation
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24 1 P a g e
"Every good ond perfect gift is from above, coming down from the Father of the heavenly l1ghts, who
does not change /1ke shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligan
'
I,.
Penalty is
Whenever people talk abom tnterest- !t's eaher the compensanon for using the money or the
penalty
If we talk about interest which is not because of any default, it is because you are using the
money of a person -this is not in a form of penalty but rather .a compensation
With stipulation but no rate- 12% for loans/forbearance of money [6% for the rest]
No agreement - it doesn't mean you arc. not entitled to collect- by mere default, you will be
liable at 12%/6% depending whether it IS loo.n or forbearance
Compoundtng of interest- charge interest over interest- only when there is a sopularion or
judicially decreed
If it ts :1 judgment obhgauon, before the judgment comes in, there 1s no obligation You don' t
reckon rhe rlamage at the time of fihng. lf
coun at first instance says ynu are bable for
damages, this IS not final but you aL:eady have an obligation from then on. You have an
obligaoon but the amount remains unliquidated. Once the judgment has become final, it
becomes liquidated. From the final.tty until your payment this becomes loan/forbearance already
(12%).
"Every good and perfect gift is from above, coming down from the For her of the heavenly lights, who
does not change like shifting shadows."
,.J. 1
Caroline Ton, Jessamyn Uy & James Ugon
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PA YMENT
Payment- is the mode of extinguishlng obligations whlch consists of.
a. The delivery of money: or
b. The performance in an} other manner of an obligation
Integrity
'
Exceptions:
a
"'(ff
Substantial performance (Article 1234 and 1235J performance accorJmg to the f.ur
tntent of the contrnct .....vah an attempt LO perform
if you read Article 1234, it IS a bit confus1ng. It
the ob!Jgor rna\ rel: OVt"r le s.s
the darnzges - what is the mea:Ung of recover? Does this mean rhar the o bligor
can take back his money:>
No. otherwise the obligation v.ril.l still eXJst. Thjs only means th:\t the
debtor can be considered as hanng ful.filled hls obhgaoon and can
enforce fulfilment of his obligation, but he is still liable to make good as
to what has not bee>n performed (balance)
Example: the obligation is at Php 100.00 but the debtor only patd
1'hp90.00, the debtor will be deemed to have been fulfilled his obhgacion
but he stiJJ has to pay the remaining).
If this is the case, is 1234 and 1235 the same?
-+
Nol In Article 1234, there is the phrase "less the.: damages obt:uncd
by the ctetlitor- tllis means that the debtor is not vet off the hook, the
effect of rhis is
the crcdttor cannot cancel the obljgauon. Th1s ts an
cxcepoon because the
at this n.me cannot snll av:ul o f remedies
such as resolution but at the ;ame time the debtor cannot be considered
as fuUy patd because he still
to pay.
b. Waiver
26
I Page
"Every good and perfect gift Is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligan
111
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c. Novaoon
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d. Waiver c.. lo..J
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- ) h- !H1.
I"()
- lf the contract does not speofy the gu:Wry.
:
Creditor- cannot demand a thing of superior quality (but if he desires, he may demand nnd
accept one of tnferior gualay).
Debtor- cannot delrver a thing of infcnor quality, but 1f he so
he may de!Jvcr one of
supenor quality.
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If intent cannot be detenmned, the paroes may resort to- jurucial interpretation.
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3. Indivisibility
A debt shall no t be understood to have been paid unless the thing or service in which the
obligation consists has been ror!!P<J delivered or rendered.
f.t
Partial performance is NOT allowed
Mtl
Exceptions:
a. Contrary sopulaoon
b. \X' hen the obligation is co' ered by chfferent conclitions or differenr terms
c. Parualliqu1daoon
d. Jomt debtOr pays fus share or rhe crednors demands the same
e. Solidary debtor pays only the pan demandable
f. Compensation - when one debt is larger than the other, it follows rhat a balance is left
g. Work is done by parts
27
I P <1 g e
"Every good and perfect gift is from above, coming down from the Father of the heavenly lighcs, who
does not change like shifting shadows.
Caroline Tan, Jessamyn Uy & James Ligan
H
Creditor to accept?
I
""
Debtor
3"' Person with interest
3rt1 person without interest
""
"
Paymenfb0.fncapacitated Person
- GR:
paying has no capacity to:
I Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Tan Jessamyn Uy & James Ligan
Can be ranfied
a.
b
c.
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Excepuons:
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1f after payment the tlurd persor; acquJreu the creditor's rtghts
W
b. If the creditor ratifies the payment to the third person
c If by the creditor's conduct, the debtor has been lt:cl to make the payment (estoppel)
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QJ
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vp tv k ri
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compel a creditor to accept in pa)mCn(
of the debt.
29
I P il g e
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not
like shifting shadows."
V
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Coroltne Tan, Jessamyn Uy & James Ligan
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"Every good and perfect gift Is from above, coming down from the Father of the heavenly fights, who
does not change like shifting shadows. n
Caroline Ton, Jessamyn Uy & james Ligon
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You have to
in cash if the creditor refuses to receive rhe checks
Creditor can refuse to accept personal check unless It has been scipuJated
However, the moment the Creditor accepts the check -cAnnot put up the uefense that
the check is not a legal tender
J
Problem
February 11 : check 1s tendered
February 15: encashment/clearance
February 14: Due date
o Are you already m default because your obligation was due on February 1-P
-+ No. As long as the check has been cleared, you'll be credited on the 11 .to
(retroactive effect)
Place ofPayment
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A. Application ofPayments
Definition: it is the destgnation of the debr to which should be apphed a payment made by a
debtor who owes several debts in favor of the same creditor.
Remember the requisites of valid payment (identity, integnry, indiVlsibility)- must sull be
complied
REQUISITES:
a. There must be two or more debts (severality of debts)
b. The debts must be of the same kind
c Owed by the same debtor in favor of the same
(thus, there must be only one
debtor and onJy one creditor)
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d. All the debts must be due
Exceptions:
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"Every good and perfect gift is from above, coming down from the Father of the heavenly ltgh ts, who
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does not change like shifting shadows."
Caroline Tan, Jessamyfl Uy & lomes Ligon
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B . D acion en Pago
- Definicion: Mode of extinguishing an <.>bligauon where the debtor alienates in favor of the
creditor, property for the saosfacuon of monetary debt.
- Governed by the Law of Sales
e. Partakes the nature of sale -i.e. the creditor is
buying some property of the debtor,
payment for which JS co be charged against the debtor's debt.
f. So, warranties in Sales applies in this case
Effect of Breach of warranty: No payment
Does it ex tinguish the obligation in full?
32
I P "g e
"Every good and perfect gift is from above, coming down from the Father of the heavenly llgh rs, who
does not change like shifting shadows.''
Caroline Ton, Jessamyn Uy & James Ligan
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- Definioon: it is a process by whtch a debtor cransfers all the propernes not subject to execution
in favor of his creditors so Ll)ar the latter may sell them, and thus apply the proceeds to their
credits.
- Kmds ol Assignment
h. Legal- governed br the Insolvency Law; maJOrtcy of creditors muse agree
1. \' oluntary - this what ts referred to in An. 1255 CC; ALL the creditors mnst agree
- Requisites.
j. More than ooe debt
k. More than one creditor
1. Complete or partial insolvencv of debtor (does nor have co be declared .insolvent)
m. Abandonment of all debtor's co
not exempt from execution in favor of creditors
n. cceptance or consent on the parr of the C!j.e.ditors
- Effects:
o. "The ctedllors do not become the owner:>; they are merdy ass1gnees with
sell
p. ne balance remams collectible
q. Creditors will collect ere ts in the order of preference agreed upon, or in default o f
agreement. in the order established by law
- Cession Distin 'shed from Daoon en Pa o
Jt/tr
\AV.
c?" 7f'Y'.
Tender of Payment - act of offenng the creditor what is due him together with a demand that
the creditor accept the same (extrajudicial process)
r. Tender ofPaymenl-+ acceptance= extinguishment of obligation
s. Tender of the pnncipal must be accompanied \Vlth the render of the
which has
accrued
Consignation - the act of depositing the thing due Wlth the court or judicial authonties
whenever the creditor cannot accept or refuses to accept payment; produces the dfec( of
paymen t
t. It is a Judicial Process
Exception: Rental Law- debtor allowed ro consign payment with the bank upon
notice to the 1'-!::;sor
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33I Page
"Every good and perfect gift is from above, coming down frqm the Father of the heavenly lights, who
does not change like shifting shadows "
:i:.
Caroline Tan, Jessamyn Uy & James Ligan
Requ1Sl.!.!d:.
'.
34
I Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
BErORE there is a jud.IClal declu:mon rhat rhc consignauon has been properly
made
dd. As a marter of erivtl.sge
AFTER consignauon had been properly made, the Crednor authonzu the Debror
to withdraw the thing
o Effects:
1. The obligation rernall1s
2. The creditor loses an} preference over the thing
3. The guaramors and succoes (accessory obl.tgacions) are
RELEASED (unless they consented)
Ri:;k of Loss !during constgnat:ion)
ee. GR: borne bv the CredJtor
ff. 1f tt ts due to:
Fortuitous event- ob!Jgatioo extingUished
Crednor's Fault- obligation extinguis,hed
Debtor's Fault- obligation remains (llable for damages)
Fault of court/ sheriff- Creditor assumes the acoon of the former; borne by the
Creditor
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I Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."'
Caroline 7an, Jessamyn U} & James Ligan
If cause of loss is NOT known, PRESUMP110N- debtor's fault IF rhc dung lost is tn lus
possesSJon
Exception; 1f it is lo;;s is caused hy narural calamity
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Requisite's:
1. Acceptance by the Debtor
gg. Donaaon Mortis Cause- there IS no need to formally or expressly at.ccpt It fhe rule an
(}.Wiitr
succession provides that if you Jo not repucliate it, then 1t ts deemed ncct:pttJ
'
bh Donation Inter V1vos - there should be an expressed acceptance. but doec; n()t
nccessanly mean written
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Real Property: Donaoon AND acceptance mllst appear U1 a Public Jnstrumenr
Personal Property <PS,OOO- there can be Oral Donation, Provided: there ts
simultaneous Deuvery of the property
Personal Property >P5,000- Donation AND Acceptance must be in Wriong
(need nor be in Public Instrument)
i.i. Effect if Remission is NOT ACCEPTED by the Debtor: No rcnussion, however, if the
Credttor does not really collect within the Starute of Llrrutat:Jons -debt is extinguished
by PRESCRIPTION
2. Capacity of both parties
3. Graruitous act on the part of the Creditor (person condoning the obhgallon)
4. F ormalities
o Express Condonation -requires formalities, if:
a. Donaoon kter Vlvos - formalities of a donauon
b. Donation Mortis Cause- formalities of a Will
o Implied Condonation- requues NO formality
a. J\n 1271 -delivery of a privalt document evidencmg a crcclit, made
h
thumlitorro tht: debtor
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NOT applicable to th"qlocuments because you have an extra copy which
1
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is kept by ootru:y pu lie, an instrument showtng that a debt still subsiSts
It is the CREDITOR who delivers the document
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36 I P a g e
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llv11.
"Every good and perfect gift is from above, coming down from ltle Father of the heavenly lights, who
does not change like shifting shadows.
Caroline Tan, Jessamyn l.{y & James Ligon
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- Yes. How? The only provisiOn we have under tlus chapter (condonaoon) refers only ro pledge.
Why is this so? Because in piedge, as long as it is still m the p ossession of the cred.Jtor, then you
can never say that the debt has been exunguished. This is the only instance that uwohes
something to be RETURNED.
- Art. 1274: Implied Remission of Pledge- when the thing is found in possession of the debtor,
or of a 3rd person who (}1Vf1J the thing
o Only the "accessory obhganon" ts presumed remitted
o Principal Obligation- remains in force
- An. 1274 NOT applicable ro Other securities
o CRC: apply Art. 1272
- Effect 1f ONLY the aet:essorv oblgaoon IS conJoned
o Debt becornes un.ur mttl
o Pnncipal obhgauon - rem:1tns tn Ioree
I CONFUSI ON OR ME R GER
Merger or Confusion- meeong in one person of the qualities of crerutor and debtor
the same obhgation
\V1th
respect to
Requisites: (Paras)
1. Takes lace betWeen the rinc1 aJ debtor and creditor
JJ
on sion of the creditor with the person of the guarantor does NOT exnnguish the
principal obligation
2 Must be clear and definite
3. The obligation must be the same or tdcnr:ical
If the debtor acquires certain nghts from ::he creditor with respect mother thjngs NO
merger
Effect of Merger on Guarantors If there is merger with respect to the prinopal Jebr, the
guaran ty is EXTIGUISHED
Problems.
37]Page
"Every good and perfect gift is from obove, coming down from the Father of the heavenly lights, who
does not change like shifting shadows.
Caroline Ton, Jessamyn Uy & James Ligon
N
I COMPENSATION,. Confusion
There is onl\2)erson
'\.
Compensation
There must be rwo persons who are murually
creditor and debtor to each other
There must be 2 obligations
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Requisites:
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xample:
A owes B, wnh Gas the guarantor of.:\ Can there be compt!nsaoon, in case B (tht: Cn:cl.itor) owes
G (the Guarantor)?
A-B
The debtor cannot cla.un compensauon. However, if A defaulted. there can be compensation
between B and G
the guarantor now becomes liable to the Creclitor.
Note: The guarantor may set up compensation as regard the creditor may owe the principal
debtor. Reason: if the principal obligation is extinguished, the accessory obligaooo of guaranty id
ruso extinguished.
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Kinds of Compensation
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"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
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Important dates:
D ate of Assignment: if theJ:e has been compensation already
3
"f"'Y good and perfect gift is f'om ubave, coming down fmm the Father of the heavenly flgh
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
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bound
Example:
A owes B PlOO due on Feb. 14, 201 1
B owes A P1 00 due on Fcl).i"S, 2011
A assigned credit to X on Feb. 20, 2011
t:IA ol
On Feb. 20, 201 1, Can X collect from B?
No more, because legal compensation has already taken place on Feb. 15, 2011 (Jt
is utoma . Hence, there 1s no more debt to be assigned on Feb. 20 because on
Fen.
the debt
.tlrcady exungutshed .
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NOVATION
IS
allowed
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Kinds ofNovation:
1/41\.
Real
(or
Objective)changing
the
subject
matter
or
the
principaJ
conditions
of
the
obligaoon
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40 1 P a g e
Reqwsttes tn Botb:
Creditor must comcnt
Totally different from 3.-d person paying the debt
not a new debtor
3<11 p erson paytng rh e d e b t - onlyl act o f
Change ofDebto r
Payment by :r' Person
DebtOr is not necessarily released from Debtor is released
debt
Two obligations- one is extinguished
One obligation
and a new one is created
3'dperson has no obligation to pay 1f
New debtOr has to pay
insolvent
Jj /111-
/ f ... - \ -
to' thUd person of .JI <he <ighr. ppewUning <a lhe c<e<lito< -
change of creditor.
Legal Subrogation- takes place by operauon of law
Conven tional or volun tary Obligation- requires agreement and the consent
of tht: ori :U arties and of the creditor
A ssi ment ofCredit
(.o nventiona/ Subro tion
Transfer of the SAME right or credit
Extinguishes the obligation, and
(the transfer did not
the
creates a new one
cred1 t
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Does NOT require the debtor's
Reguires the debtor's consent
com.ent (mere notificaoon to him 1s
sufficient
1ne debtor generally still has the nght
NO right to present against the new
to present against the new debtor any
creditor any defense wluch he could
defense available as a st old creditor have set u a st the old creduor
.Mixed-
terms)
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Requisites:
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]
1. The existence of a VAL ID O ld Obligation
f
VOID- NO novation;. there is nothing to ndvate
*.
41
I Page
''Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligon
Of' ) 11"
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Waiver. l_t is subject ro
set up che defense, undr..r r'Fi"e old obligation)
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(debror
Resossible- valid obligation, there is just an extrinsic defect
Can be Novated, provided the obligation has not yet been annulled _/
After Prescription- the obligation is convened into a "natural obligation", and this may
be the cause of a new obligation
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Effect: Waives ilie right to claim that the obligai:f m JS eitingUJshed thru
Wrl
Prescription
2. Jment of the parties (to extinguish the old obLgarion)
3. Validi
e NEW Obli tion
e condition if there j!\ 1n the OLD and NE\V Obli oon muse be fulfilled
If new oblia<!rion is "Y_OID- NO nov3tion, and che old obllgation generally will subsist.
IfVOIDAB.!- if r..l-)e new obligaaon ts annulled, the olc.l obligation subsisrs
EXCEPTION (Rule on Void and Votdablc NEW Obligation): when the parries
intended !hat lhe former relation should be extinguished in any event.
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Consent- for purposes of consent, th1s presupposes that there are two parties. You can have one
person representing two different capacities. You do not need that there are two persons. This
excludes where the law prohibtts it. Example an agent contracting himself on behalf of his pnncipai. So
autocontract is actually okay.
42
I Page
"Every good and perfect gift is from above, commg down from the Father of the heavenly lights, who
not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
1urJ
] t
fll Qt)(1
2
3.
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communicate.
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Take note that when these part1es are mvolved,, your
It can be
'"
J lA UNENFORCEABLE if the contract is between two Incapacitated to 91ve consent.
\}Tflf/1/liV Can it be void by reason that the K was entered by these people? Yes, in those K that they are
prohibited to enter. Uke H&W.
b. Communication -?
and acceptance must both be communi,cated
J0 c} Jfl
lflKI
I.
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2.
to the OFFEREE
Requirements:
(
i.
Definite, absolute, unconditional: terms must t>@r, it
be able to state
(a) what kind of K you want to enter into [nature]; (b) subject matter or the
object of the contract and (c) the consideration plus substantial terms and
conditions like payment etc
ii.
Intentional - must not be made in JEST (joke). CRC. I guess some
commentators include this because of the Filipino culture that you keep on
making offers that are not intended to be offered. Courtesy.
iii.
Oeqrly commynicated: does it have to be in writing' No. This can be through e
mail or oral as long as you have all the requirements.
advertisements: merely considered as an invitation to make an offer.
Jl.tt
Except: they are considered as an offer when the contrary appears. Meaning, rt depends on the
language. If it is very definite, like the government will sell lot A to anyone who has bided the
highest
(li, f}
kp
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How do you accept? Absolu te and unconditional acceptance which means that there are
no conditions whatsoew:YES I ACCEPT, PERIOD.
Jlll.j
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Counter-offer: what does It do to the original offer? The anginal offer will be gone. So
you cannot revert back to this original offer when your counter offer has been rejected as
well.
-+
Example: buy mangoes for PhplOO.OO per kilo, then you say, oh it is expensive, Php80.00
(counter-offer) the mama says oh sige, then you say ay wag nalang. A K here is already
perfected in the legal sense.
,. Communication: it is important that the offeror teams of the acceptance
43 1 r
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shtfting shadows."
Caroline Ton, Jessamyn Uy & James Ligan
ge
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4.
You accepted through the mail, but betore the offeror got the acceptance, I
already offered tt to somebody else. can you sue the offeror@. No K perfected
If acceptance given through middleman, or through an agent, take note that you l
have to look into their authority. If they have, then acceptance deemed
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communicated otherwtse acceptance of the agent is not an aa:eptance of the
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Interdiction
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there is a period where the offeree can accept
Immediate effect Either of the party
from this one, an offer Is terminated .
can there be an implied acceptance:
you got a t1cket through matI of Taylor Sw1ft and
then it says if you don't return this on or before February 18, it is sold. Is this valid? No. But if the
ticket was given
you personally and you took the ticket, then th1s may be constde-;:;i as V<!lid.
You may have actually accepted the offer.
-
to
valid contract.
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If you accepted the offet, can you make the consideration you paid for ttle option contract as part of
the subsequent contract? CRC: you already bought time so you cannot ask to make rt: as part of the
purchase pnce of t:!'le contracted offer. SINUSWERTE KA NAMANt But of course tf your offerer IS
generous, he can do it but no compulsion
How
IS
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441Page
"Every good and perfect gift is from above, coming down from rhe Father of the heavenly lights, who
does not change like shifting shadows."
Coraline Tan, Jessamyn Uy & James Ligan
tl.
In qenergl:
K of sale: ownership
from the moment it is entered even if there is still a balance
r/JtJ
K to sell: ownership does n_g,t transfer at the time of execution,
payment is a suspensive condition llllhl
to that contract, if condition does not happen, then no K. This does not involve a breach
!l-4L
Oetjon contract: you do not have a K yet at this point. Only the option contract which merely gives
fiJ.
not an obligation.
; . . 1i CA JIAA/,.. . f
In terms of breach:
K of sale: 12.!_1ure'to pay the balance of the purchase price
K to sell: non payriient i5 not considered a breach, simply a fa1lure of the condition. But you sta'1d to
lose whatever you have paid but of course if this is unconscionable, ask the court to return to you
11- /./
Option K: when the offerer enters into another K with another person.
What IS your action?
{&A"fA//1..
Sue for specific performance, or resolution of the K, with damages 1f warranted
K to sell: no breach here. You don't
you simply
Resolution is not a remedy,
noth1ng to resolve.
Option K: recent J: remedy is action
Because it is considered asK m fraud of
creditors. You are already a creditor 10 the option contract so when the offerer has sold it, you (as an
o fferee) is considered as a creditor
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45
I Pa g e
"Every good and perfect gift Is from above, coming down from the Father of the heavenly Ughts, who
does not change like shifting shadows.
Caroline Tan, Jessamyn Uy & James Ligon
N
f'1.
J-
what is your right? It is an action for specific performance to sell to the grantee because that point
has been no sale yet, only lhat it was offered to
person. If you d1d not know that there
was already an offer to another person,
f Aogyu
court said there IS no K. Breach is not enforceable. What you have is Art,jc!e 19 of CC, remedy
for damages
1s rescissible for being in fraud of creditor, prov1deo if there is BF, and terms are not identical
a. Fraud
b.
c.
d.
--
Violence
Intimidj!tion
oc
Preliminaries:
1
Atices of CQ!lsent:
a Affects 1ntellect: fraud and incapacity
lts voluntary but you are m1staken because the person
dealing with you gave wrong set of facts or wrong assumption
b. Affects free will: mvoluntary consent -7 y.)u know what IS happening but you have no choice
Simulated Contracts
Somethmg that is not real, you j ust pretend.
This is treated as those lack of consent of the parties
a.
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parties do not intend to be bound at all; we do not have a K here because no consent here.
to be bound = no consent)
conceal their true intention; we do have a K but it is voidable
t"' 1
It is not Illegal
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46
Ira g e
"Every good and perfect gift is from above, coming down from the Father of the heavenly fights, who
does not change like shifting shadows "
Caroline Tan, Jessamyn Uy & James Ligan
JVJl.
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e contract
Debate: what is the cause/consideration, whether it shifts from the buyer to creditor
.;;
't:
Possible objects:
Real personal things
.
'
Rights
Services
Oblig.ation to give
Those that you can give and not intransmissible
Obligation to do
Your object is service
Obli9ation to give
Requirements:
a. Within the commerce
- legal, licit, not be a contraband, or not prohibited by law
b. It must be a deternlinate thing -you know tlle object, tllis is not determine vis-a-vis generic. This
means only t:rat it must determinate in kind. Example: it is a cow. What about quantity? Must It be
stlpulatedfNo') So how do you detennine your obligation? As long as you can determine without
having to
into another contract
c. Must be existing or capable of coming into existence in the future - as long as there is a possibility
that you can acquire tfie ownership of the property
Two things:
1. Capable of transferring ownership
EXample I will sell to you that red Ferrari car pari<ed In power plant mall. This is generally not
valid because you do not own it. Except if he later on acquires it, ownership transfers
automatically by operation of law from the moment you owned it already. So this is not a VOID
contr.lct It actually becomes a CONDillON. This is a rule that is applicable only if specific
2.
property is concerned.
Yet to be produced
As long as it capable of coming into existence in the future, you have a valid object of a
contract So it is not existing at the time of entering into contract This Is a FORWARD CONTRACT.
is
things forward.
-+
-+
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With regard to rights, as long as it is not personal, then it Is valid. It must involve transmissible rights
With regard to services, as long as it is possible to perform tllen it is valid. This Includes physical impossibility
and legal impossibility.
47
I Page
"Every good and perfect gift is from above, coming down from the Father of tHe heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
What is it?
Proximate reason of the
This must be a LEGAL reason
parties to enter
Answers the
11,)
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48
Ir a g e
"Every good and perfect gift is from above, coming down from the Father of rhe heavenly lights, who
does not change like shifting shadows."
3:
Caroline Tan, Jessamyn Uy & James Ligan
-------------------------------------- - -
In other forms of K, there are other requisites, this can be considered as essential because it is voided if you
do not follow this
We also have tile real K where delfvery is essential for the validity of the K
_...,--
Forms oft<
First rule: not an essential element except certain contracts that require this for validity or enforceability
(Article 1356)
Second rule: (Article 1357)
1358 v. 1357
1358 contracts are only contracts that are only for convenience. What is tile conveniP.nce here? so that you can
register it in the register of deeds (this won't annotate unless it is in a public instrument)
If it is a requirement for validity or enforceability, you cannot compel the other party to execute in the required
form because it is void in tile first place
08 March 2011
As to form:
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If you sell a car, that is also under SOF, unless of course this is only worth PhpSOO.OO
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Once it is taken out of SOF, ttlen you can use Artide !358 tD a>mpe.l the other party. The form there is no
.f.
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REFORMATION
This Is nothing more than just merely correcting the instrument. You do not ask for this when there is no K in
writing.
For purposes of reformation, the parties have agreed, they reduced it in writing but whc,t was written did not
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difteceotiated with_simulated K,
parties in the latter intentionally agreed to oonceal the
Yo4r true
is the concealed contract.
npt require any correction, you just invike
But can
reform the K?
'
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49
I P a ge
"Every good and perfect gift is from above, coming down from the Fother of the heavenly fights, who
does not chonge like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
I
) EFECTIVE CONTRACTS
Four kinds: (lightest
heaviest)
a. Rescissible K
b. Voidable K
c. Unenforceable K
d.
Void K
1111
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K{VAYP
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Resc
.JAA.ble
but there is an economic prejudice of
You will notice that lesion and inadequacy of price
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elements of the K
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ink P;Jhkl
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{lesion or inadequacy of price)
intrinsic defect, it is not one of the essential
'I
Voidable K
This is next because these ar . VAU un
NNU
- If nobody institute an
thiSWIValld
Also, the defect here has something to do with the essential requirements of a K
LEi})
Unenforceable K
More severe than the Voidable K
Defect in form, or authority (in some instances)
You cannot sue on it until it is ratified that is why this is more severe
Void K
Not a Kat all
Nothing you can do about It
RESCISSIBLE CONTRACTS
Kinds:
..
..
b.
c.
so I Page
''Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
L-
- - - - -- - - - -- - - -- ---- - -
by the court
MJ,k1,
Does
No. Like
These are the people who have been property authorized by the court, if no authority from_the court, tlle K
that they have entered into is UNENFORCEABLE.
When you are
Only exercises acts of administratioh' (if you enter a K with regard to ttl is act, tllis is VAUD)
Does not include acts of ownerthip (ask for court approval as well _otherwise UNENFORCEABLE)
rf
f>ttJ f"W
Court approval of a K of administration validates the Keven If there is a lesion in the K. In other words, you
are safer because If it is rescissible, a court approval deanses this and VAUDATES JHE K.
As far as minors and incapacitated persons are concerned, they are protected by reason of the fact that there
is a lesion.
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- \ Ynsane, must be in
If absentee@ears from the time of knowledge of his domidle
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You resdnd
As far as minor incapadtated person are concerned, do they have to restitute what they have gotten?
There is no provision In the civil code where you are excused t o make re.s titution
Because ttlese are K that are entered into by guardians or legal representative, ttlerefore whatever
/1<-
lu
re/vi'Y"
If you did not receive the., then what will you rest:ib.Jte?
Can you resdnd this?
3(4 was paid to you guardian but your guardian spent it, now you want to rescind ttle K because you
were prejudice, what will you do as minor?
CRC: remember the third party deals wittl your guardian are in GF, as far as he is concerned, he has
rtr
paid 3/4 so you have to return it t o him. So what happens then? What is your right of action?
CRC: against your guardian because of breach of fidudary duty
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K in fraud of creditors
Prior creditor
hi- kd-
+ fraud -debtor
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51
l Page
'rEvery good and perfect gift is from above, coming down from the Father of the heavenly lights, who
doesnotchonge/ikeshiftingshadows."
__ /__
.A
Caroline Tan, Jessamyn Uy & James Ligan
v
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------------------------------------ -
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Wha t IS the fraudulent act here?
To prevent the creditor from getting your property as payment
Empty judgment
{p /tl) :rtz,.
You are allowed to rescind the subsequent contra_c t that your debtor has entered into because you have no
other means to enforce your contract. YOU HAVE TO SHOW YOU HAVE NO OTHER MfANS TO SATISFY '(OUR
Like your debtor has no property anymore. YOU MUST ALSO SHOW DEBTOR ACTED I N FRAUD
(j)
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Rely on
enter Into
, it may
e BADGES OF FRAU
Please enumerate!
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you)
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(rodstodytase)
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Remember these are not in the same categories as disputable presumptions. These are merely indications not
t.Yfly
even presumptions.
About the case mentioned, this was the compromise entered into by PNCC and Marubeni. You can
acknowledge a prescribed debt but In this case this was after its creditors-were already
after him. The
Court said that this was made in fraud of the creditors
What else are covered under contracts that are rescissible in fraud of creditors?
Payments by debtors in state of insolvency 7 more beca
nsolve
------Objects of litigation was sold through K of sale wi out approval of the court or consent of the
How is this different from those presumptions w
This one is not a presumption. These are resdssible K.
What are objed:s of litigations?
As far
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piive :.
Partial on . The right to rescind by the treditor to a K whom he is not a party, then only to the extent
t hat e was prejudice'CI
X
Php200,000
Wm"
hOW
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a thii'a1Jc!ltV'?
When summons has been served and the object is in custodia legis already
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Vitiated consent
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Vices of consent
Mistake
When will mistalt:e vitiate the rontract of a person?
Mistake of facts. Not mistake in law
Why is this? Ignorance of the law excuses no one
a.
b.
53
I Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Coraline Ton, Jessamyn Uy & James Ligan
When is this a ground for merely a computation? As con'lpilred to a ground for annulment?
Contract= 100 kg x 100; consideration: Php 90,000 (instead of PhplOO,OOO)
Exception: lf that was predsely the consideration
t;;tleJl
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GR: n,2! a mista.ke
E: K of
Two types:
a.
- annulable
b. Inddente - cancellation/SP
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This is one of the vices that are different from the rest
Who must commit the fraud?
Must be committed by the party in the K
Legal opinipns made by the lawyer, and then you rely on this to enter into a K, can you be considered in fraud?
He is your expert, the other contracting party doe not have to do anything so you cannot annul the
K. You can go after your own lawyer. Your K is ot ffected
Legal opinions are basis of good faith that is why you cannot be charged with fraud when you rely on it
There is a need for mutual restitution. Except when minors and incapacitated, they can restitute only upto the
extent that they have been benefitted.
(check sophie on this last topic)
10 March 2011
We have violence vs. Intimidation
Violence - physical
Intimidation -threat
tA
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As far a viole e is concerned, this must be committed on the party to the contract
timidat:i , this can be committed to the contracting j;'rty,
asndarJt,or descendant
May
committed by third person, unlike fraud \vhidl
be romtnitted only by the
party
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may
54
I Page
"Every good and perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligan
If you are influenced to give consent otherwise you will not inherit
It depends. If you are
a lawyer, then no
If you have a teacher, then says 1f you do not give consent, your teacher will fail you
Distinguish
influence and reverential fear
M...
Buying tickets without any condition: reverential fear
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1.UNENFORCEABLE CONTRACTS]
'
cannot be
This is a defense, so you have to raise this
So it is possible for a person to initiate a contract that is unenforceable, then if it Is unenforceable, you raise
your defense, ot herwise it will be waived.
Three kinds of unenforceable contract:
1. Entering into a K without authority from the person he represents or exceeded her/his authority
You cannot enforce this against who? Against the prindpal of the person who is claiming to be a legal
representative
2.
Bo
What is the
1. Statute of frauds
(,. jJ ,CAl"')
--
SoF
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Essential elements of the K should be indicated: what kind of K, object, price/consideration, and
t OT must subscribe [sign] to the note or
E: as long as the party
,
E to theE: sales by an auctioneer (the only thing that shouia be
nt is the signature of the parties, this is instead signed by the auctioneer)
55
I Page
"Every good ond perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change like shifting shadows."
Caroline Tan, Jessamyn Uy & James Ligan
#/f\141/,."-
:--formal waiver
Implied - failure to raise the defense of unenforceability at the first opportunity
Concept
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actually express their true intention to create the trust; does not need to
Express
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56
"Every good ond perfect gift is from above, coming down from
does not change like shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
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trusJ;- created by
o law for the purpose of satisfying the ends of justice.
What we have in the civilcode are mere examples. These are not exhaustive list.
Example:
.
if somebody buys the property, title in another person.
is proven to be a loan
You buy a car for your daughter or son, in your title but the money came from your parents, th is is
-
..
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p ot
This is in the form of EONAJ19N. COLLATIONABLE!!
f:.onst:ruc;tjve trust: Mellon Bank: received the money by mistake
;.
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Magallon Case: QUERIDA acting as trustee of the legitimate children of the donor with his legal wife
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PRESCRIPTION
We are referring to the beneficiary being able to recover the property from trustee. If
_rust, then it is
imprescriptible as long as the trustee still recognize the trust. If the trustee now starts to repudiate it, then of
course he
acquire It to !_cquisitive..,Prescription (except those under torrP.ns title).
-
,.
i -
Prescriptive Peri
Prescriptive period
b.vf
A{Xluisitive prescription
Acquisition of certain properties
We talk about lapse of time plus:
a. Good faith
b. Just title
c. Possession in the concept of an owner, uninterrupted, public etc etc
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57
I Pag e
"Every good ond perfect gift is from above, coming down from the Father of the heavenly lights, who
does not change /Ike shifting shadows."
Caroline Ton, Jessamyn Uy & James Ligon
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