Beruflich Dokumente
Kultur Dokumente
FINAL EXAMS
1. What are the different defective contracts and what makes each of them defective?
(b) Voidable - The defect is more or less intrinsic, as in the case of vitiated consent. The
voidable contract is valid till annulled. It can be annulled. It cannot be annulled, however, if there
has been a ratification.
(c) Unenforceable unenforceable contracts have no effect either because they are
unauthorized, they fail to comply with the Statute of Frauds, or both parties are incapable of
giving consent to the contract. The unenforceable contract cannot be sued upon or enforced,
unless it is ratified. In a way, it may be considered as a validable transaction, that is, it has no
effect now, but it may be effective upon ratification.
(d) Void - The void contract is one that has no effect at all either because they are
inexistent or illegal. It cannot be ratified or validated.
2. Define Rescission
Rescission is a process designated to render inefficacious a contract validly entered into
and normally binding, by reason of external conditions, causing an economic prejudice to a
party or to his creditors.
(1) Those which are entered into by the guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things which are the object
thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion y
more than one-fourth of the value of the things which are the object thereof;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner
collect the claims due them;
(4) Those which refer to things under litigation if they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial authority;
(Note: This case illustrates the principle that the presumption of fraud established in Art.
1387 does not apply to registered lands under the Torrens System IF the judgment or
attachment made is not also registered.)
FACTS: Enriquez owed Abaya a sum of money evidenced by a promissory note. Abaya
obtained a judgment, and part payment was made by Enriquez, leaving the judgment partially
unsatisfied. Subsequently, Enriquez sold two registered parcels of land to the spouses Artemio
and Nera Jongco, complete strangers to them. The judgment in favor of Abaya and the writ of
execution issued were never annotated at the back of the Transfer Certifi cate of Title to the
land. Abaya assailed the validity of the alienation on the ground that same has been made in
fraud of his rights, the transaction having been effected after a judgment and an attachment had
been issued. Thus, he sued for the rescission of the sale.
HELD: The rescission will not prosper, for the presumption established in Art. 1387 does
not apply in this case for two reasons: Firstly, the spouses Jongco had no complicity at all in the
fraud imputed to Enriquez; secondly, the encumbrance of the judgment and the attachment, not
having been registered and annotated on the certificate, cannot prejudice an innocent purchaser
for value of registered land. The Civil Code must yield to the Mortgage and to the Registration
Laws, which are special laws.
6. What is the prescriptive period for an action to claim recission? For annulment?
(a) General rule 4 years from the date the contract was entered into.
(b) Exceptions:
1) persons under guardianship 4 years from termination of incapacity
2) absentees 4 years from the time the domicile is known
And when the action refers to contracts entered into by minors or other
incapacitated persons, from the time the guardianship ceases.
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
9. Distinguish recission and annulment.
RESCISSION ANNULMENT
(a) The basis here is lesion (damage). (a) The basis here is vitiated consent or
incapacity to consent.
(b) The defect here is external or intrinsic. (b) The defect here is intrinsic (in the meeting
of the minds).
(c) The action is subsidiary. (c) The action is principal.
(d) This is a remedy. (d) This is a sanction.
(e) Private interest governs. (e) Public interest governs.
(f) Equity predominates. (f) Law predominates.
(g) Plaintiff may be a party or a third person. (g) Plaintiff must be a party to the contract
(whether bound principally or subsidiarily).
(h) There must be damage to the plaintiff. (h) Damage to the plaintiff is immaterial.
(i) If plaintiff is indemnified, rescission cannot (i) Indemnity here is no bar to the prosecution
prosper. of the action.
(j) Here, a defect is presupposed.
(j) Compatible with the perfect validity of the (k) To prevent annulment, ratification is
contract. required.
(k) To prevent rescission, ratification is not
required.
(a) If the contract has not yet been complied with, the parties are excused from their
obligations.
(b) If the contract has already been performed, there must be MUTUAL RESTITUTION
(in general) of:
1) the thing, with fruits;
2) the price, with interest.
An insane person sold his house, and squandered the proceeds while insane. Can he
ask for annulment later on and recover the house?
Under the second paragraph of Art. 1401, he cannot sue for annulment and recover the
house because the proceeds were squandered away by him. Thus, according to the Code
Commission, the action cannot prosper, even if at the time of loss, the plaintiff was still insane or
a minor.
AND YET, this would contradict Art. 1399, because there, the incapacitated person is
not obliged to make any restitution except insofar as he has been benefited by the thing or price
received by him. Being insane, he could not have profited by squandering the money.
It is thus believed that the answer of the Code Commission is NOT accurate for even
were we to apply Art. 1401 (2nd paragraph), it is clear that the loss during the insanity could not
be due to fraud or fault.
15. What are the different kinds of unenforceable contracts?
(a) Unauthorized contracts.
(b) Those that fail to comply with the Statute of Frauds.
(c) Those where both parties are incapable of giving consent to a contract.
(a) An agreement that by its terms is not to be performed within a year from the making
thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;
(c) An agreement made in consideration of marriage, other than a mutual promise to
marry;
(d) 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;
(e) An agreement for the leasing for a longer period than one year, or for the sale of real
property or of an interest therein;
(f) A representation as to the credit of a third person.
(g) Express trust in real property
(b) produces effects 'til annulled (b) generally, effects are not produced at all
(c) defect is due to incapacity or vitiated (c) the defect here is that ordinarily, public
consent policy is militated against
(f) defense may be invoked only by the parties (f) defense may be availed of by anybody,
(those whether he is
principally or subsidiarily liable), or their a party to the contract or not, as long as his
successors in interest and privies interest is directly affected.
In estoppel by deed:
1) If the deed or instrument is null and void because the contract, let us
say, is illegal, there is NO estoppel.
2) Ordinarily, the person estopped must be capacitated. But if a minor is
clever enough to deceive others, estoppel may result.
3) If a person notarizes (and is not a party to) the instrument, he is NOT
in estoppel.
32. Define trust and give its characteristics.
Trust is the right to the beneficial enjoyment of property, the legal title to which is vested
in another. It is a fiduciary relationship concerning property which obliges the person holding it
to deal with the property for the benefit of another. The person holding, in view of his equitable
title, is allowed to exercise certain powers belonging to the owner of the legal title.
(a) Express trust created by the parties, or by the intention of the trustor.
(b) Implied trust created by operation of law. There are two kinds of implied trusts:
1) Resulting trust (also called bare or passive trust) Here, there is an
intent to create a trust but it is not effective as an express trust.
2) Constructive trust Here, no intention to create a trust is present, but
a trust is nevertheless created by law to prevent unjust enrichment or oppression.
Yes, trust over personal property is valid and enforceable. The law says that no express
trusts concerning an immovable or any interest therein may be proved by parol (oral) evidence.
Thus by implication, for a trust over personal property an oral agreement is valid and
enforceable between the parties.
(1) Express trusts do not prescribe. This means that the beneficiary or cestui que trust
can recover the property anytime unless there has been repudiation of the same.
(2) With respect to implied trusts, a distinction must be made:
(a) resulting trusts generally also do not prescribe. However, recovery from the
trustee may prescribe if the trustee has expressly repudiated the trust;
(b) constructive trusts do prescribe, and this rule is well-settled.