OBLIGATIONS

Juridical necessity to give, to do, or not to do.
ELEMENTS OF OBLIGATION:
Active Subject Creditor/Obligee
Passive Subject Debtor/Obligor
Prestation Object/Subject Matter
Efficient Cause Legal/Juridical Tie
SOURCES:
1. Law there should be a law, cant be
presumed.
2. Contracts
Meeting of minds > Offer > Accepted
3. Quasi-Contracts no meeting of minds
a. Solutio Indebiti undue payment.
b. Negotiorum Gestio unauthorized
management.
4. Delicts (Crimes) - acts or omissions
punishable by law, if accused:
a. Convicted civil & criminal
obligation.
b. Acquitted civil obligation only.
TIME Obligation to Deliver Arises:
With Suspensive Condition from the time
the condition is fulfilled.
With Period; with suspensive effect when
period arises.
Without period and condition upon
perfection of the contract (meeting of
minds).
DELIVERY:
CONSTRUCTIVE:
Traditio Symbolica
Traditio Longa Manu mere consent or
agreement.
Traditio Brevi Manu objects is already in
the hands of the debtor.
Traditio Constitutum Posesorium vendor
continues in possession.
Quasi-Traditio with documents.

Did not commit act, no civil obligation.

DAMAGES harm done and the sum of money that
can be recovered.
5. Quasi-delicts tort, culpa, negligence.

SOURCES:
Start Result
1. FRAUD (DOLO)
Quasi-Contracts Lawful Benefit a. Causal Fraud (Causante) voidable
Quasi-Delicts Lawful Injury/Damages b. Incidental Fraud (Incidente) valid
Delicts Unlawful Injury/Damages
2. NEGLIGENCE (CULPA)
TO GIVE: (POSITIVE, REAL) a. Contractual with existing contract.
Whether specific or generic, you cant go to b. Aquiliana without existing contract.
the court for specific performance in case of c. Criminal with or without existing
refusal. contract.
Specific CANT be extinguished through
other parties. DILIGENCE:
Generic CAN be extinguished through As required by law
other parties. As stipulated by parties
Absence of 1 & 2, diligence of a good father
TO DO: (POSITIVE, PERSONAL) of a family.
Specific performance by court NOT allowed DEGREE OF DILIGENCE
in case of refusal, ONLY damages are Stipulated by Increase Valid
parties Decrease Void
allowed because of breach of contract.
Common Stipulated: GFF Void
Carrier Required by Law: utmost care Extraordinary
NOT TO DO: (NEGATIVE, PERSONAL)
Agency Req. by Law: extraordinary Valid
Anything done shall be undone at the
Stipulated: GFF Diligence GFF
Debtors expense.

GENERAL RULE: No one is liable in

FRUITS:
fortuitous events.
Determinate thing: right belongs to Creditor
from the time the obligation to deliver
Except:
arises.
When law so provides

Page 1 of 21
 When parties stipulate RIGHTS OF CREDITOR:
Nature of the obligation requires
assumption of risks. (Example: 1. Exact fulfillment/to demand payment =
Insurance) court.
2. Exhaust the properties of debtor. EXCEPT:
Res perit Domino from the execution
The thing perishes with the owner Writ attachment Public Sale Proceeds
3. Accion Pauliana to rescind. To impugn
3. DELAY (MORA) (question/challenge) the acts of the debtor.
a. Solvendi (Debtor) Designed to defraud creditor.
Ex re real obligation, to give. Creditor deprived right to enforce
Ex persona personal obligation, to claim.
do. 4. Accion Subrogatoria to exercise rights of
b. Accipiendi (Creditor) the Debtor.
c. Compensatio Morae both debtor and
creditor. ACTS OF DEBTOR:
d. Contravention of Tenor violation of To rescind:
terms. Donates (gratuitous) Donee: BF () GF ()
Sells (Onerous) Buyer: BF () GF ()
GENERAL RULE: No demand. No delay EXCEPT: If there are remedies.
Except:
When law so provides KINDS OF OBLIGATION:
Contract stipulates 1. Demandable at once
Time is of the essence Pure/Simple no period/condition
Demand would be useless Resolutory with condition.
Reciprocal obligation With Resolutory Effect with
period.
KINDS: (MENTAL) 2. With a period
M Moral Benefit of both creditor & debtor.
E Exemplar Cannot be demanded before due
date, court can ONLY fix period.
N Nominal
3. With Condition
T Temperate 4. With Condition and period
A Actual/Compensatory
WILL IT HAPPEN?
L Liquidated Fulfillment of Obligation
Before After
Liab./Responsibility Demandable Court-Reduce MAYBE (not sure):
condition
Fraud
Suspensive No obligation Obligation arises
Negligence
Resolutory Obligation Obligation end
arises (ext.)
DEBT: YES (sure): Period

Oral Principal () Interest () VOID Condition must not be impossible and not
Written Principal () Interest () contrary to law, morals, public policy, public
order, and good customs.
No delay. No penalty.
The creditor cant be compelled to accept FULFILLMENT OF CONDITION:
partial payment. EXCEPT: If there is a 1. Potestative depends on sole will of one of
stipulation. the parties.

Prima Facie Disputable/Assumption If Debtor: Suspensive: VOID Resolutory: VALID

If Creditor: Suspensive: VALID Resolutory: VALID

Page 2 of 21
 2. Casual depends on chance (valid) or third 2 OR MORE DEBTOR OR CREDITOR:
party (valid).
3. Mixed depends on: 1. JOINT to each his own
Will of one of the parties & third If silent, presumed joint.
party (VALID). 2. SOLIDARY all for one, one for all
Will of one of the parties & chance When the law so provides
(VALID). or stipulated.

DEEMED FULFILLED PRINCIPLE: When the MODE OF EXTINGUISHMENT OF OBLIGATION:

debtor voluntarily prevented the fulfillment
of the condition, the condition is deemed 1. PAYMENT OR PERFORMANCE
fulfilled. By Whom:
Debtor, representative/agent,
Pending fulfillment; rights estate (executor/admin.)
Principal Fruits Third Person (interested in
Resolutory CR DR fulfillment of obligation liable
Suspensive DR CR if principal debtor cant pay)
To Whom:
SUBJECT MATTER: (Before Fulfillment) CR., representative/agent,
LOST Fortuitous Event: EXTINGUISHED estate (executor/admin.)
Fault of DR: LIABLE (Value + Damages) Third Person (redounded to
the benefit of the Creditor)
IMPAIRED Fortuitous Event: CR BEARS LOSS
Fault of DR: LIABLE (Spec.Per. + Damages)
Presumed Benefit:
IMPROVED By Nature: CR BEARS IMPROVEMENT
CR/DOUBT: burden of proof = DR
Efforts of DR: DR given right to usufruct

Except: Ratification, Subrogation, Estoppel

DEBTOR DEPRIVED OF PERIOD: (IGIVA)
I Debtor INSOLVENT (total or partial).
When:
G Fails to GIVE (guaranty or security).
Principal/ Recovery?
I guaranty or security: IMPAIRED (fault
Paid before maturity:
DR) or lost (FE/fault of DR).
DR aware of () waiver of right to
V DR VIOLATES undertaking.
period period
A DR attempts to ABSCOND.
DR not aware of () + Interest + Fruits
period
Prestation Choice
On or After Maturity () Only Interest + fruits
Alternative Obligation 2 or more DR. unless
(not aware)
stipulated
Facultative Obligation 1 (with Debtor if
Where:
substitute) stipulated
To give specific thing:
Conjoint Obligation 2 or more Fulfillment:
With stipulation Place as stipulated
ALL
Obligation with a Without stipulation Where object is located
penal clause @perfection of contract

To give generic thing or to pay money:

Obligation Liable: With stipulation Place as stipulated
Exting.? Damages? Without stipulation Where debtor resides
ALTERNATIVE FE: () ()
Fault-DR () ()
VS.
How:
To pay (money):
FE: () ()
FACULTATIVE With Currency as stipulated
Fault-DR () ()
stipulation
Without Legal Tender
stipulation

Page 3 of 21
 To give: (TRAIT)
Specific As stipulated, no substitute o T 2 or more persons claiming
Generic As stipulated, neither right.
inferior/superior o R CR refuses to issue
To do: As stipulated RECEIPT w/o just cause.
If poorly done: undo @the o A Creditor ABSENT
expense of the debtor. o I CR becomes
INCAPACITATED to
SPECIAL FORMS OF PAYMENT: receive payment.
A. Application of payment o T TITLE is lost.
Gives DR privilege (right to
choose) DR pays: incapacitated:
obligation extinguished. If CR
2 or more obligation is due
benefitted or money was kept.
If silent: apply proportionately
(<CR apply to most onerous)
2. LOSS OF THE THING DUE
B. Dation en payment
Applicable if: determinable/specific
Payment in kind, ONLY 1 CR,
Not applicable: generic (genus
DR solvent.
nunguam perit)
C. Payment by Cession
LOST perishes, goes out of
DR insolvent, 2 or more CR,
commerce, disappears
obligation partially
(existence unknown/ cannot
extinguished.
be recovered).
D. Tender of payment and Consignation
CR refuses, money is
3. CONDONATION/REMISSION
deposited in court with notice
Essentially gratuitous, nature:
to the CR. If approved,
donation.
obligation extinguished.
Requirements:
Essential Capacity of Donor (CR) & Donee (DR)
Consignation allowed w/o prior
Donative Intent
T.O.P.:
Acceptance (DR)

Payment Dation in T.O.P. &

Formal Personal Property: P5000 up (writing)
A.o.P
by Payment Consignation Real Property: Public Instrument
Cession
- Multiple Debtor is Debtor T.O.P. 4. COMPENSATION
obligation insolvent need not Act of the DR of 2 persons, CR & DR of each other.
s are ALL be offering to his CR a. Conventional - by
due and insolvent what is due to him.
demand-
agreement
All Does not CONSIGNATION
able. b. Legal by operation of
properties affect all CR refuses to
law
are given the accept payment,
- Payment up to debtors deposit thing due Requirements:
not Principally bound DRs & CRs.
satisfy the properties to the judicial
enough.
needs of . Plurality authority. Both debts: payable in money,
creditors of the in kind/quality or both.
(2 or more) creditors Both obligation: due
is not Both obligation: liquidated
required.
& demandable
No transfer Transfer
of of
NO: controversy or retention
ownership property by third person.
Partial Extinguish
extinguish- c. Facultative one party
ment of can claim compensation,
debt the other cannot.
d. Judicial decree by court,
in case where there is
counterclaim.

Page 4 of 21

Compensation NOT allowed: when
one of the obligation arose from:
Deposit
Bailee in Commodatum
Obligation to give gratuitous
support (present/future)
Obligation arising from
commission on penal offenses:
civil liability.
5. CONFUSION/ MERGER
CR & DR, one person.
6. NOVATION
Changing the object (real) or
condition (real)
SUBSTITUTION Debtor
Delegacion personal
novation. Original DR
must be discharged.
(Initiative: Original DR)
Expromission personal
(Initiative: New DR or
third person)
SUBROGATION CR. (Personal)
a. Conventional - by agreement
b. Legal by operation of law
When a CR pays another
CR who is preferred even
without consent of DR.
When a third person who
is interested in the
fulfillment of the
obligation pays even
without the consent of
the DR.
First in time, First in right
If new DR fails to pay, can CR
collect original DR?
Delegacion:
YES Time of delegacion; New DR insolvent
NO After of delegacion
Expromission:
NO Time of expromission New DR insolvent
YES Time of expromission Orig.DR aware & didnt
object to expromission
YES Time of expromission Orig.DRs insolvency is
known to the public.
NO After of expromission
Mixed Novation:
Must be REAL + PERSONAL
CONTRACTS
CHARACTERISTICS: (MACRO)
M Mutuality: bind both contracting
parties. Validity: cant be left with
will of one of them.
A Autonomy: liberty/freedom to
stipulate.
C Consensuality: perfected by mere
Consent.
R Relativity of contracts: take effect
to parties.
O - Obligatoriness & compliance in
good faith.
KINDS:
NOMINATE Vs. INNOMINATE
Do ut des I give that you may give.
Do ut facias I give that you may do.
Facio ut des I do that you may give.
Facio ut facias I do that you may do.
PRINCIPAL Vs. ACCESSESORY
CONSENSUAL Vs. REAL Vs. FORMAL
(COC Vs. COC + DEL. Vs. COC + DOC.)
GRATUITOUS Vs. ONEROUS: Liberality
UNILATERAL Vs. BILATERAL
COMMUTATIVE: Exchange of values
ALEATORY: based on chance
AUTOMATIC
ADHESION
ELEMENTS:
ESSENTIAL without them, there is no
contract- Cause, Object, Consent (COC)
NATURAL deemed included except if
stipulated not to include.
ACCIDENTAL included if stipulated.
An offer becomes INEFFECTIVE BEFORE
acceptance: (DICI)
D - Death
I - Insolvency
C Civil Interdiction
I Insanity
Page 5 of 21

PERIOD TO DECIDE Can offer
or sell? (damages)
Without consideration
(option money)
Without consideration
With earnest pay
(down payment)
INCAPACITATED: (CHIPUD)
Unemancipated Minors incapacitated to
give consent (below 18 y/o).
Insane/Demented Person except: lucid
interval.
Deaf-Mute
Civil Interdiction as if dead.
Mortis Causa () Inter-vivos
Hospitalized Lepers
Prodigals/Spend Thrills
VICES OF CONSENT: (VIMFU)
V Violence (physical pain)
Serious/ irresistible force
I Intimidation (mental pain)
Well-grounded fear, imminent
danger, must be unlawful.
M Mistake (Error)
If serious: Annulment
If NOT: Reformation
F Fraud
Insidious words, machination
U Undue Influence
Professional Relationship
(Ex. Lawyer-client)
Consanguinity/Affinity
(Ex. Aunt, uncle)
Religious Affiliation
(Ex. Priest, Parishioners)
NO FRAUD:
Concealment failure to disclose acts
without duty to disclose.
Except: with duty to disclose (fraud).
Mere exaggerations in trade ads
Dealers talk: Caveat Emptor
buyer beware
Mere expression of Opinion
Except: Opinion of an Expert.
OBJECTS OF CONTRACTS:
Things existing/future
Should come to existence.
Retroactive (emtio rae speratae)
Hope with hope (); vain hope ()
Inheritance only present inheritance ();
Liable future ().
Right Transmissible (); Intransmissible
().
CAUSE OF CONTRACTS:
Lawful
If inadequate (lesion)
Fictitious/Simulated
Absolute (void)
Relative (effect True Agreement)
False : (VOID)
Motive not an essential element (with or
without: VALID)
FORMS OF CONTRACT any form (oral, written, P.I.)
() EXCEPT:
For validity failure: VOID
For enforceability Statute of fraud.
For convenience
INTERPRETATION: to give effect true intention
Words clear & unambiguous: literal
meaning.
Provision: written prevail over
printed.
Amount: words prevail over
figures.
2 or more: I solidary; We
joint.
Acts contemporaneous, subsequent.
Customs and usages
F Fraud / A Accident / M Mistake / I Inequitable Conduct
Remedy:
Before meeting of minds: Annulment
After meeting of minds: Reformation
OPTION:
Reformation or specific performance
Specific Performance to Reformation
()
Rescission to specific performance
Specific Performance to Rescission()
REFORMATION NOT ALLOWED:
Wills except by the testator
Simple donation Inter-vivo if no condition
imposed.
Real Obligation
Page 6 of 21
DEFECTIVE CONTRACTS: - Do not comply with statute of fraud.
1. RESCISSIBLE least defective. (SALSAR)
Defect: lesion (damage) (GACTS) S SPECIAL PROMISE to answer
G made by GUARDIAN debt, default, miscarriage of
Lesion: more than value. another.
Rescind: within 4 years from A AGREEMENT not to be
the time incapacity ceases. performed within 1 year from the
A made by representative of making thereof.
ABSENTEES = property L LEASING: period longer than 1
Lesion: more than value. year. Sale of real property or any
Rescind: within 4 years from interest therein.
the time his (absentee). S SALE of goods, chattels or
Whereabouts are known, things in action @least P500.
EXCEPT: within 2 years, if: A AGREEMENT made in
o Boarded airplane consideration of mortgage other
o Boarded Vessel than mutual promise to marry,
o Sent to war enforceable even if oral ONLY.
C made to defraud CREDITORS. R REPRESENTATION as to the
(Accion Pauliana) credit of a third person.
T THINGS in litigation made
without consent of litigant or Sale of Real Property Enforceable?
court. Seller & Third
Buyer Person
S SPECIFICALLY declared by law
NO DOWNPAYMENT () ()
to be rescissible. ORAL DELIVERY
()
WITH DOWNPAYMENT ()
DELIVERY

2. VOIDABLE valid until annulled. NO

Defect: consent. WRITING DOWNPAYMENT
DELIVERY () ()
W/
One of the contracting parties NO
incapacitated. PUBLIC DOWNPAYMENT () ()
INST. DELIVERY
Consent vitiated (VIMFU) W/
- To annul within 4 years time MF-discovery
4. VOID/INEXISTENT most defective.
/ VIU cease.
Defect: without effect cannot be
- Except: marriage- 5 years
ratified/period to question. ( ICAD)
Vitiated by VIMFU
O OBJECT/CP: contrary to law, morals
One of the contracting parties
O OBJECT: outside the commerce of men.
incapacitated.
- RATIFICATION retroacts on the day the O OBJECT: did not exist at the time of

contract was made. Cleans defect. transaction.

I INTENTION of the parties relative to the

3. UNENFORCEABLE validable. principal object: cannot be ascertained.

Defect: without effect unless ratified. C CONTEMPLATE an impossible service.

- Both contracting parties are incapacitated. A ABSOLUTELY simulated or fictitious.

- Made without authority. D DECLARED void by law.

Page 7 of 21
 SALES
VENDORS LIABILITY IN CASE OF EVICTION: (VICED)

SALES VS. BARTER:

V Value of the thing
I Income or fruits
1. Manifestation: (Ex. B sells his car to C)
Cash: P1M (Sale) C Cost of suit which cause the eviction
Trade-in: Cash-600 / TI-400 (sale) E Expenses of the contract
Cash-400 / TI-600 (sale) D Damages and Interest

2. Absence of Manifestation: (Ex. B transfers If vendor acted in good faith

his car to C)
Cash: P1M (Sale) IF VENDOR ACTED IN GOOD FAITH:
Kind: P1M (Barter)
Cash-600 / Kind-400 (Sale) 1. Value of the thing sold only
Cash-400 / Kind-600 (Barter) *waiver consciente (without knowledge of
Cash-500 / Kind-500 (Sale)
eviction)

SALES VS. CPW (Contract for a Piece of Work):

2. No liability
*waiver intencionada (with knowledge of
MASSACHUSETTS: Object: Same with New York Rule
eviction)
Available/Regular Stock (Sale)
Specially/Manufactured (CPW)
TYPES OF WAIVER
English Rule:
Materials > Labor = Sale
1. Waiver Intentionada seller not liable.
Labor > Materials = CPW
2. Waiver Consiente seller liable up to
FMV @ the time of eviction.

OBLIGATIONS OF THE VENDOR (SELLER):

ANIMALS:

1. To effect DELIVERY
1. Disease:
2. To TRANSFER OWNERSHIP (TITLE) to buyer
Contagious VOID
VOIDABLE: Can annul if third party is in
NOT Contagious VALID, VOID IF
bad faith.
dies within 3 Days from the date of
VOID: Stolen
purchase and existed at that time.
3. To WARRANT
EXPRESS: As stipulated
2. Defects: if hidden: BUYERS option:
IMPLIED:
within 40 days.
o Against Eviction: Except if waived.
Accion Redhibitoria to annul,
Buyer deprived of object:
because object is unfit for the use
Right: existing @ the time sale
intended.
Seller: given opportunity to Accion Quanti Minoris to reduce
defend title. price
o Against Hidden Defects: NO WARRANTY: Caveat Emptor
Defects NOT Hidden caveat
Fairs, public auction,
emptor (buyer beware)
livestock sold as
Defects Hidden caveat
condemned.
venditor (seller beware)
o Merchantability: within the commerce of
Seller: Defect If waived
man.
Aware () VOID o Fit for the purpose:
Not Aware () VALID Seller Liable
General: ()
Defects: If Seller: Good Faith Specific, if stipulated: ()
NOT liable for damages.

Page 8 of 21
RIGHTS OF THE UNPAID VENDOR (SELLER):
1. Stoppage in transit
2. Possessory lien
3. Resale
4. Cancel
OBLIGATIONS OF THE VENDEE (BUYER):
1. To ACCEPT delivery
2. To PAY terms
Ownership
TERMS: Risk of loss
AFTER on FE
delivery
A. On TRIAL or Satisfaction Seller Seller (RPD)
On SALE or Return Buyer Buyer (RPD)
B. LUMPSUM no increase or decrease in price.
Discrepancy (Estimate < Actual): Should not
exceed .
If seller insists delivery of excess between
actual and estimate: Buyers Option:
Rescind/Cancel contract +
Damages
Agree Specific performance
C. INSTALLMENT
PERSONAL PROPERTY RECTO LAW
DR default installment:
1 or more Seller to exact
fulfillment.
2 or more Altern. Remedies
I. Exact fulfillment S demands payment;
Seller Ordinary CR NO right to foreclose
Public Sale: proceeds:
Higher than debt: excess belong to
buyer.
Lower than debt: deficiency
Buyer pays.
II. Cancel Sale: B returns object/ Seller
returns payment.
III. Foreclose the Chattel Mortgage
- deficiency: no recovery, stip. VOID
- excess: belongs to seller, stip. (B)
VALID
REAL PROPERTY (Realty Installment Buyer
Protection Act)
RIBPA (MACEDA LAW)
NOT applicable to:
Sale or Financing Industrial
Lots
Sale or financing Commercial
Buildings
Sale to tenants Land Reform
Code
Applicable to: Residential Lots
DR default installment: Without
additional interest/penalty.
Grace Period:
Payment: <2 years (60 days)
2 years (1 mo. /yr.)
Available once every 5 years
Condominium: Residential,
Commercial, Industrial:
SELLER: cancels refund:
50% amount paid
+ 5% per year after 5 yrs.
D. REDEMPTION
CONVENTIONAL based on stipulation
Repossession Period:
With Stipulation max. of 10 yrs.
Without Stipulation 4 years
Pacto de retro sale (death of seller), can heir
repurchase? NO. The owner of the undivided
interest can sell his undivided interest.
LEGAL
Co-owners: (e.g. W, X, Y, Z > W, X
absolute sale to Buyer can):
Proportionate:
Y & Z repurchase what ()
W & X sold?
Y rep. what W & X sold? ()
Z rep. what W & X sold? ()
Adjacent/Ad joint Landowners
RURAL: (Agricultural)
Not > 1 hectare, &
Buyer already owns a rural
land
Can A/AJLO repossess? ()
URBAN (City)
So situated majority part: no
practical use. EXCEPT: if
there is a right to be exercised.
Acquired for speculation.
COURT - least injury to give
access.
Right of Pre-emption if not given: Right of
Redemption 2 or more most beneficial.
PRESUMTION OF EQUITABLE MORTGAGE NOT FOR
SALE:
When place with right to repurchase is usually
inadequate.
When buyer retains part = PP
Buyer extends period of redemption.
Seller retains possession
Seller pays taxes
Real intention mortgage
Traditio longa manu - mere pointing object.
Traditio brevi manu - already in possession
of the vendee (buyer) at the time of sale.
Delivery, no longer required.
Traditio constitutum possessiorium
vendor (seller) continuous to have
possession of the thing not as owner but as
tenant or lessee.
Emtio spei hope, present thing, uncertain.
Emtio re separate future thing expected
to come in existence, certain.
Absolutely Simulated Sale VOID.
SALE OF REAL ESTATE:
(a) Actual < Stated Area
Reduction of price if actual area <
1/10 of Stated
Rescind the sale if actual area > 1/10
of stated
(b) Actual Area > Stated Area
Accept and pay contract rate.
Accept the stated area and reject the
excess.
(c) Actual Area is not of the quality specified
Page 9 of 21
 Reduction of price if the inferior
value not exceed 1/10 of the
price/rate agreed upon.
Rescind if inferior value exceed 1/10
of the price/rate agreed upon.
DOUBLE SALE:
1. PERSONAL PROPERTY
1 Possession in good faith
ST
In public instrument (construction
delivery) public instrument is
preferred over private instrument
(same rule with real property)
2. REAL PROPERTY
1 register in good faith
st
1 possession in good faith
st
Present the oldest title
PERSONS NOT LIABLE FOR BREACH OF WARRANTY:
(SAMPO)
S Sheriff
A Auctioner
M Mortgagee
P Pledgee
O Other persons to sell by virtue of
authority in fact/ in law.
AGENCY
- founded upon Trust and Confidence.
By Operation of Law
Express
Implied
Principal & Agent both present
receipt of Power of Atty. Is without
objection.
Principal & Agent both NOT present:
o Acknowledgement of receipt of
the Power of Atty.
o Failure to reply: (Acceptance)
If required is to do act: the
agent: habitually engaged.
Parties:
Principal capacitated party.
Agent presumed w/ compensation.
2 or More:
Principal solidary.
Agents joint. EXCEPT: stipulated
solidary. EXCEPT: acts of dominion
which needs Special Power of Atty.
NOTICE OF AGENCYS APPOINTMENT:
Newspaper (published) or Notice Letter
another agent.
Del Credere Agent agent & surety at the
same time.
NOTICE OF REVOCATION:
rd
Newspaper, to bind 3 parties: must be
done the same manner as Notice of
Appointment EXCEPT: if the parties to be
notified have actual knowledge.
OBLIGATIONS OF an AGENT:
1. To observe instruction of the Principal
deemed not have exceeded authority.
2. To give everything to P, even if not owing
P.
3. To make accounting of transactions,
stipulation to the contrary: VOID
If A exceeds authority, still binding to P,
object belongs to A = authorized to sell
Ps option: Consider A fulfilled his
authority or ratify.
4. To advance funds: ()
EXCEPT: If stipulated: (), except: if P
insolvent ()
AGENT if authorized:
To sell to mortgage ()
To mortgage to sell ()
To lend money to be borrower()
To borrow money to be lender int. = current
rate ()
To sell on credit obligation to make list = of
ALL buyers on credit otherwise: ALL CASH
TO APPOINT SUB-AGENT:
1. With Stipulation: () & (P designates Agent)
or
2. If not prohibited:
1&2: notorially, incompetent, insolvent.
If Prohibited, ALL actions of Sub-Agent is VOID.
Page 10 of 21
EXTINGUISHMENT OF AGENCY: (EDWARD) BAILEE leases to others.
If object delivered with appraisal
E Expiration of term
D Death of P or A: to sell goods = heirs SECURITY: collateral (Sangla) things:
Take care (GFF) & give notice to P
Agency by operation of law Objects Possession
(necessity). Pledge Movable CR/pledgee
Death EXCEPT: constituted for the benefit of P or Antichresis Immovable CR/
rd
A, or 3 person (stip pour autrui), Insolvency, Civil antichretic CR
Interdiction, and Insanity. Mortgage
Chattel Movable DR/ mortgagor
Real Estate Immovable DR/ mortgagor
W Withdrawal by agent
A Accomplishment of purpose.
R Revocation of agency (P) @ will, with
1. PLEDGE:
or without cause.
Similar to Recto Law
EXCEPT: Valid Reason must be with cause.
D Dissolution of the firm which
Foreclosure then Public Sale with
established the agency.
notice:
Deficiency or excess: belongs/ suffered
Quasi Traditio execution of Public
by CR.
Instrument.
Pledge (CR) use object = NO, EXCEPT:
If stipulated or necessary to preserve
value.
CREDIT TRANSACTIONS
Bidders:
Ownership Purpose Highest Bidder(s)?
A. MUTUUM simple DR To consume Only 1 nd
() EXCEPT: after 2 notice
loan
More than 2 ()
B. COMMODATUM Bailor (CR) To use
Tie (bet. DR & () DR
3rd person)
Object Obligation Contracts Exp.

Pledge is indivisible (on > 1 object)

MM Money To pay Onerous DR
Fungible To replace Gratuitous applicable even to heirs.
CM Non- To return Essentially Ord. Accessory follows Principal.
fungible Gratuitous (bailee)
If fungible Ex-Ord. 2. CHATTEL MORTGAGE (Movable)
(display/exhibi Actual use Foreclosure: from loan:
tion)
(50% Deficiency: DR pays
bailee/ Excess: Mortgagor (DR) owns
50% bailor)

Guaranty insurer of debt, subsidiary

LOSS WHO SUFFERS? liable, with benefit of excussion,
EXCEPT if waived.
1. In mutuum: Res Perit Domino = DR
2. In Commodatum: RPD = Bailor EXCEPT: Surety insurer of prompt payment,
BAILEE guilty of delay solidarily liable, no benefit of
BAILEE uses object of CM: excussion.
purpose different from what was
agreed upon.
Deposit safe keeping.
BAILEE guilty of ingratitude
Judicial movable or
able to save.
immovable.
BAILEE allows others to use,
Extra-judicial movable,
EXCEPT: members of household if
agreement.
not prohibited.

Page 11 of 21
 Necessary in compliance 3. By Estoppel
with law. (e.g. guest-hotels, 4. Life
passengers-common carrier) At will if partners agree continue
Fixed Term dissolved, if partnership
Real Estate Antichresis continues, it will be converted into
Mortgage
partnership at will.
Possession DR CR/pledgee
Fruits/Income DR CR-to be applied
LIABILITY:
DRs obligation.
Taxes/expenses DR CR-to be charged
1. Unlimited General: ALL partners.
to DR
Original up to separate property.
3. REAL ESTATE MORTGAGE Newly Admitted:
Accessory contract, mortgagor can sell Existing at the time of
the object even without consent of the admission up to Contributed
mortgagee. Cap. EXCEPT: stipulation.
Arising after admission up to
separate property.
2. Limited at least 1 general partner; at least
PARTNERSHIP
1 limited partner.
Limited Partner up to Contri.Cap.,
2 or more persons bind to contribute money,
EXCEPT: Liable up to Separate Prop. If:
property or industry to a common fund with
intention of earning profit.
Participate in management
2 or more persons exercise same profession Allow your partnership to use
(GPP) your name in the Partnerships
firm name, EXCEPT:
NO PRESUMPTION OF PARTNERSHIP: o Such name is also name of
the general partner.
rd
1. 3 persons not partners to each other, o Name is already used when
rd
nor parties to 3 person, EXCEPT: estoppel: he joined the partnership.
In pais silence, declarations, made
others believe. SHARE IN THE CONTRIBUTION: (As to Object)
By Deed with documents.
By Laches by passage of time. Universal not allowed to husband & wife
2. Co-ownership/Co-possession guilty of concubinage/adultery.
Purpose: enjoyment/preservation 1. Universal Partnership of Present
3. Sharing of gross returns Property (UP-PP) contributed to the
4. Prima Facie presumption sharing of net partnership.
returns, EXCEPT: (GAWID)
Fruits accessory follows the
G Payment of Goodwill
principal partnership.
A Annuity (widow or representative)
Future Property:
of a partner.
without stipulation partners
W Wage: employee or Rent: landlord
with stipulation ownership:
I Interest to loan.
Partnership (Others) = VALID,
D Debt by installment.
EXCEPT: Inheritance, Legacy,
Donation, EXCEPT: fruits = VALID
PERSONALITY:

2. Universal Partnership of Profits (UP-P)

1. De jure exist in fact and in law, contract:
Highest Bidder(s)?
P3000 or more P.I. & reg. SEC,
Contribution Ownership: Partner
otherwise: De Facto
Right to Use: Partnership
Immovable description, signed by
Future Property Ownership: Partnership
parties, P.I., registered to SEC,
Gratuitous: Partner
otherwise: VOID *if through industry, FP will go to
2. De Facto exist in fact, not in law partnership

Page 12 of 21
 Preference:
Particular (General Partnership) allowed Partnership CRs partnerships assets.
to husband & wife Separate CRs separate assets
Receipt of payment (partner and
LOSS due to FORTUITOUS EVENT Res Perit Domino partnership creditors):
LOSS borne by PARTNERSHIP:
1. If the thing contributed is fungible. APPLICATION OF PAYMENT
2. Contributed for the purpose of selling. If DR assigns application of
3. If the thing cant be kept without payment.
deterioration. If DR waives AOP, if partner:
Managing partner
Partnership Credit ()
CLASSIFICATIONS OF PARTNERS:
Proportionate ()
Not managing partner
1. Contribution
Partnership Credit ()
To effect delivery; day agreed upon/
Own Credit ()
without need-demand.
Proportionate ()
To warrant the thing against eviction.
EXCEPT:
Make additional contribution
Onerous due to Partners.
imminent loss or/& contribution
Due to Partnership is not yet due.
necessary to save partnership.
Partner when received payment
Capitalist: YES, EXCEPT:
not a managing partner.
stipulation or insolvent.
Otherwise can be compelled
PROPERTY RIGHTS:
to sell his interest.
Industrial: NO, EXCEPT:
1. To specific partnership profit.
stipulation.
2. Interest surplus profit/loss:
Make Alterations Immovable
If with stipulation:
Minor (not important)
if VALID as stipulated:
administration YES
(a) Share in P/L
Major (important) NO, even
(b) Share in profit stipulation.
beneficially, EXCEPT: stip.
ALL Partners ()
Share in loss w/out stipulation
2. To engage in another business
(c) Exempting partner:
Capitalist
Profit ()
Not similar: YES
Loss ()
similar: NO EXCEPT: stipulated.
EXCEPT: industrial
Otherwise: profit: partnership
If without stipulation:
Loss: partner
Capitalist: Capital Contribution
Industrial
Industrial
similar or not: NO EXCEPT: stipulated
Profit interest or just equitable
Otherwise: Partners option:
share (JES)
(Expulsion or profit=Partnership) + Damages
Loss exempt
rd
if silent: Share of Capital Partner
3. Liability 3 person, RULE: Joint ; EXCEPT
with least Capital Contribution.
(SOLIDARY):
Capitalist-Industrial Partner 2
Partner: course of business, receive
different rights in the share.
money = misappropriation
Partnership: course of business,
3. To participate in management Who will
receive money = misappropriation
be managing partners?
Commit torts: Quasi-delict (d) One appointment
* Article of Partnership power is
rd
In the eyes of the 3 persons, partners are irrevocable without just cause.
equally liable (joint)

Page 13 of 21
 can EXECUTE ALL acts of admin. = GOOD Direct Attack office of the Solicitor
FAITH, despite objection of other partners General
* Not Article of Partnership power is
Collateral Attack - ()
revocable.
(e) 2 or more
4. Legislative Act if Congress possess a law
* With stipulation should act as 1, cant be
alleged. EXCEPT: grave/ irreparable injury to which makes business of partnership illegal.
partnership.
* Without stipulation should act as 1, 5. Loss of the thing
anyone can act, EXCEPT: To be contributed RPD = LOSS
o If managing partner objects UP-PP: ()
majority of partners, if tie. UP-P: ()
o Controlling interest, if tie.
Contributed only usufructuary, LOSS =
o Majority of ALL partners if tie.
Partner, EXCEPT:
o Controlling interest.
o Fungible
o To be sold
No one Appointed Mutual Agency
RULE: o Cant be kept without
Every partner/ agent/ partnership, deterioration
anyone can act EXCEPT: UP-PP: ()
A partner objects majority UP-P: ()
of all partners, tie C.I.
Unusual Acts: Acts of 6. D Death, I Insolvency, C Civil
Dominion, requires consent
Interdiction, I Insanity, J Judicial (DICI-J)
of ALL partners, EXCEPT:
A partner has been
authorized.
Bus. Of Partnership was LIQUIDATION: Winding Up?
abandon.
(a) With Stipulation as stipulated
UNUSUAL ACTS: must be presented to ALL partners (b) Without Stipulation not guilty. All dead-
(SACRED.D) legal rep of last surviving partner.
S Submit partnership claims/
liability to arbitration. General Limited
A Assign partnership property *Outside CR *Outside CR
trust = CRs *Inside CR *Limited
C Confess judgment -obligation
-share in profits, if any
R Renounce / Abandon
-return on contri. cap.
partnership claims.
*Return on *General
E Enter into compromise. Contributed Cap. -obligation
D Dispose goodwill. -share in profits, if any
D Do any act = impossible= -return on contri. cap.
partnership continue business. *Share in Profit, if any

DISSOLUTION:
CORPORATION
1. Without Violation of partnership
agreement. artificial being created by operation of law
Term expires with the right of succession and powers (express,
By will one, some, or all partners implied, incidental), attributes and properties
Expulsion a partner expressly authorized by law incidental to its
Fulfillment purpose existence.

2. With Violation partnership agreement Artificial being = person = citizenship = THEORIES:

3. Quo Warranto de facto

Page 14 of 21
 Incorporation laws observed in
companies
Philippine Laws = Domestic
Foreign Laws
Resident: E.T.B.
Non-resident: N.E.T.B.
Control test citizenship of owners.
Domiciliary principal office.
NOT ALLOWED to HAVE NO PAR: (BITPuB)
B Banks
I Insurance companies
T Trust companies
Pu Public institutions
B Buildings and loan associations

KINDS of CORPORATION: TO VOTE: with or without voting rights, they can

1. Public vote in: (A-ASIIMID)
2. Quasl-public: as if
3. Private MAJORITY of B.O.D & MAJORITY of Sh./M;

INCORPORATORS: A Amendment/Adoption: by laws;

EXCEPT: power to amend by laws is
1. Of legal age already delegated to the B.O.D by 2/3
2. At least 5 but not more than 15 (natural votes of Sh. /M.
person)
3. Majority: Resident of the Philippines MAJORITY of B.O.D & 2/3 Sh./M:

Primary Franchise: right to organize a corporation. A Amendment of articles in Incorporation

S SLEMP of all or substantially all of
ARTICLES OF INCORPORATION: corporate profits property.
I Incurring/creating/increasing bonded
1. Name: neither similar, nor confusingly indebtedness.
similar to existing corps I Increase/decrease of capital stock
2. Purpose: principal and secondary M Merger or consolidation
3. Principal office I Investment to another company
4. Incorporators: names, nationality and D Dissolution
residence
S Sales / B Lease / E Exchange / M Mortgage / P Pledge
5. Capital: Profit = stocks/shares
6. Board of Directors: Names, Nationality & Of all or substantially all corporate
Residence. property.

KINDS OF SHARES: Treasurers Affidavit: at least 25% of:

Authorized Cap. Stock = par /
1. Capital shares ACS = no par
2. Founders share exclusive right Subs. Paid = money/property
3. Redeemable shares (Callable Shares) (@FMV)
with or without RE, provided such
redemption will not result to: SECURITY of EXCHANGE and COMMISSION:
Insolvency of the corporation
Difficulty in paying maturing REJECTS:
obligations 1. Purpose: unconstitutional, illegal/
4. Preferred shares immoral, contrary to govt.
Dividends CP, C/NP, NC/P, NC/NP 2. Treasurys Affidavit: False
Assets 3. Failure to meet minimum Filipino
5. Common shares (Gamblers Shares) ownership.
below par (x) 4. Failure to observe form
6. Promoter share prescribed.
5. Failure to submit: favourable
recommendation from the
appropriate govt agency in charge
of the activity you are proposing.

Page 15 of 21
 ACCEPTS: (Approved)
Then issue Certificate of
Incorporation (birth of Corp.)
Exercise Secondary franchise EXCEPT:
To commence operation within 2
years; otherwise automatically
dissolve.
COMMENCE OPERATIONS:
ELECTION:
1. BOARD:
Directors by stockholders
(Cumulative or straight ())
Not convicted by final judgment =
imprisoned: more than 6 years
Not violated corporate code within 5
years prior to election.
Must own at least 1 share, EXCEPT:
by-laws require greater or other
number otherwise.
to exercise such power as may be
delegated by B.O.D
Acts that require shareholders
approval
Amend by laws
Distribute cash dividends (Impliedly
include stock dividends)
Fill up vacant seat in the B.O.D
VACANCIES: Grounds:
Removal, expiration of terms,
increase in # of BOD = SHs
Others: remaining members of
BOD:
With quorum = BOD
Without quorum = SHs
Amend acts previously approved by the
B.O.D.

Trustees non-stock (Cumulative(x)) B.O.D declares cash dividends while stock

Not convicted by final judgment = dividends needs 2/3 of shareholders
imprisoned: more than 6 years approval.
Not violated corporate code within 5
years 4. To ENTER CONTRACTS:
Must be a member of the corp. Regular/Ordinary:
rd
With 3 person:
2. OFFICERS: with quorum = BOD
President member of B.O.D without quorum = SHs
Presides meeting of With own Directors:
shareholders & B.O.D Except: if Fair and reasonable
in the By-Laws. Presence of such Director
Secretary resident citizen of the not necessary to
Philippines. constitute quorum
Treasurer no requirement. Vote of such D does not
necessary or approval
Incompatible OFFICE: one person: Otherwise: needs SHs
P&S / P&T approval 2/3
Management:
1. Managing
BOARD OF DIRECTORS:
2. Managed;
1. QUORUM as required by laws Majority of BOD and majority of SHs:
Absence: + 1 (Majority) EXCEPT:
Interlocking Directors
2. COMPENSATION reasonable (per diem & Shareholders:
allowances) o Substantial = 20% of
if given max 10% of NI before IT of outstanding Sh.
preceding year o 1/3 Outstanding Sh.

3. To Create EXECUTIVE COMMITTEE Max of 5 years, EXCEPT: natural resources.

If allowed by laws
at least majority: B.O.D 5. To ACQUIRE OWN SHARES:
Provided corporation has RE, EXCEPT:
redeemable.

Page 16 of 21
 To remove DELIQUENT subscription:
Subscriber:
Not delinquent: rights
o vote ()
o dividends ()
Delinquent: rights
o vote (x)
o dividends ()
Cash to be applied to
unpaid subscription.
Stock to be withheld
until full payment of
subscription.
To qualify as BIDDER, pay:
unpaid subscription, unpaid
expenses, interest
HIGHEST bidder least # of shares
NO bidders corporation
To remove FRACTIONAL shares
To pay DISSENTING shares
Appraisal right payment = FV
of shares
o Options:
To accept will = 1/3
To exercise appraisal right,
EXCEPT:
* Act=abandoned by corp.
/ rejected-SEC
o APPRAISAL COMMITTEE 3 members,
Chosen BY:
(1) By SHs (Dissenting)
(1) By Corp.
(1) By rep. of both Corp and SHs
o Who bears expense of Committee?
- recorded amount:
1M = SHs
more than 1M = Corporation
6. To ISSUE NEW SHARES from unissued
shares.
SHs given PRE-EMPTIVE right, EXCEPT:
In compliance with law required
public offering of shares.
To acquire property needed by
corporation.
To pay creditors.
7. To OBSERVE:
Threefold duties: (OLD)
O Obedience to by laws
L Loyalty to the Corporation
D Diligence
Underlying Doctrines:
Trust Fund Doctrine: capital
stock = separated by assets
Do not issue shares until
fully paid.
to be not liable on
watered shares:
object in writing send
to secretary
Piercing the Veil of Corporate
Functions: SHs CRs cant
collect from corp. EXCEPT:
using corp. to commit fraud.
Special Circumstances
Doctrine Duty of Disclosure
to SHs whats happening to
the Corporation.
Doctrine of Bus. / Corp.
Opportunity related to
loyalty to the Corporation.
Doctrine of Limited Capacity
all acts must be within:
(express, implied, incidental) =
intra-vires
outside = ultra-vires
(a) Legal
executed can be
ratified by
stockholder
executory should
be abandoned
(b) Illegal cannot be ratified
those involved;
liable (members of
BOD)
SUITS: (Corporation can sue and can be sued)
rd
Corporation (de jure) vs. 3 person or SHs
SHs:
Derivative: SHs vs. Board
Individual: SHs vs. Corp
Representative: SHs vs. Corp
rd
3 party vs. Corporation
2 or more same class = class suit
MEETINGS:
1. BOARD:
Regular once a month
Special as need arises
Page 17 of 21
 Place anywhere
Attendance personal () proxy (x)
NEGOTIABLE INSTRUMENT
2. SHAREHOLDERS:
Regular once a year, as fixed in by PURPOSE:
laws, if silent, any day in April
Facilitate exchange
Special as need arises
Substitute money
Place within city / municipality of
Accommodation of Secondary Contracts
Principal Office
Increase credit circulation
If practicable: Principal Office
Attendance personal (), proxy () PARTIES:

Promissory Note Bill of Exchange

Foreign With Without
Primary Liable Maker Acceptor
Corporations License License
Secondary Indorser Drawer
1. Sue? () (x), EXCEPT: Liable
Violation of
property rights
REQUISITES:
2. Be sued? () ()
Intellectual property rights: 1. In writing & signed by maker or drawer.
Trade Name/Mark True Name: complete/
Copyright
abbreviation/ misspelled
Patent
Assumed Name: trade/ business/
alias
DISSOLUTION: Symbols/signature

1. Automatic: 2. Contain unconditional promise or order to

Expiration of term as fixed in the pay sum certain in money.
Articles of Incorporation
Max. term = 50 years EXCEPT: if Subsequent events does not cure
intended, max of 50 years per non-negotiability of Non-
extension. negotiable Instrument.
Non-use Sum Certain:
failure to commence within 2 With interest
years from issuance of Certificate Installment: stated, with
of Incorporation acceleration clause
If silent: choice: holder
2. Grounds: (N) / DR (NN)
Non-use With dollar exchange rate
Failure to resume operation within whether fixed or current
5 years from Stoppage of With cost of collection or
Operation. Atty.s Fee
Legislative Enactment
Quo-Warranto Office of the Solicitor 3. Payable to:
General/ direct attack. Order - of a specific person
Amendment of Aol shortening life of - Specific person or order
corporation. PAYEE:
Judicial by order of the court. - () B
- () B & C (both should
indorse)
LIQUIDATION: winding up = 3 years - () B or C (either can
indorse)
ALL actions for/against Corporation be filed
INDORSEE:
After 3 years - pending actions receiver
- () L / L 60.00 () / L
To reserve enough funds to meet pending
40.00 remaining unpaid
act, EXCESS: Shareholders.
- () L & M

Page 18 of 21
 - () L 50.00 & M 50.00 Incomplete but delivered
- () L or M Complete but Undelivered
Bearer Absence or failure of Consideration
- so expressed bearer Illegal Consideration
- Specified person or Fraud Inducement
bearer. Insertion of wrong date/ discharge by
- Order of fictitious payment before maturity.
person.
- Does not purport to 2. Real Defense can be used against any
name any person. holder (HIDC/HFV)
- Only or last Incomplete and undelivered
indorsement: Blank Minority or other form of incapacity
Forgery
4. Payable on: Fraud in Factum or in Esse Contractus
Demand expressed, no date, Discharge at or after maturity
overdue Illegality of contract
Fixed Date Material Alteration (if silent: Personal)
Determinable Future time time
certain to come. TO NEGOTIATE:
Time
- KNOWN: Order indorsement + delivery
before/at/upon/after Bearer delivery
- UNKOWN: at/after A person who negotiated through
delivery is only liable to the party
5. Bill of Exchange (B.of.E) whom he presented the note.
- Drawee must be named or indicated with
INDORSEMENT:
reasonable certainty.
1. Special Pay to C (B)
DRAWEE:
2. Qualified Pay to C, w/o recourse (@ your own risk) (B)
- () W 3. Blank __________ (B)
- () W and Y 4. Conditional Pay to C, If.. (B)
- () W or Y (alternative) Pending fulfilment of the condition:
- () W, in his absence Y (succession)
Maker option to disregard condition
AGENT: to be not liable: and pays:
Sign within scope of authority Obligation extinguished
Disclose-principal Without incurring any liability
Indicate in what capacity C holds money in trust of B
until C fulfills condition
Agent with limited authority:
Sgd. Name: Per Procuration / Per Proc. Maker may honor/respect condition
/ P.P. / p.p. Maker can refuse to pay, such refusal
is not a dishonor, C has no recourse.
DEFENSES:
5. Facultative Pay to C, notice of Dishonor waived, (B)
1. Personal Defense
(a) Can be used against:
WAIVER:
HFV whose title did not come
(a) face of instrument: binds all parties
from a HIDC
(b) indorsement: binds indorser
HFV whose title come from a
Waiver of protest/presentment/notice
HIDC, but he is party to the
of dishonor/ Protest
defect.
(b) Cannot be used against:
6. Restrictive
HIDC
Prohibits further negotiation of
HFV whose title came from a
Instrument: Pay to C only (B)
HIDC not a party to the defect.

Page 19 of 21
 Constitute Indorsee as mere Agent: WARRANTIES (Liabilities)
Pay to C for collection (B)
Vest title to the Indorsee in trust for Indorsers Qualified General
(Special)
Another: Pay to C in trust for D (B)
Indorsement is genuine () ()
in all aspect it purports
to be
INTERVENING PARTIES: (there is Compensation) Good title () ()
Capacity of primary () ()
Discharged = compensation parties
Can be revived (negotiation): No () -
knowledge/defect/value
() new party
less
() prior party Instrument is valid & - ()
() intervening party in order to subsisting
avoid multiplicity of suits If presented accepted - ()
paid if dishonored
I will pay.
STRIKE OUT (INDORSERS):
- Only allowed if:

(a) No prior parties (new parties only) PRESENTMENT FOR ACCEPTANCE (B.of.E)
Never strike out the PAYEE
Only if the last indorsement is blank. - Unless stipulated.
EXCEPTION: Renegotiation (a) Payable elsewhere other than the
(b) Prior parties usual place/business of Drawee
Intervening parties not liable (b) Fix maturity payable after sight.
anymore.

KINDS OF ACCEPTANCE:
A party primary liable can collect from a
party secondarily liable if he is an (a) Absolute
accommodation party. (b) Qualified accepted
Payable @: place
Payable if: condition
ADMISSION:

MAKER admits:
DISHONORED BY NON-ACCEPTANCE:
Existence & Capacity of the Payee
I will pay according to the tenor of 1. To give Notice of Dishonor by N.A. to PSL
the instrument. within 24 hours;
EXCEPT: N.O.D. not required
DRAWEE/ACCEPTOR admits: On due date: PFP () / collect from PSL ()
Existence & Capacity of the Payee
Existence, Capacity, and Authority of PFP accepted due date:
the Drawer o PFP ()
Signature of the drawer genuine o Collect from PSL ()
I will pay according to tenor of Dishonored by Nonpayment:
acceptance. o Collect from PSL ()
o Give N.O.D. by NP to PSL ()
DRAWER admits:
Evidence and Capacity of the Payee. 2. To protest
If Presented Accepted Paid: a. Notary Public (NP)
If Dishonored Necessary b. Absence of NP rep. & 2 witnesses
Procedures Observed I will pay.

BILLS IN SET 2 or more parts bill

- Every part accepted in the hands of a

HIDC is considered bill.

Page 20 of 21
PRESENTMENT FOR PAYMENT

PRESENTMENT OF CHECK

PRESENTMENT OF BILL OF EXCHANGE

NOT COVERED BY NEGOTIABLE INSTRUMENTS LAW

(NIL):

(a) Warehouse receipt: not sum certain in

money. (delivery of goods)
(b) Bill of Lading: goods not money
(c) Letter of Credit: Payable to specified
person.
(d) Postal Money Order: Payable to specified
person.
(e) Certificate of Stock: not sum certain in
money with condition # of Shares.
(f) Quedan: sweet
(g) Treasury Warrant: Subject to Condition.

DISCHARGE OF NEGOTIABLE INSTRUMENT:

1. Instrument (PP-IPO)
Payment in due course by/on
behalf of Principal DR.
Payment in due course by
accommodated party.
Intentional Cancellation of the
Instrument.
Principal DR becomes the holder
@/after maturity
Other means: discharge-simple
obligation

2. Person secondary liable (DD-IVER)

Discharge of instrument
Discharge of Prior Party/ Payment
made by prior party
By a valid tender of payment
prior party
Intentional cancellation of his
signature
Release of the Principal DR
By extension of the time payment.

-NRBF

Page 21 of 21