CIVIL LAW REVIEW II OBLIGATIONS & CONTRACTS

Atty. Crisostomo Uribe - Course Outli e !"e#. $%%&'

"o ell R. A()to * Re#oletos +e ,) il) - Colle(e o- L).

T4e 4eirs #) re#o3er t4e e5#ess -rom 7. T4is is be#)use t4e /)yme t is ot 3olu t)ry. A filed an action to compel B to fulfill the latters obligation to the former, will the action prosper? Not e#ess)rily be#)use i )tur)l )#tio s o #ourt )#tio #) #om/el /er-orm) #e be#)use it is ) )#tio b)se+ o e0uity1 #o s#ie #e ) + )tur)l 2usti#e. N)tur)l obli()tio s )re mi+.)y bet.ee #i3il obli()tio s ) + t4e /urely mor)l obli()tio s. I or+er t4)t t4ere m)y be ) )tur)l obli()tio 1 t4ere must e5ist ) 2uri+i#)l tie !3i #ulum 2uris' .4i#4 is ot /ro4ibite+ by l). ) + .4i#4 i itsel- #oul+ (i3e ) #)use o- )#tio 1 but be#)use o- some s/e#i)l #ir#umst) #es is )#tu)lly .it4out su#4 le()l s) #tio or me) s o- e -or#i ( #om/li) #e by i 3o6i ( t4e i ter3e tio o- t4e #ourt.
Basis: Art. 1423 Obligations are civil or natural. Civil obligations give a right of action to compel their performance. Natural obligations, not being base on positive la! but on e"uit# performance, but after voluntar# fulfillment b# the obligor, the# authori$e the retention of !hat has been elivere or ren ere b# reason thereof. %ome natural obligations are set forth in the follo!ing articles.

I )tur)l obli()tio 1 i- t4e /)yer 3olu t)rily /)i+1 t4e #re+itor 4)s t4e ri(4t to ret)i .4)t 4e 4)s /)i+. T4e test o .4et4er ) )#t is 3olu t)ry is .4et4er t4e /erso 6 e. t4)t t4ey #) ot be #om/elle+ to /)y but o et4eless t4ey /)y. I t4is #)se1 it #oul+ ot be s)i+ t4)t t4e /)yme t is 3olu t)ry be#)use .4e t4e 4eirs /)i+ t4e )mou t o- 1% millio 1 it .)s o ly $ +)ys )-ter t4e +e)t4 o- 81 ) + by t4)t time orm)lly1 t4e 4eirs still +o 9t 6 o. t4e est)te o- t4e +e#e+e t ) + t4)t t4ey .oul+ re#ei3e less. When is an act $oluntary with respect to performance of a natural obligation? It is 3olu t)ry .4e t4e /)yer /)i+ .it4out -r)u+1 t4re)t1 or ) y 3iti)tio bei ( em/loye+. ,ost im/ort) tly1 t4e /)yer 6 e. t4)t 4e is ot #om/elle+ to /)y but t4e /)yer o et4eless /)i+. T4e re)so .4y ) /erso .4o is ot le()lly obli()te+ to /)y1 3olu t)ry /)ys be#)use oCONSCIENCE. A executed a promissory note date (eb& , ))* stating that +, promise to pay X the amount of million, and signed by him-& .o this day /ecember #, "!!), more than ! years had lapsed, may X still reco$er from A? It m)y be i -erre+ t4)t t4e obli()tio is ) /ure obli()tio +em) +)ble )t o #e1 ) + )s su#4 it is +ue ) + +em) +)ble o :eb. 1 1&&;. T4ere-ore t4e )#tio 4)+ )lre)+y /res#ribe+ be#)use more t4) 1% ye)rs 4)+ l)/se+ -rom :eb. $1 1&&;. T4is s#e )rio m)y be )//li#)ble i ) #o tr)#t o- s)le. W4e i- e3er A /)i+ to 8 t4e )mou t o- 1 millio to 7 +es/ite its /res#ri/tio 1 A #) ot re#o3er -rom 8 be#)use su#4 is 4is )tur)l obli()tio 1 /ro3i+e+ it 4)s bee m)+e 3olu t)rily .4i#4 me) s 4e 6 e. t4)t 4e is ot #om/elle+ to /)y but o et4eless /)i+ it. <o.e3er1 .4e t4e #o tr)#t is o e o- lo) )s ) e5)m/le. T4e /erio+ o- /res#ri/tio #) ot set i be#)use ) #o tr)#t o- lo) is i te +e+ to be /)i+ )t some -uture time1 ) + ot +em) +)ble )t o #e. I t4is i st) #e1 resort to .4)t is i te +e+ by t4e /)rties to be t4e +ue +)te is #o trolli ( to +etermi e .4et4er or ot t4e )#tio 4)+ /res#ribe+1 ) + ) y /)yme t t4ere)-ter #o 3erts it -rom #i3il obli()tio to ) )tur)l obli()tio .

What are the conditions necessary for the existence of natural obligation? 1. T4)t t4ere be ) 2uri+i#)l tie bet.ee t.o /erso s. $. T4is tie is ot (i3e e--e#t by l).. What is the distinction between a moral obligation and a natural obligation?
,or)l Obli()tio T4ere is o 2uri+i#)l tie. N)tur)l Obli()tio T4ere is ) 2uri+i#)l tie.

It is ) )#t o- /ure liber)lity It is ) le()l -ul-illme t o- ) .4i#4 s/ri (s -rom bloo+1 obli()tio . )--e#tio 1 or be e3ole #e.

It is .it4i t4e +om)i omor)ls.

It is .it4i t4e +om)i ol)..

X died, his heirs are ABC, ABC paid to Y ! million " days after Xs death, after # months thereafter the heirs are trying to reco$er the excess because the estate is only % million& Can the heirs reco$er the excess of ' million from Y?

(or a natural obligation to arise does it re0uire that that there is an agreement? Not e#ess)rily. It m)y eit4er be ) .it4 or .it4out ) )(reeme t. W4y> (o -i(ure. When shall natural obligation be con$erted into ci$il obligation? T4e si( i ( o- ) +o#ume t 4)s (e er)lly t4e e--e#t o- #o 3erti ( ) )tur)l obli()tio to ) #i3il obli()tio . T4e si( er re ou #es t4e +e-e se .4i#4 /re3e ts e -or#eme t o- t4e obli()tio 1 .4i#4 #) t4ere)-ter be t4e b)sis o- ) 2u+i#i)l )#tio . T4e /romise to /er-orm ) )tur)l obli()tio is )s e--e#ti3e )s /er-orm) #e itsel-1 ) + #o 3erts t4e obli()tio i to ) #i3il obli()tio . A /res#ribe+ +ebt o- t4e +e#e)se+ mot4er o- t4e +ebtor .)s 4el+ to be ) su--i#ie t #o si+er)tio to m)6e ) 3)li+ ) + e--e#ti3e t4e /romise o- t4e so to /)y t4e s)me ! Vill)roel 3s. Estr)+) ?1 @4il 1;%' Note 4o.e3er1 t4)t /romise to /er-orm must be 3olu t)ry. T4ere-ore1 /)yme t by mist)6e is ot 3olu t)ry ) + m)y be re#o3ere+. O e .4o /)ys ) )tur)l obli()tio belie3i ( it to be #i3il1 +oes ot t4ereby re#o( iAe t4e )tur)l obli()tio B ) + t4ere bei ( o #i3il obli()tio eit4er1 4e #) re#o3er .4)t 4e 4)s /)i+. NoteC @)rti)l /)yme t o- ) obli()tio +oes ot (e er)lly #o 3ert su#4 i to ) #i3il obli()tio 1 t4e /)rt /)i+ #) ot be re#o3ere+ but1 t4e /)rt ot /)i+ #) ot be e -or#e+1 e5#e/t .4e su#4 )tur)l obli()tio is o e t4)t is sub2e#t to r)ti-i#)tio or #o -irm)tio 1 t4e /)rti)l /)yme t #o 3erts it i to ) #i3il obli()tio ! o3)tio or )tur)l obli()tio by /res#ri/tio '1 e5#e/t .4e t4e s)me is #o tr)ry to l).1 mor)ls or /ubli# or+er. Gu)r) ty o- )tur)l obli()tio B .4e #o si+ere+ ) #i3il obli()tio C Ge er)lly1 i /ri #i/le1 ) )tur)l obli()tio #) ot be (u)r) tee+ be#)use t4e li)bility o- t4e (u)r) tor /resu//oses t4)t t4ere must be ) /rior e54)ustio o- t4e /ro/erty o- t4e /ri #i/)l +ebtor1 ) + t4)t t4e +ebtor )-ter /)yi ( #) re#o3er -rom t4e /ri #i/)l +ebtor- ) + bot4 o- t4is #) ot le()lly be +o e .4e t4e obli()tio is )tur)l. <o.e3er1 be#)use o- Art. $%D$ A )tur)l obli()tio m)y be (u)r) tee+. W4)t re)lly 4)//e s is t4)t t4e (u)r) ty o- t4e )tur)l obli()tio #4) (es its #4)r)#ter. W4e t4e +ebtor o--ers ) (u)r) tor -or 4is )tur)l obli()tio 1 4e im/lie+ly )##e/ts t4e #oer#i3e reme+ies to e -or#e t4e (u)r) ty1 ) +

t4ere-ore1 t4e tr) s-orm)tio o- t4e )tur)l obli()tio i to ) #i3il obli()tio . Illi#it obli()tio sC Obli()tio s .4i#4 )re #o tr)ry to mor)ls ) + (oo+ #ustoms +o ot #o stitute )tur)l obli()tio s1 )s su#4 ) y /)yme t #) be re#o3ere+ e5#e/t .4e bot4 )re i /)ri +eli#to1 or .4e o e .)s )t -)ult !see )rts. 1;11 ) + 1;1$'. Art. 1424 &hen a right to sue upon a civil obligation has lapse b# e'tinctive prescription, the obligor !ho voluntaril# performs the contract cannot recover !hat he has elivere or the value of the service he has ren ere . Art. 142( &hen !ithout the )no!le ge or against the !ill of the ebtor, a thir person pa#s a ebt !hich the obligor is not legall# boun to pa# because the action thereon has prescribe , but the ebtor later voluntaril# reimburses the thir person, the obligor cannot recover !hat he has pai . Art. 142* &hen a minor bet!een +1, an 21- #ears of age !ho has entere into a contract !ithout the consent of the parent or guar ian, after the annulment of the contract voluntaril# returns the !hole thing or price receive , not!ithstan ing the fact that he has not been benefite thereb# there is no right to eman the thing or price thus returne . NoteC W4e ) #o tr)#t is ) ulle+ t4e /)rties )re bou + to m)6e mutu)l restitutio . <o.e3er1 .4e t4e (rou + o- ) ulme t is t4e i #)/)#ity o- ) /erso to e ter i to #o tr)#t1 su#4 )s mi ority1 4e is ot bou + to m)6e restitutio e5#e/t to t4e e5te t t4)t 4e .)s be e-ite+. I- t4ere is o be e-it 4e li6e.ise ot bou + to m)6e restitutio . <o.e3er1 4e 4)s ) )tur)l obli()tio to +o so1 ) + 4e m)6e ) restitutio !3olu t)rily' 4e #) ot re#o3er .4)t 4e 4)s +eli3ere+. NoteC T4e mi or #) ot re#o3er .4)t 4e 4)s 3olu t)rily retur e+ .4et4er or ot t4e ot4er /)rty still 4)s it i 4is /ossessio . Art. 142. &hen a minor +bet!een 1, an 21 #ears of age-, !ho has entere into a contract +annulable but not #et annulle - !ithout the consent of the parent or guar ian, voluntaril# pa#s a sum of mone# or elivers a fungible thing +means consumable- in fulfillment of the obligation, there shall be no right to recover the same from the obligee !ho has spent or consume it in goo faith. Ge er)lly .4e ) #o tr)#t is ) ulle+1 t4ere .ill be mutu)l restitutio 1 e5#e/t .4e t4e /)rty .4o e ters i to ) #o tr)#t is ) mi or1 4e is ot bou + to
=

m)6e restitutio o- t4e t4i ( re#ei3e+ by 4im e5#e/t to t4e e5te t 4e .)s be e-ite+. I- 4e is ot obli(e+ to m)6e restitutio 1 but 4e e3ert4eless retur s t4e s)me1 4e #) o lo (er re#o3er be#)use su#4 is ) )tur)l obli()tio . U +er t4is )rti#le 4o.e3er1 t4ere is o )tur)l obli()tio #o tem/l)te+ but ) #)se o- ) #i3il obli()tio u +er ) ) ull)ble #o tr)#t. Com/)re+ to Art. 1;$E t4e #o tr)#t .)s )lre)+y ) ulle+1 but Art. 1;$?1 t4e #o tr)#t is ot yet ) ulle+. <e #e1 t4e s)me is 3)li+ ) + is e -or#e)ble u less it is set )si+e by #om/ete t #ourt i ) )#tio -or t4)t /ur/ose. A y retur m)+e by t4e mi or #) be re#o3ere+1 e5#e/t .4e t4e #re+itor or obli(ee 4)s s/e t or #o sume+ it i (oo+ -)it4. <o. (oo+ -)it4 o- #re+itor est)blis4e+C Belie- o- t4e #re+itor t4)t t4e +ebtor 4)s #)/)#ity to +eli3er t4e ob2e#t o- t4e #o tr)#t. NoteC I- t4e t4i ( +eli3ere+ is o -#o sum)ble1 t4e +ebtor #) ot re#o3er i- t4e t4i ( +eli3ere+ is o lo (er i t4e /ossessio o- t4e #re+itor .4o 4)s )#te+ i (oo+ -)it41 eit4er be#)use 4e 4)s )lie )te+ it or it 4)s bee lost. Art. 142, &hen, after an action to enforce a civil obligation has faile , the efen ant voluntaril# performs the obligation, he cannot eman the return of !hat he has elivere or the pa#ment of the value of the service he has ren ere . Art. 142/ &hen a testate or intestate heir voluntaril# pa#s a ebt of the ece ent e'cee ing the value of the propert# !hich he receive b# !ill or b# the la! of intestac# from the estate of the ecease , the pa#ment shall be vali an cannot be rescin e b# the pa#er. Art. 1430 &hen a !ill is eclare voi because it has not been e'ecute , but one of the intestate heirs, after the settlement of the ebts of the ecease , pa#s a legac# in compliance !ith a clause in the efective !ill, the pa#ment is effective an irrevocable. 1234C2,1.,56 5( AC.,564 Art& %)& Actions prescribe by the mere lapse of time fixed by law& 7 )# 8 NoteC T4e mere +el)y i t4e e -or#eme t o- ) #l)im +oes ot result i ) y re+u#tio or loss o- ri(4t1 u less t4e /erio+ re0uire+ by l). -or /res#ri/tio 4)s e5/ire+.

@res#ri/tio is o ly ) +e-e se ) + ot ) b)sis ori(4t o- )#tio . It must be +e-e si3ely /le)+e+ ot4er.ise it is +eeme+ .)i3e+ i- ot timely r)ise+ or /le)+e+ be-ore or +uri ( t4e 4e)ri ( o- t4e #)se. Art. 1140. Actions to recover movables shall prescribe eight #ears from the time the possession thereof is lost, unless the possessor has ac"uire the o!nership b# prescription for a less perio , accor ing to Articles 1132, an !ithout pre1u ice to the provisions of Articles ((/, 1(0(, an 1133. +1/*2aArt. 1132. 2he o!nership of movables prescribes through uninterrupte possession for four #ears in goo faith. 2he o!nership of personal propert# also prescribes through uninterrupte possession for eight #ears, !ithout nee of an# other con ition. &ith regar to the right of the o!ner to recover personal propert# lost or of !hich he has been illegall# eprive , as !ell as !ith respect to movables ac"uire in a public sale, fair, or mar)et, or from a merchant3s store the provisions of Articles ((/ an 1(0( of this Co e shall be observe . +1/((aArt. ((/. 2he possession of movable propert# ac"uire in goo faith is e"uivalent to a title. Nevertheless, one !ho has lost an# movable or has been unla!full# eprive thereof ma# recover it from the person in possession of the same. 4f the possessor of a movable lost or !hich the o!ner has been unla!full# eprive , has ac"uire it in goo faith at a public sale, the o!ner cannot obtain its return !ithout reimbursing the price pai therefor. +4*4aArt. 1(/(. &here, un er a contract of sale, the o!nership of the goo s has passe to the bu#er an he !rongfull# neglects or refuses to pa# for the goo s accor ing to the terms of the contract of sale, the seller ma# maintain an action against him for the price of the goo s. &here, un er a contract of sale, the price is pa#able on a certain a#, irrespective of eliver# or of transfer of title an the bu#er !rongfull# neglects or refuses to pa# such price, the seller ma# maintain an action for the price although the o!nership in the goo s has not passe . But it shall be a efense to such an action that the seller at an# time before the 1u gment in such action has manifeste an inabilit# to perform the contract of sale on his part or an intention not to perform it. Although the o!nership in the goo s has not passe , if the# cannot rea il# be resol for a reasonable price, an if the provisions of article 1(/*, fourth paragraph, are not applicable, the seller ma# offer to eliver the goo s to the bu#er, an , if the bu#er refuses to receive them, ma# notif# the bu#er that the goo s are thereafter hel b# the seller as bailee for the bu#er. 2hereafter the seller ma# treat the goo s as the bu#er3s an ma# maintain an action for the price. +n-

Art. 1133. 5ovables possesse through a crime can never be ac"uire through prescription b# the offen er. +1/(*a-

Art. 114*. 2he follo!ing actions must be institute !ithin four #ears: +1- 8pon an in1ur# to the rights of the plaintiff7 +2- 8pon a "uasi9 elict7 :o!ever, !hen the action arises from or out of an# act, activit#, or con uct of an# public officer involving the e'ercise of po!ers or authorit# arising from 5artial ;a! inclu ing the arrest, etention an <or trial of the plaintiff, the same must be brought !ithin one +1- #ear. +As amen e b# => No. 1.((, >ec. 24, 1/,0.NoteC A /etitio -or 0uo .)rr) to /res#ribes i 1 ye)r -rom t4e +)te o- ouster but .4e t4e /l)i ti-.)s se/)r)te+ -rom 4is em/loyme t -or u 2usti-i)ble #)use it /res#ribes i ; ye)rs +ue to ) i 2ury to t4e ri(4ts o- t4e /l)i ti--. A )#tio b)se o -r)u+ /res#ribe i ; ye)rs -rom +is#o3ery o- t4e -r)u+. Art. 114.. 2he follo!ing actions must be file !ithin one #ear: +1- ?or forcible entr# an +2- ?or efamation. +nArt. 114,. 2he limitations of action mentione in Articles 1140 to 1142, an 1144 to 114. are !ithout pre1u ice to those specifie in other parts of this Co e, in the Co e of Commerce, an in special la!s. +nArt. 114/. All other actions !hose perio s are not fi'e in this Co e or in other la!s must be brought !ithin five #ears from the time the right of action accrues. +nNoteC Limit)tio s u/o t4e ri(4t o- t4e (o3er me t to )ssess ) + #olle#t t)5es .ill ot be /resume+ i t4e )bse #e o- #le)r le(isl)tio to t4e #o tr)ry1 ) + .4ere t4e (o3er me t 4)s ot by e5/ress st)tutory /ro3isio /ro3i+e+ ) limit)tio u/o its ri(4t to )ssess u /)i+ t)5es1 su#4 ri(4t is im/res#ri/tible. Art. 11(0. 2he time for prescription for all )in s of actions, !hen there is no special provision !hich or ains other!ise, shall be counte from the a# the# ma# be brought. +1/*/T4e mome t t4e ri(4t or +uty o##urs1 t4e t4e ri(4t o- )#tio )##rues1 ) + t4e )#tio #) be le()lly i stitute+B -rom t4)t mome t1 t4ere-ore1 t4e /erio+ o- /res#ri/tio o- )#tio be(i s to ru . etainer7

Art. 1141. 6eal actions over immovables prescribe after thirt# #ears. 2his provision is !ithout pre1u ice to !hat is establishe for the ac"uisition of o!nership an other real rights b# prescription. +1/*3Art. 1142. A mortgage action prescribes after ten #ears. +1/*4aI- t4e )#tio to re#o3er t4e mort()(e +ebt itsel- 4)s /res#ribe+1 t4e )#tio to re#o3er t4e i terest must )lso /res#ribe+. Art. 1143. 2he follo!ing rights, among others specifie else!here in this Co e, are not e'tinguishe b# prescription: +1- 2o eman a right of !a#, regulate in Article *4/7 !$' 2o bring an action to abate a public or private nuisance. +nNo /res#ri/tio s4)ll ru i -)3or o- ) #o-o. er or #o 4eir )()i st 4is #o-o. ers or #o-4eirs so lo ( )s 4e e5/ressly or im/lie+ly re#o( iAe t4e #oo. ers4i/1 ot4er.ise )#0uisiti3e /res#ri/tio m)y set i . Art& **& .he following actions must be brought within ten years from the time the right of action accrues9 7 8 :pon a written contract; 7"8 :pon an obligation created by law; !=' :pon a <udgment& 7n8 W4e /ro/erty is re(istere+ i ) ot4er9s )me1 ) im/lie+ or #o stru#ti3e trust is #re)te+ by l). i -)3or o- t4e true o. er. T4e )#tio -or re#o 3ey) #e o- t4e title to t4e ri(4t-ul o. er /res#ribes i te ye)rs -rom t4e issu) #e o- t4e title. But i- -r)u+ 4)s bee #ommitte+1 ) + t4is is t4e b)sis o- )#tio 1 ot im/lie+ trust1 t4e )#tio .ill be b)rre+ )-ter ; ye)rs. Art. 114(. 2he follo!ing actions must be commence !ithin si' #ears: +1- 8pon an oral contract7 +2- 8pon a "uasi9contract. +n-

W4e ) obli()tio is sub2e#t to ) sus/e si3e #o +itio 1 /res#ri/tio ru s o ly -rom t4e 4)//e i ( o- t4e #o +itio . W4ere t4e obli()tio is .it4out +)te o- m)turity1 or ) ote is /)y)ble o +em) +1 /res#ri/tio be(i s to ru -rom t4e +)te t4e ote or obli()tio ) + ot -rom +em) +1 e5#e/t .4e t4e li)bility -or t4e u /)i+ b)l) #e o- ) subs#ri/tio to s4)res o- ) #or/or)tio 1 4ere t4e li)bility o- t4e subs#riber +oes ot )rise u til #)ll or +em) + -or /)yme t by t4e bo)r+ o- +ire#tors1 ) + t4ere-ore1 /res#ri/tio .oul+ ru o ly -rom su#4 +em) +. Art. 11(1. 2he time for the prescription of actions !hich have for their ob1ect the enforcement of obligations to pa# principal !ith interest or annuit# runs from the last pa#ment of the annuit# or of the interest. +1/.0aNoteC T4e /erio+ o- /res#ri/tio i obli()tio s .it4 i terest ru s o ly -rom t4e l)st /)yme t o- i terest1 is )//li#)ble o ly to #)ses .4ere t4e /ri #i/)l +ebt is )lre)+y +ue. W4e /ri #i/)l obli()tio is ot yet +ue1 /)yme t o- i terest )t sti/ul)te+ i ter3)ls +oes ot #)use t4e ru i ( o- /erio+ o- /res#ri/tio 1 .4i#4 .ill #omme #e o ly )-ter t4e m)turity o- +ebt. Art. 11(2. 2he perio for prescription of actions to eman the fulfillment of obligation eclare b# a 1u gment commences from the time the 1u gment became final. +1/.1Art. 11(3. 2he perio for prescription of actions to eman accounting runs from the a# the persons !ho shoul ren er the same cease in their functions. 2he perio for the action arising from the result of the accounting runs from the ate !hen sai result !as recogni$e b# agreement of the intereste parties. +1/.2Art. 11(4. 2he perio uring !hich the obligee !as prevente b# a fortuitous event from enforcing his right is not rec)one against him. +nArt. 11((. 2he prescription of actions is interrupte !hen the# are file before the court, !hen there is a !ritten e'tra1u icial eman b# the cre itors, an !hen there is an# !ritten ac)no!le gment of the ebt b# the ebtor. NoteC T4e e5ti #ti3e /res#ri/tio is i terru/te+ .4e t4e #re+itor m)+e ) +em) + be-ore t4e l)/se o- t4e /erio+ -i5e+ by l).. A 3erb)l +em) + u/o t4e +ebtor is ot su--i#ie t to i terru/t or re e. t4e /res#ri/ti3e /erio+.

What is an obligation? Obli()tio is ) 2uri+i#)l e#essity to (i3e1 to +o1 or ot to +o !Art. 11DE'. ,s it correct to say that the definition is not accurate, in the sense that there must be another prestation which is not to gi$e aside from to gi$e, to do or not to do? T4e +e-i itio is )##ur)te. T4e obli()tio i #lu+es ot to +o. ot to (i3e

,s the definition defecti$e because it only pertains to the debtor side and it lac=s the <uridical relation in its entirety? T4e +e-i itio is ot +e-e#ti3e. T4e .or+ obli()tio itsel- /ert)i s to t4e +ebtor si+e1 4e #e it is /ro/er. T4e obli()tio /ert)i s to t4e +ebtor ) + ri(4t /ert)i s to t4e #re+itor. A /erso .4o 4)s ) ri(4t #) #om/el t4e ot4er1 but 4e #) ot be #om/elle+ to /er-orm 4is ri(4t. A obli()tio m)y ot be .)i3e+B but ) ri(4t m)y be e5er#ise+ or ot. Ri(4ts ) + obli()tio s )re +i--ere t m)tters. What is the determining factor that the definition under Art& ># is a ci$il obligation? Be#)use o- t4e /4r)se F2uri+i#)l e#essityG What are the essential elements of obligation? 1. $. =. ;. A#ti3e sub2e#t @)ssi3e sub2e#t Huri+i#)l tie !3i #ulum 2uris' @rest)tio

Who are the sub<ects of an obligation? 1. A#ti3e sub2e#t !#re+itor' $. @)ssi3e sub2e#t !+ebtor' ,n a contract of lease, who is the acti$e sub<ect; the passi$e sub<ect? Si #e it is #o si+ere+ ) re#i/ro#)l obli()tio !bil)ter)l #o tr)#t'1 bot4 t4e lessee ) + t4e lessor m)y be #o si+ere+ t4e /)ssi3e or )#ti3e sub2e#ts1 +e/e +i ( o t4e )s/e#ts o- +eli3ery o- t4e /ro/erty or /)yme t o- re t. I t4e +eli3ery o- t4e /ro/erty to t4e lessor is t4e /)ssi3e sub2e#t ) + t4e lessee is t4e )#ti3e sub2e#t. T4e -ormer is obli(e+ to +eli3er t4e /ro/erty sub2e#t o- t4e le)se to t4e lessee.

I t4e #)se o- /)yme t1 t4e lessee is t4e /)ssi3e sub2e#t1 ) + t4e lessor is t4e )#ti3e sub2e#t. T4e lessee is obli(e+ to /)y t4e )mou t o- re t to t4e lessor. ,n a contract of sale, who is the acti$e and the passi$e sub<ect? I ) #o tr)#t o- s)le1 si #e it is ) re#i/ro#)l obli()tio !bil)ter)l #o tr)#t' bot4 t4e seller ) + t4e buyer m)y be #o si+ere+ t4e /)ssi3e ) + t4e )#ti3e sub2e#t +e/e +i ( o .4et4er it is -or /)yme t o- t4e )mou t o- t4e t4i ( sol+1 ) + o t4e obli()tio to +eli3er t4e t4i ( sub2e#t o- t4e s)le. What is the reason why a debtor considered a passi$e sub<ect? <e is #o si+ere+ ) /)ssi3e sub2e#t be#)use i t4e )bse #e o- +em) + -rom t4e #re+itor t4e +ebtor #oul+ 2ust .)it1 ) + let t4e /res#ri/tio ru i -)3or o- t4e +ebtor. I- t4e #re+itor +oes ot +em) + -or t4e /er-orm) #e o- t4e obli()tio 1 t4ere .ill be o #om/ulsio . T4ere must be /roo- o- +em) + i .riti (. ,s there an instance in case of consignation a right may be exercised? No e. Co si( )tio is ) le()l obli()tio . A obli()tio ) + ) ri(4t )re t.o +i--ere t #o #e/ts. 4hould an obligation and a right co?exist? 7es. I- someo e 4)s ) obli()tio somebo+y is (oi ( to 4)3e ) ri(4t. ,s there an instance where a right and an obligation pertain to the same person? 7es t4ere )re is ) i st) #e .4ere ) obli()tio ) + ) ri(4t /ert)i to t4e s)me /erso 1 su#4 t4)t t4e /erso )#0uire+ su#4 ri(4t )s i t4e #)se o#o -usio . What is the ob<ect 7prestation8 of an obligation? T4e ob2e#t o- ) obli()tio is ot4i ( but ) /)rti#ul)r #o +u#t o- t4e +ebtor. T4e t4i ( is ot t4e ob2e#t o- t4e obli()tio B it is 4is #o +u#t e#ess)ry to /ro+u#e t4e e--e#ts o- t4e obli()tio .4et4er it is ) obli()tio to (i3e1 to +o or ot to +o. It m)y i 3ol3e ) t4i ( i ) obli()tio to (i3e. What are the re0uisites of prestation or ob<ect? 1. It must be /ossible1 /4ysi#)lly ) + 2uri+i#)lly

$. It must be +etermi )te1 or )t le)st +etermi )ble )##or+i ( to /re-est)blis4e+ eleme ts or #riteri)B ) + =. it must 4)3e ) /ossible e0ui3)le t i mo ey. NoteC T4e /rest)tio ee+ ot )#tu)lly be o/e#u i)ry 3)lue. T4e #riterio to +etermi e .4et4er ) obli()tio 4)s ) /e#u i)ry 3)lue is ot limite+ to t4e ob2e#t or /rest)tio t4ereo-1 but e5te +s to t4e s) #tio .4i#4 #orres/o +s to t4e 2uri+i#)l +uty. T4ere-ore1 t4e #re+itor9s i terest ee+ ot be e#o omi# or /)trimo i)lB it m)y be se time t)l1 mor)l or i+e)l. But t4e ob2e#t o- /rest)tio must 4)3e ) e#o omi# 3)lue or i #)se oo -ul-illme t1 be sus#e/tible o- substitutio i mo ey or somet4i ( o- /)trimo i)l 3)lue. What is a <uridical tie or $inculum <uris? It is t4e e--i#ie t #)use1 2uri+i#)l tie1 or le()l tie .4i#4 bi +s t4e /)rties est)blis4e+ eit4er by !) y sour#e o- ) obli()tio 'C ). l). b. bil)ter)l )#ts #. u il)ter)l )#ts !#rimes or 0u)si-+eli#ts' What obligation has no <uridical tie? ,or)l obli()tio s 4)s o 2uri+i#)l tie be#)use it is ) )#t o- /ure liber)lity .4i#4 s/ri (s -rom bloo+1 )--e#tio or be e3ole #e. It is .it4i t4e +om)i omor)ls. What are the sources of obligations which binds the parties? 1. $. =. ;. D. L). Co tr)#ts Iu)si-Co tr)#ts "eli#ts Iu)si "eli#ts !Art. 11D?'

U il)ter)l @romisesB ) sour#e o- obli()tio Ge er)lly ) u il)ter)l /romise be-ore )##e/t) #e is ot bi +i (1 e5#e/t by ) u il)ter)l +e#l)r)tio o- t4e .ill .it4 i te t to be bou + to ) /)rti#ul)r /erso . ,s the enumeration exclusi$e? 7es. T4e e umer)tio is e5#lusi3e )s /ro3i+e+ i t4e #)se o- S)(r)+) Or+e 3s. N)#o#o .4ere t4e SC r)tio )liAe+ t4)t ! ot i t4e e5/ress m) er' @i$e an instance where " or more sources of obligation exist at the same time?

I t4e #)se %alu aga v. ?@8, A/ril =%1 $%%J t4e #ourt rule+ t4)t t4e s#4ool s4)ll be 4el+ li)ble -or +)m)(es -or bre)#4 o- #o tr)#t i t4e s#4ool9s obli()tio to /ro3i+e stu+e ts .it4 ) s)-e ) + se#ure le)r i ( )tmos/4ere. :EU bre)#4e+ t4e s#4ool-stu+e t #o tr)#t -or e(li(e #e o its obli()tio to e sure ) + t)6e )+e0u)te ste/s to m)i t)i /e)#e ) + or+er .it4i t4e #)m/us. It -ou + t4)t :EU 4)+ -)ile+ to u +ert)6e me)sures to )s#ert)i ) + #o -irm t4)t t4e se#urity (u)r+s )ssi( e+ i t4e #)m/us /ossess t4e 0u)li-i#)tio s re0uire+ i t4e Se#urity Ser3i#e A(reeme t bet.ee :EU ) + G)l)5y !Se#urity )(e #y'. T4e Court )lso or+ere+ G)l)5y ) + its /resi+e t1 ,)ri) o ". Im/eri)l1 to 2oi tly ) + se3er)lly /)y :EU +)m)(es e0ui3)le t to t4e )mou t ).)r+e+ to S)lu+)() -or )#ts o- e(li(e #e t4)t resulte+ to :EU9s bre)#4 o- obli()tio to its stu+e t. G)l)5y .)s -ou + e(li(e t i t4e sele# t i o ) + su/er3isio o- its em/loyees1 )s su//orte+ by t4e l)#6 o- )+mi istr)ti3e s) #tio )()i st Ale2) +ro Rosete1 t4e se#urity (u)r+ .4o s4ot S)lu+)(). Rosete1 .4o .)s i ste)+ )llo.e+ to (o o le)3e )-ter t4e s4ooti ( i #i+e t1 e3e tu)lly +is)//e)re+. <e #e1 #o tr)#t ) + 0u)si +eli#t .)s )//lie+ )t t4e s)me i #i+e t to 4ol+ t4e )bo3e )me+ /)rties li)ble. CUC T4e se#urity (u)r+ s4ot ) mo3ie (oer be#)use t4e l)tter trie+ to 4)#6 t4e -ormer .it4 ) bolo. Be#)use o- t4is i #i+e t t4e 4eirs o- t4e +e#e)se+ -ile+ ) #rimi )l #)se )()i st t4e se#urity (u)r+. T4e #)se .)s +ismisse+1 )s ) result o- .4i#4 t4e (u)r+ i #urre+ e5/e ses -or t4e /)yme t o- 4is )ttor ey ) + +em) +s reimburseme t -rom 4is em/loyer. I t4is #)se1 t4e em/loyer is ot li)ble to reimburse 4is em/loyee to reimburse t4e e5/e ses i #urre+ by t4e em/loyee i +e-e +i ( 4imsel- /rim)rily be#)use t4ere is o l). re0uiri ( su#4 em/loyer to reimburse. T4e -)#t t4)t t4e +ire#t ) + /ro5im)te #)use o- t4e e5/e ses i #urre+ i +e-e +i ( 4imsel- .)s +eri3e+ -rom t4e /er-orm) #e o- 4is -u #tio +oes ot m)6e t4e em/loyer li)ble be#)use t4ere is ) e--i#ie t i ter3e i ( #)use .4i#4 is t4e -ili ( o- t4e #)ses b)se+ o m)li#ious /rose#utio . 1. Aaw Art. 11(, Obligations erive from la! are not presume . Onl# those e'pressl# etermine in this Co e or in special la!s are eman able, an shall be regulate b# the precepts of la! !hich establishes them7 an as to !hat has not been foreseen, b# the provisions of this boo).

E.(. T4e (i3i ( o- le()l )ssist) #e to t4e em/loyee is ot ) le()l obli()tio . W4ile it mi(4t ) + /ossibly be re()r+e+ )s ) mor)l obli()tio 1 it +oes ot )t /rese t #ou t .it4 t4e le()l s) #tio o- ) y m) m)+e l).. I- t4e em/loyer is ot le()lly obli(e+ to (i3e le()l )ssist) #e to its em/loyee to /ro3i+e 4im .it4 ) l).yer1 s)i+ em/loyee #) ot re#o3er -rom t4e em/loyer t4e )mou t 4e /)i+ ) l).yer 4ire+ by 4im. ,n obligations arising from law, who has the burden of pro$ing the same? Ge er)lly1 t4e /erso .4o )lle(es ) -)#t 4)s t4e bur+e o- /ro3i ( t4e s)me. <o.e3er1 t4ere )re #ert)i -)#ts .4i#4 ee+ ot be /ro3e . T4ere is o ee+ to )lle(e su#4 -)#ts be#)use t4e l). /resumes t4e e5iste #e o- ) ri(4t ) + /resumes t4e e5iste #e o- ) -)#t. Who has the burden of proof in obligations arising from contracts? T4e obli(ee 4)s t4e bur+e o- /roo- be#)use i Art. 11DJ1 )s e5/ressly /ro3i+e+1 obli()tio s )risi ( -rom l). )re ot /resume+. T4is is o e i st) #e .4ere t4ere is o /resum/tio ot to )lle(e -)#ts. T4e /ri #ess o- st)rsC O e o- t4e +e#e)se+ #)use+ by t4e si 6i ( o- t4e s4i/ .ere burie+ by ) t4ir+ /erso ) + )s6i ( l)ter o -or reimburseme t -rom t4e +e#e+e t9s )u t o t4e e5/e ses -or t4e buri)l. <ere t4ere is ) obli()tio )risi ( -rom su#4 )#t b)se o 0u)si #o tr)#t u +er Art. $1E; !ot4er 0u)si #o tr)#ts' ) + u +er su#4 /ro3isio o ly /erso s obli(e+ to (i3e su//ort #) be #om/elle+ to reimburse. I t4is #)se1 si #e t4e )u t is ot o e ot4ose /erso s obli(e+ to (i3e su//ort #) ot be #om/elle+ to reimburse t4e e5/e ses -or buri)l. $. Contracts Art. 11(/ Obligations arising from contracts have the force of la! bet!een the contracting parties an shoul be complie !ith in goo faith. NoteC T4is /ro3isio /resu//oses t4)t t4e #o tr)#t is 3)li+ ) + e -or#e)ble. T4e s)me s4oul+ ot be #o tr)ry to l).1 mor)ls1 (oo+ #ustoms1 /ubli# /oli#y or /ubli# or+er. E.(. A #o tr)#t sti/ul)ti ( t4)t o /)yme t o- t4e lo) #o si+ers t4e 4ouse ) + lot sol+. T4is is ) #)se o- #o tr)#t o- lo) ) + ) /romise o- s)le o- ) 4ouse ) + lot. Su#4 #o tr)#ts )re /er-e#tly le()l1

t4e )(reeme t is t4e l). bet.ee t4em1 ) + must be e -or#e+. E.(. T4e 3)li+ity o- restr)i ts u/o tr)+e or em/loyme t is to be +etermi e+ by t4e i tri si# re)so )ble ess o- t4e restri#tio i e)#4 #)se1 r)t4er t4) by ) y -i5e+ rule1 ) + su#4 restri#tio m)y be u/4el+ .4e ot #o tr)ry to /ubli# .el-)re ) + ot (re)ter t4) is e#ess)ry to )--or+ ) -)ir ) + re)so )ble /rote#tio to t4e /)rty i .4ose -)3or it is im/ose+. T4e #o tr)#t i 0uestio is ot ob o5ious to t4e rule o- re)so )ble ess. W4ile su#4 restr)i t1 i- im/ose+ )s ) #o +itio o- t4e em/loyme t o- ) +)y l)borer1 .oul+ )t o #e be re2e#te+ )s merely )rbitr)ry ) + .4olly u e#ess)ry to t4e /rote#tio o- t4e em/loyer1 it +oes ot seem so .it4 res/e#t to ) em/loyee .4ose +uties )re su#4 o- e#essity to (i3e 4im ) i si(4t i to t4e (e er)l s#o/e ) + +et)ils o- 4is em/loyer9s busi ess. T4e #o tr)#t i t4is #)se1 #o si+eri ( t4e #ir#umst) #es1 is ot u re)so )ble. It must t4ere-ore be e -or#e+. T4e rule i t4is 2uris+i#tio 4)3e t4e -or#e o- l). bet.ee t4e #o tr)#ti ( /)rties. @re-Co tr)#tu)l Obli()tio sB .4e bi +i (B (i3es rise to li)bility I- t4e o--er by o e /)rty is #le)r ) + +e-i ite1 le)+i ( t4e o--eree i (oo+ -)it4 to i #ur e5/e ses i t4e e5/e#t)tio o- e teri ( i to t4e #o tr)#tB ) + t4e .it4+r).)l o- t4e o--er is .it4out ) y le(itim)te #)use. =. Buasi Contracts Cinds of Buasi Contracts 1. Solutio I +ebiti $. Ne(otorium Gestio =. Ot4er Iu)si Co tr)#ts 1. 6egotiorum gestio !o--i#ious m) )(eme t' Art $1;; W4oe3er 3olu t)rily t)6es #4)r(e o- t4e )(e #y or m) )(eme t o- t4e busi ess or /ro/erty o- ) ot4er1 .it4out ) y /o.er -rom t4e l)tter1 is obliged to continue the same u til t4e termi )tio o- t4e )--)ir ) + its i #i+e ts1 or to re0uire t4e /erso #o #er e+ to substitute 4im1 i- t4e o. er is i ) /ositio to +o so. T4is 2uri+i#)l rel)tio "OES NOT )rise i eit4er ot4ese i st) #esC 1' W4e t4e /ro/erty or busi ess is ot e(le#te+ or )b) +o e+ $' I- i -)#t t4e m) )(er 4)s bee t)#itly )ut4oriAe+ by t4e o. er $. 4olutio indebiti !/)yme t ot +ue' Art $1D; I- somet4i ( is re#ei3e+ .4e t4ere is o ri(4t to +em) + it1 ) + it .)s u +uly

+eli3ere+ t4rou(4 mist)6e1 t4e obligation to return it )rises. =. Ot4er 0u)si-#o tr)#ts !su//ort (i3e by str) (ers ) + ot4er FGoo+ S)m)rit) sG'
Art W4e 1 .it4out t4e 6 o.le+(e o- t4e /erso obli(e+ to $1E (i3e su//ort1 it is (i3e by ) str) (er1 t4e l)tter s4)ll 4)3e ) ri(4t to #l)im t4e s)me -rom t4e -ormer1 ;
UNLESS it )//e)rs t4)t 4e ()3e it out o- /iety ) + .it4out i te tio o- bei ( re/)i+.

Art W4e -u er)l e5/e ses )re bor e by ) t4ir+ /erso 1 $1E .it4out t4e 6 o.le+(e o- t4ose rel)ti3es .4o .ere obli(e+ to (i3e su//ort to t4e +e#e)se+1 s)i+ rel)ti3es D
s4)ll reimburse t4e t4ir+ /erso 1 s4oul+ t4e l)tter #l)im reimburseme t.

Art W4e t4e /erso obli(e+ to su//ort ) or/4) 1 or ) $1E i s) e or ot4er i +i(e t /erso u 2ustly re-uses to (i3e su//or t to t4e l)tter1 ) y t4ir+ /erso m)y -ur is4 E

rt to t4e ee+y i +i3i+u)l1 .it4 ri(4t osu//o reimb urseme t -rom t4e /erso obli(e+ to (i3e t. T4e /ro3isio s o- t4is )rti#le )//ly .4e t4e su//or -)t4er or mot4er o- ) #4il+ u +er ei(4tee ye)rs o- )(e y re-uses to su//ort 4im. u 2ustl

Art W4e t4rou(4 ) )##i+e t or ot4er #)use ) /erso is $1E i 2ure+ or be#omes seriously ill1 ) + 4e is tre)te+ or 4el/e+ .4ile 4e is ot i ) #o +itio to (i3e #o se t to ?
) #o tr)#t1 4e s4)ll be li)ble to /)y -or t4e ser3i#es ot4e /4ysi#i) or ot4er /erso )i+i ( 4im1 UNLESS t4e ser3i#e 4)s bee re +ere+ out o- /ure (e erosity.

Art W4e +uri ( ) -ire1 -loo+1 storm1 or ot4er #)l)mity1 $1E /ro/erty is s)3e+ -rom +estru#tio by ) ot4er /erso .it4out t4e 6 o.le+(e o- t4e o. er1 t4e l)tter is bou + J
to /)y t4e -ormer 2ust #om/e s)tio .

Art W4e t4e (o3er me t1 u/o t4e -)ilure o- ) y /erso $1E to #om/ly .it4 4e)lt4 or s)-ety re(ul)tio s #o #er i ( /ro/erty1 u +ert)6es to +o t4e e#ess)ry .or61 e3e &
o3er 4is ob2e#tio 1 4e s4)ll be li)ble to /)y t4e e5/e ses.

Art W4e by )##i+e t or ot4er -ortuitous e3e t1 mo3)bles $1? se/)r)tely /ert)i i ( to t.o or more /erso s )re #ommi (le+ or #o -use+1 t4e rules o #o-o. ers4i/ %
s4)ll be )//li#)ble.

Art T4e ri(4ts ) + obli()tio s o- t4e -i +er o- lost /erso )l $1? /ro/erty s4)ll be (o3er e+ by Arti#les ?1& ) + ?$%. 1 Art T4e ri(4t o- e3ery /ossessor i (oo+ -)it4 to $1? reimburseme t -or e#ess)ry ) + use-ul e5/e ses is (o3er e+ by Arti#le D;E. $ Art W4e ) t4ir+ /erso 1 .it4out t4e 6 o.le+(e o- t4e $1? +ebtor1 /)ys t4e +ebt1 t4e ri(4ts o- t4e -ormer )re (o3er e+ by Arti#les 1$=E !re#o3er .4)t 4)s bee =
be e-i#i)l to +ebtor' ) + 1$=? !#) to subro()te /)yor i 4is ri(4ts'. ot #om/el #re+itor

&

Art W4e i ) sm)ll #ommu ity ) )tio )lity o- t4e $1? i 4)bit) ts o- )(e +e#i+e u/o ) me)sure -or /rote#tio )()i st l).less ess1 -ire1 -loo+1 storm or ;
ot4er #)l)mity1 ) y o e .4o ob2e#ts to t4e /l) ) + re-uses to #o tribute to t4e e5/e ses but is be e-ite+ by t4e /ro2e#t )s e5e#ute+ s4)ll be li)ble to /)y 4is s4)re o- s)i+ e5/e ses.

*& Acts or omissions punished by law 7/elicts8 U +er Art. 1%% o- t4e R@C /ro3i+es t4)t e3ery /erso #rimi )lly li)ble is )lso #i3illy li)ble. T4is 4o.e3er is ot )bsolutely true be#)use t4ere )re #ert)i -elo ies .4ere o #i3il li)bility .ill )rise e3e i- #o 3i#te+ o- ) #rime. T4is is be#)use t4ere is o /ri3)te o--e +e+ /)rty i some #rimes. U +er Art. 1%; o- t4e R@C i )++itio to #i3il li)bility1 restitutio 1 re/)r)tio o- +)m)(e #)use+1 i +em i-i#)tio o- #o se0ue ti)l +)m)(es. NoteC It is ot #orre#t to s)y t4)t e3ery time ) /erso is 4el+ #rimi )lly li)ble u +er t4is sour#e oobli()tio )ll t4ese 6i +s o- li)bility !restitutio 1 re/)r)tio o- +)m)(e #)use+1 ) + i +em i-i#)tio o- #o se0ue ti)l +)m)(es' .oul+ )rise. NoteC I 2usti-yi ( ) + e5em/ti ( #ir#umst) #es t4ou(4 ) /erso is ot 4el+ #rimi )lly li)ble +oes ot e#ess)rily me) t4)t 4e is ot #i3illy li)ble. I 2usti-yi ( #ir#umst) #es1 (e er)lly t4ere .oul+ be o #i3il li)bility1 e5#e/t i /)r)(r)/4 ; .4ere it /ro3i+es t4)t A y /erso .4o1 i or+er to )3oi+ ) e3il or i 2ury1 +oes ot )#t .4i#4 #)uses +)m)(e to ) ot4er1 /ro3i+e+ t4)t t4e -ollo.i ( re0uisites )re /rese tC :irst. T4)t t4e e3il sou(4t to be )3oi+e+ )#tu)lly e5istsB Se#o +. T4)t t4e i 2ury -e)re+ be (re)ter t4) t4)t +o e to )3oi+ itB T4ir+. T4)t t4ere be o ot4er /r)#ti#)l ) + less 4)rm-ul me) s o- /re3e ti ( it. I e5em/ti ( #ir#umst) #es1 (e er)lly t4ere is #i3il li)bility e5#e/t /)r)(r)/4 ; .4ere it /ro3i+es t4)tC A y /erso .4o1 .4ile /er-ormi ( ) l).-ul )#t .it4 +ue #)re1 #)uses ) i 2ury by mere )##i+e t .it4out -)ult or i te tio o- #)usi ( it. NoteC I- t4ere is o #rimi )l #o 3i#tio 1 t4is sour#e o- obli()tio .ill ot )rise but m)y )rise -rom ot4er sour#e o- obli()tio or 0u)si +eli#t. *& Culpa A0uiliana 7Buasi /elict8 ,s culpa extra contractual an appropriate name for 0uasi delict? 6o& I t4e #)se o- G) (#o 3s. ,RR !=J @4il ?EJ' obli()tio s #) be #l)ssi-ie+ eit4er -rom #o tr)#tu)l obli()tio s ) + e5tr) #o tr)#tu)l obli()tio s. As to obli()tio s .4ere t4e sour#e is ot ) #o tr)#t1 it #) #)lle+ e5tr) #o tr)#tu)l obli()tio s. T4ere-ore #ul/) e5tr) #o tr)#tu)l me) s e(li(e #e outsi+e o- ) #o tr)#t.

Art A y /erso .4o is #o str)i e+ to /)y t4e t)5es o$1? ) ot4er s4)ll be e title+ to reimburseme t -rom t4e l)tter. D

Basis of Buasi Contracts9 Art. $1;$ Cert)i l).-ul1 3olu t)ry ) + u il)ter)l )#ts (i3e rise to t4e 2uri+i#)l rel)tio o- 0u)si #o tr)#t to t4e e + t4)t o o e s4)ll be u 2ustly e ri#4e+ )t t4e e5/e se o- ) ot4er. .he enumeration of the pro$isions for 0uasi contracts, not exclusi$e9 Art. $1;= T4e /ro3isio s -or 0u)si #o tr)#ts i t4is C4)/ter +o ot e5#lu+e ot4er 0u)si #o tr)#ts .4i#4 m)y #ome .it4i t4e /ur3ie. o- t4e /re#e+i ( )rti#le. NoteC E3e i- ot so /ro3i+e+ by l). it m)y be #o si+ere+ )s -)lli ( .it4i t4e /ur3ie. o- 0u)si #o tr)#t .4e it is l).-ul1 u il)ter)l ) + 3olu t)ry1 ) + t4e u +erlyi ( /ri #i/le is t4)t o o e s4)ll be u 2ustly e ri#4e+ )t t4e e5/e se o- ) ot4er. Will there be any liability e$en if no one has been un<ustly enriched? I #)se o- e(otorium (estio1 t4e o. er 4)s t4e obli()tio to reimburse t4e (estor e3e i- t4e l)tter 4)s ot bee u 2ustly e ri#4e+. T4ere-ore it .oul+ )//e)r t4)t t4e /ri #i/les be4i + 0u)si #o tr)#ts +oes ot re)lly -)ll u +er t4e /ri #i/le o- u 2ust e ri#4me t. T4e /ri #i/le be4i + t4is obli()tio is im/lie+ #o tr)#ts1 .4i#4 is t4e #o se t (i3e by t4e obli(or. .he owner left his house for a short $acation, the $ery night they lefts, their house was burned, the neighbors sa$ed some of their appliances& ,s there negotorium gestio in this case? T4e )//li) #es )re ot u +er t4e m) )(eme t ot4e (estor ) + t4)t t4ere must be )b) +o me t ) + e(le#t o- t4e /ro/erty. T4is #)se t4ere-ore -)lls u +er ot4er 0u)si #o tr)#ts.

1%

I- t4ere is e(li(e #e outsi+e o- ) #o tr)#t +oes it me) t4)t it .oul+ -)ll u +er 0u)si +eli#t> Not e#ess)rily be#)use t4ere )re ; ot4er sour#es oobli()tio s outsi+e o- ) #o tr)#t li6e e(li(e #e )risi ( -rom l).1 but t4e sour#e .oul+ be t4e l).. I 0u)si #o tr)#ts1 u +er e(otorium (estio1 t4e e(li(e #e o- t4e (estor +oes ot e#ess)rily me) t4)t it .oul+ -)ll u +er 0u)si +eli#t be#)use it .oul+ -)ll u +er 0u)si #o tr)#ts. NoteC T4e use o- t4e .or+ #ul/) e5tr)-#o tr)#tu)l o.)+)ys )re o lo (er use+ by t4e Su/reme Court. Commo ly .4)t is use+ is t4e .or+ torts. ,s torts an appropriate term for 0uasi delict? Torts )s ) )me is ot )//ro/ri)te be#)use it is more e #om/)ssi ( )s it .oul+ i #lu+e )#ts .4i#4 #oul+ ot be t4e b)sis o- ) )#tio u +er 0u)si +eli#t. Torts .oul+ i #lu+e m)li#ious )#t1 i te tio )l )#t1 .ro (-ul1 )#ts /u is4e+ by l).. I t4ese )mes1 it #) ot be t4e b)sis o- ) )#tio -or 0u)si +eli#t. A )#tio -or 0u)si +eli#t #) o ly )rise b)se+ o ) e(li(e t )#t or omissio . But t4e Su/reme Court is o- t4e 3ie. t4)t m)li#ious )#ts1 i te tio )l )#ts1 )#ts /u is4e+ by l). #) be t4e b)sis o- ) )#tio -or 0u)si +eli#t. It is .ell su//orte+ by t4e 4istory o- t4e l). ) + t4e /rese t /ro3isio s o- t4e l).. @)rti#ul)rly U +er Art. $1?E .4ere it /ro3i+es t4)t .4oe3er by )#t or omissio #)uses +)m)(e to ) ot4er1 t4ere bei ( -)ult or e(li(e #e1 is obli(e+ to /)y -or t4e +)m)(e +o e. Su#4 -)ult or e(li(e #e1 i- t4ere is o /re-e5isti ( #o tr)#tu)l rel)tio bet.ee t4e /)rties1 is #)lle+ 0u)si +eli#t ) + is (o3er e+ by t4e /ro3isio s o- t4is #4)/ter !#4)/ter o 0u)si-+eli#ts'. U +er t4e ol+ #i3il #o+e1 i or+er -or o e to be 4el+ li)ble u +er 0u)si +eli#t1 t4e )#t must ot be /u is4e+ by l).. T4is /4r)se o lo (er )//e)r u +er t4e e. #i3il #o+e1 t4ere-ore e3e i- t4e )#t is ot /u is4e+ by l). it #) ot be t4e b)sis o- ) )#tio -or 0u)si +eli#t. ,s (ault the same as negligence? No. Be#)use -)ult .oul+ #o3er i te tio )l ) + u i te tio )l )#ts. Com/li) #e .it4 Obli()tio sC Dow should these sources of obligations be complied with? .he manner of complying with this sources of obligations&

Art. 1/. @ver# person must, in the e'ercise of his rights an in the performance of his uties, act !ith 1ustice, give ever#one his ue, an observe honest# an goo faith. Art. 11*3. @ver# person oblige to give something is also oblige to ta)e care of it !ith the proper iligence of a goo father of a famil#, unless the la! or the stipulation of the parties re"uires another stan ar of care. +10/4aArt. 11*4. 2he cre itor has a right to the fruits of the thing from the time the obligation to eliver it arises. :o!ever, he shall ac"uire no real right over it until the same has been elivere to him. +10/(Art. 11*(. &hen !hat is to be elivere is a eterminate thing, the cre itor, in a ition to the right grante him b# Article 11.0, ma# compel the ebtor to ma)e the eliver#. 4f the thing is in eterminate or generic, he ma# as) that the obligation be complie !ith at the e'pense of the ebtor. 4f the obligor ela#s, or has promise to eliver the same thing to t!o or more persons !ho o not have the same interest, he shall be responsible for an# fortuitous event until he has effecte the eliver#. +10/*Art. 11**. 2he obligation to give a eterminate thing inclu es that of elivering all its accessions an accessories, even though the# ma# not have been mentione . +10/.aArt. 1244. 2he ebtor of a thing cannot compel the cre itor to receive a ifferent one, although the latter ma# be of the same value as, or more valuable than that !hich is ue. 4n obligations to o or not to o, an act or forbearance cannot be substitute b# another act or forbearance against the obligee3s !ill. +11**aArt. 124*. &hen the obligation consists in the eliver# of an in eterminate or generic thing, !hose "ualit# an circumstances have not been state , the cre itor cannot eman a thing of superior "ualit#. Neither can the ebtor eliver a thing of inferior "ualit#. 2he purpose of the obligation an other circumstances shall be ta)en into consi eration. +11*.aArt. 14*0. A thing is eterminate !hen it is particularl# esignate or ph#sical segregate from all other of the same class. 2he re"uisite that a thing be eterminate is satisfie if at the time the contract is entere into, the thing is capable of being ma e eterminate !ithout the necessit# of a ne! or further agreement bet!een the parties. +nArt. 442. Natural fruits are the spontaneous pro ucts of the soil, an the #oung an other pro ucts of animals.

4n ustrial fruits are those pro uce b# lan s of an# )in through cultivation or labor. Civil fruits are the rents of buil ings, the price of leases of lan s an other propert# an the amount of perpetual or life annuities or other similar income. +3((aArt. 443. :e !ho receives the fruits has the obligation to pa# the e'penses ma e b# a thir person in their pro uction, gathering, an preservation. +3(*-

,n an obligation to deli$er a Cia 1ride, the debtor offered to deli$er a BEW, can the obligation be $alidly extinguished? 7es1 t4ou(4 t4e #re+itor #) ot be #om/elle+ to )##e/t1 4e m)y 4o.e3er .) t to )##e/t. T4us1 t4e obli()tio .ill be e5ti (uis4e+. ,s there an exception where a debtor is obliged to deli$er a thing re0uires a different =ind of diligence in ta=ing care of the thing other than a good father of a family? 7es1 i- t4e l). re0uires ) 4i(4er +e(ree o- +ili(e #e su#4 )s .4)t is re0uire+ o- #ommo #)rriers. Ot4er t4) t4e l).1 is t4e sti/ul)tio o- t4e /)rties .oul+ re0uire ) 4i(4er +e(ree o- +ili(e #e. I t4e )bse #e o- ) l). or ) sti/ul)tio to t4)t e--e#t1 t4e +ili(e #e o- ) (o+ -)t4er o- ) -)mily s4oul+ be obser3e+. Cinds of 5bligations9 When would an obligation become due? It +e/e +s o .4)t 6i + o- obli()tio is i 3ol3e+. It is .ro ( to s)y t4)t ) obli()tio u/o +em) +. Si #e t4ere #) be .4e t4e obli()tio is ot yet +ue. +em) + 4)s (ot ot4i ( to .it4 ) be#omi ( +ue. be#omes +ue o 3)li+ +em) + T4ere-or obli()tio

I- t4e sour#es o- t4e obli()tio s is t4e l).1 t4e t4e /ro3isio s o- t4e l). .oul+ /ro3i+e 4o. t4is sour#e o- obli()tio #) be #om/lie+ .it4. I- it is ) #o tr)#t t4e t4e sti/ul)tio /ro3i+e 4o. t4e #o tr)#t s4)ll be #om/lie+ .it4. ,f it is an obligation to gi$e, what is the manner of compliance? It +e/e +s o .4)t is to be (i3e 1 .4et4er it is ) +etermi )te t4i ( or ) i +etermi )te t4i (. Can there be a $alid obligation to deli$er a generic thing? 7es. T4is m)y )rise -rom l). ) + ot -rom ) #o tr)#t o- s)le. S)le o- ) #)r or o- ) 4orse #) ot be #o si+ere+ ) 3)li+ s)le. But ) test)me t)ry /ro3isio i ) .ill .4i#4 is ) (e eri# t4i ( is 3)li+ +is/ositio . T4e l). e5/ressly )llo.s t4is. A testamentary pro$ision gi$ing an heir a car, is the testamentary pro$ision allow the heir to re<ect the disposition? <e m)y 3)li+ly re2e#t or .ro (-ully re2e#t t4e +is/ositio . :or obli()tio s to +eli3er ) (e eri# t4i (1 t4e +ebtor #) ot +eli3er ) t4i ( .4i#4 is oi -erior 6i +1 but eit4er #) t4e #re+itor +em) + ) t4i ( .4i#4 is o- su/erior 0u)lity. <o.e3er1 .4)t is su/erior or i -erior is ) 3ery sub2e#ti3e +etermi )tio . W4)t m)y be su/erior to me m)y be i -erior to most o- you. T4ere-ore i- t4e /ur/ose o- t4e test)tor is to (i3e 4is #)r is to )llo. t4e (r) +so to use t4e #)r i #om/etitio s1 t4e ) #)r i su--i#ie t to /er-orm i r)#e tr)#6s is im/ro/er. ,oreo3er1 )si+e -rom t4e /ur/ose is t4e 3)lue o- t4e est)te .4i#4 s4oul+ ot im/)ir t4e le(itime o- t4e est)te. ,n obligations to gi$e a determinate thing, what is the manner of compliance? T4e /rim)ry obli()tio o- ) +ebtor is to (i3e t4e 3ery s)me t4i ( .4i#4 4e /romise+ to +eli3er.

What =ind of obligations become due and demandable at once? 1. I /ure obli()tio s $. I #o +itio )l obli()tio s i- t4e #o +itio is resolutory but .ill be e5ti (uis4e+ )t t4e 4)//e i ( o- t4e e3e t. =. I obli()tio .it4 ) term or /erio+ i- resolutory i #4)r)#ter but it .ill be e5ti (uis4e+ )t t4e 4)//e i ( o- t4e term. ,s there such a thing as suspensi$e obligation? No e. It o ly e5ists i sus/e si3e term or #o +itio . ,s there such a thing as $oid condition? T4ere is o su#4 t4i ( )s 3oi+ #o +itio . A #o +itio is merely ) e3e t .4i#4 m)y or m)y ot 4)//e . T4ere is ot4i ( 3)li+ or 3oi+ )bout #o +itio s. Voi+ ) + V)li+ /ert)i to obli()tio s. Sus/e si3e1 /otest)ti3e1 et# /ert)i s to #o +itio s. A pure obligation whose performance does not depend upon a future and uncertain e$ent or

upon a past e$ent un=nown to the parties& ,s this statement $alid? T4is is ot 3)li+. To be /ure it must ot be #o +itio )l ) + ot .it4 ) term. I t4e )bo3e st)teme t bot4 t4e -uture ) + u #ert)i must bot4 #o #ur ) + t4is .oul+ o ly e5#lu+e ) #o +itio . A term #) e3er be u #ert)i . It is 2ust ) s/)#e otime. A e3e t is #ert)i to 4)//e . T4ere-ore it s4oul+ be or. I- F) +G is use+1 it .oul+ o ly e5#lu+e ) #o +itio .it4 ) #o +itio ) + ot t4ose .it4 ) term. I- or is use+ it .oul+ e5#lu+e obli()tio s .it4 ) #o +itio s ) + )lso t4ose .it4 ) term. I- i ) /romissory ote1 o its -)#e it +oes ot s)y or it #) ot be +etermi e+ .4et4er it is #o +itio )l or /ure obli()tio . But t4ere is ) /ro3isio i t4e ote t4)t u/o re#ei/t -rom t4e est)te t4ere is o )ssur) #e t4)t t4e #re+itor .ill re#ei3e i t4e est)te1 .4i#4 /resu//oses ) #o +itio )l obli()tio . Note 4o.e3er1 t4e #ourt tre)te+ it )s ) /ure obli()tio be#)use...... !@)y 3s. @)l) #)' What is the conse0uence of a pure obligation or a conditional obligation but resolutory in character? It is +em) +)ble )t o #e1 ) + e#ess)rily t4e /res#ri/ti3e /erio+ st)rts to ru -rom t4e time t4e #)use o- )#tio )##rues. It is .ro ( to s)y t4)t ) #)use o- )#tio )##rues -rom t4e time t4e +em) + .)s m)+e. I- su#4 be t4e #)se o )#tio s4)ll /res#ribe. What are the =inds of conditions? 1. $. =. ;. D. E. ?. J. &. Sus/e si3e Resolutory @otest)ti3e C)su)l ,i5e+ @ossible Im/ossible Ne()ti3e - re0uires t4e omissio o- ) )#t. @ositi3e - re0uires t4e /er-orm) #e o- ) )#t.

my .i-e. Ne()ti3e im/ossible #o +itio s )re +eeme+ ot .ritte 1 )s su#4 it is #o si+ere+ )s ) /ure obli()tio u less t4ere )re ot4er .or+s ) + /4r)ses .4i#4 .oul+ ot m)6e it ) /ure obli()tio . What are the =inds of impossible conditions? Le()l im/ossibility ) + /4ysi#)l im/ossibility. ,s it proper to say unlawful conditions? 7es. W4)t is im/ro/er is 3oi+ #o +itio s. ,n unlawful or impossible conditions in testamentary dispositions, what is the effect? It +oes ot result i ) 3oi+ test)me t)ry +is/ositio . U +er t4e l). i su##essio 1 su#4 u l).-ul or im/ossible #o +itio is +eeme+ ot .ritte . .he debtor promises to pay if his son does not die of cancer within year& 4tate the status of the obligation whether it is $alid or not, and if $alid state whether the obligation is due and demandable? T4e #o +itio is sus/e si3e e()ti3e /ossible!mi5e+'#o +itio . T4is is ) 3)li+ obli()tio . It is +ue ) + +em) +)ble +e/e +i ( o .4)t 4)//e e+ to t4e so . I- t4e so +ies o- #) #er .it4i 1 ye)r1 t4e obli()tio +oes ot )rise. But e3e i- t4e so +i+ ot +ie o- #) #er .it4i 1 ye)r t4e +ebtor #) be #om/elle+ to /)y1 be#)use i t4)t mome t it is )lre)+y #ert)i t4)t t4e so .ill ot +ie o- #) #er .it4i 1 ye)r su#4 )s .4e t4e so +ie+ o- ) #)r )##i+e t. ,n a condition that B should marry C within year but after " wee=s he entered the seminary? ,s it certain that the condition is not longer possible? No. B m)y (o out o- t4e semi )ry be-ore t4e 1 ye)r /erio+ l)/se+. Dowe$er, if C married / is it possible that the condition mentioned abo$e is no longer possible? No. be#)use " m)y +ie ) + B #) m)rry C .it4i t4e time me tio e+ i t4e #o +itio . What is a potestati$e conditon? U +er 11J$1 it is ) #o +itio t4)t is +e/e +e t u/o t4e sole .ill o- t4e +ebtor.

What is the effect of an impossible condition? I- t4e obli()tio is .it4 ) im/ossible #o +itio 1 it s4)ll ) ul t4e obli()tio . T4e /4r)seolo(y is +e-e#ti3e1 i ste)+ o- ) ulle+ it s4oul+ 4)3e bee 3oi+. A ull)ble /resu//oses ) 3)li+ obli()tio .4i#4 is 3)li+ u til ) ulle+. T4is i st) #e is ) im/ossible #o +itio .it4 ) sus/e si3e #o +itio . Eay there be a $alid obligation with an impossible condition? 7es. I- t4e #o +itio t4ou(4 im/ossible is i t4e e()ti3e1 li6e i .ill (i3e you 1 millio i- you +o 9t 6ill

When the condition depends upon the sole will of the debtor and it is a suspensi$e condition? Will such be $alid? It is 3oi+. T4is is be#)use ) +ebtor .4o #) im/ose ) #o +itio u/o 4is sole .ill1 4e .ill m)6e sure t4)t t4e sus/e si3e #o +itio .ill ot 4)//e so t4)t t4e obli()tio .ill ot )rise. A promise to gi$e B his car if A will go to Baguio within > days? ,s it potestati$e? 7es1 su#4 is /otest)ti3e t4)t is +e/e +e t u/o t4e sole .ill o- t4e +ebtor. It is be#)use .4et4er or ot A .ill (o to B)(uio solely +e/e + u/o 4is .ill. ,s passing the Bar exam a potestati$e condition? Casual or dependent upon chance? It is eit4er ) /otest)ti3e or ) #)su)l #o +itio . .he grandfather promises to gi$e his grandson a car upon the latters passing the bar exam& .he grandson passed the bar and demanded the deli$ery of the car& But the grandfather refused to deli$er the car and argued that he cannot be compelled to deli$er the same because it is a potestati$e condition& It is ot ) /otest)ti3e #o +itio but r)t4er ) sus/e si3e #o +itio . T4ere-ore t4e (r) +-)t4er #) be #om/elle+ to +eli3er. Assuming for the sa=e of argument that such condition is a potestati$e condition, can the grandfather be compelled to deli$er because the condition is $oid? T4e (r) +-)t4er still #) ot be #om/elle+ be#)use u +er 11J$1 it /ro3i+es t4)t ) #o +itio is m)+e by t4e sole .ill o- t4e +ebtor. I t4is #)se it is ot t4e (r) +so .4o is t4e +ebtor but r)t4er t4e (r) +-)t4er. It is ot +e/e +e t u/o t4e sole .ill o- t4e (r) +-)t4er. <e #e ot ) /otes)ti3e #o +itio . T4ere-ore t4e obli()tio is ) 3)li+ o e. A obliged herself in "!! to sell to B a house and lot upon his passing the bar exam& B passed the bar exam in "!!>& Dowe$er in "!!% A sold the house and lot to C and this house from "!! was being rented by /& B upon passing the bar exam demanded upon A to deli$er to him the house and lot pursuant to the "!! obligation made by A& Who has a better right o$er this house and lot? B or C? As ) rule1 it is B .4o 4)s ) better ri(4t be#)use u +er Art. 11J? t4e e--e#t o- t4e 4)//e i ( o- t4e #o +itio retro)#ts to t4e time o- t4e #o stitutio ot4e obli()tio )s i- t4e #o +itio )lre)+y 4)//e e+ )s e)rly )s $%%1.

<o.e3er1 )s ) e5#e/tio 1 C m)y 4)3e ) better ri(4t i- C #) /ro3e t4)t 4e is ) buyer i (oo+ -)it4 ) + -or 3)lue1 4e .oul+ 4)3e ) better ri(4t. But it must be ote+ t4)t i or+er to be ) /ur#4)ser i (oo+ -)it4 ) + -or 3)lue1 su#4 s4oul+ be re(istere+. As su#41 C .oul+ ot be bou + by t4e )(reeme t m)+e by A ) + B. Assuming that B has a better right, B demanded all the proceeds of the rentals from "!! until "!!>, is he entitled to the rentals? Si #e1 u +er Art. 11J? t4e e--e#t o- t4e 4)//e i ( o- t4e #o +itio retro)#ts to t4e #o stitutio o- t4e obli()tio 1 .oul+ /resu//ose t4)t B m)y be e title+ to t4e /ro#ee+s o- t4e re ts )s i- 4e .)s t4e o. er o- t4e /ro/erty -rom $%%1. <o.e3er1 it is submitte+ t4)t B is ot e title+ to t4e re t)ls be#)use -ruits re#ei3e+ i re#i/ro#)l obli()tio !si #e t4is is ) #o tr)#t o- s)le' it is +eeme+ mutu)lly #om/e s)te+. B is obli(e+ to /)y t4e /ri#e ) + A4)s t4e obli()tio to tr) s-er o. ers4i/. U +er t4e l). it is +eeme+ mutu)lly #om/e s)te+ be#)use1 A is e title+ to i terests o t4e /ri#e .4ile B is e title+ to t4e re t)ls1 u +er t4e l). -ruits re#ei3e+ )re +eeme+ mutu)lly #om/e s)te+. ,s the $iew that the retroacti$e effect of Art& F' does not co$er fruits? No. T4)t is .4y t4ere is ) /ro3isio t4)t i re#i/ro#)l obli()tio s1 t4e -ruits re#ei3e+ )re +eeme+ mutu)lly #om/e s)te+. T4ere is t4ere-ore ) retro)#ti3e e--e#t. I t4e )bo3e #)se1 B is e title+ to t4e -ruits but +ue to t4e /ro3isio o mutu)l #om/e s)tio 1 4e s4)ll o lo (er re#ei3e t4e -ruits. ,n conditional obligations, if the condition is suspensi$e in character, the happening of the condition shall gi$e rise to the obligation& 5rdinarily if the condition did not happen, the obligation will not arise& When shall the obligation e$en if the condition did not happen, it shall gi$e rise to the obligation? W4e it .)s t4e +ebtor .4o 3olu t)rily /re3e te+ t4e 4)//e i ( o- t4e #o +itio . Dowe$er, is there an instance where the debtor who $oluntarily pre$ented the happening of the condition in order to gi$e rise to the obligation, still not be compelled to perform? 7es1 .4e t4ou(4 4e /re3e te+ t4e 4)//e i ( ot4e #o +itio 1 su#4 /re3e tio .)s m)+e .4e 4e .)s e5er#isi ( 4is ri(4t.

,n obligation is an obligation with a suspensi$e term , the obligation arise because the term is certain to arri$e, it will only gi$e rise to the demandability of the obligation& ?

o- re ts be /)i+ ) u)lly1 it is /resume+ t4)t t4e /erio+ o- re t is -or 1 ye)r. :nder Art& )' it was pro$ided that if the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof& What is the guidelines wherein the court in this instance may fix the period? T4e #ourt 4)3i ( /o.er to -i5 t4e /erio+ /resu//oses t4)t t4ere is ) /er-e#te+ #o tr)#t. It4ere is o /er-e#te+ #o tr)#t1 t4e #ourt 4)s o /o.er to -i5 t4e /erio+. What is the procedure for the court to fix a period? To +etermi e .4et4er t4ere is ) /erio+ or o /erio+ st)te+ i t4e #o tr)#t. I- t4ere is1 t4e -i5i ( o- t4e /erio+ is ot /ro/er u +er Art. 11&?. Se#o +ly1 to +etermi e .4et4er t4e /)rties i te +e+ t4)t t4ere be ) /erio+1 i- o e1 su#4 )s .4e t4e /)rties i te +e+ t4)t it be ) /ure obli()tio 1 t4e t4e -i5i ( o- ) /erio+ is ot /ro/er u +er Art. 11&?. T4ir+ly1 e3e i- t4ere is ) /erio+ i te +e+ by t4e /)rties1 t4e #ourt must )lso +etermi e .4et4er su#4 /erio+ 4)+ )lre)+y /res#ribe+ or ot. Su#4 t4)t ) )#tio -or s/e#i-i# /er-orm) #e o ) obli()tio .4i#4 +oes ot yet )rise1 t4e )#tio #) ot /ros/er be#)use t4e )#tio is /rem)ture. Or i- ) /erio+ 4)+ )lre)+y l)/se+ ) + t4e obli()tio i 3ol3es ) obli()tio to +o1 ) )#tio -or s/e#i-i# /er-orm) #e #) o lo (er /ros/er1 but t4e )#tio -or +)m)(es s4)ll /ros/er. ,n a contract between the parties it was pro$ided, that debtor must remit the proceeds upon the sale of the tobacco& ,s a period contemplated by the parties? T4e )r(ume t by t4e +ebtor t4)t t4e est)-) #)se is /rem)ture be#)use t4e reme+y o- t4e #re+itor i- to (o to #ourt -or t4e l)tter to -i5 t4e /erio+ is ot /ro/er be#)use t4e )(reeme t by t4e /)rties is o e .it4 ) /erio+. T4e )r(ume t by t4e +ebtor t4)t t4ere .)s o /erio+ -i5e+ by t4e /)rties1 .4i#4 .oul+ re +er t4e /ro3isio s o- Art. 11&? ot to )//ly1 .ill ot /ros/er. T4e /ro3isio s o- t4e )(reeme t #le)rly /ro3i+es -or ) /erio+ .4i#4 is u/o t4e s)le o- t4e tob)##o. T4ere-ore1 u/o t4e s)le t4e +ebtor #) be #om/elle+ to remit. T4ere is o ee+ -or t4e #ourt to -i5 t4e /erio+ !Lim 3s. @eo/le'.

,n suspensi$e condition, the creditor filed an action, will the action prosper? It m)y /ros/er -or )s lo ( )s it is ot ) )#tio -or s/e#i-i# /er-orm) #e be#)use t4e #o +itio bei ( sus/e si3e1 t4ere is yet o obli()tio t4)t )rise. But1 t4e #re+itor m)y -ile ) )#tio -or t4e /reser3)tio o- 4is ri(4ts1 li6e i- t4e )#tio is to #om/el t4e ot4er /)rty to 4)3e t4e )(reeme t re(istere+ .it4 t4e )//ro/ri)te re(istry o- /ro/erty. ,n suspensi$e conditions imposed on an obligation, what is the effect of any impro$ement or deterioration on the thing to be deli$ered? I im/ro3eme ts1 i- t4e #)use o- t4e im/ro3eme t is t4rou(4 )ture1 su#4 im/ro3eme ts s4)ll /ert)i to t4e #re+itor. I- i im/ro3i ( t4e /ro/erty t4e +ebtor s/e t ) sum o- mo ey1 t4e #re+itor is e title+ to t4e im/ro3eme ts. U +er t4e l). t4e #re+itor i t4is #)se o ly 4)s t4e ri(4ts o- ) usu-ru#tu)ry. T4e +ebtors ri(4ts is limite+ to t4e remo3)l o- t4e im/ro3eme t )s lo ( )s it .ill ot #)use +)m)(e to t4e t4i ( to be +eli3ere+. ,n obligations with a term or period, may be definite if there is a day certain& ,ndefinite periods will arri$e, but dependent on certain e$ents which is certain to happen but the specific date is not certain& Another classifications of periods is the source of the period on whether it is by con$entional or $oluntary period 7by agreement of the parties8, fixed by law, or fixed by the court& ,s a year period of redemption, a period in relation to obligations? No. It is ) /erio+ i t4e e5er#ise o- ) ri(4t1 be#)use .4o 4)s ) ri(4t is ot #om/elle+ to re+eem. @i$e examples of period fixed by law? 1. No /)yme t o- t)5es $. I ) le)se #o tr)#t1 e3e .4e t4e /)rties +i+ ot -i5 ) /erio+ but it /ro3i+es t4)t t4e /)yme t

:nder Art& F! which pro$ides that when the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period sub<ect to the pro$isions of Art& )', and as such the court shall fix the period& ,n this case, when will the obligation become due, so that an action for the court to fix the period may prosper? T4e #re+itor s4oul+ o ly (o to t4e #ourt i- 4e 6 e. t4)t t4e +ebtor )lre)+y 4)s t4e me) s to /)y. I- t4e +ebtor )lre)+y 4)s t4e me) s to /)y1 (o to #ourt to -i5 t4e /erio+ ) + u/o t4e l)/se o- t4e /erio+1 t4e obli()tio be#ome +ue ) + +em) +)ble. When the period is solely dependent upon the will of the debtor, such is also a <udicial period&
8n er Art. 11/1 2he po!er to rescin obligations is implie in reciprocal ones, in case one of the obligors shoul not compl# !ith !hat is incumbent upon him. 2he in1ure part# ma# choose bet!een the fulfillment an the rescission of the obligation, !ith the pa#ment of amages in either case. :e ma# also see) rescission, even after he has chosen fulfillment, if the latter shoul become impossible. 2he court shall ecree the rescission claime , unless there be 1ust cause authori$ing the fi'ing the perio . 2his is un erstoo to be !ithout pre1u ice to the rights of thir persons !ho have ac"uire the thing, in accor ance, !ith Articles 13,( an 13,, an the 5ortgage ;a!.

#om/elle+ to /er-orm t4e obli()tio be-ore t4e )rri3)l o- t4e /erio+. O t4e ot4er 4) +1 4o.e3er1 t4e +ebtor #) #om/el t4e #re+itor to )##e/t t4e /er-orm) #e o- t4e obli()tio e3e be-ore t4e e5/ir)tio o- t4e /erio+. ,s there contracts solely for the benefit solely of the creditor? 7es1 .4e t4ere )re sti/ul)tio s t4)t t4e +ebtor #) ot /)y .it4i = mo t4s or $ ye)rs. T4is #oul+ be s)i+ to be -or t4e be e-it o- t4e #re+itor be#)use o- ) s#e )rio .4ere t4e #re+itor 4)s t4e ri(4t to t4e -ruits o- t4e t4i ( sub2e#t o- t4e obli()tio . T4is is /rob)bly be#)use t4e #re+itor .oul+ .) t to 4)r3est -irst be-ore t4e retur s t4e t4i (. <o.e3er1 t4e #re+itor m)y retur it )t ) y time be#)use t4e /ro3isio is solely -or t4e be e-it o- t4e #re+itor. A borrowed money from B in Ganuary payable at the end of the year& .o secure the fulfillment of the obligation A deli$ered his car to B and it was stipulated that B can use the car& After a few months, come August of the same year, the debtor offered to pay the entire amount to the creditor and also demanded for the return of his car& Can the creditor be compelled to accept the payment? Can he be compelled to return the car? W4ile t4e +ebtor #) ot be #om/elle+ to /)y be-ore t4e )rri3)l o- t4e /erio+1 t4e #re+itor #) ot )lso be #om/elle+ to )##e/t t4e /er-orm) #e o- t4e obli()tio be#)use o- t4e /ri #i/le t4)t ) /erio+ is bot4 -or t4e be e-it o- bot4 t4e +ebtor ) + t4e #re+itor. B)se o t4e -)#ts t4e )bo3e /ri #i/le -i +s )//li#)tio i t4e /rese t #)se be#)use t4e +ebtor #) ot be #om/elle+ /)y be-ore t4e )rri3)l o- t4e /erio+ .4i#4 is t4e e + o- t4e ye)r. <o.e3er1 t4e #re+itor 4)s ) i terest i t4e /erio+ be#)use it .)s sti/ul)te+ t4)t 4e #) use t4e #)r be-ore t4e )rri3)l o- t4e /erio+. T4ere-ore u +er t4e -)#ts1 t4e /erio+ is bot4 -or t4e be e-it o- t4e +ebtor ) + t4e #re+itor. 3$en assuming that the period is solely for the benefit of the debtor, before the arri$al of the term, is it possible that the creditor $alidly demand for the performance of the obligation? 7es. T4)t #) 4)//e i- t4e +ebtor lost 4is ri(4t to m)6e use o- t4e /erio+. U +er Art. 11&J1 ) +ebtor m)y lose 4is ri(4t to m)6e use o- t4e /erio+.
Art. 11/,. 2he ebtor shall lose ever# right to ma)e use of the perio :

Can the debtor be compelled to perform the obligation before the arri$al of the period, or can the creditor be compelled to accept the obligation e$en before the arri$al of the period? I t4e se#o + s#e )rio t4e #re+itor #) ot be #om/elle+ to )##e/t t4e obli()tio e3e be-ore t4e )rri3)l o- t4e /erio+ be#)use t4e #re+itor m)y ot .) t to )##e/t be#)use 4e 4)+ ot /l)#e to store t4e (oo+s .4i#4 is t4e sub2e#t o- t4e obli()tio . ,s a period for the benefit of both the creditor and the debtor? No. It is merely ) +is/ut)ble /resum/tio t4)t t4e /erio+ is bot4 -or t4e be e-it o- t4e #re+itor ) + t4e +ebtor. ,f the phrase pro$ided for in the obligation is payable on or before /ecember % , and no other factor has been pro$ided for, is it both for the benefit of the creditor and the debtor? No su#4 /4r)se is #le)rly -or t4e be e-it o- t4e +ebtor. T4is is be#)use t4e +ebtor #) ot be

+1- &hen after the obligation has been contracte , he becomes insolvent, unless he gives a guarant# or securit# for the ebt7 +2- &hen he oes not furnish to the cre itor the guaranties or securities !hich he has promise 7 +3- &hen b# his o!n acts he has impaire sai guaranties or securities after their establishment, an !hen through a fortuitous event the# isappear, unless he imme iatel# gives ne! ones e"uall# satisfactor#7 +4- &hen the ebtor violates an# un erta)ing, in consi eration of !hich the cre itor agree to the perio 7 !D' &hen the ebtor attempts to abscon .

It +e/e +s o t4e 6i + o- obli()tio i 3ol3e+. It m)y be ) #o 2u #ti3e obli()tio 1 )lter )ti3e obli()tio 1 -)#ult)ti3e obli()tio . I #o 2u #ti3e obli()tio s1 t4e im/ossibility o/er-orm) #e o- o e .ill ot result i t4e e5ti (uis4me t o- t4e obli()tio be#)use t4ere is ) ot4er or t.o or more ot4er obli()tio s to be /er-orme+. I -)#ult)ti3e obli()tio s1 it +e/e +s o .4et4er t4ere is )lre)+y substitutio )t t4e time o- t4e im/ossibility o- t4e /er-orm) #e o- o e o- t4e /rest)tio . I- be-ore substitutio t4e im/ossibility oo e o- t4e obli()tio be#omes im/ossible to /er-orm +ue to ) -ortuitous e3e t1 t4e obli()tio is e5ti (uis4e+. But i- o e o- t4e obli()tio be#ome im/ossible to /er-orm +ue to t4e -)ult o- t4e +ebtor1 t4e obli()tio is ot e5ti (uis4e+ !+eb)t)ble o t4e se#o + s#e )rio'. I- i -)#ult)ti3e obli()tio .4)t .)s lost or be#)me im/ossible to /er-orm .)s t4e substitute /rest)tio ) + t4ere .)s o substitutio yet )t t4e time o- t4e loss1 t4e obli()tio is ot e5ti (uis4e+ be#)use t4e +ue /rest)tio .)s t4e /ri #i/)l /rest)tio . Con1unctive9 an 7 alternative9or7 facultative9 ebtor has the right to ma)e a substitution or to perform instea a substitute prestation. I )lter )ti3e obli()tio s1 i- t4ere .)s )lre)+y ) #ommu i#)tio o- ) #4oi#e. By t4e t4e obli()tio is #o 3erte+ i to ) sim/le obli()tio ) + t4e o e #4ose .)s t4e o e im/ossible to /er-orm es/e#i)lly i- it is +ue to ) -ortuitous e3e t. As su#41 t4e obli()tio is e5ti (uis4e+. I- t4ere .)s )lre)+y ) #ommu i#)tio o- ) #4oi#e but .4)t be#ome im/ossible .)s t4e ot4er /rest)tio .4i#4 .)s ot #4ose 1 t4e obli()tio is ot e5ti (uis4e+. Bs car was lost due to the fault of the debtor, what are the remedies of the creditor? It +e/e +s o .4o 4)s t4e ri(4t to #4oose. I- it s4o.s t4)t t4e #4oi#e is ot e5/ressly (r) te+ to t4e #re+itor1 t4e ri(4t o- #4oi#e /ert)i s to t4e +ebtor. U +er t4e l). it .)s /ro3i+e+ t4)t t4e #4oi#e is .it4 t4e +ebtor1 u less ot4er.ise e5/ressly (r) te+ to t4e #re+itor. I- t4e #4oi#e is .it4 t4e +ebtor1 e3e i- it .)s +ue to 4is -)ult1 4e 4)s ot4er /rest)tio s to #4oose -rom .it4out bei ( 4el+ li)ble -or +)m)(es. A y.)y1 t4ere is yet o +ue /rest)tio be#)use t4e +ebtor 4)s ot yet )ble to m)6e ) #4oi#e. ,f howe$er in alternati$e obligations, the first two prestations become impossible to perform due to the fault of the debtor, and the remaining

A borrowed a sum of money from B& .o secure the fulfillment of his obligation he mortgaged his house and lot& Before the arri$al of the period 7before the obligation became due8, the house was burned due to a fortuitous e$ent& .he day after the creditor demanded the payment of the debt& Was there a $alid demand? 7es. Can the debtor be compelled to pay? <e lost 4is ri(4t to m)6e use o- t4e /erio+ e3e it4e lost .)s +ue to ) -ortuitous e3e t1 u less o#ourse 4e (i3es ) ot4er se#urity -or t4e +ebt. Why would the debtor lost his right to ma=e use of the period when the lost was due to a fortuitous e$ent and the same is not imputable to the fault of the debtor? T4is is be#)use t4e #re+itor .oul+ ot 4)3e le-t 4im mo ey i- ot -or t4e se#urity. ,n number of Art& )F, how can the debtor gi$e another security if the debtor is already insol$ent? I- t4e +ebtor still 4)s ot4er /ro/erties e3e i- 4e is still i sol3e t. Or 4e m)y ot 4)3e ) y /ro/erties1 but 4e #) /ro3i+e -or ) (u)r) tor or ) se#ure ) mort()(e to se#ure t4e -ul-illme t o- t4e obli()tio . Cinds of obligations as to multiple prestations9 ,n multiple prestations where one of the prestation is impossible to perform e$en if the other prestation still are possible to perform, may the obligation be considered to ha$e been extinguished?

prestation becomes impossible to perform due to a fortuitous e$ent& Can the debtor be held liable for damages? T4e +ebtor #) be 4el+ li)ble i- t4is is t4e #4oi#e ot4e #re+itor. <o.e3er1 i- t4e #4oi#e is .it4 t4e +ebtor1 4e #) ot be 4el+ li)ble -or +)m)(es e3e i- t4e loss o- t4e l)st rem)i i ( /rest)tio .)s +ue to ) -ortuitous e3e t. T4is is be#)use t4e +ebtor +imi is4e+ t4e /ossibility o- t4e /er-orm) #e o- t4e obli()tio ) + se#o +ly 4e .)s )t -)ult t4ere-ore 4e #) be 4el+ li)ble -or +)m)(es u +er Art. 11?%. <o.e3er1 t4e /ro3isio s i Art. 11?% /resu//oses ) sim/le obli()tio 1 ) + t4us ot )//li#)ble i t4e /rese t #)se to m)6e t4e +ebtor li)ble. Se#o +ly1 e3e i- t4e obli()tio 4)s +imi is4e+ t4e /er-orm) #e o- t4e obli()tio im/ut)ble to t4e +ebtor1 4e #) ot be 4el+ li)ble be#)use it #) be #o si+ere+ )s 4is #4oosi ( to m)6e t4e -irst t.o /rest)tio s im/ossible to /er-orm1 ) + t4e l)st /rest)tio be #o si+ere+ )s 4is #4oi#e. T4e l)st t4ou(4 lost +ue to -ortuitous e3e t1 #) ot m)6e t4e +ebtor li)ble. Art. 11.0. 2hose !ho in the performance of their obligations are guilt# of frau , negligence, or ela#, an those !ho in an# manner contravene the tenor thereof, are liable for amages. +1101.he horse died due to the fault of the debtor, this time the creditor has the right to choose& What are the rights of the creditor? <e #) #4oose -rom o e o- t4e rem)i i ( /rest)tio s or #4oose t4e /rest)t)tio .4i#4 .)s lost +ue to t4e -)ult o- t4e +ebtor. I- t4e #re+itor #4oose to +em) + -or t4e 3)lue ot4e obli()tio .4i#4 .)s lost +ue to t4e -)ult o- t4e +ebtor1 t4e +ebtor #) be 4el+ li)ble -or +)m)(es. I- t4e #re+itor #4ose to #om/el /er-orm) #e t4rou(4 t4e rem)i i ( /rest)tio s1 t4e +ebtor #) ot be 4el+ li)ble -or +)m)(es. .he horse was lost due to the fault of the debtor, then after the second prestation was also lost due to the fault of the debtor, and thirdly a boo= was lost due to the fault of the debtor& What is the extent of the liability of the debtor under the foregoing circumstances? Can the creditor choose for the $alue for any of the three prestations? It +e/e +s o .4o 4)s t4e ri(4t to #4oose. I- t4e #re+itor 4)s t4e ri(4t o- #4oi#e1 4e #) #4oose o t4e 3)lue o- ) y o- t4e t4ree /rest)tio s.

But i- t4e #4oi#e is .it4 t4e +ebtor1 t4e li)bility .ill be b)se+ o t4e 3)lue o- t4e /rest)tio .4i#4 .)s lost l)st +ue to 4is -)ult. Bualification in Alternati$e 5bligation9 ,f one of the prestations become impossible to perform due to the fault of the debtor, and the choice is with the creditor9 .he creditor can either demand for the $alue of the prestation with damages or he can demand for the performance of one of the remaining prestations without damages& 4econd $iew9 ,f the creditor can demand for the performance of one of the rem a i n i n g prestations, the creditor may opt to demand for the $alue of the thing which was lost due to the fault of the debtor& ,n this instance under alternati$e obligations, it is possible that the debtor is not the owner of the horse& ,n alternati$e obligations the debtor is not sure whether he can deli$er the horse or not& if the horse was owned by the creditor, as such he can see= damages& ,f the thing lost was owned by the debtor as a $alid premise, the debtor cannot be held liable for damages& ,n alternati$e obligations it must be remembered that the prestation may either be owned by the debtor or not& :)#ult)ti3e obli()tio s I -)#ult)ti3e obli()tio s it is im/ro/er to s)y t4)t t4ere is o ly o e /rest)tio . :or 4o. #oul+ it be #o si+ere+ to -)ll i obli()tio s .it4 multi/le /rest)tio s i- t4ere is o ly o e /rest)tio i 3ol3e+. R)t4er it is better to s)y t4)t t4ere is o ly o e /rest)tio +ue i ) -)#ult)ti3e obli()tio . At ) y (i3e /oi t i time t4ere #) o ly be o e /rest)tio +ue u li6e t4e ot4er /rest)tio s. When will the obligation in fac u l t a t i $ e obligation become due? I- t4ere is )lre)+y ) #ommu i#)tio substitutio . o- t4e

,f the principal prestation before substitution became impossible to perform due to the fault of the debtor , can the creditor demand to perform the substitute prestation? No. T4is is be#)use i -)#ult)ti3e obli()tio 1 t4e #4oi#e is )l.)ys .it4 t4e +ebtor. T4e reme+y o- t4e #re+itor is to +em) + -or +)m)(es.

,f before substitution became impossible to perform due to the fault of the debtor, can the debtor be held liable for damages by the creditor? T4e +ebtor #) ot be 4el+ li)ble -or +)m)(es be#)use t4)t .)s ot t4e +ue /rest)tio . T4e +ebtor .ill be)r t4e lost1 but 4e #) ot be 4el+ li)ble -or +)m)(es.

) soli+)ry +ebtor. T4e #re+itor ee+ ot sue e3eryo e. Assuming there is an issue whether the obligation is a <oint or a solidary obligation, who would claim that it is a <oint obligation? It .oul+ be B .4o .oul+ #l)im t4)t t4e obli()tio is 2oi t. T4e /l)i ti-- A o t4e ot4er 4) + .4o +em) +e+ /)yme t -rom o ly o e o- t4e +ebtors .oul+ +e-i itely #l)im t4)t t4e obli()tio is ) soli+)ry obli()tio . What would be an indication in a case which will warn the examinee on whether the obligation is <oint or solidary? T4e e5te t o- t4e li)bility is t4e +etermi i ( -)#tor t4)t t4e obli()tio is 2oi t or soli+)ry. T4e 0uestio is .4et4er o e o- t4e +ebtors #) be #om/elle+ t4e e tire )mou t. A and B sold !!! sac=s of rice to X and Y& X demanded deli$ery of !!! sac=s of rice from A and B& A and B deli$ered the !!! sac=s of rice to X& Y did not recei$e anything out of the !!! sac=s of rice& Can Y still compel A and B to deli$er a portion of the !!! sac=s of rice& ,f he can, how many can Y demand? It is ) 2oi t obli()tio u less -rom t4e sti/ul)tio ot4e /)rties or i t4e )ture1 or t4e l). it s4o.s soli+)rity. U +er t4e -)#ts1 .4e A ) + B +eli3ere+ t4e 1%%% s)#6s to 8 it +i+ ot )#tu)lly e5ti (uis4e+ t4e obli()tio to 7 be#)use 4e +i+ ot re#ei3e ) yt4i ( -rom t4e 1%%% s)#6s o- ri#e1 t4ere-ore it +i+ ot e5ti (uis4 t4e obli()tio . What obligations are considered solidary?

-When can the debtor ma=e the substitution? T4e +ebtor #) m)6e t4e substitutio )t ) y time. Can the debtor ma=e the substitution if the debtor is already in delay? No. W4y s4oul+ t4e l). )llo. t4e +ebtor to m)6e substitutio is 4e is )lre)+y i +el)y. I- 4e is )lre)+y i +el)y 4e #) )lre)+y be li)ble -or +)m)(es. T4ere is o se se to (i3e 4im ) ri(4t i- 4e is )lre)+y li)ble -or +)m)(es. ,f the obligation is already impossible, can the debtor ma=e a substitution? No. :or 4o. #) t4e +ebtor m)6e ) substitutio it4e obli()tio is )lre)+y im/ossible1 u less it .)s re)lly t4e )(reeme t or t4e i te tio o- t4e /)rties. Ot4er.ise1 it is #o si+ere+ sim/ly )s ) obli()tio .it4 ) /e )l #l)use. U/o o #om/li) #e .it4 t4e obli()tio 1 t4e +ebtor #) be #om/elle+ to /er-orm t4e ot4er /rest)tio or t4e )##essory u +ert)6i (. ,s the substitute prestation had already been agreed upon by the parties? 7es. T4ere #) e3er be ) 3)li+ -)#ult)ti3e obli()tio .4e t4e substitute /rest)tio 4)s ot bee )(ree+ u/o . Ot4er.ise i- t4e +ebtor 4)s t4e ri(4t to m)6e ) substitutio .it4out t4e substitute /rest)tio 4)3i ( bee )(ree+ u/o 1 it m)y be /re2u+i#i)l to t4e #re+itor be#)use su#4 .ill (i3e t4e ri(4t to t4e +ebtor to +eli3er ) i -erior /rest)tio . G5,6. A6/ 5BA,@A.,564 45A,/A2Y

Art. /2.. 4f t!o or more heirs ta)e possession of the estate, the# shall be soli aril# liable for the loss or estruction of a thing evise or be"ueathe , even though onl# one of them shoul have been negligent. +nArt. 1,24. All partners are liable soli aril# !ith the partnership for ever#thing chargeable to the partnership un er Articles 1,22 an 1,23. +nArt. 1,22. &here, b# an# !rongful act or omission of an# partner acting in the or inar# course of the business of the partnership or !ith the authorit# of co9partners, loss or in1ur# is cause to an# person, not being a partner in the partnership, or an# penalt# is incurre , the partnership is liable therefor to the same e'tent as the partner so acting or omitting to act. +nArt. 1,23. 2he partnership is boun loss: to ma)e goo the

A filed an action against B for the reco$ery of a sum of money& Would it matter if it is a <oint or solidary obligation? 7es. T4ere .ill be ) issue be#)use A m)y -ile ) )#tio )()i st A )s ) 2oi t +ebtor or ) soli+)ry +ebtor. T4ere is ) +i--ere #e o ) )#tio -ile+ )()i st o e +e-e +) t or ) )#tio -ile+ )()i st ) +ebtor. A +e-e +) t m)y eit4er be ) 2oi t +ebtor or

1- &here one partner acting !ithin the scope of his apparent authorit# receives mone# or propert# of a thir person an misapplies it7 an +2- &here the partnership in the course of its business receives mone# or propert# of a thir person an the mone# or propert# so receive is misapplie b# an# partner !hile it is in the custo # of the partnership. +n-

!;' All ta'es, liens, charges an e'penses, inclu ing ma1or or minor repairs, upon the communit# propert#7 !D' All ta'es an e'penses for mere preservation ma e uring marriage upon the separate propert# of either spouse use b# the famil#7 !E' @ ' p e n s e s t o e n a b l e e i t h e r s p o u s e t o commence or complete a professional or vocational course, or other activit# for self9 improvement7 !?' Ante9nuptial ebts of either spouse insofar as the# have re oun e to the benefit of the famil#7 !J' 2he value of !hat is onate or promise b# both spouses in favor of their common legitimate chil ren for the e'clusive purpose of commencing or completing a professional or vocational course or other activit# for self9 improvement7 !&' Ante9nuptial ebts of either spouse other than those falling un er paragraph +.- of this Article, the support of illegitimate chil ren of either spouse, an liabilities incurre b# either spouse b# reason of a crime or a "uasi9 elict, in case of absence or insufficienc# of the e'clusive propert# of the ebtor9spouse, the pa#ment of !hich shall be consi ere as a vances to be e ucte from the share of the ebtor9spouse upon li"ui atio n o f t h e communit#7 an !1%' @'penses of litigation bet!een the spouses unless the suit is foun to be groun less. 4f the communit# propert# is insufficient to cover the foregoing liabilities, e'cept those falling un er paragraph +/-, the spouses shall be soli aril# liable for the unpai balance !ith their separate properties. Art. 121. +?C- 2he con1ugal partnership shall be liable for: !1' 2he support of the spouse, their common chil ren, an the legitimate chil ren of either spouse7 ho!ever, the support of illegitimate chil ren shall be governe b# the provisions of this Co e on %upport7 !$' All ebts an obligations contracte uring the marriage b# the esignate a ministrator9 spouse for the benefit of the con1ugal partnership of gains, or b# both spouses or b# one of them !ith the consent of the other7

Art. 1/11. @ven !hen the agent has e'cee e his authorit#, the principal is soli aril# liable !ith the agent if the former allo!e the latter to act as though he ha full po!ers. +nArt. 1/1(. 4f t!o or more persons have appointe an agent for a common transaction or un erta)ing, the# shall be soli aril# liable to the agent for all the conse"uences of the agenc#. +1.31Art. 1/4(. &hen there are t!o or more bailees to !hom a thing is loane in the same contract, the# are liable soli aril#. +1.4,aArt. 21(.. 2he responsibilit# of t!o or more pa#ees, !hen there has been pa#ment of !hat is not ue, is soli ar#. +nArt. 21/4. 2he responsibilit# of t!o or more persons !ho are liable for "uasi9 elict is soli ar#. +nArt. 214*. 4f the officious manager elegates to another person all or some of his uties, he shall be liable for the acts of the elegate, !ithout pre1u ice to the irect obligation of the latter to!ar the o!ner of the business. 2he responsibilit# of t!o or more officious m a n a g e r s s h a l l b e s o l i a r #, u n l e s s t h e management !as assume to save the thing or business from imminent anger. +1,/0aArt. /4. +?C- 2he absolute communit# of propert# shall be liable for: !1' 2he support of the spouses, their common chil ren, an legitimate chil ren of either spouse7 ho!ever, the support of illegitimate chil ren shall be governe b# the provisions of this Co e on %upport7 !$' All ebts an obligations contracte uring the marriage b# the esignate a ministrator9 spouse for the benefit of the communit#, or b# both spouses, or b# one spouse !ith the consent of the other7 !=' !=' >ebts an obligations contracte b# either spouse !ithout the consent of the other to the e'tent that the famil# ma# have been benefite 7

!=' >ebts an obligations contracte b# either spouse !ithout the consent of the other to the e'tent that the famil# ma# have benefite 7 !;' All ta'es, liens, charges, an e'penses, inclu ing ma1or or minor repairs upon the con1ugal partnership propert#7 !D' All ta'es an e'penses for mere preservation ma e uring the marriage upon the separate propert# of either spouse7 !E' @ ' p e n s e s t o e n a b l e e i t h e r s p o u s e t o commence or complete a professional, v o c a t i o n a l , o r o t h e r a c t i v i t # f o r s e l f 9 improvement7 !?' Ante9nuptial ebts of either spouse insofar as the# have re oun e to the benefit of the famil#7 !J' 2he value of !hat is onate or promise b# both spouses in favor of their common legitimate chil ren for the e'clusive purpose of commencing or completing a professional or vocational course or other activit# for self9 improvement7 an !&' @'penses of litigation bet!een the spouses unless the suit is foun to groun less. 4f the con1ugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be soli aril# liable for the unpai balance !ith their separate properties. @i$e an example of an obligation which is solidary by nature? T4e li)bility o- t4ose .4o -i(ure+ i 3e4i#ul)r mis4)/s .4ere ) /erso is ) /)sse (er o- o e )t t4e time o- t4e mis4)/1 su#4 /)sse (er 4ol+ t4e o. er o- t4e 3e4i#le u +er bre)#4 o- #o tr)#t to(et4er .it4 t4e +ri3er u +er t4e #o tr)#t. T4e o. er o- t4e 3e4i#le )s .ell )s t4e +ri3er m)y be 4el+ li)ble u +er 0u)si +eli#t. T4ere is o b)sis u +er t4e l). .4i#4 .oul+ m)6e t4em soli+)rily li)ble t4e #)se bei ( b)se+ o +i--ere t #)uses o)#tio . T4ere is o l). .4i#4 /ro3i+es -or soli+)rity1 but by t4e )ture o- t4e obli()tio t4ey )re 4el+ soli+)rily li)ble. (or contractual obligations, may the partners be held solidarily liable? No. be#)use )s ) rule 2oi t .it4out /re2u+i#e t4)t t4e /)rt ers bi +i ( t4emsel3es soli+)rily.

Eay an insurance company of a $ehicle be held solidarily liable with the owner of the $ehicle , the dri$er, and the employer of the dri$er? No. It is o ly t4e o. er o- t4e 3e4i#le !Sio C4oy' ) + t4e t4e em/loyer o- t4e +ri3er !S) Leo Ri#e ,ill' s4oul+ be 4el+ soli+)rily li)ble ) + ot t4e i sur) #e #om/) y. T4e b)sis o- t4e li)bility o- t4e o. er o- t4e 3e4i#le is Art. $1J; .4i#4 /ro3i+es t4)t i motor 3e4i#le mis4)/s1 t4e o. er is soli+)rily li)ble .it4 4is +ri3er1 i- t4e -ormer1 .4o .)s i t4e 3e4i#le1 #oul+ 4)3e1 by t4e use o- +ue +ili(e #e1 /re3e te+ t4e mis-ortu e it is +is/ut)bly /resume+ t4)t ) +ri3er .)s e(li(e t1 i- 4e 4)+ bee -ou + (uilty ore#6less +ri3i ( or 3iol)ti ( tr)--i# re(ul)tio s )t le)st t.i#e .it4i t4e e5t /re#e+i ( t.o mo t4s. Si #e t4e o. er .)s ot i t4e 3e4i#le Art. $1J; is ot )//li#)ble. I- t4e o. er .)s ot i t4e motor 3e4i#le1 t4e /ro3isio s o- )rti#le $1J% m)y be )//li#)ble. Se#o +ly t4e b)sis o- t4e li)bility o- t4e em/loyer is i Art. $1J% .4i#4 /ro3i+esC T4e obli()tio im/ose+ by )rti#le $1?E is +em) +)ble ot o ly -or o eKs o. )#ts or omissio s1 but )lso -or t4ose o/erso s -or .4om o e is res/o sible. 555 555 555 Em/loyers s4)ll be li)ble -or t4e +)m)(es #)use+ by t4eir em/loyees ) + 4ouse4ol+ 4el/ers )#ti ( .it4i t4e s#o/e o- t4eir )ssi( e+ t)s6s1 e3e t4ou(4 t4e -ormer )re ot e ()(e+ ill ) y busi ess or i +ustry. But t4e o. er o- t4e 3e4i#le is ot t4e em/loyer so Art. $1J% is li6e.ise ot )//li#)ble. 555 555 555 T4e res/o sibility tre)te+ i t4is )rti#le s4)ll #e)se .4e t4e /erso s 4erei me tio e+ /ro3e+ t4)t t4ey obser3e+ )ll t4e +ili(e #e o- ) (oo+ -)t4er o- ) -)mily to /re3e t +)m)(e. U +er t4e -ore(oi (1 t4e em/loyer ) + t4e o. er o- t4e 3e4i#le )re soli+)rily li)ble )s 2oi t tort-e)sors. U +er t4e l).C T4e res/o sibility o- t.o or more /erso s .4o )re li)ble -or ) "uasi9 elict is soli+)rily. T4e b)sis o- t4e li)bility o- t4e i surer is t4e i sur) #e #o tr)#t .4ile t4e em/loyer ) + t4e o. er is torts .4i#4 #oul+ ot m)6e t4e i surer be soli+)rily li)ble !,)l)y) I sur) #e 3s. CA' (or contractual obligations may the partners in a partnership be hold solidarily liable?

No. As ) rule 2oi t u less o- #ourse i- t4e /)rt ers bi + t4emsel3es soli+)rily ) + u +er #ert)i s/e#i-i# s#e )rios or e5#e/tio )l #ir#umst) #es u +er t4e #i3il #o+e .4i#4 m)6e t4em soli+)rily li)ble. !See /ro3isio s )bo3e' NoteC I t4ese s#e )rios t4e e5)mi ee must be )ble to +etermi e u +er .4)t s/ e # i -i # #ir#umst) #es t4)t t4e +ebtor m)y be 4el+ soli+)rily li)ble. 5ther word or phrase for solidary? Hoi t ) + #olle#ti3e1 2oi t ) + se3er)l1 2oi tly ) + i +i3i+u)lly. Ro 0uillo 3s. CA Cle)rly t4e 1 by t4e e5/ress term o- t4e #om/romise )(reeme t ) + t4e +e#isio b)se+ u/o it1 t4e +e-e +) ts obli()te+ t4emsel3es to /)y t4eir obli()tio Li +i3i+u)lly ) + 2oi tlyL. T4e term Li +i3i+u)llyL 4)s t4e s)me me) i ( )s L#olle#ti3elyL1 Lse/)r)telyL1 L+is t i # t i 3 e l y L 1 res/e#ti3ely or Lse3er)llyL. A )(reeme t to be Li +i3i+u)lly li)bleL u +oubte+ly #re)tes ) se3er)l obli()tio 1 1; ) + ) Lse3er)l obli()tio is o e by .4i#4 o e i +i3i+u)l bi +s 4imsel- to /er-orm t4e .4ole obli()tio . 1D I t4e #)se o- @)rot 3s. Gemor) 1E We t4erei rule+ t4)t Lt4e /4r)se 2u tos or se/)r)+)me te or i t4e /romissory ote is ) e5/ress st)teme t m)6i ( e)#4 o- t4e /erso s .4o si( e+ it i +i3i+u)lly li)ble -or t4e /)yme t o- t4e -u )mou t o- t4e obli()tio #o t)i e+ t4erei .L Li6e.ise i U @)6 Leu ( 3s. Ne(orr) 1? We 4el+ t4)t Li t4e )bse #e o- ) -i +i ( o- -)#ts t4)t t4e +e-e +) ts m)+e t4emsel3es i +i3i+u)lly li)ble -or t4e +ebt i #urre+ t4ey )re e)#4 li)ble o ly -or o e-4)l- os)i+ )mou t T4e obli()tio i t4e #)se )t b)r bei ( +es#ribe+ )s Li +i3i+u)lly ) + 2oi tlyL1 t4e s)me is t4ere-ore e -or#e)ble )()i st o e o- t4e umerous obli(ors. A and B, debtors X and Y creditors& X filed an action against A, the action was dismissed, thereafter X filed an action against B, may the action be dismissed? It .oul+ +e/e + o .4)t 6i + o- obli()tio i 3ol3e+1 .4et4er it is 2oi t or soli+)ry. is

<o.e3er1 e3e i- A ) + B )re soli+)rily li)ble ) + t4e )#tio )()i st A is +ismisse+1 ) subse0ue t )#tio )()i st B m)y /ros/er i- t4e +e-e ses is /urely /erso )l to A1 li6e .4e A is ) mi or. T4ere-ore it .oul+ +e/e + o t4e +e-e se r)ise+ .4i#4 is t4e b)sis o- t4e +ismiss)l. I- t4e obli()tio is 2oi t1 t4e +ismiss)l o- t4e -irst #)se s4)ll ot )--e#t t4e )#tio )()i st t4e ot4er +ebtor1 be#)use t4eir obli()tio s )re se/)r)te ) + +isti #t -rom e)#4 ot4er. What =ind of defense is minority? ,s it a defense? ,f it is a defense, ,s it partial or total defense? It +e/e +s1 i- it is ) 2oi t or soli+)ry obli()tio . I- t4e obli()tio is 2oi t1 it is ) +e-e se )s to t4e mi or but ot )s to B. T4eir obli()tio is se/)r)te ) + +isti #t -rom e)#4 ot4er. T4e s)me is li6e.ise ) +e-e se i soli+)ry obli()tio . It is ) tot)l i- it is t4e mi or is r)isi ( t4e +e-e se. I- t4e o e #l)imi ( t4e +e-e se is ) #o+ebtor1 it is o ly /)rti)l )s to t4e s4)re o- t4e mi or. ,s there a total defense in any =ind of obligation whether <oint or solidary and can be in$o=ed by any of the debtors? I- t4e obli()tio is 3oi+ it it ) tot)l +e-e se. A and B are solidary debtors, A paid the creditors million last year, today A demanded money from B, how much can A reco$er from B? Can A reco$er interest? A m)y re#o3er D%M o- t4e +ebt /)i+. A m)y re#o3er i terest -rom t4e +)te t4e obli()tio be#)me +ue ) + ot o t4e +)te .4e 4e /)i+ t4e obli()tio be-ore it .)s +ue. A obliged himself to pay X or Y, X demanded payment from A, thereafter Y demanded payment from A, A paid Y& Eay X able to hold A liable? It +e/e +s o t4e i te tio o- t4e /)rties .4o 4)s t4e ri(4t to #4oose. 8 m)y still )ble to 4ol+ A li)ble +es/ite t4e -)#t t4)t 8 4)s )lre)+y /)i+ 7 i- it is u +er ) )(reeme t bet.ee 8 ) + 7 t4)t 8 4)+ t4e ri(4t to #4oose. T4e t4e /)yme t by A to 7 is ) /)yme t to ) .ro ( /)rty.

I- t4e obli()tio is soli+)ry1 t4ere is more re)so t4)t t4e )#tio )()i st B s4oul+ li6e.ise be +ismisse+ si #e it 2oi t obli()tio is soli+)ry.

I- i t4eir )(reeme t A 4)+ t4e ri(4t to #4oose1 t4e it +oes ot m)tter .4o m)+e t4e +em) + be#)use A #le)rly #) #4oose to /)y t4e obli()tio . T4e i t4is #)se /)yme t to 7 e5ti (uis4es t4e obli()tio . ,f the intention of the parties is not clear as to who has the right to choose, Eay X still hold A liable? 8 m)y still 4ol+ A li)ble u +er t4e rules o soli+)ry obli()tio be#)use i- o e o- t4e soli+)ry #re+itors .)s t4e -irst o e to m)6e ) +em) + 4e s4)ll be t4e o e .4o 4)s t4e ri(4t to #4oose. Si #e u +er t4e -)#ts1 8 .)s t4e -irst to m)6e t4e +em) +1 8 m)y still 4ol+ A li)ble. T4is rule is )//lie+ be#)use t4is .oul+ be #o +u#i3e to t4e -ul-illme t o- t4e obli()tio !Tole ti o' UribeC I- t4e rules o soli+)ry obli()tio s is to be )//lie+ t4e t4ere is o re)so to m)6e /ro3isio s o ot4er 6i +s o- obli()tio s. T4e l). s4oul+ 4)3e m)+e )ll obli()tio s soli+)ry be#)use t4e s)me s4)ll be #o +u#i3e to t4e -ul-illme t o- t4e obli()tio . T4ere-ore1 t4e 3ie. o- Tole ti o is i #orre#t. T4e rules o )lter )ti3e obli()tio s s4oul+ be )//lie+1 ) + u +er t4is rule1 t4e ri(4t to #4oose is .it4 t4e +ebtor. I- t4e i te tio is ot #le)r1 it is t4e +ebtor s4oul+ be (i3e t4e ri(4t to #4oose. An obligation to pay di$isible obligation? million pesos is a

A, B and C obliged to deli$er a handy?dandy amaHing thing?a?ma?<ig, not your e$eryday complicated multi use tool worth %!,!!! pesos to X& When the obligation to deli$er the thing to X is due the handy dandy amaHing thing?a?ma? <ig exploded due to the fault of A, X filed an action against B, may the action proper? Si #e t4is is ) 2oi t ) + i +i3isible obli()tio be#)use ) -i ite t4i ( is i 3ol3e+1 ) )#tio to +eli3er #) ot /ros/er si #e it is ) -i ite t4i (. But t4e )#tio -or mo ey #l)ims .ill /ros/er )s to t4e s4)re o- B .4i#4 is 1%1%%% .it4 res/e#t to 4is s4)re1 si #e t4e sti/ul)tio is sile t )s to t4e +ebtors s4)re1 t4ey s4)ll s4)re e0u)lly. B #) ot be li)ble -or +)m)(es1 it is o ly A .4o #) be li)ble . W4e t4e obli()tio is ) 2oi t ) + i +i3isible obli()tio 1 ) + t4e obli()tio 4)s be#ome im/ossible o- /er-orm) #e1 t4e obli()tio is #o 3erte+ i to ) mo et)ry obli()tio 1 ) + e)#4 ot4e +ebtor s4)ll e)#4 be res/o sible -or 4is s4)re i t4e )bse #e o- +esi( )tio o- 4is s4)re ) + t4e o e )t -)ult s4)ll be li)ble -or +)m)(es. Wit4 res/e#t to A1 4e s4)ll be li)ble -or 4is s4)re /lus +)m)(es. Robes- :r) #is#o 3s. C:I ,n this case there was a stipulation that in case the de$eloper fail to issue a certificate of title after the amount is paid by the buyers, the de$eloper be liable to the amount of *I interest& Eay the de$eloper be held liable for damages? 5r should the *I int e r e s t compensate to the damages as a form of a penal clause? Art. 1$$E. I obli()tio s .it4 ) /e )l #l)use1 t4e /e )lty s4)ll substitute t4e i +em ity -or +)m)(es ) + t4e /)yme t o- i terests i # ) s e o - o #om/li) #e1 i- t4ere is o sti/ul)tio to t4e #o tr)ry. Ne3ert4eless1 +)m)(es s4)ll be /)i+ i- t4e obli(or re-uses to /)y t4e /e )lty or is (uilty o- -r)u+ i t4e -ul-illme t o- t4e obli()tio . T4e /e )lty m)y be e -or#e+ o ly .4e it is +em) +)ble i )##or+) #e .it4 t4e /ro3isio s ot4is Co+e. No it is ot ) /e )l #l)use be#)use e3e .it4out su#4 sti/ul)tio o- i terests t4e +e3elo/er m)y still be 4el+ -or i terests )t t4e le()l r)te o- EM /er ) um. It is t4ere-ore i #o #ei3)ble t4)t t4e sub2e#t #l)use i t4e #erti-i#)te o- title be #o si+ere+ )s ) /e )l #l)use .4i#4 .oul+ relie3e t4e +e3elo/er oli)bility.

Not e#ess)rily1 be#)use it .oul+ +e/e + o i te tio or )(reeme t o- t4e /)rties.

t4e

Without any express agreement on how the obligation is to be performed, is it a di$isible or an indi$isible obligation? I- t4ere is o )(reeme t it .oul+ be ) i +i3isible obli()tio . U +er t4e l).1 o #re+itor #) be #om/elle+ to )##e/t /)rti)l /er-orm) #e1 u less t4ere is ) sti/ul)tio to t4e #o tr)ry. ,s there an obligation which is considered di$isible by nature e$en if there is no stipulation? I- t4e obli()tio is to be /er-orme+ -or ) umber o+)ys li6e t4e #o stru#tio o- ) buil+i (. ,s there an obligation which is considered by law an indi$isible obligation? I- t4e obli()tio #o sists i +eli3eri ( ) -i ite t4i (.

Besi+es t4e le()l i terest is EM1 t4e i terest is o ly #4)r(e+ )t ;M .4i#4 me) s it is lo.er. <o. #) ) lo.er i terest be ) /e )l #l)use. @e )lty s4oul+ #4)r(e ) bi((er )mou t1 .4i#4 is t4e /ur/ose o- ) /e )lty. Assuming that a penal clause is contained in a contract, in case of $iolation may the debtor be still liable for damages in addition to the penal clause? As ) (e er)l rule1 t4e /e )l #l)use is #o si+ere+ )s ) substitute to t4e +)m)(es t4)t m)y be su--ere+1 4o.e3er1 .4e t4e +ebtor -)ile+ to #om/ly .it4 t4e /ro3isio s o- t4e /e )l #l)use 4e m)y still be li)ble )si+e -rom t4e /e )lty. A ot4er (rou + is i- t4ere .)s -r)u+ ) + i- t4ere is sti/ul)tio . ,f the penal clause agreed upon is !!,!!! but the damages sustained is "!!&!!!, e$en assuming there was fraud, how much shall the creditor be entitled? T4e #re+itor s4)ll be e title+ to 1%%1%%% /lus )#tu)l +)m)(e o- $%%1%%% )s +e#i+e+ by t4e Su/reme Court. Eay the court reduce the amount of the penalty agreed upon in the penal clause? T4e #ourt m)y re+u#e t4e /e )lty i- t4ere .)s )lre)+y ) #om/li) #e o- t4e obli()tio . ,n an obligation with a penal clause, can the debtor compel the creditor to accept the penalty instead the debtor performing the obligation? As ) rule t4e +ebtor #) ot #om/el t4e #re+itor to )##e/t t4e /e )lty i ste)+ o- /er-ormi ( t4e obli()tio 1 t4e #re+itor #) #om/el t4e +ebtor to /er-orm t4e obli()tio . As ) e5#e/tio 1 t4e +ebtor #) #om/el t4e #re+itor .4ere t4is ri(4t 4)s bee e5/ressly reser3e+ -or 4im )s /ro3i+e+ i )rt. 1$$? o- t4e #i3il #o+e. Can the creditor both demand f o r t h e performance of the obligation and the payment of the penalty agreed upon? Ge er)lly t4e #re+itor #) ot +em) + bot4 t4e /er-orm) #e ) + )t t4e s)me time #om/el to +em) + -or t4e /e )lty1 e5#e/tC i- su#4 ri(4t is #le)rly (r) te+ to 4im. T4is m)y ot be e5/ressly

(r) te+ or sti/ul)te+ be#)use it m)y be i -erre+ by t4e )#ts o- t4e /)rties. ,f the obligation is $oid and there is a penal clause, may a party be held liable under the penal clause? Or+i )rily o1 be#)use ) /e )l #l)use is ) )##essory u +ert)6i (. I- t4e obli()tio is 3oi+ ) y )##essory u +ert)6i ( is li6e.ise 3oi+. As ) e5#e/tio i- t4e ullity o- t4e obli()tio .oul+ (i3e rise to t4e e -or#eme t o- t4e /e )l #l)use1 t4e /)rty t4ereto #) be 4el+ li)ble u +er t4e /e )l #l)use. :or i st) #e1 i- o e o- t4e /)rties is ) -ili/i o1 i- t4)t #o tr)#t .ill be (o3er e+ by @4ili//i e l).1 t4e )lie 4)s e3ery ri(4t to rely o t4e @4ili//i e l). )s to t4e 3)li+ity o- t4e #o tr)#t. T4ere-ore i- t4is #o tr)#t is +e#l)re+ ull ) + 3oi+1 t4e :ili/i o s4)ll be li)ble -or i +em ity. Su#4 .ill be ) 3)li+ /e )l #l)use. Breach of 5bligations9 4pecific circumstances affecting obligations I- t4ere is ) obli()tio 1 o e o- t4e /)rties m)y be 4el+ li)ble or e3e ) t4ir+ /erso m)y be 4el+ li)ble -or +)m)(es i #urre+ by o e o- t4e /)rties or ) t4ir+ /erso . U +er 11?% t4ose .4o i t4e /er-orm) #e o- t4e obli()tio )re (uilty o- -r)u+1 e(li(e #e or +el)y #) be 4el+ li)ble -or +)m)(es. Note t4)t e3e i- t4ere is o e(li(e #e1 -r)u+ or +el)y t4ose .4o i ) y m) er #o tr)3e e t4e te or o- t4e obli()tio s4)ll )lso be li)ble -or +)m)(es. Ge er)lly1 o /er-orm) #e or #o tr)3e tio o- t4e te or #) be t4e b)sis o- li)bility. I- bot4 /)rties 4)3e -)it4-ully #om/lie+ .it4 t4eir res/e#ti3e obli()tio s1 o o e m)y be 4el+ li)ble. T4e l). s)ys Ft4ose .4o i t4e /er-orm) #eG be#)use it is ot o ly t4e +ebtor .4o m)y be 4el+ li)ble -or +)m)(es. Cre+itors li6e.ise m)y be 4el+ li)ble li6e i- t4ey #ommit -r)u+ or i +el)y m)y be 4el+ li)ble -or +)m)(es. (raud :r)u+ 4ere me) s -r)u+ i t4e /er-orm) #e o- t4e obli()tio . U +er Art. 11?% ) + Art. 11?11 t4ere is ) e5isti ( obli()tio .

Art. 11.0. 2hose !ho in the performance of their obligations are guilt# of frau , negligence, or ela#, an those !ho in an# manner contravene the tenor thereof, are liable for amages. +1101Art. 11.1. 6esponsibilit# arising from frau is eman able in all obligations. An# !aiver of an action for future frau is voi . +1102a-

is1 .4e .)s t4e .)i3er e5e#ute+ i rel)tio to t4e -r)u+ule t )#t. 6egligence Ne(li(e #e1 ot4er.ise 6 o. )s 0u)si +eli#t is -)ult u +er Art. $1?E .4i#4 /ro3i+esC
Art. 21.*. &hoever b# act or omission causes amage to another, there being fault or negligence, is oblige to pa# for the amage one. %uch fault or negligence, if there is no pre9e'isting contractual relation bet!een the parties, is calle a "uasi9 elict an is governe b# the provisions of this Chapter.

U li6e t4e ot4er 6i + o- -r)u+ .4i#4 )re i t4e l). o #o tr)#ts1 t4ere is -r)u+ i obt)i i ( #o se t. A /erso m)y e ter i to ) #o tr)#t be#)use o- t4e -r)u+ em/loye+ u/o 4im Wit4out su#4 -r)u+ 4e .oul+ ot 4)3e e tere+ i to su#4 #o tr)#t. T4is is #)lle+ #)us)l -r)u+ or +olo #)us) te. <o.e3er t4ere is ) ot4er 6i + o- -r)u+ i obt)i i ( #o se t .4i#4 )re ot #)us)l i #4)r)#ter. It is merely i #i+e t)l1 ) + t4is .oul+ be u +er Art. 1=;;. <o.e3er1 t4is .ill ot )--e#t t4e 3)li+ity o- ) #o tr)#t1 u li6e #)us)l -r)u+ .4i#4 .ill m)6e t4e #o tr)#t 3oi+)ble. I i #i+e t)l -r)u+ .ill o ly m)6e ) /erso li)ble -or +)m)(es i em/loyi ( su#4 -r)u+.
Art. 1344. 4n or er that frau ma# ma)e a contract voi able, it shoul be serious an shoul not have been emplo#e b# both contracting parties. 4nci ental frau onl# obliges the person emplo#ing it to pa# amages.

,s negligence synonymous to fault? No. Ne(li(e #e is 2ust ) omissio o- t4e +ili(e #e re0uire+ .4ere)s -)ult m)y )#tu)lly be i te tio )l i #4)r)#ter. O e .or+ .4i#4 .oul+ #o3er bot4 -)ult ) + e(li(e #e is Cul/). Dow do u =now that an act is negligent or not? U +er Art. 11?=1 t4is is t4e best +e-i itio oe(li(e #e .4i#4 #oul+ be t4e b ) s i s o +etermi i ( .4et4er ) )#t is ) e(li(e t )#t or ot.
Art. 11.3. 2he fault or negligence of the obligor consists in the omission of that iligence !hich is re"uire b# the nature of the obligation an correspon s !ith the circumstances of the persons, of the time an of the place. &hen negligence sho!s ba faith, the provisions of Articles 11.1 an 2201, paragraph 2, shall appl#. 4f the la! or contract oes not state the iligence !hich is to be observe in t h e performance, that !hich is e'pecte of a goo father of a famil# shall be re"uire .

<o.e3er1 i Art. 11?%1 t4e /er-orm) #e o- ) obli()tio #) be t4e b)sis o- li)bility -or +)m)(es. Art. 11?% s4oul+ be #)lle+ m)li#e or b)+ -)it4. T4e term F"oloG #) ot be use+ u +er Art. 11?% be#)use +olo re)lly is +e#eit )s use+ i Art. 1=JJ 6 o. )s +olo #)us) te1 ) + .4ile -r)u+ i Art 1=;; )bo3e is 6 o. )s +olo i #i+e te.
Art. 13,,. &hoever ac"uires in ba faith the things alienate in frau of cre itors, shall in emnif# the latter for amages suffere b# them on account of the alienation, !henever, ue to an# cause, it shoul be impossible for him to return them. 4f there are t!o or more alienations, the first a c " u i r e r s h a l l b e l i a b l e fi r s t , a n so o n successivel#.

I- -r)u+ .)s #ommitte+ .4i#4 #) be t4e b)sis oli)bility1 t4e ot4er /)rty #) )#tu)lly .)i3e 4is ri(4t to (o )-ter t4e /)rty #ommitti ( t4e -r)u+. T4is #) be +o e t4rou(4 ) .)i3er. <o.e3er i- t4e .)i3er is e5e#ute+ be-ore t4e -r)u+ule t )#t .)s #ommitte+ !.)i3er o- -uture -r)u+' t4e .)i3er is 3oi+. As su#41 t4e ot4er /)rty #) 4ol+ t4e /erso em/loyi ( -r)u+ li)ble -or +)m)(es. T4ere-ore1 o e t4i ( t4)t s4oul+ be #o si+ere+ i /roblems i 3ol3i ( .)i3ers

<ere t4e t4e l). +e-i es e(li(e #e .4i#4 is t4e omissio o- t4e +ili(e #e re0uire+ by t4e )ture ot4e obli()tio . S)y i- ) /erso sle/t o ly -or t.o se#o +s1 it .oul+ +e/e + o 4is 2ob o .4et4er to m)6e 4im e(li(e t or ot. I- 4e .)s ) +ri3er1 i- 4e sle/t -or t.o se#o +s1 t4e is e(li(e #e1 4is omissio .oul+ #)use t4e +e)t4 o- so m) y /eo/le. T4e most im/ort) t t4i ( to +etermi e .4et4er ) /erso is e(li(e t or ot is to #o si+er t4e )ture o- t4e obli()tio . A-ter #o si+eri ( t4e )ture o- t4e obli()tio 1 ot4er t4i (s .4i#4 must be #o si+ere+ is t4e time1 t4e /erso ) + t4e /l)#e. I t4e #)se o- G) (#o 3s. ,RR1 t4e Su/reme #ourt rule+ t4)t t4e )#t o- )li(4ti ( -rom t4e tr)i .)s ot

) e(li(e t )#t be#)use o- t4e #ir#umst) #es surrou +i ( t4e e3e t. @rim)rily it .)s be#)use ot4e #ir#umst) #es surrou +i ( t4e /erso oC) (#o be#)use t4e Su/reme Court +is#usse+ t4e #ir#umst) #e t4)t 4e .)s )t 4is /rime. 4e .oul+ ri+e t4e tr)i e3ery+)y1 ) + t4e tr)i .)s )bout to sto/ .4e 4e .)s )bout to )li(4t -rom t4e tr)i . It is ) im/ort) t -)#tor i +etermi i ( e(li(e #e1 be#)use i- is )bout to )li(4t .4e t4e tr)i .)s still ru i ( )t 1J% 6mN4r ) + 4e )li(4te+ -rom su#4 tr)i 1 ob3iously t4)t .oul+ be #o si+ere+ ) e(li(e t )#t. <o.e3er1 i t4e #)se o- Tele-)st 3s. C)stro1 t4e res/o +e t So/4i) C)stro )s6e+ tele-)st to se + ) -)5 mess)(e i t4e U ite+ St)tes to tell 4er rel)ti3es t4)t 4er mot4er )lre)+y +ie+1 tele-)st .)s ot )ble to se + t4e mess)(e1 )lle(e+ly be#)use o)tmos/4eri# /ressure. W4e t4e rel)ti3es 6 e. o.4)t 4)//e e+1 t4e +e#e)se+ .)s )lre)+y burie+ so t4ey -ile+ ) )#tio )()i st Tele-)st. Tele-)st .)s .illi ( to retur t4e mo ey t4)t .)s /)i+ by So/4i) but mor)l +)m)(es .)s ).)r+e+ by t4e #ourt. Tele-)st 0uestio e+ t4e 3)li+ity o- t4e ).)r+ -or mor)l +)m)(es be#)use t4ey s)i+ t4)t i #o tr)#ts1 t4e ).)r+ -or mor)l +)m)(es #) o ly be ).)r+e+ i- t4ere .)s b)+ -)it4 or t4ere .)s .) to +isre()r+ o- t4e obli()tio o- ) /)rty i t4e #o tr)#t. But .4e t4ey -)ile+ to se + t4e mess)(e +ue to )tmos/4eri# /ressure1 )//)re tly t4ere .)s o b)+ -)it4. <o.e3er1 t4e Su/reme Court o et4eless 4el+ Tele-)st li)ble -or +)m)(es be#)use t4ey -)ile+ to i -orm So/4i) i- t4e -)#t t4)t t4ey -)ile+ to se + t4e mess)(e. As su#41 t4e Su/reme Court #o si+ere+ t4e )#t oTe l e - ) s t ) s ) ( r o s s l y e(li(e t ) # t 1 ) + 2uris/ru+e #e .ill tell you t4)t Gross e(li(e #e )mou ts to -r)u+. T4ere-ore it )//e)rs to be b)+ -)it41 .4i#4 #) be t4e b)sis o- li)bility -or mor)l +)m)(es. T4ere-ore1 t4ere is ) ee+ to +etermi e .4et4er t4e )#t is sim/le e(li(e #e or ) (ross e(li(e #e. NoteC Ne(li(e #e u +er t4is to/i# is ) e(li(e #e i t4e /er-orm) #e o- ) obli()tio ) + ot t4e e(li(e #e )s ) se/)r)te sour#e o- obli()tio . It4e e(li(e t )#t is ) )#t /u is4e+ by l).1 su#4 )s t4ose u +er t4e Re3ise+ @e )l Co+e1 t4)t .oul+ be #rimi )l e(li(e #e .4i#4 #) be t4e b)sis oli)bility u +er +eli#t. <o.e3er1 t4e s)me e(li(e t )#t u +er +eli#t #) be t4e b)sis o- li)bility u +er 0u)si +eli#t. /elay "el)y is )lmost sy o ymous t4is time to +e-)ult1 or mor). ,or) A##i/ie +i .4i#4 is +e-)ult o t4e /)rt

o- t4e #re+itor. ,or) Sol3e +i or +e-)ult o t4e /)rt o- t4e +ebtor. ,f a party to an obligation was able to comply with his obligation, nonetheless may he be considered in delay? 7es. T4is is +e-)ult or +el)y .it4 res/e#t to time. Can there be a delay in obligations not to do? No1 be#)use )s lo ( )s o e is ot +oi ( .4)t 4e is ot su//ose+ to +o1 4e is )#tu)lly -ul-illi ( 4is obli()tio . :or +el)y to set i t4e l). re0uires +em) +1 ) + -or +em) + to be ) 3)li+ o e t4e obli()tio must )lre)+y be +ue. "em) + 4ere is ot e#ess)ry -or t4e obli()tio to be +ue1 r)t4er +em) + 4ere is e#ess)ry i or+er to 4ol+ t4e ot4er /)rt li)ble be#)use 4e is )lre)+y i +el)y. T4e +em) + 4ere ee+ ot be i .riti (1 it ee+ ot be i ) y /)rti#ul)r -orm. A +em) + letter ee+ ot be ot)riAe+1 ) /ri3)te +o#ume t .oul+ su--i#e. Note 4o.e3er1 t4)t i or+er -or +el)y to set i t4e l). re0uires +em) +1 su#4 is o ly ) (e er)l rule. A /erso m)y still be 4el+ li)ble e3e i- t4ere is o +em) +1 li6eC ). By Sti/ul)tio b. By l). su#4 )s i t4e l). o /)rt ers4i/1 .4ere it /ro3i+e t4)t .4e ) /)rt er -)ils to m)6e 4is #o tributio o t4e +)te )(ree+ u/o 1 e3e .it4out ee+ o- +em) + -rom t4e o +e-)ulti ( /)rt ers1 4e is +eeme+ by l). to be i +el)y. <e .ill be 4el+ li)ble -or i terests but )lso -or +)m)(es. U +er t4e belo. 0uote+ /ro3isio /)rti#ul)rly t4e l)st /)r)(r)/4 o- 11E& is o e (oo+ /ro3isio o ) obli()tio .it4 re#i/ro#)l obli()tio su#4 )s t4)t o- s)le. I- ) /)rty to t4)t #o tr)#t 4)+ )lre)+y #om/lie+ .it4 4is obli()tio ) + t4e ot4er 4)s ot1 u +er t4e l). 4e s4)ll )lre)+y be #o si+ere+ i +el)y1 e3e io +em) + .)s m)+e. <o.e3er1 Art. 11E& )s i ter/rete+ by t4e Su/reme Court s4oul+ be re)+ or i ter/rete+ to me) t4)t t4ere .)s o )(reeme t )s to t4e .4e t4e ot4er /)rty is to /er-orm 4is obli()tio . I ot4er .or+s1 t4is /ro3isio is sub2e#t to t4e sti/ul)tio o- t4e /)rties. W4e t4ere is ) sti/ul)tio to t4e e--e#t t4)t t4e ot4er /)rty must #om/ly .it4 t4e obli()tio 1 =% +)ys -rom +eli3ery1 t4e t4e ot4er /)rty #) ot be #o si+ere+ i +el)y e3e i- o e o- t4e /)rties 4)s /er-orme+ 4is obli()tio .

Art. 11*/. 2hose oblige to eliver or to o something incur in ela# from the time the obligee 1u iciall# or e'tra1u iciall# eman s from them the fulfillment of their obligation. :o!ever, the eman b# the cre itor shall not be necessar# in or er that ela# ma# e'ist: !1' &hen the obligation or the la! e'pressl# so eclare7 or !$' &hen from the nature an the circumstances of the obligation it appears that the esignation of the time !hen the thing is to be elivere or the service is to be ren ere !as a controlling motive for the establishment of the contract7 or &hen eman !oul be useless, as !hen the obligor has ren ere it be#on his po!er to perform.

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4f he len s or leases the thing to a thir person, !ho is not a member of his househol 7

!D' 4f, being able to save either the thing borro!e or his o!n thing, he chose to save the latter. +1.44a an 1.4(-

#. W4e /erio+ is t4e #o trolli ( moti3e. <ere t4e time is o- t4e esse #e i t4is #o tr)#t. +. W4e +em) + be#omes useless. T4is /resu//ose+ t4)t +em) + be#omes useless be#)use o- t4e -)ult o- t4e +ebtor. I- t4e +em) + be#omes useless +ue to t4e -)ult o- t4e #re+itor1 t4e o- #ourse t4e #re+itor #) ot 4ol+ t4e +ebtor li)ble -or +)m)(es. W4e t4e +em) + be#omes useless +ue to -ortuitous e3e t1 ob3iously t4e obli()tio s4)ll be e5ti (uis4e+. A(#)oili 3s. GSIS I- bot4 /)rties )re i +el)y1 .4)t .ill be its e--e#t> U +er t4e l).1 .4e bot4 )re i +el)y1 o o e is #o si+ere+ to be i +el)y1 4e #e1 o o e #) be 4el+ li)ble -or +)m)(es1 or o o e #) 4)3e ) #)use o- )#tio by ) + bet.ee t4e /)rties. ,n this case, Agcaoili suspended the payment of the monthly amortiHations& @4,4 cancelled the contract& Was @4,4 correct in cancelling the contract? No.Be#)use bot4 )re i +el)y. A(#)olili -)ile+ to /)y 4is mo t4 )mortiA)tio .4ile GSIS is )lso i +el)y i ot +eli3eri ( ) 4)bit)ble 4ouse. T4e GSIS o ly +eli3ere+ ) stru#ture .it4 ) roo-. Cristine went to a <ewelry shop to ha$e her <ewelry cleaned and it should be returned to her after a wee=, when she returned after a wee= the <ewelry shop told her that the <ewelry had not yet been cleaned, so she has to return again after another wee=& When she returned bac= after another wee=& 4he was informed that the ring was lost because of an alleged robbery that too= place& Claiming that robbery is fortuitous e$ent, then the <ewelry shop cannot be held liable& ,s such contention tenable? No. U +er t4e -)#ts Art. 11ED .oul+ )//ly. I ) obli()tio to +eli3er ) +etermi )te t4i (1 ) + t4e t4i ( .)s lost e3e i- +ue to ) -ortuitous e3e t1 t4e obli(or .oul+ be 4el+ li)ble -or +)m)(es i- 4e .)s )lre)+y i +el)y.

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4n reciprocal obligations, neither part# incurs in ela# if the other oes not compl# or is not rea # to compl# in a proper manner !ith !hat is incumbent upon him. ?rom the moment one of the parties fulfills his obligation, ela# b# the other begins. +1100a-

Art. 1.,*. @ver# partner is a ebtor of the partnership for !hatever he ma# have promise to contribute thereto. :e shall also be boun for !arrant# in case of eviction !ith regar to specific an eterminate things !hich he ma# have contribute to the partnership, in the same cases an in the same manner as the ven or is boun !ith respect to the ven ee. :e shall also be liable for the fruits thereof from the time the# shoul have been elivere , !ithout the nee of an# eman . +1*,1aArt. 1.,,. A partner !ho has un erta)en to contribute a sum of mone# an fails to o so becomes a ebtor for the interest an amages from the time he shoul have complie !ith his obligation. 2he same rule applies to an# amount he ma# have ta)en from the partnership coffers, an his liabilit# shall begin from the time he converte the amount to his o!n use. Art. 1,/*. 2he agent o!es interest on the sums he has applie to his o!n use from the a# on !hich he i so, an on those !hich he still o!es after the e'tinguishment of the agenc#. +1.24aArt. 1/42. 2he bailee is liable for the loss of the thing, even if it shoul be through a fortuitous event: !1' 4f he evotes the thing to an# purpose ifferent from that for !hich it has been loane 7 4f he )eeps it longer than the perio stipulate , or after the accomplishment of the use for !hich the commo atum has been constitute 7 4f the thing loane has been elivere !ith appraisal of its value, unless there is a stipulation e'emption the bailee from responsibilit# in case of a fortuitous event7

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Cle)rly1 t4e 2e.elry s4o/ .)s )lre)+y i +el)y. E3e -or t4e -)#t1 t4)t t4e 2e.elry .)s lost +ue to ) -ortuitous e3e t1 t4e s4o/ s4)ll be li)ble be#)use t4ere .)s )lre)+y ) +el)y .4e t4e #re+itor -)ile+ to +eli3er t4e s)me )-ter )s .ee6 time )s /romise+. A leased a machine of B because he opened his own car repair shop& .hey agreed that the lease would only be for month, and the lease was entered only in (ebruary > of )F>, in Earch > the next month, the lessor demanded for the return of the machine& Dowe$er, the lessee was not able to return the machine because As truc= had a mechanical problem& 5n EArch # which was still in the lessee A was destroyed in a fire that started in a neighboring house, which apparently is a fortuitous e$ent& Can the lessee be held liable for the lost of the machine? A #) ot be 4el+ li)ble be#)use e3e i- t4ere .)s ) +em) + m)+e ) + t4e loss 4)//e e+ )-ter t4e +em) + .)s m)+e1 t4e lessee .)s ot yet i +el)y be#)use )t t4e time o- t4e +em) +1 t4e obli()tio .)s ot yet +ue. T4is is be#)use :ebru)ry .)s o ly $J +)ys. :rom :ebru)ry 1D to ,)r#4 1D1 t4)t .)s o ly $J +)ys. T4e +eli3ery must be m)+e o ly )-ter ) mo t41 ) + ) mo t4 u +er t4e l). is =% +)ys. T4e B s4oul+ 4)3e m)+e t4e +em) + o ly o ,)r#4 1?1 be#)use 1&JD is ot ) le)/ ye)r. I- ) le)/ ye)r1 o- #ourse ,)r#4 1E s4oul+ be t4e +em) + +)te1 be#)use i- ) le)/ ye)r ) mo t4 is $& +)ys. ,f a party to an obligation was not able to comply or it was not completely fulfilled or irregularly complied, does it mean that he will be liable for damages? Not e#ess)rily. T4ere )re e5#uses to o /er-orm) #e1 i #om/lete /er-orm) #e or irre(ul)r /er-orm) #e. E.(. :)ult o- t4e #re+itor or -ortuitous e3e t. NoteC Not e3ery time t4)t t4ere .)s ) -ortuitous e3e t or -or#e m)2eure #) be ) e5#use+ to o /er-orm) #e. U +er Art. 11?; ) /)rty t4ereto #) be 4el+ li)ble e3e i- t4ere .)s ) -ortuitous e3e t it4ere .)s ) e5/ress sti/ul)tio 1 i- t4e l). so /ro3i+es1 or be#)use t4e )ture o- t4e obli()tio re0uires t4e )ssum/tio o- ris6. ....by sti/ul)tio
Art. 11.4. @'cept in cases e'pressl# specifie b# the la!, or !hen it is other!ise eclare b# stipulation, or !hen the nature of the obligation re"uires the assumption of ris), no person shall be responsible for those events !hich coul not be foreseen, or !hich, though foreseen, !ere inevitable. +110(a-

.....la! so provi es I- t4e +ebtor /romises to +eli3er t4e s)me t4i ( to t.o /erso s .4o +o ot 4)3e t4e s)me i terest1 t4ere)-ter t4e t4i ( .)s lost +ue to ) -ortuitous e3e t1 4e .ill still be res/o sible -or t4e loss o- t4e t4i (. Note 4o.e3er1 t4ere s4oul+ be o #o #urri ( e(li(e #e o t4e /)rt o- t4e /erso i 3o6i ( t4e +e-e se Ft4)t li)bility )tt)#4es e3e i- o #om/li) #e .)s +ue to ) -ortuitous e3e t i- t4e l). so /ro3i+esG.
Art. 11*(. &hen !hat is to be elivere is a eterminate thing, the cre itor, in a ition to the right grante him b# Article 11.0, ma# compel the ebtor to ma)e the eliver#. 4f the thing is in eterminate or generic, he ma# as) that the obligation be complie !ith at the e'pense of the ebtor. 4f the obligor ela#s, or has promise to eliver the same thing to t!o or more persons !ho o not have the same interest, he shall be responsible for an# fortuitous event until he has effecte the eliver#. +10/*Art. 11**. 2he obligation to give a eterminate thing inclu es that of elivering all its accessions an accessories, even though the# ma# not have been mentione . N@C 3s. CA NA@OCOR .)s li)ble be#)use it rele)se+ t4e .)ter .4e t4e +)m .)s -ull. It s4oul+ 4)3e rele)se+ t4e .)ter .4e t4e +)m .)s ot yet -ull so t4)t t4e /ressure .oul+ t4)t be ot mu#4 )s .oul+ result to so mu#4 +)m)(e. <e #e1 to i 3o6e -ortuitous e3e t .4i#4 tr) s/ire+ i t4e #)se +ue to 4e)3y r)i -)ll1 t4ere s4oul+ be o #o #urri ( e(li(e #e o t4e /)rt o- t4e +e-e +) t NA@OCOR. I ) ot4er #)se1 i t4e e3e t t4)t NA@OCOR .oul+ rele)se t4e .)ter o- ) +)m1 i or+er ot to be 4el+ li)ble ) /ro/er oti-i#)tio to t4e /ro/er )ut4orities is re0uire+. Noti#e to /erso s ot )ut4oriAe+ su#4 )s ) @%1 o--i#er is ot ) /ro/er oti-i#)tio .4i#4 .oul+ relie3e NA@OCOR o- li)bility. 2emedies for Breach of 5bligations NoteC T4e -irst t4i ( to #o si+er i ) /roblem .it4 res/e#t to t4e reme+ies -or bre)#4 o- obli()tio s is t4e /l)i ti--1 be#)use i- t4e /l)i ti-- is ot t4e )((rie3e+ /)rty1 4e .ill ot 4)3e ) y reme+y u +er t4e l).. A#tio s by su#4 /erso s .4o is ot t4e )((rie3e+ /)rty .ill ot /ros/er. Reme+ies )re )3)il)ble o ly by t4e )((rie3e+ /)rties. Cl)ssi-i#)tio o- Reme+iesC 1. Hu+i#i)l

$. E5tr)-2u+i#i)l =. Reme+ies /ro3i+e+ by l). ;. Reme+ies .4i#4 ) /)rty #) i 3o6e .4e t4ere )re o ot4er )3)il)ble reme+ies !subsi+i)ry reme+y'

reme+ies1 t4ere-ore t4e )#tio s4oul+ be +ismisse+. Is t4is ) 3)li+ +e-e se> I t4e #o #urri ( o/i io o- HBL Reyes i t4is #)se /ro3i+e+ i subst) #e t4)t t4is +e-e se o- o e54)ustio is ) result o- t4e #o -usio to res#issio u +er Art. 11&1 ) + Art. 1=J1. T4)t +e-e se #) 3)li+ly be i 3o6e+ o ly i- t4e )#tio -or res#issio is b)se+ o Art. 1=J1. But i- t4e )#tio .)s b)se+ o Art. 11&11 t4)t is ot ) 3)li+ +e-e se be#)use u +er t4is /ro3isio 1 t4e reme+y is ) /ri #i/)l reme+y. A /)rty is ot re0uire+ to e54)ust 4is ot4er reme+y be-ore 4e #) i 3o6e res#issio u +er Art. 11&1. A ot4er issue r)ise+ or +e-e se r)ise+ .)s t4)t ,)(+)lo :r) #iso 4)s ot #om/lie+ .it4 4is obli()tio i t4e #o tr)#t1 t4ere-ore 4e s4oul+ 4)3e o ri(4t to res#i +. :or res#issio to be ) reme+y1 or ) y reme+y to be i 3o6e+1 t4e /)rty #l)imi ( t4e reme+y must 4imsel- 4)3e #om/lie+ .it4 4is obli()tio . Ot4er.ise1 4e #oul+ ot #l)im to be t4e )((rie3e+ /)rty. <o. #oul+ 4e be t4e i 2ure+ /)rty i- 4e +i+ ot #om/ly .it4 4is obli()tio . Si #e bot4 4)3e ot #om/lie+1 bot4 )re )lre)+y i +el)y1 ) + t4ere-ore1 o o e .oul+ be i +el)y1 ) + res#issio ) + #) #ell)tio .oul+ ot be ) 3)li+ +e-e se or reme+y. T4ere-ore1 t4e Su/reme Court 4)s to +etermi e .4et4er or ot ,)(+)lo :r) #is#o 4)s )lre)+y #om/lie+ .it4 4is obli()tio . I t4is #)se1 ,)(+)lo :r) #is#o 4)+ t4e obli()tio to +eli3er t4e -ormul) i t4e C)tsu/ to U:C. <o.e3er1 ,: #l)ime+ t4)t 4is obli()tio to +eli3er is o ly to )llo. U:C t4e use o- t4e -ormul) ) + ot o- o. ers4i/. I or+er -or ,: to ret)i #o trol o3er t4e -ormul) 4e is bot4 t4e #4emist ) + )t t4e s)me time 4e .)s t4e o ly o e i si+e t4e l)bor)tory -or t4e /ur/ose o- m)6i ( t4e #)tsu/. T4is .)s t4e #ore issue o .4et4er or ot ,: 4)+ t4e obli()tio to +eli3er or tr) s-er o. ers4i/ o3er t4e -ormul). U/o #loser s#ruti y ot4e +ee+ o- )ssi( me t it .)s /ro3i+e+ t4)t F,: .)s su//ose+ to tr) s-er )ll 4is ri(4tsG but t4e SC rule+ t4)t .4)t is tr) s-erre+ is o ly t4e use o- t4e #)tsu/1 4e #e t4ere .)s o obli()tio to +eli3er o. ers4i/. <o.e3er1 my /ro-essor is o- t4e 3ie. t4)t #o si+eri ( t4e .or+s use+ i t4e +ee+1 is t4)t ,: is su//ose+ to tr) s-er )ll 4is ri(4ts1 t4ere-ore it i #lu+es tr) s-er o- o. ers4i/. W4)t #oul+ be ) better ri(4t t4) t4e ri(4t to o. ers4i/. T4e it s4oul+ be rule+ t4)t ,: 4)s t4e obli()tio to tr) s-er o. ers4i/. <o.e3er1 )si+e -rom t4)t issue1 t4e Su/reme Court is im/e##)ble o t4e issue t4)t .4e ,: 4)s o obli()tio to tr) s-er o. ers4i/1 t4e o +eli3ery ot4e -ormul) to U:C +oes ot m)6e ,: ot bei ( )ble to #om/ly .it4 4is obli()tio 1 i -)#t 4e 4)s o obli()tio to +eli3er o. ers4i/. <e #e1 4e is )ble to #om/ly .it4 .4)t is i #umbe t u/o 4im .4i#4 is to

An action for rescission was filed, the defense raised was the action had already prescribed because the action had already prescribed year from the date of the contract, was this a $alid defense? It +e/e +s o t4e )ture o- t4e )#tio . T4is is

be#)use t4ere )re $ 6i +s o- res#issio . T4e res#issio u +er Art. 11&1 ) + Art. 1=J% ) + 1=J1 u +er res#issible #o tr)#ts. Res#issio u +er Art. 11&1 s4oul+ 4)3e bee #)lle+ resolutio . T4is is ot t4e ri(4t res#issio 1 be#)use res#issio i t4e /ro/er se se is u +er res#issible #o tr)#ts. T4us i- t4is )#tio -or res#issio .)s -ile+ u +er Art. 1=J% ) + 1=J1 t4e +e-e se m)y 4)3e bee #orre#t be#)use it s4oul+ 4)3e bee -ile+ .it4i ; ye)rs -rom t4e +)te o- t4e #o tr)#t. T4e +e-e se s4oul+ 4)3e bee #orre#t1 4o.e3er1 t4e res#issio .)s -ile+ be#)use obre)#4 o- t4e #o tr)#t1 ) + i- t4ere is bre)#4 or -)ilure to #om/ly1 t4e )#tio .oul+ -)ll u +er Art. 11&1. O- #ourse u +er Art. 11&11 it is ot ) y 6i + obre)#4 t4)t m)y be t4e sub2e#t o- res#issio but subst) ti)l bre)#4 or -u +)me t)l bre)#4. Sli(4t bre)#4 or #)su)l bre)#4 #) ot be t4e b)sis o- ) )#tio -or res#issio u +er Art. 11&1. :urt4ermore1 u +er Art. 11&1 it is ) subst) ti)l reme+y. W4ere)s i Art. 1=J11 it is merely ) subsi+i)ry reme+y .4i#4 me) s t4)t it m)y be i 3o6e+ .4e t4e )+3erse /)rty 4)+ o ot4er le()l reme+y. <e #e1 Art. 1=J1 is merely ) l)st resort. :nder Art& %F , is there a need for a breach for rescission to be in$o=ed? No. T4e re)so .4y res#issio is ) reme+y u +er Art. 1=J1 is be#)use o- omissio or e#o omi# /re2u+i#e !U:C 3s. CA'. T4ere-ore1 u +er Art. 1=J1 t4e )#tio o- res#issio m)y /ros/er e3e i- t4ere is o bre)#4 i t4e obli()tio be#)use o- omissio or e#o omi# /re2u+i#e -or e5)m/le t4e )#t .)s i -r)u+ o- #re+itors. U i3ers)l :oo+ Cor/. 3s. CA I t4is #)se1 o e o- t4e +e-e ses r)ise+ .)s t4)t ,)(+)lo :r) #is#o 4)s ot e54)uste+ 4is )3)il)ble

)llo. U:C to use t4e -ormul). I t4is #)se1 4e m)y ri(4t-ully res#i + t4e #o tr)#t )s 4e is ot i +el)y1 ) + it is o ly U:C is i +el)y. ,n the case of 7Jhong 8 rescission was in$o=ed here because the buyer of molasses failed to pay the price agreed upon& Dowe$er the buyer offered to pay the seller "! days thereafter& Dowe$er, the seller did not accept the payment and told the buyer that the contract had already been rescinded& Was the rescission $alid? No. U +er t4e #ir#umst) #es t4e +el)y o- =% +)ys .)s ot ) -u +)me t)l bre)#4 or ) subst) ti)l bre)#4 ) + t4ere-ore #) ot be t4e b)sis o- ) )#tio -or res#issio . <o.e3er1 it must be ote+ t4)t +e/e +i ( o t4e #ir#umst) #es1 $% +)ys m)y )lre)+y be #o si+ere+ ) subst) ti)l bre)#4 i- t4e (oo+s is ) /eris4)ble (oo+s. A + )s +e#i+e+ i o e #)se1 t4e +eli3ery o/)+lo#6s to t4e CO,ELEC to be use+ i t4e ele#tio 1 but +eli3ere+ )-ter t4e ele#tio 1 it is #o si+ere+ ) subst) ti)l bre)#4. 55 " remedies under Art& ) 9

,s rescission a$ailable in unilateral obligations? No1 it is o ly )3)il)ble i re#i/ro#)l obli()tio s. I Res#issio t4e /)rty i 3o6i ( t4e s)me is -or t4e /ur/ose o- m)6i ( t4e /erso ot to #om/ly .it4 4is o. obli()tio . It is ot )3)il)ble to ) ot4er /)rty .4o re-uses to #om/ly .it4 4is obli()tio . T4e e--e#t o- res#issio t4ere-ore is -or t4e /erso .4o i 3o6es t4e s)me ot to #om/ly .it4 4is o. obli()tio . :ul-illme t or S/e#i-i# @er-orm) #e .he issue here is that if the aggrie$ed party to a contract in$ol$ing reciprocal obligations, for example has already in$o=ed fulfillment, may he thereafter be able to rescind the obligation? 5r if a person in$o=es rescission, can he thereafter demand fulfillment? A /erso i 3o6i ( -ul-illme t m)y l)ter o res#i + it4e -ul-illme t o- t4e obli()tio 4)s be#ome im/ossible. T4is i- e5/ressly (r) te+ u +er t4e l).. Note 4o.e3er1 t4e im/ossibility o- /er-orm) #e .)s to be +ue to t4e -)ult o- t4e +ebtor. I- t4e im/ossibility o- /er-orm) #e .)s +ue to t4e -)ult ot4e #re+itor1 o- #ourse 4e .ill ot 4)3e t4e ri(4t to res#i +1 or i- .)s +ue to ) -ortuitous e3e t1 t4e 4e .oul+ ot be ) )((rie3e+ /)rty1 t4ere-ore 4e .oul+ ot 4)3e t4e ri(4t to res#i +. I t4e se#o + s#e )rio .4ere t4e l). .)s sile t )s .4e ) )((rie3e+ /)rty .4o e5er#ise+ 4is ri(4t to res#i +1 t4ere is o more obli()tio to be -ul-ille+ si #e t4e e--e#t o- res#issio is to e5ti (uis4 t4e obli()tio . <e #e1 t4ere is ot4i ( more to be -ul-ille+. T4is is t4e ruli ( o- t4e Su/reme Court i t4e #)se o- ,)(+)le ) Est)te 3s. ,yri#6. T4e e--e#t o- res#issio .it4 res/e#t to re#i/ro#)l obli()tio is mutu)l restitutio .4i#4 me) s t4)t t4e rel)tio s4i/ .ill be re3erte+ b)#6 to t4eir st)tus /rior to t4e time .4ere t4e /)rties )(ree+ to t4eir obli()tio s. Eay the court after an action for rescission was filed allow the other party to perform the obligation? 7es. T4e #ourt m)y (r) t t4e +ebtor to /er-orm 4is obli()tio . T4is is 6 o. )s t4e 2u+i#i)l /erio+. 55 A obliged himself to deli$er to B a refrigerator with motor number wxy "%, and a brand new sony bra$ia *!- AC/ .K& A obliged himself to repair the piano of B& 6one of these were performed by A& Can the court compel A to

U +er Art. 11&1 it /ro3i+es -or t.o reme+ies1 )melyC 1' res#issio ) + $'-ul-illme t. Res#issio Res#issio 4ere is ) /ri #i/)l reme+y ) + is e5/ressly (r) te+ by l).. I t4e #)se o- U@ 3s. +e Los A (eles1 t4is reme+y #) be i 3o6e+ e5tr)2u+i#i)lly. I 2u+i#i)l res#issio 1 .4e t4e /)rty i 3o6es t4e s)me1 ) + it 4)s bee t4e sub2e#t o- )//e)l to t4e Su/reme Court = ye)rs )-ter1 t4e e--e#t ores#issio is re#6o e+ -rom t4e time o- i 3o#)tio o- t4e res#issio ) + ot o ) l)ter +)te. ,n what instance where <udicial rescission is re0uired? It is re0uire+ .4e ) /erso i 3o6i ( res#issio .) te+ t4e +e-e +) t to +o somet4i (1 or to #om/el 4im to +o somet4i (. T4is is so be#)use ) /erso #) ot t)6e t4e l). i to 4is o. 4) +s. I- 4o.e3er1 t4e /erso i 3o6i ( res#issio i or+er -or 4im to (r) t t4e #o tr)#t to ) ot4er /erso 1 t4e e5tr)2u+i#i)l res#issio .oul+ su--i#e.

perform these obligations? ,f not, what are the remedies of B? T4e reme+ies 4ere .oul+ +e/e + o t4e )ture ot4e obli()tio . T4e -irst t.o )re obli()tio s to (i3e1 t4e -irst is ) +etermi )te t4i (1 .4ile t4e ot4er is ) i +etermi )te or (e eri# t4i (. T4e l)st o e is ) obli()tio to +o. Wit4 res/e#t to t4e re-ri(er)tor1 ) +etermi )te t4i ( .4i#4 is /)rti#ul)rly +esi( )te+ -rom )ll ot4er o- its 6i +1 t4e #re+itor #) #om/el 4im t4rou(4 ) )#tio -or s/e#i-i# /er-orm) #e. <o.e3er1 t4is )#tio is o lo (er )3)il)ble .4e t4e 3ery ob2e#t is )lre)+y o. e+ by ) ot4er /erso .4o bou(4t it i (oo+ -)it4 ) + -or 3)lue1 or .4e t4e ob2e#t .)s )lre)+y +estroye+. Wit4 res/e#t to t4e LC" TV t4e #re+itor m)y #om/el t4e +ebtor to +eli3er t4e TV e3e i- lost or +estroye+ or su#4 ob2e#t 4)s bee o. e+ by ) ot4er /erso be#)use it is ) (e eri# t4i (. T4e +ebtor m)y be #om/elle+ to +eli3er ) ;%G LC" TV o- t4e s)me 6i + ) + 0u)lity1 )t t4e e5/e se o- t4e +ebtor. Wit4 res/e#t to t4e re/)ir o- t4e /i) o1 t4e #ourt #) ot #om/el A to /er-orm t4e obli()tio be#)use it .oul+ 3iol)te 4is ri(4t )()i st i 3olu t)ry ser3itu+e. T4e reme+y o- B t4ere-ore1 u +er t4e l). .it4 res/e#t to obli()tio s to +o is t4)t t4e #re+itor m)y 4)3e t4)t t)s6 /er-orme+ by ) ot4er /erso )t t4e e5/e se o- t4e +ebtor. T4is is #)lle+ ) )#tio -or substitute /er-orm) #e. But ote t4)t ot )ll obli()tio s to +o1 substitute /er-orm) #e is )3)il)ble1 be#)use t4ere )re obli()tio s to +o t4)t o ly t4e +ebtor #) /er-orm1 be#)use o- t4e /erso )l 0u)li-i#)tio s o- t4e +ebtor 4)s bee #o si+ere+1 ) + .ill o ly e title t4e #re+itor -or +)m)(es. I )ll t4ese reme+ies1 +)m)(es #) be #l)ime+. :nder Art& '' there are two remedies which are both subsidiary, what are those? ). To im/u( t4e )#ts .4i#4 t4e +ebtor .oul+ 4)3e +o e to +e-r)u+ t4em is )#tu)lly res#issio u +er Art. 1=J1. T4ese )re #o tr)#ts i -r)u+ o#re+itors. b. A##io Subro()tori) .4i#4 is to e5er#ise )ll t4e ri(4ts ) + bri ( )ll t4e )#tio s o- t4e +ebtor )s )()i st t4ir+ /erso s. T4ere-ore t4e /erso s i 3ol3e+ 4ere )re t4e +ebtors .4o .oul+ be subro()te+ i t4e ri(4ts o- t4e #re+itor )s )()i st t4ir+ /erso . T4e t4ir+ /erso is t4e +ebtor o- t4e +ebtor.

<o.e3er1 ot )ll t4e ri(4ts o- ) +ebtor )s )()i st t4ir+ /erso s4)ll be t4e sub2e#t o- subro()tory )#tio Be#)use t4ere )re ot4er ri(4ts .4i#4 )re /urely /erso )l i )ture. Ge er)lly1 /ro/erty ri(4ts m)y be t4e sub2e#t osubro()tio 1 e5#e/t (o3er me t /e sio s be#)use it (oes i to t4e e5iste #e o- ) /erso 1 4e #e #) ot be ) subro()tory )#tio . Can the creditors ha$e all the properties of the debtor le$ied upon and sold in an execution sale? Not )ll t4e /rese t /ro/erties m)y be le3ie+ u/o . Be#)use t4ere )re #ert)i /ro/erties )re #o si+ere+ by l). ) + t4e rules o- #ourt to be e5em/t -rom e5e#utio . Eay future properties of the debtor be le$ied upon by the creditor in an execution sale? As ) rule1 yes. I sol3e #y o- ) +ebtor )s ) -)#t +oes ot e5ti (uis4 ) +ebtors obli()tio . <o.e3er1 i- t4ere is ) 2u+i#i)l +e#l)r)tio o- su#4 i sol3e #y ) + t4e #ourt )bsol3e+ 4im -rom t4is obli()tio t4e 4is obli()tio s )re e5ti (uis4e+. U +er t4e l)tter s#e )rio1 t4e #re+itors #) o lo (er re)#4 t4e +ebtors -uture /ro/erties. T4us1 t4e e umer)tio /ro3i+e+ i Art. 1$=1 is ot e5#lusi3e1 be#)use ) 2u+i#i)l +e#l)r)tio oi sol3e #y ) + t4e #ourt )bsol3e+ t4e +ebtor o- 4is obli()tio 1 t4e obli()tio is )lso e5ti (uis4e+. Asi+e -rom t4ose me tio e+ i Art. 1$=11 .4i#4 /ro3i+es -or 1% mo+es o- e5ti (uis4me t oobli()tio 1 2u+i#i)l +e#l)r)tio .4i#4 )re ot )mo ( t4ose me tio e+ m)y )lso be ) mo+e oe5ti (uis4i ( t4e obli()tio 1 t4e )rri3)l o- ) resolutory /erio+1 ) + mutuum +i#e #io or mutu)l +esist) #e.
Art& #>& When what is to be deli$ered is a determinate thing, the creditor, in addition to the right granted him by Article '!, may compel the debtor to ma=e the deli$ery& 4f the thing is in eterminate or generic, he ma# as) that the obligation be complie !ith at the e'pense of the ebtor. 4f the obligor ela#s, or has promise to eliver the same thing to t!o or more persons !ho o not have the same interest, he shall be responsible for an# fortuitous event until he has effecte the eliver#. +10/*Art. 11**. 2he obligation to give a eterminate thing inclu es that of elivering all its accessions an

accessories, even though the# ma# not have been mentione . +10/.aArt. 11*.. 4f a person oblige to o something fails to o it, the same shall be e'ecute at his cost. 2his same rule shall be observe if he oes it in contravention of the tenor of the obligation. ?urthermore, it ma# be ecree that !hat has been poorl# one be un one. +10/,Art. 11*,. &hen the obligation consists in not oing, an the obligor oes !hat has been forbi en him, it shall also be un one at his e'pense. +10//aArt. 11.0. 2hose !ho in the performance of their obligations are guilt# of frau , negligence, or ela#, an those !ho in an# manner contravene the tenor thereof, are liable for amages. +1101Art. 11... 2he cre itors, after having pursue the propert# in possession of the ebtor to satisf# their claims, ma# e'ercise all the rights an bring all the actions of the latter for the same purpose, save those !hich are inherent in his person7 the# ma# also impugn the acts !hich the ebtor ma# have one to efrau them. +1111Art. 11.,. %ub1ect to the la!s, all rights ac"uire in virtue of an obligation are transmissible, if there has been no stipulation to the contrar#. +1112Art. 11/1. 2he po!er to rescin obligations is implie in reciprocal ones, in case one of the obligors shoul not compl# !ith !hat is incumbent upon him. 2he in1ure part# ma# choose bet!een the fulfillment an the rescission of the obligation, !ith the pa#ment of amages in either case. :e ma# also see) rescission, even after he has chosen fulfillment, if the latter shoul become impossible. 2he court shall ecree the rescission claime , unless there be 1ust cause authori$ing the fi'ing of a perio . 2his is un erstoo to be !ithout pre1u ice to the rights of thir persons !ho have ac"uire the thing, in accor ance !ith Articles 13,( an 13,, an the 5ortgage ;a!. +1124Art. 11/2. 4n case both parties have committe a breach of the obligation, the liabilit# of the first infractor shall be e"uitabl# tempere b# the courts. 4f it cannot be etermine !hich of the parties first violate the contract, the same shall be eeme e'tinguishe , an each shall bear his o!n amages. +n-

pension or gratuit# from the government is sub1ect to attachment or e'ecution. +nArt. 1.0,. 2he laborer3s !ages shall not be sub1ect to e'ecution or attachment, e'cept for ebts incurre for foo , shelter, clothing an me ical atten ance. Art. 1(3 +?C-. 2he famil# home is eeme constitute on a house an lot from the time it is occupie as a famil# resi ence. ?rom the time of its constitution an so long as an# of its beneficiaries actuall# resi es therein, the famil# home continues to be such an is e'empt from e'ecution, force sale or attachment e'cept as hereinafter provi e an to the e'tent of the value allo!e b# la!. +223aArt. 1(( +?C-. 2he famil# home shall be e'empt from e'ecution, force sale or attachment e'cept: !1' ?or nonpa#ment of ta'es7+2- ?or ebts incurre prior to the constitution of the famil# home7 !=' ?or ebts secure b# mortgages on the premises before or after such constitution7 an ?or ebts ue to laborers, mechanics, architects, buil ers, materialmen an others !ho have ren ere service or furnishe material for the construction of the buil ing. +243a-

!;'

6ule 3/ %ec 13, Civil =roce ure 9 =ropert# e'empt from e'ecution. @'cept as other!ise e'pressl# provi e b# la!, the follo!ing propert#, an no other, shall be e'empt from e'ecution: !)' 2he 1u gment obligor3s famil# home as provi e b# la!, or the homestea in !hich he resi es, an lan necessaril# use in connection there!ith7 !b' Or inar# tools an implements personall# use him in his tra e, emplo#ment, or livelihoo 7 b#

!#' 2hree horses, or three co!s, or three carabaos, or other beasts of bur en such as the 1u gment obligor ma# select necessaril# use b# him in his or inar# occupation7 !+' :is necessar# clothing an articles for or inar# personal use, e'clu ing 1e!elr#7 !e' :ousehol furniture an utensils necessar# for house)eeping, an use for that purpose b# the 1u gment obligor an his famil#, such as the 1u gment obligor ma# select, of a value not e'cee ing one hun re thousan pesos7 !-' =rovisions for in ivi ual or famil# use sufficient for four months7 !(' 2he professional libraries an e"uipment of 1u ges, la!#ers, ph#sicians, pharmacists, entists, engineers, surve#ors, clerg#men, teachers, a n o t h e r professionals, not e'cee ing three hun re thousan pesos in value7 !4' One fishing boat an accessories not e'cee ing the total value of one hun re thousan pesos o!ne b#

Art. 223*. 2he ebtor is liable !ith all his propert#, present an future, for the fulfillment of his obligations, sub1ect to the e'emptions provi e b# la!. +1/11aArt. 302. Neither the right to receive legal support nor an# mone# or propert# obtaine as such support or an#

a fisherman an b# the la!ful use of !hich he earns his livelihoo 7 !i' %o much of the salaries, !ages, or earnings of the 1u gment obligor of his personal services !ithin the four months prece ing the lev# as are necessar# for the support of his famil#7 !2' ;ettere gravestones7 !6' 5onies benefits, privileges, or annuities accruing or in an# manner gro!ing out of an# life insurance7 !l' 2he right to receive legal support, or mone# or propert# obtaine as such support, or an# pension or gratuit# from the Aovernment7 !m' =roperties speciall# e'empt b# la!. But no article or species of propert# mentione in his section shall be e'empt from e'ecution issue upon a 1u gment recovere for its price or upon a 1u gment of foreclosure of a mortgage thereon.

.ill be +em) +i ( -or ) ot4er -or t4e /er-orm) #e o- ) ot4er obli()tio . <e #e1 t4ere is o3)tio .4e t4ere is ) #4) (e i t4e ob2e#t o- t4e obli()tio . <e #e -rom t4e -ore(oi (1 t4is .oul+ ot be #o si+ere+ ) se/)r)te ) + +isti #t mo+e. O e ot4er .4i#4 is )lle(e+ly m)y be #o si+ere+ to be ) mo+e o- e5ti (uis4me t o- obli()tio .oul+ be #om/romise. T4is .oul+ )//e)r to be ) ot4er mo+e o- e5ti (uis4me t se/)r)te ) + +isti #t t4) t4)t me tio e+ i Art. 1%=1. It is ) ot4er mo+e oe5ti (uis4me t be#)use t4e e--e#t o- ) #om/romise )(reeme t. Or+i )rily it .oul+ o ly +e#re)se t4e li)bility o- t4e +ebtor. As i t4e #)se o- Ro 0uillo 3s. CA1 t4e li)bility .)s +e#re)se+ -rom 1?% to 11%. T4us1 ) #om/romise )(reeme t is o ly ) /)rti)l e5ti (uis4me t. Is t4is ot ) se/)r)te ) + +isti #t mo+e> No be#)use it .oul+ -)ll u +er #o +o )tio or remissio . <o.e3er1 #) t4ere be ) #om/romise .4ere t4e ob2e#t o- t4e obli()tio #) be #4) (e+> 7es1 su#4 )s .4e t4e obli()tio to +eli3er ) 4orse .)s #4) (e+ to ) l)/to/. Woul+ it be #o si+ere+ ) se/)r)te ) + +isti #t obli()tio ot4er t4) t4ose me tio e+> No1 be#)use it .oul+ -)ll u +er o3)tio . Eay the unilateral act of one of the parties extinguish the obligation? 7es it m)y1 4o.e3er i #o tr)#ts1 )s ) rule it #) ot. T4e u il)ter)l )#t o- o e o- t4e /)rties .ill ot e5ti (uis4 t4e obli()tio )risi ( -rom #o tr)#ts1 be#)use it .oul+ 3iol)te t4e -u +)me t)l /ri #i/le i #o tr)#ts 6 o. )s t4e mutu)lity o- #o tr)#ts1 e5#e/t o t4ose #o tr)#ts .4i#4 )re b)se+ o trust ) + #o -i+e #e su#4 )s .4e t4e l). (r) t ) /)rty to ) #o tr)#t t4e ri(4t to termi )te t4e obli()tio )risi ( t4ere-rom. :or e5)m/le1 ) #o tr)#t o)(e #y. U +er t4e l). t4e /ri #i/)l #) termi )te t4e )ut4ority o- t4e )(e t ) + t4us e5ti (uis4 t4e #o tr)#t1 ) + t4ereby t4e obli()tio s )risi ( -rom it by re3o#)tio .4i#4 is t4e )#t o- t4e /ri #i/)l. A + t4e )(e t m)y )lso termi )te t4e obli()tio by .it4+r).)l. ,s a happening of a fortuitous e$ent a mode of extinguishment? No. T4e Su/reme Court 4)s #o siste tly rule+ t4)t ) 4)//e i ( o- ) -ortuitous e3e t is ot ) mo+e oe5ti (uis4me t. R)t4er it is t4e e--e#t o- t4e 4)//e i ( o- t4e -ortuitous e3e t .4i#4 is t4e im/ossibility o- /er-orm) #e1 i- it .oul+ 4)3e su#4 e--e#t1 or t4e loss o- t4e t4i ( +ue .4i#4 is ) mo+e o- e5ti (uis4me t. Li6e.ise1 i- t4ere is ) obli()tio to +eli3er ) (e eri# t4i ( or /)y ) sum o- mo ey1 t4e s)me .oul+ ot li6e.ise e5ti (uis4 t4e obli()tio e3e i-

Eodes of 3xtinguishment of 5bligations

Art. 1231. Obligations are e'tinguishe : !1' B# pa#ment or performance: !$' B# the loss of the thing ue: +3- B# the con onation or remission of the ebt7 +4- B# the confusion or merger of the rights of cre itor an ebtor7 +(- B# compensation7 +*- B# novation.

Asi+e -rom t4ose me tio e+ i Art. 1%=11 +e)t4 oo e o- t4e /)rty m)y )lso e5ti (uis4e+ ) obli()tio )s 3ie.e+ by some )ut4ors. But @ro-essor Tole ti o is o- t4e 3ie. t4)t obli()tio is ot e5ti (uis4e+ by t4e +e)t4 o- o e o- t4e /)rties. But CU belie3e+ t4)t t4e st)teme t o- @ro-. Tole ti o )//ly o ly to #o tr)#ts1 be#)use )s ) e5)m/le -or obli()tio s )risi ( -rom l).1 it is t4e l). .4i#4 .oul+ +etermi e i- t4e +e)t4 o- o e ot4e /)rties .ill e5ti (uis4 t4e obli()tio . As to #o tr)#ts1 )s ) rule +e)t4 o- ) /)rty +oes ot e5ti (uis4 t4e obli()tio )risi ( -rom #o tr)#ts be#)use u +er Art. 1=11 obli()tio s )risi ( -rom #o tr)#ts1 ri(4ts ) + obli()tio )re tr) smissible to t4e 4eirs or to t4e est)te1 ) + t4ere-ore t4ey )re ot e5ti (uis4e+. O t4e ot4er 4) +1 it .)s s)i+ t4)t re u #i)tio by ) #re+itor is ) mo+e o- e5ti (uis4me t. T4is is #o si+ere+ )s ot4er #)uses. I- it is #o si+ere+ )s ot4er #)uses it is im/lie+ t4)t it is ot #o3ere+ by t4ose me tio i Art. 1$=1. T4e #i3il #o+e 4o ors re u #i)tio )s ) (r)tuitous or ) o erous )#t. Ire u #i)tio is ) (r)tuitous )#t1 #le)rly it .oul+ -)ll u +er #o +o )tio . I- re u #i)tio is -or ) #o si+er)tio 1 t4e t4is .oul+ ri(4t-ully -)ll u +er o3)tio . By t4e 1 4e .oul+ .)i3e 4is ri(4t1 but 4e

t4e t4i ( is lost be#)use t4e (e us +oes ot /eris4. T4is is o- #ourse )s ) rule. I- t4ere is ) obli()tio to +eli3er ) +etermi )te t4i ( .oul+ ot e#ess)rily resu l t t o t 4 e e5ti (uis4me t o- t4e obli()tio i- t4e s)me is lost t4rou(4 ) -ortuitous e3e t. I- t4e -ortuitous e3e t +oes ot )--e#t t4e t4i ( .4i#4 is to be +eli3ere+. <o.e3er i- t4e -ortuitous e3e #)use+ t4e im/ossibility o- t4e /er-orm) #e1 t4e it .ill e5ti (uis4e+ t4e obli()tio . It is t4e im/ossibility o/er-orm) #e .4i#4 is t4e mo+e o- e5ti (uis4me t ) + ot t4e -ortuitous e3e t. T4is im/ossibility o/er-orm) #e is #o si+ere+ by @ro-. Tole ti o )s ullity o- #o tr)#ts. But CU is o- t4e 3ie. t4)t it #) ot be #o si+ere+ )s ) mo+e o- e5ti (uis4me t be#)use .4e ) #o tr)#t is ull ) + 3oi+ t4ere is ot4i ( to e5ti (uis4. I- t4ere is ) #4) (e i #i3il st)tus t4ere m)y be ) obli()tio .4i#4 m)y be e5ti (uis4e+ .4i#4 is t4e obli()tio to (i3e su//ort. I- t4e m)rri)(e is +e#l)re+ ull ) + 3oi+ or i- t4ere is le()l se/)r)tio 1 ) s/ouse m)y o lo (er 4)3e t4e obli()tio to (i3e su//ort. Note 4o.e3er1 t4e #ourt m)y or+er t4e (uilty s/ouse to #o ti ue .it4 t4e su//ort. @)yme t or @er-orm) #e @)yme t is sy o ymous to /er-orm) #e t4)t e3e ) obli()tio to +o m)y be e5ti (uis4e+ by /)yme t. Alt4ou(4 t4ere is ) 3ie. t4)t .4e t4e #o+e .)s bei ( +r)-te+ /)yme t is o ly limite+ o ly to mo et)ry obli()tio s but t4ose .4o )+3o#)te+ t4is 3ie. +i+ ot su##ee+. T4is m o + e o - e5ti (uis4i ( ) obli()tio is )//li#)ble to ) y 6i + o- obli()tio 1 e3e obli()tio s ot to +o1 )s lo ( 4e is ot +oi ( .4)t 4e is su//ose+ to +o 4e is )#tu)lly -ul-illi ( 4is obli()tio . @)yme t +oes ot e#ess)rily /ert)i to ) mo et)ry obli()tio . To +etermi e .4et4er ) obli()tio is e5ti (uis4e+ by /)yme t1 or to +etermi e .4et4er /)yme t is ) 3)li+ /)yme t or ot1 it .oul+ be (oo+ to #l)ssi-y t4e rules o- /)yme t i to ;1 1. T4ere )re rules .4i#4 /ert)i to t4e /erso .4o /)ys. $. T4ere )re rules .4i#4 /ert)i to t4e /erso to .4om /)yme t is m)+e. =. T4ere )re rules .4i#4 /ert)i to t4e /rest)tio to be /er-orme+1 or to t4e t4i ( to be +eli3ere+. ;. T4ere )re rules .4i#4 /ert)i to t4e +)te1 time1 /l)#e ) + m) er o- /)yme t. All t4ese rules .ill 4)3e to be #om/lie+ i or+er t4)t /)yme t m)y e5ti (uis4 t4e obli()tio .

To t4e /erso .4o /)ys ee+ ot be t4e +ebtor1 su#4 )s t4ir+ /)rty /)yme t. Also t4e /erso to .4om t4e /)yme t is m)+e ee+ ot be t4e #re+itor. <e is #)lle+ t4e /)yee. As to t4e /erso .4o /)ys1 t4e re0uireme ts o- t4e l). to e5ti (uis4 t4e obli()tio @)yme t by ) mi or m)y e5ti (uis4 t4e obli()tio es/e#i)lly i obli()tio )risi ( -rom 0u)si +eli#t. <o.e3er /)yme t by ) mi or m)y li6e.ise ot e5ti (uis4 t4e obli()tio be#)use t4ere )re /)yme ts .4i#4 m)y o ly be m)+e by t4e /erso .4o 4)s t4e #)/)#ity to )lie )te 4is /ro/erties. @)yme t m)y be m)+e by t4e mi ors (u)r+i) 1 or i- t4ere is o e to #ourt m)y )//oi t ) (u)r+i) )+ litem. I- t4e mi or .) te+ to /)y or e5ti (uis4 4is obli()tio 1 .4o m)y 0uestio 4is #)/)#ity to m)6e /)yme t> T4e ot4er #re+itors. Se#o +ly1 ) /erso .4o .4o /)ys must )lso 4)3e t4e -ree +is/os)l o- 4is /ro/erty. <e #e1 ) /erso su--eri ( -rom #i3il i ter+i#tio #) ot 3)li+ly -ul-ill or /)y 4is +ebts be#)use 4e 4)s o -ree +is/os)l o4is /ro/erty. ,f A is indebted to B and X offered to pay B& Eay this extinguish the obligation? T4e obli()tio m)y be e5ti (uis4e+ i- B )##e/ts. T4ou(4 4e m)y ot be #om/elle+1 4e m)y .) t to )##e/t. A #re+itor )s ) rule m)y ot )##e/t /er-orm) #e -rom ) t4ir+ /erso 1 e5#e/tC ). by sti/ul)tio b. i- t4e t4ir+ /erso 4)s ) -ul-illme t o- t4e obli()tio . i terest i t4e

Why cant a creditor be compelled to accept payment or performance? I ) obli()tio to +o1 ) #re+itor m)y ot .) t to )##e/t /er-orm) #e -rom ) /erso .it4 .4om t4e #re+itor +oes ot .) t to m)6e t4e /er-orm) #e1 /rob)bly by t)6i ( i to #o si+er)tio t4e /erso )l #ir#umst) #es o- t4e +ebtor. I ) obli()tio s to (i3e1 t4e #re+itor m)y ot li6e.ise be #om/elle+ to )##e/t /)yme t -rom ) /erso ot4er t4) t4e ori(i )l +ebtor1 /rob)bly be#)use t4e mo ey #omi ( -rom ) ot4er /erso m)y /rob)bly #ome -rom +ru(s or t4e mo ey is #ou ter-eit. Who are these persons who ha$e an interest in the fulfillment of the obligation other than the debtor?

@erso s .it4 I terest i t4e /)yme t )re t4ose .4o )re subsi+i)rily li)ble li6e1 (u)r) tors1 mort()(ors1 or /le+(ors. T4ey 4)3e ) i terest be#)use i- t4e obli()ito is ot #om/lie+ t4eir /ro/erty m)y be lost. ,f there are > debtors in an obligation to pay !!,!!! can any one of the debtors compel acceptance from the creditors the payment of the entire of the obligation? T4ere s4oul+ be o +eb)te i soli+)ry obli()tio s be#)use i ) soli+)ry obli()tio s1 ) y o e o- t4e +ebtors #) be #om/elle+ to /er-orm t4e -ul-illme t o- t4e e tire obli()tio . As to #o-2oi t +ebtors #) )lso #om/el t4e #re+itor to )##e/t /)yme t o- t4e e tire obli()tio 1 i- t4e #o2oi t +ebtors 4)s ) i terest i t4e -ul-illme t o- t4e obli()tio . E3e 4e #) ot be #om/elle+ to /)y t4e e tire1 4e 4)s ) i terest i t4e /er-orm) #e o- t4e obli()tio . What if a person who has no interest in the fulfillment of the obligation, yet he paid the creditor $oluntarily the payment of the entire obligation, can the creditor be compelled to accept payment of the entire obligation? Can the person who paid, $alidly d e m a n d reimbursement from one of the principal debtors? .hird if the one who paid cannot $alidly ma=e the demand from the debtors, can X go after the guarantors? T4e #re+itor #) ot be #om/elle+ be#)use t4e o e /)yi ( +oes ot 4)3e ) i terest1 but 4e m)y )##e/t. Assumi ( 4e )##e/ts1 t4e o e .4o /)i+ #l)ims reimburseme t t4e -ollo.i ( obser3)tio s )re see C As to t4e +em) + -or reimburseme t1 t4e ) s.er .oul+ +e/e + o .4et4er t4e /)yme t .)s m)+e .it4 or .it4out t4e 6 o.le+(e or )()i st t4e .ill!t4ere-ore .it4out #o se t' o- t4e /ri #i/)l +ebtors1 t4e i su#4 i st) #e .4e t4ere is o 6 o.le+(e1 t4e o e .4o /)i+ m)y or m)y ot 3)li+ly +em) + reimburseme t. I- t4ere is 6 o.le+(e or #o se t1 t4e /erso .4o /)i+ m)y 3)li+ly +em) + .it4out issue. Wit4 res/e#t .it4 t4e i st) #e .4ere t4ere is o 6 o.le+(e1 u +er t4e l).1 t4e o e .4o /)i+ m)y o ly +em) + reimburseme t -rom o e o- t4e /ri #i/)l +ebtors o ly to t4e e5te t t4)t 4e m)y be be e-ite+. <ere1 o e o- t4e /ri #i/)l +ebtor m)y 4)3e /re3iously /)i+ ) /)rt o- t4e +ebt1 4e #e to be )s6e+ -or reimburseme t o- t4e )mou t /)i+ by su#4 t4ir+ /erso m)y .or6 to t4e /re2u+i#e o- o e o- t4e /ri #i/)l +ebtors +em) +e+ o- reimburseme t1 )s

4e #) o ly reimburse t4e )mou t -rom .4i#4 4e .)s be e-ite+. X demanded for reimbursement under the same scenario 7has no interest8, and he cannot demand reimbursement, may X foreclose the mortgage? No. W4e 8 /)i+ t4e #re+itor1 t4e obli()tio is e5ti (uis4e+. It +oes ot m)tter .4et4er t4e +ebtor #o se te+ /)yme t or ot. T4e -)#t t4)t t4e #re+itor )##e/te+ /)yme t1 t4e obli()tio is e5ti (uis4e+. I- t4e obli()tio is e5ti (uis4e+1 .4i#4 is t4e /ri #i/)l #o tr)#t1 ) + t4e mort()(e .)s o ly ) )##essory #o tr)#t1 t4ere-ore t4e mort()(e -ollo.s t4e /ri #i/)l1 t4ere-ore t4e mort()(e m)y li6e.ise be e5ti (uis4e+. It is )lso )r(ue+ t4)t 8 #) ot -ore#lose t4e mort()(e be#)use 8 is ot ) /)rty to t4e mort()(e. T4e /)rties to t4e mort()(e is t4e mort()(or ) + t4e #re+itor. It .)s #o stitute+ to se#ure t4e +ebtor9s obli()tio ) + ot 89s obli()tio . !WRONG' Assumi ( t4)t t4is /)yme t .)s .it4 t4e #o se t o- t4e +ebtor1 ) + 8 #) ot #l)im reimburseme t -rom t4e -ormer. 8 #) -ore#lose t4e mort()(e e3e .4e t4e obli()tio .)s )lre)+y e5ti (uis4e+. T4is is be#)use i t4is /)yme t .it4 t4e #re+itor1 8 .ill be subro()te+ to t4e ri(4ts o- t4e /ri #i/)l +ebtor. E3e .4e t4is obli()tio .)s e5ti (uis4e+ .4i#4 )//)re tly result .it4 t4e e5ti (uis4me t o- t4e mort()(e1 t4)t .ill ot /re2u+i#e 8 ri(4t to (o o3er t4e /ri #i/)l +ebtors or (u)r) tors u +er t4e /ri #i/le o- subro()tio . <o.e3er1 .4e t4is /)yme t is .it4out t4e 6 o.le+(e o- t4e +ebtor or )()i st t4e .ill1 t4ere .ill be o ri(4t o- subro()tio 1 4e #e 4e #) ot (o to t4e mort()(ors ) + (u)r) tors. ,f X and B 7creditor8 entered into an agreement without the =nowledge of A 7principal debtor8 that if X pays B as to his obligation, X will be subrogated in the rights of B& X paid B& Can X now foreclose the mortgage if A fails to reimburse? No 8 #) ot -ore#lose t4e mort()(e e3e .4e t4ere is ) )(reeme t. Alt4ou(4 t4e ) s.ere+ .oul+ be yes )s im/lie+ by t4e /ro3isio . T4e /ro3isio s)ys t4)t i- /)yme t .)s .it4out t4e 6 o.le+(e or )()i st t4e .ill o- t4e +ebtor1l 8 #) ot #om/el B -or 4im to be reimburse+1 but t4ey #) #ome to ) )(reeme t. But su#4 is ot t4e i te tio o- t4e l).. T4e i te tio o- t4e l). is t4)t .4e t4ere is o 6 o.le+(e or it is )()i st t4e .ill1 8 #) ot be subro()te+. Su#4 is -or t4e /rote#tio o- t4e +ebtor.

,f X paid B, without the intention of being reimbursed by A, after two wee=s he demanded what he paid to B claiming that A did not gi$e consent to this payment& 4ince it is a form of an indirect donation, A did not gi$e consent, which is a re0uirement in donations where the donee must accept& Dere, there is no acceptance, hence the payment is $oid& ,s the contention correct? No. E3e i- t4e /)yme t .)s .it4out t4e 6 o.le+(e o- A ) + +i+ ot i te + to be reimburse+1 )s -)r )s t4e #re+itor is #o #er e+1 4e .oul+ o 4)3e t4e ri(4t to re#l)im .4)t .)s /)i+. .o whom payment should be made in order for the obligation is to be extinguished? @)yme t s4oul+ me m)+e toC ). To t4e /erso #o stitute+. i .4ose -)3or t4e obli()tio is

person authori$e to receive it. +11*2a-.

NoteC T4e /erso i .4ose -)3or t4e obli()tio is #o stitute+ ee+ ot e#ess)rily be t4e /erso .4o e tere+ i to ) #o tr)#t1 it m)y be ) ot4er /erso . :or e5)m/le i- A ) + B e tere+ i to ) #o tr)#t ) + A /)i+ B1 +oes it e#ess)rily e5ti (uis4e+ t4e obli()tio > No. ,)ybe it is ot B .4o is t4e /erso i .4ose -)3or t4e obli()tio is #o stitute+. b. Su##esors i i terests1 or )ssi( s. #. To t4e /erso /)yme t. .4o 4)s t4e )ut4ority to re#ei3e

NoteC To t4e /erso .4o 4)s t4e )ut4ority -rom t4e #re+itor to re#ei3e /)yme t is ot )##ur)te be#)use ) /erso m)y 4)3e t4e )ut4ority to re#ei3e /)yme t .4e t4e s)me is )ut4oriAe+ or (r) te+ by l). !s4eri--1 (u)r+i) 1 li0ui+)tors1 re#ei3ers1 #o ser3)tors1 et#. '. W4e t4e +ebtor /)i+ t4e s4eri--1 +oes it e5ti (uis4 t4e obli()tio .4e t 4 e s 4 e r i -- /o#6ete+ t4e mo ey> 7es. be#)use 4e 4)s t4e )ut4ority o- t4e l). to re#ei3e /)yme t. I- /)yme t .)s m)+e to ) /erso .4o is ot o e o- t4ose /erso s me tio e+ i Art. 1$;%1 .4)t .ill be t4e e--e#t o- su#4 /)yme t> It .ill ot e5ti (uis4 t4e obli()tio . As ) rule1 /)yme t to ) .ro ( /)rty is ot ) /ro/er /)yme t ) + t4ere-ore +oes ot e5ti (uis4 ) obli()tio .
Art. 1240. =a#ment shall be ma e to the person in !hose favor the obligation has been constitute , or his successor in interest, or an#

W4)t is t4e reme+y o- ) /erso to .4om 4e .ro (-ully /)i+> To re#o3er -rom t4e /erso .it4 .4om 4e /)ys u +er solutio i +ebiti be#)use t4)t /erso .ill ot 4)3e t4e ri(4t to +em) + -or /)yme t. By .)y o- e5#e/tio 1 /)yme t to ) .ro ( /)rty m)y )lso e5ti (uis4 t4e obli()tio 1 .4e C W4e t4e /)yme t re+ou +e+ to t4e be e-it o- t4e #re+itor1 but o ly u/ to t4e e5te t t4)t t4e #re+itor .)s be e-ite+. @)yme t to t4e #4il+ o- t4e #re+itor1 .oul+ t4)t e5ti (uis4 t4e obli()tio > As ) rule o1 be#)use t4e #4il+ is ot t4e #re+itor. It is ) /)yme t to ) .ro ( /)rty. W4o .ill 4)3e t4e bur+e i /ro3i ( t4)t t4e /)yme t re+ou +e+ to t4e be e-it o- t4e #re+itor> Ob3iously1 t4e /)yer or +ebtor .ill 4)3e t4is bur+e . As ) e5#e/tio .4ere t4e /)yer or +ebtor .oul+ ot 4)3e t4e bur+e o- /ro3i ( t4)t t4e /)yme t re+ou +e+ to t4e be e-it o- t4e #re+itor .4e C 1. W4e t4ere is r)ti-i#)tio o- t4e #re+itor1 )s su#4 it is +eeme+ re+ou +e+ to t4e #re+itors be e-it. W4y .oul+ 4e r)ti-y i- it +i+ ot re+ou + to 4is be e-itB $. t4rou(4 t4e )#ts o- t4e #re+itor1 t4e +ebtor .)s le)+ to belie3e t4)t t4e /erso or /)yee 4)s )ut4ority to re#ei3e /)yme t1 t4is is u +er t4e /ri #i/le o- t4e esto//elB =. .4e t4e /)yee )#0uire+ t4e ri(4ts o- t4e #re+itor )-ter t4e /)yme t. NoteC T4e /)yee s4oul+ )#0uire t4e ri(4t o- t4e #re+itor )-ter t4e /)yme t ) + ot be-ore t4e /)yme t1 t4is is be#)use .4e t4e /)yee )#0uire+ t4e ri(4ts o- t4e #re+itor be-ore t4e /)yme t1 t4is .oul+ ot be ) /)yme t to ) .ro ( /)rty1 )s t4is .oul+ be ) /)yme t to ) su##essor i i terest or ) )ssi( ee1 ) + su#4 .oul+ be ) 3)li+ /)yme t. A executed a promissory note and deli$ered the same to B the creditor& But few wee=s thereafter, the promissory note was already in the possession of C& ,n the hands of C the promissory note matured and C demanded payment from A& A paid C& Would payment to C by A extinguished the obligation to B? 7es. Not 2ust be#)use C .)s i /ossessio o- t4e /romissory ote +oes ot m)6e 4im ) /ro/er /)rty to re#ei3e /)yme t. T4ere )re t.o re0uireme ts .4i#4 )re re0uire+ i or+er -or it to be #o si+ere+ ) 3)li+ /)yme tC 1. T4is /erso !C' must be i /ossessio o- t4e #re+it. Note t4)t /ossessio o- ) /romissory ote +oes ot e#ess)rily me) t4)t 4e .)s i /ossessio o- t4e #re+it. T4e l)tter is merely ) e3i+e #e o- #re+it. To be i /ossessio o- ) #re+it is t4)t su#4 /erso must )//e)r to 4)3e /ossessio o- t4e #re+it. :or e5)m/le1 t4e /romissory ote /ro3i+es t4)t F/)yme t to Hose ReyesG It #oul+ ot be #o si+ere+ )s ) /erso

)//e)ri ( to 4)3e /ossessio o- t4e #re+it1 t4e s)me ot bei ( ) e(oti)ble i strume t. It .oul+ be +i--ere t i- t4e /romissory ote is ) e(oti)ble ) + ) be)rer /romissory ote ) + i /ossessio oC. T4ere-ore u +er t4is #ir#umst) #e it #) be i -erre+ t4)t C e(ot)ti)te+ t4e ote by mere +eli3ery. <e t4ere-ore is i /ossessio o- t4e #re+it. But ote t4)t /)yme t to 4im +oes ot e#ess)rily e5ti (uis4 t4e obli()tio be#)use t4e ot4er re0uireme t is1 $C /)yme t must be i (oo+ -)it4. me) i ( t4)t .4e A /)i+ C 4e must 4)3e o 6 o.le+(e o- t4e +e-e#t o- title C. T4ese t.o re0uireme t must #o #ur i or+er t4)t t4e /)yme t to ) .ro ( /)rty to e5ti (uis4 t4e obli()tio o- A to B. Si #e u +er t4e -ore(oi ( #ir#umst) #e1 t4e obli()tio o- A is e5ti (uis4e+1 B t4ere-ore 4)s t4e reme+y )()i st C. A is the debtor of B, thereafter B assigned his credit to C& ,t was after the assignment that A paid B& .hat is a payment to a wrong party because C is not supposed to be the new creditor through assignment& Eay the payment of A to B, extinguish his obligation to C? 7es1 .4e A /)i+ B .it4out 6 o.le+(e ot4e )ssi( me t. Eay a creditor be compelled to partial performance? As ) rule1 o1 u less t4ere is ) sti/ul)tio to t4e #o tr)ry or i- t4e obli()tio is /)rtly li0ui+)te+ or /)rtly u li0ui+)te+ to t4e e5te t o- t4e /ortio .4i#4 is li0ui+)te+1 t4e #re+itor m)y #om/el t4e +ebtor to /er-orm1 li6e.ise t4e +ebtor m)y #om/el t4e #re+itor to )##e/t. ,f the obligation is to deli$er a determinate thing, the creditor may not be compelled to accept the deli$ery of another thing e$en if such other thing is more $aluable than the thing supposed to be deli$ered& ,n Art& "%* what is the effect of substantial performance?
Art. 1234. 4f the obligation has been substantiall# performe in goo faith, the obligor ma# recover as though there ha been a strict an complete fulfillment, less amages suffere b# the obligee. +n-

:or e5)m/le .4e t4e +ebtor is i +ebte+ to ) sum o- mo ey /)y)ble i 1% ye)rs i mo t4ly i st)llme ts. W4e t4e +ebtor 4)s )lre)+y /)i+ -or J ye)rs1 t4e #re+itor #) o lo (er res#i + t4e #o tr)#t be#)use t4ere is /)yme t .4i#4 is #o si+ere+ /)rti)l /er-orm) #e. I- t4ere is subst) ti)l /er-orm) #e i rel)tio to Art. 11J1 t4ere is o more subst) ti)l bre)#4. What would constitute substantial performance? J out o- 1% i st)llme ts is subst) ti)l /er-orm) #e. &D i st)llme ts out o- 1$% is )lso subst) ti)l /er-orm) #e. EDM o- t4e obli()tio s t ) t i ) l /er-orm) #e. is ot sub

?;M is ot ) subst) ti)l /er-orm) #e. What are the rights of the parties when there is an obligation to pay or deli$er !! sac=s of rice& F> sac=s has been deli$ered, the other > can no longer be deli$ered despite good faith& Dow much can the seller reco$er from the buyer? U +er t4e l). t4e seller m)y re#o3er o ly t4e 3)lue o- t4e JD s)#6s less +)m)(e t4)t m)y be su--ere+ by t4e #re+itor. T4e buyer ot 4)3i ( bee )ble to re#ei3e 1%% s)#6s o- ri#e1 4e m)y 4)3e su--ere+ be#)use i- t4e 1%% s)#6s o- ri#e 4)s bee )ll +eli3ere+1 4e m)y 4)3e sol+ it -or ) 4i(4er /riAe. T4is is #)lle+ u re)liAe+ /ro-it .4ere t4e t4e 3)lue o- t4e JD s)#6s o- ri#e s4)ll be lesse e+ be#)use o- t4e u re)liAe+ /ro-its .4i#4 t4e buyer m)y 4)3e re#ei3e+ .ere it ot -or t4e i #om/lete +eli3ery When there is an irregular or incomplete fulfillment, there is an instance under the law that the obligation is fully complied with& Dowe$er the following re0uisites must be complied with, namely9 1. T4ere must be )##e/t) #e by t4e #re+itor $. T4e )##e/t) #e must be .it4 -ull 6 o.le+(e ot4e i #om/lete ess or irre(ul)rity. =. <e must ot 4)3e m)+e ) ob2e#tio .
Art. 123(. &hen the obligee accepts the performance, )no!ing its incompleteness or irregularit#, an !ithout e'pressing an# protest or ob1ection, the obligation is eeme full# complie !ith.

T4e /remise o- subst) ti)l /er-orm) #e is t4)t t4e #re+itor )##e/te+. W4et4er or ot 4e #) be #om/elle+ to )##e/t +oes ot m)tter1 .4)t m)tters is 4e )##e/te+ t4e /)rti)l /er-orm) #e.

I t4e #)se o- AA#o ) 3s. Am) +re .4ere t4e Su/reme Court rule+ t4)t t4e /)yme t e5ti (uis4e+ t4e obli()tio .4ere t4e )#tu)l

)mou t +ue .)s ?1$%% but o ly /)i+ ?1%%% .4e t4e seller issue+ ) re#ei/t ?%%% )s /er #o tr)#t1 it is )s i- t4ere .)s -)it4-ul #om/li) #e. ,n monetary obligations, can there be a $alid obligation in money which is not in 1hilippine currency? 7es. .it4 or .it4out RA D$&1 )s )me +e+ it .ill be ) 3)li+ obli()tio .
6@=8B;4C AC2 NO. ,1,3 . . AN AC2 6@=@A;4NA 6@=8B;4C AC2 N85B@6@> ?4B@ :8N>6@> 2&@N2C9N4N@ A% A5@N>@>, @N242;@> DAN AC2 2O A%%86@ 2:@ 8N4?O65 BA;8@ O? =:4;4==4N@ CO4N AN> C866@NCC.D %ection 1. All monetar# obligations shall be settle in the =hilippine currenc# !hich is legal ten er in the =hilippines. :o!ever, the parties ma# agree that the obligation or transaction shall be settle in an# other currenc# at the time of pa#ment. %ec. 2. 6epublic Act Numbere ?ive :un re 2!ent#9 Nine +6.A. No. (2/-, as amen e entitle DAn Act to Assume the 8niform Balue of =hilippine Coin an Currenc#,D is hereb# repeale . %ec. 3. 2his Act shall ta)e effect fifteen +1(- a#s after its publication in the Official Aa$ette or in t!o +2- national ne!spapers of general circulation. 2he Bang)o %entral ng =ilipinas an the >epartment of ?inance shall con uct an intensive information campaign on the effect of this Act. ,f the currency agreed upon is not in 1hilippine pesos, can the creditor demand fulfillment in the currency agreed upon and not in 1hilippine currency? U +er R.A. D$& it is ot )llo.e+. E3e i- t4e /)rties )(ree to ) #urre #y e5/ressly sti/ul)te+1 u +er RA D$&1 su#4 is ) 3oi+ sti/ul)tio . T4e obli()tio is ot 3oi+1 it is t4e sti/ul)tio o- /)yme t i t4e #urre #y o--ere+ .4i#4 is 3oi+. :o!ever in 6A ,1,3 amen ing 6A (2/ a cre itor can eman fulfillment other than =hilippine currenc# if such !as the stipulation is vali .

When creditor accepted the chec= and the same became stale, can the creditor demand for the issuance of another chec=? No& W4e t4e #re+itor .)s i /ossessio o- ) #4e#61 t4ere is ) +is/ut)ble /resum/tio t4)t t4e +ebt 4)s ot yet bee /)i+. It m)y be rebutte+ .4e t4e +ebtor 4)+ )lre)+y /)i+1 ) + t4e #re+itor .)s still i /ossessio o- t4e #4e#6. What are those which are considered legal tenders? ). otes !#)s4' b. #oi s NoteC E3e .4e t4e mo ey is #o si+ere+ le()l te +ers t4e s)me 4)s bee .it4+r). -rom #ir#ul)tio or 4)s bee +emo itiAe+. An action was filed under 0uasi delict and thereafter a <udgment was rendered in fa$or of the plaintiff on a contract entered into ! years ago, today A filed a motion to ha$e his <udgment ad<usted claiming that there is an extraordinary inflation& Eay the <udge award As motion? U +er Art. 1$D% I #)se ) e5tr)or+i )ry i -l)tio or +e-l)tio o- t4e #urre #y sti/ul)te+ s4oul+ su/er3e e1 t4e 3)lue o- t4e #urre #y )t t4e time ot4e est)blis4me t o- t4e obli()tio s4)ll be t4e b)sis o- /)yme t1 u less t4ere is ) )(reeme t to t4e #o tr)ry. U +er t4e -)#ts1 -or Art 1$D% to )//ly1 t4e s)me must be b)se+ o ) #o tr)#t ) + ot 0u)si +eli#t be#)use t4e l). )s .or+e+ F#urre #y sti/ul)te+G. <e #e1 Art 1$D% .ill ot )//ly ) + t4ere-ore )+2ustme t #) ot be )llo.e+. I- t4e )#tio .)s -ile+ b)se+ o #o tr)#t1 t4e 2u+(e s4oul+ ot (r) t t4e motio -or )+2ustme t i- t4e s)me is ot ) e5tr)or+i )ry i -l)tio . Be#)use t4e )+2ustme t s4oul+ be (r) te+ i- t4ere is o ly ) e5tr)or+i )ry i -l)tio t4)t o##ur1 ot4er.ise ot (r) te+. NoteC Art. 1$D% me) s t4)t t4ere must be ) )+2ustme t )t t4e time o- t4e #o stitutio o- t4e obli()tio i- t4ere is ) e5tr)or+i )ry i -l)tio or +e-l)tio b)se+ o ) #o tr)#t. ,f the due date for the performance of the obligation is a sunday and demand was made on that day howe$er the debtor only performed it the next day, may he be considered in delay?

Can the creditor be compelled to accept payment by chec=s? No. .4)te3er 6i + o- #4e#6 is ot )llo.e+1 t4ey )re ot le()l te +ers. When creditor accepted the chec= and the same became stale, is the obligation extinguished? No. It is o ly t4)t it #) ot be be e #)s4e+.

7es. E3e i- su +)y or 4oli+)y1 i- t4e +ebtor /romise+ to /er-orm t4e obli()tio o su#4 +)y ) + 4e +i+ ot /er-orm1 4e is #o si+ere+ i +el)y. As ) e5#e/tio 1 e3e i- t4e +)te )(ree+ u/o is ) su +)y t4e +ebtor m)y ot be #o si+ere+ i +el)y .4e t4ere is ) im/ossibility o- /er-orm) #e o- t4e obli()tio 1 or .4e t4e +ebtor ()3e t4e #re+itor ) #4e#6 ) + t4e #4e#69s +ue +)te is ) 4oli+)y or ) o b) 6i ( +)y1 i t4e l)tter #)se it is )llo.e+ -or )s lo ( )s it is t4e e5t b) 6i ( +)y. ,n an obligation to gi$e or deli$er a determinate thing and the thing was deli$ered at the place of business of the creditor, and the creditor refused to accept& ,s the creditor already in delay? Not e#ess)rily1 be#)use t4ere m)y be ) sti/ul)tio t4)t +eli3ery be m)+e i ) ot4er /l)#e. ,f there is no stipulation as to the place where the thing is to be deli$ered, where should such thing be deli$ered? It +e/e +s o .4et4er t4e t4i ( is +etermi )te or (e eri#. I- it is ) +etermi )te t4i (1 t4e /)yme t s4)ll be m)+e )t t4e /l)#er .4ere3er t4e t4i ( mi(4t be )t t4e mome t t4e obli()tio .)s #o stitute+. I ) y ot4er #)se !su#4 )s .4e t4e t4i ( is i +etermi )te' t4e t4e +ebtors +omi#ile s4)ll be t4e /l)#e o- /)yme t. What are the special forms of payment? 1. $. =. ;. ")tio i /)yme t A//li#)tio o- /)yme t /)yme t by #essio or )ssi( me t te +er o- /)yme t ) + #o si( )tio

,s the consent of the creditor re0uired in order that obligation be extinguished by way of consignation? No. Co si( )tio +oes o re0uire t4e #re+itors #o se t i- t4e #re+itor re-uses to )##e/t1 t4e t4e #ourt s4)ll +etermi e .4et4er t4e #o si( )tio is 3)li+ or ot. T4e #re+itor #) ot +o ) yt4i ( i- t4e #o si( )tio is ) 3)li+ #o si( )tio . <e #e1 t4e obli()tio is to be e5ti (uis4e+. It m)y eit4er by )##e/t) #e or by +e#l)r)tio o- t4e #ourt. ,n these special forms of payment, when the debtor deli$ers a thing to the creditor, there is transfer of ownership? Not e#ess)rily. I #)se o- #essio . T4is is be#)use .4e t4e t4i ( is +eli3ere+ to t4e #re+itor i or+er -or 4im to sell. T4e #re+itor +oes ot )#0uire o. ers4i/ be#)use t4is t4i ( is to be sol+ to t4ir+ /erso s .4o .ill be t4e o e to )#0uire o. ers4i/. When can consignation to the court pass ownership to the creditor? I #)se o- 3)li+ #o si( )tio 1 o. ers4i/ is tr) s-erre+ to t4e #re+itor )t t4e time o- +eli3ery. I #)se o- i 3)li+ #o si( )tio 1 ) + t4e #re+itor +i+ ot )##e/t1 o. ers4i/ is ot tr) s-erre+ to t4e #re+itor. ,f there is dation in payment, the obligation of the debtor is totally extinguished? Not e#ess)rily. T4is is be#)use .4e t4e t4i ( )lie )te+ is less t4) t4e 3)lue t4e i +ebte+ ess1 t4e obli()tio is ot e5ti (uis4e+ tot)lly. It is merely ) /)rti)l /er-orm) #e. NoteC "i--ere t 3ie. u +er 1$=D ,n dation in payment if the thing is alienated by the debtor in satisfaction of his debt and the $alue of such thing is less than the indebtedness, is the obligation extinguished to the extent of the $alue unless otherwise stipulated? 5r in dation in payment, it totally extinguishes the obligation, unless there is a stipulation to the contrary? It o ly e5ti (uis4es to t4e e5te t o- t4e 3)lue o- t4e t4i ( u less )(ree+ u/o by t4e /)rties. It is ) /ro/er /ositio be#)use o #re+itor .oul+ )##e/t less t4) t4) .4)t is t4e 3)lue o- t4e t4i (. T4is /ositio .oul+ )//e)r to be 2ust. <o.e3er1 t4ere is ) 3ie. to t4e e--e#t t4)t it m)y tot)lly e5ti (uis4 t4e obli()tio u +er 1$=D1 )s .4e t4e obli(ee )##e/ts t4e /er-orm) #e1

,s payment by a third party a special form of payment? No. It is ) /)yme t by ) /erso #o tr)#t. ot ) /)rty to )

,n these special forms of payment, do they re0uire the consent of the parties in order that the obligation be extinguished? As to +ebtors1 t4eir #o se t is re0uire+ be#)use 4e is t4e o e o--eri ( to /)y. As to t4e #re+itor1 )s ) rule t4e #re+itor9s #o se t is ot re0uire+ be#)use t4e +ebtor u +er t4e l). 4)s t4e ri(4t to +esi( )te to .4i#4 t4e /)yme t is to be )//lie+.

6 o.i ( its i #om/lete ess or irre(ul)rity1 ) + .it4out e5/ressi ( ) y /rotest or ob2e#tio 1 t4e obli()tio is +eeme+ -ully #om/lie+ .it4. /ation in payment shall be go$erned in the law on sales? Not e#ess)rily. It .ill be (o3er e+ i t4e l). o s)les .4e /ro/erty is )lie )te+ to t4e #re+itor i s)tis-)#tio o- ) +ebt i mo ey1 ot4er.ise it .ill be (o3er e+ by t4e l). o- o3)tio be#)use t4ere is ) #4) (e i t4e ob2e#t. ,s it correct to say that when a property is alienated to the creditor in satisfaction of a debt in money, it can be go$erned by the law on no$ation, since there is a change in the ob<ect? It m)y be s)i+ t4)t si #e t4ere is ) #4) (e i t4e ob2e#t1 t4e l). o o3)tio is /ro/er. <o.e3er1 t4ere is ) l). o t4e m)tter .4i#4 is Art. 1$;D .4i#4 /ro3i+es t4)t .4e /ro/erty is )lie )te+ to t4e #re+itor i s)tis-)#tio o- ) +ebt i mo ey1 s4)ll be (o3er e+ i t4e l). o s)les. T4ere is .is+om i t4e l)tter 3ie. !Art. 1$;D' be#)use I- ) /erso is i +ebte+ to ) ot4er /erso 1 ) + i t4is /re-e5isti ( +ebt t4e +ebtor /)i+ t4e #re+itor ) .)t#41 i ) .)y it .ill 4)3e to be (o3er e+ by t4e l). o s)les be#)use it m)y be s)i+ t4)t t4e +ebtor /)i+ i #)s4 ) + t4e #re+itor use+ t4is #)s4 to buy t4e .)t#4 o- t4e +ebtor. (or the rules of application of payment to be in$o=ed, there should only be one creditor? Not e#ess)rily. T4ere m)y be $ or more #re+itors si #e t4e l). +oes ot s/e#i-y t4)t t4e +ebtor s4oul+ o ly 4)3e 1 #re+itor. ,n application of payments therefore, is there a scenario where there will be total extinguishment of obligation? No. :or )//li#)tio o- /)yme ts to be )//lie+1 t4e +ebtor /)i+ /)rti)lly. I- t4e +ebtor /)i+ i ) sum .4i#4 is su--i#ie t to #o3er )ll t4e +ebts1 t4ere .ill o lo (er ) 0uestio to .4i#4 +ebt is /)yme t is to be )//lie+. T4is 4)//e s .4e t4e +ebtor /)i+ less t4) t4e )mou t o- t4e +ebt. A has an obligation of %!,!!!, >!,!!!, and >!!!!! to X& A paid the %!,!!! to satisfy the >!!,!!! debt? ,s that allowed? Why would A apply the payment to the >!!,!!!? It is )llo.e+ to )//ly t4e /)yme t to D%%1%%%%. A .oul+ )//ly t4e /)yme t to t4e D%%1%%% be#)use it .oul+ be more bur+e some to t4e D%%1%%% be#)use t4e l)tter is i terest be)ri (.

.o which the debt the payment is to be applied? It is ) +ebtor )s ) rule1 4)s t4e #4oi#e to .4i#4 t4e /)yme t is to be )//lie+. U +er t4e )bo3e s#e )rio1 i- $ o- t4e +ebts is ot yet +ue ) + t4e -irst o e is +ue t4e +ebtor m)y )//ly t4e /)yme t to t4e -irst +ebt i- t4e +ebtor is t4e /erso to .4om t4e /erio+ is -i5e+1 ot4er.ise1 e3e i- o e is +ue but t4e /erio+ .)s -i5e+ i t4e #re+itors -)3or1 t4e t4e +ebtor m)y ot )//ly t4e /)yme t i t4e -irst +ebt. I- )ll t4e +ebts is )lre)+y +ue1 t4e +ebtor #) ot #om/el t4e #re+itor to )//ly t4e /)yme t to t4e -irst +ebt by #4oi#e1 u +er t4e /ri #i/le t4)t t4e #re+itor #) ot be #om/elle+ to )##e/t /)rti)l /er-orm) #e or by sti/ul)tio o- t4e /)rties t4e -irst +ebt is t4e l)st to be /)i+ or $ +. What are the limitations to the right of the debtor for which the payment is to be applied? 1. @)rti)l /)yme t $. +ue ) + +em) +)bility =. I- t4ere is ) )(reeme t t4)t t4e +ebtor #) m)6e t4e #4oi#e o- )//li#)tio .it4out t4e #o se t o- t4e #re+itor. ;. W4e t4e +ebt /ro+u#es i terests

ot

All the debts are due and demandable, and one of the debt produces interests, may the debtor apply the payment to the debt which does not incur interests? I- o e o- t4e +em) +)ble +ebt /ro+u#es i terest1 /)yme t o- t4e /ri #i/)l s4)ll ot be +eeme+ to 4)3e bee m)+e u til t4e i terests 4)3e bee #o3ere+. What if the debtor failed to designate to which the payment is to be applied, to which the payment is to be applied? T4e +ebt +esi( )te+ by t4e #re+itor ) + su#4 +esi( )tio is to be )##e/te+ by t4e +ebtor. ,f the debtor and the creditor failed to designate to which the payment is to be applied, to which the payment is to be applied? It +e/e +s i- t4e +ebts )re o- t4e s)me )ture ) + bur+e 1 /)yme t s4)ll be )//lie+ to )ll o- t4em /ro/ortio )tely u +er Art. 1$D;. <o.e3er1 i- t4e +ebts )re ot o- t4e s)me )ture or bur+e 1 me) i ( o e o- t4em is more o erous1 )//ly t4e /)yme t to t4e most o erous obli()tio . ,f the amount of the debt is bigger does it mean that it is the most onerous?

Not e#ess)rily. T4e sm)ller )mou t m)y i #ur bi((er i terests. T4ere is o 4)r+ ) + -)st rule to +etermi e .4i#4 o- t4e +ebt is more o erous. A EM i terest i -)#t m)y be more o erous t4) ) 1$M i terest .4e t4e )mou ts i 3ol3e+ )re +i--ere t. ,f in one of the debt, A is a principal debtor, and in another debt, he is merely a guarantor, which is more onerous? T4e more o erous is t4e +ebt i .4i#4 t4e +ebtor is /ri #i/)lly bou + be#)use t4e (u)r) tor #) +em) + -rom reimburseme t -rom t4e #re+itor. @)yme t by Cessio ,f the client is the debtor, and he is willing to abandon his properties to his creditor, what if the creditors refused to adhere to this offer, what ad$ice would you gi$e to your client? U +er Art. 1$DD. T4e +ebtor m)y #e+e or )ssi( 4is /ro/erty to 4is #re+itors i /)yme t o- 4is +ebts. T4is #essio 1 u less t4ere is sti/ul)tio to t4e #o tr)ry1 s4)ll o ly rele)se t4e +ebtor -rom res/o sibility -or t4e et /ro#ee+s o- t4e t4i ( )ssi( e+. T4e )(reeme ts .4i#41 o t4e e--e#t ot4e #essio 1 )re m)+e bet.ee t4e +ebtor ) + 4is #re+itors s4)ll be (o3er e+ by s/e#i)l l).s. !11?D)' So it me) s t4)t .4e t4e 3)lue o- t4e t4i ( to be #e+e+ to t4e #re+itor is less t4) t4e +ebt1 su#4 .ill be ) /)rti)l /)yme t ) + s4)ll rele)se t4e +ebtor o ly to t4e e5te t o- t4e et /ro#ee+s o- t4e t4i ( )ssi( e+ or #e+e+. ,s insol$ency a re0uirement that the debtor is insol$ent in order for him to assign or cede his property? Not /)yme t by #essio is by )(reeme t o- t4e /)rties ) + t4ere-ore )s lo ( )s t4e +ebtor #e+es ) + t4e #re+itor )##e/ts -or t4e l)tter to sell1 i sol3e #y is ot re0uire+. Te +er o- /)yme t ) + #o si( )tio ,s tender of payment a mode of extinguishment? Te +er o- /)yme t is ot ) mo+e oe5ti (uis4me t. No obli()tio is e5ti (uis4e+ by mere te +er o- /)yme t. .ender of payment, as a rule, re0uired in order to extinguish an obligation by way of consignation?

As ) rule1 it is ot re0uire+ t4)t te +er o- /)yme t be m)+e to e5ti (uis4 ) obli()tio by .)y o#o si( )tio 1 e5#e/t .4e t4e #re+itor to .4om te +er o- /)yme t 4)s bee m)+e re-uses .it4out 2ust #)use to )##e/t it1 t4e +ebtor s4)ll be rele)se+ -rom res/o sibility by t4e #o si( )tio o- t4e t4i or sum +ue !Art. 1$DE'. U +er t4e l).1 te +er o- /)yme t is ot re0uire+ )s /ro3i+e+ by l).1 .4i#4 )reC ). W4e t4e #re+itor is )bse t or u 6 o. 1 or +oes ot )//e)r )t t4e /l)#e o- /)yme tB b. W4e 4e is i #)/)#it)te+ to re#ei3e t4e /)yme t )t t4e time )t t4e time it is +ueB #. W4e 1 .it4out 2ust #)use1 4e re-uses to (i3e ) re#ei/tB +. W4e t.o or more /erso s #l)im t4e s)me ri(4t to #olle#tB e. W4e t4e title o- t4e obli()tio 4)s bee lost !Art. 1$DE'. .ender of payment may be extra<udicial? No1 it is )l.)ys e5tr)2u+i#i)l ) + #) e3er be 2u+i#i)l. It is ot re0uire+ to i 3ol3e t4e #ourt to m)6e ) te +er o- /)yme t. By its )ture it is e5tr)2u+i#i)l. <o.e3er1 i ) #)se .4ere t4e SC 4el+ t4)t te +er o- /)yme t m)y be 2u+i#i)l .4e t4e te +er o/)yme t .)s m)+e +uri ( t4e /e +e #y o- t4e )#tio . But ote by its )ture te +er o- /)yme t is e5tr)2u+i#i)l. A has a right to redeem within the period within which A has a right to redeem, he offered the money to the other party for the redemption of a property& Dowe$er, the other party refused to accept without <ust cause, after the lapse of the period to redeem, the redemptioner filed an action to sell the property and deli$er the same to him& 5ne of the defenses raised by the other party was the tender was not in good faith because the redemptioner did not deli$er the money to the court by way of consignation, when he refused to accept the money? ,4 it a $alid defense? I t4e #)se o- Imm)#ul)t) 3s. N)3)rro1 t4e +e-e se is ot te )ble. It is ot re0uire+ t4)t .4e t4e ot4er /)rty re-use+ to )##e/t by .)y o- #o si( )tio 1 t4e re+em/tio er s4oul+ +eli3er t4e mo ey to t4e #ourt by .)y o- #o si( )tio be-ore t4e l)/se o- t4e re+em/tio /erio+. T4e re)so is t4)t #o si( )tio is o ly re0uire+ .4e t4ere is ) obli()tio to be e5ti (uis4e+. <ere t4ere .)s o obli()tio to be e5ti (uis4e+ but o ly ) ri(4t to be e5er#ise+.

O e o- t4e re0uisite i or+er to 4)3e ) 3)li+ #o si( )tio is t4)t t4ere must be ) +ebt .4i#4 is +ue. ,f the creditor refuses to issue a receipt, is it a ground to ma=e a deli$ery to the court by way of consignation? 7es be#)use ) re#ei/t is ) e3i+e #e o- /)yme t1 o issu) #e o- ) re#ei/t t4e #re+itor m)y )()i +em) + -or t4e /)yme t. A law which pro$ides that a payment is only considered as such upon issuance of the receipt, is it ad$antageous? 7es. It is )+3) t)(eous be#)use it .oul+ i 3ol3e less liti()tio s1 se#o +ly t4e +ebtor #) #om/el t4e #re+itor to issue ) re#ei/t. But o- #ourse1 /)yme t is t4e o e .4i#4 e5ti (uis4es t4e obli()tio ) + ot ) re#ei/t. ,n an obligation to deli$er a horse, % persons are claiming to ha$e a right o$er this horse, therefore the creditor has the right to deli$er the horse to the court by way of consignation? Not e#ess)rily be#)use o e /erso m)y 4)3e ) better ri(4t t4) t4e ot4ers su#4 )s .4e o e 4)s ) #erti-i#)te o- title o3er t4e 4orse ,s the two notice re0uirement under consignation mandatory? Would these two notices both come from the creditor? 7es it is re0uire+ )s 4el+ i t4e #)se So#o 3s. ,ilit) te. I or+er t4)t #o si( )tio m)y be e--e#ti3e1 t4e +ebtor must -irst #om/ly .it4 #ert)i re0uireme ts /res#ribe+ by l).. T4e +ebtor must s4o. !1' t4)t t4ere .)s ) +ebt +ueB !$' t4)t t4e #o si( )tio o- t4e obli()tio 4)+ bee m)+e be#)use t4e #re+itor to .4om te +er /)yme t .)s m)+e re-use+ to )##e/t it1 or be#)use 4e .)s )bse t or i #)/)#it)te+1 or be#)use se3er)l /erso s #l)ime+ to be e title+ to re#ei3e t4e )mou t +ue !Art. 11?E1 Ci3il Co+e'B !=' t4)t /re3ious oti#e o- t4e #o si( )tio 4)+ bee (i3e to t4e /erso i tereste+ i t4e /er-orm) #e o- t4e obli()tio !Art. 11??1 Ci3il Co+e'B !;' t4)t t4e )mou t +ue .)s /l)#e+ )t t4e +is/os)l o- t4e #ourt !Art. 11?J1 Ci3il Co+e'B ) + !D' t4)t )-ter t4e #o si( )tio 4)+ bee m)+e t4e /erso i tereste+ .)s oti-ie+ t4ereo- !Art. 11?J1 Ci3il Co+e'. :)ilure i ) y o- t4ese re0uireme ts is e ou(4 (rou + to re +er ) #o si( )tio i e--e#ti3e. /o these notice both come from the debtor?

No. T4e -irst oti#e !/rior #o si( )tio ' must #ome -rom t4e +ebtor but t4e se#o + o e !)-ter #o si( )tio ' m)y #ome -rom t4e #re+itor. A sum of money was deli$ered to the court by way of consignation, howe$er he was able to withdraw the sum of money, thereafter he paid the debt& ,f the obligation of the debtor is secured by a mortgage because of failure of the debtor to pay the debt, may the creditor foreclose the mortgage e$en if the debtor withdraw the payment by way of consignation? It +e/e +s .4et4er t4e .it4+r).)l .)s ) m)tter ori(4t1 t4e #re+itor m)y -ore#lose t4e mort()(e. It .oul+ be ) m)tter o- ri(4t .4ere t4e #o se t o- t4e #re+itor is irrele3) t .4e it is +o e be-ore )##e/t) #e ) + t4ere or o +e#l)r)tio by t4e #ourt t4)t t4ere is ) 3)li+ #o si( )tio !Art 1$E%'. T4e )ut4ority o- t4e #re+itor is re0uire+ .4e t4e .it4+r).)l is ) m)tter o- ri(4t1 si #e t4e #o se t ot4e #re+itor is re0uire+1 t4ere #) o lo (er be ) -ore#losure be#)use t4e #re+itor ()3e 4isN4er #o se t ) + t4e obli()tio is )lre)+y e5ti (uis4e+. .he due date was ? ?! , tender of payment was made ? ?!" and consignation was made ? ?!>, on ?""? ! the court rendered <udgment in relation to this consignation, would the debtor be held liable for interest from the tender of payment on ? ?! ? I- t4ere .)s +em) + m)+e1 4e is li)ble -or i terest be#)use .it4 su#4 4e is #o si+ere+ i +el)y1 .it4out +em) + o li)bility to /)y i terest. T4e +ebtor m)y be 4el+ li)ble to /)y i terest !)ssumi ( +ebtor is i +el)y' -rom 1-1-%1 to 1-$$-%1 i- t4e #ourt #o si+ere+ to #o si( )tio to be 3oi+. Assumi ( t4e #ourt +e#l)re+ t4e #o si( )tio to be 3)li+ !t4ere is )lso +el)y'1 t4e i terest s4)ll be #ou te+ o ly u/to t4e time t4e +ebtor +eli3ere+ t4e /)yme t i #ourt. But 2usti#e ) + e0uity ser3es t4)t /)yme t o- i terest s4oul+ o ly be #ou te+ u/ to t4e time te +er o- /)yme t is m)+e or t4e /ri #i/le .4ere bot4 t4e +ebtor ) + #re+itor is i +el)y1 su#4 .4e t4e +ebtor re-uses to )##e/t1 )s su#4 t4e +ebtor #) o lo (er be 4el+ li)ble -or i terest. .4e /ro/erty is )lie )te+ to t4e #re+itor i s)tis-)#tio o- ) +ebt i mo ey1 it .ill be (o3er e+ o t4e l). o s)les /ursu) t to Art. 1$;D1 u less t4ere is ) sti/ul)tio to t4e #o tr)ry1 -urt4er Loss o- t4e T4i ( "ue or im/ossibility o/er-orm) #e

Can loss of the thing be in$o=ed in all =inds of obligations? No. be#)use t4ere )re obli()tio s to +o or ot to +o .4i#4 +oes ot i #lu+e ) t4i (.I t4e -ormer #)ses it .oul+ be /ro/er to #)ll it im/ossibility o/er-orm) #e. ,n an obligation to deli$er a generic thing, is loss of the thing extinguish an obligation? Im/ossibility /ert)i s to /4ysi#)l ) + le()l. A l). .4i#4 /ro4ibits t4e /er-orm) #e o- ) obli()tio to (i3e e3e i- it /ert)i s to ) (e eri# t4i (1 i .4i#4 t4e l). be#)me e--e#ti3e +uri ( t4e /e +e #y ot4e obli()tio 1 by l). it is #o si+ere+ le()lly im/ossible to /er-orm. I- /rior t4e #o stitutio o- t4e obli()tio it is #o si+ere+ )s 3oi+ bei ( #o tr)ry to l).1 4e #e t4ere is ot4i ( to be e5ti (uis4e+. Loss o- t4e t4i ( m)y be e5ti (uis4e+ e3e i- t4e t4i ( is ) (e eri# t4i (1 by mutu)l )(reeme t o- t4e /)rties1 it is ot be#)use o- t4e loss o- t4i (. A ot4er s#e )rio is .4e t4e (e eri# t4i ( is t4e l)st o- its 6i +1 )s .4e it (oes out o- #ommer#e. ,n an obligation to deli$er a determinate thing, when would this obligation be extinguished under the Code? I- t4e loss o- t4e t4i ( is +ue to t4e -)ult o- t4e +ebtor1 it is ot e5ti (uis4e+1 but i- t4e +ebtor .)s ot )t -)ult t4e obli()tio is e5ti (uis4e+. ,f the obligation was not extinguished and the thing was lost 7a determinate thing8, what is the effect? T4e t4i ( itsel- #) o lo (er be +eli3ere+ e5ti (uis4es 4is obli()tio to +eli3er t4e t4i (1 but .oul+ e title t4e #re+itor to +)m)(es. A y /erso .4o i t4e /er-orm) #e o- t4eir obli()tio s )re (uilty o- -r)u+1 e(li(e #e or +el)y ) + t4ose .4o i ) y m) er #o tr)3e e t4e te or t4ereo- s4)ll be li)ble -or +)m)(es !Art 11?%'. ,f there was a lost of the thing due to the fault of the debtor, which ma=es him liable, who has the burden of pro$ing that the loss was due to the fault of the debtor? T4e #re+itor )bsolutely 4)s t4e bur+e o- /ro3i ( t4)t it .)s lost i- t4e s)me .)s lost +ue to t4e -)ult o- t4e +ebtor. <o.e3er1 t4ere .4e t4e t4i ( lost .)s i t4e /ossessio o- t4e +ebtor1 ) /resum/tio .ill )rise

t4)t is .)s +ue to 4is -)ult1 u less t4ere is /roo- to t4e #o tr)ry. T4is /resum/tio t)6e /l)#e o ly .4e t4ere is o )lle()tio t4)t t4e t4i ( .)s lost .)s ot +ue to t4e -)ult o- t4e +ebtor. <o.e3er1 t4is /resum/tio .ill ot )//ly i #)se o- e)rt40u)6e1 -loo+1 storm1 or ot4er )tur)l #)l)mity. When the lost of the thing was due to a fortuitous e$ent, may the debtor shall be held liable due to the loss of the thing? Not e#ess)rily. <e m)y be li)ble .4e 4e .)s i +el)y. I- 4e .)s ot i +el)y1 4e .ill li6e.ise be li)ble i- t4ere is ) sti/ul)tio to t4e #o tr)ry. Asi+e -rom sti/ul)tio 1 i- t4e l). so /ro3i+es. NoteC W4e t4e )ture o- t4e obli()tio re0uires t4e )ssum/tio o- ris6s )s ) +e-e se #) ot )//ly to +etermi )te t4i (s. ,f the performance of the obligations becomes so difficult, the obligation is extinguished? Not e#ess)rily. It m)y be e5ti (uis4e+ .4e it be#)me so +i--i#ult1 so +i--i#ult t4)t it is beyo + t4e #o tem/l)tio o- t4e /)rties. T4e #ourt m)y rele)se t4e +ebtor /)rti)lly or .4olly -rom t4is obli()tio . An action was filed for the court to ad<ust the agreement of the parties as to their share in the profits in relation to the sale of a house and lot& /efendant was the owner of the land and the plaintiff was the owner of the materials used in the construction, the proceeds to be di$ided between them #!L*!& .he plaintiff went to court to ad<ust the shares due to difficulty of performance as the prices of the materials increased& .he court did ad<ust the terms and conditions of the agreement& A motion to dismiss was filed on the ad<ustment& ,s the motion granted? ad<ustment proper? T4e. T4e #ourt 4)s o /o.er to #4) (e t4e terms ) + #o +itio s o- t4e )(reeme t. T4e o ly /o.er (i3e by l). to t4e #ourt is to rele)se t4e +ebtor i .4ole or i /)rt . E3e i- t4e re)so -or t4e +i--i#ulty is be#)use o- ) u -oresee e3e t still t4e #ourt 4)s ot /o.er to #4) (e t4e terms ) + #o +itio s o- t4e #o tr)#t. T4e #ourt m)y 4o.e3er1 rele)se t4e +ebtor i .4ole or i /)rt. T4)t is t4e o ly /o.er (r) te+ to t4e #ourt u +er t4is /ro3isio /ro3i+e+ i Art. 1$E? .4i#4 /ro3i+es t4)t .4e t4e ser3i#e 4)s be#ome so +i--i#ult )s to be m) i-estly beyo + t4e #o tem/l)tio o- t4e /)rties1 t4e obli(or m)y )lso be rele)se+ t4ere-rom1 i .4ole or i /)rt. A has a cellphone, and it had a casing, and if someone would forcibly ta=e his cellphone he would re0uest that the cellphone alone should be ta=en& ,f there is an obligation to deli$er a

cellphone with its case, and the cellphone was lost or destroyed due to a fortuitous e$ent, the obligation therefore is extinguished? It +e/e +s o t4e i te tio o- t4e /)rties )s to t4e im/ort) #e o- t4e t4i ( .4i#4 .)s lost i rel)tio to t4e e tire obli()tio . I ot4er .or+s1 .4e t4e #re+itor .oul+ ot 4)3e e tere+ i to t4e #o tr)#t .it4out t4e ot4er t4i ( .4i#4 .)s lost1 t4e obli()tio .oul+ t4ere-ore be e5ti (uis4e+. T4e #)si ( .oul+ be #o si+ere+ be more im/ort) t .4e t4e #)si ( .)s 2e.el e #ruste+. Co +o )tio or Remissio o- t4e +ebt Condonation is also =now as? "o )tio o- #re+it or remissio o- t4e +ebt. ,s renunciation also a good name for condonation? No be#)use re u #i)tio m)y ot be ) (r)tuitous )#t. T4e #i3il #o+e .oul+ re#o( iAe ) o erous re u #i)tio . I- t4e re u #i)tio is ) (r)tuitous )#t it .ill )mou t to #o +o )tio . 4on A is indebted to his father B in the amount of >!!,!!!& .hrough a chec= A paid his father B %!!,!!!& B, his father died& .he executor of the father of the decedent demanded payment from A "!!,!!!& Dowe$er the son raised that his obligation was totally extinguished because as shown in the annotation at the bac= of the chec=, it pro$ides that +it was in full payment of the obligation-& ,s it condoned? It .ill +e/e + o .4o .rote t4e ) ot)tio . I- t4e -)t4er .4o m)+e t4e ) ot)tio 1 it +e/e +s o .4et4er it is e5/ress or im/lie+. I- t4e obli()tio is e5/ress t4ere must be ) )##e/t) #e by t4e so be#)use it is ) -orm o- +o )tio 1 .4i#4 re0uires )##e/t) #e. <e #e t4e so is still #om/elle+ to /)y. A borrowed money from B, !!,!!!& A executed a promissory note which he deli$ers to B was already in the possession of A& Was the obligation of A was extinguished by condonation? Not e#ess)rily. T4ere is ) /resum/tio t4)t t4e obli()tio is e5ti (uis4e+ .4e t4e /romissory ote is ) /ri3)te i strume t. I- t4e /romissory ote is #o t)i e+ i ) /ubli# i strume t t4e /resum/tio .ill ot )rise. When the promissory note was a pri$ate instrument and it was already in the possession of the debtor, does it raise the presumption that

the obligation was extinguished by condonation? W4)t t4e l). /ro3i+es u +er Art 1$?$1 .4e t4e /ri3)te +o#ume t .)s i t4e /ossessio o- t4e +ebtor1 t4ere is ) /resum/tio t4)t t4e #re+itor +eli3ere+ it 3olu t)rily1 t4e it /resu//oses t4)t t4ere is /)yme t .4e t4ere is ) re#ei/t !e3i+e #e o- /)yme t' (i3e . I- t4ere is o e1 ) +is/ut)ble /resum/tio is (i3e t4)t t4ere is #o +o )tio . A borrowed !!,!!! from B& .o secure fulfillment of his obligation a watch was deli$ered to B& .hereafter, the watch was already in the possession of X& .herefore, the obligation of A to B was extinguished? T4e t4i ( t4)t .)s +eli3ere+ to se#ure .)s ob3iously ) -orm o- /le+(e. W4e t4e t4i ( .)s -ou + o lo (er i t4e /ossessio o- t4e #re+itor1 /le+(ee. T4ere is o /resum/tio t4)t t4e obli()tio is e5ti (uis4e+. W4)t is /resume+ is t4)t t4e /le+(e is e5ti (uis4e+. U +er t4e -)#ts1 t4ere .oul+ be ) /resum/tio t4)t t4e obli()tio is e5ti (uis4e+ i- 8 .)s t4e o. er. I8 .)s t4e /le+(or1 t4e t4ere is o /resum/tio t4)t su#4 .ill )rise. Co -usio or mer(er o- ri(4ts Confusion is also =nown as? ,er(er o- ri(4ts. Can there be confusion by operation of law? 7es. I- ) /erso i 4erits t4e #re+it1 t4e t4ere .ill be #o -usio )s .4e t4e so .4o 4)s ) +ebt to 4is -)t4er1 t4e so m)y i 4erit -rom 4is -)t4er t4e #re+it t4ereby e5ti (uis4i ( t4e obli()tio by mer(er o- ri(4ts1 )ssumi ( 4e is t4e o ly 4eir. ,f it was the debtor child who died in the abo$e scenario, will there be confusion? Not e#ess)rily. Or+i )rily t4ere .ill be o #o -usio be#)use t4e -)t4er .ill ot )##e/t. :or tr) smissio o- su##essio )l ri(4ts t4e 4eir must )##e/t. I- 4e )##e/ts t4e t4ere .ill #o -usio . Norm)lly1 )s to obli()tio s or +ebts1 o o e .oul+ )##e/t. By agreement of the parties the most common agreement which would result in confusion is =nown as? ,er(er )(reeme t or #o tr)#ts.

Can there be a partial extinguishment of an obligation by confusion? 7es. I- t4ere )re t.o +ebtors. Can there be partial confusion? No. T4ere is o /)rti)l #o -usio . A debt of A to B became due in ))>, a merger agreement was entered into in "!!", <ust li=e any agreement there can be a rescission, as in this case were rescission was made in "!!F, today "! ! an action was filed by B against A on the debt, may the action still prosper? Observation: 4n the e'am !hen C8 uses the !or %24;; prosper, it tal)s of prescription. &hen C8 uses 5a# the action prosper, it oesnEt tal) about prescription but on some other groun s. T4e )#tio m)y still /ros/er. T4e obli()tio is e5ti (uis4e+ i $%%$ by mer(er. T4e mer(er u/ to t4e time o- res#issio s4oul+ ot be i #lu+e+ i t4e #om/ut)tio o- t4e /res#ri/ti3e /erio+ o- 1% ye)rs. "uri ( t4e mer(er /erio+1 B #) ot sue A1 t4eir /erso )lity bei ( o e ) + t4e s)me. T4e e--e#t ores#issio re3i3es t4e st)tus o- t4e /)rties /rior to t4e mer(er1 it is i- A )()i 4)s ) obli()tio to B )()i . T4ere-ore -rom 1&&D to $%%$ ) + -rom $%%J to $%1% t4e time l)/se+ is o ly & ye)rs1 4e #e .ell .it4i t4e /res#ri/ti3e /erio+. Com/e s)tio Art. 12.,. Compensation shall ta)e place !hen t!o persons, in their o!n right, are cre itors an ebtors of each other. +11/(Art. 12./. 4n or er that compensation ma# be proper, it is necessar#: !1' 2hat each one of the obligors be boun principall#, an that he be at the same time a principal cre itor of the other7 !$' 2hat both ebts consist in a sum of mone#, or if the things ue are consumable, the# be of the same )in , an also of the same "ualit# if the latter has been state 7 +3- 2hat the t!o ebts be ue7 +4- 2hat the# be li"ui ate an eman able7 +(- 2hat over neither of them there be an# retention or controvers#, commence b# thir persons an communicate in ue time to the ebtor. +11/*Art. 12,0. Not!ithstan ing the provisions of the prece ing article, the guarantor ma# set up compensation as regar s !hat the cre itor ma# o!e the principal ebtor. +11/.-

Art. 12,1. Compensation ma# be total or partial. &hen the t!o ebts are of the same amount, there is a total compensation. +nArt. 12,2. 2he parties ma# agree upon the compensation of ebts !hich are not #et ue. +nArt. 12,3. 4f one of the parties to a suit over an obligation has a claim for amages against the other, the former ma# set it off b# proving his right to sai amages an the amount thereof. +nArt. 12,4. &hen one or both ebts are rescissible or voi able, the# ma# be compensate against each other before the# are 1u iciall# rescin e or avoi e . +nArt. 12,(. 2he ebtor !ho has consente to the assignment of rights ma e b# a cre itor in favor of a thir person, cannot set up against the assignee the compensation !hich !oul pertain to him against the assignor, unless the assignor !as notifie b# the ebtor at the time he gave his consent, that he reserve his right to the compensation. 4f the cre itor communicate the cession to him but the ebtor i not consent thereto, the latter ma# set up the compensation of ebts previous to the cession, but not of subse"uent ones. 4f the assignment is ma e !ithout the )no!le ge of the ebtor, he ma# set up the compensation of all cre its prior to the same an also later ones until he ha )no!le ge of the assignment. +11/,aArt. 12,*. Compensation ta)es place b# operation of la!, even though the ebts ma# be pa#able at ifferent places, but there shall be an in emnit# for e'penses of e'change or transportation to the place of pa#ment. +11//aArt. 12,.. Compensation shall not be proper !hen one of the ebts arises from a epositum or from the obligations of a epositar# or of a bailee in commo atum. Neither can compensation be set up against a cre itor !ho has a claim for support ue b# gratuitous title, !ithout pre1u ice to the provisions of paragraph 2 of Article 301. +1200aArt. 12,,. Neither shall there be compensation if one of the ebts consists in civil liabilit# arising from a penal offense. +n-

Art. 12,/. 4f a person shoul have against him several ebts !hich are suscept i b l e o f compensation, the rules on the application of pa#ments shall appl# to the or er of the compensation. +1201Art. 12/0. &hen all the re"uisites mentione in Article 12./ are present, compensation ta)es effect b# operation of la!, an e'tinguishes both ebts to the concurrent amount, even though the cre itors an ebtors are not a!are of the compensation. +1202aArt. 1243. =a#ment ma e to the cre itor b# the ebtor after the latter has been 1u iciall# or ere to retain the ebt shall not be vali . +11*(Art. 121(. Novation, compensation, confusion or remission of the ebt, ma e b# an# of the soli ar# cre itors or !ith an# of the soli ar# ebtors, shall e'tinguish the obligation, !ithout pre1u ice to the provisions of Article 121/. 2he cre itor !ho ma# have e'ecute an# of these acts, as !ell as he !ho collects the ebt, shall be liable to the others for the share in the obligation correspon ing to them. +1143What is compensation? It is ) mo+e o- e5ti (uis4i ( to t4e #o #urre t )mou t1 t4e obli()tio s o- t4ose /erso .4o i t4eir o. ri(4t )re re#i/ro#)lly +ebtors ) + #re+itors o- e)#4 ot4er. What are the =inds of compensation? 1. :)#ult)ti3e - "e/osit1 Commo+)tum1 Gr)tuitous su//ort ) + #i3il li)bility -rom #rime Re0uires #o se t o- o e o- t4e /)rties $. Le()l - By o/er)tio o- l). =. Co 3e tio )lNVolu t)ry - by )(reeme t o- t4e /)rties. ,n compensation is re0uired that the parties ha$e capacity to recei$e and capacity to dispose of their properties? Not e#ess)ry. Com/e s)tio o/er)tio o- l).. o/er)tes by

7es. T4ere m)y be /)rti)l e5ti (uis4me t o- ) obli()tio . As lo ( )s t4e +ebts o- o e )re ot e0u)l to t4e +ebts o- t4e ot4er1 t4e #om/e s)tio .ill o ly be to t4e #o #urre t )mou t ) + t4ere .ill be o tot)l e5ti (uis4me t. When can total extinguishment ta=e place? W4e t4e +ebts o- o e )re tot)lly e0u)l .it4 t4e ot4er. A o.es B 1%%1%%%1 but B 4)s se3er)l +ebts to A 161 $61 D6 ) + $%61 J%6 i tot)l1 .it4 #om/e s)tio 1 )ll t4e +ebts .ill be tot)lly e5ti (uis4e+1 be#)use t4e e5ti (uis4me t is -or t4e #o #urre t )mou t1 but A .ill still o.e B $%6. A has an obligation to B, and B has an obligation to A& As obligation is interest bearing, after compensation can B still collect interest from A? It +e/e +s o .4et4er t4e +ebt o- B is l)r(er t4) t4e +ebt o- A. I- t4e +ebt o- B is l)r(er t4) A1 t4e A .ill ot be li)ble -or i terest )s t4ere .ill be tot)l e5ti (uis4me t o- t4e +ebt o- A. What if the debt of A is secured by a mortgage, and compensation too= place, may B foreclose the mortgage? 7es. be#)use t4ere .ill still be ) b)l) #e o- D%6. A mort()(e is ) i +i3isible #o tr)#t1 u til t4e obli()tio is e5ti (uis4e+ t4e mort()(e .ill rem)i i -or#e. I- A -)ile+ to /)y t4e D%6 t4e B #) -ore#lose o t4e mort()(e. A opened a sa$ings account with Y Ban= in the amount of E, thereafter A borrowed money from the same ban= F!!=, thereafter A wanted to withdraw the E, the ban= refused to allow A to withdraw the E as A can only withdraw up to the extent of "!!= and in$o = i n g compensation& Can the ban= deposits be a sub<ect of compensation with the debt? No. U +er Art. 1$J? it .)s /ro3i+e+ t4)t t4ere #) be o #om/e s)tio .4e o e o- t4e +ebts )rises -rom ) +e/osit. But ) b) 6 +e/osit is ot ) #o tr)#t o- +e/osit .4i#4 is /ro4ibite+. T4e o/e i ( o- ) s)3i (s )##ou t is ) #o tr)#t o- lo) . Si #e bot4 )re sim/le lo) t4ere #) be #om/e s)tio . What if A deli$ered a thing to the ban= as a depositary for safe=eeping, can this be a sub<ect of compensation?

Can there be partial compensation?

7es it #) be ) sub2e#t o- #om/e s)tio 1 but o ly t4e +e/ositor #) i 3o6e #om/e s)tio . What is A promised to gi$e B a specific =ind of bi=e, in the meantime A already had a bi=e& B borrowed the bi=e& Can the borrowed bi=e be a sub<ect of compensation? 7es. But o ly t4e b)ilor A #) i 3o6e #om/e s)tio ) + ot t4e b)ilee B. T4is is #ommo+)tum. Can support be a sub<ect of compensation? It +e/e +s1 i- it is le()l su//ort it #) ot be#)use it is ee+e+ -or ) /erso 9s sur3i3)l. It s4oul+ be (r)tuitous su//ort ) + ot #o tr)#tu)l su//ort. I(r)tuitous #om/e s)tio #) t)6e /l)#e. A is indebted to B !!=, when B tried to collect the debt from A, A refused to pay, so B stabbed A and hold B criminally liable& Can there be compensation? 7es1 but o ly t4e )((rie3e+ /)rty A !o--e +e+ /)rty'#) i 3o6e #om/e s)tio ) + ot B !#o 3i#t' ,f A and B are indebted to each other and the debts are not yet due, can compensation ta=e place? 7es1 by 3olu t)ry #om/e s)tio . ,f A is indebted to B of a carabao while B is indebted to A of a car, can compensation ta=e place? 7es1 by 3olu t)ry #om/e s)tio . A owes B a sum of money due in ))", B owes A a sum of money due ))), both debts $alued at million& A filed an action against B and in$o=e compensation, A howe$er said that B cannot in$o=e compensation because Bs credit had already prescribed& ,s A correct? No. I 1&&& e3e .it4out t4e /)rties 6 o.le+(e1 .4e t4e +ebts be#ome +ue ) + +em) +)ble1 #om/e s)tio too6 /l)#e by o/er)tio o- l).. What are the re0uirements of l e g a l compensation? 1. T4ey must be mutu)l #re+itors ) + +ebtors

$. Bot4 +ebts must be i sums o- mo ey or i- t4ey /ert)i to (oo+s1 t4ey must be o- t4e s)me 6i + ) + 0u)lity. =. Bot4 /)rties must be /ri #i/)lly bou +. ;. T4ey must be #re+itors ) + +ebtors o- e)#4 ot4er i t4eir o. ri(4t. ,s it correct to say reciprocal creditors? No1 t4is is be#)use t4is .oul+ /ert)i to re#i/ro#)l obli()tio s1 .4i#4 .oul+ e#ess)rily re0uire t4)t t4e s)me )rose -rom t4e s)me tr) s)#tio . T4ere-ore i re#i/ro#)l obli()tio s1 t4ere #) o o le()l #om/e s)tio e3e i- t4ey )re s)i+ to be mutu)l #re+itors ) + +ebtors o- e)#4 ot4er. (ranciaMs property was expropriated by the 2epublic of the 1hilippines& 4ince )#% up to )'' inclusi$e, (rancia failed to pay his real estate taxes& .hus, on /ecember >, )'', his property was sold at public auction by the City .reasurer of 1asay City pursuant to 4ection '% of 1residential /ecree 6o& *#* =nown as the 2eal 1roperty .ax Code in order to satisfy a tax delin0uency of 1",*!!&!!& Eay compensation ta=e place? No. T4ere #) be o o---setti ( o- t)5es )()i st t4e #l)ims t4)t t4e t)5/)yer m)y 4)3e )()i st t4e (o3er me t. A /erso #) ot re-use to /)y ) t)5 o t4e (rou + t4)t t4e (o3er me t o.es 4im ) )mou t e0u)l to or (re)ter t4) t4e t)5 bei ( #olle#te+. T4e #olle#tio o- ) t)5 #) ot ).)it t4e results o- ) l).suit )()i st t4e (o3er me t. A #l)im -or t)5es is ot su#4 ) +ebt1 +em) +1 #o tr)#t or 2u+(me t )s is )llo.e+ to be set-o-u +er t4e st)tutes o- set-o--1 .4i#4 )re #o strue+ u i-ormly1 i t4e li(4t o- /ubli# /oli#y1 to e5#lu+e t4e reme+y i ) )#tio or ) y i +ebte+ ess o- t4e st)te or mu i#i/)lity to o e .4o is li)ble to t4e st)te or mu i#i/)lity -or t)5es. Go3er me t ) + t)5/)yer )re ot mutu)lly #re+itors ) + +ebtors o- e)#4 ot4er u +er Arti#le 1$?J o- t4e Ci3il Co+e ) + ) #l)im -or t)5es is ot su#4 ) +ebt1 +em) +1 #o tr)#t or 2u+(me t )s is )llo.e+ to be set-o--. By le()l #om/e s)tio 1 obli()tio s o- /erso s1 .4o i t4eir o. ri(4t )re re#i/ro#)lly +ebtors ) + #re+itors o- e)#4 ot4er1 )re e5ti (uis4e+ !Art. 1$?J1 Ci3il Co+e'. T4e #ir#umst) #es o- t4e #)se +o ot s)tis-y t4e re0uireme ts /ro3i+e+ by Arti#le 1$?&1 to .itC F!1' t4)t e)#4 o e o- t4e obli(ors be bou + /ri #i/)lly ) + t4)t 4e be )t t4e s)me time )

/ri #i/)l #re+itor o- t4e ot4erB 555 !=' t4)t t4e t.o +ebts be +ue. 16BMs main thesis is that when it opened a sa$ings account for ,4AB3AA on Earch ), )') in the amount of 1 "E, it 716B8 became indebted to ,4AB3AA in that amount& 4o that when ,4AB3AA itself subse0uently came to be indebted to it on account of ,4AB3AAMs breach of the terms of the Credit Agreement of 5ctober %, )'', and therefore ,4AB3AA and 16B became at the same time creditors and debtors of each other, compensation automatically too= place between them, in accordance with Article "'F of the Ci$il Code& .he amounts due from each other were, in its $iew, applied by operation of law to satisfy and extinguish their respecti$e credits& Eore specifically, the 1"E owed by 16B to ,4AB3AA was automatically applied in payment and extinguishment of 16BMs own credit against ,4AB3AA& .his ha$ing ta=en place, that amount of 1"E could no longer be le$ied on by any other creditor of ,4AB3AA, as the AC3254 attempted to do in the case at bar, in order to satisfy their <udgment against ,4AB3AA& ,s t h e r e compensation by operation of law between 16B and ,4AB3AA? No. T4e #ourt rule+ i @NB 3s. A#ero1 t4)t e3e t4ou(4 t4)t @NB .)s ) +ebtor o- ISABELA u +er t4e l)tter9s s)3i (s +e/osit i t4e b) 61 .4i#4 is #o si+ere+ ) sim/le lo) 1 t4ere .)s o /roos4o. by @NB i t4e #)se t4)t ISABELA .)s )lso i +ebte+ to @NB1 t4e o ly e3i+e #e /rese t by @NB to.)r+s t4is e + #o sists o- t.o !$' +o#ume ts m)r6e+ i its be4)l- )s E54ibits 1 ) + $1 But )s t4e IAC 4)s #o(e tly obser3e+1 t4ese +o#ume ts +o ot /ro3e ) y i +ebte+ ess oISABELA to @NB. All t4ey +o /ro3e is t4)t ) letter o- #re+it mi(4t 4)3e bee o/e e+ -or ISABELA by @NB1 but ot t4)t t4e #re+it .)s e3er )3)ile+ o-. Eay there be obligations both in sums of money in reciprocal obligations? It #) ot 4)//e . I re#i/ro#)l obli()tio t4ere )re +i--ere t /rest)tio s1 o e is +eli3ery o- ) t4i ( ) + t4e ot4er is mo et)ry. Will there be legal compensation only if the debt in money arose from contract? No1 t4ere )re #)ses .4ere #om/e s)tio by o/er)tio o- l). too6 /l)#e .4e t4ere .)s ).)r+ o- )ttor ey9s -ees ) + t4e #ourt rule+ t4)t le()l #om/e s)tio m)y t)6e /l)#e. Eay all monetary obligation be the sub<ect of legal compensation?

No. Le()l #om/e s)tio #) ot t)6e /l)#e i #ert)i mo et)ry obli()tio s su#4 )s t)5es1 #ustoms +uties1 t)ri-- et#. Where A is indebted to B and this obligation is secured by a guarantor @, on the other hand B is also a debtor of @, if @ demands payment from B, can B claim that since @ is a guarantor on As debt to be, compensation may ta=e place on As debt and Bs debt to @? No be#)use t4e (u)r) tor is ot /ri #i/)lly bou +1 but t4e mome t A +e-)ults ) + 4is /ro/erties )re )lre)+y e54)uste+1 t4e (u)r) tor .ill ot be /rim)rily li)ble to B1 ) + -rom t 4e o #om/e s)tio m)y t)6e /l)#e. T4e o. er o- ) s4)re o- sto#6 )ut4oriAe+ L to sell t4e s)me1 L o t4e ot4er 4) + )ut4oriAe+ S to sell it1 t4e l)tter .)s )ble to sell t4e s4)re o- sto#61 4o.e3er1 +es/ite +em) + o- A -rom S to remit t4e /ro#ee+s o- t4e s)le 4e re-use+ to +o so. S .)s #4)r(e+ -or est)-) ) + .)s #o 3i#te+1 o )//e)l S #l)ime+ t4)t L o.e+ 4im )lso1 so #om/e s)tio too6 /l)#e1 t4ere-ore 4e #) ot be li)ble -or est)-). Is S9s #o te tio #orre#t> No1 e3e )ssumi ( t4)t L is i +ebte+ to S1 t4e l)tter is re)lly ot i +ebte+ to L i 4is o. ri(4t. T4e re)l #re+itor o- L is t4e buyer o- t4e s4)res. L ) + S s4oul+ be +ebtors ) + #re+itors o- e)#4 ot4er. ,s it re0uired that when both debts are due and demandable means that they are due at the same time? No. W4)t is re0uire+ is t4)t bot4 +ebts )re +ue. So i- o e o- t4e +ebts be#)me +ue = ye)rs )(o1 ) + t4e +ebt be#)me +ue to+)y1 #om/e s)tio .ill o ly t)6e /l)#e to+)y be#)use it is o ly to+)y t4)t bot4 +ebts be#)me +ue. A borrowed from B, B bought a car from A on credit, can there be legal compensation? T4ere #) be le()l #om/e s)tio be#)use .4e B bou(4t t4e #)r -rom A o #re+it1 t4e buyer B is )lso (oi ( to /)y t4e /ri#e i mo ey1 so t4ere #) be le()l #om/e s)tio . (a<ardo borrowed money from ,CB in the sum of >!E, the ban= released "!E, to secure this obligation (a<ardo mortgaged properties amounting !E, thereafter she also deli$ered E to the ban= for money mar=et in$estment, so li=e <ust other in$estments it matured, so (a<ardo demanded for the return of the E, the

ban= claimed that (a<ardo has nothing to reco$er from the ban= because as to her loan which (a<ardo failed to pay, upon foreclosure of the mortgage (a<ardo still has a deficiency of # million, so compensation too= place& (a<ardo 0uestioned the mortgage& Can there be legal compensation? No. T4ere #) be o le()l #om/e s)tio .4ile t4e #l)im o- :)2)r+o 0uestio i ( t4e mort()(e is bei ( liti()te+. As o e o- t4e re0uireme t o- le()l #om/e s)tio 1 t4e +ebts must be li0ui+)te+ ) + +em) +)ble. <ere1 t4e )mou ts o- t4e +ebt is ot yet i+e ti-ie+ or li0ui+)te+1 t4e -ore#losure bei ( sub2e#te+ to liti()tio . Eay legal compensation ta=e p l a c e i n depositum or commodatum? No. As e5/resse+ i Art. 1$J?. I su#4 #)ses le()l #om/e s)tio .ill ot t)6e /l)#e si #e i +e/ositum t4e +e/ositor or t4e b)ilor must i 3o6e le()l #om/e s)tio > Eay legal compensation ta=e place in debts which consists of ci$il liability arising from a criminal offense? No )s e5/resse+ i Art. 1$JJ. O ly t4e t4e )((rie3e+ /)rty m)y i 3o6e #om/e s)tio . Assi( me t o - Cre+i t ) s ) ri(4 t t o i 3o6 e #om/e s)tio A was indebted to B for >!=, %!=, and "!=, B on the other hand is indebted to A for !!=, A assigned his credit to X, X demanded payment from B, how much can X demand from B? It +e/e +s o .4e +i+ t4is )ssi( me t o##ur1 be-ore or )-ter t4e +ebt be#)me +ue. ,f the >!= was made on Gune >, "!!", the %!= was made on 5ct& >, "!!", and the "!= was on /ec& >, "!!", the deed of assignment was made on Gan& >, "!!%, and the !!= debt of B to A was due on 6o$& >, "!!"& Dow much can X reco$er from B? Si #e t4e +ebt be#)me +ue o No3. 1D1 $%%$ .4i#4 is /rior to t4e +ebt i #urre+ o "e#. 1D1 $%%$ ) + t4e )ssi( me t .)s m)+e lo ( be-ore t4e +ebt o1%%6 be#)me +ue1 #om/e s)tio too6 /l)#e o ly to t4e e5te t o- J%6. <e #e1 8 #) re#o3er )s mu#4 )s $%6 o ly1 -or t4e l)tter .)s m)+e )-ter t4e +ebt o- 1%%6 be#)me +ue.

Assuming the !!= debt of B to A is due on 6o$& >, "!!" and A assigned his credit X on Earch "!!", how much can X reco$er from B? Si #e t4e )ssi( me t .)s m)+e be-ore t4e +ebt be#)me +ue1 8 #) re#o3er ot4i (. T4e obli()tio is ot yet +ue u til No3. 1D1 $%%$. Assuming the due date of the !!= debt is on 6o$& >, "!!", and the assignment is in Guly "!!", how much can X 7assignee8 reco$er from B? T4e o ly +ebt sub2e#t to #om/e s)tio is t4e D%6 ) + t4e =%6 ) + $%6 is ot #o3ere+. <e #e1 o ly D%6 is sub2e#t to #om/e s)tio . T4e O#t ) + "e#. $%%$ +ebts m)y be re#o3ere+ by 8 sub2e#t to #ert)i re0uireme ts re0uire+ by l).. What are these re0uirements? "etermi e i- B 4)+ 6 o.le+(e or .it4out 6 o.le+(e o- t4e )ssi( me t. I- B is .it4 6 o.le+(e o- t4e )ssi( me t1 +etermi e .4et4er t4ere is #o se t or o e. I- #o se t is (i3e 1 +etermi e .4et4er 4e 4)s m)+e ) reser3)tio )s to B9s ri(4t to t4e #om/e s)tio )t t4e time 4is #o se t is (i3e . What are the effects of reser$ation at the time of consent? I- t4e +ebtor reser3es t4ere is #om/e s)tio . It4ere is o reser3)tio 1 t4e +ebtor .)i3e+ 4is ri(4t to #om/e s)tio . ,f B did not reser$e his right to compensation, what is his remedy? "em) + t4e +ebts o t4e D%1 =% ) + $%6. ,f B is without =nowledge of the assignment, what is the effect? T4ere is #om/e s)tio . No3)tio Art. 1$&1. Obli()tio s m)y be mo+i-ie+ byC !1' C4) (i ( t4eir ob2e#t or /ri #i/)l #o +itio sB !$' Substituti ( t4e /erso o- t4e +ebtorB !=' Subro()ti ( ) t4ir+ /erso i t4e ri(4ts o- t4e #re+itor. !1$%='

No3)tio is t4e e5ti (uis4me t o- ) obli()tio by t4e substitutio or #4) (e o- t4e obli()tio by ) subse0ue t o e .4i#4 e5ti (uis4es or mo+i-ies t4e -irst1 eit4er by #4) (i ( t4e ob2e#t or /ri #i/)l #o +itio 1 or by substituti ( t4e /erso o- t4e +ebtor1 or by subro()ti ( ) t4ir+ /erso i t4e ri(4ts o- t4e #re+itor. T4e e--e#t o- .4i#4 is to e5ti (uis4 t4e ol+.

1. $. =. ;.

A /re3ious 3)li+ obli()tio )(reeme t - )ll t4e /)rties to t4e e. #o tr)#t e5ti (uis4me t o- t4e ol+ #o tr)#t 3)li+ity o- t4e e. o e

What are the classifications of no$ation? No3)tio is t4e e5ti (uis4me t o- ) obli()tio by t4e substitutio or #4) (e o- t4e obli()tio by ) subse0ue t o e .4i#4 termi )tes it1 eit4er by #4) (i ( its ob2e#t or /ri #i/)l #o +itio s1 or by substituti ( ) e. +ebtor i /l)#e o- t4e ol+ o e1 or by subro()ti ( ) t4ir+ /erso to t4e ri(4ts o- t4e #re+itor. ; No3)tio t4rou(4 ) #4) (e o- t4e ob2e#t or /ri #i/)l #o +itio s o- ) e5isti ( obli()tio is re-erre+ to )s ob2e#ti3e !or re)l' o3)tio . No3)tio by t4e #4) (e o- eit4er t4e /erso o- t4e +ebtor or o- t4e #re+itor is +es#ribe+ )s sub2e#ti3e !or /erso )l' o3)tio . No3)tio m)y )lso be bot4 ob2e#ti3e ) + sub2e#ti3e !mi5e+' )t t4e s)me time. I bot4 ob2e#ti3e ) + sub2e#ti3e o3)tio 1 ) +u)l /ur/ose is )#4ie3e+-) obli()tio is e5ti (uis4e+ ) + ) e. o e is #re)te+ i lieu t4ereo-. D I- ob2e#ti3e o3)tio is to t)6e /l)#e1 it is im/er)ti3e t4)t t4e e. obli()tio e5/ressly +e#l)re t4)t t4e ol+ obli()tio is t4ereby e5ti (uis4e+1 or t4)t t4e e. obli()tio be o e3ery /oi t i #om/)tible .it4 t4e ol+ o e. E No3)tio is e3er /resume+C it must be est)blis4e+ eit4er by t4e +is#4)r(e o- t4e ol+ +ebt by t4e e5/ress terms o- t4e e. )(reeme t1 or by t4e )#ts o- t4e /)rties .4ose i te tio to +issol3e t4e ol+ obli()tio )s ) #o si+er)tio o- t4e emer(e #e o- t4e e. o e must be #le)rly +is#er ible. ? A()i 1 i- sub2e#ti3e o3)tio by ) #4) (e i t4e /erso o- t4e +ebtor is to o##ur1 it is ot e ou(4 t4)t t4e 2uri+i#)l rel)tio bet.ee t4e /)rties to t4e ori(i )l #o tr)#t is e5te +e+ to ) t4ir+ /erso . It is esse ti)l t4)t t4e ol+ +ebtor be rele)se+ -rom t4e obli()tio 1 ) + t4e t4ir+ /erso or e. +ebtor t)6e 4is /l)#e i t4e e. rel)tio . I- t4e ol+ +ebtor is ot rele)se+1 o o3)tio o##urs ) + t4e t4ir+ /erso .4o 4)s )ssume+ t4e obli()tio o- t4e +ebtor be#omes merely ) #o-+ebtor or surety or ) #osurety. It m)y be e5/ress !by )(reeme t' or im/lie+ !i #om/)tible'. It m)y be /)rti)l or tot)l. What are the re0uisites of no$ation?

Art. 1$&$. I or+er t4)t ) obli()tio m)y be e5ti (uis4e+ by ) ot4er .4i#4 substitute t4e s)me1 it is im/er)ti3e t4)t it be so +e#l)re+ i u e0ui3o#)l terms1 or t4)t t4e ol+ ) + t4e e. obli()tio s be o e3ery /oi t i #om/)tible .it4 e)#4 ot4er. !1$%;' Can no$ation be presumed? It is e3er /resume+. What is the test of incompatibility between the old and the new obligation in order to effect no$ation? T4e #4) (e must re-er to t4e ob2e#t1 t4e #)use1 or t4e /ri #i/)l #o +itio s o- t4e obli()tio . I ot4er .or+s t4ere must be ) esse ti)l #4) (e. A##i+e t)l mo+i-i#)tio s i ) e5isti ( obli()tio +o ot e5ti (uis4 it by o3)tio . ,ere mo+i-i#)tio s ot4e +ebt1 )(ree+ u/o bet.ee t4e /)rties +o ot #o stitute o3)tio . W4e t4e #4) (es re-er to se#o +)ry )(reeme ts1 ) + ot t4e t4e ob2e#t or /ri #i/)l #o +itio s o- t4e #o tr)#t1 t4ere is o o3)tio B su#4 #4) (es .ill /ro+u#e mo+i-i#)tio s o- i #i+e t)l -)#ts1 but .ill ot e5ti (uis4 t4e ori(i )l obli()tio . E.(. A mere e5te sio o- t4e term o- /)yme t +oes ot result i o3)tio 1 -or t4e /erio+ )--e#ts o ly t4e /er-orm) #e1 ) + NOT T<E CREATION O: T<E OBLIGATION. Ultim)tely1 t4e +etermi )tio o- .4et4er t4e #4) (es i ) y (i3e #o tr)#t or obli()tio )re su--i#ie t to bri ( )bout ) o3)tio 1 must +e/e + u/o t4e -)#ts ) + #ir#umst) #es o- e)#4 #)se. T4e +isti #tio bet.ee ) /ri #i/)l ) + ) )##i+e t)l #o +itio i t4e #o tr)#t or obli()tio is rel)ti3e. T4e le()l e--e#t o- ) y #4) (e m)+e by t4e /)rties .ill +e/e + u/o ) sou + )//re#i)tio o- t4eir im/ort) #e. T4e #ourts s4oul+ #o si+er1 i e)#4 /)rti#ul)r #)se1 ot o ly t4e )ture o- t4e #l)use t4)t is mo+i-ie+1 but )lso t4e i te tio o- t4e /)rties ) + t4e e#o omi# si( i-i#) #e o- t4e mo+i-i#)tio . Art. 1$&=. No3)tio .4i#4 #o sists i substituti ( ) e. +ebtor i t4e /l)#e o- t4e ori(i )l o e1 m)y be m)+e e3e .it4out t4e 6 o.le+(e or )()i st t4e .ill o- t4e l)tter1 but ot .it4out t4e #o se t o- t4e #re+itor. @)yme t by t4e e. +ebtor (i3es 4im t4e ri(4ts me tio e+ i Arti#les 1$=E ) + 1$=?. !1$%D)'

What are the two forms of substitution of debtor? 1. E5/romissio .4i#4 t4e i iti)ti3e -or t4e #4) (e +oes ot em) )te -rom t4e +ebtor ) + m)y be m)+e e3e .it4out 4is 6 o.le+(e1 si #e it #o sists i ) t4ir+ /erso )ssumi ( t4e obli()tio . $. "ele()#io is by t4e +ebtor .4o o--ers ) + t4e #re+itor )##e/ts ) t4ir+ /erso .4o #o se ts to t4e substitutio 1 so t4)t t4e #o se t o- t4ese t4ree )re e#ess)ry. ,s the release of the old debtor re0uired in order that a new debtor may be substituted? It is re0uire+. ,s the consent of creditor re0uired? W4et4er e5/romissio or +ele()#io 1 t4e #o se t o- t4e #re+itor is re0uire+. T4is is so be#)use substitutio o- o e -or ) ot4er m)y +el)y or /re3e t t4e -ul-illme t o- t4e obli()tio by re)so o- t4e i )bility or i sol3e #y o- t4e e. +ebtorB 4e #e t4e #re+itor s4oul+ )(ree to )##e/t t4e substitutio i or+er t4)t it m)y be bi +i ( o 4im. It m)y be e5/ress or im/lie+1 simult) eous or ot1 or is it re0uire+ to be i ) y /)rti#ul)r -orm. ,s the consent of the old debtor re0uired? I e5/romissio t4e #o se t o- t4e ol+ +ebtor is ot e#ess)ry1 .4ile i +ele()#io t4e ol+ +ebtors #o se t is re0uire+ -or it s4)ll be i iti)te+ i 4is i st) #e. ,s the consent of the new debtor necessary? O-#ourse1 be#)use 4e is to )ssume ) obli()tio . .o w h o m c a n t h e n e w d e b t o r d e mand reimbursement? I- t4e o3)tio is by +ele()#io 1 ) + t4e e. +ebtor /)ys t4e obli()tio 1 4e #oul+ +em) + -rom t4e ol+ +ebtor .4)t 4e 4)s /)i+. I- t4e o3)tio is by e5/romissio 1 ) + t4e e. +ebtor /)ys t4e +ebt .it4out t4e 6 o.le+(e o- t4e ol+ +ebtor1 t4e -ormer #) re#o3er o ly i so-)r )s t4e /)yme t 4)s bee be e-i#i)l to t4e ol+ +ebtor. Art. 1$&;. I- t4e substitutio is .it4out 6 o.le+(e or )()i st t4e .ill o- t4e +ebtor1 t4e +ebtorKs i sol3e #y or o --ul-illme t oobli()tio s s4)ll ot (i3e rise to ) y li)bility o t4e e. t4e t4e

/)rt o- t4e ori(i )l +ebtor. ! '

,n case the new debtor became insol$ent, can the new debtors liability be enforced against the old debtor who has no =nowledge of the no$ation? Io3)tio is by e5/romissio 1 o li)bility -or t4e e. +ebtor9s i sol3e #y #) be e -or#e+ )()i st t4e ol+ +ebtor1 be#)use t4e l)tter +i+ ot 4)3e t4e i iti)ti3e i m)6i ( t4e #4) (e1 .4i#4 mi(4t 4)3e bee m)+e .it4out 4is 6 o.le+(e. ,n case the new debtor became insol$ent, can the new debtors liability be enforced against the old debtor who has =nowledge of the no$ation? It +e/e +s. I #)se o- e5/romissio 4e is )lso rele)se+ -rom li)bility ot.it4st ) + i ( 4 i s 6 o.le+(e be#)use ob3ious i te t o- t4e #o+e is t4e rele)se t4e ol+ +ebtor. To m)6e t4e ol+ +ebtor li)ble i e5/romissio sim/ly be#)use 4e 4)s 6 o.le+(e o- t4e )ssum/tio o4is +ebt by ) ot4er1 or t4)t 4e )sse te+ to it1 .oul+ m)6e 4is li)bility e3e (re)ter t4)t t4)t o- ) +ebtor .4o too6 t4e i iti)ti3e ) + o--ere+ ) e. +ebtor i 4is /l)#eB i t4e l)tter #)se1 t4e li)bility o- t4e ol+ +ebtor .oul+ be limite+ to t4e t.o e5#e/tio s /ro3i+e+ i )rt. 1$&D1 .4ile i t4e -ormer1 4is li)bility i )ll #)ses o o -ul-illme t .oul+ be .it4out limit)tio . Art. 1$&D. T4e i sol3e #y o- t4e e. +ebtor1 .4o 4)s bee /ro/ose+ by t4e ori(i )l +ebtor ) + )##e/te+ by t4e #re+itor1 s4)ll ot re3i3e t4e )#tio o- t4e l)tter )()i st t4e ori(i )l obli(or1 e5#e/t .4e s)i+ i sol3e #y .)s )lre)+y e5isti ( ) + o/ubli# 6 o.le+(e1 or 6 o. to t4e +ebtor1 .4e t4e +ele()te+ 4is +ebt. !1$%E)' !"ELEGACION' Ot4er mo+es .4i#4 +oes ot e5em/t t4e ol+ +ebtor -rom li)bility +ue to t4e e. +ebtor9s i sol3e #y> ). i- t4e e. +ebtor is o ly se#o +)rily li)ble b. i- t4e t4ir+ /erso is o ly ) )(e t o- t4e +ebtor #. .4ere t4e e. +ebtor is bou + soli+)rily .it4 t4e ol+ +ebtor. Art. 1$&E. W4e t4e /ri #i/)l obli()tio is e5ti (uis4e+ i #o se0ue #e o- ) o3)tio 1 )##essory obli()tio s m)y subsist o ly i so-)r )s t4ey m)y be e-it t4ir+ /erso s .4o +i+ ot (i3e t4eir #o se t. !1$%?' A##essory obli()tio su#4 )s /le+(es1 mort()(es )s .ell )s (u)r) tors ) + sureties1 u less t4e l)tter )(ree to be bou + u +er t4e e. obli()tio . T4e e5#e/tio /ro3i+e+ 4)s re-ere #e to ) sti/ul)tio i -)3or o- t4e t4ir+ /erso 1 .4i#4 is

subor+i )te+ by t4e /ri #i/)l obli()tio . Alt4ou(4 te#4 i#)lly it is ) )##essory obli()tio 1 it i i s re)lity ) +isti #t obli()tio i -)3or o- ) t4ir+ /erso 1 ) + #) ot be e5ti (uis4e+ by o3)tio .it4out t4e #o se t o- t4e l)tter. Art. 1$&?. I- t4e e. obli()tio is 3oi+1 t4e ori(i )l o e s4)ll subsist1 u less t4e /)rties i te +e+ t4)t t4e -ormer rel)tio s4oul+ be e5ti (uis4e+ i ) y e3e t. ! ' What if the new obligation is $oidable, or not entirely $oid, will the old obligation subsist? T4e o3)tio ) ulle+. be#omes e--e#ti3e1 it is 3)li+ u til

T4ey must )ll be -ul-ille+ i or+er t4)t o3)tio m)y be#ome e--e#ti3e ) + t4e e. obli()tio be e -or#e)ble. I- o ly t4e #o +itio s )--e#ti ( t4e ol+ obli()tio )re -ul-ille+1 ) + t4ose )--e#ti ( t4e e. obli()tio )re ot1 t4e 1 t4ere is o o3)tio 1 ) + t4e ol+ obli()tio subsists1 be#)use t4e re0uisite o) e. 3)li+ obli()tio .oul+ be l)#6i (. Art. 1=%%. Subro()tio o- ) t4ir+ /erso i t4e ri(4ts o- t4e #re+itor is eit4er le()l or #o 3e tio )l. T4e -ormer is ot /resume+1 e5#e/t i #)ses e5/ressly me tio e+ i t4is Co+eB t4e l)tter must be #le)rly est)blis4e+ i or+er t4)t it m)y t)6e e--e#t. !1$%&)' Art. 1=%1. Co 3e tio )l subro()tio o- ) t4ir+ /erso re0uires t4e #o se t o- t4e ori(i )l /)rties ) + o- t4e t4ir+ /erso . ! ' Art. 1=%$. It is /resume+ t4)t t4ere is le()l subro()tio C O !1' W4e ) #re+itor /)ys ) ot4er #re+itor .4o is /re-erre+1 e3e .it4out t4e +ebtorKs 6 o.le+(eB!$' W4e ) t4ir+ /erso 1 ot i tereste+ i t4e obli()tio 1 /)ys .it4 t4e e5/ress or t)#it )//ro3)l o- t4e +ebtorB !=' W4e 1 e3e .it4out t4e 6 o.le+(e ot4e +ebtor1 ) /erso i tereste+ i t4e -ul-illme t o- t4e obli()tio /)ys1 .it4out /re2u+i#e to t4e e--e#ts o- #o -usio )s to t4e l)tterKs s4)re. !1$1%)'

What if there is a conditional new obligation, is there no$ation? It +e/e +s1 i- t4e #o +itio is )tt)#4e+ to t4e ol+ obli()tio or ot. Be#)use i- it is )tt)#4e+ to t4e ol+ obli()tio 1 t4ere is o o3)tio )t )ll. I- t4e #o +itio o t4e e. obli()tio is i te +e+ to substitute t4e ori(i )l /ure obli()tio 1 t4e o3)tio itsel-1 ) + t4e #o se0ue t e5ti (uis4me t o- t4e ori(i )l obli()tio 1 is sub2e#t to t4e #o +itio 1 t4e o3)tio itsel- +i+ ot t)6e /l)#e1 u til t4e 4)//e i ( o- t4e #o +itio . @e +i ( t4e 4)//e i ( o- t4e #o +itio 1 o3)tio +i+ ot yet t)6e /l)#e1 t4e ori(i )l obli()tio ot e5ti (uis4e+. Can the creditor demand from the ob<ect of the old obligation if the no$ated ob<ect is loss? T4e #re+itor #) ot +em) + -rom t4e ori(i )l ob2e#t1 t4e l)tter is )lre)+y e5ti (uis4e+ by t4e e. obli()tio . Art. 1$&J. T4e o3)tio is 3oi+ i- t4e ori(i )l obli()tio .)s 3oi+1 e5#e/t .4e ) ulme t m)y be #l)ime+ o ly by t4e +ebtor or .4e r)ti-i#)tio 3)li+)tes )#ts .4i#4 )re 3oi+)ble. !1$%J)' ,)y ) 3oi+ ori(i )l obli()tio be 3)li+)te+> No. It is 3oi+ ) + #) ot be r)ti-ie+. W4)t #) be r)ti-ie+ is ) 3oi+)ble obli()tio . A 3oi+ obli()tio #) ot be ) sour#e or ri(4ts1 or .)i3)ble by t4e /)rties. Art. 1$&&. I- t4e ori(i )l obli()tio sus/e si3e or resolutory #o obli()tio s4)ll be u +er t4e u less it is ot4er.ise sti/ul)te+. ! .)s sub2e#t to ) +itio 1 t4e e. s)me #o +itio 1 '

Art. 1=%=. Subro()tio tr) s-ers to t4e /erso s subro()te+ t4e #re+it .it4 )ll t4e ri(4ts t4ereto )//ert)i i (1 eit4er )()i st t4e +ebtor or )()i st t4ir+ /erso 1 be t4ey (u)r) tors or /ossessors omort()(es1 sub2e#t to sti/ul)tio i ) #o 3e tio )l subro()tio . !1$1$)' Art. 1=%;. A #re+itor1 to .4om /)rti)l /)yme t 4)s bee m)+e1 m)y e5er#ise 4is ri(4t -or t4e rem)i +er1 ) + 4e s4)ll be /re-erre+ to t4e /erso .4o 4)s bee subro()te+ i 4is /l)#e i 3irtue ot4e /)rti)l /)yme t o- t4e s)me #re+it. !1$1=' What obligation may be no$ated? ,s it re0uired that an obligation must arise from a contract? No1 ) y obli()tio m)y be t4e sub2e#t o- o3)tio . ,s it re0uired that there be agreement between the parties in order that no$ation will ta=e place? 7es. A(reeme t is re0uire+. T4ere m)y o ly be ) o3)tio )s ) result o- t4e )(reeme t o- t4e /)rties. What is the effect of no$ation?

W4)t i- bot4 obli()tio s )re #o +itio )l1 ol+ ) + e.>

T4ere .ill be e5ti (uis4me t o- t4e ol+ obli()tio ) + ) e. o e e5ist1 e5#e/t /res#ri/tio . I /res#ri/tio t4ere is o e5iste #e o- ) e. obli()tio . >>>>>> ,f there are changes in the original obligation does it mean that there is no$ation? No. I- t4e #4) (es +oes ot result i o3)tio 1 t4ere is o o3)tio . Asi+e -rom t4e #l)ssi-i#)tio 1 it (oes i to t4e )ture o- t4e e5ti (uis4me t.

1. Iu)si "eli#t - T4e em/loyer o- t4e se#urity (u)r+ m)y be 4el+ li)ble. :EU 4o.e3er1 .ill ot be li)ble u +er 0u)si +eli#t be#)use :EU .)s ot t4e em/loyer o- t4e se#urity (u)r+. $. Co tr)#t - :EU is li)ble u +er t4e #o tr)#t be#)use .4e t4e stu+e t e rolls i ) U i3ersity1 ) #o tr)#t is e tere+ i to. I t4)t #o tr)#t it i #lu+es t4e +uty o- t4e s#4ool to m)i t)i ) /e)#e-ul e 3iro me t ) + #o +u#i3e to le)r i (. ,s the right to enter into a contract a purely statutory right? No. T4is ri(4t is /rote#te+ by t4e #o stitutio . T4is is #)lle+ t4e o im/)irme t #l)use. Not e3e t4e St)te #) im/)ir t4e -ree+om o- /)rties to e ter i to #o tr)#ts1 .it4 t4e e5#e/tio i- it is i t4e e5er#ise o- /oli#e /o.er.

Contracts Are agreements contracts? Co tr)#ts )re )(reeme ts but ot )ll )(reeme ts )re #o tr)#ts. ,f A and B had an agreement, is it a contract? A mere )(reeme t .ill ot e#ess)rily #o stitute ) #o tr)#t. T4e )ture o- ) #o tr)#t is o e o- t4e sour#es oobli()tio s. I ) )(reeme t .4ere t4ere is meeti ( ot4e mi +s bet.ee t.o /erso s )s +e-i e+ i Art. 1=%D .4ere o e bi +s 4imsel- to (i3e somet4i ( or to re +er some ser3i#e. T4us1 -or ) )(reeme t to be#ome ) #o tr)#t t4ere must be ) #orres/o +i ( obli()tio )risi ( -rom t4)t )(reeme t. ,s dacion en pago a contract? No. ")#io e /)(o is t4e +eli3ery o- t4e +ebtor o- ) t4i ( i s)tis-)#tio o- 4is +ebt. It is ot mere )(reeme t to +eli3er1 but r)t4er it is t4e +eli3ery. Wit4out t4e +eli3ery t4ere is o +)#io e /)(o. ")#io is ) mo+e oe5ti (uis4i ( obli()tio . Co tr)#ts #re)tes ) obli()tio . ,s a contract an obligation? No. It is o e o- t4e sour#es o- ) obli()tio . ,s there such a thing as a mode of extinguishing a contract? 7es. I- ) mo+e o- e5ti (uis4me t is ) mo+e oe5ti (uis4i ( obli()tio s t4)t .oul+ )lso be ) mo+e oe5ti (uis4i ( #o tr)#ts be#)use1 i- it e5ti (uis4es ) #o tr)#t t4e t4e obli()tio )risi ( -rom t4e #o tr)#t .ill li6e.ise be e5ti (uis4e+1 e5#e/t t4ose .4i#4 4)s )lre)+y bee 3este+. S)lu+)() 3s. :EU A sophomore law student of (3: was shot by the security guard of (3:& De sur$i$ed and sued (3:& What possible liabilities may arise?

,s marriage a contract? No it is #o si+ere+ )s ) s/e#i)l #o tr)#t be#)useC 1. /)rties - i #o tr)#ts it +oes ot re0uire t4)t /)rties be m)le ) + ) -em)le. $. (o3er i ( l). - t4e sti/ul)tio o- t4e /)rties .ill /rim)rily (o3er t4e rel)tio o- t4e /)rties1 .4ere)s i ) #o tr)#t o- m)rri)(e1 it is t4e l). .4i#4 .ill (o3er t4e ri(4ts ) + obli()tio s o- t4e /)rties to su#4 m)rri)(e. =. termi )tio - t4ere )re so m) y mo+es o- e5ti (uis4i ( ) #o tr)#t1 .4ere)s i ) #o tr)#t o- m)rri)(e it is o ly +e)t4 /rim)rily .4i#4 .ill #)use t4e e5ti (uis4me t ot4e obli()tio o- t4e /)rties ) + ) ulme t. Contracts is defined as the meeting of the minds between two persons& Eay a person contract with himself? Contracts is a meeting of the min s bet!een t!o persons +parties- !hereb# one +reciprocal9t!o- bin s himself, !ith respect to the other to give something or to ren er some service +inclu es not to o- +Art. 130(-. 7es. T4is #o tr)#t is 6 o. )s ) )uto #o tr)#t. I o e #)/)#ity )#ti ( -or o e /erso ) + i ) ot4er #)/)#ity -or 4imsel- or yet ) ot4er /erso . E.(. W4e ) /erso is )ut4oriAe+ to borro. mo ey1 4e 4imsel- m)y be t4e le +er. When a person is authoriHed to borrow money, can he himself be the lender? 7es. I t4)t lo) )(reeme t 4e .ill be si( i ( )s re/rese t)ti3e o- t4e /ri #i/)l or t4e borro.er ) + 4e 4imsel- be si( i ( -or 4imsel- )s ) le +er. T4is )ut4ority is sub2e#t to t4e rule t4)t t4e i terest s4)ll be o ly -or t4e m)r6et r)te. What auto contracts which are prohibited under 1hilippine law?

1. A (u)r+i) is /ro4ibite+ -rom )#0uiri ( by /ur#4)se t4e /ro/erty o- 4is .)r+ !)rt. 1;&1P1Q'. T4is is be#)use t4e (u)r+i) #) ot sell -or 4imsel- t4e /ro/erty o- t4e .)r+. ,s it correct to say that only one of the parties to a contract will be obligated to perform the contract because as defined that an obligation is the meeting of the minds of the parties where one binds himself to gi$e something or to perform a ser$ice? No. It is ) +e-e#t i t4e +e-i itio be#)use re#i/ro#)l obli()tio s m)y )rise -rom #o tr)#ts. It is ot merely u il)ter)l. ,s there an obligation not to do arise from contracts because as defined that an obligation is limited to an obligation to gi$e and to render some ser$ice? 7es t4ere is ) obli()tio F ot to +oG .4i#4 m)y )rise -rom ) #o tr)#t ) + .oul+ re +er t4e +e-i itio +e-e#ti3e. As ) e5)m/le1 i t4e +e)lers o- <o +) t4e buyers )re obli()te+ ot to use t4e #)rs )s ) t)5i#)b. (undamental 1rinciplesLCharacteristics of Contracts9 What are the fundamental characteristics of a contracts? 7>8 1. )uto omy o- #o tr)#ts !Art. 1=%E' $. #o se su)lity o- #o tr)#ts =. mutu)lity o- #o tr)#ts ;. obli()tory -or#e o- #o tr)#ts D. rel)ti3ity o- #o tr)#ts What is autonomy of contracts or freedom of contract or liberty to stipulate? T4e #o tr)#ti ( /)rties m)y est)blis4 su#4 sti/ul)tio s1 #l)uses1 terms ) + #o +itio s )s t4ey m)y +eem #o 3e ie t1 /ro3i+e+ t4ey )re ot #o tr)ry to l).1 mor)ls1 (oo+ #ustoms1 /ubli# or+er or /ubli# /oli#y !Art. 1=%E'. Sti/ul)tio s #o tr)ry to l). ,n a contract of partnership entered into by A, B and C, in that contract it was stipulated that of the profits of the partnership, >!I will go to A, the other >!I will go to B& .hus, if a !!,!!! profit was earned by the business of the partnership, who will share this profit? Will A and B share >!,!!! each? No. T4is is be#)use t4is sti/ul)tio )s to t4e +i3isio os4)ri ( is 3oi+ u +er t4e l).. W4ile t4e /)rties #) est)blis4 su#4 sti/ul)tio s1 #l)uses1 terms ) + #o +itio s )s t4ey m)y +eem #o 3e ie t1 t4e re0uireme t o- t4e l). is t4)t t4eses sti/ul)tio s s4oul+ ot be #o tr)ry to l).1 mor)ls1 (oo+ #ustoms1 /ubli# or+er or /ubli# /oli#y. T4is is ) sti/ul)tio /)#tum leo i )1 .4ere t4ere is ) sti/ul)tio bet.ee t4e /)rt ers .4i#4 e5#lu+es o o- t4e /)rt ers -rom s4)ri ( i t4e /)rt ers4i/ /ro-its.

As to l).1 .4et4er t4is sti/ul)tio is #o tr)ry to l). or ot is to 6 o. t4e l).s .4i#4 +e#l)res #ert)i sti/ul)tio s to be 3oi+. Eay a forfeiture clause in a contract be $oid? 7es. T4e l). re +ers it to be 3oi+ i- #o -ro te+ by t4e m)#e+) l).. I- t4e /roblem #o3ers issues u +er t4e m)#e+) l).1 t4e t4)t #l)use +e#l)res to be ) 3oi+ #l)use. Are wai$ers $alid? Ge er)lly1 yes. <o.e3er t4ere )re l).s .4ere .)i3ers )re ot 3)li+. :or e5)m/le i S)les1 i- t4ere is ) .)i3er )s )()i st t4e seller i #)se o- e3i#tio . T4)t .oul+ be ) 3oi+ .)i3er i- t4e seller is i b)+ -)it4. W)i3er )s to -uture -r)u+ is ) 3oi+ .)i3er. @)#tum Commissorium i ) #o tr)#t o- ) /le+(e or mort()(e is ) 3oi+ sti/ul)tio .4ere it /ro3i+es t4)t u/o +e-)ult o- t4e /ri #i/)l +ebtor1 t4e /ro/erty /le+(e or mort()(e .ill )utom)ti#)lly be o. e+ by t4e /le+(ee or mort()(ee. @)#tum Leo i ) .4ere t4ere is ) sti/ul)tio bet.ee t4e /)rt ers .4i#4 e5#lu+es o o- t4e /)rt ers -rom s4)ri ( i t4e /)rt ers4i/ /ro-its. @)#tum +e o )lie +o is ) 3oi+ sti/ul)tio /ro4ibiti ( t4e mort()(or -rom )lie )ti ( 4is /ro/erty .it4out t4e #o se t o- t4e mort()(ee. Guly , ))F Brian leased and office space of a building at the rental rate of ,!!! a month& .he lease contract stipulated that in case of inflation or de$aluation of the 1hilippine peso the monthly rental may be increased depending on the amount of de$aluation of inflation of the peso to the dollar& 4tarting Guly "!!! the lessor increased the monthly rental to ",!!! a month on the ground that there is inflation pro$en by the fact that the exchange rate of peso to the dollar is "> pesos to >! pesos& Brian refused to pay in the increased rate, and an action for unlawful detainer was filed against him& Will the action prosper? Why? T4e )#tio .ill /ros/er. T4e /)rties m)y est)blis4 su#4 sti/ul)tio s1 #l)uses1 terms ) + #o +itio )s t4ey m)y +eem #o 3e ie t. T4e sti/ul)tio t4)t i #)se o+e3)lu)tio o- t4e /eso1 t4e i #re)se i re t)ls m)y be +o e. Su#4 sti/ul)tio is ot ) 3oi+ sti/ul)tio 1 )s it is ot #o tr)ry to l).1 mor)ls1 (oo+ #ustoms1 /ubli# or+er or /ubli# /oli#y. Su#4 is ) re)so )ble sti/ul)tio bet.ee t4e /)rties1 be#)use .4e t4e 3)lue o- t4e /eso +e3)lu)tes1 t4e t4e re t)l o- 11%%% /esos ) mo t4 is o lo (er ) re)so )ble re t1 4e #e /ro/er i #re)se i re t)ls )s ) result o- t4e +e3)lu)tio m)y /ros/er. T4is is #)lle+ ) es#)l)tio #l)use .4ere t4e 4)//e i ( o- ) #ert)i #o ti (e #y1 t4e #om/e s)tio o- o e o- t4e /)rties m)y be i #re)se+. Eay an escalation clause be rendered $oid or ineffecti$e?

7es i- t4is es#)l)tio #l)use is /ro3i+e+ i t4e #o tr)#t olo) .4i#4 .oul+ (i3e t4e b) 6 t4e ri(4t to i #re)se t4e i terest. T4e re)so .4y t4is es#)l)tio #l)use be #o si+ere+ 3oi+ is be#)use t4ere is o +e-es#)l)tio #l)use. T4is is be#)use t4ere is ) mo et)ry bo)r+ resolutio )s -)r )s lo) s )re #o #er e+1 i or+er -or ) es#)l)tio #l)use to be 3)li+1 t4ere s4oul+ be ) +ees#)l)tio #l)use. :urt4er1 su#4 es#)l)tio or i #re)se i i terest s4oul+ be o ly o #e ) ye)r. It must be stresse+ t4)t ) es#)l)tio #l)use to be 3)li+ must ot be solely /otest)ti3e i #4)r)#ter. T4e #l)use s4oul+ ot be b)se+ o o e o- t4e .4im o- o e o- t4e /)rties. It s4oul+ be b)se+ o ) re)so )ble ) + 3)li+ st) +)r+. 6on in$ol$ement clause in an employment contract, is it $alid? I t4e #)se o- +)isy tiu 3s. /l)ti um /l) s it .)s sti/ul)te+ t4)t Ft4e em/loyee +uri ( 4is e ()(eme t .it4 t4e em/loyer1 ) + i #)se o- se/)r)tio -rom t4e #om/) y .4et4er 3olu t)ry or -or #)use1 4eNs4e s4)ll ot -or t4e e5t t.o ye)rs1 e ()(e i or be i 3ol3e .it4 ) y )sso#i)tio 1 #or/or)tio or e tity1 .4et4er +ire#tly or i +ire#tly e ()(e i t4e s)me busi ess or belo (i ( to t4e s)me /re- ee+ i +ustry )s t4e em/loyer. A y bre)#4 o- t4e -ore(oi ( /ro3isio s4)ll re +er t4e em/loyee li)ble to t4e em/loyer i t4e )mou t o- 1%%1%%% /esos -or ) + )s li0ui+)te+ +)m)(es. Ge er)lly ) o i 3ol3eme t #l)use is ot ) 3)li+ #l)use be#)use it .ill limit t4e ri(4t o- ) /erso )s -)r )s 4is li3eli4oo+ is #o #er e+1 ) + t4is .oul+ be ) u re)so )ble restr)i t o- tr)+e. <o.e3er1 i t4is #)se su#4 is ot ) 3oi+ /ro3isio be#)use t4is is ot ) )bsolute /ro4ibitio . T4is is ot )bsolute /ro4ibitio i rel)tio to t4e /erio+ !$ ye)rs' ) + tr)+e or )re) oe ()(eme t !/re- ee+ busi ess o ly i t4e @4ili//i es'. ")isy Tiu .)s ) E5e#uti3e Vi#e @resi+e t o- t4e Com/) y ) + 4er 2ob is 4i(4ly #o -i+e ti)l ) + 4)3i ( su--i#ie t 6 o.le+(e o- t4e str)te(ies o- t4e #om/) y1 it is but /ro/er -or t4e #om/) y to t)6e me)sures to /reser3e t4eir tr)+e se#rets. <e #e1 su#4 sti/ul)tio #o stitute ) re)so )ble #l)use .4i#4 +oes ot im/)ir t4e ri(4ts o- t4e em/loyee. Co tr)ry to mor)ls What stipulation may be considered immoral by the 4upreme Court? I terest or /e )lties sti/ul)tio . I- t4e /e )lties s4oul+ be D /esos ) +)y -or e3ery +)y o- +el)y m)y eit4er be immor)l or mor)l +e/e +i ( o t4e /ri #i/)l )mou t. I o e #)se1 .4ere t4e /ri #i/)l )mou t is ;%% /esos1 t4e Su/reme Court s)i+ t4)t t4e D /eso /e )lty is 3oi+ -or bei ( #o tr)ry to mor)ls1 u #o s#io )ble1 ) + e5#essi3e. It is )lmost ;%%M /er ) um /e )lty. T4e D.D. i terest /er mo t4 is #o si+ere+ #o tr)ry to mor)ls it bei ( )lmost ?E /er#e t i terest /er ) um.

T4e i terest o- = /er#e t /er mo t4 /lus /e )lty !=EM /er ) um' o t4e #re+it #)r+ +e#i+e+ by t4e Su/reme Court is #o si+ere+ u #o s#io )ble1 i e0uitous1 ) + #o tr)ry to mor)ls. Su#4 i terest ) + /e )lties bei ( re +ere+ 3oi+ by t4e S.C. +oes ot re +er t4e B) 6 u )ble to re#o3er i terest1 but re+u#e+ t4e i terest ) + /e )lty to 1 /er#e t /er mo t4 !,)#)li )o 3s. B@I $%%& C)se'. Co tr)ry to /ubli# /oli#y Dow would you =now if there is a certain public policy in$ol$ed in relation to a certain topic? I- ) l). is /)sse+1 orm)lly t4ere .ill be ) /ubli# /oli#y be4i + t4e l). t4)t m)y be #ite+ by t4e l).m)6ers. @ubli# /oli#ies m)y be see o t4e -u +)me t)l l). ot4e l) +1 .4i#4 is t4e #o stitutio . Alma was hired as a domestic helper in Dong Cong by the /ragon 4er$ices Aimited, through its local agent& 4he executed a standard employment contract designed by the 1hilippine 5$erseas Wor=ers Administration for o$erseas (ilipino wor=ers& ,t pro$ided for a salary for one year with a salary of ,!!! :&4& dollars a month& ,t was submitted to and appro$ed by the 153A, howe$er when she arri$ed in Dong Cong she was as=ed to sign another contract, which reduced her salary to only #!! :&4& dollars per month& Da$ing no other choice she signed the contract, but when she returned to the 1hilippines, she demanded a salary differential of at least *!! :4 dollars a month& Both dragon ser$ices limited and its local agency claimed that the "nd contract is $alid under the laws of Dong Cong and therefore binding on Alma& ,s their claim correct? T4e #l)im is ot #orre#t e3e i- t4e sti/ul)tio i <o ( Ro ( .4ere t4e s)l)ry is E%% +oll)rs is ) 3)li+ sti/ul)tio u +er t4e l). o- <o ( Ro (1 it #) ot be e -or#e+ i t4e @4ili//i es. Su#4 sti/ul)tio is #o tr)ry to our /ubli# /oli#y u +er t4e Co stitutio .4i#4 /ro3i+es -ull /rote#tio to l)bor. Cui was a student and en<oyed a scholarship& Dowe$er, it was stipulated that if he would transfer to another law school he will ha$e to reimburse Arellano for the amounts which he should ha$e paid had he not been a scholar& .he Aaw /ean of Arrellano at that time was the uncle of Cui& When the law dean transferred to another law school, Cui also transferred& When he was about to ta=e the bar exams, he as=ed for his grades from Arellano, but the latter refused to release the grades until he would reimburse Arellano as so pro$ided in the scholarship agreement& De paid under protest& De passed the bar exam and sued Arellano& What was the ruling of the 4upreme Court? T4e )(reeme t re0uiri ( reimburseme t is #o tr)ry to /ubli# /oli#y. T4e /ubli# /oli#y i 3ol3e+ i t4is #)se is t4)t s#4ol)rs4i/ (r) ts )re (r) te+ o t4e b)sis o- merit ) + s4oul+ ot be (r) te+ i or+er to bolster t4e re/ut)tio o- l). s#4ools. I- ) stu+e t .) ts to tr) s-er to ) ot4er l). s#4ool1 4e s4oul+ ot be re0uire+ to reimburse !Cui 3s. Arrell) o S#4ool o- L).'.

An agreement of two persons $ying for special nomination as an official candidate of a congressional seat of the 6ationalista party& ,t was stipulated in the agreement that they would ha$e to go through the process of con$ention, and whoe$er would lose in that con$ention shall not run as an independent or rebel candidate& 4yndico the defendant lost in the party con$ention but she still run and won& 4aura sued 4yndico for damages, will the action prosper? T4e )#tio .ill ot /ros/er be#)use t4e sti/ul)tio .4i#4 /ro4ibite+ Sy +i#o -rom ru i ( is ) 3oi+ sti/ul)tio be#)use it is #o tr)ry to /ubli# /oli#y. A mere )(reeme t o- t.o /erso s #) ot ot limit 4imsel- )s ) #) +i+)te i ) ele#tor)l #o test. A )(reeme t bet.ee t.o /erso s #) ot limit t4e ri(4t o- t4e ele#tor)te to #4oose .4o )mo ( t4e #) +i+)tes is -it -or t4)t /)rti#ul)r /ositio . Co se su)lity o- Co tr)#ts :or ) #o tr)#t to be 3)li+1 t4e /)rties must 3olu t)rily (i3e t4eir #o se t. No o e #) be #om/elle+ to e ter i to ) #o tr)#t. Re/ubli# 3s. @L"T 2epublic filed an action to compel 1A/. to enter into an interconnection agreement& At that time when the action was filed, the telecommunication ser$ices within the country was controlled by 1A/.& Will the action prosper? @L"T #) ot be #om/elle+ by t4e Re/ubli# to e ter i to ) #o tr)#t. Co se t must be 3olu t)rily (i3e i or+er to 4)3e ) 3)li+ #o tr)#t. Co se t must be -reely (i3e . <o.e3er1 t4is )#tio .)s tre)te+ )s ) e5/ro/ri)tio /ro#ee+i (. Co tr)#t o- A+4esio 2here is a contract !hich is claime to be voi allege l# for lac) of consent of one of the parties because the contract !as prepare onl# b# one of the parties. %uch contract !as presente to the other part# for his a hesion, an there is practicall# no negotiation or consent as to the contracts terms an con itions. 2his is a contract of a hesion. Atty& 5ng Yu was on his way to Butuan City and his luggage was lost and he filed an action against 1AA claiming damages& 1AA in$o=e a pro$ision in the contract +,f at all 1AA shall be held liable for the luggage, such cannot exceed !! pesos-& Atty& 5ng Yu interpose that such stipulation was in a contract of adhesion and he did not consent to such contract& A #o tr)#t o- )+4esio is ) 3)li+ #o tr)#t. T4e re)so is t4)t ) /)rty 4)s ) #4oi#e .4et4er to )##e/t or to re2e#t t4e #o tr)#t. I- bou(4t t4e ti#6et1 4e /r)#ti#)lly )##e/te+ t4e terms ) + #o +itio s !O ( 7u 3s. CA'.

A case in$ol$ing a trust receipt which is a contract of adhesion& Gimmy @o 0uestioned the $alidity of the trust receipt claiming that it is a contract of adhesion& T4e trust re#ei/t is 3)li+ 4o.e3er1 i- t4ere is )mbi(uity i t4e #o tr)#t1 su#4 )mbi(uity s4)ll be #o strue+ )()i st t4e /)rty .4o /re/)re+ t4e #o tr)#t. Si #e it .)s ,etrob) 6 .4o /re/)re+ t4e #o tr)#t1 su#4 )mbi(uity .)s rule+ i -)3or o- Himmy Go. T4e )mbi(uity is to .4e Himmy Go .oul+ +eli3er t4e (oo+s1 t4e Su/reme Court s)i+ t4is sti/ul)tio s4oul+ be #o strue+ )()i st ,etrob) 6. T4e obli()tio be#)me +ue .4e t4e +em) + .)s m)+e by ,etrob) 6 !,etro/olit) B) 6 3s. Himmy Go'. Sti/ul)tio /our )trui !Sti/ul)tio i ) #o tr)#t -or t4e be e-it o- ) t4ir+ /erso 'N ,utu)lity o- Co tr)#ts. I or+er -or t4is sti/ul)tio be bi +i ( o t4e be e-i#i)ry1 4e must #ommu i#)te 4is )##e/t) #e be-ore t4e re3o#)tio o- su#4 be e-it to t4e obli(or. What if one of the parties to the contract 7not the beneficiary8 re$o=ed the benefit, in fact he may ha$e sent a letter to the beneficiary informing the latter that the benefit in your fa$or in the contract which i entered into with B has already been re$o=ed& .his re$ocatory letter has been sent by A before the beneficiary communicated his acceptance& /oes it mean that the beneficiary would no longer be entitled to this benefit? Not e#ess)rily. <e m)y still be e title+ be#)use i or+er -or t4e re3o#)tio to be e--e#ti3e it 4)s to be #o se te+ to by bot4 /)rties. Ot4er.ise i- o ly o e o- t4e /)rties re3o6e+ t4e be e-it i -)3or o- t4e be e-i#i)ry1 t4)t .oul+ be #o tr)ry to t4e -u +)me t)l /ri #i/le o- #o tr)#ts .4i#4 is t4e mutu)lity o- #o tr)#ts. U +er t4is mutu)lity o- #o tr)#ts /ri #i/le1 ) #o tr)#t must bi + bot4 #o tr)#ti ( /)rties ) + its 3)li+ity ) + #om/li) #e #) ot be le-t to t4e .ill o- o e o- t4em. So1 )s -)r )s t4e be e-it is #o #er e+ )s it .)s )(ree+ u/o by bot4 /)rties1 it #) o ly be re3o6e+ by bot4 /)rties. A re3o#)tio by o ly o e is ) 3iol)tio o- t4is -u +)me t)l /ri #i/le o- mutu)lity o- #o tr)#ts. 4f an escalation clause !oul be invo)e b# one of the parties !ithout a reasonable an vali stan ar , the %upreme Court !oul rule that it is contrar# to the mutualit# of contracts principle. 2o be a vali clause, it must be base on a vali an reasonable stan ar . 4t shoul not solel# be potestative in character. Eay the termination of the contract by one of the parties be $iolati$e of this fundamental principle of mutuality of contracts? No. I t4e #)se o- @4ilb) 6i ( 3s. Louie Sy i 3ol3i ( ) #o tr)#t o- le)se .4ere t4e lessee .)s (i3e t4e ri(4t to termi )te t4e #o tr)#t by merely (i3i ( oti#e to t4e lessor1 ) + t4e termi )tio s4)ll t)6e e--e#t )-ter 1D +)ys -rom re#ei/t o- t4e oti#e o- t4e termi )tio . T4e S.C. rule+ t4)t su#4 sti/ul)tio +oes ot 3iol)tio t4e mutu)lity o- #o tr)#ts /ri #i/le. It is ot #o3ere+ by t4e mutu)lity o-

#o tr)#t1 .4)t is #o3ere+ is t4e 3)li+ity or #om/li) #e1 it +oes ot /ert)i to t4e termi )tio o- t4e #o tr)#t. Obli()tory :or#e o- Co tr)#ts 8n er this principle, obligations arising from contracts have the force of la! bet!een the contracting parties, an shoul therefore be complie !ith in goo faith. When would a contract ha$e the force of law between the contracting parties? .he fact that there is already a meeting of the minds between the ob<ect and sub<ect matter of the cause, does it mean that the contract already has the force of law? Not e#ess)rily. I or+er -or ) #o tr)#t to 4)3e t4e -or#e o- l).1 t4e #o tr)#t must 4)3e bee /er-e#te+. It is )t t4e time o- t4e /er-e#tio o- t4e #o tr)#t t4)t eit4er /)rties to t4e #o tr)#t #) #om/el t4e ot4er /)rty to /er-orm t4e obli()tio s u +er t4)t #o tr)#t. Gust because the contract has been perfected does it mean that such is already enforceable? Not e#ess)rily. Be#)use su#4 /er-e#tio o- t4e #o tr)#t is sub2e#t to t4e st)tute o- -r)u+s. A #o tr)#t o- s)le m)y 4)3e bee /er-e#te+ be#)use t4ere is )lre)+y ) meeti ( o- t4e mi +s )s to t4e ob2e#t ) + t4e /ri#e1 4o.e3er i- it is ot i t4e -orm /res#ribe+ by l). or it is ot #o3ere+ by Arti#le 1;%=1 t4)t .oul+ be ) u e -or#e)ble #o tr)#ts. Auto omy o- #o tr)#ts .he parties to the contract in the loan for money agreed that the yearly interest rate is "I will be increased if there is a law authoriHe the increase of the interest rates& 4uppose 5B would increase the interest rate by >I to be paid by .Y the borrower without a law authoriHing such increase, would that increase would be <ust and $alid? Would .Y has a remedy against the imposition of such interest rate increase& Would 5Bs action be <ust and $alid? O-#ourse o. U +er t4e )uto omy o- #o tr)#ts /ri #i/le t4e /)rties #) est)blis4 su#4 sti/ul)tio s terms ) + #l)uses )s t4ey m)y +eem #o 3e ie t. T4ey )(ree+ t4)t t4ere #) o ly be ) i #re)se i- t4ere is ) l).. Si #e t4ere .)s o l).1 t4ere #) be o 3)li+ i #re)se. ,n one case, similar to this scenario that there should be law authoriHing such increase& .hereafter at that time, the usury law has not yet been suspended& .he Central Ban= at that time issued a monetary board resolution authoriHing an increase rate& With that monetary board resolution authoriHing the increase in the rate, would that now gi$e the lender the increase in the rate considering their stipulation? T4e SC s)i+ o be#)use ) l). is ot t4e s)me )s ) mo et)ry bo)r+ resolutio . Alt4ou(4 su#4 mo et)ry bo)r+ resolutio m)y 4)3e t4e -or#e o- l).1 but it is ot ) l).. Si #e t4e /)rties )(ree+ o ly i- t4ere is ) l).. Si #e t4ere is o l).1 but o ly ) mo et)ry bo)r+ resolutio 1 t4ere #) be o 3)li+ i #re)se i t4e i terest r)te.

/on, an American businessman secured parental consent for the employment of > minors to certain roleses in two mo$ies he was producing at home in Ea=ati& .hey wor= > hours a day and night but always accompanied by their parents or other adults& .he producer paid the children talent fees better than adult wages, but a social wor=er reported to 4W( that these children often missed going to school& .hey sometimes dran= wine and in some cases they were exposed to drugs and sometimes they were filmed na=ed or in re$ealing costumes& /on, in his defense, all these are part of artistic freedom and cultural creati$ity& 6one of the parents complained said /on, and he said that the contract containing a wai$er of the right to file any complaint in any office or tribunal concerning the wor=ing conditions of the children acting in the mo$ies& ,s the wai$er $alid and binding? T4e .)i3er 4ere is ) 3oi+ .)i3er be#)use t4is .oul+ be #o tr)ry to t4e l). .4i#4 /ro3i+es -or t4e /rote#tio omi ors. A y .)i3er )s to t4e ri(4ts o- mi ors i rel)tio to t4e l). /rote#ti ( t4em .oul+ be ) 3oi+ .)i3er be#)use it is #o tr)ry to l).. Rel)ti3ity o- #o tr)#ts A sold an item to B, thereafter B sold the same item to C& 5rdinarily would A ha$e the cause of action against C? 6one because there is no pri$ity of contracts between A and C& ,t is only A and B and B and C who has pri$ity of contract& 4o who would be bound to a contract? Or+i )rily t4e /)rties1 t4eir )ssi( s ) + 4eirs ) + t4ose .4o .oul+ be )--e#te+1 be e-ite+ ) + .4o #) be li)ble u +er t4e #o tr)#t. T4e )ssi( s ) + 4eirs )re /ri3y to t4e #o tr)#t. U +er Art. 1=111 #o tr)#ts t)6e e--e#t bet.ee t4e /)rties1 t4eir )ssi( s1 ) + 4eirs. ,s it possible that a contract will not affect the heirs, or not to benefit the heirs? 7es1 u +er t4is /ro3isio . A #o tr)#t m)y t)6e e--e#t o ly u/o t4e /)rties .4e t4e ri(4ts ) + obli()tio s )risi ( -rom t4is #o tr)#t )re i tr) smissible. T4ree s#e )rios .4ere ri(4ts ) + obli()tio s )re i tr) smissibleC 1' W4e t4e l). so /ro3i+esB $' I- t4ere is ) sti/ul)tio B =' I- t4e )ture o- t4e ri(4ts ) + obli()tio s .oul+ ot )llo. t4e tr) smissibility o- t4ese ri(4ts ) + obli()tio s. 74tipulation8 ,n a lease contract decided by the 4upreme Court, there was a stipulation in the contract that the rights and obligations of the parties are intransmissible& .he lessee died, would his heir would still ha$e the right to the possession of the leased premises until the expiration of the period? T4e S.C. s)i+ o be#)use .it4 t4e +e)t4 o- t4e lessee1 t4e #o tr)#t .)s e5ti (uis4e+ be#)use t4e ri(4ts ) + obli()tio s )risi ( -rom t4e #o tr)#t )re i tr) smissible by sti/ul)tio .

But or+i )rily1 t4e 4eirs .ill still 4)3e t4e ri(4t to /ossess be#)use ) le)se #o tr)#t is ot ) /urely /erso )l #o tr)#t. T4ere-ore t4e ri(4ts ) + obli()tio s o- t4e /)rties i rel)tio to t4e #o tr)#t m)y be tr) smitte+ to 4eirs ) + )ssi( s. E3e i le)se #o tr)#ts1 )lso ) lessee or+i )rily suble)se t4e /remises i .4ole ) + i /)rt1 u less 4e is /ro4ibite+ -rom suble)si ( t4e /ro/erty. 7Aaw8 :nder the law on usufruct, ordinarily, when the usufructuary dies, will his rights be transmitted to his heirs? No be#)use t4e l). so /ro3i+es1 e5#e/t .4e t4ere is ) #o tr)ry sti/ul)tio i t4eir )(reeme t. 7By Contract or agreement8 A /ro/erty ri(4t o- ) /)rt er 6 o. )s t4e ri(4t i ) s/e#i-i# /)rt ers4i/ /ro/erty. A /)rt er #) ot )ssi( 4is ri(4ts i ) s/e#i-i# /)rt ers4i/ /ro/erty .it4out )ll /)rt ers m)6i ( t4e s)me )ssi( me t o3er t4e s)me /ro/erty. A /)rt er )lo e .it4out t4e #o se t or 6 o.le+(e o- t4e ot4er /)rt ers #) ot tr) smit 4is ri(4ts to ) )ssi( ee by l).. 7By nature8 W4e t4e ri(4ts ) + obli()tio s )re /urely /erso )l or t4e 0u)li-i#)tio s o- t4e /)rties 4)3e bee #o si+ere+ i t4e est)blis4me t o- t4e #o tr)#t. T4is is #ommo i #o tr)#ts .4i#4 .ill i 3ol3e s6ills be#)use .it4 t4e )ture o- su#4 ri(4ts it #) ot be )ssi( e+ to ) ot4er /erso 1 -or su#4 is ) /urely /erso )l ri(4t. ,n the principle of pri$ity of contracts, in what circumstances may a third person may be bound to a contract? A t4ir+ /erso m)y be 4el+ li)ble i ) #o tr)#t i .4i#4 4e is ot ) /)rty or i .4i#4 4e is ot /ri3y1 or ) t4ir+ /erso m)y 4)3e ) #)use o- )#tio i rel)tio to ) #o tr)#t1 .4e 4e m)y be be e-ite+ or /re2u+i#e+ by su#4 #o tr)#t. I #o tr)#ts i 3ol3i ( or #re)ti ( re)l ri(4ts1 t4ir+ /erso s .4o .oul+ t)6e /ossessio o- t4e ob2e#t or sub2e#t m)tter o- t4e #o tr)#t1 sub2e#t to t4e re0uireme ts omort()(e l).s ) + re(istr)tio l).s1 et#. 7,n contracts in$ol$ing real rights8 ,n a contract in$ol$ing a real estate mortgage on a parcel of land entered into between A and B, A being the mortgagee and B being the mortgagor& A sells his land to C and thereafter if A the mortgagor is also the principal debtor, he defaulted& Can the mortgagagee foreclose the mortgage of this parcel of land? With the sale and the land may ha$e been deli$ered to C, C may already be the owner of the land& Eay there be still a $alid foreclosure o$er the land, if the land is no longer owned by the mortgagor? 7es it is /ossible be#)use i su#4 #o tr)#ts .4i#4 #re)tes re)l ri(4ts1 t4e ri(4ts o- t4e mort()(ee )tt)#4es to t4e /ro/erty .4oe3er m)y be t4e o. er o3er t4e /ro/erty .4o m)y be bou + to t4is mort()(e. E3e i- C is t4e o. er1 4is ri(4ts .ill be sub2e#t to t4e ri(4ts o- t4e

mort()(ee1 sub2e#t to t4e 0u)li-i#)tio o- t4e l). o mort()(e ) + re(istr)tio l).. I t4is #)se1 -or C to be bou + to t4is #o tr)#t1 t4ou(4 C is ot ) /)rty or /ri3y to t4is #o tr)#t1 o et4eless 4e .oul+ be bou + i- t4is #o tr)#t is re(istere+ or e3e i- ot re(istere+1 C 4)s )#tu)l 6 o.le+(e o- t4is #o tr)#t. A#tu)l 6 o.le+(e 4)s t4e s)me e--e#t )s re(istr)tio . !I #o tr)#ts i -r)u+ o- #re+itors' A sol+ ) /)r#el o- l) + to B1 but t4e s)le is i -r)u+ o#re+itor 8. Or+i )rily B bei ( ) t4ir+ /erso .ill ot be bou + to t4e #o tr)#t or .ill 4)3e ) #)use o- )#tio to t4is #o tr)#t. But be#)use t4is #o tr)#t is i -r)u+ o#re+itors1 t4e l). (r) ts 4im t4e ri(4t to res#i + t4e #o tr)#t. T4is is o e #o tr)#t .4i#4 is res#issible u +er Art. 1=J1. When may a third person be held liable under a contract which he is not a party or pri$y to such contract? U +er Art. 1=1; .4e ) t4ir+ /erso i ter-eres i ) #o tr)#t sub2e#t to t4e re0uireme t t4)t t4ere must be m)li#e i t4e i ter-ere #e. (rancis Albert, a citiHen and resident of 6ew Gersey :4A, under whose law, he is still a minor being only "! years of age which was hired by ABC corporation Eanila to ser$e for " years as its chief computer programmer& After ser$ing for only * months he resigned to <oin XYJ corporation which entice him by offering more ad$antages terms& Dis first employer sued him for damages arising from the breach of contract arising from his employment, he sets up his minority defense as for annulment of the contract on that ground& .he plaintiff disputes this by alleging that the contract was executed in the 1hilippines under whose law the age of ma<ority is F, he was only a minor& 4uppose XYJ corporation was impleaded as a co?defendant, what would be the basis of its liability? 87S Cor/. is ) t4ir+ /erso i ) #o tr)#t e tere+ i to bet.ee ABC ) + :r) #is Albert. 87S Cor/. m)y be 4el+ li)ble u +er Art. 1=1; .4e 4e m)li#iously i +u#e+ ) /)rty to ) #o tr)#t to 3iol)te t4e #o tr)#t. Si #e 87S Cor/. e ti#e+ :r) #is Albert o--eri ( t4e l)tter more )+3) t)(es terms me) t4)t t4e -ormer m)y be 4el+ li)ble -or m)li#ious i ter-ere #e be#)use o- su#4 e ti#eme t. :or li)bility to )rise u +er Art. 1=1;1 t4e -irst re0uireme t o- t4e l). is t4)t t4ere must be 6 o.le+(e osu#4 t4ir+ /erso o- t4e e5iste #e o- ) #o tr)#t. I- 4e 4)s o 6 o.le+(e ) + merely )s6s t4e /erso to 2oi t4e #om/) y1 )//)re tly t4ere #) be o m)li#e. By t4e use o- t4e term e ti#eme t ) + (i3i ( more )+3) t)(eous terms1 to t4)t e5te t it #) me) t4)t t4ere is su#4 m)li#ious i ter-ere #e o t4e /)rt o- 87S. T4e b)sis o- li)bility o- 87S .oul+ be soli+)ry li)bility .it4 :r) #is Albert be#)use su#4 is ) tortious )#t ) + u +er Art. $1&; .4ere it /ro3i+e t4)t .4e $ or more /erso s )re 4el+ li)ble -or 0u)si +eli#t1 s4)ll be soli+)rily li)ble.

Eay the liability of a third person who maliciously interfered to the contract be more than the liability of a party to a contract who $iolated the contract? No. I o e #)se t4e S.C. 4el+ t4)t t4e li)bility o- su#4 t4ir+ /erso #) ot be more t4) t4e li)bility o- ) /)rty to t4e #o tr)#t .4o 4imsel- 3iol)te+ t4e #o tr)#t. 2oland, a bas=etball star was under a contract for year to play for and exclusi$ely for lady lo$e& 3$en before the bas=etball season could open, he was offered a more attracti$e pay plus fringe benefits& 2oland accepted the offer for sweet taste& Aady lo$e sued 2oland and 4weet taste& /efendants claimed that the restriction to play for lady lo$e alone i

A #4)ttel mort()(e bei ( ) )##essory #o tr)#t1 ) + )lt4ou(4 su#4 )##essory #o tr)#t is e5ti (uis4e+1 t4)t .ill ot e5ti (uis4 t4e /ri #i/)l be#)use t4e )##essory -ollo.s t4e /ri #i/)l. So1 e3e i- t4e #ro/s .ere +estroye+ +ue to ) -ortuitous e3e 1 )t best it .oul+ o ly e5ti (uis4 t4e #4)ttel mort()(e. Bei ( ) )##essory #o tr)#t it +oes ot )t )ll )--e#t t4e obli()tio s u +er t4e /ri #i/)l #o tr)#t. T4e e--e#t o- su#4 e5ti (uis4me t o t4e lo) #o tr)#t is t4)t it .ill ot be u se#ure+. I- t4e s#e )rio .oul+ /ert)i to t4e e5ti (uis4me t o- t4e /ri #i/)l #o tr)#t1 t4e t4e )##essory #o tr)#t .oul+ e#ess)rily i #lu+e t4e e5ti (uis4me t o- t4e )##essory #o tr)#t by o/er)tio o- l).. T4e )##essory .ill -ollo. t4e /ri #i/)l !Re/ubli# 3s. Gri4)l+o'. What are the accessory contracts? 1. Gu)r) tee $. Suretys4i/ =. @le+(e ;. C4)ttel ,ort()(e D. Re)l Est)te ,ort()(e E. A ti#4resis Are preparatory contracts accessory contracts? No. @re/)r)tory #o tr)#ts )re /ri #i/)l #o tr)#ts. /ri #i/)l #o tr)#ts .ill ot e#ess)rily be t4e e + by t4emsel3es. T4ey )re e tere+ i to -or ot4er #o tr)#ts to be m)+e li6e )(e #y or /)rt ers4i/. ,f the agent did not enter into a contract as he bound himself to do so in an agency to sell such that he did not sell anything of the goods of the principal& Will it affect the $alidity of the contract of agency? No. /re/)r)tory #o tr)#ts #) st) + o t4eir o. . T4ou(4 t4ey #) ot be t4e e + by t4emsel3es1 t4ey #) st) + o t4eir o. 1 t4ey )re ot )##essory #o tr)#ts. I- 4e -)ile+ to #om/ly .it4 4is obli()tio u +er t4e #o tr)#t1 )s ) rule1 4e #) be 4el+ li)ble -or ot /er-ormi ( 4is obli()tio . Re)l Co tr)#tsC @er-e#te+ by +eli3ery o- t4e ob2e#t or t4e sub2e#t m)tter o- t4e obli()tio . A borrowed money from B& .o secure the fulfillment of his obligation, A agreed to deli$er his watch to B as a security in a $erbal agreement& Without this watch being deli$ered to B and before the deli$ery of the sum of money borrowed& Was there a perfected contract in$ol$e in the problem? T4e #o tr)#ts i 3ol3e i t4e /roblems )re 1' #o tr)#t olo) ) + $' /le+(e. No #o tr)#ts 4)s bee /er-e#te+ to bot4. T4ese #o tr)#ts )re re)l #o tr)#ts. :or t4e /er-e#tio o- t4is #o tr)#t1 +eli3ery o- t4e ob2e#t or t4e sub2e#t m)tter ot4e #o tr)#t is re0uire+. Art. 1=1E e umer)tes re)l #o tr)#ts1 t4ou(4 t4ere )re o ly = e umer)te+ re)l

#o tr)#ts .4i#4 is /le+(e +e/osit or #ommo+)tum1 #le)rly mutuum or sim/le lo) is )lso ) re)l #o tr)#t )s e5/ressly /ro3i+e+ u +er t4e /ro3isio s o- sim/le lo) . T4is #o tr)#t #) o ly be /er-e#te+ u/o t4e +eli3ery ot4e t4i ( or mo ey borro.e+ to t4e borro.er or t4e le +er1 )s t4e #)se m)y be. Co se su)l Co tr)#tsC T4ese )re #o tr)#ts .4i#4 is /er-e#te+ by mere #o se t. T4is s4oul+ be #o si+ere+ )s t4e meeti ( o- t4e mi +s )s to t4e ob2e#t ) + t4e #o si+er)tio NoteC I- t4ere is ) meeti ( o- t4e mi +s )s to t4e ob2e#t ) + ot to ) #o si+er)tio 1 t4ere is ) meeti ( o- t4e mi +s but t4ere is o /er-e#te+ #o tr)#t. :orm)l Co tr)#tsC Co tr)#ts re0uire #ert)i -orm. What contract is not perfected by mere consent e$en if it is not a real contract? I- su#4 #o tr)#ts is re0uire+ to be i ) #ert)i -orm to be 3)li+. ,f a contract is not $alid, may it be perfected? O-#ourse ot. I -)#t1 o obli()tio .oul+ e3e )rise1 i- it is ) 3oi+ #o tr)#t. As ) e5)m/le i ) ti#4resis1 t4e l). re0uires t4)t t4e )(reeme t )s to t4e /ri #i/)l ) + i terest s4)ll be i .riti (1 ot4er.ise t4e ) ti#4resis is 3oi+. Ot4er e5)m/le .oul+ /ert)i to ) +o )tio 1 .4ere t4e ob2e#t o- t4e +o )tio is ) re)l /ro/erty1 t4e +o )tio s4oul+ be i ) /ubli# i strume t1 ot4er.ise1 t4e +o )tio is 3oi+. Eerly offered to sell an automobile to Kioly for #!=, after inspecting the automobile Kioly offered to buy it for >!=& .he offer was accepted by Eerly& .he next day Eerly offered to deli$er the automobile but Kioly being short of funds secured postponement of the deli$ery& 1romising to pay the price upon arri$al of the steamer Delena& .he steamer howe$er, ne$er arri$ed because it was wrec=ed by a typhoon and sun= somewhere o$er the coast of 4amar& ,s there a perfected contract in this case? Why? Si #e t4is is ) #o tr)#t o- s)le1 ) + it bei ( ) #o se su)l #o tr)#t1 t4ere .)s ) /er-e#te+ #o tr)#t o- s)le be#)use .4e Violy9s #ou ter o--er .)s )##e/te+1 t4e t4ere .)s )lre)+y ) /er-e#te+ #o tr)#t o- s)le. Alt4ou(41 Violy9s +eli3ery o- t4e #)r is #o +itio e+ t4)t ste)ms4i/ <ele ) .oul+ )rri3e1 +oes ot )--e#t t4e /er-e#tio o- t4e #o tr)#t. T4e #o +itio 4ere is ot ) #o +itio -or t4e obli()tio to )rise1 be#)use t4e #o tr)#t 4)+ )lre)+y bee /er-e#te+. T4e #o +itio 4ere is o ly to t4e -ul-illme t o- t4e obli()tio . T4is is ot ) obli()tio to )rise. ,n a problem in$ol$ing a contract where a thing was deli$ered, what contract was entered into& What rights and obligations of the parties under the contract? E%

It +e/e +s o t4e i te tio o- t4e /)rties )s to t4e e--e#t o- t4e +eli3ery. Woul+ t4e +eli3ery result i t4e tr) s-er oo. ers4i/> W)s t4e /ur/ose o- t4e +eli3ery .)s o ly -or t4e use ) + e 2oyme t o- t4e t4i ( by t4e ot4er /)rty> W)s t4e +eli3ery o ly -or t4e /ur/ose o- s)-e6ee/i (> I- it i 3ol3es tr) s-er o- o. ers4i/ it m)y be ) #o tr)#t or tr) s)#tio . I- it is ) #o tr)#t it #oul+ be ) s)le1 b)rter. But it #) ot be ) le)se or #ommo+)tum be#)use t4ere is tr) s-er o- o. ers4i/. I- it is merely ) tr) s)#tio t4is #oul+ be +)#io e /)(o si #e t4ere is tr) s-er oo. ers4i/. I- t4e /ur/ose is o ly -or t4e use ) + e 2oyme t o- t4e t4i ( by t4e ot4er /)rty to .4om t4e t4i ( .)s +eli3ere+1 t4e #o tr)#t #oul+ be ) le)se or #ommo+)tum. T4e +i--ere #e t4is time (oes i to t4e )ture o- t4e #o tr)#t )s to t4e #)use. Be#)use i- t4ere is ) /ri#e to be /)i+ -or t4e use ) + e 2oyme t o- t4e t4i (1 t4)t is ) le)se. But it4e use or e 2oyme t is (r)tuitous1 t4is #oul+ be #ommo+)tum. Ri +s o- Co tr)#ts )s to #)useC 1. O erous $. Co tr)#ts o- /ure be e-i#ie #e =. Remu er)tory O erous Co tr)#t - Le)se o- Ser3i#e Art. 1=D% I o erous #o tr)#ts t4e #)use is u +erstoo+ to be1 -or e)#4 #o tr)#ti ( /)rty1 t4e /rest)tio or /romise o- ) t4i ( or ser3i#e by t4e ot4erB i remu er)tory o es1 t4e ser3i#e or be e-it .4i#4 is remu er)te+B ) + i #o tr)#ts o- /ure be e-i#ie #e t4e mere liber)lity o- t4e be e-)#tor. Commut)ti3e - E0ui3)le t i t4e 3)lue o- t4e /rest)tio !i ) #o tr)#t o- s)le t4e 3)lue o- t4e t4i ( to be +eli3ere+ is e0u)l to t4e 3)lue o- t4e /ri#e'. Are all contracts of sale commutati$e? No S)le o- <o/e is ot #ommut)ti3e1 li6e lotto or s.ee/st)6es. Nomi )te - S/e#i)l Rules (o3er i ( t4is #o tr)#t. I omi )te - Wit4out ) )me

When must the cause exist? It mist e5ist )t t4e time t4e #o tr)#t is e tere+ i to. ,n a deed of sale, what is the cause? As to t4e seller1 it is t4e /ri#e1 )s to t4e buyer it is t4e t4i ( sol+. ,f the price does not appear in the contract, is the contract $oid? No. t4e #)use is /resume+ to e5ist1 so e3e i- ot st)te+ i t4e #o tr)#t it is /resume+ to be l).-ul. I- t4e buyer bou(4t ) (u -or t4e /ur/ose o- 6illi ( ) /erso 1 .)s t4e s)le 3oi+> No1 be#)use #)use is +i--ere t -rom moti3e. C)use is t4e esse ti)l re)so 1 moti3e is t4e /erso )l re)so . A /erso )l re)so e3e i- u l).-ul or ille()l +oes ot )--e#t t4e 3)li+ity o- t4e #o tr)#t. ,f the person entered into a contract to a$oid a threatened in<ury, would that be affected by the moti$e? 7es. As ) rule1 t4e ille()lity o- moti3e .ill ot )--e#t t4e 3)li+ity o- t4e #o tr)#t. It mi(4t )--e#t t4e 3)li+ity i- t4e /ur/ose o- t4e /erso or moti3e /re+omi )tes t4e /ur/ose o- t4e #o tr)#t. ,)y ) #o tr)#t be 3oi+ be#)use t4e moti3e is ille()l or u l).-ul> 7es i #)ses .4ere t4e s)le to ) /erso .4ose moti3e is o ly to #ir#um3e t t4e /ro4ibitio u +er Art. 1;&% .4ere t4e 4usb) + ) + .i-e #) ot sell /ro/erty to e)#4 ot4er sub2e#t to #ert)i e5#e/tio s )s /ro3i+e+ t4erei . ,f the cause or reason why the seller sold the thing is to defraud his creditors, is the contract $alid? It is 3)li+ but t4e #o tr)#t m)y be #o si+ere+ +e-e#ti3e1 it is ) res#issible #o tr)#t. /eed of 4ale o$er a certain car for 1 , is the sale $alid? 7es t4e s)le is 3)li+. Lesio +oes ot )--e#t t4e 3)li+ity o) #o tr)#t e5#e/t i #)ses /ro3i+e+ by l). su#4 )s lesio su--ere+ by ) .)r+ u +er res#issible #o tr)#ts. <o.e3er1 .4e t4ere is -r)u+1 mist)6e or u +ue i -lue #e1 t4e it is ot 3)li+1 it is 3oi+)ble !Art. 1=DD' ,f the cause stated in the contract is a false cause, is the contract $alid? T4e #)use is -)lse i- it is -i#titious or simul)te+. I- t4e #)use is -)lse1 it +oes ot -ollo. t4)t t4e #o tr)#t is 3oi+B it is #o si+ere+ o ly )s ) 3oi+)ble #o tr)#t be#)use i- it #) be /ro3e t4)t t4ere is ) ot4er #)use .4i#4 is true ) + l).-ul1 t4e #o tr)#t is 3)li+.

,f the stipulation of the parties are not sufficient to resol$e the contro$ersy, what rules should apply? Rules o obli()tio s ) + #o tr)#ts. I- ot1 rules ) )lo(ous to obli()tio s ) + #o tr)#ts. ,n accessory contracts, what is the cause? It +e/e +s o t4e #o tr)#t. T4e /le+(or or mort()(or m)y be ) =r+ /erso . I- t4e /le+(or or mort()(or is t4e s)me /erso 1 t4e #)use is t4e s)me.

E1

E.(. I ) #o tr)#t e5e#ute+ bet.ee S ) + B1 it .)s m)+e to )//e)r t4)t S +eli3ere+ to B ) /)r#el o- l) +1 ) + B /)i+ S 1%1%%%1 .4e i -)#t t4ere .)s i +ee+ ) +eli3ery but o /)yme t .)s e3er m)+e. T4e #o tr)#t os)le e5e#ute+ is ot 3)li+ be#)use t4e #)use st)te+ is -)lse. <o.e3er1 i- t4e /)rties #) /ro3e t4)t t4e #)use oS (i3i ( t4e l) + to B is /ure liber)lity1 t4e t4)t #o tr)#t m)y be #o si+ere+ )s ) +o )tio . Ri +s o- #o tr)#ts )##or+i ( to sub2e#t m)tterC 1. T4i ( $. Ser3i#e =. Ri(4t /oes it mean that all special contracts will ha$e the % sub<ect matters as $alid sub<ect matters of contract? No. I ) #o tr)#t o- s)le1 t4ere #) be o ser3i#e. St)(es o- ) Co tr)#tC 1. Ne(oti)tio !@re/)r)tio ' $. @er-e#tio =. Co summ)tio Eay there be a perfected contract during the negotiation stage? 7es i o/tio #o tr)#t. Before the preparation of the contract, what if the offerer withdrew the offer? As ) rule t4e o--erer 4)s t4e ri(4t to .it4+r). 4is o--er )t ) ytime u less t4ere is o/tio mo ey or t4ere is ) #o si+er)tio )s somet4i ( /)i+ or /romise. ,f there is a withdrawal of the offer and there is no option contract, may the offeror be held liable for damages? As ) rule1 o be#)use t4ere is o /er-e#te+ #o tr)#t. But t4e o--eror m)y be li)ble be#)use t4ere )re ot4er sour#es o- obli()tio . <e m)y be li)ble u +er torts. <e m)y be li)ble u +er torts .4e -or e5)m/le t4e o--eror 4)s )lre)+y +e#i+e+ to .it4+r). t4e o--er = mo t4s be-ore 4e m)+e t4e #ommu i#)tio to t4e ot4er /)rty1 4e m)y be #o si+ere+ e(li(e t. At the performance stage, will the statute of frauds apply? No it .ill )//ly i- t4e #o tr)#t is e5e#utory. I- t4e /)rties 4)3e )lre)+y /er-orme+ t4e obli()tio t4ere is o room -or t4e st)tute o- -r)u+s to )//ly. Re0uisites o- V)li+ity o- Co tr)#tsC 1. Co se t $. Ob2e#t =. C)use ,s a particular form or deli$ery an essential re0uisite of contracts?

No re0uiri ( ) /)rti#ul)r -orm or to re0uire +eli3ery is ot ) ESSENTIAL eleme t o- ) #o tr)#t. It is o ly #o se t1 ob2e#t ) + #)use .4i#4 )re t4e esse ti)l eleme ts o- ) #o tr)#t. An action was filed to nullify or to declare null and $oid a contract, will the action prosper? I #)se o- )#tio to ) ul ) #o tr)#t1 .4i#4 /ert)i s to ) 3oi+)ble #o tr)#t1 t4e )#tio m)y /res#ribe be#)use ) 3oi+)ble #o tr)#t /res#ribes i ; ye)rs -rom t4e time t4e +e-e#t o- t4e #o se t #e)ses i #)se o- I timi+)tio 1 Viole #e or U +ue I -lue #e. I #)se o- mist)6e or -r)u+1 ; ye)rs -rom t4e time o- t4e +is#o3ery o- t4e s)me. What distinguishes an absolutely simulated contract from a relati$ely simulated contract? I )bsolutely simul)te+ t4ere is o ly o e #o tr)#t1 .4ile i rel)ti3ely simul)te+ #o tr)#t1 t4ere )re )#tu)lly t.o #o tr)#ts .4ere t4e true i te tio or true #o tr)#t o- t4e /)rties )re #o #e)le+. I )bsolutely simul)te+ t4ere is )#tu)lly o #o tr)#t ) + t4e /)rties +i+ ot i te + to be bou + by ) y #o tr)#t )t )ll1 .4ile i rel)ti3ely simul)te+1 t4ere is ) #o tr)#t. What are the =inds of capacity? 1. Huri+i#)l #)/)#ity - To be#ome t4e sub2e#t o2uri+i#)l rel)tio s. $. C)/)#ity to )#t - /o.er to +o )#ts .it4 le()l e--e#ts !but m)y be sub2e#t o- 2uri+i#)l rel)tio s'. A person without <uridical personality entered into a contract, status of the contract? Voi+. Can minors enter into a contract of sale? ,i ors )re i #)/)ble o- (i3i ( #o se t1 e5#e/t .4ere e#essities )re sol+ ) + +eli3ere+ to ) mi or or ot4er /erso .it4out #)/)#ity to )#t1 t4e 4e must /)y o ly ) re)so )ble /ri#e !Art. 1;J&'. A contract entered into by a minor without the consent of the parents or guardian is $oidable, what are the exceptions? 1. W4ere t4e #o tr)#t is e tere+ i to by ) mi or .4o misre/rese ts 4is )(e1 )//lyi ( t4e +o#tri e oesto//el. $. W4ere t4e #o tr)#t i 3ol3es t4e s)le ) + +eli3ery oe#essities to t4e mi or !Art. 1;J&'. X, of age entered into a contract with a minor, Y =new the age of Y& Eay X demand annulment of the contract? No. A #o tr)#t e tere+ i to by ) /erso .4o is #)/)#it)te+ #) ot )lle(e t4e i #)/)#ity o- t4e /erso .4o is i #)/)#it)te+ by re)so o- esto//el. E$

What is absolute incapacity? @erso s .4o )re /ro4ibite+ by l). to e ter i to ) y #o tr)#ts. It is 3oi+ -rom t4e be(i i (. What is relati$e incapacity? @erso s .4o )re #)/)#it)te+ to e ter i to #o tr)#ts but -or ot4er #o tr)#ts t4ey )re ot )llo.e+ by re)so o- t4eir rel)tio s4i/ to t4e /erso .it4 .4om t4ey re/rese t. !e.(. Art. 1;&1'. Eay an agent buy the property of the principal? 7es1 /ro3i+e+ it is #o se te+ to by t4e /ri #i/)l. Eay an alien may ac0uire property by purchase in the 1hilippines? 7es1 ) )lie m)y )#0uire /ro/erty by /ur#4)se i t4e @4ili//i es1 /ro3i+e+ 4e is ) -ormer )tur)l bor #itiAe )s /ro3i+e+ i t4e Co stitutio . Eay there be a contract of sale o$er a pri$ate land e$en if the alien is not a natural born citiHen? 7es1 i- t4e )lie is +is/osi ( o- t4e /ro/erty. W4)t is /ro4ibite+ is )#0uiri ( /ro/erty. Dow can the alien sell if he did not ac0uire? <e m)y 4)3e )#0uire+ it by su##essio . A contract was entered into by a person who has capacity to gi$e consent, is the contract $alid? Not e#ess)rily be#)use e3e i- #o se t .)s (i3e by ) /erso .4o 4)s #)/)#ity to )#t1 t4e #o tr)#t m)y be 3oi+)ble .4e t4ere is 3iti)te+ #o se t. A ga$e consent with a contract with C& De ga$e consent in representation of B& ,f B did not authoriHe A to enter into the contract, what is the status of the contract? It m)y be u e -or#e)ble. It m)y be 3)li+ i- A is (i3e )ut4ority o- t4e l). to e ter i to su#4 #o tr)#t su#4 )s (u)r+i) s1 e5e#utors or )+mi istr)tors. What are the $ices of consent? 1. ,ist)6e or error $. I timi+)tio or t4re)t =. Viole #e or -or#e ;. U +ue i -lue #e D. :r)u+ or "e#eit !Art. 1==%' ,ist)6e An action was filed by the buyer of a car for the annulment of a contract on the ground that he was mista=en as to the brand of stereo of the car which is alleged to be 1ioneer but it was 4anyo& Would the court grant the prayer of the plaintiff for the annulment of the contract?

No. Not e3ery time t4ere is mist)6e .oul+ (i3e ) /erso ) ri(4t to ) ul t4e #o tr)#t. T4e error or mist)6e i or+er -or ) ulme t to /ros/er must be subst) ti)l re()r+i (C ). ob2e#t o- t4e #o tr)#t b. #o +itio s .4i#4 /ri #i/)lly mo3e+ o e or bot4 /)rties to e ter i to t4e #o tr)#t #. i+e tity or 0u)li-i#)tio s o- /erso s +. error must be e5#us)ble1 ) + ot #)use+ by e(li(e #e e. t4e error must be ) mist)6e o- -)#t ) + ot o- l).. Sim/le error or mist)6e )s to )##ou t .ill (i3e rise to #orre#tio 1 ot ) ulme t o- t4e #o tr)#t. T4e mist)6e i t4e br) + o- t4e stereo m)y ot be t4e #o +itio .4i#4 im/els t4e buyer to /ur#4)se t4e #)r. T4e /ossible mist)6e .4i#4 .oul+ (i3e rise to ) #o +itio .4i#4 .oul+ /ri #i/)lly mo3e t4e buyer to /ur#4)se t4e #)r is t4e e (i e1 be#)use it (oes i to t4e esse #e o- t4e t4i (1 /rob)bly be#)use 4e is ) r)#e #)r +ri3er1 ) + 4e .oul+ .) t ) #)r .it4 ) /o.er-ul e (i e. A entered into a contract of sale payable on installment, may annulment be a remedy? :or t4e buyer1 it m)y be ) #o +itio .4i#4 im/els 4im to e ter i to ) #o tr)#t1 .4e t4ere is ) error t4)t t4e /)yme t .ill ot be i i st)llme t. A ulme t is ) reme+y be#)use 4e #oul+ ot 4)3e e tere+ i to su#4 #o tr)#t .4e 4e 6 e. t4)t t4e s)le .)s o ) #)s4 b)sis. Eay the mista=e in the identity or 0ualification of persons re0uired in order to be a ground for annulment? Not e#ess)rily. It is e#ess)ry 4o.e3er1 )s i t4e #)se o- #o tr)#t o- (u)r) ty .4e t4e /ri #i/)l #)use .4i#4 mo3es t4e #re+itor to )##e/t 4im )s ) (u)r) tor. Viole #eNI timi+)tio Viole #e - T4ere is 3iole #e .4e i or+er to .rest #o se t1 serious or irresistible -or#e is em/loye+ !Art. 1==D'. I timi+)tio - W4e o e o- t4e #o tr)#ti ( /)rties is #om/elle+ by ) re)so )ble ) + .ell (rou +e+ -e)r o- ) immi e t ) + (r)3e e3il u/o 4is /erso or /ro/erty1 or u/o t4e /erso or /ro/erty o- 4is s/ouse1 +es#e +) ts or )s#e +) ts to (i3e 4is #o se t !Art. 1==D'. Kiolence was employed upon the spouse of the party claiming $itiation of consent? Would that be a $alid ground for annulment? Vie. 1C No. <e #) ot i 3o6e ) ot em/loye+ u/o 4is /erso . ulme t be#)use it .)s

Vie. $C But1 i- i i timi+)tio 1 t4e /erso m)y )lre)+y i 3o6e t4e reme+y o- ) ulme t .it4 more re)so t4)t su#4 reme+y s4oul+ be )3)il)ble t4ere bei ( /4ysi#)l #om/ulsio . ,f the plaintiff claims that he sold his fish pond at a time where there were lawless elements ro$ing in E=

that area where his fish pond was located& Dis neighbors also did the same& Eay he in$o=e that they were compelled to sell because of lawless $iolence? No. I or+er -or 3iole #e or i timi+)tio to be ) 3)li+ (rou + -or ) ulme t1 it s4oul+ ot be ) (e er)l +uress. It 4)s to be )#tu)lly em/loye+ u/o t4e /)rty or t4ose /erso s so /ro3i+e+ by l).. T4is +uress is #)lle+ #olle#ti3e +uress .4i#4 is ot ) (rou + -or ) ulme t ot4e #o tr)#t. NoteC 1. A t4re)t to e -or#e o e9s #l)im t4rou(4 #om/ete t )ut4ority1 i- t4e #l)im is 2ust ) + le()l +oes ot 3iti)te #o se t. $. I +etermi i ( t4e +e(ree o- i timi+)tio 1 t4e se51 )(e ) + #o +itio o- t4e /erso i timi+)ti ( ) + i timi+)te+ s4oul+ be t)6e i to #o si+er)tio . =. Viole #e or i timi+)tio s4)ll ) ul t4e obli()tio )lt4ou(4 it m)y 4)3e bee em/loye+ by ) t4ir+ /erso .4o +i+ ot t)6e /)rt i to t4e #o tr)#t !Art. 1==E'. ,f it was undue influence that was exerted by a %rd person upon one of the contracting parties, would that party ha$e a right to annul if he can pro$e collusion upon a %rd person? T4ou(4 t4e l). +oes ot /ro3i+e1 t4e ) s.er is yes be#)use u +ue i -lue #e .oul+ )lso )--e#t 3olitio or 3olu t)ri ess 2ust li6e 3iole #e ) + i timi+)tio . ,f $iolence, intimidation or undue influence is employed by a %rd person upon one of the contracting parties, would that party ha$e a right to annul the obligation if he cannot pro$e collusion by the %rd person and the other contracting party? Wit4 or .it4out #ollusio 1 t4ere is ) ri(4t to ) #o tr)#t. :r)u+ T4ere is -r)u+1 .4e 1 t4rou(4 i si+ious .or+s or m)#4i )tio s o- o e o- t4e #o tr)#ti ( /)rties1 t4e ot4er is i +u#e+ to e ter i to ) #o tr)#t1 .it4out .4i#41 4e .oul+ ot 4)3e )(ree+ !Art. 1==J'. "olo I #i+e te - Committe+ )-ter t4e /er-e#tio o- t4e #o tr)#tB t4e /)rty .oul+ 4)3e e tere+ i to t4)t #o tr)#t u +er +i--ere t terms ) + #o +itio s. T4e reme+y o- t4e /)rty is to )s6 -or +)m)(es. "olo C)us) te - Committe+ be-ore or )t t4e time o/er-e#tio . C)us)l -r)u+ t4)t .oul+ m)6e t4e #o tr)#t 3oi+)ble1 ) + ) (rou + -or ) ulme t o- t4e #o tr)#t. Dow is Consent manifested? ul t4e

1. ,ust be (i3e by t.o or more /)rties $. @)rties must be #)/)#it)te+ to (i3e #o se t1 )s ) rule =. Co se t must be i telli(e tly or -reely (i3e 1 )s ) rule ;. E5/ress m) i-est)tio o- t4e .ill o- t4e #o tr)#ti ( /)rties.

A offered to sell his parcel of land to B& B could not decide whether he would but the land or not& A granted B " years to decide& .his agreement was put into writing 7option agreement8& Assuming % months from the time the offer was made the offeror withdrew the offer and informed B& 5ne year thereafter B said , am buying the land& A said he does not want to sell the land& Eay A be compelled to sell the land? No. A #) ot be #om/elle+ to sell. W4e B -i )lly +e#i+e+ to )##e/t t4e o--er1 A 4)+ )lre)+y .it4+r). t4e o--er. T4ere is o more o--er to be )##e/te+. I ) i st) #e .4ere B )##e/te+ t4e o--er .)s .it4+r). 1 B #) ot #om/el A to )##e/t t4e /ri#e be#)use t4)t .oul+ )mou t to i 3olu t)ry ser3itu+e. T4e reme+y o- B is ) )#tio -or +)m)(es +ue to bre)#4 o#o tr)#t. ,n the abo$e scenario where there is an option money gi$en after the withdrawal by A, may B compel A to accept the price? No. T4ere #) e3er be ) meeti ( o- t4e o--er ) + )##e/t) #e be#)use t4ere is o #o tr)#t to t)l6 )bout. ,n a scenario where A can withdraw but has not withdrawn, an option money is gi$en, may B compel A to accept the price? Si #e t4e (i3i ( o- ) o/tio mo ey )mou ts to reser3)tio o- )##e/t) #e1 ) + (i3es A o ri(4t to .it4+r).1 B is o et4eless /re#lu+e+ -rom #om/elli ( A to )##e/t t4e /ri#e be#)use t4)t .oul+ )mou t to i 3olu t)ry ser3itu+e. T4e reme+y o- B is to )s6 -or +)m)(es -or bre)#4 o- #o tr)#t. ,f there is an option agreement, should it always be money which is the consideration to the option agreement? Not e#ess)rily1 It is ) #o si+er)tio .4i#4 is somet4i ( /)i+ or /romise+ .4i#4 is se/)r)te ) + +isti #t -rom t4e /ri#e. &hen the offerer has allo!e the offeree a certain perio to accept, the offer ma# be !ith ra!n at an# time before acceptance b# communicating such !ith ra!al, e'cept !hen the option is foun e upon a consi eration as something pai or promise +art. 1324-. NoteC

Co se t is m) i-este+ by t4e meeti ( o- t4e o--er ) + t4e )##e/t) #e o- t4e ob2e#t ) + t4e #)use. What are the re0uisites of consent?

1. A##e/t) #e m)+e by letter or tele(r)m +oes ot bi + t4e o--eror e5#e/t -rom t4e time it #omes to 4is 6 o.le+(e. A o--er be#omes i e--e#ti3e u/o t4e +e)t41 E;

#i3il i ter+i#tio 1 i s) ity or i sol3e #y o- eit4er /)rty be-ore )##e/t) #e is #o 3eye+. $. T4e )##e/t) #e by t4e o--eree m)y be re3o6e+ be-ore re)#4i ( t4e 6 o.le+(e o- t4e o--eror. I- it is re3o6e+1 t4e #o tr)#t is ot /er-e#te+ i- t4e oti#e o- re3o#)tio re)#4es t4e o--eror be-ore t4e letter o- )##e/t) #e is re#ei3e+. =. I- ) obli(or /romises ) re.)r+ -or t4e re)liA)tio o- ) )#t or )#4ie3eme t o- ) /)rti#ul)r result1 s)i+ obli(or is obli(e+ to /)y t4e re.)r+ to ) yo e .4o /er-orms t4e )#t or )tt)i s t4e result. No s/e#i-i# )##e/t) #e is re0uire+ be#)use t4e o--er is m)+e to t4e /ubli#. T4is is ) e5#e/tio to t4e rule o- l). t4)t i- t4e o--er is ot )##e/te+ t4e s)me is ot bi +i (. ;. U less it )//e)rs t4)t t4e o--er is +e-i ite or #ert)i 1 busi ess )+3ertiseme ts o- t4i (s -or s)le )re ot +e-i ite o--ers1 but mere i 3it)tio s to m)6e ) o--er !Art. 1=$D'. D. A+3ertiseme ts -or bi++ers )re sim/ly i 3it)tio s to m)6e /ro/os)ls1 ) + t4e )+3ertiser is ot bou + to )##e/t t4e 4i(4est or lo.est bi++er1 u less t4e #o tr)ry )//e)rs. An offer was made on Ganuary ", "!!F when A sent a letter offering to sell his land to B& .his letter was recei$ed " wee=s after 7 ? *?!F8, two days thereafter 7 ? #?!F8 he sent his letter accepting the offer& .he letter was recei$ed 7 ?">?!F8& ,f A died on ?"%?!F would there a perfected contract? No e. T4e )##e/t) #e must be -rom t4e time it .)s m)+e 6 o. to t4e o--eror ) + ot -rom t4e time t4e o--eree m) i-este+ 4is +esire to e ter i to ) #o tr)#t. ,f A was insane on ?"%?!F, would there be a perfected contract? No e. E3e i- A .)s merely i s) e )t t4e time 4e re#ei3es t4e letter1 t4ere .ill be o /er-e#te+ #o tr)#t. T4ere is o meeti ( o- t4e mi +s be#)use 4e .)s )lre)+y i s) e )t t4e time 4e 4)s 6 o.le+(e o- t4e )##e/t) #e. 2e0uirements for ob<ect of contracts? 1. T4e t4i ( must be .it4i t4e #ommer#e o- me $. Tr) smissible =. Li#it ;. @ossible D. "etermi )te ,f the ob<ect of a contract a thing? Not e#ess)rily. It m)y /ert)i to /er-orm) #e oobli()tio s to +o !t4i (s1 ri(4ts1 ser3i#es'. Is it #orre#t t4)t i s/e#i)l #o tr)#ts = sub2e#t m)tters !t4i (1 ri(4t ) + ser3i#e' m)y be ) 3)li+ sub2e#t m)tter ot4e #o tr)#t> 7es. I ) #o tr)#t o- le)se.

,n all other contracts? No1 )s i s)le o ly t4i (s ) + ri(4ts m)y be to sub2e#t os)le. Ri(4ts /oes the law re0uire it to be licit? No. Be#)use by t4eir 3ery )ture 1 it s4oul+ be li#it. /oes the law re0uire rights to be transmissible to be the sub<ect matter of contracts? No. It m)y or m)y ot be tr) smissible. It m)y ot be tr) smissible i- t4e l). or sti/ul)tio o- t4e /)rties /ro3i+e ot4er.ise. Eay future rights be sold? 7es. Ri(4ts o3er ) boo6 .4i#4 is still to be .ritte m)y be sol+. 2e0uirements in order that ser$ice may be the sub<ect matter of contracts? It must ot be #o tr)ry to l).1 mor)ls1 (oo+ #ustoms or /ubli# /oli#y. It must ot be im/ossible. 2e0uirements in order that a thing may be the sub<ect matter of contracts? It must be .it4i t4e #ommer#e o- me 1 ot4er.ise it is 3oi+. :orm o- Co tr)#ts /oes the law re0uire a particular form for the $alidity and enforceability of contracts? As ) rule1 t4e l). +oes ot re0uire ) /)rti#ul)r -orm1 e5#e/t .4e t4e l). re0uires t4)t ) #o tr)#t must be i ) #ert)i -orm to be 3)li+ ) + e -or#e)ble t4e t4is re0uireme t is )bsolute ) + i +is/e s)ble. When the law re0uires a particular form and the parties failed to comply, the contract is $oid? Not e#ess)rily. I- t4e l). re0uires ) /)rti#ul)r -orm1 t4e #o tr)#t ee+ ot be 3oi+ i- t4e l). +i+ ot /ro3i+e -or ullity o- #o tr)#t. What contracts would be $oid if the parties failed to comply? "o )tio o- re)l /ro/erty must be i ) /ubli# i strume t i or+er to be 3)li+1 e3e bet.ee t4e +o or ) + t4e +o ee !Art. ?;&'1 ot4er.ise i- is 3oi+. I- t4e 3)lue o- t4e /erso )l /ro/erty +o )te+ e5#ee+s D t4ous) + /esos 1 t4e +o )tio ) + t4e )##e/t) #e s4)ll be m)+e i .riti (1 ot4er.ise t4e +o )tio s4)ll be 3oi+ !Art. ?;J'. I ) ti#4resis1 t4e )(reeme t )s to t4e /ri #i/)l ) + i terest must be i .riti (1 ot4er.ise it is 3oi+. ED

Co tributio o- ) /)rt er i s ) /)rt ers4i/ o- ) immo3)ble /ro/erty1 must be i .riti (1 ot4er.ise1 3oi+ !Art. 1??='. S)le o- l) + t4rou(4 ) )(e t1 t4e )ut4ority o- t4e )(e t to sell must be i .riti (1 ot4er.ise 3oi+ !Art. 1J?;'. A #re+itor #) o ly +em) + i terest i- it is i .riti (. A sti/ul)tio re+u#i ( t4e +e(ree o- +ili(e #e re0uire+ t4)t s4oul+ be obser3e+ by t4e #ommo #)rrier s4oul+ be i .riti (. 5ral sale of large cattle, is the sale $alid? T4e s)le is 3oi+ be#)use t4e ) ti-#)ttle rustli ( l). re0uires t4)t it must be i ) /ubli# i strume t ) + must be re(istere+. 4 sold orally to B a parcel of land for !,!!!& B needed a public instrument to register the sale at the register of deeds& Can B compel 4 to execute a public instrument of sale? No1 be#)use t4e #o tr)#t is u e -or#e)ble be#)use t4e s)me is ot i .riti (. T4e re0uireme t t4)t ) /)rty m)y #om/el t4e ot4er to e5e#ute t4e e#ess)ry -orm is .4e t4e #o tr)#t is 3)li+ ) + e -or#e)ble. Si #e i t4is #)se t4e #o tr)#t is u e -or#e)ble1 )lt4ou(4 3)li+1 t4e ri(4t to e5e#ute t4e re0uire+ -orm #) ot be e -or#e+. 4 sold to B in writing a parcel of land for !,!!!& Aater, B wanted to register the sale with the 2egister of /eeds, but registration re0uires a public instrument& B, therefore, re0uested 4 to execute the public instrument of sale but the latter refused& Can B compel 4 to execute the public instrument of sale? 7es1 be#)use t4e #o tr)#t is 3)li+ ) + e -or#e)ble. ,n what contracts would the law re0uire a particular form for enforceability of contract? Co tr)#ts #o3ere+ by st)tute o- -r)u+ u +er Art. 1;%=. Co tr)#ts #o3ere+ by Art. 1J?J -- e.(. )(e t must 4)3e S@A to be e -or#e)ble )()i st t4e /ri #i/)l. 4ale of public land, if not in a public instrument would that be $alid and enforceable? It +e/e +s o .4et4er t4e #o tr)#t o- s)le .)s o ly ) 3erb)l s)le or i .riti ( but ot i ) /ubli# i strume t. I- 3erb)l s)le it .ill be u e -or#e)ble be#)use it .ill be #o3ere+ by t4e St)tute o- :r)u+s. I- i .riti (1 e3e i- ot i ) /ubli# i strume t1 t4)t .ill )lre)+y be 3)li+ ) + bi +i ( )t le)st bet.ee t4e /)rties. I- i ) /ubli# i strume t1 it m)y )lso bi + =r+ /erso s be#)use o ly /ubli# i strume ts m)y be re(istere+ i t4e re(ister o- +ee+s. I- /ri3)te i strume t1 t4e re(ister o- +ee+s 4)s o busi ess o- re(isteri ( t4e i strume t.

NoteC T4e re0uireme t o- t4e l). .4ereby ) /ubli# i strume t is re0uire+ is o ly -or #o 3e ie #e ) + to bi + =r+ /erso s1 ot -or 3)li+ity ) + e -or#e)bility. T4e #o tr)#t rem)i s to be 3)li+1 t4e ri(4t o- t4e /)rties is to #om/el e)#4 ot4er to e5e#ute ) /ubli# i strume t i- m)+e i ) /ri3)te i strume t. Re-orm)tio o- I strume tsC Eay a $erbal agreement be the sub<ect of reformation? No. O ly i strume ts m)y be re-orme+ ) + t4e re)so -or re-orm)tio is t4)t t4e i strume t +oes ot re-le#t t4e re)l i te tio o- t4e /)rties. 2e0uisites for reformation of instruments in a contract? 1. ,eeti ( o- t4e mi +s o- t4e /)rties $. I strume t +oes ot e5/ress t4e re)l i te tio o- t4e /)rties =. :)ilure o- i te tio +ue to mist)6e1 -r)u+1 i e0uit)ble #o +u#t or )##i+e t. ;. T4ere must be #le)r ) + #o 3i #i ( /roo-. NoteC I- t4e mist)6e1 -r)u+1 i e0uit)ble #o +u#t or )##i+e t 4)s /re3e te+ t4e meeti ( o- t4e mi +s o- t4e /)rties1 t4e /ro/er reme+y is ) ulme t o- #o tr)#t ) + ot re-orm)tio o- t4e i strume t. A deli$ered a sum of money to B which was accepted by B& 5ne year thereafter, A went bac= to B and demanded the return of the money plus interest& B as=ed why should , return the money, it was a donation& A told him it is not a donation but a loan& ,s reformation a remedy? It .ill ot be ) reme+y. Re-orm)tio /resu//oses ) meeti ( o- t4e mi +s. Si #e t4ere is o meeti ( o- t4e mi +s be#)use t4e /)rties +oes ot 6 o. .4et4er it is ) s)le or +o )tio 1 ) + se#o +ly t4ere is o i strume t to be re-orme+1 re-orm)tio s4)ll ot be ) reme+y. ,f the plaintiff as=ed for reformation of the instrument where it was stated +cocaine-, but the real intention was morphine, may reformation prosper? 7es be#)use t4e re)l #o tr)#t is ot ) 3oi+ #o tr)#t. T4e #o te t o- t4e i strume t is bei ( re-orme+. What instances where reformation cannot prosper? 1. Sim/le +o )tio s i ter 3i3os .4erei o #o +itio is im/ose+ si #e t4e i te tio s o- t4e +o or .ill /re3)il1 be#)use +o )tio s re-le#t t4e liber)lity o- t4e be e-)#tor. $. Wills be#)use t4e test)tor is )lre)+y +e)+1 ) + t4e .ill re-le#t 4is /erso )l i te tio s. =. W4e t4e re)l )(reeme t is 3oi+. Voi+ #o tr)#ts )re i e5iste t1 so t4ere is ot4i ( to re-orm.

EE

,n case of conflict between intention and the words or phrases which shall pre$ail? T4e re)l i te tio o- t4e /)rties /re3)il e3e i- t4e .or+s ) + /4r)ses )re #le)r )s to t4eir me) i (. Rules i I ter/ret)tio o- Co tr)#tsC ,f the terms of the contract is clear, the literal meaning shall control? Not e#ess)rily. I- t4e sti/ul)tio is #o tr)ry to t4e i te tio o- t4e /)rties1 t4e i te tio s4)ll /re3)il ) + t4e liter)l me) i ( .ill ot bi + t4e /)rties. Dow to determine the real intention of the parties? T4e #o tem/or) eous ) + subse0ue t )#ts o- t4e /)rties1 su#4 )s t4e subse0ue t /)yme ts ) + t4e subse0ue t e5e#utio o- re)l est)te mort()(e s4o.s t4)t t4ere is o +)tio i /)yme t. A stipulation in a contract of sale that payment is deemed made upon the signing of the contract& /espite such stipulation, seller filed an action for reco$ery of purchase price& Will the action prosper? 7es. be#)use t4ere is o /resum/tio t4)t /)yme t is m)+e. By t4e #o tem/or) eous ) + subse0ue t )#ts ot4e /)rties1 it .)s s4o. t4)t i +ee+ /)yme t .)s ot m)+e. 2ules in the interpretation of words and phrases shall not fa$or who? T4e /)rty .4o #)use+ t4e )mbi(uity. I t4e #)se o- ESL 3s1 ,)r()ri e1 t4e s4i//er .4o /re/)re+ t4e bill ol)+i (1 it .)s sti/ul)te+ )s to t4e e5te t o- t4e li)bility ot4e #ommo #)rrier i #)se +)m)(e is sust)i e+. T4e SC 4el+ t4)t it .ill be i ter/rete+ )()i st t4e s4i//er .4o /re/)re+ t4e +o#ume t. ,n a sale of one of the cars, the seller, despite the application of the rules on interpretation of contracts and the circumstances surrounding it, there is ambiguity as to which car is the ob<ect of the sale& What is the effect? T4e #o tr)#t is 3oi+ .4e it is )bsolutely im/ossible to settle t4e +oubt. A obliged himself to deli$er and transfer ownership o$er a specific car& /uring the negotiation B already saw the car with stereo& When the car was deli$ered, there was no stereo& B demanded deli$ery of stereo& ,f the claim of B a $alid claim? It +e/e +s o .4)t #o tr)#t .)s e tere+ i to. I- (r)tuitous1 t4e +oubt re-ers o ly to t4e i #i+e t)l #ir#umst) #e /ert)i i ( to t4e #o tr)#t1 ) + be#)use t4e /ri #i/le o- le)st tr) smissio o- ri(4ts s4)ll /re3)il. I- it is ) o erous #o tr)#t1 t4e 4e .ill be e title+ to t4e stereo be#)use i o erous #o tr)#ts t4e (re)test re#i/ro#ity o- i terest s4)ll (o3er .

"e-e#ti3e Co tr)#ts ,s defecti$e contracts a good classification under this title? No. Be#)use t4e term +e-e#ti3e #o tr)#t me) t4)t t4ere is ) e5isti ( #o tr)#t. I Voi+ Co tr)#ts t4ere is o #o tr)#t to s/e)6 o-. Eay a contract be rescissible, $oidable and unenforceable all at the same time? 7es be#)use t4e +e-e#ts +i--er +e/e +i ( o t4e st)tus ot4e #o tr)#t. What are the four =inds of defecti$e contracts? 1. Res#issible Co tr)#tsB V)li+ u til res#i +e+B t4e +e-e#t is e5tri si# +e-e#t #o sisti ( o- ) e#o omi# +)m)(e or lesio . $. Voi+)ble Co tr)#tsB V)li+ u til ) ulle+. A ull)ble u less r)ti-ie+. I- r)ti-ie+1 t4e #o tr)#t is #le) se+ o- its +e-e#t. T4is #o tr)#t is e--e#ti3e o.1 but m)y be i 3)li+)te+. =. Voi+ Co tr)#ts is o e t4)t 4)s o e--e#t )t )llB it #) be r)ti-ie+ or 3)li+)te+. T4is is #)lle+ i e5iste t #o tr)#ts. /istinguish 2escission under Art& ) and 2escission under 2escissible Contracts? ot

1. I 11&1 t4ere must be ) bre)#4 .4ile i Res#issible Co tr)#ts t4ere m)y or m)y ot be ) bre)#4. $. T4e /res#ri/ti3e /erio+ u +er 11&1 is 1 ye)rs .4ile res#issio u +er 1=J% ) + 1=J1 s4oul+ be -ile+ .it4i ; ye)rs -rom t4e +)te o- t4e #o tr)#t. =. T4e bre)#4 u +er Art. 11&1 s4oul+ be ) subst) ti)l bre)#4 or -u +)me t)l bre)#4. Sli(4t bre)#4 or #)su)l bre)#4 #) ot be t4e b)sis o ) )#tio -or res#issio u +er 11&1. ;. U +er 11&1 it is ) /ri #i/)l reme+y1 .4ile i 1=J% ) + 1=J11 it is ) subsi+i)ry reme+y. Eay the defect of the contract be $oid and $oidable at the same time? No1 be#)use 3oi+ #o tr)#ts )re i e5iste t .4ile 3oi+)ble #o tr)#ts e5ist. Eay rescissible, unenforceable and $oidable contracts be ratified? U e -or#e)ble #o tr)#ts ) + 3oi+)ble #o tr)#ts m)y be r)ti-ie+. Res#issible #o tr)#ts #) ot be r)ti-ie+ be#)use it 4)s o i 4ere t +e-e#t )s to t4e re0uisite. E?

,)y ) 3oi+ #o tr)#t be r)ti-ie+> be-ore 7es1 u +er Art. 1J&J t4e /ri #i/)l #) r)ti-y t4e #o tr)#t )s .4e t4e )(e t )#te+ i e5#ess o- )ut4ority ) + t4e =r+ /erso .)s ).)re t4)t t4e )(e t )#te+ i e5#ess o)ut4ority. <o.e3er1 t4e e umer)tio u +er Art. 1;%& #) ot be r)ti-ie+ -or t4ey )re 3oi+ ) + i e5iste t -rom t4e be(i i (. Res#issible Co tr)#ts Dow may contracts be considered rescissible? Co tr)#ts m)y o ly be #o si+ere+ res#issible be#)use t4e l). so /ro3i+es. I- t4ere is o l). +e#l)ri ( t4e #o tr)#t to be res#issible1 it is ot. What contracts are considered rescissible? 1. T4ose .4i#4 )re e tere+ i to by (u)r+i) s .4e e3er t4e .)r+s .4om t4ey re/rese t su--er lesio by more t4) 1N; o- t4e 3)lue o- t4e t4i (s .4i#4 )re t4e ob2e#t t4ereo-B $. T4ose )(ree+ u/o i t4e re/rese t)tio o- )bse tees1 i- t4e l)tter su--er t4e lesio st)te+ i t4e /re#e+i ( umber. =. T4ose u +ert)6e i -r)u+ o- #re+itors .4e t4e l)tter #) ot i ) y m) er #olle#t t4e #l)ims +ue t4emB ;. T4ose .4i#4 re-er to t4i (s u +er liti()tio i- t4ey 4)3e bee e tere+ i to by t4e +e-e +) ts .it4out 6 o.le+(e ) + )//ro3)l o- t4e liti() ts or #om/ete t 2u+i#i)l )ut4ority. D. All ot4er #o tr)#ts s/e#i)lly +e#l)re+ by l). to be sub2e#t to res#issio !Art. 1=J1'. What other contracts declared by law to be rescissible? 1. T4e ri(4t to res#i + )s /ro3i+e+ u +er Art. 11J& i #)se o- +eterior)tio o- t4e t4i ( +eli3ere+. $. T4e ri(4t to res#i + (i3e ) u /)i+ seller )s /ro3i+e+ -or i Art. 1D$E. =. T4e ri(4t to res#i + (i3e to ) 3e +ee i s)le o- re)l /ro/erty /er u it o- me)sure or lum/ sum /ri#e. ;. Viol)tio o- .)rr) ty )()i st 4i++e +e-e#ts u +er Art. 1DE?. Dow to determine whether a contract is entered into in fraud of creditors? 1. T4ere must be ) i te tio to +e-r)u+ #re+itors. $. T4ere must be ) /re-e5isti ( obli()tio )t t4e time it .)s e tere+ i to.

NoteC E3e i- t4e #o tr)#t .)s e tere+ i to t4e obli()tio )rose1 it is still i -r)u+ o- #re+itors .4e t4e /ur/ose is re)lly to +e-r)u+ #re+itors.

=. T4e e5iste #e o- -r)u+ or b)+ -)it4 o t4e /)rt o- t4e +ebtor .4i#4 #) eit4er be /resume+ or /ro3e B ) + ;. T4e #re+itors #) m) er. ot re#o3er t4eir #re+its i ) y ot4er

,n what instance may a contract be said to be in fraud of creditor e$en before the obligation arose? I ) #o tr)#t o- lo) .4ere ) /erso is su//ose+ to mort()(e 4is /ro/erty )s se#urity -or t4e lo) . <ere t4e +ebtor o. s t4e /ro/erty )t t4e time o- t4e lo) but be-ore t4e mo ey to be lo) e+ .)s rele)se+ by t4e B) 61 t4e /erso +is/ose+ o- t4e /ro/erty. T4ere .)s o /er-e#te+ lo) but t4ere .)s )lre)+y -r)u+ o- #re+itors1 e3e be-ore t4e mo ey .)s rele)se+1 t4e titles .ill )lre)+y be +eli3ere+ to t4e b) 6. Dow to pro$e fraud in 7contracts in fraud of creditors8? Cre+itor m)y /ro3e -r)u+ by i 3o6i ( t4e /resum/tio s /ro3i+e+ -or by l).. It m)y be /ro3e+ by /ro3i ( b)+(es o- -r)u+. What are some instances considered by the Court as badges of fraud? 1. T4e -)#t t4)t t4e #o si+er)tio o- t4e #o 3ey) #e is -i#titious or i )+e0u)teB $. A tr) s-er m)+e by ) +ebtor )-ter suit 4)s be(u ) + .4ile it is /e +i ( )()i st 4imB =. A s)le o #re+it by ) i sol3e t +ebtorB ;. E3i+e #e o- l)r(e i +ebte+ ess or #om/lete i sol3e #yB D. Tr) s-er o- )ll or e)rly )ll i- 4is /ro/erty by ) +ebtor es/e#i)lly .4e 4e is i sol3e t or (re)tly emb)r)sse+ -i ) #i)llyB E. T4e -)#t t4)t t4e tr) s-er is m)+e bet.ee -)t4er ) + so 1 .4e t4e )bo3e #ir#umst) #es )re /rese tB ?. T4e -)ilure o- t4e 3e +ee to t)6e e5#lusi3e /ossessio o- )ll t4e /ro/erty. Eay a contract be considered rescissible e$en without badges of fraud? 7es1 i C 1. Gr)tuitous #o tr)#ts - Co tr)#ts e tere+ i to by t4e +ebtor .4e 4e +i+ ot reser3e su--i#ie t /ro/erty to /)y 4is +ebts be-ore +o )tio )re #o si+ere+ -r)u+ule t. $. O erous #o tr)#ts EJ

). ,)+e by ) /erso )()i st .4om some 2u+(me t 4)s bee re +ere+ e3e i- ot yet -i )l. b. ,)+e by /erso )()i st .4om some .rit o)tt)#4me t 4)s bee issue+. T4e +e#isio or )tt)#4me t 4)s bee issue+. T4e +e#isio or )tt)#4me t ee+ ot re-er to t4e /ro/erty )lie )te+. NoteC E3e i- t4e or+er o- )tt)#4me t is ot yet -i )l ) + t4e e5e#utor $ +)ys )-ter t4e issu) #e +is/ose+ o- it1 t4e /resum/tio .oul+ still )rise. is ot e#ess)ry t4)t t4e or+er be#omes -i )l.

$. I #)se o- )bse tees1 .it4i ; ye)rs -rom t4e time t4e +omi#ile is 6 o. . B. I #ert)i #o tr)#ts o- s)le .4i#4 )re s/e#i)lly +e#l)re+ by l). to be res#issible1 t4e /erio+ is E mos. or e3e ; +)ys #ou te+ -rom t4e +)y o- +eli3ery !Arts. 1D;=1 1D?11 1D??'. Who are the persons who can bring the action for rescission? 1. t4e i 2ure+ /)rty $. t4e 4eirs o- t4e i 2ure+ /)rty =. t4e #re+itors i- t4e tr) s)#tio is -r)u+ule t .wo parcels of land are alienated in fraud of creditors in one contract, may the contract be rescinded? T4e #o tr)#t m)y be res#i +e+ by t4e restitutio o- bot4 /ro/erties is ot re0uire+ be#)use t4e restitutio m)y o ly be to t4e e5te t to re#o3er +)m)(es #)use+. Voi+)ble Co tr)#ts What are $oidable contracts? T4ose .4i#4 /ossess )ll t4e esse ti)l re0uisites o- ) 3)li+ #o tr)#t but o e o- t4e /)rties is INCA@ABLE O: GIVING CONSENT1 or CONSENT IS VITIATE" by mist)6e1 3iole #e1 i timi+)tio 1 u +ue i -lue #e or -r)u+. Who may a$ail of the remedy of annulment of a $oidable contract? O ly t4ose /ri #i/)lly ) + subsi+i)rily obli(e+ #) be ) /)rty. T4e #)/)#it)te+ /erso #) ot i 3o6e t4e i #)/)#ity ot4e ot4er /)rty. O ly t4e i #om/ete t /)rty m)y )3)il ot4is reme+y. Eay a %rd party who is subsidiarily obliged ha$e the contract annulled? A )#tio -or ) ulme t by =r+ /erso m)y be )llo.e+ it4)t /erso #) s4o. to t4e #ourt +)m)(es t4)t 4e m)y i #ur i- t4e #o tr)#t is ot )llo.e+. Gu)r+i) s1 (u)r) tors or /le+(ors )re subsi+i)rily li)ble1 t4ey .ill be be e-ite+ i) ulle+ ) + /re2u+i#e+ i- ot ) ulle+. /o $oid contracts produces no legal effect?

It

A donated a property worth >E to X, and the debt is >!!=, is there a presumption that the donation is in fraud of creditors? Not e#ess)rily be#)use A m)y 4)3e reser3e+ su--i#ie t /ro/erty to /)y 4is +ebts. /oes it matter whether the debtor was aware of the order? It +oes ot m)ter. Are the presumptions conclusi$e or disputable? T4e /resum/tio s )re merely +is/ut)ble ) + t4e +ebtor #) /ro3e (oo+ -)it4. But .it4 res/e#t to +o )tio s1 t4e -r)u+ o- #re+itors s4oul+ be #o #lusi3e be#)use +ebts s4oul+ be s)tis-ie+ -irst be-ore ) y (r)tuitous tr) s)#tio s s4oul+ be m)+e by t4e +ebtor. Because there was lesion of ">I, is it rescissible? Not e#ess)rily. It is 3oi+ i- t4e (u)r+i) is t4e buyer. It is 3)li+ i- it is m)+e .it4 2u+i#i)l )ut4ority. Because there was lesion of ">I, is rescission a remedy? No be#)use t4ere )re re0uireme ts -or res#issio to /ros/er. Res#issio is merely subsi+i)ry ) + t4ere must be /rior e54)ustio o- )ll le()l reme+ies. ,f there is rescission, should there be a return of what has been recei$ed? Not e#ess)rily be#)use i- t4e t4i ( .4i#4 is t4e ob2e#t ot4e #o tr)#t is le()lly i t4e /ossessio o- ) ot4er .4o +i+ ot )#t i b)+ -)it41 res#issio .ill ot /ros/er. Eay a %rd person pay for the damage or indebtedness of the debtor who is the seller in fraud of creditors? No. T4e #re+itor #) o lo (er res#i +.

Voi+ #o tr)#ts /ro+u#es o le()l e--e#t .4)tsoe3er. An action to reco$er from a $oid contract, can it prosper? ,f so, there is an effect of a $oid contract? It #) /ros/er1 t4ere is ) ri(4t to re#o3er i #)se t4e /)rties )re i /)r +eli#to !Art. 1;111 1;1$1 1;1;1 1;1E'. T4ere is ri(4t to re#o3er be#)use t4e l). so /ro3i+es. It is ot ) e--e#t o- #o tr)#ts. U e -or#e)ble Co tr)#ts

What is the prescripti$e period for rescission? A. Ge er)l Rule Wit4i ; ye)rs -rom t4e +)te it .)s e tere+ i toC 1. I- t4e /erso is u +er (u)r+i) s4i/1 .it4i ; ye)rs -rom t4e time t4e (u)r+i) s4i/ #e)sesB

E&

T4ese #o tr)#ts #) ot be e -or#e+ t4rou(4 #ourt )#tio u less r)ti-ie+. I- t4ere is ) /ro/er ob2e#tio t4ere is ob3iously o r)ti-i#)tio . O e 6i + o- r)ti-i#)tio is .4e t4ere is -)ilure to /ro/erly ob2e#t1 .4e or)l e3i+e #e is /rese te+ to /ro3e t4e e5iste #e o- ) #o tr)#t. What contracts are considered as unenforceable contracts? 1. Co tr)#ts .4ere bot4 /)rties )re i #)/)#it)te+B $. Co tr)#t e tere+ i to i re/rese t)tio o- ) ot4er but 4e +oes ot 4)3e t4e )ut4ority o- t4)t /erso . =. Co tr)#ts e umer)te+ u +er Art. 1J?J e tere+ i to by ) )(e t .it4out ) S/e#i)l @o.er o- Attor ey. ;. Co tr)#ts e tere+ i to u +er 1;%= more /ro/erly 6 o. )s t4e St)tute o- :r)u+s. W4)t )re t4e u e -or#e)ble #o tr)#ts u +er Art. 1;%=> T4e -ollo.i ( #o tr)#ts )re u e -or#e)ble1 u less t4ey )re r)ti-ie+C 1. T4ose e tere+ i to i t4e )me o- ) ot4er /erso by o e .4o 4)s bee (i3e o )ut4ority or le()l re/rese t)tio 1 or .4o 4)s )#te+ beyo + 4is /o.ers. $. T4ose t4)t +o ot #om/ly .it4 t4e St)tute o- :r)u+s )s set -ort4 i t4is umber. I t4e -ollo.i ( #)ses ) )(reeme t 4ere)-ter m)+e s4)ll be u e -or#e)ble by )#tio 1 u less t4e s)me1 or some ote or memor) +um t4ereo-1 be i .riti (1 ) + subs#ribe+ by t4e /)rty #4)r(e+1 or by 4is )(e tB e3i+e #e1 t4ere-ore1 o- t4e )(reeme t #) ot be re#ei3e+ .it4out t4e .riti (1 or ) se#o +)ry e3i+e #e o- its #o te tsC ). A )(reeme t t4)t by its terms is ot to be /er-orme+ .it4i ) ye)r -rom t4e m)6i ( t4ereo-B b. A s/e#i)l /romise to ) s.er -or t4e +ebt1 +e-)ult1 or mis#)rri)(e o- ) ot4erB #. A )(reeme t m)+e i #o si+er)tio o- m)rri)(e1 ot4er t4) mutu)l /romise to m)rryB +. A )(reeme t -or t4e s)le o- (oo+s1 #4)ttels or t4i (s i )#tio 1 )t ) /ri#e ot less t4) @D%%1 u less t4e buyer )##e/t ) + re#ei3e /)rt o- su#4 (oo+s ) + #4)ttels1 or t4e e3i+e #es or some o- t4em1 o- su#4 t4i (s i )#tio 1 or /)y )t t4e time some /)rt o- t4e /ur#4)se mo eyB but .4e ) s)le is m)+e by )u#tio ) + e try is m)+e by t4e )u#tio eer i 4is s)les boo6. )t t4e time o- t4e s)le1 o- t4e )mou t ) + 6i + o/ro/erty sol+1 terms o- s)le1 /ri#e1 )mes o- t4e /ur#4)sers ) + /erso s o .4ose )##ou t t4e s)le is m)+e1 it is ) su--i#ie t memor) +umB e. ) )(reeme t -or t4e le)si ( -or ) lo (er /erio+ t4) 1 ye)r1 or -or t4e s)le o- re)l /ro/erty or o- ) i terest t4erei B -. A re/rese t)tio )s to t4e #re+it o- ) t4ir+ /erso . =. T4ose .4ere bot4 /)rties )re i #)/)ble o- (i3i ( #o se t to ) #o tr)#t.

,f both parties are incapacitated and one of the parties ratified, what is the status of the contract? Voi+)ble be#)use by t4e o ly o e /)rty is i #)/)#it)te+. ,f a person entered into a contract in representation of another but does not ha$e the authority of that person, is the contract unenforceable? Not e#ess)rily be#)use su#4 /erso m)y 4)3e e tere+ i to ) #o tr)#t t4rou(4 le()l re/rese t)tio !)ut4oriAe+ by l). or by t4e #ourt'1 e3e i- 4e is ot )ut4oriAe+ by t4e /erso re/rese te+. St)tute o- :r)u+s ,s the 4tatute of (rauds applicable only in Contracts of 4ale andLor Aease? No. U +er Art 1;%= it .)s /ro3i+e+ t4)t ) y )(reeme t u +er its terms is ot to be /er-orme+ .it4i 1 ye)r ) + it is ot i .riti ( .oul+ be u e -or#e)ble. T4us ) #o tr)#t -or /ie#e o- .or6 or #o tr)#t o- )(e #y1 or ) y #o tr)#t -or t4)t m)tter m)y be #o3ere+ by t4e St)tute o- :r)u+s iu +er t4e terms o- su#4 #o tr)#t1 is ot to be /er-orme+ .it4i 1 ye)r. It .ill be u e -or#e)ble i- ot i .riti (. What is the purpose of the law in re0uiring a contract to be in writing if it is to be performed within year, is it to pre$ent fraud from being committed? It is ot e#ess)rily to /re3e t -r)u+ -rom bei ( #ommitte+ but r)t4er be#)use t4)t e3e 4o est me m)y #ommit mist)6es. An oral partnership is $alid? True1 e3e i- o e o- t4e /)rties #o tribute+ ) immo3)ble /ro/erty. W4)t t4e l). re0uires is t4)t t4e /)rt ers4i/ itsel- s4oul+ be i .riti (1 .4i#4 re0uire to 4)3e ) i 3e tory o- su#4 immo3)ble /ro/erty1 to be si( e+ by )ll t4e #o tr)#ti ( /)rties. T4ere is o +eb)te to t4e -)#t t4)t t4e /ro3isio u +er ARt. 1??1 .4ere it /ro3i+es t4)t .4ere immo3)ble /ro/erty or re)l ri(4ts )re #o tribute+ t4ereto1 ) /ubli# i strume t s4)ll be e#ess)ry. I rel)tio to Art. 1??= .4ere it /ro3i+es t4)t .4e e3er ) immo3)ble /ro/erty or re)l ri(4ts is #o tribute+1 i- ) i 3e tory is ot m)+e1 t4e #o tr)#t o- /)rt ers4i/ is 3oi+. No.4ere i t4ese t.o /ro3isio s t4)t .oul+ tell t4)t .4e e3er t4e #o tr)#t o/)rt ers4i/ is e tere+ ) + ) #o tributio o- re)l /ro/erty is m)+e1 i- ot i ) /ubli# i strume t1 it is 3oi+. W4)t is 3oi+ is .4e t4ere is o i 3e tory o- t4e re)l /ro/erty1 t4)t .oul+ m)6e t4e #o tr)#t o- /)rt ers4i/ 3oi+. It is 3)li+1 t4e /ur/ose o- i 3e tory is to oti-y t4ir+ /erso s .4o .oul+ e ter i to #o tr)#ts .it4 t4e /)rt ers4i/. 5ral promise of guarantee is $alid? A or)l (u)r) tee is )l.)y e tere+ i to by ) =r+ /erso . T4e (u)r) tor 4ere is ot t4e /ri #i/)l +ebtor. T4is .oul+ -)ll u +er t4e st)tute o- -r)u+s1 ) s/e#i)l /romise to ) s.er -or t4e +ebt o- ) ot4er. Si #e it is ot i .riti (1 it ?%

is merely ) or)l /romise o- (u)r) ty1 it #) ot be ) 3)li+ ) + bi +i ( #o tr)#t1 it .ill be u e -or#e)ble u +er Art. 1;%=. C)b)(ui 3s. Ro5illo .he father and his son had a $erbal agreement with another father with his daughter, that the son and the daughter will get married, but the father and the son will cause the repair of the house of the father and the daughter& 1ursuant to this agreement the father and the son had the house of the father and the daughter repaired& .hey spent '!! pesos& Dowe$er, after the house of the father and the daughter repaired, the daughter refused to marry the son& .he father and the son filed an action for damages against the father and the daughter& Will the action prosper? As to t4e #)use o- )#tio t4e -)t4er )s )()i st t4e -)t4er ) + t4e +)u(4ter1 t4is .oul+ be ) )#tio b)se+ o ) )(reeme t1 i #o si+er)tio o- m)rri)(e. T4ere-ore1 u +er t4e st)tute o- -r)u+s it s4oul+ be i .riti (1 si #e t4is is merely ) 3erb)l )(reeme t1 t4)t )(reeme t is u e -or#e)ble. T4e )#tio s4oul+ be +ismisse+. !Art. 1;%=' <o.e3er1 )s to t4e so 1 t4e #)use o- )#tio /ert)i s to ) )#tio u +er ) mutu)l /romise to m)rry .4i#4 is ot #o3ere+ by t4e st)tute o- -r)u+s. U +er t4e l).1 A )(reeme t m)+e i #o si+er)tio o- m)rri)(e ot4er t4) ) mutu)l /romise to m)rry. !Art. 1;%='. NoteC A mere bre)#4 o- ) mutu)l /romise to m)rry is ot )#tio )ble1 but t4e m) er by .4i#4 t4e bre)#4 o/romise to m)rry m)y be t4e b)sis o- ) )#tio -or +)m)(es. /oes the law re0uire that for the statute of fraud to apply it had to be in a public instrument? No. It merely re0uire t4)t it be i .riti ( to be ) 3)li+ ) + bi +i ( #o tr)#t. ,f the contract of sale in$ol$es an immo$able property, and it is not in writing, it will be unenforceable? I s)le o- ) immo3)ble /ro/erty )s lo ( )s it is i .riti (1 it .oul+ be ) 3)li+ ) + bi +i ( #o tr)#t bet.ee t4e /)rties. But it .ill ot bi + =r+ /erso s1 be#)use ) /ri3)te i strume t #) ot be re(istere+ e5#e/t i- su#4 =r+ /erso 4)3e )#tu)l 6 o.le+(e o- t4is #o tr)#t. /oes it matter if the purchase price of the immo$able property is only %!! pesos? No. T4e /ri#e i s)le o- immo3)ble is irrele3) t. ,f A sold a bag to B, which bag he purchased % days ago for %>!! but he sold it to a friend today and it is not in writing, is it co$ered by the statute of frauds? Not e#ess)rily. E3e i- t4e 3)lue o- t4e b)( is =D%%1 ) + 4e sol+ it merely -or @=D%1 it .ill ot be #o3ere+ by t4e

st)tute o- -r)u+s. T4e l). o s)les -ollo. t4e /ri #i/le t4)t lesio +oes ot )--e#t t4e 3)li+ity o- #o tr)#ts. A contract of sale in$ol$ing a mo$able property, wort 1%!!, may that contract still be co$ered by the statute of frauds? 7es it m)y still be #o3ere+ .4e u +er t4e terms o- t4e #o tr)#t1 it is ot to be /er-orme+ .it4i o e ye)r. ,n a contract of lease which is for a period of % years, it is merely a $erbal contract, would that be co$ered by the statute of frauds? Not e#ess)rily. U +er t4e l). ) )(reeme t -or le)si ( -or ) lo (er /erio+ t4) o e ye)r1 must be i .riti ( to be e -or#e)ble /ert)i s to ) re)l /ro/erty or ) i terest t4erei . I- t4e sub2e#t o- t4e le)se is ) /erso )l /ro/erty1 t4e it #) ot be sub2e#t to t4e /ro3isio o- t4e st)tute o-r)u+ /ert)i i ( to le)se #o tr)#ts. ,n a contract of lease entered into by an agent, and the contract will in$ol$e a real property and the period is more than year& What is re0uired for this to be enforceable? It 4)s to be i .riti ( ) + t4e )(e t s4oul+ 4)3e ) s/e#i)l /o.er o- )ttor ey. X came across an ad$ertisement in the Eanila /aily Bulletin about the rush sale of three slightly used .oyota Corollas model )F) for "!!= pesos each& (inding the price to be $ery cheap and in order to be sure he gets of the unit ahead of the others, X immediately phoned the ad$ertiser and placed an order for car& Y accepted the order and promised to deli$er the ordered unit on Guly >, )F)& 5n the said date, howe$er, Y did not deli$er the unit& X brings an action to compel Y to deli$er the unit& Will such action prosper? T4is )#tio .ill ot /ros/er is t4ere is ) /ro/er ob2e#tio o t4e /)rt o- 7. But i- or)l e3i+e #e is /rese te+ to /ro3e t4e e5iste #e o- t4e #o tr)#t1 ) + t4ere is o /ro/er ob2e#tio o t4e /)rt o- 71 t4e t4e )#tio m)y /ros/er to /ro3e t4e e5iste #e o- t4e #o tr)#t. As st)te+ u +er t4e -)#ts1 t4e #o tr)#t is ) s)le o- ) mo3)ble /ro/erty 3)lue+ more t4) D%% /esos1 4e #e #o3ere+ by t4e St)tute o:r)u+s .4i#4 re0uire t4)t t4e #o tr)#t be i .riti (. I t4is #)se t4ere is o ly ) 3erb)l #o tr)#t. A and B entered into a $erbal contract whereby A agreed to B to sell his only parcel of land for "!= pesos& B agreed to buy the land on the aforementioned price& B went to the ban= to withdraw the money to be paid to A and immediately returned A for the consummation of the contract& A howe$er, changed his mind and refused to go through with the sale& ,s the agreement $alid? Will the action by B against A for specific performance prosper? T4e )(reeme t is 3)li+ but t4is #) ot be e -or#e+ t4rou(4 #ourt )#tio be#)use t4e -)#ts i 3ol3e ) /)r#el ol) + .4i#4 is re0uire+ to be i .riti ( to be e -or#e)ble. ?1

T4e )#tio -or s/e#i-i# /er-orm) #e m)y /ros/er i- t4ere is o /ro/er ob2e#tio o t4e /)rt o- A .4e B o--ere+ 4is e3i+e #e to /ro3e t4e e5iste #e o- t4e #o tr)#t1 ot4er.ise su#4 )#tio .ill ot /ros/er. T4is )#tio m)y )lso /ros/er ot.it4st) +i ( t4e -)ilure o t4e /)rt o- A to ob2e#t to t4e e3i+e #e .4e B r)ises t4e +e-e se o- /)rti)l -ul-illme t. <o.e3er1 u +er t4e -)#ts t4ere is o /)rti)l -ul-illme t. B 2ust .e t to t4e B) 6 ) + .it4+r). t4e mo ey ) + retur e+ to A. Su#4 -)#t +oes ot /ro3e /)rti)l /er-orm) #e1 but merely ) )#t /relimi )ry to t4e -ul-illme t o- t4e obli()tio to /)y. <e o ly /l) e+ to /)y. ,n an oral contract which by its terms is not to be performed within year from the execution thereof, 5ne of the contracting parties already complied within the year with the obligation imposed upon him by said contract& Can the other party a$oid fulfillment of those incumbent upon him by in$o=ing the 4tatute of (rauds? No. <e #) o lo (er i 3o6e t4e St)tute o- :r)u+s 4)+ t4ere bee /er-orm) #e o- t4e obli()tio by o e o- t4e /)rties. T4e re)so .4y ) /erso #) i 3o6e t4e St)tute o- :r)u+s is be#)use t4e #o tr)#t is still .4olly e5e#utory t4us t4ere is o /roo- o- t4e e5iste #e o- t4e #o tr)#t. It4ere 4)+ bee /er-orm) #e )lre)+y o- t4e #o tr)#t1 e3e i- /)rti)l1 it /resu//oses t4ere 4)s bee ) #o tr)#t i t4e -irst /l)#e. 5ne half of a parcel of land belonging to A and B was sold by X to Y for the amount of >!!& .he sale was executed $erbally& 5ne year later A and B sold the entire land to X& ,s the sale executed $erbally by X to Y, $alid and binding? T4e s)le bet.ee 8 ) + 7 bei ( ) 3erb)l s)le .4i#4 i 3ol3es ) /)r#el o- l) +. O its -)#e it )//e)rs to be #o3ere+ by t4e St)tute o- :r)u+s. Alt. 1 But t4e ) s.er .oul+ be1 )s su((este+ by t4e U@ L). Ce ter1 t4e s)le is 3)li+ ) + bi +i ( be#)use o- t4e /)yme t1 ) + t4)t too6 t4e #o tr)#t outsi+e t4e o/er)tio o- t4e St)tute o- :r)u+s. A##+(. to @ro-essor Uribe1 u +er t4e -)#ts t4ere .)s o /)yme t. T4ere .)s o me tio t4)t 7 /)i+ 8 1D%%. Alt.$ E3e i- 8 .)s ot t4e o. er )t t4e time o- t4e s)le1 .4e 4e t4ere)-ter )#0uire+ o. ers4i/ be#)use A ) + B sol+ t4e e tire l) + to 81 by o/er)tio o- l).1 o. ers4i/ /)sses to 4is o. buyer !7'. T4e b)sis o- .4i#4 is Art. 1;=;. A##+(. to @ro-essor Uribe 4o.e3er1 t4e )bo3e b)sis #) ot )lso )//ly be#)use -or Art. 1;=; to )//ly t4e l). -urt4er re0uires t4ere must 4)3e bee +eli3ery o- t4e t4i ( by t4e seller to t4e buyer1 e3e i- t4e seller .)s ot t4e o. er ) + o ri(4t to sell1 4e must +eli3er t4e t4i ( to t4e buyer i or+er t4)t o. ers4i/ to )utom)ti#)lly /)ss to t4e buyer1 t4e mome t t4e seller )#0uires o. ers4i/ o3er t4e t4i (. U +er t4e -)#ts1 t4ere .)s o me tio o+eli3ery.

Alt. = Si #e t4is ) s)le o- ) immo3)ble /ro/erty ) + t4is is ) 3erb)l s)le1 t4ere bei ( o /)rti)l -ul-illme t o- ) y obli()tio s )risi ( -rom t4is #o tr)#t1 t4is is u e -or#e)ble u +er t4e St)tute o- :r)u+s. !/ro/er ) s.er' An agreement or contract which in$ol$es a 2eal 1roperty is co$ered by the 4tatute of (rauds? Not e#ess)rily. A )(reeme t )s to t4e /)rtitio o- ) /)r#el o- l) +1 but t4)t )(reeme t is ot #o3ere+ by t4e St)tute o- :r)u+s. T4e St)tute o- :r)u+s .oul+ be )//li#)ble i- t4e )#tio -ile+ is to e -or#e ) #o tr)#t .4i#4 is #o3ere+ to #l)im +)m)(es be#)use o- bre)#4 o- t4)t #o tr)#t. Where an e<ectment suit was filed and the plaintiff was about to testify as to the existence of a contract in relation to the land to pro$e his right to e$ict the occupant& .he lawyer of the defendant in$o=ed the 4tatute of (rauds& 4hould the <udge sustain the ob<ection of the defendant? No. T4e )#tio .)s ot ) )#tio to e -or#e ) u e -or#e)ble #o tr)#t1 or ) )#tio #o3ere+ by t4e St)tute o- :r)u+s1 or ) )#tio to #l)im +)m)(es b)se+ o ) u e -or#e)ble #o tr)#t. T4is i 3ol3es ) t4ir+ /erso . A t4ir+ /erso u +er t4e l). #) ot )ss)il ) u e -or#e)ble #o tr)#t. ,f there is no partial payment or no partial deli$ery, the doctrine of part performance shall not apply, which will bring the contract outside the co$erage of the 4tatute of (rauds? No True. @)rti)l -ul-illme t m)y /ert)i to ) y obli()tio )risi ( -rom ) 3erb)l #o tr)#t. :or e5)m/le i ) #)se +e#i+e+ by t4e Su/reme Court i 3ol3i ( ) s)le o- ) /)r#el o- l) +1 )s 3erb)lly )(ree+ u/o buyer /)i+ t4e re)l /ro/erty t)5es. T4e buyer )lso 4)+ t4e /ro/erty sur3eye+. T4e buyer )lso #o stru#te+ ) buil+i (1 more or less /erm) e t i #4)r)#ter. T4ese obli()tio s +oes ot 4)3e ) yt4i ( to +o .it4 /)yme t or +eli3ery1 but o et4eless t4e S.C. rule+ t4)t be#)use o/)rti)l -ul-illme t o- t4e obli()tio s )risi ( -rom t4)t #o tr)#t1 t4e #o tr)#t .)s t)6e out o- t4e St)tute o:r)u+s. :ul-illme t +oes ot e#ess)rily be rel)te+ to /)yme t or +eli3ery. ,f a contract is co$ered by the 4tatute of (rauds, and the plaintiff would want to present a witness who would testify without any document at hand& ,n other words, oral testimony is being presented, and there is an ob<ection under the 4tatute of (rauds, does it necessarily mean that the <udge should sustain the ob<ection, because the contract is co$ered by the 4tatute of (rauds? It +e/e +s o t4e /ur/ose o- t4e testimo y. I- t4e /ur/ose o- t4e testimo y is to /ro3e /)rti)l -ul-illme t1 t4e t4e St)tute o- :r)u+s is ot )//li#)ble. @)rti)l -ul-illme t m)y be /ro3e .4olly by or)l testimo y. No +o#ume t)ry e3i+e #e is re0uire+ i rel)tio to /)rti)l ?$

-ul-illme t. <e #e1 t4e 2u+(e s4oul+ ot sust)i t4e ob2e#tio . ,oreo3er1 e3e i- t4ree !=' .it esses .oul+ testi-y i #ourt )s to /)rti)l -ul-illme t. T4e #ourt s4oul+ ot )utom)ti#)lly #o #lu+e t4)t t4ere .)s i -)#t /)rti)l -ul-illme t. T4e #ourt s4oul+ s)tis-y itsel- b)se o t4e testimo y t4)t i +ee+ t4ere .)s /)rti)l -ul-illme t. O t4e ot4er 4) + t4e St)tute o- :r)u+s +oes ot /ert)i to t4e .ei(4t o- e3i+e #e. T4e St)tute o- :r)u+s )--e#ts t4e )+missibility o- t4e e3i+e #e. I ot4er .or+s i- t4e #o tr)#t is #o3ere+ by t4e St)tute o- :r)u+s1 t4e testimo y m)y ot e3e be )llo.e+ u +er t4is ob2e#tio . It (oes i to t4e )+missibility o- t4e e3i+e #e. Dow shall unenforceable contracts be ratified? 1. By )##e/t) #e o- t4e be e-its u +er su#4 #o tr)#t. $. :or -)ilure to ob2e#t to t4e /rese t)tio o- or)l e3i+e #e )t t4e /ro/er time. Voi+ Co tr)#ts or I e5iste t Co tr)#ts What contracts are $oid or inexistent from the beginning? 1. T4ose .4ose #)use1 ob2e#t or /ur/ose is #o tr)ry to l).1 mor)ls1 (oo+ #ustoms1 /ubli# or+er or /ubli# /oli#yB $. T4ose .4i#4 )re )bsolutely simul)te+ or -i#titiousB =. T4ose .4ose #)use or ob2e#t +i+ ot e5ist )t t4e time o- t4e tr) s)#tio B ;. T4ose .4ose ob2e#t is outsi+e t4e #ommer#e o- me B D. T4ose .4i#4 #o tem/l)te ) im/ossible ser3i#eB E. T4ose .4ere t4e i te tio o- t4e /)rties rel)ti3e to t4e /ri #i/)l ob2e#t o- t4e #o tr)#t #) ot be )s#ert)i e+B ?. T4ose e5/ressly /ro4ibite+ or +e#l)re+ 3oi+ by l). !Art. 1;%&'. Are relati$ely simulated contracts $oid? T4e rel)ti3ely simul)te+ #o tr)#t is 3oi+ but t4ey .ill be bou + to t4e #o tr)#t or tr) s)#tio .4i#4 t4e /)rties )#tu)lly e tere+ i to. .he cause or ob<ect of the contract need not exist as long as such cause has the potentiality of existence? :)lse. T4e ob2e#t is ot ) t4i (1 t4e ob2e#t is t4e sub2e#t m)tter o- t4e #o tr)#t. Su#4 3ie. m)y be ri(4t i ) #o tr)#t o- s)le1 .4ere t4e #o tr)#t o- s)le m)y be 3)li+ e3e i- t4e t4i ( is ot yet i e5iste #e )s lo ( )s it 4)s t4e /ote ti)lity o- e5iste #e. But i #o tr)#ts1 t4ere 4)s to be ) #)use or ob2e#t )t t4e time o- t4e tr) s)#tio . It4ere .ill be o sub2e#t m)tter1 it l)#6s o e o- t4e esse ti)l re0uisite o- ) #o tr)#t. What other contracts expressly prohibited or declared $oid by law?

T4e -ollo.i ( /erso s #) ot )#0uire by /ur#4)se1 e3e )t /ubli# or 2u+i#i)l )u#tio 1 eit4er i /erso or t4rou(4 t4e me+i)tio o- ) ot4erC 1. T4e (u)r+i) 1 t4e /ro/erty o- t4e /erso or /erso .4o m)y be u +er 4is (u)r+i) s4i/B $. A(e ts1 t4e /ro/erty .4ose )+mi istr)tio or s)le m)y 4)3e bee i truste+ to t4em1 u less t4e #o se t o- t4e /ri #i/)l 4)3e bee (i3e B =. E5e#utors ) + )+mi istr)tors1 t4e /ro/erty o- t4e est)te u +er )+mi istr)tio B ;. @ubli# o--i#ers ) + em/loyees1 t4e /ro/erty o- t4e St)te or o- ) y sub+i3isio t4ereo-1 or o- ) y (o3er me t o. e+ ) + #o trolle+ #or/or)tio 1 or i stitutio 1 t4e )+mi istr)tio o- .4i#4 4)s bee i truste+ to t4emB t4is /ro3isio s4)ll )//ly to 2u+(es ) + (o3er me t e5/erts .4o1 i ) y m) er .4)tsoe3er t)6e /)rt i t4e s)leB D. Husti#es1 2u+(es1 /rose#uti ( )ttor eys1 #ler6s osu/erior ) + i -erior #ourts1 ) + ot4er o--i#ers ) + em/loyees #o e#te+ .it4 t4e )+mi istr)tio o2usti#e1 t4e /ro/erty ) + ri(4ts i liti()tio or le3ie+ u/o ) e5e#utio be-ore t4e #ourt .it4i .4ose 2uris+i#tio or territory t4ey e5er#ise t4eir res/e#ti3e -u #tio sB t4is /ro4ibitio i #lu+es t4e )#t o- )#0uiri ( by )ssi( me t ) + s4)ll )//ly to l).yers1 .it4 res/e#t to t4e /ro/erty ) + ri(4ts .4i#4 m)y be t4e ob2e#t o) y liti()tio i .4i#4 t4ey m)y t)6e /)rt by 3irtue ot4eir /ro-essio B E. A y ot4ers s/e#i)lly +is0u)li-ie+ by l). !Art. 1;&1 - l). o s)les'. A $oid contract produces no legal effect whatsoe$er? True1 ) 3oi+ #o tr)#t /ro+u#es o le()l e--e#t .4)tsoe3er. U +er Art. 1=D$1 Co tr)#ts .it4out #)use1 or .it4 u l).-ul #)use1 /ro+u#e o e--e#t .4)tsoe3er. Se#o +ly1 ) 3oi+ #o tr)#t is bei ( #)te(oriAe+ )s i e5iste t. I- ) #o tr)#t is i e5iste t1 4o. #) it /ro+u#e ) y le()l e--e#t. ,f an action is filed to enforce a $oid contract, will the action prosper? No. A y )#tio to e -or#e ) 3oi+ #o tr)#t .ill e3er /ro/er be#)use t4ere is ot4i ( to be e -or#e+. ,f the contract is $oid, and pursuant to that contract, one of the parties deli$ered a sum of money or a thing to the other party, may he be able to reco$er what he deli$ered to the other party? Or+i )rily i- ) #o tr)#t is ) ille()l #o tr)#t1 me) i ( t4e ob2e#t or t4e #)use is #o tr)ry to l).1 mor)ls1 (oo+ #ustoms1 /ubli# or+er or /ubli# /oli#y1 4e #) o lo (er +eli3er u +er t4e /ri #i/le o- i /)ri +eli#to. T4e #ourt s4oul+ le)3e t4e /)rties )s t4ey )re1 ) + o )i+ s4oul+ be (i3e to eit4er /)rty to t4is #o tr)#t.

?=

<o.e3er1 u +er Art. 1;111 1;1$ 1 1;1;1 1;1D ) + 1;1E. T4e e5#e/tio sC 1. I- o e o- t4e /)rties to t4is ille()l #o tr)#t .)s i #)/)#it)te+ )t t4e time t4e #o tr)#t .)s e tere+ i to1 4e m)y be )llo.e+ to re#o3er .4)t 4e +eli3ere+ to t4e ot4er /)rty. T4ere-ore1 e3e i- t4e #o tr)#t is ille()l ) + t4ere-ore 3oi+1 still 4e s4oul+ be )llo.e+ to re#o3er i/ubli# i terest .)rr) ts .4)t 4e +eli3ere+ /ursu) t to t4e 3oi+ #o tr)#t. $. "es/ite t4e -)#t t4)t t4e #o tr)#t is ) ille()l #o tr)#t1 ) /)rty to su#4 #o tr)#t m)y be )llo.e+ to re#o3er .4)t 4e +eli3ere+ i- 4e re/u+i)te+ t4e #o tr)#t be-ore t4e #o summ)tio o- t4e #o tr)#t or be-ore +)m)(e is #)use+ to ) t4ir+ /erso . What is the distinction between an inexistent contract and annullable contract? I e5iste t )re 3oi+ #o tr)#t .4ile ) 3)li+ #o tr)#ts u til ) ulle+. ul)ble #o tr)#ts )re

What defense could ha$e been proper by B under the facts? T4e /ro/er +e-e se s4oul+ 4)3e bee l)#4es. I t4is #)se )lmost ;% ye)rs 4)+ el)/se+. T4e (r) tee1 t4e seller sle/t o 4is ri(4ts1 ) + t4ere-ore 4e ) + 4is 4eirs m)y ot re#o3er1 u +er t4e /ri #i/le o- l)#4es. E an unwed mother ga$e her child for adoption to a childless couple, BC for which the latter paid "!=& ,n the ci$il register of birth, the father was listed as father un=nown& .wo years later after BC learned to lo$e the child as their own, the adoption proceedings commenced with re0uired publication& ( the father of the child appeared to oppose the adoption and to see= custody of the child& E sided with BC claiming that ( had abandoned her when he was pregnant declararing that she wanted BC to =eep the child& Could BC reco$er the twenty thousand 7"!,!!!8 they had paid for either ( or E? 2easons& No t4ey #) ot re#o3er. E--e#ti3ely1 , sol+ t4e #4il+ to t4e s/ouses BC ) + ob3iously t4e s)le is ) 3oi+ s)le be#)use t4e ob2e#t is #o tr)ry to l).1 mor)ls1 (oo+ #ustoms1 /ubli# or+er or /ubli# /oli#y. T4e #o tr)#t bei ( ) ille()l #o tr)#t 1 t4e i /)ri +eli#to rule .oul+ be )//li#)ble ) + .4)te3er .)s +eli3ere+ by t4e /)rty to t4e ot4er m)y o lo (er be re#o3ere+1 )s t4e #ourt #) ot (i3e )i+ to eit4er /)rty to su#4 #o tr)#t.

I e5iste t #o tr)#ts #) ot be r)ti-ie+B .4ile ) #o tr)#ts #) be r)ti-ie+.

ul)ble

I e5iste t #o tr)#ts )re 3oi+ be#)use o e o- t4e esse ti)l eleme ts is l)#6i ( or m)ybe be#)use t4e #o tr)#t is #o tr)ry to l).1 mor)ls1 (oo+ #ustoms1 /ubli# or+er or /ubli# /oli#y. A ul)ble #o tr)#ts is ) +e-e#ti3e #o tr)#t be#)use o- +e-e#t i t4e #o se t eit4er i #)/)#it)te+ or t4ere is 3iti)tio )s to 4is #o se t. ,n )>!, the Bureau of Aands issued a homestead patent to A& .hree 7%8 years later A sold the homestead to B& A died in ))! and his heirs filed an action to reco$er the homestead from B on the ground that the sale of A 7their father8 to B is $oid under sec& F of the 1ublic Aand Aaw& B contends howe$er, that the heirs of A cannot reco$er the homestead from him because their action has prescribed, and furthermore, A was in pari delicto& /ecide& As to /res#ri/tio 1 it is ot ) (oo+ +e-e se be#)use t4e s)le m)+e .it4i = ye)rs -rom t4e (r) t u +er t4e @ubli# L) + L). is ) 3oi+ s)le. A y )lie )tio o- t4e l) + u +er t4is l). .it4i t4e D ye)r /ro4ibitory /erio+ is ) 3oi+ )lie )tio . A #o tr)#t .4i#4 is ull ) + 3oi+ ) + ) )#tio to re#o3er -rom su#4 3oi+ #o tr)#t +oes ot /res#ribe. <o.e3er1 i to t4e se#o + +e-e se t4)t t4e 4eirs #) ot re#o3er u +er t4e i /)ri +eli#to rule1 )s /ro3i+e+ i Art. 1;1E1 t4)t .4e ) l). +e#l)res ) #o tr)#t ull ) + 3oi+ but t4ere is o i 4ere t ille()lity ! ot ille()l /er se' i t4e #o tr)#t ) + t4e +e#l)r)tio o- ullity by l). is i te +e+ or +esi( e+ to /rote#t o e o- t4e /)rties to t4)t #o tr)#t1 t4)t /erso i .4ose -)3or t4e l). .oul+ so /ro3i+e its ullity m)y re#o3er .4)t 4e sol+ to t4e ot4er /)rty. T4e /ro4ibitio u +er t4e @ubli# L) + L). is i te +e+ to /rote#t t4e (r) tee ) + 4is -)mily be#)use i- 4e sell or )lie )te t4e /ro/erty .it4i t4)t /erio+ 4e .oul+ 4)3e ot4i ( more to #ulti3)te 4imsel- ) + 4is -)mily. T4)t is .4y 4e .oul+ still 4)3e t4e ri(4t to re#o3er t4e /ro/erty )s t4e #o tr)#t is ) 3oi+ #o tr)#t ) + t4e i /)ri +eli#to rule is ot )//li#)ble u +er t4e -)#ts.

?;