7/28/2019 4068616 Obligations and Contracts http://slidepdf.com/reader/full/4068616-obligations-and-contracts 1/41 Week 1 – Welcome / Introduction to Law I. Introduction to Law 1. Not Divine Law, law of religion and faith 2. Not Natural Law, justice, fairness and righteousness 3. Not Moral Law, norms of good and right conduct 4. Not Physical Law, order or regularity in nature a. a. Sources of Law i) i) Constitution – Fundamental Law of the land ii) ii) Legislations – Passed by Senate and House of Representatives iii) iii) Administrative issuances – Quasi Legislative Functions iv) iv) Jurisprudence – Decisions of the Supreme Court (SCRA) Stare decisis v) v) Treaties and Generally accepted principles of International Law - Art II Sec 2, Pacta sund servanda vi) vi) Customs – habits and practices through long and accepted usage have become binding rules of conduct vii) vii) Principles of Justice and Equity – common law jurisdiction a. b. Characteristics of Law - - Rule of Conduct - - Obligatory - - Promulgated by legitimate authority - - Of common observance and benefit b. c. Organization of courts - - Supreme Court - - Court of Appeals, Sandiganbayan, Court of Tax Appeals - - Regional Trial Court
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2. Not Natural Law, justice, fairness and righteousness3. Not Moral Law, norms of good and right conduct4. Not Physical Law, order or regularity in nature
a. a. Sources of Lawi) i) Constitution – Fundamental Law of the land
ii) ii) Legislations – Passed by Senate and House of Representatives
iii) iii) Administrative issuances – Quasi Legislative
Functions
iv) iv) Jurisprudence – Decisions of the SupremeCourt (SCRA) Stare decisis
v) v) Treaties and Generally accepted principles of International Law - Art II Sec 2, Pacta sundservanda
vi) vi) Customs – habits and practices through longand accepted usage have become binding rules of conduct
vii) vii) Principles of Justice and Equity – common law jurisdiction
a. b. Characteristics of Law
- - Rule of Conduct- - Obligatory - - Promulgated by legitimate authority - - Of common observance and benefit
b. c. Organization of courts
- - Supreme Court- - Court of Appeals, Sandiganbayan, Court of
- - Metropolitan Trial Court, Municipal TrialCourt
- - Quasi Judicial Bodies1. 1. Comelec2. 2. NLRC
3. 3. LTFRC4. 4. ERB
c. d. Quantum of Evidence- - Criminal cases: Proof Beyond Reasonable
Doubt
- - Civil cases: Preponderance of Evidence-greater weight of all the evidence which as a wholeshows that the act sought to be proved is moreprobable than not.
- - Administrative cases: Substantial Evidence – Such evidence that a reasonable mind mightaccept as adequate to support a conclusion
d. e. Effects and Applications of law
- - Requirement for publication1. 1. 15 days after publication in OG or
newspaper2. 2. Ignorance of the law excuses no one
from compliance3. 3. Due Process
- - Law is prospective except:1. 1. If the law provides for retroactivity 2. 2. Penal law insofar as it favors the
accused3. 3. Remedial or curative law
- - Computing time1. 1. Year is 12 calendar months2. 2. Month is 30 days, except when it refers
to a calendar month3. 3. First day excluded, last day included
- - Conflict of Laws Provisionsi. ... i. Penal laws apply to all who sojourn to
ii. ..ii. Family Law and inheritance based onnational law of the party regardless of wherehe lives
iii. .iii. Forms and solemnities of contracts andother instrument based on the place where it
is executed
e. f. Obligations and Contracts Defined
The body of rules which deals with the nature andsources of obligations and the rights and duties arisingfrom agreements and the particular contracts.
Obligation – A Juridical relation whereby a person may demand from another the observance of a determinativeconduct (giving, doing, not doing), and in case of breach,
may demand satisfaction from the assets of the latter.
Contract – Meeting of the mind between two personswhereby one binds himself, with respect to the other, togive something or to render some service.
A contract necessarily gives rise to an obligation but anobligation does not always need to have a contract.
f. g. Corporation and Partnership Defined
Partnership – Two or more persons bind themselves tocontribute money, property, or industry to a commonfund, with the intention of dividing the profits amongthemselves.Corporation – Artificial being created by operation of law,having right of succession and the powers, attributes,properties expressly authorized by law or incident to itsexistence.
Weeks 2 to 4 – Obligations
I. General Provisions, Nature and Effects of Obligations
- - Four essential requisites of an obligation(i) (i) A passive subject (Debtor – to give; Obligor – to
do)
(ii) (ii) An active subject (Creditor/Obligee)(iii)(iii) Object (Prestation) – subject matter(iv) (iv) Juridical tie (Vinculum) – Source of Obligation
- - Form as a manifestation of intent; but no specificform unless required by law
(b) (b) Kinds of Obligations1. 1. According to subject matter
a. a. Real Obligation – to giveb. b. Personal Obligation – to do
i. ... i. Positive – to give or doii. ..ii. Negative - not to do or not to give
A borrower agreed to pay his debt in 60 days, andin case of non-payment to render free service asdriver/servant. When due date came, borrowerrefused to render free service. Decide.
2. 2. According to person obligeda. a. Unilateralb. b. Bilateral (Reciprocal or non-reciprocal)
(c) (c) Sources of Obligation1. 1. LAW – Imposed by law
- - A wife was about to deliver a child. Herneighbor brought her to hospital. Who shouldpay the hospital bill – Husband or Neighbor?
- - P.D. 1517 grants the right of first refusalto person who has leased for more than 10 yearsan urban land and who construct his housethereon. Lessee of a Condo in Manila now claimshis right of first refusal because he has beenliving in the unit for almost 15 years. Decide.
Obligations derived from law are not presumed.
- - In a newspaper ad, there was an offer toreplace 30 sachets of Tide for one Venetian cut
Glass until the end of the year. At the end of the year, you present your tide sachets, but Tiderefused to honor it anymore since the ad wasposted more than half a year ago. Decide. 657
a. a. Quasi-contracts – Juridical relations basedon the principle that no one shall be unjustly enriched or benefited at the expense of another.
i. ... i. Negotiorum Gestio – When a personvoluntarily takes charge of the managementof a business or property of another that hasbeen neglected or abandoned, without any power from the latter, as a consequence of which, he is obliged to continue the sameuntil the termination of the affair or to
require the owner to substitute him. Ex. NPAinfested area Fishpond
ii. ..ii. Solutio indebiti – When a personunduly delivers a thing through mistake toanother who has no right to demand it.(melon bank v. Javier)
b. b. Crimes (acts or omission punished by law)
If you commit a crime, you are liable bothcriminally and civilly for the consequence of youracts or omissions such as restitution, reparationfor damages caused and indemnification forconsequential damages.
Ex. Support for impregnated rape victim; loss of earning capacity of murder victim
c. c. Quasi delict or Torts – The fault ornegligence of a person who, by his act oromission, independent from any contractualrelation, causes damage to another person
A 3-year-old child was bitten by a dogof her neighbor. As a result, she got infectedby rabies and died. Can the neighbor be heldliable for the acts of the dog?
A signboard of hanging out of abuilding dropped on a car resulting in totalwreck of the car. The car owner sues thebuilding owner and demand to replace thecar. Building owner cites the strong wind as
force majeure condition indicating no fault onhis part. Decide.
2. 2. Contracts
Have the force of law between thecontracting parties and should be compliedwith in good faith.
Sincerity and Honesty
II. Nature and Effect of Obligations
(a) (a) Specific v. Generic Thing1. 1. Specific is designated or physically segregated
from others of the same class.2. 2. Generic refers to a class or genus and cannot
be determined with particularity.
(b) (b) Duties of debtor in delivery of generic thing1. 1. To delivery a thing which must neither be of
superior nor inferior quality (1246)2. 2. To pay damages in case of breach (1170)
(c) (c) Duties of debtor in delivery of specific thing1. 1. To deliver the thing which he has obligated
himself to give2. 2. To take care of the thing with the proper
diligence of a good father of a family The ordinary care that an average or
reasonably prudent person exercises over hisproperty
Another standard of c are may be requiredby law or by stipulation of the parties
3. 3. To deliver all the accessions and accessories4. 4. To pay damages in case of breach
(d) (d) Remedies of Creditors in breach of obligation1. 1. To Give Determinate Thing
2. 2. But obligation to deliver accessions oraccessories does not include the principal
(g) (g) Legal Delay 1. 1. From the time obligee judicially or extra-
judicially demand fulfillment; not mere notice
2. 2. No demand from creditor necessary infollowing cases:a. a. When obligation or law expressly so
declaresb. b. Time is of the essence (controlling motive)c. c. When demand would be useless
3. 3. In reciprocal obligation, from the moment oneparty fulfills his obligation, delay by the other
begins.
4. 4. Kinds of Delay a. a. Mora solvendi – delay on the part of debtorb. b. Mora acccipiendi – delay of creditorc. c. Compensatio more – delay in reciprocal
obligation
5. 5. Effects of Delay a. a. Liable for interest and damagesb. b. Liable even for fortuitous event when the
obligation is to delivery a determinate thing
(h) (h) Fortuitous Events1. 1. Any event which cannot be foreseen or which
though foreseen is inevitable, independent of thewill or from aggravation of the debtor, renderimpossible the fulfillment of obligation
2. 2. No person shall be responsible for fortuitousevents, except:a. a. Where expressly specified by law or
stipulated in contractb. b. When nature of the obligation requires
assumption of riskc. c. When debtor incurs delay d. d. When debtor promises to deliver same
thing to two or more personse. e. When obligation to deliver arises from
(i) (i) Fraud (deceit or dolo) Deliberate or intentional
evasion of the normal fulfillment of an obligation;1. 1. Dolo incidente (Incidental Fraud) - committed
in the performance of pre-existing obligation,
remedy is damages2. 2. Dolo causante (Causal Fraud) – Fraudemployed at the time of the execution of a contractin order to secure consent, remedy is annulmentbec of vitiation of consent
3. 3. Demandable in all obligations4. 4. Waiver of future fraud is void
(j) (j) Negligence (culpa) Omission of that diligence whichis required by the nature of the obligation, but no malice
1. 1. Culpa contractual – Negligence in the
performance of contractual obligation,a. a. Pre-existing contractb. b. Liable for damages based on breach of
contractc. c. Proof of contract and breach is enough for
recovery of damaged. d. Negligence of employee conclusive
presumption of employer’s negligencee. e. Proof of due diligence in the selection of
employee not a defense
2. 2. Culpa aquiliana – Negligence between partiesnot so related by any pre-existing contract,a. a. Obligation for damages based on quasi
delictb. b. No pre existing contractc. c. Negligence must be proved for recovery of
damaged. d. Negligence of employee prima facie
presumption of employer’s negligence e. e. Due diligence in the selection and
supervision of employee is a valid defense
3. 3. Can be regulated by the Court depending oncircumstance
4. 4. Waiver of future negligence allowed
(k) (k) Presumptions1. 1. Receipt of principal without reservation as to
1. 1. Pure Obligation – One whose effectivity orextinguishments does not depend upon thefulfillment or nonfulfillment of a condition or uponthe expiration of a term or period. Characterized by Immediate Demandability.
2. 2. Conditional Obligation – Effectivity issubordinated to the fulfillment or non-fulfillment of a future or uncertain fact or event
Future and uncertain event or
Past event and unknown to theparties
a. a. Suspensive v. Resolutory
In suspensive condition, fulfillmentgive rise to an obligation – acquisition of rights
In resolutory condition, fulfillmentextinguishes obligation – loss of rightsacquired
b. b. Casual, Potestative, Mixed
Casual – Depends on chance or will of third party (Valid)
Potestative – Depends on the will of one of the contracting parties
(1) (1) If suspensive conditiondepends on will of debtor, theobligation is void
(2) (2) If resolutory condition dependson will of debtor, the obligation isvalid
(3) (3) If depends on will of creditor, itis valid.
Mixed – Depends partly upon the willof a party and partly upon chance or thirdparty (Valid)
1. 1. Joint Obligation – Each of creditor has rightto demand, and each debtor is bound to rendercompliance, with his proportionate part of theprestation
a. a. Default rule is obligation is JOINT
b. b. Joint creditor cannot act in representationof the other creditors
c. c. Joint debtor cannot be compelled toanswer for liability of other debtors
d. d. “Jointly”, “We promise to pay”, “Pro rata”,“proportionately”
2. 2. Solidary Obligation – Each creditor has aright to demand, and each debtor is bound torender compliance, with the entire prestation; butas to co-debtor he is liable only for his share
iv. .iv. In indivisible obligation, other debtorsnot liable for insolvency; if solidary debtorbecomes insolvent, the co-debtors bore hisdebt in proportion
e. e. Solidary creditors may do whatever may beuseful to others, but not anything which may beprejudicial to the others
f. f. A solidary creditor cannot assign his rightswithout the consent of the others, except if to co-creditors
g. g. Debtor must pay to the creditor who madedemand, if none demanded, then he may pay any one of the solidary creditor
h. h. Novation, compensation, confusion orremission of a solidary creditor shall extinguishthe obligation but the creditor who did theseacts shall be liable to the other creditors
i. i. No re-imbursement if payment made afterobligation prescribed or illegal
j. j. Remission of the whole obligation obtainedby a solidary debtor does not entitle him toreimbursement from his co-debtors
k. k. Defenses available to solidary debtors
i. ... i. Derived from nature of obligation Payment, fraud, prescription,
remission, illegality, non performance of condition
ii. ..ii. Personal to the debtor Insanity, incapacity, mistake,
violence, minority
iii. .iii. Personal to the other solidary debtors Partial defense
1. Payment or performance2. Loss of the thing due3. Condonation or remission4. Confusion or merger of the rights of creditor and debtor5. Compensation6. Novation7. Death of a party in personal obligation8. Annulment or Rescission of contract9. Arrival of Resolutory period or fulfillment of resolutory conditon10. Impossibility of fulfillment
11. Prescription
I. Payment(a) (a) General Provisions Payment
(i) (i) Complete Delivery of money,performance of obligation
(ii) (ii) If substantially performed in goodfaith, obligor may recover as thoughthere had been complete fulfillmentless damages
(iii)(iii) Third party cannot compel creditorto accept payment or performance,except
a. a. When there is stipulation tothe contrary
b. b. When third person has aninterest in the fulfillment of obligation
(iv) (iv) Rights available to third party whopays:
a. a. If payment made with theconsent of the debtori. .. i. Recover from debtor the
3. 3. Expenses of consignation forCreditor’s account
a. a. If creditor allows debtor to withdraw the consignation, creditorlose preference over the thing. Co-debtor, guarantors, sureties shallbe released.
II. Loss of the Thing Due(a) (a) Lost – when perished, go out of commerce, or
disappear in such a way that its existence unknown orcannot be recovered
Or becomes legally or physically impossible to perform, or
so difficult as to be manifestly beyond the contemplationof the parties
(b) (b) The obligation to deliver specific thing isextinguished if
1. 1. Without the fault of debtor, and2. 2. Debtor not in delay
(c) (c) No person shall be responsible for fortuitous events,except:
1. 1. Where expressly specified by law or stipulatedin contract
2. 2. When nature of the obligation requiresassumption of risk
3. 3. When debtor is at fault, partly 4. 4. When debtor incurs delay 5. 5. When debtor promises to deliver same thing
to two or more persons6. 6. When obligation to deliver arises from
criminal offense7. 7. When obligation is generic
(d) (d) In case of partial loss the court shall determinewhether it is so important as to extinguish the obligation
(e) (e) In case lost when the thing is in the possession of debtor, presumption is it is his fault
Except earthquake, flood, storm or othernatural calamity
g. h. Act of liberality by virtue of which creditor
abandons his right Gratuitous Accepted by debtor Obligation must be demandable Parties must be capacitated Donation not inofficious Forms in express condonation
h. i. Implied remission- - Delivery of private document evidencing
credit
- - If thing pledge is found in the possessionof debtor or owner of thing
- - Renunciation of principal extinguishaccessory obligation
IV. Confusion or Merger of Rights Creditor and Debtor merged in the same
person1. 1. Between principal debtor and principal
creditor2. 2. Complete and definite merger
a. a. Merger of debtor and creditor benefits theguarantor
b. b. Extinguish only the portion of the jointobligation corresponding to the creditor and debtormerged
c. c. Merger of one solidary debtor with creditorextinguishes obligation
V. Compensationa. a. Persons who in their own rights are debtors and
creditors of each other extinguishes the debts to theconcurrent amount
b. b. Guarantor can set up compensation of whatprincipal debtor may owe creditor
c. c. Compensation may be total or partiald. d. Parties may agree to compensate debts not yet due
VI. Novation – extinction of an obligation through the creation of a new one which substitutes it
a. a. Requisites:
i. Previous valid obligation
ii. Agreement to enter new obligation
iii. Extinguishments of old
iv. Creation of new valid obligationb. b. Must be declared in unequivocal termsc. c. Or incompatible on every point – Test: Whether
old and new contract can stand together each havingits own independent existence
d. d. Substitution of Debtor
i. Expromision – Without the knowledgeor consent of debtor, at the instance of the newdebtor
1. 1. Payment by new debtor gives himright to beneficial reimbursment
2. 2. Insolvency or non fulfillment of obligation by new debtor will not give riseto liability of old debtor
ii. Delegacion – Substitution made at theinstance of old debtor
3. 1. Payment by new debtor entitles himto reimbursement and subrogation
4. 2. Non fulfillment of obligation by newdebtor will not give rise to liability of olddebtor
5. 3. Insolvency of new debtor will reviveaction against old debtor if insolvency wasalready existing and of public knowledge,or known to the debtor when he delegatedhis debt
e. e. If new obligation is void, the original one shallsubsists
f. f. If original obligation is void, novation is void;except when annulment may be claimed only by debtor or when voidable acts have been ratified
DD ee f f iinn iitt iioo nn oo f f aa CC oo nn tt rr aa cc tt
A meeting of the minds Between two persons Whereby one binds himself, with respect to the other
To give something or to render some service
DD iif f f f ee rr ee nn tt pp hh aa ss ee ss oo rr ss tt aa ggee ss iinn tt hh ee lliif f ee oo f f aa cc oo nn tt rr aa cc tt 1. 1. Preparation – Preliminary to formation 2. 2. Perfection – birth of the contract3. 3. Consummation - fulfillment
EE ss ss ee nn tt iiaa ll cc hh aa rr aa cc tt ee rr iiss tt iicc ss oo f f CC oo nn tt rr aa cc tt ss 1. 1. Obligatory force – must be complied with in good faith
2. 2. Autonomy – parties are free to enter such stipulations,
clauses, terms and conditions – – Clauses and condtions must not be contrary to:
LAW Morals Good Customs Public Order Public Policy
3. 3. Mutuality – contract must bind both parties
Determination can be left to third party, whose decisionshall be binding only when communicated to both parties
Unless such determination be evidently inequitable
4. 4. Relativity – takes effect only bet parties, their assigns andheirs
Stipulation pour autrui accepted by third party Where third persons comes into possesion of the object of
contract creating real rights Where contract is to defraud a third person Where third person induces a contracting party to violate his
contracta.
DD iif f f f ee rr ee nn tt CC llaa ss ss ee ss oo f f CC oo nn tt rr aa cc tt ss
According to perfection – – Consensual – Perfected by mere agreement of the parties
– – Real – Requires not only consent, but also the delivery of the object
According to form – – Common – Do not require particular form
– – Formal – Those which require particular form, likedonation, mortgage
According to nature of vinculum – – Unilateral – Obligation of one party only – – Bilateral – Reciprocal obligations for both parties
According to cause – – Onerous – Giving of an equivalent or compensation – – Gratuitous – Given without compensation, just pure
liberality
According to risks involved – – Commutative – Prestation is pecuniarily appreciable and
determined at the moment of celebration of contract – – Aleatory – Pecuniarily appreciable but not yet determined
at the moment of celebration, since it depends upon thehappening of an uncertain event. Ex. Insurance
According to name – – Nominate – with specific names or designation in law – – Innominate – no specific name
EE ss ss ee nn tt ii aa ll RR ee qq uu ii ss ii tt ee ss oo f f CC oo nn tt rr aa cc tt ss
Consent of the contracting parties Object certain subject matter of the contract Cause of the obligation which is established
EE llee mm ee nn tt ss oo f f CC oo nn ss ee nn tt
Concurrence of the offer and the acceptanceo Definite Offer that may be exactly fixedo Assent to the terms without qualifications or conditionso Conveyed before the death, civil interdiction, insanity, or
o Qualified acceptance is a counter offero Perfected when acceptance comes to knowledge of offeroro Offer can be withdrawn anytime before acceptance, unless
option is founded on considerationo If offer made thru agent, accepted when communicated to
the agent By parties with legal capacity to contract
o Not minors, insane or demented, deaf-mutes who do notknow how to write, incompetents under guardianship, civilinterdiction
o Minor can be liable if he misrepresents his ageo Prohibited by law from entering into contracts
Husband and Wife to each othero o Insolventso o Persons prohibited from giving donationso o Adultery, concubinageo o In consideration of criminal offenseo o Made to public officer, spouse, by reason of
officeo o Persons with fiduciary relationso o Guardian, for property under his
guardianshipo o Agents, for property entrusted to themo o Executor/administratoro Public officers, judges, for property under their
jurisdictiono
Intelligently, freely given, consciously - - Vices of the will
Mistake - False notion of a thing or a factmaterrial to the contract
Simple mistake gives rise to correction Render voidable in following cases:
Mistake as to object of the contracto Identity of thing, Substance, Condition, Quantity only if principal reason o
Mistake of Lawo Will not make it voidable except: Mutual
error as to the legal effect of an agreement when the real purpose of theparties is frustrated
o If such identity or qualification is principalcause of contract
Violence – Employment of external physical
force, irresistible and serious to wrest consent
Intimidation – Moral compulsion to influenceanother to give his consent thru fear of imminent orgrave evil
o o Force employed must be serious orirresistible
o o Determining cause for the party inentering into the contract
Undue Influence – Improper advantage of hispower over the will of another depriving the latter of
reasonable freedom of choice
Confidential, Family, Spiritual and otherrelations or
Person influenced suffering from mentalweakness, ignorant, financial distress
Fraud – Insidious words or machinations of oneof the contracting parties induced the other to enterinto a contract, which without them he would not haveagreed; Failure of one party to disclose facts to otherparty when there is a duty to reveal them
Dolo incidente (Incidental Fraud) - committed inthe performance of pre-existing obligation,remedy is damages
Dolo causante (Causal Fraud) – Fraud employed at thetime of the execution of a contract in order to secureconsent, remedy is annulment bec of vitiation of consent
o o Must be employed by one of thecontracting parties,
o o but not by both or by third partieso o Must be Seriouso Must have induced the other party to
– Contracting parties do not intend to be boundby the contract at all – – Void
2. Relative – Contracting parties conceal their trueintentions
– Real agreement binding on the parties if it doesnot prejudice third person
OO bb j j ee cc tt ss
Thing, right or service which is the subject matter of the obligationcreated or established Thing or service must be within the commerce of man
o o The law prohibits future inheritance as object of contract
o o Transmissible and can be appropriatedo o Not contrary to Law Moral Good Conduct Public
Order Public Policy o o Real or possibleo o Determinate or determinable
CC aa uu ss ee
Essential reason why the parties enter into the contracto Cause should be in existenceo Licit or lawfulo True Interchangeable with consideration, but not same as motive
o General rule: Particular motive of the party in enteringinto a contract are not material. Except: When itpredetermines the purpose of the contract
Whatever may be the form, Contract shall be obligatory on allprovided all the essential requisites are present
Two exceptions: When Law requires a certain form for validity When Law requires form for enforcement
Must appear in Writing to be valid:o o Donation exceeding P 5,000o o Sale of piece of land or interest therein by an agento o Antichresis - Creditor acquires rights to fruits of
immovable but applying to payment of interesto o Agreement regarding payment of interest
Must appear in Public Instrument to be valid: Donations of immovable property Partnership where immovable or real rights are
contributed Must appear in Public Instrument for Enforcement Creation, transmission, modification, sales or
extinguishments of real rights over immovable properties Cession, repudiation, or renunciation of hereditary
rights, or those of conjugal partnership of gains Power to administer property Cession of actions or rights proceeding from an act
appearing in a public document
RR ee f f oo rr mm aa tt iioo nn
When the true intention of the parties are not expressed in theinstrument, one of the party may ask for the instrument to bechanged so that true intention may be expressed.
Requisities
Must be a meeting of the minds of the parties True intention is not expressed in the instrument Failure due to mistake, fraud, inequitable conduct or
What may be reformed Mutual mistake of parties cause failure to disclose real
agreements One party mistaken and the other acted fraudulently
or inequitably
One party was mistaken and the other knew thatinstrument did not state real agreement, yet concealed it Ignorance, lack of skill,, negligence or bad faith on the
part of person drafting it Where parties agree on mortgage, but instrument states
property is sold absolutely or with right to repurchase
o o What may not be reformedo o Simple Donations with no conditiono o Willso o Those where real agreement is void
DD ee f f ee cc tt iivvee CC oo nn tt rr aa cc tt ss
o o As to defect o o Rescissible - Injury or damageo o Voidable - Vitiation of consent or legal capacityo o Unenforceable - In excess of authority or do not
complyy with S of Fraudo o Void - Lack of an element of a valid contract
o o As to effecto o Rescissible and Voidable - Valid until annulledo o Unenforceable - Cannot be enforced by action in
courto o Void - No legal effects at all
o o As to parties who can file actiono o Rescissible and Void – May be attack directly By
contracting parties or by third partieso o Voidable and Unenforceable - Cannot be
attacked by third persons
Resolution (Rescission of reciprocal obligationo Party who may institute action
o Causes Failure of one party to comply w/ obligation
o Kind of contract Reciprocal obligation only
o Power of the courts
Can grant extension for performance Rescissible Contracts
Guardian who represent ward, lession of more than ¼of the value of the thing
In representation of absentee, lession of ¼ In fraud of creditor who is unable to collect Things under litigation, entered into by defendant
without approval of litigants and court Payment made in state of insolvency where debt not
yet dueo Those which may be declared by law
Partition (1098) Result of deterioration (1189) Unpaid seller (1526 and 1534)
Badges of Fraud
o o Cause or consideration is inadequateo o Transfer made after suit has begun or pendingo o Sale on credit by an insolvent debtoro o Evidence of large indebtedness or complete
insolvency o o Transfer of all or nearly all of debtor propertieso o Between father and son, with any of above
circumstanceso o Failure of vendee to take exclusive possession
VVoo iidd aa bb llee CC oo nn tt rr aa cc tt ss Where one party is incapable of giving consent to a contract
Where the consent is vitiated by mistake, violence,intimidation, fraud, undue influence
CC oo nn vvaa ll iidd aa tt iioo nn Prescription (Four years)
From time incapacity ceases From discovery of such fraud or mistake
Ratification or confirmation Loss of the thing by thru the fault of the person who has right
to annul
EE f f f f ee cc tt ss oo f f aa nn nn uu llmm ee nn tt oo f f VVoo iidd aa bb llee CC oo nn tt rr aa cc tt
– – If not consummated, then parties are released from obligation – – If consummated, parties are to restore to each other what theyhave given, with fruits and interests, plus damages
– – If to do or not to do, there will be apportionment of damages – – Incapacitated party not obliged to make restitution except forwhat he was benefited
UU nn ee nn f f oo rr cc ee aa bb llee CC oo nn tt rr aa cc tt ss Those entered into in the name of another person by one who
has been given no authority or legal representation or who hasacted beyond his powers
Those not complying with Statute of Frauds.
SS tt aa tt uu tt ee oo f f FF rr aa uu dd – – Purpose is to prevent fraud, not to aid the commission of fraud – – Basic and fundamental principles
Applies only to executory contracts Cannot apply if action is not for damage bec of violation of
agreement or for specific performance Exclusive May be waived Personal defense Contracts are not void Rule of exclusion Concerns admissibility of evidence, not credibility Does not apply if action is to claim reformation
– – Following must be in writing or in some notes or memorandum: – – Agreement not to be performed within a year from the
making thereof – – A special promise to answer for debt, defaults or
miscarriage of another – – Agreement in consideration of marriage – – Sales of goods, chattels, things above P500 – – Lease of more than one year – – Representation as to credit of another
VVoo iidd CC oo nn tt rr aa cc tt ss – – No concurrence of offer/acceptance – – Cause, object, purpose contrary to law, morals, good customs,
public order, or public policy – – Absolutely simulated or fictitious
– – Cause or object did not exist at the time of the transaction – – Object outside commerce of men – – Impossible service – – Intention of the parties relative to principal object cannot be
ascretained – – Prohibited or declared void by law
EE ss tt oo pp pp ee ll
Estoppel in pais - by one’s conduct or acts, representatioons,admissions or silence, culpable negligience induces another to
believe certain facts to exist and such other rightfully relies andacts on such belief.
Estoppel by Deed - A party to a deed, are precluded fromaasserting against the other party to the deed any right or title inderogation of the deed, or from denying any material fact assertedtherein.
Estoppel by Record - A party precluded from denying thetruth of matters set forth in a record, whether judicial orlegislative.
EE ss tt oo pp pp ee ll bb y y L L aa cc hh ee ss Estoppel by Laches
Failure or neglect to enforce a right for an Unreasonable and unexplained length of time Despite knowledge or notice
EXTINCTIVE PRESCRIPTION(Arts. 1139-1155)
40 days Redhibitory action based on defectsof animals.
6 months (a) (a) Action for reduction of price forrescission in case of breach of sale of real estate, either with a statementof its area at a certain price for aunit of measure or number.