Civil Law 2 Notes

MOTO-Q NOTES
Morales, Occiano, Tongcua, Occiano, Quitain

Atty. Crisostomo Uribe
Notes in Civil Law Review 2
I. OBLIGATIONS A: Yes
20% Midterm Q: Suppose a promissory note was
30% quizzes and recitations made:
50% finals 1/2/93
Digest – Sales; starting with Sanchez I promise to pay B P1M
v. Rigos
- 2 quizzes in oblicon A
- Certification that the digest is Is it civil or natural?
complete and is in your own A: It may be civil or natural. Civil-
handwriting - from 2 within 10 years prescriptive period;
classmates natural-beyond ten years.
- - cases penned by justice
Azcuna - 2 quizzes Q: If it was made beyond the
prescriptive period, may it be
OBLICON – Tolentino considered a civil obligation?
Sales – Baviera A: Yes. If prescriptive period was
Partnership – Bautista interrupted or if no written demand
was made. Only if demanded within
Common Law – general and ordinary the prescriptive period may it be due
law of a country/ community; and demandable.
unwritten law founded on memorial
usage and natural justice and reason. Q: Is consent one of the essential
elements of obligations?
Passive solidarity – not always one A: NO. It is true only with contracts.
debtor; may/ may have 2 or more
debtors/creditors. Essential elements of obligation:
When the fulfillment of the condition 1. Active Subject – creditor/obligee
depends upon the sole will of the Q: Is any kind of person subject to
debtor, the conditional obligation shall obligation?
be void – this is true only in resolutory A: Yes. Not only Natural persons
conditions. but also juridical entities/persons.
Alternative conditions – simple when
choice has already been 2. Prestation – to give, to do, or
communicated! If not communicated not to do.
there is no consent.
Q: Is it a thing?
Facultative conditions – is the choice A: No. It is the particular conduct
always with the creditor? of the debtor.
3 Juridical tie – vinculum juris

Obligations: - that which binds the parties.
Art. 1156. An obligation is a juridical Q: When can there be a tie? What
necessity to give, to do or not to do. creates a tie?
(n) A: when there is an existence of
the source of obligation.
- it is a civil obligation because of
the phrase juridical necessity. Sources of Obligation:
Q: Does a creditor have a right under
Art. 1157. Obligations arise from:
natural obligations?
BOGS QUITAIN; TERE MORALES; PAULETTE TONGCUA; TINO OCCIANO; BUDS OCCIANO 1
MOTO-Q NOTES
(1) Law; Art. 2167. When through an accident
or other cause a person is injured or
(2) Contracts; becomes seriously ill, and he is treated
or helped while he is not in a condition
(3) Quasi-contracts; to give consent to a contract, he shall
be liable to pay for the services of the
physician or other person aiding him,
(4) Acts or omissions punished
unless the service has been rendered
by law; and
out of pure generosity.
(5) Quasi-delicts. (1089a)
Art. 2168. When during a fire, flood,
storm, or other calamity, property is
QUASI CONTRACTS: saved from destruction by another
person without the knowledge of the
Kinds: owner, the latter is bound to pay the
former just compensation.
1.Nominate:
Art. 2169. When the government,
a.) solutio indebiti
upon the failure of any person to
b.) Negotiorum gestio
comply with health or safety
regulations concerning property,
2. Innominate – Articles 2164-2175
undertakes to do the necessary work,
even over his objection, he shall be
SECTION 3. - Other Quasi-Contracts
liable to pay the expenses.
Art. 2164. When, without the
knowledge of the person obliged to Art. 2170. When by accident or other
give support, it is given by a stranger, fortuitous event, movables separately
the latter shall have a right to claim pertaining to two or more persons are
the same from the former, unless it commingled or confused, the rules on
appears that he gave it out of piety co-ownership shall be applicable.
and without intention of being repaid.
(1894a) Art. 2171. The rights and obligations
of the finder of lost personal property
Art. 2165. When funeral expenses are shall be governed by Articles 719 and
borne by a third person, without the 720.
knowledge of those relatives who were
obliged to give support to the Art. 2172. The right of every
deceased, said relatives shall possessor in good faith to
reimburse the third person, should the reimbursement for necessary and
latter claim reimbursement. (1894a) useful expenses is governed by Article
546.
Art. 2166. When the person obliged to
support an orphan, or an insane or Art. 2173. When a third person,
other indigent person unjustly refuses without the knowledge of the debtor,
to give support to the latter, any third pays the debt, the rights of the former
person may furnish support to the are governed by Articles 1236 and
needy individual, with right of 1237.
reimbursement from the person
obliged to give support. The provisions Art. 2174. When in a small community
of this article apply when the father or a nationality of the inhabitants of age
mother of a child under eighteen years decide upon a measure for protection
of age unjustly refuses to support him. against lawlessness, fire, flood, storm
or other calamity, any one who
objects to the plan and refuses to
MOTO-Q NOTES
contribute to the expenses but is
benefited by the project as executed
shall be liable to pay his share of said Q: Is innominate quasi contract
expenses. exclusive?
Art. 2175. Any person who is A: No. Acts or omissions punishable by

constrained to pay the taxes of law.-> crimes and delicts.
another shall be entitled to
reimbursement from the latter.  felony is limited
only to the RPC.
 certain lawful,
unilateral act must concur. Requisites for it to arise:
 For negotiorum
gestio- there must be abandonment.
There must be a conviction. Proof
beyond reasonable doubt.
BAR EXAM QUESTION:
Q: Is there a crime where there is no
A bought a pack of cigar worth civil liability?
P225.00. He paid P375.00. What
relationship was created?
A: Justifying Circumstances.
A: Quasi contract; solutio indebiti

QUASI DELICT:
Q: A had a fishpond. Lawless events

Quasi-delict = culpa aquiliana
forced to go to Manila and then
Europe. B, who has in the business of
buying and selling fish, realized that it - it is not culpa extra contractual or
was harvest time, harvested the fish torts.
and sold them to X. B borrowed
money from Y in order to buy the Culpa extra contractual includes:
fingerlings.
1. contractual
a. What Juridical relationship was 2. Extra contractual – includes
created between A and B? other sources under 1157.
A: Negotiorum gestio Pineda would say that torts is not

quasi-delict because torts include
b. What juridical relationship was malicious and negligent acts.
created by A with respect to B
and X? Atty. Uribe does not agree with him.
Torts is the same as quasi delict.
A: to remit the sale of fish sold to
X Art. 2177. Responsibility for fault or
negligence under the preceding article
c. A with respect to B and Y? is entirely separate and distinct from
the civil liability arising from
negligence under the Penal Code. But
A: A must pay the loan to B
the plaintiff cannot recover damages
because it was for the benefit of A.
twice for the same act or omission of
the defendant. (n)
d. If A ratified the acts of B, what
will happen?
A: A shall be indebted to B
MOTO-Q NOTES
Cangco v. Manila Railroad (18 Phil July 7, 2007 (7/7/07)
768)
Compliance of Obligation; specific
Q: What were the defendant's obligation of the debtor; different
defenses? kinds of obligation – joint solidary.
A: plaintiff was negligent; defendant July 10 and 28 -make up class

exercised due diligence in selecting its
employees. (not a good defense. It is Compliance – determine the kind of
raised only in quasi delict.MRR’s obligation; determine the purpose.
liability was based on contract of
carriage.) BAR EXAM QUESTION:
Q: Was it the negligence of Cangco? There was an obligation on the part of

A to deliver mangoes on july 1, 2006,
A: No. the proximate cause was the 6 months after agreement with B. One
bulk of watermelon. It was dimly month before delivery, A sold to the
lighted. There is negligence fruit to X. Can B recover the fruits
considering the person, time and from X?
place.
A: No. B has no real rights over the
Gutierrez v. Gutierrez (56 Phil 177) fruits since it was not delivered to him.
- there were 5 defendants. 3 were KINDS OF OBLIGATIONS AS TO

held liable. The mother and child were PERFECTION AND EXTINGUISHMENT:
not held liable.
Q: promissory note:
Q: A obliged himself the following to
B: a. to give a refrigerator, model 1/2/93
123; b. an 18 inch TV set; c. fix piano
of B. A failed to perform any. What are I promise to pay B P1M
the remedies?
A
A: Determine first the nature of the What kind of obligation?
thing to be delivered whether
determinate or indeterminate: A: Pure Obligation
 even if
a. determinate/specific(ref)- suspensive or postestative condition,
specific performance plus the debtor may be compelled if there
damages. is a pre existing condition.
b. Generic (TV) – to have Impossible Conditions:
another person perform at
the expense of the debtor. If with a term – shall annul condition
c. Service (to do) – If without a term – it is void
damages;involuntary If negative impossible – valid
servitude. condition
Generic – depends on the purpose and

circumstances. Art. 1187. The effects of a conditional
obligation to give, once the condition
has been fulfilled, shall retroact to the
day of the constitution of the
obligation. Nevertheless, when the
MOTO-Q NOTES
obligation imposes reciprocal A: When he loses the right to make
prestations upon the parties, the fruits use of the period. If debtor has
and interests during the pendency of promised, in this case the debtor did
the condition shall be deemed to have not promise anything.
been mutually compensated. If the
obligation is unilateral, the debtor Q: If insolvent, will he lose his right?
shall appropriate the fruits and
interests received, unless from the A: No, if he furnishes a guaranty which
nature and circumstances of the is acceptable to the creditor.
obligation it should be inferred that
the intention of the person
Q: How will he be insolvent?
constituting the same was different.
A: by giving one or more of his
Reciprocal – sale
property.
Unilateral – donation
Q: A obliged himself to B to deliver a Q: What if he has no assets?

thing on September 2005, after they
agreed in January 2003. A however A: third person may guarantee.
delivered it to in April of 2003. Who
has a better right? What about C? Art. 1198. The debtor shall lose every
A: B has a better right. C will have a right to make use of the period:
better right if he acted in good faith.
* with regard to improvements, if (1) When after the obligation has been
voluntarily made by the debtor, no contracted, he becomes insolvent,
other right than usufructuary. unless he gives a guaranty or security
for the debt;
BAR EXAM QUESTION:
(2) When he does not furnish to the
Q: A borrowed P1M from B payable at creditor the guaranties or securities
the end of the year; A delivered a car which he has promised;
as stipulated, B may use the car. On
August 1, A offered to pay P1M, can B (3) When by his own acts he has
be compelled to accept P1M? impaired said guaranties or securities
after their establishment, and when
A: It depends on whose benefit the through a fortuitous event they
term was constituted. If for the benefit disappear, unless he immediately
of both parties, there may be no gives new ones equally satisfactory;
compulsion. If for the benefit of the
debtor, creditor may be compelled to
(4) When the debtor violates any
accept.
undertaking, in consideration of which
the creditor agreed to the period;
Instances for the benefit of the debtor:
1. on or before
2. Not later than (5) When the debtor attempts to
3. within ___ mos. abscond. (1129a)
Q: A borrowed from B P1M, payable at

the end of the year. August 1, creditor
demanded a mortgage constituted on
the house of A. No mortgage was
delivered. On Aug.16, can creditor
demand? When?
MOTO-Q NOTES
Lim v. People (133 SCRA 333) Art. 1202. The debtor shall lose the
right of choice when among the
-> merely an agent; 1197 is not prestations whereby he is alternatively
applicable. Period “as soon as sold” bound, only one is practicable. (1134)
Millares v. Hernando (151 SCRA 484) Art. 1203. If through the creditor's
acts the debtor cannot make a choice
-> 1197 is not applicable. according to the terms of the
obligation, the latter may rescind the
contract with damages. (n)
Art. 1197. If the obligation does not
fix a period, but from its nature and
the circumstances it can be inferred Art. 1204. The creditor shall have a
that a period was intended, the courts right to indemnity for damages when,
may fix the duration thereof. through the fault of the debtor, all the
things which are alternatively the
object of the obligation have been lost,
The courts shall also fix the duration
or the compliance of the obligation has
of the period when it depends upon
become impossible.
the will of the debtor.
The indemnity shall be fixed taking as

In every case, the courts shall
a basis the value of the last thing
determine such period as may under
which disappeared, or that of the
the circumstances have been probably
service which last became impossible.
contemplated by the parties. Once
fixed by the courts, the period cannot
be changed by them. (1128a) Damages other than the value of the
last thing or service may also be
awarded. (1135a)
AS TO PLURALITY OF
PRESTATION:
Art. 1205. When the choice has been
expressly given to the creditor, the
SECTION 3. - Alternative Obligations
obligation shall cease to be alternative
from the day when the selection has
Art. 1199. A person alternatively
been communicated to the debtor.
bound by different prestations shall
completely perform one of them.
Until then the responsibility of the
debtor shall be governed by the
The creditor cannot be compelled to
following rules:
receive part of one and part of the
other undertaking. (1131)
(1) If one of the things is lost
through a fortuitous event, he
Art. 1200. The right of choice belongs
shall perform the obligation by
to the debtor, unless it has been
delivering that which the
expressly granted to the creditor.
creditor should choose from
among the remainder, or that
The debtor shall have no right to which remains if only one
choose those prestations which are subsists;
impossible, unlawful or which could
not have been the object of the
(2) If the loss of one of the
obligation. (1132)
things occurs through the fault
of the debtor, the creditor may
Art. 1201. The choice shall produce no claim any of those subsisting,
effect except from the time it has been or the price of that which,
communicated. (1133) through the fault of the former,
MOTO-Q NOTES
has disappeared, with a right to from the day when the selection has
damages; been communicated to the debtor.
(3) If all the things are lost * choice must be communicated.

through the fault of the debtor, (relevant if one of the prestation was
the choice by the creditor shall lost)
fall upon the price of any one of
them, also with indemnity for 1. if fault of debtor after
damages. communication – debtor is liable.
The same rules shall be applied to 2. if loss happened before

obligations to do or not to do in case communication due to fortuitous event
one, some or all of the prestations – debtor may still choose from the
should become impossible. (1136a) remaining.
Art. 1206. When only one prestation IF FAULT WAS DUE TO ONE OF THE
has been agreed upon, but the obligor PARTIES; MAKE A DISTINCTION, WHO
may render another in substitution, HAS AT FAULT AND WHO HAS THE
the obligation is called facultative. CHOICE:
The loss or deterioration of the thing 1. Choice of debtor; fault of creditor.

intended as a substitute, through the
negligence of the obligor, does not - debtor may choose from those
render him liable. But once the remaining or debtor may opt to
substitution has been made, the rescind the obligation.
obligor is liable for the loss of the
substitute on account of his delay,
2. Choice of creditor; fault of debtor.
negligence or fraud. (n)
- creditor may opt to choose from
those remaining or that value of which
a.) alternative
was lost plus damages.
b.) facultative
c.) conjunctive – 2 or more
prestations which shall be Example:
complied with.
Choice of debtor, first prestations were
Example: lost due to his fault, only one is left
and yet was lost through fortuitous
event.
I promise to __,__,and ___
(conjunctive)
- debtor can’t be held liable.
I promise to __,__,or ___
(alternative) In alternative, if all prestations were
lost due to the fault of the debtor?
In conjunctive and facultative, no
choice is made.  depends on who has the right
to choose:
In alternative, choice is with debtor
unless: 1. if debtor: value of last
prestation plus damages.
2. if creditor’s choice: anything of
Art. 1205. When the choice has been
those lost plus damages.
expressly given to the creditor, the
obligation shall cease to be alternative
MOTO-Q NOTES
In Facultative: involves 2 or more Art. 1208. If from the law, or the
prestations but only one is due. nature or the wording of the
obligations to which the preceding
- if one is lost, depends if there article refers the contrary does not
was a communication. appear, the credit or debt shall be
presumed to be divided into as many
Tolentino: if debtor destroys the shares as there are creditors or
substitute, it doesn’t matter. debtors, the credits or debts being
considered distinct from one another,
subject to the Rules of Court
Q: What if debtor refuses to make
governing the multiplicity of suits.
a choice?
(1138a)
A: Creditor file an action in the
Art. 1209. If the division is impossible,
alternative.
the right of the creditors may be
prejudiced only by their collective
Final exams/ midterms (might be acts, and the debt can be enforced
asked) only by proceeding against all the
debtors. If one of the latter should be
In July 1, 2003, A and B entered into insolvent, the others shall not be liable
an agreement. When it fell due, B for his share. (1139)
failed to fulfill and was in delay. (Sir
said that he is not in delay, because Art. 1210. The indivisibility of an
there was no demand.) obligation does not necessarily give
rise to solidarity. Nor does solidarity of
Q: When can debtor make a choice of itself imply indivisibility. (n)
the substitution?
Art. 1211. Solidarity may exist
A: He can make a choice even before it although the creditors and the debtors
becomes due and demandable. may not be bound in the same manner
and by the same periods and
Facultative vs. Penal clause (there conditions. (1140)
should be non-compliance.)
Art. 1212. Each one of the solidary
AS TO THE RIGHTS AND creditors may do whatever may be
OBLIGATION OF MULTIPLE useful to the others, but not anything
PARTIES: which may be prejudicial to the latter.
(1141a)
SECTION 4. - Joint and Solidary
Obligations Art. 1213. A solidary creditor cannot
assign his rights without the consent
Art. 1207. The concurrence of two or of the others. (n)
more creditors or of two or more
debtors in one and the same Art. 1214. The debtor may pay any
obligation does not imply that each one of the solidary creditors; but if
one of the former has a right to any demand, judicial or extrajudicial,
demand, or that each one of the latter has been made by one of them,
is bound to render, entire compliance payment should be made to him.
with the prestation. There is a solidary (1142a)
liability only when the obligation
expressly so states, or when the law Art. 1215. Novation, compensation,
or the nature of the obligation requires confusion or remission of the debt,
solidarity. (1137a) made by any of the solidary creditors
or with any of the solidary debtors,
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shall extinguish the obligation, without in case the debt had been totally paid
prejudice to the provisions of Article by anyone of them before the
1219. remission was effected. (1146a)
The creditor who may have executed Art. 1220. The remission of the whole
any of these acts, as well as he who obligation, obtained by one of the
collects the debt, shall be liable to the solidary debtors, does not entitle him
others for the share in the obligation to reimbursement from his co-debtors.
corresponding to them. (1143) (n)
Art. 1216. The creditor may proceed Art. 1221. If the thing has been lost or
against any one of the solidary if the prestation has become
debtors or some or all of them impossible without the fault of the
simultaneously. The demand made solidary debtors, the obligation shall
against one of them shall not be an be extinguished.
obstacle to those which may
subsequently be directed against the If there was fault on the part of any
others, so long as the debt has not one of them, all shall be responsible to
been fully collected. (1144a) the creditor, for the price and the
payment of damages and interest,
Art. 1217. Payment made by one of without prejudice to their action
the solidary debtors extinguishes the against the guilty or negligent debtor.
obligation. If two or more solidary
debtors offer to pay, the creditor may If through a fortuitous event, the thing
choose which offer to accept. is lost or the performance has become
impossible after one of the solidary
He who made the payment may claim debtors has incurred in delay through
from his co-debtors only the share the judicial or extrajudicial demand
which corresponds to each, with the upon him by the creditor, the
interest for the payment already provisions of the preceding paragraph
made. If the payment is made before shall apply. (1147a)
the debt is due, no interest for the
intervening period may be demanded. Art. 1222. A solidary debtor may, in
actions filed by the creditor, avail
When one of the solidary debtors himself of all defenses which are
cannot, because of his insolvency, derived from the nature of the
reimburse his share to the debtor obligation and of those which are
paying the obligation, such share shall personal to him, or pertain to his own
be borne by all his co-debtors, in share. With respect to those which
proportion to the debt of each. personally belong to the others, he
(1145a) may avail himself thereof only as
regards that part of the debt for which
Art. 1218. Payment by a solidary the latter are responsible. (1148a)
debtor shall not entitle him to
reimbursement from his co-debtors if
such payment is made after the 1. Joint obligation
obligation has prescribed or become 2. Solidary obligation
illegal. (n)
In the exams if A, B and C are debtors
Art. 1219. The remission made by the and X and Y are creditors, and it
creditor of the share which affects one speaks of solidarity, presume solidarity
of the solidary debtors does not on both sides.
release the latter from his
responsibility towards the co-debtors,
MOTO-Q NOTES
BAR EXAM QUESTION: (2) Where the partnership in
the course of its business
Q: A and B obliged themselves to receives money or property of a
deliver 1thousand pesos worth of third person and the money or
specific sacks of rice to X and Y. What property so received is
is the type of obligation? misapplied by any partner while
it is in the custody of the
A: It is a joint obligation unless there partnership. (n)
is a stipulation; the law requires it; the
nature of the obligation requires it. Art. 1824. All partners are liable
solidarily with the partnership for
Q: B delivered entire 1 thousand pesos everything chargeable to the
to X, can Y compel B to deliver? partnership under Articles 1822 and
1823. (n)
A: Yes. Because the obligation is joint.
NATURE OF THE OBLIGATION
WHICH REQUIRES SOLIDARITY:
Solidary:
Example:
1. Joint and several.
2. jointly and severally.
1. Liability arising from human
relations. (torts-2194)
Ronquillo v. CA (132 SCRA 274)
Art. 2194. The responsibility of two or

“individually and jointly, respectively,
more persons who are liable for quasi-
collectively and distinctively.”
delict is solidary.
In promissory note: I promise to pay A
2. Decisions of the Supreme
and B (solidary).
Court which became final.
We promise to pay. (solidary)
Liwanag v. WCC
If simple “We” – joint
Computations:
Solidary liability examples:
Joint obligations
LAW
P120
Solution indebiti, crimes, negotiorum
A X
gestio. In agency read b.solidary on
the on the outline, 1823-1824->
tortuous act of one of the parties. B
Art. 1823. The partnership is bound to C Y

make good the loss:
-> X may demand P60
(1) Where one partner acting
within the scope of his apparent If X demands from A, A is to pay only
authority receives money or P20.
property of a third person and
misapplies it; and Mixed Solidarity
X may demand 120 from any of them.
MOTO-Q NOTES
Q: if X remitted entire obligation in
favor of A, can Y still collect from B
What if there was an agreement? A = and C?
½; B = ¼; C =1/4; X = ¾ ; Y = ¼
A: Yes.
A: If joint- X with respect to A can
demand 45; Q: If solidary, C became insolvent,
how much can X demand?
Q: If mixed:
A: 120. The share of 1 solidary debtor
A: X= 90; Y = 30; X may demand shall be shouldered by other solidary
P22.50 from A. debtors.
Passive solidarity:
No agreement – debtors are solidarily Q: If A was compelled to pay X, how

bound. X may demand 60 from A. much can A recover?
If there is an agreement: X may A: From B=P60

demand from A- 45, B and C- 22.50.
REMISSION IN SOLIDARY:
Active Solidarity:
Q: X condones share of A and
Creditor solidarily bound. X can demanded payment from B. How much
demand from A = 40; if Y receives 40, can B pay?
he should give 20 to X.
A: P80
If there is an agreement: X may
demand 45 from A and Y may demand Q: If after condonation C was already
15 from A. insolvent, how much can B recover
from A?
In a joint obligation if A paid the whole
120, he cannot claim reimbursement A: Having paid 80, B shall recover 20,
from B and C unless he proves that even if remitted, it does not exempt if
they have been benefited. There was one is insolvent.
payment to the wrong party.
EFFECT OF DISMISSAL OF ACTION
Solidary:
Q: X and Y filed a case against A,
Q: A demanded payment from X, can however it was dismissed. Y filed a
Y still collect? case again. Will his action prosper?
A: No. the payment of one debtor A: it depends if joint or solidary.

extinguishes the obligation.
Q: If joint: If reason is prescription, Y
Q: In joint, C became insolvent, how still files, may it prosper?
much can X demand from A?
A: Yes. The debts are separate and
A: Still P20. Insolvency shall not distinct in joint. Action shall not inure
increase the debt of joint debtors. to X.
MOTO-Q NOTES
Q: If the ground is subject to different Q: If X demands payment, A paid Y,
conditions? can X still demand payment from A?
Who has the right to choose?
A: Yes. The debts are separate and
distinct in joint. Action shall not inure A: Depends on the agreement.
to X.
Q: What if there is no agreement?
Q: If ground is minority. May it
prosper? A: Tolentino- should be treated like
solidary. Payment should be made to
A: No, it is an absolute defense. the solidary creditor who demanded
first.
Q: If dismissed because contract is
void, will it prosper? * Sir does not agree! Rules on
alternative obligation should govern
A: No. because under the law solidarity is not
presumed hence disjunctive is not one
Q: if solidary? of it.
A: No. The demand of one creditor NEXT MEETING TUESDAY!

inures to the benefit of other creditors.
July 24, 2007
BAR EXAMINATION QUESTION:
BAR EXAM QUESTION:
Q: Four medical students rented an
apartment. They agreed for the Q: Corporation promised to deliver
payment of utilities. Before the lease furniture set to A. they agreed that in
contract ended, 3 of the 4 went back case of non compliance, a penalty of
to their country. They have unpaid 100 thousand pesos must be paid.
telephone bills worth 100k, can the The corporation delivered furniture set
one left pay only P25? which is different, instead of Narra.
Buyer is asking for 300 thousand
A: Yes. It is presumed to be a joint pesos as damages and 100 thousand
obligation as provided in Article 1207. for the penalty. Is this claim tenable?
Art. 1207. The concurrence of two or A: UP Law Center: It is not tenable.

more creditors or of two or more The penalty is the substitute for
debtors in one and the same damages.
obligation does not imply that each
one of the former has a right to Alternative answer: Yes, he may claim
demand, or that each one of the latter for damages because there was fraud
is bound to render, entire compliance committed.
with the prestation. There is a solidary
liability only when the obligation PENAL CLAUSE – provides for greater
expressly so states, or when the law liability.
or the nature of the obligation requires
solidarity. (1137a) Robes-Francisco v. CFI 86 SCRA 59
DISJUNCTIVE The supreme court ruled that the 4%

stipulation is not a penal clause. Even
1. A will pay P120 either to X or Y without such stipulation, corporation is
2. A or B will pay X still liable to pay 6% based on Article
2209.
MOTO-Q NOTES
Art. 2209. If the obligation consists in Exception: if the basis is the nullity of
the payment of a sum of money, and the obligation there can be a penalty.
the debtor incurs in delay, the
indemnity for damages, there being no Example:Foreigners who contracted
stipulation to the contrary, shall be the Filipinos usually penalty is provided in
payment of the interest agreed upon, case contract is declared void. In this
and in the absence of stipulation, the case the nullity of the principal does
legal interest, which is six per cent per not affect the penalty.
annum. (1108)
BREACH OF OBLIGATION:
Bachrach v. Espiritu 52 PHIL 346
Q: Who can be held liable?
Facts: There was a sale of 2 trucks
with interest of 12% for the unpaid A: Those who are enumerated in
portion and a penalty of 25%. Article 1170; hence, anyone.
Held: Parties expressly stipulated the Art. 1170. Those who in the
payment of interest hence liable, the performance of their obligations are
penalty was reduced to 10% because guilty of fraud, negligence, or delay,
there was partial performance; and those who in any manner
usurious. contravene the tenor thereof, are
liable for damages. (1101)
* no need to present proof of damages
as long as there is breach of the FRAUD:
obligation.
1. Fraud in contract – art. 1338
Q: May the aggrieved party be able to
compel the other party to pay penalty
Art. 1338. There is fraud when,
plus performance?
through insidious words or
machinations of one of the contracting
A: The general rule is they may not, parties, the other is induced to enter
however if it is clearly granted, they into a contract which, without them,
may. he would not have agreed to. (1269)
Illustration: A construction of a 2. Causal fraud – dolo causante in

building which has a penalty of 10 contracts; voidable.
thousand pesos per day if not 3. Incidental fraud – dolo
completed on the agreed day, plus incidente
performance was agreed upon.
Art. 1170. Those who in the
Q: Debtor offered his car instead of performance of their obligations are
paying the penalty. May a debtor guilty of fraud, negligence, or delay,
compel creditor to accept penalty and those who in any manner
instead of car. contravene the tenor thereof, are
liable for damages. (1101)
A: General rule: No; Exception: Unless
expressly reserved. - if obligation is monetary in character
for example, P1M, it is interest by way
Q: If the principal is void, will it follow of damages.
that the accessory is void?
Compensatory damages – expressly
A: General Rule: Yes stipulated in writing.
MOTO-Q NOTES
DELAY:
“Mora”; non-fulfillment with respect to

time.
Q: Is article 1170 by way of dolo?
- no delay in obligation not to do.
A: No. Better term is bad faith or (obviously!)
malice. The phrase “in any manner”
covers not only fraud but also Effects of delay:
negligence and delay.
1. If determinate thing to deliver,
WAIVER of future fraud is void: there was a fortuitous event –
the obligor is still liable.
- consider the dated when waiver
was made, and date when the BAR EXAM QUESTION:
fraudulent act happened.
Q: A and B entered into a lease
NEGLIGENCE (memorize) agreement over certain machineries. B
was to open a car repair shop. On
Art. 1173. The fault or negligence of February 15, they agreed that the
the obligor consists in the omission of machineries will be leased for one
that diligence which is required by the month. On March 15, the lessor
nature of the obligation and demanded return of the machineries.
corresponds with the circumstances of Because the truck of B had a problem,
the persons, of the time and of the the machineries were not returned. Is
place. When negligence shows bad B liable?
faith, the provisions of Articles 1171
and 2201, paragraph 2, shall apply. A: No, B is not liable. There were only
28 days. An agreement of 1 month is
If the law or contract does not state 30 days.
the diligence which is to be observed
in the performance, that which is *As a rule there has to be a demand.
expected of a good father of a family
shall be required. (1104a) *Demand need not be in writing; It is
different from demand to interrupt the
- depends on the circumstances, prescriptive period.
time and place.
- Degree of diligence: that of a Art. 1169. Those obliged to deliver or
good father of a family unless to do something incur in delay from
the law or the stipulations the time the obligee judicially or
provide otherwise. extrajudicially demands from them the
fulfillment of their obligation.
Q: May a waiver of future negligence
be considered void. However, the demand by the creditor
shall not be necessary in order that
A: Yes. Gross negligence is equivalent delay may exist:
to fraud.
(1) When the obligation or the
Telefast v. Castro 158 SCRA 445 law expressly so declare; or
The negligence in this case was (2) When from the nature and
considered gross in character. the circumstances of the
obligation it appears that the
MOTO-Q NOTES
designation of the time when which, though foreseen, were
the thing is to be delivered or inevitable. (1105a)
the service is to be rendered
was a controlling motive for the - it is the happening of a
establishment of the contract; fortuitous event. It applies to
or any kind of obligation.
(3) When demand would be In obligation to give, Article 1262

useless, as when the obligor applies:
has rendered it beyond his
power to perform. Art. 1262. An obligation which consists
in the delivery of a determinate thing
In 1169 – no demand is needed. shall be extinguished if it should be
lost or destroyed without the fault of
1. by law – eg. Payment of tax, the debtor, and before he has incurred
agency. in delay.
2. Stipulation
3. When period is the controlling When by law or stipulation, the obligor
motive. Ex. Wedding. is liable even for fortuitous events, the
4. Demand would be useless due loss of the thing does not extinguish
to the of the debtor. the obligation, and he shall be
responsible for damages. The same
In reciprocal obligations, neither party rule applies when the nature of the
incurs in delay if the other does not obligation requires the assumption of
comply or is not ready to comply in a risk. (1182a)
proper manner with what is incumbent
upon him. From the moment one of In Article 1165, even if obligation
the parties fulfills his obligation, delay became impossible due to Fortuitous
by the other begins. (1100a) event, debtor is still liable.
Reciprocal obligations: Art. 1165. When what is to be

delivered is a determinate thing, the
- arise from the same transaction. creditor, in addition to the right
granted him by Article 1170, may
Example: Contract of sale. compel the debtor to make the
delivery.
1169 – should apply only if both are
already due and demandable upon If the thing is indeterminate or
establishment or at the same time. generic, he may ask that the
obligation be complied with at the
Agcaoili v. GSIS 165 SCRA 1 expense of the debtor.
- if both in delay, no right of If the obligor delays, or has promised

recission. to deliver the same thing to two or
more persons who do not have the
same interest, he shall be responsible
Art. 1174. Except in cases expressly
for any fortuitous event until he has
specified by the law, or when it is
effected the delivery. (1096)
otherwise declared by stipulation, or
when the nature of the obligation
requires the assumption of risk, no - promise to deliver to two or
person shall be responsible for those more persons, the debtor is still
events which could not be foreseen, or liable. In Napocor v. CA (161
SCRA 344), to be excused
MOTO-Q NOTES
there should be no concurring fourth of the value of the things
negligence. which are the object thereof;
BAR EXAM QUESTION: (2) Those agreed upon in

representation of absentees, if
Q: A ring was delivered to a jewelry the latter suffer the lesion
shop for cleaning. After a week, the stated in the preceding
ring was not yet cleaned. Thereafter, number;
the ring was lost due to robbery. Is
the jewelry shop liable? (3) Those undertaken in fraud
of creditors when the latter
A: Yes. Before the fortuitous event, cannot in any other manner
the jewelry shop was already in delay. collect the claims due them;
REMEDIES FOR BREACH: (4) Those which refer to things

under litigation if they have
A. Extra judicial – principal remedy, been entered into by the
expressly granted by law. - 1191. It defendant without the
can be invoked aside from other knowledge and approval of the
remedy. Art.1381 is only a subsidiary litigants or of competent
remedy. judicial authority;
Art. 1191. The power to rescind (5) All other contracts specially
obligations is implied in reciprocal declared by law to be subject
ones, in case one of the obligors to rescission. (1291a)
should not comply with what is
incumbent upon him. If court declared the act as rescissory,
it will retroact from the time notice
The injured party may choose between was given to the other party.
the fulfillment and the rescission of
the obligation, with the payment of Q: Why is there a need to file a
damages in either case. He may also rescission with the courts when it can
seek rescission, even after he has be extrajudicial?
chosen fulfillment, if the latter should
become impossible. A: Because a party cannot take the
law in his own hands especially if
The court shall decree the rescission there is recovery needed.
claimed, unless there be just cause
authorizing the fixing of a period. UP v. de los Angeles (35 SCRA 102)
This is understood to be without - there can be unilateral decision

prejudice to the rights of third persons provided it is agreed upon.
who have acquired the thing, in
accordance with Articles 1385 and BAR EXAMINATION QUESTION
1388 and the Mortgage Law. (1124)
Q: A sold a parcel of land to B for
Art. 1381. The following contracts are P1M, B paid 100 thousand as down
rescissible: payment. Vendor will be liable for
eviction of squatters, balance to be
(1) Those which are entered paid 30 days after eviction, if
into by guardians whenever the squatters are still there for 6 months
wards whom they represent buyer should return the money.
suffer lesion by more than one- During the 6th month period, the price
MOTO-Q NOTES
of the land was doubled. Seller offered while he is in possession of
to return the 100 thousand pesos. them;
Buyer refused and offered to pay the
balance and asked seller to sign. (2) In case of the insolvency of
Seller filed an action for rescission. Is the buyer, a right of stopping
the action proper? the goods in transitu after he
has parted with the possession
A: No. The seller was not the of them;
aggrieved party. Rescission as a
remedy maybe invoked only by the (3) A right of resale as limited
aggrieved party. by this Title;
UFC v. CA (33 SCRA 1) (4) A right to rescind the sale

as likewise limited by this Title.
1. Only those who have complied
with their obligation or at least Where the ownership in the goods has
ready to comply. not passed to the buyer, the unpaid
2. Violation must be seller has, in addition to his other
substantial/fundamental in remedies a right of withholding
character. delivery similar to and coextensive
with his rights of lien and stoppage in
There was no showing that Mafran had transitu where the ownership has
exhausted all the remedies available. passed to the buyer. (n)
SC: rescission is under 1191 not 1381. B. Judicial Remedies:
Q: If obligation becomes impossible, a.) Principal remedies – specific

what is the remedy? performance
Q: In obligation to do, is substitute

A: Rescission. If already rescinded, he
performance allowed?
can no longer demand for the
fulfillment.
A: It depends. If personal qualification
was stipulated.
Magdalena Estate v. Myrick (71 Phil
344) If no specific performance, it amounts
to involuntary servitude.
Myrick was able to recover because
there was no stipulation as to Q: If obligation was to do and
forfeiture. obligation was poorly done.
Other extrajudicial remedies: A: Art. 1167. If a person obliged to do

something fails to do it, the same shall
Rights of unpaid seller: be executed at his cost.
Art. 1526. Subject to the provisions of This same rule shall be observed if he
this Title, notwithstanding that the does it in contravention of the tenor of
ownership in the goods may have the obligation. Furthermore, it may be
passed to the buyer, the unpaid seller decreed that what has been poorly
of goods, as such, has: done be undone. (1098)
(1) A lien on the goods or right

to retain them for the price
b.) Subsidiary remedies
MOTO-Q NOTES
1. accion pauliana – to be discussed in (6) By novation.
rescissible contracts.
Other causes of extinguishment of
2. accion subrogatoria – creditor may obligations, such as annulment,
be subrogated to the right of the rescission, fulfillment of a resolutory
debtor as to 3rd persons. condition, and prescription, are
governed elsewhere in this Code.
- pertains to obligation to give; (1156a)
monetary obligation. It does not
pertain to purely personal right.
Example: acts of agency. - It presupposes that there is an
existing valid obligation.
Q: What is the extent of liability?
Recission – principal remedy is under
A: 2236, applies to present and future article 1191.
property.
Art. 1191. The power to rescind
Art. 2236. The debtor is liable with all obligations is implied in reciprocal
his property, present and future, for ones, in case one of the obligors
the fulfillment of his obligations, should not comply with what is
subject to the exemptions provided by incumbent upon him.
law. (1911a)
The injured party may choose between
- If a person is judicially declared the fulfillment and the rescission of
to be insolvent, when he the obligation, with the payment of
inherits, the future property is damages in either case. He may also
exempt. seek rescission, even after he has
chosen fulfillment, if the latter should
Family Home: May be a subject for tax become impossible.
nonpayment, creditors for
construction, claim of laborers and The court shall decree the rescission
mortgagee. (Rules of Court rule 39, claimed, unless there be just cause
sec.13) authorizing the fixing of a period.
MODES OF EXTINGUISHMENT – This is understood to be without

Article 1231 prejudice to the rights of third persons
who have acquired the thing, in
Art. 1231. Obligations are accordance with Articles 1385 and
extinguished: 1388 and the Mortgage Law. (1124)
(1) By payment or
performance: Extinctive prescription – conversion of
civil to natural.
(2) By the loss of the thing
due: Q: Are thes modes exclusive?
(3) By the condonation or A: No! In Saura v. DBP, there was a

remission of the debt; mutual dissent. This also considered as
a mode. The Supreme Court said that
(4) By the confusion or merger there was a perfected consensual
of the rights of creditor and contract of loan. (mutuum)
debtor;
Q: Aside from it, what are the other
(5) By compensation; modes?
MOTO-Q NOTES
A: Death - To the extent of personal - May apply to all kinds of
obligation to do. It does not extinguish obligation.
property rights. Eg. Agency – death of
an agent; Partnership – death of a Rules:
partner.
a.) As to person who pays.
Q: Fulfillment of resolutory condition in b.) As to whom payment is made.
1231 pertains to? c.) Prestation in obligation.
d.) Date, time and place.
A: Happening of a resolutory
condition. a.) person who pays.
- will of one of the parties in - Should be called payor, not

contracts as a general rule does only debtor, because third
not extinguish obligation. persons may pay.
- Exception: contracts involving - Not every person under the
trust and confidence. NCC can compel a person to
Partnership without prejudice to pay except those who have an
the possible liability of partner interest and those who by
causing dissolution. virtue of stipulation.
Q: Is happening of a fortuitous event a Eg. A is indebted to B. X is a 3 rd

mode of extinguishment? person.
A: Fortuitous events are not modes of Q: Who are those who have interest?
extinguishment. Only results to loss of
the thing due. A: Joint debtors have interest in the
fulfillment of the entire obligation,
- Insolvency per se is not a mode those who are subsidiary liable.
of extinguishment, there must (guarantors, mortgagors, pledgors.)
be a judicial declaration.
Q: If a third person pays, if he has
Q: What about renunciation by the interest, what happens?
creditor?
A: Subrogation.
A: Not necessarily. If it is gratuitous, it
would fall under - If X is a guarantor, Y is a
condonation/remission. If for a mortgagor who secured debt, Y
consideration, it falls under novation. pays, he shall be subrogated to
the rights of B and can exercise
Q: Compromise? right of a creditor.
- if X pays B, obligation of A to B
A: It may. But it would fall under one is extinguished but accessory
of those mentioned by law; common obligations are not
result reduction of obligation which extinguished. It subsists that is
falls under condonation; if it would fall why X can still foreclose the
under a totally new obligation, it is mortgage.
novation.
Q: A is indebted to B. X pays 100
1. PAYMENT thousand to B for A’s debt. Does A
have a right to recover from A and can
- synonymous with performance. he have a right of foreclosure?
MOTO-Q NOTES
A: It depends. If A consented, he has Q: X paid B without any intention of
the right. being reimbursed. What if X demanded
the return after one week?
Q: If before X pays, A partially paid 20
thousand, X paid entire 100 thousand, A: Indirect Donation. As far as
how much can Y ask for payment, it is valid and binding.
reimbursement?
- Payor must have the capacity to
A: Only 80 thousand, that which alienate the thing or has free disposal.
redounded to the benefit of A.
b.) as to the person to whom payment
Q: If X pays without the knowledge of is made.
A, can he compel A to pay?
- called payee; normally the creditor.
A: No. He is not subrogated to the
rights of B, hence he cannot foreclose CASE: Arañas v. Tutaan
the mortgage.
- creditor does not have to be a
“consented” – means debtor failed to party. A creditor may be any
object at a reasonable time. person who has the right to
compel the performance.
Q: X had agreement with B without
knowledge of A, can he recover the Eg. A is indebted to B. But the real
payment made? payment should be given to Y; even if
A pays B, Y can still compel A to pay.
A: As long as payment was without
knowledge, third person shall not be - there is also payment to a
subrogated to the rights of the person authorize to receive
creditor. (1236-1237) payment; the law may provide.
Eg. Payment to a sheriff,
Art. 1236. The creditor is not bound to executors and administrators.
accept payment or performance by a
third person who has no interest in the Q: May payment to a wrong person
fulfillment of the obligation, unless extinguish obligation?
there is a stipulation to the contrary.
A: Gen. rule: No! Except: 1. if
Whoever pays for another may payment redounded to the benefit of
demand from the debtor what he has B. Otherwise, obligation is not
paid, except that if he paid without the extinguished.
knowledge or against the will of the
debtor, he can recover only insofar as Q: Who has the burden to prove?
the payment has been beneficial to
the debtor. (1158a)
A: No need to prove if: 1. it was
ratified by the creditor; 2. principle of
Art. 1237. Whoever pays on behalf of estoppel; 3. if the person to whom
the debtor without the knowledge or payment made acquired rights of
against the will of the latter, cannot creditor after the payment.
compel the creditor to subrogate him
in his rights, such as those arising
Q: Are there any more exceptions?
from a mortgage, guaranty, or
penalty. (1159a)
A: Yes. If payment was made in good
faith to a person in possession of the
MOTO-Q NOTES
credit, not a mere possession of the As to kind of obligation:
instrument.
Q: A is obliged to B. He paid Japanese
Q: X (in possession of PN) demanded yen. Is it valid?
payment from A when the promissory
note became due and demandable, A A: Yes. RA 8183. Payment may be
paid x in good faith. made in any currency as long as
stipulated. Before: RA 529-payment
A: Obligation is extinguished. not in Philippine currency is prohibited.
Q: A is indebted to B. However, B dies Q: Can creditor be compelled to accept

and is survived by Y. Even if A paid Y, check?
can it be invalidated?
A: No. As stated in New pacific timber
A: Yes. If the payment was not made v. Señeris. Creditor may refuse to
in good faith, such as when there is a accept check.
pending action to declare Y
incapacitated. Before: If Manager or Cashier’s check,
it is deemed as cash.
Q: A is indebted to B. B assigned the
credit to X. May it extinguish the Q: If partly check and partly cash?
assignment?
A: Creditor may refuse. Except if
A: Yes. stipulated. In Article 1249, it is
extinguished if encashed.
c.)Prestation in obligation
Art. 1249. The payment of debts in
- identity of the obligation; consider money shall be made in the currency
the purpose. stipulated, and if it is not possible to
deliver such currency, then in the
General Rule: A partial performance is currency which is legal tender in the
non-compliance. Philippines.
Except: The delivery of promissory notes

payable to order, or bills of exchange
1. The parties expressly stipulate. or other mercantile documents shall
- Subject to different terms – produce the effect of payment only
integrity of the prestation. when they have been cashed, or when
Rescission is not a remedy if through the fault of the creditor they
there is substantial have been impaired.
performance.
In the meantime, the action derived
Case: JM Tuason v. Javier from the original obligation shall be
held in the abeyance. (1170)
A obligated himself to deliver 100
sacks to B for 1000 pesos. He only Q: If check is stale, will the obligation
delivered 95. be extinguished?
Q: How much can he recover? A: No.
A: Amount or value delivered, less Q: When is payment thru check

damages. extinguish obligation?
MOTO-Q NOTES
A: When it is encashed or through special laws. (1175a)
fault of the debtor when it had been
impaired.
 conventional assignment
Q: B owes A 1M in 1968. A claimed
that in 1968, the value of 1M is only  requires consent of both parties.
500k compared to the present because
of devaluation, hence he claimed 2M CASE: Filinvest v. Philippine Acetylene
base on Art.1250.
- no dation en pago, the delivery
Art. 1250. In case an extraordinary of the case was not consented
inflation or deflation of the currency to.
stipulated should supervene, the value - Filinvest was only an agent; there
of the currency at the time of the
establishment of the obligation shall
was no transfer of ownership.
be the basis of payment, unless there
is an agreement to the contrary. (n) Dacion en pago Cession
As to transfer of
Is his contention correct? ownership:
A: No. As decided in the Philippine The delivery

Pipe Foundry case, the supreme court results to the No transfer of
said “as far as Philippine experience is transfer of ownership, creditor
concerned, there has never been an ownership, same only given the
extraordinary inflation as experienced is true with power to sell.
by Germany in 1920-1923. Art.1250 application of
may only be invoked if the source is a payment.
contract. In Velasco v. Meralco, Article
1250 may not be invoked because the
source is a quasi delict.”
d.)date, time, place
Determinate – place where obligation

was constituted.
Generic – domicile of the debtor.
SPECIAL FORMS OF PAYMENT
1. Payment by Cession and decion

en pago.
Art. 1255. The debtor may cede or

assign his property to his creditors in
payment of his debts. This cession,
unless there is stipulation to the
contrary, shall only release the debtor
from responsibility for the net
proceeds of the thing assigned. The
agreements which, on the effect of the
cession, are made between the debtor
and his creditors shall be governed by
MOTO-Q NOTES
As to effect of General Rule: agreement that they will be
payment: Extinguish only as liable upon default on payment
to the extent of of surety bond, hence no
General rule: the proceeds of obligation yet on that day.
Extinguished only the sale of - SC: Dation en pago may
as to the extent of creditor. pertain to delivery of
value delivered. rights/things.
Exception: Unless
Exception: unless there is an express 2. Application of payments:
stipulated upon agreement.
that anything Problem: X is the creditor. A owes
delivered shall him, 100k, 50k, 20k and 10k.
extend the entire
obligation.General Rules:
Rule: governed by
law on sales only if 1. debtor ha the right to designate to
the pre- existing which payment is to be applied.
obligation is in
money. a.) no partial payment.
Art. 1245. Dation

b.) to that which is due and
in payment, demandable, except if payment was
whereby property
made for the benefit of the debtor.
is alienated to the
creditor in
c.) If the debt is interest bearing.
satisfaction of a
debt in money,
shall be governed 2.) if debtor fails to designate, the
by the law of creditor may designate.
sales. (n)
3.) if both failed to designate:
Note: provision for application of

payment is not applicable here.
3. that which is most onerous.

4. Proportionate application
(provided, it is of the same
nature and burden) – if the
debts are of different amounts.
Q: If A is to deliver a carabao, but
instead gave a refrigerator. Is it dacion
Q: How do we determine what is the
en pago on sale?
most onerous?
A: No. It is novation. The pre-existing
A: There is no hard and fast rule. We
obligation is not in money.
must consider factors and
circumstances.
CASE: Citizens Surety v. CA
3. Payment by cession:
- no dation en pago if at the time
of the transaction there is no
1255: voluntary assignment requires
obligation.
consent of the creditor.
- All transactions were executed
within one day. The indemnity
MOTO-Q NOTES
Art. 1255. The debtor may cede or (2) When he is incapacitated to
assign his property to his creditors in receive the payment at the
payment of his debts. This cession, time it is due;
unless there is stipulation to the
contrary, shall only release the debtor (3) When, without just cause,
from responsibility for the net he refuses to give a receipt;
proceeds of the thing assigned. The
agreements which, on the effect of the (4) When two or more persons
cession, are made between the debtor claim the same right to collect;
and his creditors shall be governed by
special laws. (1175a)
(5) When the title of the
obligation has been lost.
(1176a)
Q: How will the proceeds of the sale be
applied?
CASE: Soco v. Militante:
A: 1. based on stipulation. 2. without

Q: When may Tender of payment be
agreement; rules in concurrence and
made judicial?
preference of credits shall be applied.
A: No. Tender of payment by its
- debtor must deliver his
nature is extra judicial.
property to creditor.
- Resorted to by debtor who is
experiencing financial difficulty. Illustration:
4. Tender of payment and Q: There was a sale with right to

consignation: repurchase. Seller a retro refuses to
accept money, an action was filed.
Plaintiff said that he is not obliged
- tender of payment alone shall
because there is no tender of payment
never extinguish the obligation.
required. Is his contention correct?
- Actual offering of the amount or
thing.
A: Yes. No tender of payment is
required. No consignation is required
1256 – the only one scenario when
in sale with right to repurchase.
tender of payment should be made,
when creditor refuses to accept
without just cause. Q: Is notice required by consignation?
Art. 1256. If the creditor to whom A: Yes.

tender of payment has been made
refuses without just cause to accept it, Q: 2nd notice after consignation is
the debtor shall be released from required?
responsibility by the consignation of
the thing or sum due. A: Yes. Required but it does not need
to come from the debtor, it is in the
Consignation alone shall produce the form of summons.
same effect in the following cases:
Soco v. militante – 2 notices per
(1) When the creditor is absent amount due.
or unknown, or does not
appear at the place of Q: When will obligation be
payment; extinguished?
MOTO-Q NOTES
A: When creditor accepted, even if A: No. This is not a valid obligation
debtor refuses, may extinguish after therefore no extinguishment.
consignation, it retroacts from the
time of delivery. Q: If the thing is lost, who has the
burden to prove?
Q: The obligation was due in January,
1998. There was a tender of payment A: depends on who is in possession of
in January 1, 2000 but was refused. In the thing at the time of the loss.
January 2, 2004, there was However, this rule is not absolute
consignation. In January 2, 2007 there when the loss occurred during the
was a court ruling. Is the debtor liable happening of a calamity, like typhoon.
to pay interest?
Read: Art 1265 and Art 1262.
A: Yes. If from January 1998 he was
already in delay, up to consignation if Art. 1265. Whenever the thing is lost
court ruled to be valid. If the in the possession of the debtor, it shall
consignation was ruled by the court to be presumed that the loss was due to
be invalid, the interest must be from his fault, unless there is proof to the
January 1998 till court ruled. contrary, and without prejudice to the
provisions of article 1165. This
According to Sir: however, mora presumption does not apply in case of
accipiendi.-delay of the creditor to earthquake, flood, storm, or other
accept. Debtor may release himself natural calamity. (1183a)
from the obligation by the
consignation of the thing. Art. 1262. An obligation which consists
in the delivery of a determinate thing
Q: Can debtor withdraw the shall be extinguished if it should be
consignated money? lost or destroyed without the fault of
the debtor, and before he has incurred
A: Yes. If the withdrawal is made in delay.
before acceptance of creditor and
before court ruled on the consignation. When by law or stipulation, the obligor
is liable even for fortuitous events, the
- if creditor accepted and court loss of the thing does not extinguish
ruled, no withdrawal. If no the obligation, and he shall be
ruling yet, it may be withdrawn responsible for damages. The same
if creditor accepted. rule applies when the nature of the
- Revival without consent of obligation requires the assumption of
accessory – creditor is risk. (1182a)
released.
Q: In an agreement between A and B
for construction of house, proceeds
shall be equally distributed from the
LOSS sale. B didn’t give his share in the
house because of the high price of
When not valid? materials. A filed an action. May court
grant the action?
- when it goes out of commerce.
- Prohibited by law. A: No. Because the event of increase
- Impossibility of performance. of price is foreseen. 1267 is not
applicable.
Q: To deliver shabu? Is the obligation
extinguished?
MOTO-Q NOTES
CASE: Occeña v. Jacobsen by proving that the delivery of the
document was made in virtue of
- court can’t change agreement payment of the debt. (1188)
of the parties.
Art. 1272. Whenever the private
1267 – only difficulty not impossibility. document in which the debt appears is
found in the possession of the debtor,
Art. 1267. When the service has it shall be presumed that the creditor
become so difficult as to be manifestly delivered it voluntarily, unless the
beyond the contemplation of the contrary is proved. (1189)
parties, the obligor may also be
released therefrom, in whole or in Q: X owes A 1M, he lends the same
part. (n) amount to A. Is there condonation?
1264 – depends on the intention of the A: Maybe, if payment of interest is

parties. remitted.
Art. 1264. The courts shall determine Q: If employment of interest is found

whether, under the circumstances, the in debtor X? Is it condonation?
partial loss of the object of the
obligation is so important as to A: No.
extinguish the obligation. (n)
Q: If employment of interest is found
CONDONATION OR REMISSION in debtor’s possession, is there
necessarily condonation?
“donation of a credit”
A: No, may be through other modes,
1272 – refers to “private document like payment.
only” . If public document, it needs
many copies. Q: A is the creditor of 100k to B. X, a
third party, pledged his car to B. May
Art. 1270. Condonation or remission is the pledged car be used as
essentially gratuitous, and requires condonation?
the acceptance by the obligor. It may
be made expressly or impliedly. A: Determine first the status of X.
Whether he is the owner or for what
One and the other kind shall be the pledge is for.
subject to the rules which govern
inofficious donations. Express Then state the accessory v. principal.
condonation shall, furthermore, Not X. Because A and B are the parties
comply with the forms of donation. in the principal obligation; there is only
(1187) a presumption of X on part of the
accessory obligation of the pledge.
Art. 1271. The delivery of a private
document evidencing a credit, made CONFUSION OR MERGER OF
voluntarily by the creditor to the RIGHTS
debtor, implies the renunciation of the
action which the former had against Art. 1275. The obligation is
the latter. extinguished from the time the
characters of creditor and debtor are
If in order to nullify this waiver it merged in the same person. (1192a)
should be claimed to be inofficious,
the debtor and his heirs may uphold it
MOTO-Q NOTES
Q: May it be made through agreement Art. 1279. In order that compensation
of parties? may be proper, it is necessary:
A: May be. It depends upon the (1) That each one of the
intention. Ex. Merger of rights of a obligors be bound principally,
corporation. and that he be at the same
time a principal creditor of the
Q: By operation of law, can there be other;
confusion?
(2) That both debts consist in a
A: By succession, creditor died, debtor sum of money, or if the things
is son or daughter. due are consumable, they be of
the same kind, and also of the
Q: debtor died, creditor is an heir, can same quality if the latter has
confusion take place? been stated;
A: there can be, when there is (3) That the two debts be due;
acceptance.
(4) That they be liquidated and
Q: A is indebted to B. The debt is demandable;
secured by a mortgage by M on B. Can
there be a confusion of B and M? (5) That over neither of them
there be any retention or
A: No. controversy, commenced by
third persons and
communicated in due time to
Q: If there is an agreement?
the debtor. (1196)
A: No. It will be subrogation. If B
Q: In compensation, is it a reciprocal
assigned his rights to M, but still
obligation?
obligation is not extinguished.
A: Not necessarily.
Q: Will confusion result in total
extinguishment?
Q: When is it a reciprocal obligation?
A: No. In cases of joint obligations, in
1277. A: Reciprocal obligations arise from a
single transaction; contract of sale.
Art. 1277. Confusion does not
extinguish a joint obligation except as Q: What about legal compensation?
regards the share corresponding to Will it take place in reciprocal
the creditor or debtor in whom the two obligations?
characters concur. (1194)
A: Not necessarily. In reciprocal
obligations, there can be none.
COMPENSATION
Q: In partial compensation, is debt
totally extinguished?
Q: If 2 or ore persons are debtors and
creditors, will there be compensation?
A: No. Extinguished as to at least one
debt.
A: No, the requirements must be
complied with. – Art. 1279
Q: In compensation, how many debts
are involved?
MOTO-Q NOTES
A: 2 or more debts. Q: Give an example of facultative.
Q: Which debts will be extinguished? A: Support. Invoked by the one who

claims for support.
A: Less onerous amount.
Q: A opened a checking account with a
Q: A owes B the following, 50k, 100k, bank, he borrowed money with the
75k, 225k, 100k. B owes A 100k. How same bank. A failed to pay, Bank
many of the debts will be totally invoked compensation. A said that his
extinguished? checking account is depositum. Is his
claim tenable?
A: 2 debts of A and debt of B.
A: No. In a checking account, the bank
Q: A paid 100k to B. A has the is the creditor, A is a debtor governed
following debts to B; 50k, 25k, 10k. by mutuum, hence compensation can’t
How many debts are extinguished? take place.
A: 3 debts are extinguished. Partial Q: When is there a deposit?

compensation because there is still a
balance. A: If the delivery is only for safe
keeping.
Q: How many kinds of compensation
are there? Q: Other kind of facultative.
A: 4: legal, conventional, facultative, A: In case of commodatum, bailor can

judicial. invoke. In a civil case/penal, invoke by
injured party.
Q: In some books, there are three;
facultative is removed, why? CASE: PNB v. Acero
A: It is a modification only of PNB invoked: No legal compensation,

conventional. the credit line was used, lawyer of PNB
claimed that credit line was shown to
Q: What are the other names of Acero.
compensation?
- you don’t prove a fact by
A: set off or counterclaim. showing it to the other party.
Q: Not really the same because? Q: A is indebted to B with G as

guarantor. Can G invoke
compensation?
A: Set-off and counterclaim must be
invoked in courts of law.
A: No. they are not debtors and
creditors to each other. The law
Q: What distinguishes legal from
requires that they are principally
conventional?
bound.
A: As to requirements, not the same.
CASE: Sycip V. CA
In legal, all requirements should be
present, in conventional, not
necessary that all requirements are SC: debtors and creditors should be
present. i.e. different amounts or debtors and creditors in their own
objects; one debt is not yet due. rights.
MOTO-Q NOTES
CASE: Francia v. IAC Q: A is the creditor of B worth 100k
secured by a mortgage. B gave 50k. If
SC: There is no compensation when there is a partial compensation, will
Francia paid real property tax to the the mortgage be extinguished?
LG of Pasay. The national government
was the one who expropriated. A: Not necessarily. It depends which
debt is most onerous.
- compensation takes place if
debt became due at the same Q: If there is total compensation, will
time. the mortgage be extinguished?
Q: Monetary debts must arise from A: Yes. Mortgage will be extinguished.

contracts?
Q: B is indebted to A for 100k which is
A: Not necessarily. Eg. Attorneys fees interest bearing. B gave 50 k to A. Will
there be payment of interest even
Q: Are all monetary debts subject to after payment of compensation?
compensation?
A: Depends. If there is total
A: No. Custom duties. (Francia v. IAC) compensation, no interest will be paid.
If partial, depends on whose debt is
CASE: International Corp. Bank v. IAC bigger.
Facts: Villanueva applied a loan from Q: Will partial compensation be

ICB for 50M. Only 1M was delivered by extinguished by prescription?
the bank. The loan was secured by a
mortgage, which is 110 M asset. A: Yes. Partial compensation does not
Villanueva deposited 1M to ICB. He toll the running of the period.
invoked compensation.
ASSIGNMENT OF THE CREDIT
SC: Since there was a question on the
foreclosure sale, there was no legal Q: On January 1, 2002, A owes B
compensation. 100k. B assigned the credit to C on
June 1, 2002. Can C demand payment
from A?
CASE: Solinap v. del Rosario A: Determine when the assignment

was made; if made after both
Facts: The lessee did not pay rentals. obligation was due and demandable,
He invoked that the lessor had made there will already be compensation.
advancements.
Q: What if A paid B 50k in May 1,
SC: No legal compensation because 2002? How much can C claim?
alleged debt were being questioned in
the estate proceedings. A: 50k. He must ask B for the other
50k.
- no legal compensation if debts
arise from depositum, Q: In the same case, the debt is
commodatum, civil liability demandable on May 1, 2002. The
arising from crime. credit was assigned to on March 1,
2002. May D validly demand it on the
same date?
MOTO-Q NOTES
A: No. The obligation is not yet due. Q: In ACTIVE SUBJECTIVE, operative
word is subrogated. When does this
Q: A owes B 100k due and happen?
demandable on May 1, 2003. B
assigned it to X on April 1, 2003. A A: 1. by agreement (express);
made the following payments to B:
20k-March 1, 2003; 30K-June 1, 2. art. 1302 – legal subrogation.
2003; 40k-decemeber 1, 2003. On
May 1, 2003, how much may X validly a. Third Party pays creditor without
demand? consent of debtor.
A: It depends: If A had knowledge of b. TP who has an interest pays creditor

assignment of X and he consented with or without consent of debtor.
with reservation, X may claim 90k, if
he consented without reservation,
c. Creditor of debtor pays creditor of
100k. If it was without knowledge of
the same debtor.
A, X may claim 10k.
Art. 1302. It is presumed that there is
NOVATION
legal subrogation:
I. Subjective/Personal
(1) When a creditor pays
II. Objective/Real
another creditor who is
III. Mixed
preferred, even without the
debtor's knowledge;
Art. 1291. Obligations may be
modified by:
(1) Changing their object or (2) When a third person, not
principal conditions; interested in the obligation,
pays with the express or tacit
approval of the debtor;
(2) Substituting the person of
the debtor;
(3) When, even without the
knowledge of the debtor, a
(3) Subrogating a third person
person interested in the
in the rights of the creditor.
fulfillment of the obligation
(1203.)
pays, without prejudice to the
effects of confusion as to the
I. Subjective: latter's share. (1210a)
A. Active – third person is subrogated Q: In PASSIVE SUBJECTIVE, operative

in the rights of the creditor. word is substitution. When does this
happen?
B. Passive – substitution of the person
of the debtor. A: 1. Expromission – substitution was
made without knowledge or against
* other classifications: will of original debtor.
1. express or implied. 2. delegacion – substitution was

made with knowledge of
2. extinctive. debtor.
3. modificatory. Q: A is indebted to B. A mortgaged to

B his property worth 100k. B is
Eg. Prescription
MOTO-Q NOTES
indebted to C, 100k also. If A does not or such insolvency is of public
pay, can C foreclose the mortgage? knowledge.
A: No. He was not subrogated. II. Objective
DELEGACION – there is already A. Change in object – no problem,

subrogation, therefore, C may eg. Money to celphone
foreclose the mortgage. (art.1245)
 if there is Art. 1245. Dation in payment,

already whereby property is alienated to the
novation creditor in satisfaction of a debt in
through money, shall be governed by the law
delegacion, no of sales. (n)
consent of
original debtor B. Change in principal obligation:
is void.
 If payment a. express
consented to by b. implied
A, no novation,
subrogation.
* if 2 obligations can’t stand together,
(1236-1237)
there is novation, there is
incompatibility.
Art. 1236. The creditor is not bound to
accept payment or performance by a
* there was novation in FOA and the
third person who has no interest in the
Villar case.
fulfillment of the obligation, unless
there is a stipulation to the contrary.
There was a lease contract entered
into for 5 years. Another contract was
Whoever pays for another may
entered into for 10 years. The
demand from the debtor what he has
contention is that the 2nd agreement is
paid, except that if he paid without the
void, therefore novation is void.
knowledge or against the will of the
debtor, he can recover only insofar as
the payment has been beneficial to CASE: Ronquillo v. CA
the debtor. (1158a)
Facts: The obligation was due in 1952,
Art. 1237. Whoever pays on behalf of In 1967, debtor acknowledge debt and
promised to pay. Since it is now
the debtor without the knowledge or
against the will of the latter, cannot transformed to a natural obligation,
will the action for novation prosper?
compel the creditor to subrogate him
in his rights, such as those arising
from a mortgage, guaranty, or SC: Even natural obligations may be
penalty. (1159a) subject of novation.
Effect of Insolvency of new debtor: Q: X is the creditor of A, B and C for

10M. After 3 months, C paid 10M to X
- If C becomes insolvent after without the knowledge of A and B.
After 6 months A and B paid 7M to X.
substitution, A is no longer
liable. May A and B recover the 7M from X?
- If C was already insolvent at
the time of substitution, A can’t A: if voluntarily given, the creditor can
be held liable if no knowledge retain.
except if he acted in Bad Faith
MOTO-Q NOTES
According to sir: It is actually a provision shall apply to judges
payment by mistake therefore solution and government experts who,
indebiti. in any manner whatsoever,
take part in the sale;
 In natural
obligations, (5) Justices, judges,
payor knows he prosecuting attorneys, clerks of
can’t be superior and inferior courts,
compelled to and other officers and
pay but employees connected with the
nonetheless administration of justice, the
pays. property and rights in litigation
or levied upon an execution
before the court within whose
II. CONTRACTS jurisdiction or territory they
exercise their respective
- while all contracts are functions; this prohibition
agreements, not all agreements includes the act of acquiring by
are contracts. assignment and shall apply to
lawyers, with respect to the
Prohibited: property and rights which may
be the object of any litigation in
- Auto contracts – a person which they may take part by
contracts himself. virtue of their profession.
- article 1491.
(6) Any others specially
Art. 1491. The following persons disqualified by law. (1459a)
cannot acquire by purchase, even at a
public or judicial auction, either in ELEMENTS OF A CONTRACT:
person or through the mediation of
another: Natural – implied warranties.
(1) The guardian, the property
of the person or persons who
Essential – Consent, Object,
may be under his guardianship;
Consideration
(2) Agents, the property whose

Accidental – payment of interest.
administration or sale may
(compensatory)
have been entrusted to them,
unless the consent of the
CHARACTERISTICS:
principal has been given;
(3) Executors and 1. Autonomy – freedom of

contract/liberty of contract.
administrators, the property of
the estate under
administration; Art. 1306. The contracting parties may
establish such stipulations, clauses,
(4) Public officers and terms and conditions as they may
deem convenient, provided they are
employees, the property of the
State or of any subdivision not contrary to law, morals, good
customs, public order, or public policy.
thereof, or of any government-
owned or controlled (1255a)
corporation, or institution, the
administration of which has
been intrusted to them; this
MOTO-Q NOTES
Void waiver: not contrary to law, morals, good
customs, public order, or public policy.
Example: (1255a)
a. for agent to waive accounting. CASE: Republic v. PLDT
b. pactum commisorium - to compel PLDT to enter into

inter- connection agreements is
c. partnership, exclusive partner from actually expropriation.
sharing profits – pactum aliena
Validity of contracts of adhesion:
mortgage – pactum aliendro
CASE: Ong Yu v. CA
- plaintiff bought ticket from PAL,

d. Public policy: eventually he lost his baggage.
In the ticket it contained a
waiver of a right.
CASE: Cui v. Arellano
SC: waiver of a right in a contract

- scholarship in law school must
of adhesion are not considered
not be contrary to public policy.
gladly by the Supreme Court.
CASE: Saura v. Sandico
3. Mutuality: goes to validity and
compliance.
- Escalation clause – ex.
Construction contracts. Creditor
has right to demand a higher Art. 1308. The contract must bind
compensation upon the both contracting parties; its validity or
happening of a contingency. compliance cannot be left to the will of
Ex. Contract of loan (interest). one of them. (1256a)
- Acceleration clause –
stipulation whereby in an  termination by mere notice – valid.
obligation to pay on
installment, balance shall 4.Obligatory:
automatically become due and
demandable when debtor fails Art. 1315. Contracts are perfected by
to pay. mere consent, and from that moment
the parties are bound not only to the
Q: Will an escalation clause be valid fulfillment of what has been expressly
when there is no descalation clause? stipulated but also to all the
consequences which, according to
A: It is relevant only in contracts of their nature, may be in keeping with
loan; only effect of circular issued by good faith, usage and law. (1258)
the Central Bank provided the
escalation clause only happens once a Q: When is a contract obligatory?
year.
A: Upon perfection of the contract.
2. Consensuality:
Q: When is a contract perfected?
Art. 1306. The contracting parties may
establish such stipulations, clauses, A: It depends if it is consensual
terms and conditions as they may (concurrence between the offer
deem convenient, provided they are
MOTO-Q NOTES
and acceptance), real (like deposit, Requisites:
pledge, commodatum requires
delivery), formal/solemn (requires - existence of a valid contract
compliance with certain formalities - knowledge of contract by third
prescribed by law). persons
- interference by third persons
5. Relativity: without legal justification or
excuse.
Art. 1311. Contracts take effect only
between the parties, their assigns and Q: A has a contract with GMA.
heirs, except in case where the rights Subsequently, A entered a contract
and obligations arising from the with ABS-CBN. A was in bad faith. May
contract are not transmissible by their ABS CBN be liable?
nature, or by stipulation or by
provision of law. The heir is not liable A: No. To be liable there must be
beyond the value of the property he malice impugned. Third Party liability
received from the decedent. does not impugn liability of debtor who
violated.
If a contract should contain some
stipulation in favor of a third person, 3. Contracts in fraud of creditors:
he may demand its fulfillment
provided he communicated his Q: A is the debtor of B. A sold his
acceptance to the obligor before its property to C. May B rescind the
revocation. A mere incidental benefit contract between A and C?
or interest of a person is not sufficient.
The contracting parties must have A: Yes.
clearly and deliberately conferred a
favor upon a third person. (1257a) 4. Stipulation pour atrui – stipulation
in favor of third persons. It is not the
General rule: Contracts take effect main agreement.
only between parties, their assigns and
heirs. CASE: Kaufman v. PNB
CASE: Florentino v. Encarnacion

Exceptions:
- acceptance may be implied.
1. creation of real rights
CASE: Bonifacio bros. v. Mira
Q: A mortgaged his
land to B and - enforcement of insurance.
eventually A sold it
to C. Can C be
bound by the
mortgage? CLASSIFICATION OF CONTRACTS:
A: Yes. A: Degree of Dependence

1) principal (agency, partnership)
2. Interference by a third party. 2) accessory (Real Estate
Mortgage, Chattel Morgtage,
Pledge, Antichresis)
Art. 1314. Any third person who example: crop loan scenario
induces another to violate his contract
shall be liable for damages to the
other contracting party. (n)
MOTO-Q NOTES
B. As to Perfection 4. onerous- always! otherwise
1) Real (Pledge, Commodatum, donation
Mutuum. Deposit) 5. commutative- emptio spei
2) Formal (antichresis; donation)
C. Purpose Subject matter:
D. As to cause » things and rights, service is not
1) onerous included
2) pure beneficience
a) gratuitous As to object:
b) lucrative a. movable
»liberality id the consideration b. immoxable
3) remuneratory
» seller (payment); buyer Concepts involve:
(deliver) a) Recto Law- personal prop by
E. Risk of Fulfillment installment
1) Aleatory b) Maceda- immovable
» sale of hope – emptio spei c) double sale
d) Statute of Frauds
» risk of fulfillment
» insurance Q: As to WON tangible/intangible?
»life annuity
2) commutative A: corporeal (things); incorporeal
F. Name and Designation (rights)
1) Nominate Q: relevant as to what concept?
2) innominate
G. As to subject matter A: delivery
1) Things
2) Right Q: As to validity?
3) Services
A: void, unenforceable, rescissible,
PAQIII/Oct2007 voidable
Q: 1458 2nd par: provides for?

III. SALES
A: absolute/conditional sale:
- there must be an agreement to » In an absolute sale there is an
transfer ownership. automatic transfer of ownership while
in conditional sale, there is a
Q: A sold goods to B for purpose of reservation of ownership.
resale, Y bought goods from X for
personal consumption. What law shall Art. 1458. By the contract of sale one
govern this contract? of the contracting parties obligates
himself to transfer the ownership and
A: NCC and Code of Commerce, to deliver a determinate thing, and the
A-B commercial sale other to pay therefor a price certain in
Y-X civil sale money or its equivalent.
»now no distinction, NCC governs

A contract of sale may be absolute or
conditional. (1445a)
Characteristics:
1. principal
2. bilateral-imposes obligations on
two parties Q: Conditional sale vs. contract to sell
3. nominate
MOTO-Q NOTES
A: In conditional sale, ownership A: 1st. depends on manifest intention
depends on the happening of condition of parties.
and it take place by operation of law. Barter = value of thing given as a part
In contract to sell, ownership passes of consideration > money/its
after full payment passes. There is no equivalent; if value of watch >100k
automatic transfer, buyer have right to Sale- if same value
ask execute final deed. Q: A granted B exclusive right (right to
sell within a specific area) to sell
Q: A delivered receipt to B “as partial maong pants to Isabela, before B
payment to my car”, received by D, could sell, his store was burned, can B
balance payable at the end of the be compelled to pay?
month, signed by A.
Is this contract pertaining to a A: contract of sale bec. There is a
contract to sell? stipulation. B is a distributor/dealer
99.99% » Quiroga vs. Parsons- “will
A: NO, there is already transfer of supply the bed and pay price within a
ownership, there was no reservation certain period”. No obli to remit the
as to ownership. price, no stipulation.
dacion en pago vs. contract of sale ELEMENTS OF SALE:

»dacion en pago is a mode of 1. Consent
extinguishing obli, it is a pecial form of 2. Price- consideration as to
payment; while contract of sale is a whom? The seller.
source of obli. Buyer- acquisition of ownership
over the thing.
Q: Kobe & companion B is to buy 3. Object
shoes, B’shoes to be delivered, upon
payment, Kobe ordered a particular »Contracts which are void: Absolutely
shoe. simulated contract (parties voluntarily
entered)
A: Kobe- contract of piece of work ex. To defraud creditors, wife hide
B- contract of sale property from husband, buyer go
»contract for a piece of work under abroad.
(Aticle1467) is also called
Massachusetts Rule relatively simulated- why? To reduce
tax liability, circumvent law on legitime
Art. 1467. A contract for the delivery
at a certain price of an article which SPECIFIC PERSONS PROHIBITED
the vendor in the ordinary course of TO ENTER INTO SALE
his business manufactures or procures Guardian- absolute
for the general market, whether the Agent- administration/sale
same is on hand at the time or not, is
a contract of sale, but if the goods are Q: A inherited property from father to
to be manufactured specially for the transfer property; executor to pay
customer and upon his special order, 700k, status?
and not for the general market, it is a
contract for a piece of work. (n) A: valid; Assignment of rights which A
can validly sell, not part of the estate
under Y’s administration.
Q: A to deliver his car to B, B to give A
his watch plus money, 100k. What law Q: a sued B for recovery of a parcel of
should govern? land, hired lawyer, one year after
filing, entered into a contract of sale
with B involving the land.
MOTO-Q NOTES
A: not valid. object of sale is subject to administration of justice, the
litigation-actually depends. WON the property and rights in litigation
case is still pending. or levied upon an execution
Q: 1491 status of contracts jurisdiction or territory they
exercise their respective
A:GR: voidable functions; this prohibition
Except: agents- subject to ratification includes the act of acquiring by
Par.1,2,3 voidable- can be ratified assignment and shall apply to
»private interests is involved. lawyers, with respect to the
4,5,6 void property and rights which may
1,2,3 can be ratified because after be the object of any litigation in
lapse of incapacity, another contract which they may take part by
maybe entered into Rubias VS. Materia virtue of their profession.
Wolfgang vs. Martinez
public or judicial auction, either in
person or through the mediation of Q: If both parties are capacitated to
another: give consent, contract of sale valid?
(1) The guardian, the property
of the person or persons who A: not necessarily because consent of
may be under his guardianship; one might had been vitiated.
(2) Agents, the property whose Q: A person sold a thing to another in

administration or sale may representation of another person
have been entrusted to them, without authority, status?
unless the consent of the
principal has been given; A: unenforceable
(3) Executors and Q: can it be valid?

the estate under A: Yes, in case of statutory power to
administration; sell 1505; officious manager, executor
notary public (where pledgor can go to
(4) Public officers and NP to have the thing sold).
employees, the property of the
State or of any subdivision Art. 1505. Subject to the provisions of
thereof, or of any government- this Title, where goods are sold by a
owned or controlled person who is not the owner thereof,
corporation, or institution, the and who does not sell them under
administration of which has authority or with the consent of the
been intrusted to them; this owner, the buyer acquires no better
provision shall apply to judges title to the goods than the seller had,
and government experts who, unless the owner of the goods is by his
in any manner whatsoever, conduct precluded from denying the
take part in the sale; seller's authority to sell.
(5) Justices, judges, Nothing in this Title, however, shall

prosecuting attorneys, clerks of affect:
superior and inferior courts,
and other officers and (1) The provisions of any
employees connected with the factors' act, recording laws, or
MOTO-Q NOTES
any other provision of law
enabling the apparent owner of A: rights and obligations arising from
goods to dispose of them as if contracts are transmissible
he were the true owner XPN: NATURE, STIP, LAW (right in
thereof; specific partnership property)
(2) The validity of any contract Q: As to things to be valid subject

of sale under statutory power matter?
of sale or under the order of a
court of competent jurisdiction; A: determinate, capable of being
determinate
(3) Purchases made in a example: buying a car in the casa
merchant's store, or in fairs, or outside commerce of man, corpse
markets, in accordance with Q: Agreement between A&B, A sell
the Code of Commerce and palay that will be harvested this
special laws. (n) November.
Q: Status of sale
A: sale is valid.
Q: contract of sale involving alien.
Q: if no palay is harvested, A is liable
A: depends; if private agricultural, if
A: GR: Yes, liable, if he was at FAULT,
he is seller, valid. If he is the buyer,
except if reason was a FE
GR: NO. XPN: former natural born
citizen.
Q: sale of a sweepstakes ticket
status?
Q: All matters could be a valid subject
matter of sale.
A: depends, if winning ticket not void
A: every matter that can be a subject
Q: A sold B land with right of
matter of contracts in general can be
repurchase within one year, 3 rd month
subject matter of sale (service, things,
sold to C. what if on the 6 th month, A
and rights). Service CAN NOT BE A
offered to repurchase land status of
SUBJECT MATTER OF SALE
sale
Q: For rights to be a valid subject
A: Sale maybe valid. 1465 »
matter. of sale, what are the
1. things (ownership over the thing)
requirements?
subject to a resolutory condition may
»for rights- conclusively presumed to
be the object of the contract of sale.
be valid
2. validity of contract requires
Consent, Price, Object, the fact that it
A: must be transmissible
is present, sale is valid
Q: Sale of the right, known as?
Art. 1465. Things subject to a
A: assignment of rights resolutory condition may be the object
of the contract of sale. (n)
Q: if deed of assignment
Q: Who will have a better right?
A: sale? Not necessarily, if gratuitous-
donation, maybe dation in payment, or A: GR: A EXCEPT: C was a buyer in
a security arrangement. GF, no knowledge of right of
repurchase and right to repurchase
Q: rights arising from contracts WAS NOT ANNOTATED
MOTO-Q NOTES
Q: when is a sale of right perfected? A: No!

Gross inadequacy of price=lesion
A: upon meeting of the minds, -does not invalidate contract of sale
consensual contract -guardian ,more than ¼ of value,
contract of absentee
Q: does it bind 3rd person? Q: A & B-price fixed by 3rd person
A: No, unless in writing (public A: void if 3rd person refuse/unwilling to

instrument) fix the price
Q: if in public instrument, binding Q: one peso as value of car

already?
A: maybe donation/vitiation of consent
A: only requirement in real property
Q: parties to option agreement
Q: deed of sale, no price mentioned,
valid? A: promisor, promissee;
offeror;offeree optioner,optionee
A: sale maybe valid. »earnest money depends if perfected
as to object,price
Q: agreement A-B specific car, price is SOF-goes only to enforceability not
500k yen. validity of sale!
1487=1356
A: valid, if so stipulated, 1458 “in
money”
Art. 1487. The expenses for the
Art. 1458. By the contract of sale one execution and registration of the sale
of the contracting parties obligates shall be borne by the vendor, unless
himself to transfer the ownership and there is a stipulation to the contrary.
to deliver a determinate thing, and the (1455a)
other to pay therefor a price certain in
money or its equivalent. Art. 1356. Contracts shall be
obligatory, in whatever form they may
have been entered into, provided all
Q: if not in money, valid? the essential requisites for their
validity are present. However, when
A: “its equivalent” the law requires that a contract be in
some form in order that it may be
Q: can seller compel of lapad? valid or enforceable, or that a contract
be proved in a certain way, that
A: stipulated, RA8183 (currency requirement is absolute and
stipulated) repealed RA 529 (only in indispensable. In such cases, the right
philippine currency) of the parties stated in the following
article cannot be exercised. (1278a)
Q: why RA 529-because of dollar
reserves problem
Q: sale of ballpen 2k worth,valid?
A: at that time, RA 8183, our dollar Enforceable?
reserves improved
A: value ‡ worth ‡ price, if sold
Q: sell specific car, amount of two to<400
academic load, 2 semesters status,
valid?
MOTO-Q NOTES
1358- not a requirement for the Q: May a person sell something he
validity of contract does not own?
- only goes to the
enforceability A: As to validity, Yes! Sale will
always be valid even if not owned;
ownership of the thing has nothing
Art. 1358. The following must appear to do with validity
in a public document:
Q: What do you call a sale where a
(1) Acts and contracts which person may sell something he does
have for their object the not own?
creation, transmission,
modification or extinguishment A: Statutory Power to sell- 1505
of real rights over immovable
property; sales of real property Q: When should the seller has the
or of an interest therein a right to sell?
governed by Articles 1403, No.
2, and 1405; A: At the time ownership is to pass
 If seller has no right to sell,
buyer acquires no better right
(2) The cession, repudiation or
renunciation of hereditary
SCENARIOS WHEN SELLER HAS
rights or of those of the
NO RIGHT TO SELL BUT
conjugal partnership of gains;
OWNERSHIP IS TRANSFERRED
TO THE BUYER
(3) The power to administer
property, or any other power 1) ESTOPPEL
which has for its object an act a) equitable estoppel/estoppel
appearing or which should in pais
appear in a public document, or -led 3rd person to believe…
should prejudice a third b) estoppel by deed-technical
person; estoppel
-Art.1434
(4) The cession of actions or
rights proceeding from an act Q: Who is estopped?
appearing in a public
document. A: the owner,that the seller has no
authority to sell
All other contracts where the amount
involved exceeds five hundred pesos c) estoppel by record-also
must appear in writing, even a private technical estoppel
one. But sales of goods, chattels or
things in action are governed by -estafa,owner testified that he
Articles, 1403, No. 2 and 1405. is not the owner to free the
(1280a) accused (said authorized even
not)
OPTION
2)MERCHANT STORE + GF
 founded upon a consideration- * unlawful & stolen-with
no withdrawal allowed reimbursement- Art.559
 if option contract perfected, * not unlawful- no recovery-
optionee nay file for damages Art.1505
in case of breach
 option money- separated & Art. 1505. Subject to the provisions of
distinct from the price this Title, where goods are sold by a
MOTO-Q NOTES
person who is not the owner thereof,
and who does not sell them under
authority or with the consent of the CASE:SunBros.vs.Velasco(refrigerator)
owner, the buyer acquires no better
title to the goods than the seller had, *Buyer cannot recover if thing was not
unless the owner of the goods is by his lost/stolen
conduct precluded from denying the
seller's authority to sell. Q: lady owned a painting w/c was
stolen from her, owner of house
Nothing in this Title, however, shall bought from gallery auction, can she
affect: recover?
(1) The provisions of any A: Yes even w/o reimbursement public

factors' act, recording laws, or sale ‡ gallery auction
any other provision of law
enabling the apparent owner of Q: lady owned a necklace w/c was
goods to dispose of them as if stolen can the lady recover?
he were the true owner A: Yes, Art. 559
thereof;
Q: If delivery of certificate of
ownership there is transfer of
(2) The validity of any contract
ownership-ex: TCT, OCT
of sale under statutory power
of sale or under the order of a
A: Quasi-tradition-what is delivered is
court of competent jurisdiction;
a right -1501
(3) Purchases made in a
merchant's store, or in fairs, or
markets, in accordance with
the Code of Commerce and
special laws. (n) Art. 559. The possession of movable
property acquired in good faith is
equivalent to a title. Nevertheless, one
who has lost any movable or has been
unlawfully deprived thereof may
2) SALE BY AN APPARENT
recover it from the person in
OWNER + GF
possession of the same.
a) recording laws-land
registration decree –(now
involves forgery) If the possessor of a movable lost or
b) factor acts(old term for which the owner has been unlawfully
agency) sale made by deprived, has acquired it in good faith
agents at a public sale, the owner cannot
c) any other law- ex.goods obtain its return without reimbursing
covered by NDT incase of the price paid therefor. (464a)
bearer document when
negotiated Art. 1501. With respect to incorporeal
property, the provisions of the first
Q: If bought from merchant store, is it paragraph of article 1498 shall govern.
possible to recover? In any other case wherein said
provisions are not applicable, the
A: Yes, if buyer is in BF placing of the titles of ownership in the
possession of the vendee or the use
Q: In GF,can owner recover? by the vendee of his rights, with the
vendor's consent, shall be understood
A: Yes +reimbursement as a delivery. (1464)
MOTO-Q NOTES
Q: Public instrument, signed by INSTANCES WHERE SELLER STILL
notary, ownership passes? THE OWNER DESPITE DELIVERY
A: No,because contrary intention may a) conditional sale-

appear ownership passess upon
fulfillment of condition bec.
CASE:MAPALO VS. MAPALO Ownership was reserved
b) sale/trial approval
Q: If at the time of the signing, buyer return- ownership is
has no knowledge of defect of title of transferred already but the
seller? buyer may revert title back to
the seller
A: May not be considered in GF bec. c) sale on installment-
GF should exist up to the full payment not necessarily depends on
stipulation
Q: When can seller have possession if 1502(2)- Read instances
thing not lost/stolen? when buyer deem to have
accepted goods
A: If he acts as a depositary
Q: When can there be a transfer of Art. 1502. When goods are delivered
ownership even w/o delivery? to the buyer "on sale or return" to give
the buyer an option to return the
A: None! Ownership is transferred only goods instead of paying the price, the
upon delivery ownership passes to the buyer of
delivery, but he may revest the
Q: How many kinds of delivery are ownership in the seller by returning or
there? tendering the goods within the time
fixed in the contract, or, if no time has
A: Two kinds been fixed, within a reasonable time.
1) Actual/Physical (n)
2)Constructive
a) symbolica
b) tradition brevi mano Q: lapse of 12 hrs. will it be
c) longa mano reasonable time as acceptance?
d) constitutum
possesorium A: Yes, depending on the
e) formal delivery circumstances i.e. perishable goods
* there should be delivery=
contract + possession delivery of Q: Contract to sell, when does
public instrument=formal ownership pass?
delivery
A: Upon full payment?when?
Q: Delivery where seller still in -execution of final deed of sale
possession?
Q: if thing is lost/destroyed, who is
A: constitutum possessorium liable?
Symbolica- key to the place
where goods are located A: First to consider if due to FE, who
Longa Manu- why cant be is at FAULT
delivered?
-may only be depository GR: if who is at fault, liable
]
MOTO-Q NOTES
Q: When can buyer bears loss? A: Yes, if land is unregistered land,

1544 does not apply
A: If buyer is in delay
*RES PERIT DOMINO
XPN: 1) stipulation of reservation Art. 1544. If the same thing should
of ownership have been sold to different vendees,
2) security title-ownership was the ownership shall be transferred to
retained only for purposes of the person who may have first taken
security possession thereof in good faith, if it
-buyer bears the lost should be movable property.
Lawyers Cooperative Case Should it be immovable property, the

ownership shall belong to the person
DOUBLE SALE acquiring it who in good faith first
recorded it in the Registry of Property.
Q: A sold to B, A sold the same thing
to C who took possession
Should there be no inscription, the
ownership shall pertain to the person
A: depends on who registered it in GF.
who in good faith was first in the
One must be in GF at the time of the
possession; and, in the absence
possession
thereof, to the person who presents
the oldest title, provided there is good
Q: if both A&B did not take
faith. (1473)
possession, did not register, is it
possible for B to have a better right?
A: if A was in BF; Immovable: Q: Delivery to common

Registration of deed of sale in GF carrier=delivery to buyer?
Q: A 1st registered w/ knowledge of A: depends on stipulation &

2nd sale? reservation of ownership by seller
A: A has a better right, no knowledge Q: As to bill of lading, no delivery to

of defect at the time of sale buyer when?
Q:A 1st register w/ knowledge of 1 st A: on the face of bill of lading

sale? deliverable to the seller
A: 2nd buyer has better right Q: delivery to the common carrier-

delivery to buyer? When?
Q: no possession, can 2nd buyer have
a right? Such as when A sold to B who A: if bill is not retained by seller
leased same land to A while A sold the Q: delivered 10 dozens, 8 dozens was
same land to C. only delivered
Who has a better right?
A: accept 8, reject excess
A: B has a better right. B 1st took
possession, B deemed to be in legal Q: if less?
possession
Q: A sold land to B (took possession) A: if agreed to partial delivery, may
A--------C (judgment CR sold; be compelled to accept
Buyer, registered w/o
knowledge of 1st sale Q: if to deliver 8, only delivered 7
Can B have a better right? dozens & never delivered 1 dozen
MOTO-Q NOTES
A: WON at the time he accepted 7 Q: If parties agreed…delivery after 5

dozens buyer knows that seller will days; is he obliged to make deliver?
not deliver balance When not obliged?
If knows- contract rate
Does not know- FMV A: not obliged to deliver if buyer does
not pay yet
Q: To deliver 1 sack durado, wagwag, Not yet obliged-when the buyer loses
when is the sale void? the right to make use of the period
1198
A: When what is to be delivered is
indivisible, buyer may reject if buyer became insolvent?-if he
delivers a security
Q: Call seller demand increase in price PLACE OF DELIVERY
of sale of land? 1) stipulation
2) place fixed by usage of trade
A: If lump sum-No! 3) depends on nature of object
If per unit measure- Yes! determinate-where thing is located at
time of perfection
Q: Price 1K-100 sq.m.area delivered generic- seller’s place
is greater USAGE OF TRADE
F.O.B.-free on board-seller shall only
A: Buyer may accept + payment of be liable to shoulder expenses up to
contract price port of origin
C.I.F.-cost insurance freight
Q: if only 93 sq.m. -delivery already taken place at
port of origin
A: Remedies of buyer F.O.B.-port of origin(Mla)
-port of destination(Cebu)
a) may accept, proportional »”these shipping arrangements are
reduction only presumptions, parties may still
b) specific performance stipulate manner & payment” – SC
c) damages
»less than 1/10 rescission is not a OBLIGATION TO WARRANT
remedy
Rescission- remedy if buyer could Caveat emptor- not adopted by
prove that he would not have bought Phil.Law;
land if less than… De Leon bec. Of implied
warranties.
Q: Is it possible for buyer to have the
right to rescind if 100 sq.m. was BAR QUESTION:
delivered
Q:sale of parcel of land for IM, down
A: Yes if land is inferior quality or if payment Php 100, bal.to be paid after
value is less than 1/10 of the value squatters will be evicted, if within 6
mos.,squatters still there,seller shall
Q: Bound to deliver upon perfection of return 100k, in 6 mos.,value of land
sale doubled,squatters still there, seller
offered to return Php100k buyer did
A: Not necessarily not accept,seller refuse to execute
1. stip as to final deed of sale,seller filed for
period rescission.
2. no payment of
purchase price A: 1)NO! seller is not the aggrieved
party
MOTO-Q NOTES
2)(1545) buyer given option to double sale in the case of the 2nd
refuse to proceed with contract buyer)
3) waive the happening of
condition & proceed with the contract Q: How about if somebody was
*mere opinion not breach of already occupying the land, acquired it
warranty unless given by expert. by acquisitive prescription, buyer did
*if warranty is as to title,fitness & not visit land, can he hold seller for
characters, breach of warranty?
mere opinion= express warranty
ex. Fertilizers to yield better harvest A: No!
guarantee ‡ warranty
VENDOR’S LIABILITY IN CASE OF
Art. 1545. Where the obligation of EVICTION (see TABLE 1)
either party to a contract of sale is
subject to any condition which is not Waiver intencionada
performed, such party may refuse to »waiver made by buyer if he already
proceed with the contract or he may knew of the defect of the thing.
waive performance of the condition. If Waiver consciente
the other party has promised that the »waiver made by buyer where both
condition should happen or be buyer & seller knew that there was no
performed, such first mentioned party defect on the thing sold.
may also treat the nonperformance of VENDOR’S LIABILITY IN CASE OF
the condition as a breach of warranty. EVICTION
TABLE 1
IMPLIED WARRANTY Extent of If If there is waiver If there is no
a) warranty against hidden liability of v Vendor in good waiver
vendor e faith
defects n conci intencio Vend Vendee
b) warranty in case of eviction d
o
ente nada ee in in bad
Good faith
c) warranty of quality as to quality, r faith
i
fitness n
b
a
WARRANTY IN CASE OF EVICTION d
f
ai
Q: is it required for buyer to be t
h
deprive? .
1) val
A: also includes peaceful possession ue Y YES NO YES YES
of E
the S
thi
Q: is it possible if buyer is not ng
deprived of ownership but deprived of at
the
possession? tim
e
of
A: Yes, in case of Contract of Lease the
evi
cti
on
REQUIREMENTS:
1) there should be a final judgment
2) income Y NO NO YES YES
in favor of 3rd person or fruits E
-seller must be S
summoned,impleaded
3) cost of Y NO NO YES YES
2) based on a right prior to the sale suit E
3) no valid waiver in the form of S
waiver intencionada
4) expenses Y NO NO YES YES
4) act imputable to the seller after the of contract E
sale (non-payment of taxes, S
5) damages Y NO NO NO YES
and interest E
S
MOTO-Q NOTES
A: Yes, if vendor was not aware of the
defect if the return price is less than
Warranty Against Hidden Defects the value of the thing at the time of
1) thing is already defective at the loss.
time of sell
2) he would not have bought if he SALE OF ANIMALS WITH DEFECT
knew/bought for less than the Php Redhibitory- when even after the
sale it cannot be seen even by
Q: can buyer not hold seller liable for expert
hidden defects?
Q: If 10 birds,1 defective, can be
A: Yes if buyer was an expert rescind?
Q: What if the thing which is defective

was lost? A: GR: No.
XPN: if buyer could prove that he
A: XPN to 1174,vendor liable even would not have bought if he had
through FE known of the defect-- presumption if
bought in pairs
Q: If animal died 10 days after sale?
EXTENT OF LIABILITY OF THE VENDOR A: No, can recover if died within 3

IN CASE OF LOSS OF THE THING days for a disease existing at the
WITH HIDDEN DEFECTS (SEE TABLE time of sale.If died with contagious
2) disease, he can recover.
THE DEFECT CAUSE OF LOSS: FE OR

FAULT OF VENDEE
NON-APPARENT ENCUMBRANCE
Ex. Encumbrance on a Road
VENDOR
IS IN
VENDOR
IS IN
VENDOR
IS IN BAD
VENDOR
IS IN
requirements-
BAD GF FAITH GOOD 1) non-apparent
FAITH FAITH
2) not known to the buyer
1) RETURN
PRICE YES YES NO NO
Q: If knowledge of buyer can he
hold seller liable?
A: Yes, if it was annotated in the

2)
PRICE/VALUE NO NO YES YES title
AT THE TIME
OF LOSS
Remedy: rescission/damages
Rescission- invoke within 1 yr.
3) REFUND from date of contract
OF YES YES NO NO
EXPENSES
OF
CONTRACT
Q: If he filed damages 1 yr.& 6 mos,
4) DAMAGES YES NO YES NO can the case prosper?
5) ONLY NO YES NO NO A: It depends on when was the

INTEREST
discovery, damages should be filed
within 1 yr. from discovery
Q: If animals bought from fairs,

auctions, no warranty at all?
Q: Is it possible for vendor not liable
for anything? A: Not necessarily, only there is no
warranty as to hidden defects; there
MOTO-Q NOTES
is still warranty as to title & XPN:
warranty against eviction 1) stipulation
2nd hand sale- “as is where is 2) thing delivered produces fruits
basis” 3) if buyer was already in default
after Extra J demand
Q: Is it correct to say that there is (needed if there was stipulation as to
no IW in judicial/ execution sale? payment of price)
 contact of sale results to
A: No! there is still warranty by reciprocal obligation
express provision of law- warranty
as to title even to judgment debtor Q: right of inspection, absolute?
except if he was exempted fr. Such
liability by order of the court. A: No, no law providing for such
 There are people who cannot Buyer has no right to inspection
be liable for warranties, not preliminary to acceptance
sale without warranty/ Ex.: delivery of mining co. of coal
Ex.: sheriff to NAPOCOR
RIGHTS AND OBLIGATIONS OF BAR EXAM QUESTION:

VENDEE
Q: 1/1/03-----7/1/03 (delivery of
Q: If he received the goods, means mango plantation)
acceptance? 8/1/03 (delivered)
seller sold fruits to X between the
A: not necessarily, “receive” is only period 7/1/03- 8/1/03
preliminary to acceptance, subject to Can buyer recover the fruits from
inspection X?
Q: If buyer accepted, is seller A: 1537 only applies if both parties

discharged of his warranty? are already obliged, not applicable if
there is a stip as to delivery 1164-
A: No. 7/1/03------5/1/03 Buyer entitled to
XPN: 1) stipulation fruits but 2nd par. 1164 not yet
2) buyer failed to give notice of such delivered so, remedy is for damages
breach within reasonable time
Q: If goods already at the warehouse Art. 1537. The vendor is bound to

of buyer, informed seller of refusal, deliver the thing sold and its
fire broke out, can seller be liable? accessions and accessories in the
condition in which they were upon the
A: It depends whether there has a perfection of the contract.
just cause for refusal. If no just cause,
ownership is transferred to buyer, All the fruits shall pertain to the
RES PERIT DOMINO vendee from the day on which the
contract was perfected. (1468a)
As to Price
-payment to be made at place of
MACEDA LAW RA 6652 REALTY
delivery
INSTALLMENT BUYER ACT
»only applies to residential realty
Q: 1/1/03 delivery----------1/1/04
 not applicable to commercial &
buyer paid
industrial sale on installment= sale on
credit
A: can buyer be held to pay %?
NO.
MOTO-Q NOTES
»sale on credit not necessarily sale or (1) A lien on the goods or right
installment-maybe on a straight term to retain them for the price
basis while he is in possession of
 even only one instrument is them;
paid, already covered by MACEDA
LAW (2) In case of the insolvency of
»60 days grace period without interest the buyer, a right of stopping
if he paid at least 2 yrs.-entitled to the goods in transitu after he
CASH SURRENDER VALUE-50% paid has parted with the possession
by buyer, only up to 90% of them;
Grace Period-claimed only once
every 5 yrs. (3) A right of resale as limited
 there must be a delivery to the by this Title;
buyer of cash surrender value
not a mere notice
(4) A right to rescind the sale
REMEDIES FOR BREACH OF
as likewise limited by this Title.
WARRANTY
1) UNPAID SELLER 1526
Where the ownership in the goods has
a. withhold goods
b. stoppage in transit not passed to the buyer, the unpaid
seller has, in addition to his other
c. resale
d. rescind remedies a right of withholding
delivery similar to and coextensive
» GR: the following remedies are
alternative except for letter a and with his rights of lien and stoppage in
transitu where the ownership has
b.
passed to the buyer. (n)
MACEDA LAW
Q: If buyer paid seller a check, can
1526 be invoke?
Q: A sold a house for 10M---
downpayment of 3M was given while
A: Yes if check was dishonored not
remaining 7M will be paid in 60 equal
monthly installment defaulted through the fault of the seller
47th,49th, offered to pay arrears.Seller
cancel the sale,Cancellation Valid?
Q: Remedies exclusive?
A: No. Paid for at least 2 yrs. He is
A: No! he nay file action for specific
entitled to 1 mo.for every year.
performance/ damages
Facts: 46 installments 3 days=90 days
grace period. A is within the grace Q: Even if ownership had passed to
the buyer, may seller invoke 1526?
period to update account.
A: Yes! Ex. Constructive delivery
Q: if seller only paid 80% can he
invoke 1526? POSSESSORY LIEN- right to withhold
the goods
A: Yes! lien – if goods already delivered
the buyer & seller not yet paid
»not required that buyer be insolvent
Art. 1526. Subject to the provisions of
»seller will not lose lien over the goods
this Title, notwithstanding that the
--requiring the buyer to pay
ownership in the goods may have
passed to the buyer, the unpaid seller
STOPPAGE IN TRANSIT
of goods, as such, has:
---seller must have parted possession
---buyer is insolvent
---goods are in transit
MOTO-Q NOTES
How exercised? By mere notice to A: seller! Is there unjust enrichment?
common carrier No, it was the buyer who was really at
 if goods are covered by fault
NDT,NDT should be
surrendered to common carrier Q: If the buyer already acquired
 in order for the goods to be no ownership should seller rescind 1st?
longer in transit, buyer should A: No. he can automatically resale as
have obtained it lawfully ruled by SC Katigbak vs.CA
Q: S-------------B
Has possessory lien, Does C RIGHT TO RESCIND
S loses his lien if B sold it to C? ---same requirements in resale except
for perishable goods
A: No. Unless he consented; if B sold
the goods to C covered by NDT & was RECTO LAW 1484
sold by B to C through negotiation & C
bought it in GF Art. 1484. In a contract of sale of
personal property the price of which is
RESALE payable in installments, the vendor
---seller must still have the goods may exercise any of the following
---maybe exercised if buyer is in remedies:
default for unreasonable time; if
perishable goods are involve, if by (1) Exact fulfillment of the
stipulation seller reserves right to obligation, should the vendee
resale fail to pay;
Q: if seller failed to give notice to

(2) Cancel the sale, should the
resale, valid?
vendee's failure to pay cover
If no notice as to date, time &
two or more installments;
place
(3) Foreclose the chattel
A: notice not necessary as to validity
of resale. These notice are valid only if mortgage on the thing sold, if
one has been constituted,
seller use the ground that buyer has
been in default for immeasurable should the vendee's failure to
pay cover two or more
length of time.
2nd notice is relevant whether the sale installments. In this case, he
shall have no further action
is a GF sale.
against the purchaser to
recover any unpaid balance of
Q: Buyer has unpaid Php 100,000,
seller sold goods for 70,000 can he the price. Any agreement to
the contrary shall be void.
recover 30k from buyer?
(1454-A-a)
A: Yes. As long as the sale is a GF sale
Q: What if goods sold for Php 150,000, Q: What are this recto law & maceda
who is entitled to 50k? law in connection with installment?
A: seller shall not be responsible to the A: Recto law- sale & movable property
buyer for whatever profit he may have on installment
obtained 1) EXACT FULFILLMENT/SPECIFIC
PERFORMANCE
Q: If from 100k, 50k was paid by 2) CANCELLATION
buyer, remaining goods sold for 100k, 3) FORECLOSURE
who is entitled? (alternative in character)
MOTO-Q NOTES
Q: Sale of jewelry,10M, 100k,(10 yrs. deficiency. May S, foreclose the real
Equal installment),buyer defaulted, 3rd estate mortgage?
installment
A: No! 1484 applicable
A: exact fulfillment is the remedy
Q: after 1 month S filed action for REMEDY OF BUYER

recovery of balance? 1) action for specific
performance-determinate
A: As a rule no, only 100k is due. XPN substitute performance-generic
if there’s an acceleration clause thing
2) action for damage
Q: defaulted 3rd installment, and so 3) rescission (1191)- if there
with 7th, can cancellation of sale be was a substantial breach
involve?
MODES OF EXTINGUISHMENT
A: No! cancellation to be involve
2/more consecutive installment is 1) 1236 IN GENERAL-
defaulted ORDINARY MODE
2) RESCISSION-those provided
Q: If 3rd,4th, defaulted, cancellation, is a law on sales-special modes
seller compelled to return all amount? 3) EXTRA SPECIAL-REDEMTION
REDEMPTION
A: No! he may retain reasonable amt. 1) CONVENTIONAL-available
for the use of the thing only if there was an agreement of
repurchase
Q: Is it possible for S to retain
everything? Q: Who has this right?
A: Yes,if there is forfeiture clause A: Seller, owners previous to the

seller, assignee,heirs, creditors of
Q: Is it possible even if there is seller
forfeiture, S is not able to retain
everything? BAR QUESTION: S (debtotr) sold land
to B with right of repurchase for 50K
A: Yes if amt. is unconscionable
Q: If seller offered 200k, can buyer
Q: A bought brand new BMV, 5M refuse?
installment basis. A mortgaged his
jewelries worth 5M to secure A: Yes! Bec. Seller is responsible also
fulfillment for the useful & necessary expenses
S foreclose.deficiency of 1M, can
seller recover 1M from buyer? Q: On 1/1/02 sold mango plantation
4/ 1/02 supposed delivery but was
A: Yes! Bec. The very thing bought is only delivered on 10/1/06. if there
not the thing mortgaged. For 1484 to were fruits between the period it
apply. It should be the thing bought should had been delivered, Can seller
w/c is mortgaged. be compelled to pay entire 100k?
BAR QUESTION: A: It depends if there were fruits at

Q: A bought car, seller required real the time of the sale, determine if
estate mortgage aside from the buyer paid the fruits at the time of
chattel mortgage covering the car. sale, when it comes to repurchase
Seller foreclose mortgage on the car, seller should also pay.
despite foreclosure there is still a
MOTO-Q NOTES
Q: If no fruits at the time of sale, at (3) When upon or after the
the time of repurchase there were expiration of the right to
fruits. repurchase another instrument
extending the period of
A: 75k value of fruits should be redemption or granting a new
divided into proportion counted unto period is executed;
the last anniversary date
(4) When the purchaser retains
BAR EXAM QUESTION: for himself a part of the
purchase price;
Q: A sold to B land w/ right of
repurchase, no fix period as to (5) When the vendor binds
repurchase – when should it be? If A himself to pay the taxes on the
failed to repurchase, what will you thing sold;
suggest to your client?
»4 yrs, ownership of the thing
(6) In any other case where it
delivered to buyer- not absolute
may be fairly inferred that the
ownership-subject to resolutory
real intention of the parties is
condition of proper exercise of right of
that the transaction shall
repurchase
secure the payment of a debt
 if seller a retro
or the performance of any
failed,ownership of buyer becomes
other obligation.
absolute? If movable? Yes.
Immovable? Yes!
In any of the foregoing cases, any
FILE ACTION FOR CONSOLIDATION money, fruits, or other benefit to be
OF TITLE NEEDED received by the vendee as rent or
----Consolidation of title needed. Yes otherwise shall be considered as
with respect to immovable, necessary interest which shall be subject to the
for buyer to be able to register the usury laws. (n)
prop in his own name
Q: Why would the CR have
Q: If expiration of date of repurchase, Dr signed a sale w/ right of repurchase
can no longer recover? than a mortgage?
A: No! it might be an equitable A: to avoid pactum commissorium

mortgage; file for reformation (read
1602 for presumptions) Q: Against whom should right of
repurchase be exercise?
A: Anyone who derive the title from

Art. 1602. The contract shall be
buyer a retro
presumed to be an equitable
mortgage, in any of the following
Q: X with right to purchase
cases:
Q:
A B
(1) When the price of a sale
C D
with right to repurchase is
unusually inadequate; D sold to X his lot with right of
repurchase, can X compel D to
repurchase entire land?
(2) When the vendor remains
A: GR: No
in possession as lessee or
XPN: If the thing is essentially an
otherwise;
inadmissible thing ex. Bungalow
house, painting w/c is immovable
by destination
MOTO-Q NOTES
2) LEGAL- prop. Be annotated at RD, RD send
a) co-owners- any prop another notice to co-owner (deadma!)
b) of adjacent lnd-immovable After more than a year, buyer filed for
Q: Co-owners partition, co-owner received summons,
filed for redemption-prosper?
A B
C D A: Yes! Notice in writing given by
vendor not vendee,not RD
D donated his land to X, Can co
Alternative answer: No! bec. She
owners redeem?
already received notices, the 30 day
period should have already run
A: No! for redemption to exist;
DOROMAL VS. CA notice should be w/
onerous title
deed of sale!
Q: Same table, D sold the land to
TGMOct2007
B, can their be a right of redemption?
A: No! should be sold to other person IV.LEASE

for redemption to arise
Kinds of Lease
CASE: 3 bros. had mother title 1. things- consensual contract;
cancelled… RD registered still in their onerous
names instead of one TCT each, 2. work or service
despite actual partition one of bro.  Household service- Labor
sold, can the two redeem?  Employment contract- Labor
 Contract for a piece of work-
A: As adjacent owner,Yes! But can’t Civil
claim as co-owner  Contract of Carriage-
Commercial
Q: If only 350k is stated in deed of 3. Right
sale, actual payment is 1M, purchase
price should be? COMMODATUM LEASE
A: 350k only! Contrary to public policy Essentially For a price
case of Doromal gratuitous certain; onerous
Q: If 1M is stated in deed of sale,  Q: What is the nature of the

350k interest how much can co-owner contract in the boundary system?
be compelled to pay in order to
redeem?  A: It is contract for the Lease of
Service. Employment contract
A: 1M which requires the elements of an
employer-employee relationship.
Q: 2 sisters, A& B, A sold her interest
to X-(2006) w/o B knowing.  Q: Is the lease of a safety deposit
B paid real property tax & knew of the box, considered lease of things?
sale, informed X right of redemption,
can he still redeem?  A: NO. It is a special kind of
deposit. The lessee has no control
A: When will the 30 days run? 30 days over the object.
fr. Actual knowledge
Characteristics
Q: A-X (buyer) informed B of the sale,
co-owner did not react; buyer wanted  CASE Dimaculangan-
MOTO-Q NOTES
 In lease of things, a death of the (4) Public officers and
party does not extinguish the contract employees, the property of the
of lease. State or of any subdivision
 It is essentially onerous. thereof, or of any government-
 Consensual, Nominate, Bilateral owned or controlled
corporation, or institution, the
 CASE:Bagtas- administration of which has
been intrusted to them; this
 The 2nd bull was not turned over provision shall apply to judges
due to a fortuitous event- crossfire and government experts who,
during the era of the Huks. Is it a in any manner whatsoever,
contract of commodatum by which the take part in the sale;
government bears the loss?
 SC-This is a Lease. (5) Justices, judges,
Bagtas has to pay a certain prosecuting attorneys, clerks of
breeding fee. superior and inferior courts,
and other officers and
 Spouses, guardians and those employees connected with the
enumerated under Article 1490 and administration of justice, the
1491 cannot enter into a lease property and rights in litigation
contract with each other. or levied upon an execution
Art. 1490. The husband and the wife jurisdiction or territory they
cannot sell property to each other, exercise their respective
except: functions; this prohibition
includes the act of acquiring by
(1) When a separation of assignment and shall apply to
property was agreed upon in lawyers, with respect to the
the marriage settlements; or property and rights which may
be the object of any litigation in
(2) When there has been a which they may take part by
judicial separation or property virtue of their profession.
under Article 191. (1458a)
public or judicial auction, either in As to Formalities
person or through the mediation of
another:  Q: A appointed B as his agent. A
(1) The guardian, the property withholds no power against B
of the person or persons who granting the latter a Power of
may be under his guardianship; Attorney. B entered into 3
contracts…
(2) Agents, the property whose 1) Contract of lease of
administration or sale may parcel of land for 4 years and a
have been entrusted to them, rental of 60,000php annually.
unless the consent of the 2) Contract of lease of a
principal has been given; parcel of land with a rental on a
monthly basis of 3,000php.
3) Contract of sale of a
(3) Executors and
parcel of land for 3x the value
of the land.
the estate under
What is the status of these
administration;
contracts?
MOTO-Q NOTES
A: Yes.
A: 1) Unenforceable. What is
authorized of B is an act of Q: There was a lease over a fishpond
administration. SPA is needed. for 5 yrs. The rental for next year will
2) Valid and Binding. Rental of an be reduced to ½. However, the
immovable without a fixed period, the harvest was only ½ due to the rebels.
same period as payment of rentals; It The lessee contended that the lease
is an act of administration only. period is extended for 10 yrs now. Will
3) Void. Authorization of the there be a reduction?
agent is not in writing.
A: None. The right of reduction can
CASE Donald Dee- Documentary only be invoked if failure to harvest
formalism is not an element in was due to an extraordinary fortuitous
employment. event such as war, fire, pestilence. It
does not include the intrusion of
BAR EXAM QUESTION: lawless elements, flood, and typhoon.
» reduction can be allowed only in
Q: A leased a cockpit to B. During the cases where B harvested less than one
pendency of the lease, the cockpit half and that it should had been due to
collapsed. Who is liable for the fortuitous event
collapse? »lawless element is not a fortuitous
event
A: Lessor. His is the duty to repair,
unless there’s a stipulation to the Q: Will there be an extension?
contrary.
A: None. Lease is suspended during
CASE:Gonzales v. Mateo- the fortuitous event. He can claim not
to pay the monthly rental.
Lessee is liable because he » Fortuitous event is not a reasonable
agreed to repair. ground for extension but only for
suspension of payment of lease during
BAR EXAM QUESTION: that period
Q: A leased a parcel of land to B for 10 Q: May the lessee sublease with the
years. There was an agreement to consent of the lessor?
extend the Lease and it’s binding. B
put up a 2-storey building. Upon A: Yes. As long as it is not prohibited
expiration of the Lease, B failed to from subleasing. Assignment of lease
renew the Lease. A filed an ejectment is valid if with the consent of the
suit against B. B contended that he is lessor. In sublease, it is valid although
a builder in good faith thus absent consent of the lessor provided
reimbursement of the expenses. it is not prohibited.
A: Builder in good faith cant be CASE:Manlapac v. Salazar-

invoked. Lessee can’t build in the
concept of an owner. He is neither A leased his fishpond to B till the end
entitled to reimbursement. The option of June 1, 1947. During the existence
is with the lessor if he opts to retain ½ of the contract, B contracted with C,
amount paid by the lessee or remove the latter to have the rights in the
the improvements though causing fishpond. The contract between B and
damages. Damages must not be C was made without A’s consent. The
necessary, though. heirs of A contended that the contract
is void because it is only an
Q: Is chapel a useful improvement? assignment.
MOTO-Q NOTES
Q: A constructed a building for 5M and
SC- The lease agreement leased it to B. B will be the lessee for
constitutes as an assignment only if 10 years for 100,000/month. After
the lessee absolutely transferred all completion of the construction, B will
his rights to 3rd persons, dissociating become the owner thereof. On the 5 th
rd
himself in the lease. The 3 person year, the entire building was burned. A
becomes the new lessee. constructed another building. Before
»there should be absolute transfer completion, B gave notice to A that he
will continue the lease. Can A refuse B
CASE: Frezel vs. Mariano as lessee?
There was a construction contract A: Yes. With the original building

(labor and materials). Frezel as the destroyed by a fortuitous event, the
supplier. A took over the construction lease contract is extinguished, since
of the building. C demanded payment there is total destruction.
from A. Is C, the owner, liable for the
unpaid amount? The claims of C are as  Death of the lessee does not
follows: extinguish the lease. Except is
There’s no privity between A and C. B there is a stipulation to the
is an agent. contrary.
SC- There’s no agency because A’s BAR EXAM QUESTION:

extent of control over B goes only into
the result and not the manner, Q: A entered into a lease contract with
therefore, it is to be considered as a B for 3 years. There was a stipulation
contract for a piece of work. in the contract that B will have the
option to buy the parcel of land leased
C can recover from A by him. However, B failed to exercise
the option as stipulated in the
SC- Only to the extent of the contract. B still continued paying the
unpaid amount by B to C. rentals and A continues to receive the
same. B, now, exercised the option. A
refused to sell the land to B. Can A be
Might be asked in the finals! compelled to sell the land?
In 1952, A lease to B a house, in A: There was a renewal of the lease

1967 B transferred his rights to C. known as IMPLIED NEW LEASE.
Will the transfer be valid and
binding against A, the lessor? Q: Does B have the right to exercise
A: It depends on the nature of the the option?
transfer if it was assignment or
sublease. A: No. Only the terms and conditions
SC: If the transfer of rights is GERMANE to the Lease contract is
absolute, where lessee cease to be deemed renewed. Otherwise, it is not
lessee, then the transfer is not renewed. If payment be on an annual
bindind on the lessor however if basis in the original contract, the same
lessee reserves reversionary interest period and manner of payment will
no matter how small, it would be also be adopted in the renewed
binding on the lessor contract. NOTE ARTICLE 1670.
Art. 1670. If at the end of the contract

 Termination of Lease the lessee should continue enjoying
the thing leased for fifteen days with
the acquiescence of the lessor, and
unless a notice to the contrary by
MOTO-Q NOTES
either party has previously been
given, it is understood that there is an
implied new lease, not for the period AGENCY vs
of the original contract, but for the
time established in Articles 1682 and
GUARDIANSHIP
Person represented must be Person represented is
1687. The other terms of the original capacitated incapacitated
contract shall be revived. (1566a)
Pvt/101707
V. AGENCY AGENCY vs PARTNERSHIP
Termination may be by the will It has a separate juridical
Q: baptismal proxy, agency? of either party entity
A: No. political and social relations are  Principal- revocation
 Agent- withdrawal
not included
»Agency refers only to juridical act
KINDS of AGECY:
- BOUND himself to another
Actual
>objective : execution of juridical
Apparent/Ostensible
act
Agency by estoppel
extinguish legal relationship such
as payment
I. ACTUAL AGENCY
- there must be consent
Mack vs. Cams (?)
- “ agency “ includes instrumentality
as government instrumentality. X is clothed with full authority to
manage restaurant of Y (owner). X
CASE:Quiroga V. Parsons purchased some items from Z. X was
indebted to Z. Y’s defense is that X
– exclusive right to sell is an exclusive was not authorized to purchase.
agency. However, X led other people to believe
that X has authority such as signing as
agent.
Nature of AGENCY vs. SALE
Consensual SC-Estoppel lies. Y is liable.
Nominal
May be Gratuitous Essentially Onerous
*burden: principal II. APPARENT/OSTENSIBLE
*presumption: for
compensation
Preparatory contract
-a means by which other
Rallos vs. Yangco
contracts may enter into.
A sent a letter to B authorizing C to
Based on trust and confidence buy abaca/copra. B transacted with C.
There’s no transfer of Ownership passes upon Consequently, from Jan. 2, the
ownership but only transfer of delivery.
possession. purchases remained unpaid. B
AGENCY vs. CONTRACT FOR A complained to A. A contended that
PIECE OF WORK before Jan. 2 he revoked the
Extent of control by the
Principal over the agent is with
Extent of control by the
Principal over the agent is with
authorization from C. Therefore,
the Result and Manner. the Result only. transactions hereafter are not binding
upon A.
SC-Invoked Article 1873. Revocation is
immaterial. C’s transaction has full
force and effect in exercising authority
AGENCY vs. NEGOTIORUM until rescission. If C is specially
GESTIO informed of the revocation of the
By agreement By law
authorization, B shall also be informed
in the same manner as C.
MOTO-Q NOTES
- JBL REYES: If B had actual However, if the agent accepted a
knowledge of the revocation, he special power of attorney and he
cannot hold A liable as it would did nothing, it depends upon the
amount to Bad Faith. kind of business as to consider it as
an implied agency, with the agent
giving his consent. If the principal
Q: What if A actually caused a notice
and agent are engaged in the same
of publication?
business, there is an implied
A: Can still be liable pursuant to Article
agency whereby the agent is
1873
deemed to have given his consent.
Q: Mere silence of agent deem
Art. 1873. If a person specially
accepted agency?
informs another or states by public
A: not necessarily
advertisement that he has given a
»If parties are in the same place, no
power of attorney to a third person,
the latter thereby becomes a duly problem, stipulation on the SPA
authorized agent, in the former case governs
with respect to the person who Q: if not in the same place such as
received the special information, and when using the telegram, if did not
in the latter case with regard to any reply deem accepted?
person. A: It depends on the nature of the
business, if the task is also within the
The power shall continue to be in full nature of the agency, yes.
force until the notice is rescinded in Q: A authorized B to sell land of A in
the same manner in which it was Baguio, did not do anything, Is B an
given. (n) agent?
A: No.
Q: How about if A gave the letter to B
and B accepted?
Classifications of Actual Agency
A: There is an implied agency
 as to manner of creation
 As to consideration or
 express – consent of both
compensation
parties given
 Onerous- presumption is for
 implied
consideration.
 Gratuitous- liability is
CASE: Dela Pena vs. Hidalgo-
mitigated in the part of the
agent.
After the authorization was executed,
the agent appointed a
BAR EXAM QUESTION:
substitute. The principal did
Contract of Agency as to scope of
nothing to repudiate such
authority
appointment.
1. Acts of administration
SC-There is an Implied agency by the
2. Acts of strict dominion
principal’s silence or
inaction. The principal is
Q: In the sale of Rolex, the agent has
deemed to have accepted
no SPA, with the act bind the
the new agency.
principal?
Agent A: No. Any act of strict dominion

requires an SPA.
- When the agent is authorized to
sell a parcel of land and he just As to form:
stared at the ceiling, he is NOT 1. Oral
deemed to have given his consent.
MOTO-Q NOTES
2.Writing Q: The deceased principal authorized
1. Oral the agent to dispose of his land. The
2.Writing heirs of the principal, however, sold
2.Writing the 12 hectares to B. The agent sold
the same land to C. Who has the
Q: Why is the form of agency peculiar? better right?
A: Because it involves two contracts,
the agency itself and the contract to A: It depends on the authority of the
be contracted by the agent. agent. If it is not in writing, the
contract of sale is void. Thus, C has a
better right.
Q: If it is in writing, the authority of

the agent is extinguished. B has a
Q: Principal was in the hospital and better right?
executed a GPA with the following:
- contact of lease of a parcel of A: Not necessarily. If the agent has no
land with a term knowledge of the death of the principal
- contract of lease with no
and C is in good faith, C being the 1 st
agreement as to term and
payment registrant, therefore, C has a better
- contract of sale for a three right.
times higher than the land
A: Discuss the status: Depends on the »Notarization or recording in a public
power given, GPA was only given instrument is not a requirement.
» unenforceable if not in a public
instrument
CASE:Jimenez-
» valid and binding if merely acts of
administration
» sale is void under 1874 ; SELLING IS X mailed a letter to Y giving him the
AN ACT OF STRICT DOMINION authority to sell a parcel of land. So Y
sold the same to a third person. The
letter is sufficient to bind X.
» In a SPA, the only requirement must
Q : A is represented by B. There is a be in writing , need not be notarized
lease for 5 years and such lease was
not put into writing. Essential Elements
A: First, determine the object. If it is 1. consent of the parties

personal, SPA is not required. If it is 2. object
an immovable, it depends on B’s 3. act within the scope
capacity in the contract of Lease. 4. act in representation of principal
» 3 and 4 are not necessary to the
Q: 3rd person is the lessee and the validity of the contract but these
principal is the lessor, SPA is needed. are the obligations of the agent.
However, if the principal is the lessee, Absence of these, Agency remains
authority of A must be in writing in valid.
order for it to bind B? 3 and 4 are the TWIN REQTS.
How to know whether it is within or in
A: Not necessarily. For lease to be in excess of authority?
writing or not, the provisions on
Statute of Frauds must find  Consider the SPA.
application.
CASE: Linan
BAR EXAMINATION QUESTION
MOTO-Q NOTES
- Whether or not the agent is 1872 “transmit”
authorized to sell a parcel of land. 1900
1902 “presentation”
Justice Perfecto: under the SPA, he
has no authority. Good faith is not
within the scope. Art. 1871. Between persons who are
present, the acceptance of the agency
Rely on the provisions of law- the may also be implied if the principal
authority to manage the restaurant delivers his power of attorney to the
includes the authority to buy the agent and the latter receives it without
equipments. any objection. (n)
Art. 1882. The limits of the agent's Art. 1872. Between persons who are
authority shall not be considered absent, the acceptance of the agency
exceeded should it have been cannot be implied from the silence of
performed in a manner more the agent, except:
advantageous to the principal than
that specified by him. (1715) (1) When the principal
transmits his power of attorney
to the agent, who receives it
Article 1882- Considered within without any objection;
if it is to the advantage of
the Principal. (2) When the principal entrusts to him
by letter or telegram a power of
CASE:Insular Drug- attorney with respect to the business
in which he is habitually engaged as
The agent’s authority to collect money an agent, and he did not reply to the
does not include encashing or letter or telegram. (n)
endorsing of check.
Art. 1900. So far as third persons are
Municipality of Ilo-ilo vs. Evangelista
concerned, an act is deemed to have
been performed within the scope of
»The authority to hire a lawyer the agent's authority, if such act is
includes authority to pay said lawyer. within the terms of the power of
attorney, as written, even if the agent
»If the agent’s authority to has in fact exceeded the limits of his
borrow money and mortgage, authority according to an
he cannot use it to satisfy his understanding between the principal
own debts. and the agent. (n)
Q: A authorized B to borrow money Art. 1902. A third person with whom

from any bank, agent borrowed money the agent wishes to contract on behalf
in his name to buy land, defaulted, can of the principal may require the
bank go after the principal presentation of the power of attorney,
A: No. Third person may have or the instructions as regards the
recourse against principal except if it agency. Private or secret orders and
was property of principal which was instructions of the principal do not
involve prejudice third persons who have
relied upon the power of attorney or
instructions shown them. (n)
Q: SPA may be oral?
A: NO! It is a written authorization as
Rights and Obligations of the
the following provision provides:
Agent
1871 “delivers”
MOTO-Q NOTES
 His main obligation is to CARRY The agent is not the insurer of the
OUT THE AGENCY. principal’s success in business.
 If the principal died…
GR: The agency is GR: The agent cannot sell the goods
extinguished. on credit.
EXC: If it will endanger the EXC: Without consent of the
Agency, the latter shall be principal, the sale is not void but the
continued principal holds him liable as sale in
cash basis.
Ex: X sold the car to Y with the
breaks in a defective condition Q: When can agent be held liable?
and without the principal’s A: When he bound himself.
knowledge, Y bought the car. Exception:
Therefore, the principal 1. When the principal ratified
incurred loss/damage. 2. When 3rd person informed
(Art. 1888- An agent shall not that agent is acting beyond the
carry out an agency if its scope of his authority
execution would manifestly 3. When agent informed 3rd
result in loss or damage to the person such as when he
principal.) promise to secure ratification
and was not able to
Art. 1888. An agent shall not carry out Case Law

an agency if its execution would Q: P authorized A too sell his house
manifestly result in loss or damage to and A introduced prospective buyer.
the principal. (n) The buyer gave him 1K. P terminated
the authority of the agent and the
agent went to RD and found out that a
Liability of Agents to 3rd persons: sale was consummated. A demanded
Personally bound himself commission, can the case prosper?
Acted negligently
Acted outside the scope of his SC: No. Failure of agent to deliver to
authority principal even not owing to him the 1k
 Even if the agent acted given by the buyer constitute a
outside the scope of his forfeiture of agent’s right to
authority, the agent is NOT commission
liable if:
The principal ratified the Case Law:
agent’s acts Q: Agent to collect P800 he was able
The 3rd person was to collect only P500 and deducted 20%
informed by the agent as commission.
that he acted outside SC: The act of the agent constitutes
The 3rd person was estafa.
aware thereof
BAR EXAM QUESTION:
CASE:Domingo vs. Domingo-
Q: A authorized B to sell property in
Whatever commission is received by Cebu, B appointed a subagent. Can B
the agent as a consequence of his appoint a subagent?
agency, albeit the absence of UPLAW Center:
knowledge of the principal of the
agreement between the 3rd person and A: Yes, under 1892 if it was not
the agent, the latter shall give to the prohibited.
principal whatever he received. » Sir said with due respect to the UP
law Center, the answer is erroneous.
MOTO-Q NOTES
Subagent – does not take the
relationship of B as agent; assistant - For a fortuitous event to be a valid
agent defense, there must be no
concurrent event.
Art. 1892. The agent may appoint a
substitute if the principal has not - However, if it happened today,
prohibited him from doing so; but he Agent is considered to be
shall be responsible for the acts of the negligent. If it happened in the
substitute: 60’s, the agent is not liable.
(1) When he was not given the
power to appoint one; - The SC held that the agent is liable
because there’s negligence.
(2) When he was given such
power, but without designating  On Death
the person, and the person Effect of death of the agent
appointed was notoriously  It will absolutely
incompetent or insolvent. extinguish the agency. If
the agency is for the
All acts of the substitute appointed benefit of a 3rd person,
against the prohibition of the principal the agency will continue
shall be void. (1721) to be in full force and
effect despite the death
Substitute – “kapalit niya” Article 1892 of the principal.
shall apply  Effect of death of the
» if principal was informed of the principal
substitute Article 1892 shall not apply If without knowledge
and the agent is in good
Modes of Extinguishment faith, the agency is
(EDWARD) extinguished but the act
of registration in good
faith even after the
E- expiration of the period death of the principal is
valid as the law says so.
D- death
W- withdrawal
On Revocation
A- accomplishment
 May be made anytime; at
R- revocation
will
D- dissolution of entity
 Q: If there’s a period, will
» not exclusive, Article 1231 also the revocation before the
applies stipulated period hold the
 Other modes may apply to agency. principal liable?
BAR EXAM QUESTION A: NO.
Q: X authorized Y to sell a pendant CASE:Barreto

with diamond. The pendant was
robbed. X sued Y. Y’s defense is Agency is based on trust and
robbery. confidence therefore, the principal can
revoke anytime. P can only be held
A: Austria Case liable for damages if he acted in bad
faith.
- Robbery is a fortuitous event.
CASE: Collongco
- The perpetrators need not be
convicted of robbery.
MOTO-Q NOTES
A authorized B to sell the land for Q: Can two corporations organize a general
100M. B did not remit the 100M. What partnership, can a corporation enter into a
was agreed was that B will be the partnership?
agent of A in subdividing the land and A: No! Corporation and partnership may
constituting the house. The proceeds organize a joint venture but they cannot
will go to A as payment. The authority enter into partnership contract
granted was for 10 yrs. On the 5 yr., th » Sir said that Corporation can enter into a
contract of partnership if there was an
A revoked the authority given to B.
express grant of power in its articles of
Was the revocation valid?
incorporation. (Tecson vs. Bolaños)
Q: What is the effect of illegality of contract?
SC: NO. The agency is was coupled Can a partner recover what he had given if
with interest and as such, it cannot be cause was illegal?
validly revoked after the interest A: Yes, because it will result in unjust
ceases; means of fulfilling interest enrichment.
must be different from the Q; How about if both was in pari delicto?
commissioner given; very interest that A: If there was repudiation before there was
an agent is claiming should be stated any damage, the court is in its discretion to
at the SPA without prejudice to his allow recovery
liability if revocation was done in bad
faith
BAR QUESTION: A and B put up a car
Pvt/101707 repair shop. A contributed money while B
contributed his services. A likewise put up a
coffee shop on the left side of the car repair
VI. PARTNERSHIP shop. B likewise engaged in another
business of his own. Are they legally allowed
to venture into such businesses?
BAR EXAM:
A used all his savings to put up a
ANSWER: A under the facts can engage in
restaurant, B gave A 4k as financial
such services since he is only a capitalist
assistance in exchange of 20% profits, 22
partner. As to B, since he is an industrial
years after B filed action demanding profits.
partner, he is prohibited from engaging in
A denied and invoked prescription.
any kind of business without the consent of
A: UP Law Center – Contract of Partneship
the other partners.
exists because they contributed to a
common fund plus there was a stipulation as
to profit. » Partnership may be constituted in any
»Sir said, no contract of partnership exists. other form. – Article 1172
There was no agreement to contribute to a
common fund, only financial assistance. Q: How about 3rd person who contracted
with Partnership with unlawful object, can
Q: Partnership vs. Co-ownership recover?
A: Contract of partnership is created by A: Yes, as long as no knowledge of the
mere agreement while co-ownership is illegality
created by operation of law.
 When one or more parties
Essential Element: contribute an immoveable
» object is to engage in a lawful activity
 General Partnership and Limited If there is no inventory – VOID;
Partnership (relevant only in Limited If there is an inventory, but not put in
Partnership) writing
Q: Can the spouses enter into a limited
partnership and engage in real estate  If such partnership is not put into
business public instrument -> it will not affect
A: Yes, prohibition is only on universal the validity of the partnership
partnership agreement, though it may affect the
MOTO-Q NOTES
greater efficacy or the enforceability b) both debts are due and
of the contract. demandable
c) receipt was given in the
Case: Hernandez v. name of the
Angeles partnership
d) payment should be
» Form is not necessary for the validity, applied to the most
maybe necessary for enforceability onerous
»ENTITY THEORY/LEGAL PERSON LIMITED PARTNER IS LIABLE WHEN:
THEORY means that a partnership has a a) he participated in the
juridical personality separate and distinct management
from the partners b) if surname appears in the
partnership name except;
 A general partner can be an a) already existing surname
industrial partner. b) if also the surname of a
 Can a partner be both capitalist and general partnership
industrial partner at the same time? c) if at the same time general
YES or limited partner
 Can a limited partner be both an
industrial and a capitalist partner at » Article 1892 subagent is not equivalent to
the same time? NO substitute
CLASSIFICATION OF PARTNERSHIP: » in having a substitute, must be with the
I. As to Object: knowledge of the principal. (De la Peña vs.
a) present property Hidalgo)
b) profits
II. a) General » all general partners
b) Limited » one or more general Proportional Application of Debts:
and one or more limited partner; a
limited  One obtaining is a managing
partner (has no right to partake in the partner;
management  Both debts are due and
Commercial Partnership » governed by demandable;
Code of Commerce  If the partner receipted the
III. As to term: amount in the name of the
a) maybe for a particular partnership
undertaking (Ortega vs. CA)  estoppel
 agency
Admission of a new partner  If the debt is more onerous
»If given a question concerning
the liability of a newly-admitted Property Rights of a Partner
partner for a partnership
obligation, ask, “when was the  see the 3 major
partnership obligation incurred? classification of the
Was it incurred PRIOR TO / property rights of
AFTER the new partner’s partners
admission to the partnership?  plus right to formal
accounting
Q: ABC partnership admitted D as new  plus the right to the
partner. The ABC partnership incurred the access of partnership
following liabilities. ABC- 100; X- 30K, A- book
50k. What is the liability of D as a new
partner? If A is a managing partner.  Rights in specific
A: GR: up to capital contribution only unless partnership property = a
he bound himself to be solidarily liable partner is co-owner with his
NOTA BENE: application of proportionate partners of specific
sharing: partnership property; see
a) if A is a general partner 1811 = co-ownership sui
generis.
MOTO-Q NOTES
 Cf. co-ownership in
partnership law and co-
ownership in property law.
In the former, a co-owner BAR QUESTION: W (industrial partner), X
may sell his share even (industrial partner), Y (P 50 K) and Z (P 20
without the knowledge and K) entered into a partnership agreement.
consent of the other co- W and X will act as managing partners.
owners, whereas, in Thereafter, two persons were appointed:.
partnership law, such would W and X appointed the SECRETARY, one
not be allowed. of the two persons appointed. Y and Z
 Interest in partnership = however opposed such appointment. The
pertains to the share in ACCOUNTANT, the other person named,
profits and surplus. was appointed by W and Z, whose
appointment was however opposed by X
and Y. Whose appointment will bind the
Sharing of the Partners in the Profits and Partnership?
in the Losses
ANSWER: The secretary’s appointment will
 if there is a STIPULATION (except bind the partnership. As to the accountant, it
when there is a stipulation where should be resolved as to the partnership
one or more of the parties shall be having the controlling interest, such
excluded from the profits, the controlling interest being dependent on the
stipulation shall be VOID) aggregate capital contributions of those who
 if there is NO STIPULATION , appointed vis-à-vis those who opposed.
sharing shall be in proportion to the
capital contributions.
 What about the Industrial Partner?
=> give him the value of his service;
the balance of which should be  MANAGEMENT ARRANGEMENTS
distributes to the capitalist partners  One managing partner
in proportion to their capital  Solidary management
contributions.  Joint Management
 Partner as Agent
RIGHTS/ OBLIGATIONS OF PARTNERS

BAR QUESTION: A, B, and C entered into a
 To make good his promise to
partnership. Agreed to Php360 share profits
contribute MONEY PROPERTY
equally. C assigned his interest in the
INDUSTRY
partnership to X. Therefore, X demanded
 If money = equally, unless there is a
share in the profits and management. Are
stipulation
these demands of X legally justifiable?
 If in default, he is a debtor of the
partnership plus interest plus
ANSWER: As to the management, an damages (i= 12%)
assignee cannot participate in the  If property = ask what was actually
management, not even right to access… As contributed. Was it the property itself
to the share in the profits, an assignee has or the use of such property. If
the right to receive the profits the assignor property itself => transfer ownership
would have received. As to interest, a plus obligation to warrant in case of
partner may assign however limited only to eviction. If thing was lost before
the receipt of such amount and nothing delivery, the partner bears the loss,
more. Therefore, to receive PHp 120k RES PERIT DOMINO. See
(360/3) Exceptions (1) FUNGIBLE (2) FOR
SALE (3) WITH APPRAISAL.
 Partnership bears the loss if
possession is with partnership
already.
MOTO-Q NOTES
 If services, SPECIFIC LIABILITY AS TO:
PERFORMANCE WOULD NOT Contractual Obiligation = joint
LIE. Remedy is to demand the value Joint and solidarily 1822 & 1823 – tortious/
of service plus damages incurred by wrongful acts of partners
partnership
PROPERTY RIGHTS: Q: Bought set of SCRA in the account of the
1) specific partnership property » a partners partnership, can partnership be liable?
is a co-owner as to his co-parners not A: It depends if the act is for the apparent
carrying of the usual business of
partnership;l co-ownership is sui generis partnership.
2) interest Q: Can partnership be liable even if not
3) participate related to the business?
A: Yes, if such party was not authorized
Q: Can a creditor of a co-owner levy such
interest of a co-owner in a partnership land DISSOLUTION:
A: Yes, but he cannot do so if indebted to » change in relation where partner ceases to
partnership be associated in carrying on the business of
partnership
Q: W and X are managing partners, Y-50k, »marriage of partners not a ground
Z-20k. W and X were appointed as secretary
by 2 persons, opposed to by Y and Z; Entry of a new Partner
accountant appointed by W and Z but
opposed by X and Y  General Rule: It will dissolve
A: In the 1st case, YZ has no right to oppose. the partnership
In the second case, controlling partners shall  Exceptions:
prevail based on capital contribution. a) act is necessary to wing
Appointment shall not be valid having up partnership affairs
opposed by Y who has controlling interest. b)
This case is called subsidiary management CAUSES OF DISSOLUTION
1) extrajudicial
a) voluntary » No. 1 & 2 of Article
FIDUCIARY OBLIGATIONS; Honesty and 1830
Good faith starts during the negotiation b) involuntary » No. 3-7
stage. Obligation would continue not only up 2) judicial Article 1831
to dissolution but also until termination. Q: A B C assigned whole interest to X
against the will of A & B and decided to
REMEDIES OF A NON-DEFAULTING dissolve the partnership, X filed for a
PARTNER dissolution, which dissolution will be valid?
A: That made by A & B is valid. X was mere
 Specific performance assignee, no legal interest to file dissolution
 Dissolution for he is not by law a partner.
 RESCISSION IS NOT A REMEDY
DEATH OF A PARTNER:
AS TO DISTRIBUTION: » if general, partnership is not extinguished
»As to stipulation, if it excludes a partner, if biz nis continued or not stated due to
stipulation is void not the partnership. unanimous consent.
Share in the Losses:
1. determine agreement EFFECT of DISSOLUTION:
Q: if one partner is excluded valid? » termination of authority of partners.
A: depends: if capitalist, stipulation is void; if
industrial partner was excluded – valid
among partners but void as to third persons.
–Article 1816
2. if no stipulation to losses, use stipulation
on the sharing of profits
3. no stipulation at all = share in their capital
contribution
MOTO-Q NOTES
credit
 not all credit transactions
are contracts (judicial
LIABILITY OF NOT GIVEN POWER TO APPOINT
SUBSTITUTE deposits, legal deposits)
All acts of the LIABLE if NOT LIABLE if the

substitute substitute acted substitute acted
appointed outside the scope within the scope of Loan
against the
prohibition of the
of authority or
there is bad faith
authorization
representation of
 consider first the kind
principal shall be
void
or negligence on
the part of the
the principal and
acted with due
whether mutuum or
substitute diligence and in commodatum
good faith
 mutuum or simple loan-
» the agent is
an insurer of
not
the the agreement between
success of
business of
the
the
the parties to constitute
principal a loan is already a
binding agreement,
however, unless it is
delivered there is no
perfected contract of
EFFECTS OF APPOINMENT OF loan yet.
SUBSTITUTE/LIABILITY IN DAMAGE TO  If the contract of loan is
PRINCIPAL
not yet perfected,
GIVEN POWER TO APPOINT cannot be revoked
 In mutuum, if without
express stipulation,
contract is compensatory
Designated Not designated  case: Rep vs Bagtas
 case: Soccoro- What is

Not liable
unless he knew
Agent shall be responsible
for the acts of the substitute
Not liable as
agent shall
the effect of a declaration that the
that the if substitute is notoriously NOT be interest is unconscionable? Still
designated incompetent or insolvent responsible for
person is the acts of the liable to pay interest but at the
notoriously substitute if the
incompetent or substitute is legal rate
already
insolvent
notoriously
incompetent or
 in a contract of
insolvent commodatum, the bailor need not
be the owner because there is no
transfer of ownership
 in mutuum, lender has
to be the owner
 precarium, a special
form of commodatum wherein the
VII. CREDIT bailor may demand the thing at will
TRANSACTIONS (1947)
 RA 8183 all monetary
obligations shall be settled in
 not the same as bailment Philippine currency which is the
 not all credit transactions legal tender. However, parties may
are bailment agree that the obligation be settled
 in bailment, there has to be in other currencies
a delivery (deposit, loan,  thing pledged must be
mutuum, commodatum) delivered to the creditor unlike in
 in some credit transactions, chattel mortgage and real estate
delivery is not necessary mortgage
(guaranty, mortgage)
 sale may be a credit
transaction of the sale is on Deposit
MOTO-Q NOTES
 essentially gratuitous,
unless stipulated otherwise Pledge/ Mortgage
 irregular deposits- a
depositary has the right to use the  free disposition
thing means that the mortgagor should
 in deposit, object cannot be capacitated
refer to future thing because it  pledge may be
requires delivery perfected even if delivery is merely
constructive
 characteristics  liability of the pledgor
or mortgagor is only up to the value
a) principal of the pledged/ mortgaged
b) real property. Nawala na sa kanya yung
c) gratuitous or onerous property, kaya tama na yun unless
expressly stipulated otherwise
 kinds of deposit  creditor cannot
a) judicial recover if property is
b) extra-judicial covered by Recto Law
 no right of
i. Conventional / voluntary redemption in chattel
ii. Necessary mortgage and pledge
iii. Legal
TABLE 1
PLEDGE All are Real Article Unilateral

Guaranty accessory 1316, Article
contracts 2093)
 covered by the A pledge or

mortgage But a promise
Statute of Frauds cannot exist to constitute a
without a pledge gives
valid rise to a
1. Personal- personal commitment obligation personal action
between the
to answer for the debt, default of parties; public
interest.
another unilateral
2. Real – guarantor delivers CHATTEL Nevertheless, Solemn or
MORTGAGE a pledgor or Formal (De
collateral mortgagor leon)
a. pledge maybe
constituted to
CM Registration
is indepensable.
b. chattel mortgage guarantee the If not recorded,
performance binding on the
c. real estate mortgage of a voidable/ parties.
d. antichresis unenforceable
contract.
Promise to
constitute
It may mortgage.
guarantee a Affidavit of GF
natural to binf 3rd
 continuing guaranty – obligation parties. If not
executed,
Art. 2053 mortgage may
still bind third
 the only parties in persons if the
guaranty are the creditor and the latter had
knowledge of
debtor the promise to
constitute
 sub guarantor- mortgage
benefit of excussion REAL ESTATE
MORTGAGE
Solemn. (Vitug)
Must be
 co-guarantor- benefit » maybe recorded, if not
foreclosed binding to
of division even if only parties.
 guarantor- insures written in a
private
promise»
personal/action
the solvency of the debtor instrument
 surety- insures the

solvency of the debt
MOTO-Q NOTES
BILATERAL
ANTICHRESIS A conditional Solemn.
obligation
may also be Amount of
secured. principal and
interest must
be in writing, if
not void.
TABLE 2
KINDS RIGHT TO USE RIGHT TO INDIVISIBILITY

APPROPRIATE
(PACTUM
COMMISORIUM)
PLEDGE NONE, unless Creditor cannot Pledgor or

1. authorized appropriate. Any Mortgagor is
2. necessary for stipulation to indivisible,
the the contrary is eventhough debt
preservation of null and void. may be divided
the thing among the
However, in successors-in-
pledge, if at the interest of the
first auction the debtor/ creditor.
CHATTEL Not applicable unless thing sold, a 2nd
MORTGAGE stipulated one with the EXCEPT:
same formalities Where several
shall be held, things are given
but there is no in a pledge or
sale either. mortgage, each
Creditor may one of them
appropriate but guarantees only
REAL ESTATE Not applicable unless
the shall acquit a determinate
MORTGAGE stipulated
the entire claim. portion of the
credit.
Encashment of a
deposit Right of
certificate given Extinguishment.
as security.
» not postdated Indivisibility is
check (Chua vs. not affected by
CA, Sept. 26, the fact that the
1989) debtors are not
ANTICHRESIS Only right to receive solidarily liable.
fruits unless
stipulated.
MOTO-Q NOTES
TABLE 3: RIGHTS OF MORTGAGOR
KINDS RIGHT OF SALE/ RIGHT TO RIGHT TO SPECIFIC PERFORMANCE
FORECLOSURE BID RECOVER
DEFICIENCY
Article 2112 The YES. VOLUNTARY: None YES, but pledged deemed abandoned.
PLEDGE creditor to Provided even if there’s
whom the credit he is the stipulation.
has not been not the Article 2112, Article
satisfied in due only 2115
time pledged bidder.
may proceed Article LEGAL: YES
before a NP. X x 2113
x
1. Judicial YES. Except on YES, but chattel mortgage deemed abandoned.
CHATTEL Foreclosure installment.
MORTGAGE Sec.13 Article
1508
2. Extrajudicial
Foreclosure Sec.
14 Article 1508
REAL ESTATE 1. Judicial (Rule YES. Rules of Court YES, but security deemed abandoned.
MORTGAGE 68 of the Rules on Foreclosure.
of Court)
2. Extrajudicial
Foreclosure Act.
3135
ANTICHRESIS
TABLE 4: RIGHTS OF PLEDGOR
KINDS RIGHT TO ALIENATE RIGHT TO RIGHT TO RECOVER EXCESS EQUITY OF REDEMPTION
BID
ARTICLE 2097 YES! YES VOLUNTARY: NONE:

PLEDGE ARTICLE 2108 ARTICLE ARTICLE 2115 NONE
2113 LEGAL: YES, ARTICLE 2121
Equity of redemption within 90

CHATTEL Sale valid and buyer may YES. Act 1528 days from order of foreclosure.
MORTGAGE acquire ownership but if After foreclosure no right of
not consented to by redemption.
mortgagee, mortgagor is Equity of redemption within 90
criminally liable. (Art. 319 days from foreclosure. After
RPC) foreclosure no right of
redemption. Except foreclosure
REAL ESTATE Article 2130 A stipulation YES (Rules of Court on of real property by banking
MORTGAGE forbidding the owner from Foreclosures) institution and in extrajudicial
alienating the immovable foreclosure of real property—
mortgaged shall be void. full amount of purchase price
within 1 year
YES. Article 2137, Rules on
ANTICHRESIS Same as above, Article Foreclosures
2130.
VII. TORTS Q: Driver in a acquitted in a criminal case,
heirs filed civil case for quasi-delict, may
» there is no need for a pre-existing contract action prosper?
Q: Why file for action for quasi-delict? A: Yes, in quasi delict mere preponderance
A: Claim for moral damages which has of evi is enough
many grounds
II. DAMAGES
Essential Elements:
I. Act or Omission there being » any hurt or harm inflicted
fault/negligence Q: What will be the degree of diligence
» negligent act, even acts punished by law required?
Dulay vs. CA A: That of a good father of a family or that
» Quasi-delict is not limited to negligent acts, which the law provides
even a malicious or intentional act may be Extraordinary » common carrier, doctors,
the basis of a quasi delict. banks
Q: Who has the burden of proof?
Article 2177 A: plaintiff
» acts punished by law maybe the basis, the
only exception is that there be no double III. CAUSAL CONNECTION BETWEEN ACT
recovery OR OMISSION AND DAMAGE
Q: May an action for quasi-delict subsist with

a criminal case?
A: Yes, they are distinct from each other - end-
Share niyo to!
To God be the glory

MOTO-Q NOTES
Atty. Crisostomo Uribe notes
Civil Law Review 2
74
Bogs Quitain; Tere Morales; Paulette Tongcua; Tino Occiano; Budz Occiano
MOTO-Q NOTES
Atty. Crisostomo Uribe notes
Civil Law Review 2
75
Bogs Quitain; Tere Morales; Paulette Tongcua; Tino Occiano; Budz Occiano

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MOTO-Q NOTES

Morales, Occiano, Tongcua, Occiano, Quitain

3 Juridical tie – vinculum juris

Art. 2175. Any person who is A: No. Acts or omissions punishable by

A: Quasi contract; solutio indebiti

Q: A had a fishpond. Lawless events

A: Negotiorum gestio Pineda would say that torts is not

A: plaintiff was negligent; defendant July 10 and 28 -make up class

Q: Was it the negligence of Cangco? There was an obligation on the part of

- there were 5 defendants. 3 were KINDS OF OBLIGATIONS AS TO

Generic – depends on the purpose and

Q: A obliged himself to B to deliver a Q: What if he has no assets?

Q: A borrowed from B P1M, payable at

The indemnity shall be fixed taking as

(3) If all the things are lost * choice must be communicated.

The same rules shall be applied to 2. if loss happened before

The loss or deterioration of the thing 1. Choice of debtor; fault of creditor.

Art. 2194. The responsibility of two or

Art. 1823. The partnership is bound to C Y

X may demand 120 from any of them.

No agreement – debtors are solidarily Q: If A was compelled to pay X, how

If there is an agreement: X may A: From B=P60

A: No. the payment of one debtor A: it depends if joint or solidary.

A: No. The demand of one creditor NEXT MEETING TUESDAY!

Art. 1207. The concurrence of two or A: UP Law Center: It is not tenable.

DISJUNCTIVE The supreme court ruled that the 4%

Illustration: A construction of a 2. Causal fraud – dolo causante in

“Mora”; non-fulfillment with respect to

(3) When demand would be In obligation to give, Article 1262

Reciprocal obligations: Art. 1165. When what is to be

- if both in delay, no right of If the obligor delays, or has promised

BAR EXAM QUESTION: (2) Those agreed upon in

REMEDIES FOR BREACH: (4) Those which refer to things

This is understood to be without - there can be unilateral decision

UFC v. CA (33 SCRA 1) (4) A right to rescind the sale

SC: rescission is under 1191 not 1381. B. Judicial Remedies:

Q: If obligation becomes impossible, a.) Principal remedies – specific

Q: In obligation to do, is substitute

Other extrajudicial remedies: A: Art. 1167. If a person obliged to do

(1) A lien on the goods or right

MODES OF EXTINGUISHMENT – This is understood to be without

(3) By the condonation or A: No! In Saura v. DBP, there was a

- will of one of the parties in - Should be called payor, not

Q: Is happening of a fortuitous event a Eg. A is indebted to B. X is a 3 rd

Q: A is indebted to B. However, B dies Q: Can creditor be compelled to accept

Except: The delivery of promissory notes

Q: How much can he recover? A: No.

A: Amount or value delivered, less Q: When is payment thru check

A: No. As decided in the Philippine The delivery

d.)date, time, place

Determinate – place where obligation

Generic – domicile of the debtor.

SPECIAL FORMS OF PAYMENT

1. Payment by Cession and decion

Art. 1255. The debtor may cede or

Art. 1245. Dation

Note: provision for application of

3. that which is most onerous.

A: 1. based on stipulation. 2. without

4. Tender of payment and Q: There was a sale with right to

Art. 1256. If the creditor to whom A: Yes.

1264 – depends on the intention of the A: Maybe, if payment of interest is

Art. 1264. The courts shall determine Q: If employment of interest is found