Académique Documents
Professionnel Documents
Culture Documents
is no
Atty. Crisostomo
compensation
Uribe
for the transfer of ownership to the
SALES
Articles / Laws to Remember: 1458, 1467, 1477
transfer of ownership, 1505, 559 who can transfer
xxx, 1504, 1544, 1484 Recto Law, R.A. 6552,
1602, 1606, 1620, 1623, Redemption xxx
Q: A obliged himself to deliver a certain thing
to B. Upon delivery, B would pay a sum of
money to A. Is that a contract of sale?
A: Not necessarily. Even if there is an obligation to
deliver, if there is no obligation to transfer
ownership, it will not be a contract of sale. It may
be a contact of lease.
other party.
5. Commutative (2010) meaning there is
equivalency in the value of the prestation to be
performed by both parties. Normally, the thing sold
would be equal to the price paid by the other party
(buyer).
Exception: a contract of sale which is an aleatory
contract like sale of hope. In sale of hope, the
obligation of 1 party will arise upon the happening
of a certain event or condition.
Example Sale of Hope: Sale of a lotto ticket, PCSO
will have the obligation to pay you only if you got all
the 4 or 6 numbers which are drawn
6. Nominate (1458)
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Distinctions
1. Deed of Absolute Sale (DAS) vs. Conditional
Sale (CS) vs. Contract to Sell (CTS)
2. Dation in Payment (DIP) vs. COS
3. Contract for a Piece of Work (CPW) vs. COS
4. Barter vs. COS
5. Agency to Sell (ATS) vs. COS
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Kind of Capacity
1. Juridical Capacity it is the fitness to be the
subject of legal relations. If a party to a sale has no
juridical capacity, the contract is void. Note that all
natural living persons have juridical capacity. Even
if he is a 1 day old baby, he has juridical capacity.
The baby can be the subject of donation. Even if
he is conceived, he has provisional personality.
Example: One example of a party to a sale without
juridical capacity would be a corporation not
registered with the SEC. The contract entered by
this corporation is a void contract because one of
the parties has no juridical capacity to enter into
that contract.
2. Capacity to Act it is the power to do acts with
legal effects. If the incapacity only pertains to
capacity to act, the contract would normally be
voidable. Without capacity to act or there are
restrictions with ones capacity to act such as
minority, insanity, deaf mute and does not know
how to write and civil interdiction.
Note: Under R.A. 6809 (December 1989) there is
no more creature known as unemancipated
minor. Before 1989, the age of majority was 21.
C. If both parties are incapacitated
not only voidable but unenforceable.
Q: What if one of the parties in a COS is a
minor and the minor actively misrepresented
as to his age?
A: The SC said that the minor will be bound to such
contract under the principle of estoppel. Active
misrepresentation, can be seen from the deed
itself. In a deed of sale, normally after the name,
the words of age were stated. If the minor signed
that contract, he will be bound. If no statement in
the deed of sale as to his age, in one case, the fact
he misrepresented to the notary public when he
appeared before the notary public for the
notarization of the document and he was asked by
the notary public as to his age and he again
misrepresented, he will be bound to such contract.
Atty. Uribes Comment: Estoppel is not a good
ground because the minor is not aware.
Sale of Necessaries
In sale of necessaries such as food, clothing and
medicine to a minor, the minor has to pay a
reasonable price. This contract is not voidable. The
sale of necessaries will bind the minor and he will
be compelled to pay not really the contract price
but only to reasonable price.
Relative Incapacity (Articles 1490 and 1491)
1. Sale between spouses it is void except:
a. The spouses executed a marriage
settlement and in the marriage settlement
they agreed for a complete separation of
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b.
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Note:
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THE
PERFECTION
OF
THE
Auction Sale
Auction sale is perfected upon the fall of the
hammer or any other customary manner. Thus,
before the fall of the hammer in an auction sale,
the bidder even if he has already made a bid, he
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Example 1
1M down payment of 500,000 today and the
balance to be paid at the end of the year not
covered by Maceda Law
Example 2
300,000 today, the balance of 700,000 to be paid
on 10 equal monthly installments covered by the
Maceda Law
All the provisions under the Maceda Law are for
the benefit of the buyer.
Q: Is it correct to say that in this law, the buyer
cannot invoke this law if he has not yet paid for
at least 2 years?
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2.
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LEASE
Notes:
Read the Definition of Lease under Articles
1643, 1644, 1713.
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2. Object
Q: In lease of things, may a consumable thing
be the subject matter of lease?
A: Normally when a consumable thing is use in
accordance with its nature it is consumed, as a rule
therefore consumable things cannot be the subject
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AGENCY
Definition 1868, 1874 and 1878 - formalities
Because a form is required for the validity or for
the enforceability of the contract entered by the
agent-1878, 1874
1892 - pertain to appointment of the substituteeffect- may the agent nonetheless be held liable for
the loss that incurred by the principal as the result
of the appointment of the substitute.
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OF
A CONTRACT
OF
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A: Yes, the agent may appoint a substitute or subagent, if the principal does not prohibit him in doing
so. But he shall be responsible for the acts of the
substitute (because he was not given authority by
the principal) especially if one appointed turns to
be incompetent or insolvent.
Atty. Uribe: Is this correct?
Mukhang mali. Mukhang confused ang sagot. Ang
tanong sub-agent? Can Y appoint sub-agent? Yes,
the agent may appoint substitute or sub-agent
which means apparently there is no distinction
between a sub-agent and substitute. With due
respect to the answer of the UP Law Center,
Professor de Leon is really good on this matter, a
sub-agent is very much different from a substitute.
If it is in replacement (kapalit) that is a
substitute which means that the agent would be
disassociating himself from the agency (Aalis na
sya or lalabas na sya ng Pilipinas etc.) and
somebody else must take over his functions.
An agent who appoints a sub-agent will
continue to be an agent in that agency relationship.
He does not disassociate himself from the
relationship. He is still the agent and therefore all
the rights and obligations would still be there even
if he appointed a sub-agent. But if the agent
appointed a substitute, the answer will depend on
Art 1892.
Kung ang tanong ay substitute and during
the management of the business by the substitute,
losses were incurred by the principal, mask isang
taon pa lng ang substitute 2M was incurred by the
principal, may the principal hold the agent
liable? Iba ung can the principal hold the
substitute liable?
A: The first thing you have to consider is if he was
prohibited in appointing a substitute or not. If he
was prohibited he will be held liable because he
appointed 1 despite the prohibition. In fact, under
the law all acts of the substitute appointed, if it is
against the prohibition, such acts are void. If he
was not prohibited under the law, he shall be
responsible for the acts of the substitute under
certain circumstances. Take note that the operative
word here is responsible and not liable. You may
be responsible - there are consequences.
If he was not prohibited there are 2
scenarios:
(1) Not prohibited but he was neither given the
power to appoint or
(2) He was not prohibited precisely because he
was given the power to appoint.
Kung he was not prohibited he but he also lacks
the power to appoint, ang scenario dito wala lng
namention sa SPA so nothing was mentioned in
the SPA regarding the appointment of the
substitute. Ang ibig sabihin nun he was not
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3.
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Partnership
BE: Chato, using all his savings in the total
amount of 2,000, decided to establish a
restaurant. Faye, however, gave 4,000 as
financial assistance with the agreement that
Faye will have 22% share of the profits of the
business. After 22 years, Faye filed an action to
compel Chato to deliver to her the share in the
profits claiming that she was a partner. Chato
denied that Faye was her partner. Is Faye a
partner of Chato?
A: Yes, Faye was a partner in the business
because there was a contribution of money to a
common fund and there was an agreement to
divide the profit among themselves.
Atty. Uribes Comment: I do not agree with the
answer. Id rather agree with the alternative
answer. WHY? In the alternative answer as can be
seen from the facts, Faye gave 4,000 only as a
financial assistance. It was not a contribution to a
common fund. As such, she actually became a
creditor of Chato. Therefore, she did not contribute
to a common fund.
Q: What about the stipulation that Faye will
have 22% share of the profits?
A: The law on partnership is very clear that a
sharing in the profits does not necessarily result in
a partnership contract because the sharing of the
profits may only be a way of compensating the
other person, in fact that can be a mode of
payment of the loan. Kasi yung loan, supposedly
pwede payable every month with a fixed amount.
But mas maganda ang agreement na ito, 22% of
the profits, so that if walang profit sa isang taon,
wala munang bayad. Di ba thats reasonable
agreement. Only kung may profit, saka lang
babayaran. Kumbaga, friendly loan ito. The sharing
in the profits as expressly provided by law does not
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FORMALITIES:
Q: If the agreement of the parties to a contract
of partnership was only a verbal agreement,
would that be a valid and binding contract?
Will there be a juridical personality created?
A: As a rule, yes. Even if under Art. 1772, the law
provides that every contract of partnership, having
a capital of more than Php3,000 or more, shall be
in a public instrument and must be registered with
the SEC.
The 2nd paragraph of Art. 1772 provides
that despite failure to comply with the requirements
in the preceding paragraph, this is without
prejudice to the liability of the partnership and the
individual partners to third persons. From that
article alone, it is clear that despite non-compliance
with the requirements of the law as to form, there is
a partnership created, because this is without
prejudice to the liability of the partnership (kung
may partnership). But more directly, Art. 1768, the
law provides, the partnership has a juridical
personality separate and distinct from that of each
if the partners, even in case of failure to comply
with the requirements of Art. 1772, par.1.
After all, a verbal partnership contract is valid and
binding between the parties.
Q: Is there a partnership agreement which
would require a particular form for the validity
of the partnership agreement?
A: Yes. There is only one scenario here: if one of
the contracting parties promised to contribute an
immovable, there has to be an inventory of such
immovable and signed by the contracting parties. If
there is no inventory, the law is very clear, the
partnership is void.
Q: What if there was an agreement to
contribute an immovable and there was an
inventory signed by all the partners, however,
the partnership agreement itself was not put
into writing, what is the status of that
partnership contract?
Atty. Uribe: I agree with the position of Professors
Agbayani and Bautista that, despite Art. 1771, as
long as there is an inventory of such immovable,
the partnership agreement is valid and binding and
the juridical personality will be created.
Why?: As ruled by the SC consistently, like in the
case of Dauden-Hernaez vs. delos Angeles, for a
contract to be void for non-compliance with the
requirements of the law as to form, the law itself
must provide for the nullity of the contract. If the
law only required a form, but the law itself did not
provide for the nullity of the contract, if the parties
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TYPES OF MANAGEMENT:
1.) Solidary Management:
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until
the
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TRUST
2 KINDS:
1.) Express;
2.) Implied.
Implied Trust: 2 Kinds:
1.) Resulting trust;
2.) Constructive trust
The classification of trust into two kinds
(express and implied) and implied trust into two
kinds (resulting and constructive) would be relevant
in two concepts:
1.)
Applicability of the parole evidence
rule; and
2.)
Prescription, specifically, acquisitive
prescription.
Note: An express trust over an immovable may not
be proven by parole evidence. This means that
implied trust over an immovable may be proven by
parole evidence or express trust over a movable,
may be proved by parole evidence.
EXPRESS TRUST
Q: May an express trust over an immovable be
proven by mere testimony of the witness?
A;Yes, if the lawyer of the other party did not object
to the presentation of the witness.
BE: In an agreement between A and B, a
property of A was to be registered in the name
of B, with an agreement the B will reconvey the
property to As son upon the graduation of the
said son (As son). This agreement was entered
into in 1980. The property was in fact
registered in the name of B the following yea,
1981. In 1982, A died. In 1983, As son
graduated. Despite that fact, B did not
reconvey the property. He had no knowledge of
this agreement until 1993, when accidentally,
the son of A discovered such instrument
pertaining to the agreement of A and B. Thus,
he demanded that the land be conveyed to him.
B refused raising the defense of prescription.
Is this claim tenable?
A: Definitely not. This pertains to an express trust.
In an express trust, trustee will be holding the
property only in the name of the beneficiary or the
cestui que trust, therefore, he cannot acquire the
said property by acquisitive prescription unless
there would be adverse possession over the
property.
Q: When would there be adverse possession?
A: It may only start with repudiation. Without
repudiation, the period for acquisitive prescription
will not start to run. Such act of repudiation should
be made known to the beneficiary.
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IMPLIED TRUST
Resulting Trust:
BE: A and B, brother and sister respectively,
inherited two identical parcels of land. For
purposes of convenience, B, sister of A, agreed
to have the land registered in the name of A.
However, when the parcels of land were
registered in the name of A, A sold one of the
parcels of land to a buyer in good faith and for
value. Can B recover the land from the buyer?
What would be the remedy of B?
A: This question clearly pertains to a resulting trust.
This is specifically, Art. 1451 of the NCC.
B cannot recover the land from the buyer.
As discussed in Sales, a buyer who had bought the
property from a seller who has no right to sell, but
he has apparent authority to sell, who appears to
be the owner and the buyer bought the property in
good faith, he will acquire ownership over the thing
even if the seller has no right to sell.
Bs remedy would be to go after her
brother for breach of trust in selling the property
without her consent.
BE: A property was bought by a father and was
registered in the name of his illegitimate
daughter. The illegitimate daughter occupied
the said parcel of land and constructed a
house where she and her husband and their
children lived. Several years thereafter, her
father died. The other heir of her father (his
legitimate children) demanded for the delivery
of the said property to the estate for
distribution to the other heirs, claiming that a
trust relationship was established between the
father and the illegitimate child. Is this a valid
claim?
A: Under the law, there is no presumption as to
trust relationship under 1448, because the donee
in this situation is a child, even if illegitimate, of the
father. Therefore, it may be a donation as provided
under Art. 1448.
Q: Can the other heirs recover that property?
A: It depends, considering that it is a donation, if
the donation is inofficious. If the same be
inofficious, the other heirs may demand for the
return of the property or at least the value of the
property.
Resulting trust includes Articles 1448, 1451, 1449,
1450,1452,1453,1454.
Constructive Trust:
BE: A applied for the registration of a parcel of
land in his name. However, he was called in
New York to be a chef in a hotel. So, he asked
his cousin to follow up his application for
registration of land while he was in New York.
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B. Kind of Deposits
1. Judicial
2. Extrajudicial
C. Guaranty
D. Suretyship
E. Real Guaranty favorite in the bar exams
1. Pledge
2. Chattel Mortgage (CM)
3. Real Estate Mortgage (REM)
4. Antichresis
Focus on the following provisions:
1933, 1962, 2047, 2132, 2140
Obligations of the bailee 1942
Obligations of depositary - 1979
Right to demand for interest 1956
Requisites of pledge and mortgage - 2085
Pactum Commissorium 2088
Indivisibilty Principle
Right to recover the deficiency / excess 2115
Mutuum vs. Commodatum
1. C a thing is delivered to the bailee for the use
of the property and therefore ownership is not
transferred.
M a consumable thing is delivered and therefore
ownership thereof is transferred to the bailee or
borrower.
2. M only consumables are the object
C may be immovables (house, rice field)
Credit transactions
Q: Why credit transactions?
A: Because these transactions all involved credit
meaning there is a belief in the capacity of one of
the parties to perform his obligation in the future.
Note: Credit transactions ang tawag but they are
not all contracts. There can be legal relationship
even without an agreement examples legal
pledge, judicial deposit. But the others are
contracts there are contractual deposit and
pledge by agreement.
Transactions:
A. Kinds of Loans
1. Mutuum
2. Commadatum
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2.
Deposit
Q: Are checking accounts, savings account,
dollar accounts irregular deposits?
A: No. They are not deposits under the law
because they are governed by the rules on
mutuum (loan). The bank is the debtor. SC called
these deposits in the nature of irregular deposits
but not irregular deposits because the banks use
the money that is why it is in the nature of irregular
deposits.
Irregular Deposits these are deposits where the
depositary has the right to use the thing because
normally in an ordinary deposit, the depositary has
no right to use because the purpose is
safekeeping. But if he has the right to use, that
deposit may be called an irregular deposit, the
limitation of the law is that the use must not be the
principal purpose (the principal purpose should be
the safekeeping).
Examples: Car was delivered to you as depositary.
Kung pwede mo gamitin araw araw sa paghatid
sundo sa mga anak mo, hindi ito deposit, mukhang
commodatum ito kung walang bayad for the use.
But if the delivery is for safekeeping but the
depositor allowed you to use the car for an
occasion that is an irregular deposit because the
depositary has the right to use the thing with the
permission of the depositor.
Another scenario where the depositary would have
the right to use and therefore the deposit is an
irregular deposit - when the preservation of the
thing deposited delivered to depositary requires the
use of the thing like using the car to preserve it.
BE: The parties in a contract of loan of money
agreed that the yearly interest rate is 12% and
it can be increased if there is a law that would
authorize the increase of interest rates.
Suppose the lender would increase the rate by
5% to be paid by the borrower without a law
authorizing such increase. Would the lenders
action be just and valid? What is the remedy of
the borrower?
SA: Not valid because by the agreement of the
parties, the increase in the rate will only be made if
there is a law that would authorize the increase.
SC Case: There can be no valid increase without a
law authorizing it but in this case the Bangko
Sentral issued a resolution increasing the
maximum rate. The SC said the banks cannot
increase the interest rates because a Monetary
Board Resolution is not the same as a law. It may
have the effect of a law but that is not a law and
therefore that could not be a basis.
CREDIT TRANSACTIONS
Quiz
1. Deposit is a real contract TRUE
2. A contract of deposit is not covered by the statute of frauds FALSE
3. If deposit has been made by capacitated person, if perfected with another who is not a
depositor shall only have an action to recover the thing deposited while it is still in the
possession of the depositary - FALSE
4. Depositary is obliged to keep the thing safely and to return it to the depositor FALSE
5. If deposit with a third person is allowed, the depositary shall not be liable for the loss
FALSE
6. The depositary cannot make use of the thing deposited without the express permission
of the depositor FALSE
7. When depositary has permission to use the thing deposited the contract loses the
concept of deposit and becomes a loan - FALSE
8. Depositary cannot demand that the depositor prove his ownership of the thing deposited
TRUE
9. The thing deposited must be returned to the depositor even though there is a specified
period or time for such FALSE
10. The deposit of effects made by travelers of inns is a necessary deposit TRUE
11. Contracts of loan and deposit are essentially gratuitous FALSE
12. The bailor in commodatum acquires the use of the thing loaned without compensation
but not the fruits, if there is a stipulation to the contrary, the contract ceases to be
commodatum
13. Bailee shall not be liable for loss of thing if it should be through fortuitous event. FALSE
14. A contract of deposit is a consensual contract, thus xxx to deliver arise. FALSE
15. An escalation clause is void if there is no de-escalation clause FALSE (true only if
loans in banks)
16. While a surety undertakes to pay if the principal does not pay, the guarantor only binds
himself to pay if the principal cannot pay. The one is the insurer of the debt, the other is
the insurer of the solvency of the debtor. TRUE
17. Guaranty is essentially gratuitous. FALSE
18. A guaranty may be constituted to guaranty the performance of a voidable contract. TRUE
19. A guaranty may also be given as security for future debts, the amount of which is not yet
known. TRUE
20. The guarantor cannot be compelled to pay the credit unless the latter has exhausted all
the properties of the debtor and has resorted to all the legal remedies against the debtor.
- FALSE
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