Civ2 (Sale, Lease, Agency Notes)

CIVIL LAW REVIEW II
act #i2e it
co pensation for the transfer of ownership Sales, Lease, Agency, Partnership, Trust and to the other part$. Credit Transactions #. Uribe Comm tati+e ($*1*) , Atty. Crisostomo
a$ 'e a donation if there is no
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, Rede ption 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! "ot necessari#$. %&en if there is an o'#i(ation to de#i&er, if there is no o'#i(ation to transfer ownership, it wi## not 'e a contract of sa#e. )t a$ 'e a contact of #ease. Memorize: Art. 1458 Note: *a#e is a contract, so the (enera# princip#es in o'#icon are app#ica'#e to sa#e '+t note that there are pro&isions which are contrar$. Characteristics of Contract of Sale (COS) 1. Consens al (1!"#) , -.* is consens+a#, it is perfected '$ ere eetin( of the inds of the parties as to the o'/ect and price. Note: 0here is 1 specia# #aw which re1+ires a partic+#ar for for the &a#idit$ of a contract of sa#e , in that sa#e, it can 'e said that 2ind of sa#e is a for a# contract 3 -att#e Re(istration 4ecree. )n a sa#e of #ar(e catt#e, the #aw pro&ides that the contract of sa#e of #ar(e catt#e +st 'e! in a p+'#ic instr+ ent, re(istered and a certificate of tit#e sho+#d 'e o'tained in order for the sa#e to 'e &a#id. 5+t otherwise, the other contracts are perfected '$ ere consent or ere eetin( of the inds. $. %rinci&al , sa#e is a principa# contract, it can stand on its own. )t does not depend on other contracts for its existence and &a#idit$. '. (ilateral (1!#)) , necessari#$ in a -.*, 'oth parties wi## 'e o'#i(ated. )t is not possi'#e that on#$ 1 part$ is o'#i(ated 'eca+se a contract of sa#e is essentia##$ onero+s. !. Onero s (1'#*) , -.* is essentia##$ onero+s. .therwise, it a$ 'e another contract or an$ other
eanin( there is e1+i&a#enc$ in the &a#+e of the prestation to 'e perfor ed '$ 'oth parties. "or a##$, the thin( so#d wo+#d 'e e1+a# to the price paid '$ the other part$ 6'+$er7. %xception! a contract of sa#e which is an a#eator$ contract #i2e sa#e of hope. )n sa#e of hope, the o'#i(ation of 1 part$ wi## arise +pon the happenin( of a certain e&ent or condition. Example Sale of Hope: *a#e of a #otto tic2et, 8-*. wi## ha&e the o'#i(ation to pa$ $o+ on#$ if $o+ (ot a## the 4 or 6 n+ 'ers which are drawn Another Example of Aleatory: )ns+rance ,. Nominate (1!#)) Classification of Contract of Sale 1. As to Nat re of S b-ect Matter a. 9o&a'#e '. ) o&a'#e Q: hy there is a need to determine? A! 5eca+se so e concepts wi## app#$ if the o'/ect is o&a'#e or so e #aws wi## app#$ if the o'/ect is i o&a'#e. Examples: :nder the *tat+te of ;ra+ds, $o+ ha&e to deter ine if the o'/ect if o&a'#e or i o&a'#e in order that stat+te of fra+ds wi## app#$. 0he Recto #aw wi## app#$ if the o'/ect is o&a'#e. 0he 9aceda #aw wi## app#$ if the o'/ect is rea#t$. Artic#e 1544 or 4o+'#e *a#e wi## re1+ire $o+ to deter ine the nat+re of the s+'/ect atter. $. As to Nat re a. 0hin( '. Ri(ht Q: hy there is a need to determine? A! Re#e&ant in the ode of de#i&er$
.istinctions 1. 4eed of A'so#+te *a#e 64A*7 &s. -onditiona# *a#e 6-*7 &s. -ontract to *e## 6-0*7 2. 4ation in 8a$ ent 64)87 &s. -.* 3. -ontract for a 8iece of <or2 6-8<7 &s. -.* 4. 5arter &s. -.* 5. A(enc$ to *e## 6A0*7 &s. -.* .ee/ of Absol te Sale (.AS) +s. Con/itional Sale (CS) +s. Contract to Sell (C0S) .AS , se##er does not reser&e his tit#e o&er the thin( so#d and th+s, +pon de#i&er$ of the thin(,
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;a$e 9arie -. 9artine= , -hato -a'i(as , >essica A. Lope= , 4ian Rosapapan "o&e 'er 2008
ownership passes re(ard#ess of whether or not the '+$er has paid. CS ? condition@s are i posed '$ the se##er 'efore ownership wi## pass. "or a##$, the condition is the f+## pa$ ent of the price. )n -*, ownership a+to atica##$ passes to the '+$er fro the o ent the condition happens. 0here is no need for another contract to 'e entered into. B!: "eceipt was issued by A to B. #he receipt$s tenor %&ate of the receipt ''' "eceived from B the sum of ()*,+++.++ as partial payment for the car ''' the balance to be paid at the end of the month ''',. -ontract to .ell? *A! "o. )t does not pertain to a -0* 'eca+se in a -0* ownership is reser&ed '$ the se##er despite de#i&er$ to the '+$er. 0he '+$er does not ac1+ire ownership. 0his is an A'so#+te *a#e. Q: In a -#., upon the happening of the condition/s imposed by the seller, would ownership automatically pass to buyer? A! "o. <hi#e a -0* is considered a specia# 2ind of conditiona# sa#e, it is a pec+#iar 2ind of sa#e 'eca+se despite the happenin( of the condition and act+a# de#i&er$, the '+$er does not a+to atica##$ ac1+ire ownership. )n -0*, if condition@s happen, the ri(ht of the '+$er is to co pe# the se##er to exec+te a fina# deed of sa#e. *o ownership does not a+to atica##$ pass. .ation in %a1ment (.2%) +s. COS .2% (1$!#) , where'$ propert$ is a#ienated to the creditor. )t is pro&ided that the #aw on sa#es sha## (o&ern s+ch transaction. )t is specifica##$ pro&ided that the pre?existin( o'#i(ation +st 'e in one$. )f not in one$ and there is 4)8, it wi## not 'e (o&erned '$ the #aw on sa#es '+t '$ the #aw on no&ation 'eca+se practica##$ there is a chan(e in the o'/ect of the contract. Example 1: )f A owes 5 8100,000.00 instead of pa$in( 8100,000, he offers 5 and 5 accepts the car of A as an e1+i&a#ent perfor ance 3 this is 4)8 and wi## 'e (o&erned '$ the #aw on sa#es. Example 2: )f the pre?existin( o'#i(ation is to de#i&er a specific horse '+t instead of de#i&erin( the horse, the de'tor to#d his creditor and the creditor accepted, that he wi## instead de#i&er his car 3 it is sti## 4)8 '+t it wi## not fa## on 1245 '+t on no&ation 'eca+se there is a chan(e in the o'/ect of the o'#i(ation which wo+#d extin(+ish the o'#i(ation. Note: A (+ide to distin(+ish one concept fro another is to 2now the nat+re, re1+isites and effects. 1. As to Nat re .2% , a specia# for of pa$ ent COS ? it is a contract $. As to Re3 isites
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.2% , with a pre?existin( o'#i(ation COS , not a re1+ire ent '. As to 4ffect .2% , to extin(+ish the o'#i(ation either who##$ or partia##$. COS , o'#i(ation wi## arise instead of 'ein( extin(+ished. Contract for a %iece of 5or6 (C%5) +s. COS B!: A team if bas0etball players went to a store to buy shoes and out of the 1+ members, * of them were able to choose the shoes. #hey agreed to pay the price upon delivery. #he other 2 members were able to choose but the shoes were not available at that time but they are normally manufactured. #he last member could not find shoes that could fit his 13 inches feet and therefore he has to order for such 0ind of shoes. hat transactions were entered into by these players? *A! 1467 3 the first 2 transactions in&o#&in( a tota# of 9 p#a$ers wo+#d 'e considered a -.* 'eca+se the shoes which the$ ordered are 'ein( an+fact+red or proc+red in the ordinar$ co+rse of '+siness for the (enera# ar2et. Aowe&er, the #ast transaction which wi## 'e an+fact+red on#$ 'eca+se of the specia# order of the p#a$er and is not ordinari#$ an+fact+red for the (enera# ar2et wi## 'e considered a -8< which is 2nown as the 9assach+setts r+#e. 9assach+setts r+#e , r+#e in deter inin( whether the contract is a -.* or a -8<. (arter +s. COS Q: A obliged himself to deliver a determinate car with a mar0et value of (4*+,+++.++. B obliged himself to deliver his watch and (1*+,+++.++ in cash. hat 0ind of contract? A! ;irst, $o+ ha&e to consider the intention of the parties. 0he$ a$ want this transaction to 'e considered as a sa#e or 'arter and that wi## pre&ai#. 5+t if the intention of the parties is not c#ear fro their a(ree ent then the nat+re of the contract wi## depend on the &a#+e of the watch. )f the &a#+e of the watch is (reater than 8150,000 then this is 'arter. )f the &a#+e of the watch is e1+a# or #ess than 8150,000 then this is sa#e. 0he &a#+e of the car is irre#e&ant. <hat is on#$ re#e&ant is the &a#+e of the thin( 6watch7 in re#ation to the cash to 'e (i&en '$ one of the parties. A7enc1 to Sell (A0S) +s. COS B!: A gave B the e'clusive right to sell his maong pants 5he has his own brand of maong pants6 in Isabela. It was stipulated in the contract that B has to pay the price of maong within 7+ days from delivery to B. It was stipulated that B will receive 4+8 commission 5discount6 on sale. #he maong pants were delivered to B. 9owever, before B could sell the goods, the store was burned without fault of anyone. -an B be compelled to pay the price?
;ro the wordin(s of the pro'#e $o+ a$ ha&e an idea that this is an a(enc$ to se##. )f this is an A0*, the fact that the a(ent has not $et so#d the aon( pants when the$ were '+rned wi## not res+#t in a #ia'i#it$ on his part, there 'ein( no ne(#i(ence on his part 'eca+se with the de#i&er$ of the thin( fro the principa# to the a(ent, ownership does not pass. :nder the princip#e in the -i&i# -ode , res perit do ino , it wi## 'e the se##er 6owner7 who wi## 'ear the #oss. 5+t if this transaction is sa#e then with the de#i&er$ of the aon( pants to 5, ownership passed to 5 'eca+se he did not reser&e ownership o&er the pants despite the fact that the other part$ has not paid the price. *o when the pants were '+rned, it wo+#d now 'e 5 as the owner who wi## 'ear the #oss. *A! 0his is exact#$ the case of 8 iro7a +s. %arsons. Artic#e 1466 , in constr+in( a contract containin( pro&isions characteristics of 'oth a -.* and A0*, $o+ ha&e to (o into the essentia# c#a+ses of the who#e instr+ ent. )n this pro'#e , one of the c#a+ses B5 has to pa$ the price within 30 da$sC. 0hat wo+#d a2e the contract -.* and not A0* 'eca+se in 30 da$s fro de#i&er$, whether or not 5 has a#read$ so#d those pants to other persons, he is a#read$ o'#i(ed to pa$ a price. 0hat is not an A0*. 5ein( a -.*, therefore, after ha&in( 'een de#i&ered, ownership passed to the '+$er and hence +nder res perit do ino r+#e, the '+$er 'ears the #oss and therefore he can 'e co pe##ed to pa$ the price. 4ssential 4lements of a Contract of Sale 1. Consent of the Contractin7 %arties $. Ob-ect or S b-ect Matter , which is a deter inate thin( or ri(ht Note: *er&ice cannot 'e the s+'/ect atter of sa#e. '. Ca se or Consi/eration , as far as se##er is concerned, it is the price in one$ or the e1+i&a#ent of the pa$ ent of the price. CONS4N0 O9 0:4 CON0RAC02N; %AR024S A. No consent of one or both of the &arties 3 the contract is &oid. :nder the #aw on sa#es, it is a fictitio+s contract where the si(nat+re of one of the parties was for(ed. "or a##$, the se##erDs si(nat+re is for(ed. )f the si(nat+re of the se##er is for(ed, that wo+#d 'e a fictitio+s contract. 0he a##e(ed se##er wi## not ha&e participation in the exec+tion of the contract. 5+t another 2ind of contract reco(ni=ed in the -i&i# -ode is a si +#ated contract. *i +#ated , parties to this contract act+a##$ wo+#d ha&e participation. 0he$ wo+#d &o#+ntari#$ si(n in the deed of sa#e. Aowe&er, the$ do not intend to 'e 'o+nd at a## or the$ a$ intend to 'e 'o+nd to another contract '+t the$ exec+ted a deed of sa#e. 0h+s, the #aw wo+#d ratif$ these contracts considerin( there is a si +#ated sa#e. <in/s of Sim late/ Contracts
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1. A'so#+te#$ *i +#ated , the$ do not intend to 'e 'o+nd at a##. Q: hy would they enter into this 0ind of sale? A! 6a7 0o defra+d creditors. 0he de'tor wo+#d se## his re ainin( assets to a2e it appear that he has no ore assets which a$ 'e reached '$ his creditors. 6'7 App#icants for residenc$ a'road wo+#d nor a##$ 'e re1+ired to present certificate of tit#e o&er parce#s of #and so that the app#icant wi## appear to ha&e assets. 0herefore, hindi a( 0"0 $+n( app#icant. 0hese app#icants wo+#d nor a##$ as2 his 'rother or sister or friends na 2+nwari that #and wo+#d 'e so#d to the . 0he$ wi## ha&e the propert$ re(istered in their na e. 0he$ wi## present the tit#e to the % 'ass$. 5+t act+a##$ the parties do not intend to 'e 'o+nd. 0a2e note that this a$ 'e a root of a &a#id tit#e as far as 3 rd persons are concerned. 0hese 3rd persons who re#ied on the transfer certificate of tit#e in the na e of the se##er e&en if that se##er is not the owner 'eca+se the sa#e is si +#ated a$ ac1+ire ownership. 2. Re#ati&e#$ *i +#ated , sa#e where the$ act+a##$ intended another contract which nor a##$ wo+#d 'e a donation. Q: hy would they e'ecute a deed of sale instead of e'ecuting a deed of donation? A! 6a7 0o ini i=e tax #ia'i#ities. 4onorDs tax is hi(her than capita# (ains tax or fina# inco e tax and doc+ entar$ sta p tax. 6'7 0o circ+ &ent the pro&isions on #e(iti es and co##ation +nder s+ccession. 0his a$ 'e 1+estioned if $o+ can pro&e that there was no consideration. (. 2f consent was 7i+en 3 )f consent was (i&en, it does not necessari#$ ean that the -.* is &a#id. 0he consent a$ 'e (i&en '$ an incapacitated person or one with capacit$ to (i&e consent. )f (i&en '$ an incapacitated person, consider the nat+re of the incapacit$. )t a$ 'e! a. A'so#+te )ncapacit$ , the part$ cannot (i&e consent to an$ and a## contracts. '. Re#ati&e )ncapacit$ , the part$ is prohi'ited fro enterin( so eti es with specific persons and so eti es o&er specific thin(s. <in/ of Ca&acit1 1. >+ridica# -apacit$ , it is the fitness to 'e the s+'/ect of #e(a# re#ations. )f a part$ to a sa#e has no /+ridica# capacit$, the contract is &oid. "ote that a## nat+ra# #i&in( persons ha&e /+ridica# capacit$. %&en if he is a 1 da$ o#d 'a'$, he has /+ridica# capacit$. 0he 'a'$ can 'e the s+'/ect of donation. %&en if he is concei&ed, he has pro&isiona# persona#it$. Example: .ne exa p#e of a part$ to a sa#e witho+t /+ridica# capacit$ wo+#d 'e a corporation not re(istered with the *%-. 0he contract entered '$ this corporation is a &oid contract 'eca+se one of
the parties has no /+ridica# capacit$ to enter into that contract. 2. -apacit$ to Act , it is the power to do acts with #e(a# effects. )f the incapacit$ on#$ pertains to capacit$ to act, the contract wo+#d nor a##$ 'e &oida'#e. <itho+t capacit$ to act or there are restrictions with oneDs capacit$ to act s+ch as inorit$, insanit$, deaf +te and does not 2now how to write and ci&i# interdiction. Note: :nder R.A. 6809 64ece 'er 19897 there is no ore creat+re 2nown as B+ne ancipated inorC. 5efore 1989, the a(e of a/orit$ was 21. C. 2f both &arties are inca&acitate/ 3 not on#$ &oida'#e '+t +nenforcea'#e. Q: hat if one of the parties in a -:. is a minor and the minor actively misrepresented as to his age? A! 0he *- said that the inor wi## 'e 'o+nd to s+ch contract +nder the princip#e of estoppe#. Acti&e isrepresentation, can 'e seen fro the deed itse#f. )n a deed of sa#e, nor a##$ after the na e, the words Bof a(eC were stated. )f the inor si(ned that contract, he wi## 'e 'o+nd. )f no state ent in the deed of sa#e as to his a(e, in one case, the fact he isrepresented to the notar$ p+'#ic when he appeared 'efore the notar$ p+'#ic for the notari=ation of the doc+ ent and he was as2ed '$ the notar$ p+'#ic as to his a(e and he a(ain isrepresented, he wi## 'e 'o+nd to s+ch contract. Att1. =ribe>s Comment: %stoppe# is not a (ood (ro+nd 'eca+se the inor is not aware. Sale of Necessaries )n sa#e of necessaries s+ch as food, c#othin( and edicine to a inor, the inor has to pa$ a reasona'#e price. 0his contract is not &oida'#e. 0he sa#e of necessaries wi## 'ind the inor and he wi## 'e co pe##ed to pa$ not rea##$ the contract price '+t on#$ to reasona'#e price. Relati+e 2nca&acit1 (Articles 1!?* an/ 1!?1) 1. *a#e 'etween spo+ses , it is &oid except! a. 0he spo+ses exec+ted a arria(e sett#e ent and in the arria(e sett#e ent the$ a(reed for a co p#ete separation of propert$ re(i e. 0hen the$ can se## to each other. '. )f no arria(e sett#e ent, the$ a$ ha&e o'tained /+dicia# dec#aration of separation of propert$. After that, the$ can se## to each other. 2. 0hose entioned in Artic#e 1491 a. A (+ardian cannot '+$ the propert$ of the ward. 0he (+ardian is not act+a##$ prohi'ited fro enterin( into an$ and a## contracts. )t is /+st that he cannot 'e the '+$er of a propert$ of his ward.
'. c. d.
An a(ent cannot '+$ witho+t the consent of the principa# a propert$ which he was s+pposed to se## or ad inister. 0he exec+tors and ad inistrators of the estate cannot '+$ a propert$ which is part of the estate. 8+'#ic officers, /+d(es, their staff, c#er2 of co+rt, steno(raphers and #aw$ers are prohi'ited fro '+$in( those properties which are the s+'/ect of #iti(ation d+rin( the pendenc$ of the case.
Q: hat is the status of the contracts under 12;1? A! 8rof. 0o#entino , &oida'#e >+stice Eit+( F 8rof. 5a&iera , &oid 8rof. 8ineda F 8rof. de Leon , the first 3 are &oida'#e and the #ast 3 are &oid. 0he 'etter answer is &oid 'eca+se these persons are prohi'ited fro enterin( into these contracts. :nder Artic#e 1409, if the contract is prohi'ited, it is &oid. .isc ssion of %rof. .e Leon>s Answer 0he first 3 are &oida'#e 'eca+se these contracts a$ 'e the s+'/ect of ratification. )f $o+ wi## read his disc+ssion, he 'ased his disc+ssion in the case of R+'ias &s. 5ati##er wherein the (+ardian 'o+(ht the propert$ of his ward. *o the contract is &oida'#e 'eca+se if the ward 'eco es of a(e, he can enter a -.* o&er the thin( to his (+ardian and that sa#e wo+#d 'e a &a#id sa#e. 68#s. read the f+## text of 8rof. 4e LeonDs co ent7 Att1. =ribe: )t is correct that it is a &a#id sa#e. 5+t does that ean that the sa#e ratified the 1 st contractG ) disa(ree 'eca+se ratification +nder the -i&i# -ode has the effect of c#eansin( the contract fro a## its defects fro the &er$ 'e(innin( as if the contract was entered into d+rin( the first a(ree ent that the a(ree ent was &a#id fro the &er$ start. )n fact, the *- said in "ubias vs. Batiller BratificationC 61+ote and 1+ote7, 'eca+se the effect of the second contract wi## not retroact to the first contract. )t wi## on#$ 'e &a#id fro the ti e the second contract was entered into. After a##, there is no ratification in that sense +nder the -i&i# -ode. 0h+s, since it does not retroact to the first, the second contract is &oid. .therwise, if &oida'#e then it can 'e ratified. 0he defect on the first contract wo+#d ha&e 'een c#eansed with the exec+tion of the second contract. 2. A#iens are prohi'ited fro ac1+irin( '$ p+rchase pri&ate #ands , 0a2e note Bac1+irin(C which eans '+$in( not se##in(. 0he$ can se##. %xceptions @ when a#iens can '+$! a. ;or er nat+ra# 'orn ;i#ipino citi=en. :nder the -onstit+tion the$ are a##owed to '+$ s a## #and which the$ can +se for residentia# p+rpose. '. Another wa$ of ac1+irin( is '$ s+ccession '+t this is not a sa#e
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.. 4+en if consent was 7i+en b1 one with ca&acit1 to 7i+e consent b t if the consent is +itiate/ 3 &oida'#e. ;)E:9 4. 2f the &art1 7a+e s ch consent in the name of another witho t a thorit1 of that &erson or no a thorit1 of law 3 +nenforcea'#e. 0a2e note a$ 'e a+thori=ed '$ the person or '$ #aw. Example of authorized by law: notar$ p+'#ic has the ri(ht to se## in p#ed(e 'eca+se he has the a+thorit$ to se## +nder the #aw. O(@4C0 OR S=(@4C0 MA004R 0he re1+isites in sa#e as to thin( wo+#d a# ost 'e the sa e as the re1+isites of contracts in (enera#. 1. 0he thin( +st 'e within the co erce of en Examples: sa#e of a na&i(a'#e ri&er is &oid, sa#e of a cada&er is &oid '+t donation of a cada&er is a##owed, sa#e of h+ an or(ans is &oid, thin(s which are not appropriated #i2e air is &oid '+t if appropriated it can 'e the o'/ect of a &a#id sa#e. 2. 0he thin( +st 'e #icit , not contrar$ to #aw Examples: sa#e of prohi'ited dr+(s or sha'+ is &oid, sa#e of ari/+ana is &oid, sa#e of wi#d f#owers or wi#d ani a#s is &oid 3. 9+st 'e deter inate Q: .ale of a car without agreement as to the features for (1<. :n the other hand, another transaction would be a sale of <itsubishi =ancer, 4++), >.= and color blac0 for (1<. Are these 4 transactions, valid sale? 5oth wo+#d pertain to (eneric thin(. :nder the #aw, a thin( is considered deter inate on#$ when it is partic+#ar#$ desi(nated or ph$sica##$ se(re(ated fro a## others of the sa e c#ass. 5oth transactions pertain to (eneric so 'oth transactions are &oidG A! "o. 0he first transaction is &oid. 0he second transaction is &a#id 'eca+se Artic#e 1460 re1+ires that the re1+ire ent of the #aw that a thin( sho+#d 'e deter inate wo+#d 'e s+fficient#$ co p#ied with if the thin( which is the o'/ect of the sa#e is capa'#e of 'ein( ade deter inate witho+t a need of a new or f+rther a(ree ent. Example: *a#e of 1 (a##on 9ino#a p+re cocon+t oi#. 0ho+(h (eneric, it is &a#id +nder Artic#e 1460. R=L4S AS 0O O(@4C0 O9 COS Q: A obliged himself to deliver and transfer ownership over the palay that will be harvested from a specific parcel of rice land in <ay 4++?. hat if by <ay 4++?, no palay was harvested? a. hat is the status of the sale? b. <ay the seller %A, be held liable for damages for failure to comply with his obligation? A! a. A#wa$s consider that in a -.* there are on#$ 3 re1+isites. As #on( as these 3 were co p#ied, there is a &a#id sa#e. )n fact, '$ express pro&ision of
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#aw, sa#e of thin(s ha&in( potentia# existence 6e ptio rei sperati7 is &a#id. '. "ot necessari#$ 'eca+se there are exc+ses to non?perfor ance s+ch as pesti#ence, t$phoon, f#ood and therefore his fai#+re to co p#$ is an exc+se. 5+t if the reason of the se##er is 'eca+se of his ne(#i(ence, he cannot find s+pport +nder Art. 1174. Sale of :o&e (4m&tio S&ei) Example: *a#e of a #otto tic2et Q: Assuming the sale of a lotto tic0et happened the day after it was drawn, what is the status of the sale? A! )t wi## depend whether the tic2et is a winnin( or #osin( tic2et. <hat the #aw pro&ides is that the sa#e of a &ain hope is a &oid sa#e. )f the tic2et is a winnin( tic2et, it is not a &ain hope hence, it is a &a#id sa#e. Q: hy would a person sell a winning tic0et? A! Ae a$ need the one$ i ediate#$. 8aran( disco+nted $+n( tic2et. "ana#o n( 819, i'e'enta n$a n( 8990,000 'eca+se he needs the one$ i ediate#$. Q: .ale of a land to B with a right to repurchase within 1 year which A delivered. :n the 7 rd month, B sold the land to -. 9owever, on the ;th month, A offered to repurchase the land. 5a6 hat is the status of the sale between A and -? 5b6 ho will have a better right over the land? 5.ale with a right to repurchase6 A! 6a7 5e (+ided '$ the fact that a -.* is a consens+a# contract. 0he ere eetin( of the inds as to the o'/ect and the price, then there is a &a#id and perfected sa#e. Aence, this is a &a#id sa#e e&en if the o'/ect of the sa#e is a sa#e with a ri(ht to rep+rchase. Artic#e 1465 pro&ides that thin(s s+'/ect to a reso#+tor$ condition a$ 'e the o'/ect of a -.*. Att1. =ribe: 9as ta an( sa'ihin , since the ownership thereof is s+'/ect to a reso#+tor$ condition. Aindi na an $+n( thin( is the s+'/ect of reso#+tor$ condition, it is the ownership o&er the thin(. )f A exercises the ri(ht to rep+rchase and s+ch wo+#d 'e a &a#id exercise of s+ch ri(ht then the ownership of 5 wo+#d 'e extin(+ished. 0he exercise of the ri(ht is considered a reso#+tor$ condition as to the ownership of 5. 0he fact that the o'/ect of the sa#e is s+'/ect to a rep+rchase wi## not affect the &a#idit$ of the sa#e. 6'7 As a r+#e, it wo+#d 'e A as a se##er a retro 'eca+se he has the ri(ht to rep+rchase ass+ in( his rep+rchase is &a#id. - a$ ha&e a 'etter ri(ht if he can c#ai that he is an innocent p+rchaser for &a#+e. Example: a$'e the ri(ht to rep+rchase was not annotated at the 'ac2 of the tit#e of the #and and he has no act+a# 2now#ed(e. )f that is the case, - a$ ha&e a 'etter ri(ht.
SAL4 O9 R2;:0 / ASS2;NM4N0 O9 R2;:0 Assi(n ent of ri(ht is not necessari#$ a sa#e. )f there is a &a#+a'#e consideration for the assi(n ent, it is a sa#e. )f there is no &a#+a'#e consideration, it a$ 'e a donation or dacion en pa(o. Examples of right: credit, shares of stoc2 Re3 isite of a ri7ht 3 the on#$ re1+ire ent is that the ri(ht +st not 'e intrans issi'#e Q: hy or when a right would not be transmissible? A! )f it is intrans issi'#e '$ nat+re or '$ stip+#ation or '$ pro&ision of #aw. ;.R.: As a r+#e, ri(hts and o'#i(ations arisin( fro contracts are trans issi'#e. 4Ace&tions: 1. 2ntransmissible b1 Nat re , Examples: ri(ht as a #e(iti ate chi#d cannot 'e so#d. An$ contract where the persona# 1+a#ifications has 'een considered . $. 2ntransmissible beca se of Sti& lation , Example: 0he parties stip+#ated in a #ease contract that the ri(ht to s+'#ease cannot 'e transferred if it is prohi'ited '$ the #essor. '. 2ntransmissible beca se of Law , Example: )n partnership, the ri(ht in specific partnership propert$ witho+t a## the partners a2in( the assi(n ent cannot 'e &a#id#$ assi(ned. Q: .ale of a right, also perfected by mere consent? A! Hes. 0o 'ind 3rd persons, it +st 'e in a p+'#ic instr+ ent. Recorded in the Re(istr$ of 8ropert$. CA=S4 OR %R2C4 C4R0A2N 2N MON4B OR 20S 48=2CAL4N0 Q: A deed of sale was entered into by A and B. #he price agreed upon was 1< yen. 5a6 <ay that be a valid sale? 5b6 -an the seller compel the buyer to pay in yen? A! 6a7 Hes, it is &a#id. 5asis is Artic#e 1458 'eca+se the on#$ re1+ire ent of the #aw is Bin one$C. %&en >apanese $en is in one$. 0he #aw states that it a$ not e&en 'e in one$, it a$ 'e Be1+i&a#entC #i2e pro issor$ notes whether or not ne(otia'#e or #etters of credit. 6'7 )f the contract was entered into toda$, $es it is &a#id 'eca+se of R.A. 8183 which repea#ed R.A. 529 in 1996. )f -.* was entered 'efore R.A. 8183, the se##er cannot co pe# e&en tho+(h the contract is &a#id. 0he pa$ ent has to 'e ade in 8hi#ippine one$. -onsider the date of the sa#e. )f parties fai#ed to stip+#ate as to which c+rrenc$, it has to 'e in 8hi#ippine c+rrenc$. Q: -an there be a valid payment in (1+,+++ @ (1 coins?
8a(e 6
A! Hes. Q: -an you compel the seller to accept? A! "o. :nder the 8hi#ippine #aw, 81 wi## ha&e #e(a# tender power on#$ +p to 81,000. Ae a$ accept '+t he cannot 'e co pe##ed. Note: 81, 85, 810 +p to 81,000 #ess than 81 +p to 8100
%rice M st be Certain Q: .ale of shares of stoc0s but there was no date as to the value of the share, valid? A! 0he &a#+e of the shares as to what date is ateria# 'eca+se the &a#+e of the shares chan(es a# ost e&er$da$ dependin( on the shares. *hares of co panies who are acti&e in tradin( wo+#d chan(e e&er$ now and then. )n fact, e&en if the date as to the &a#+e of the shares has 'een fixed '+t the ti e was not considered, a$'e the openin( or the c#osin( in a partic+#ar exchan(e wo+#d affect the &a#idit$ of the sa#e. ;or exa p#e, in the openin(, the &a#+e of the share is 850 '+t in the c#osin( it is 839. *o a(ain, it has to 'e certain. Q: If you will fi' the price by considering the tuition fee of a student per unit, would that be a certain price? A! "o 'eca+se different schoo#s wo+#d ha&e different t+ition fees and e&en in a certain schoo#, fees per co##e(e are different. Q: ho can fi' the price? A! 617 0he 'est wa$ is for the parties to a(ree as to the price. 627 0he$ a$ a(ree that one of the wi## fix the price. Q: <ay the sale be perfected if the agreement of the parties was for one of them to fi' the price? A! Hes, it a$ 'e perfected on#$ if the price fixed '$ the part$ who was as2ed to fix the price was accepted '$ the other part$. )f not accepted, there was no eetin( of the inds. Note: 0he perfection wi## on#$ 'e considered at the ti e of the acceptance of the price fixed '$ the other part$ not fro the ti e of the first a(ree ent of the parties. Q: hat if a 7rd person was as0ed to fi' the price A A and B agreed that B will fi' the price, may the sale be void? A! Hes, the sa#e a$ 'e &oid if the third person does not want to fix the price or +na'#e to fix the price. Aence, there was no eetin( of the inds. Q: If the 7rd person fi'ed the price but it was too high or too low or maybe there was fraud committed by the 7rd person or he was in connivance with one of the parties, may the sale be void? A! "o, 'eca+se the re ed$ of the other part$ is to (o to co+rt for the co+rt to fix the price.
Q: .ale of a car, the price of the car is (1, valid? A! Hes, it is &a#id. )t can 'e a &a#id sa#e. Lesion or (ross inade1+ac$ of the price does not as a r+#e in&a#idate a contract +n#ess otherwise specified '$ #aw. %xception! when otherwise pro&ided '$ #aw. Example: Artic#e 1381 , when the (+ardian se##s the propert$ of the ward and there is #esion of ore than 25I or ore than J of the &a#+e of the thin(. 0a2e note that the '+$er +st not 'e the (+ardian otherwise 1491 wi## app#$ 3 &oid. 5+t if the (+ardian so#d it to another person there 'ein( #esion of ore than J #i2e when the &a#+e of the propert$ is 8100,000 was so#d for 865,000, the contract is rescissi'#e. Note: :nder the #aw on sa#es, if there is (ross inade1+ac$, it a$ ref#ect &itiation of consent so the *- wo+#d nor a##$ en/oin the #ower co+rts to 'e warned of the possi'i#it$ of fra+d in case of #esion. Lesion +st 'e pro&en as a fact. )t is not pres+ ed. )f there is (ross inade1+ac$, it a$'e 'eca+se act+a##$ the$ intended another contract and that wo+#d a2e the sa#e a si +#ated sa#e and therefore the sa#e is &oid. Example! 0he &a#+e of the propert$ is 819 '+t on#$ 810,000 was written in the contract 'eca+se the$ intended it to 'e a donation 3 &oid. 02M4 O9 CON0RAC0 0:4 %4R94C02ON O9 0:4
2 $ears, *anche= to#d Ri(os that he is '+$in( and offered the price a(reed +pon '+t Ri(os ref+sed c#ai in( that she was not 'o+nd '$ the written option a(ree ent 'eca+se no option one$ 6consideration7 was (i&en '$ *anche=. Accordin( to Ri(os, the option contract is &oid. Ae#d! *ince *anche= accepted the offer and decided to '+$ within the period 'efore the offer was withdrawn, a perfected -.* was created e&en witho+t option one$. )n this case, there was no option contract 'eca+se it was ere#$ an option a(ree ent. 0herefore, there was ere#$ an offer on the part of Ri(os and once the offer was accepted 'efore it was withdrawn, re(ard#ess of whether option one$ was (i&en and in this case no option one$ was (i&en, a perfected -.* was created. Note: )'a pa( a$ option one$ Q: 4 years within which to decide A assuming there was option money, before the offeree could decide to buy, the offeror withdraw on the 3th month. 5a6 -an the offeree on the 1+th month say %I would li0e to buy,? 5b6 -an the buyer compel the seller to sell? A! 6a7 "o. 6'7 "o, an action for specific perfor ance wi## not prosper 'eca+se when he said he wi## '+t there was not ore offer to 'e considered. "a?withdraw na eh. Q: If the offeree files an action for damages, may that action prosper there being option money given? A! Hes, 'eca+se with the option one$, an option contract is perfected, the offeror is 'o+nd to (i&e the offeree, 2 $ears within which to decide and fai#+re to that he is #ia'#e not 'ased on perfected -.* '+t on perfected contract of option. O&tion Mone1 (OM) +s. 4arnest Mone1 (4M) .9 is not part of the price whi#e %9 is part of the price and at the sa e ti e, it is a proof of the perfection of the contract. Q: -an the parties themselves agree that there would be a perfected -:. and then the :< would be treated as part of the price? A! 0he *- said that this is 'indin( 'etween the parties. 0ho+(h it is an .9, it can 'e considered as part of the price as #on( as it is stip+#ated. <itho+t stip+#ation, the .9 cannot 'e considered as partia# pa$ ent 'eca+se it is a consideration for the option and therefore not part of the price. Q: ith !<, does it mean that there is already a perfected -:.? A! "ot necessari#$. :nder the #aw, it is on#$ a proof of the perfection of the sa#e. )n fact, there a$ not 'e a perfected sa#e e&en if there was %9 (i&en, 'ein( ere#$ a part of the p+rchase price or tota#
A ction Sale A+ction sa#e is perfected +pon the fa## of the ha er or an$ other c+sto ar$ anner. 0h+s, 'efore the fa## of the ha er in an a+ction sa#e, the 'idder e&en if he has a#read$ ade a 'id, he can sti## withdraw the 'id as #on( as he wo+#d do that 'efore the fa## of the ha er. .therwise, 6if after the fa## of the ha er7, there is a#read$ a perfected sa#e. Q: -an the auctioneer withdraw the goods before the fall of the hammer? A! As a r+#e, $es 'eca+se the sa#e has not 'een perfected at the o ent +n#ess the 'iddin( or a+ction has 'een anno+nced to 'e witho+t reser&e. Note: 5efore perfection, there is one contract which a$'e perfected. 5efore perfection eanin( in the ne(otiation sta(e 3 this contract is 2nown as the option contract. O&tion Contract .ancheC vs. "igos ;acts! 9rs. Ri(os offered to se## her #and to *anche= for a certain price. Ri(os (a&e *anche= 2 $ears within which to decide. 6 Note: 0he optionee or pro isee or offeree is not 'o+nd to p+rchase '+t he has the option to '+$ or p+rchase7. )n this case, *anche= has the option. 5efore the #apse of
8a(e 7
contract price. 0he parties a$ not ha&e act+a##$ a(reed as to the tota# price, therefore, e&en if the$ a(reed that a certain a o+nt is part of the price, the$ ha&e not a(reed on the tota# price or if the$ a(reed on the tota# price, the$ ha&e not a(reed on the o'/ect of the sa#e. *o no perfected -.*. %9 (oes into on#$ 1 of the essentia# e#e ents, that is not the on#$ e#e ent in -.*. 0hat is on#$ a proof of the perfection of the contract. 0a2e note, a proof does not necessari#$ esta'#ish a fact, it a$ not 'e s+fficient to esta'#ish a fact. Q: ith a perfected -:., does it mean it is already enforceable? A! "ot necessari#$. "ote that +pon perfection, the parties a$ co pe# the other part$ to perfor their respecti&e o'#i(ations. 5+t the perfection is s+'/ect to the for a#ities prescri'ed '$ #aw for that contract. 0herefore, e&en +nder 1475, the perfection of the contract is s+'/ect to the pro&isions of #aw on the for a#ities of -.* #i2e the stat+te of fra+ds. 0here a$ 'e eetin( of the inds '+t if it is not in the for prescri'ed '$ #aw, it a$ 'e +nenforcea'#e. ;.R.: A -.* a$ 'e in an$ for . Artic#e 1483 pro&ides that a -.* a$ 'e in writin(, part#$ in writin( xxx. 0his pro&ision is exact#$ the sa e as Artic#e 1356 in contracts which pro&ides that contracts a$ 'e o'#i(ator$ in whate&er for the$ a$ ha&e 'een entered into pro&ided a## the essentia# re1+isites are present. 5+t then a(ain e&en Artic#e 1356 /+st #i2e Artic#e 1475 wo+#d pro&ide for exceptions. 4Ace&tions: 0he #aw a$ re1+ire a partic+#ar for for its &a#idit$. 0he -att#e Re(istration 4ecree is an exa p#e ? where the #aw itse#f pro&ides for a partic+#ar for for the &a#idit$ of the sa#e. 5+t the #aw a$ re1+ire partic+#ar for for its enforcea'i#it$ of the sa#e and that wo+#d 'e 1403 or the stat+te of fra+ds. -oncrete#$, the sa#e of a parce# of #and if not in writin( is &a#id '+t +nenforcea'#e. )t is not &oid. "ote that the price of the #and is irre#e&ant if i o&a'#e. Example: 5efore, the sa#e of a #and for 8300 is &a#id and enforcea'#e e&en if not in writin(. 5+t present#$, it has to 'e in writin( to 'e enforcea'#e. 0he price is sti## irre#e&ant. )f the o'/ect of the sa#e is o&a'#e, $o+ ha&e to consider not the &a#+e of the thin( '+t the price a(reed +pon. 0he &a#+e a$ 'e different fro the price. Ho+ can se## a thin( worth 81,000 for 8400 '+t the #aw pro&ides for the price. )f the price is at #east 8500 and the sa#e is not in writin(, it wi## 'e +nenforcea'#e. Q: .ale of a watch (2*+, not in writing, may it be unenforceable? A! )t a$ 'e +nenforcea'#e if '$ the ter s of s+ch a(ree ent, the o'#i(ation therein is not to 'e perfor ed within 1 $ear. )f the$ a(reed that the watch wi## 'e de#i&ered 2 $ears after and the
8a(e 8
pa$ ent wi## a#so 'e 'e +nenforcea'#e.
ade +pon de#i&er$, it wo+#d
(aredes vs. !spino ;acts! 8aredes was a prospecti&e '+$er. %spino owns a #and in 8a#awan. 8aredes is fro "orthern L+=on. 0heir ne(otiation was thr+ #etters and te#e(ra s. %spino sent a #etter to 8aredes statin( that he and his wife a(reed to se## the #and to 8aredes, that the deed of sa#e wi## 'e exec+ted +pon the arri&a# of 8aredes in 8a#awan. <hen 8aredes arri&ed, %spino said he is no #on(er interested in se##in(. 8aredes fi#ed a case to co pe# %spino to se## the #and. %spino contended that the contract is +nenforcea'#e 'eca+se it is not in writin(. Ae contended that +nder the stat+te of fra+ds it is +nenforcea'#e. Ais contention was s+stained '$ the tria# co+rt. Ae#d! 0his contract is no #on(er co&ered '$ the stat+te of fra+ds 'eca+se there was a #etter. Artic#e 1403 pro&ides that a note or e orand+ si(ned '$ the part char(ed wo+#d 'e s+fficient to ta2e that contract o+t of the operation of the stat+te of fra+ds. )n this case, the defendant wrote a #etter with his si(nat+re on it. 0he #etter too2 that contract o+t of the operation of the stat+te of fra+ds and therefore he a$ 'e co pe##ed to exec+te the fina# deed of sa#e. R2;:0S AN. O(L2;A02ONS O9 0:4 C4N.OR )n a deed of sa#e 64.*7, there can 'e h+ndreds of o'#i(ations of the &endor '+t those o'#i(ations wo+#d 'e 'eca+se of the stip+#ation. 5+t there are on#$ few o'#i(ations i posed '$ #aw. 0he 3 ost i portant! 1. 0o transfer ownership 2. 0o de#i&er 3. 0o warrant the thin( 0here are other o'#i(ations! 4. .'#i(ation to ta2e care of the thin( so#d with the di#i(ence of a (ood father of a fa i#$ prior to de#i&er$. 5. ;ro the ti e of the perfection +p to the ti e of de#i&er$ then there wo+#d 'e o'#i(ation to pa$ for the expenses for the exec+tion and re(istration of the sa#e and o'#i(ation to pa$ the capita# (ains tax wo+#d 'e on the se##er as a r+#e. 6. .'#i(ation to de#i&er the fr+its which is re#ated to the o'#i(ation to de#i&er the thin( O(L2;A02ON 0O .4L2C4R 0:4 9R=20S B!: A sold a mango plantation to B but they stipulated that delivery will be after the signing of the deed of sale. After the e'piration of the 3@month period, B demanded for the delivery. #he vendor was able to deliver 1 month after the date when he was supposed to deliver the mango plantation. &uring this period, the vendor harvested mango fruits and sold them to B. #he vendor was able to deliver only after the other fruits were harvested and sold to D.
-an B recover the mango fruits from D during the 3th month period? *A! 4eter ine first whether 5 is entit#ed to the fr+its 'eca+se if he is not entit#ed, then he cannot reco&er the fr+its. )s he entit#ed to the fr+its after 6? onth period d+rin( the 1? onth period prior to de#i&er$G Hes, in fact, +nder 1537, the fr+its of the thin( so#d fro the ti e of perfection sha## pertain to the '+$er. Q: &oes it mean that the fruits from the time of perfection shall pertain to the buyer? A! Aindi na an. 1537 sho+#d 'e considered in re#ation to 1164. :nder 1164, the fr+its sha## pertain to the creditor on#$ fro the ti e the o'#i(ation to de#i&er the thin( arises. 0h+s, 5 is entit#ed to the fr+its on#$ fro the ti e of the expiration of the 6? onth period. 4i 'a a$ a(ree ent si#a that the an(o p#antation wi## 'e de#i&ered on#$ after 6 onthsG :pon the arri&a# of this period, the o'#i(ation to de#i&er the thin( arose, therefore, 5, consistent with 1164 and 1537 wi## ha&e the ri(ht to the fr+its. Q: -an he recover the fruits from B? A! "o. :nder 1164, 2nd para(raph, the '+$er or the creditor wi## ha&e no rea# ri(ht o&er the fr+its after the de#i&er$ of the thin(. Q: hat is the remedy of the buyer? A! 0he re ed$ is to (o after the se##er for se##in( these fr+its na hindi na an s$a entit#ed. 0he '+$er is a#read$ entit#ed a#tho+(h a(ain he wi## ha&e no rea# ri(ht o&er the fr+its +nti# the de#i&er$ of the thin( to hi . O(L2;A02ON 0O 0A<4 CAR4 O9 0:4 0:2N; ;.R.: 0he thin( so#d sho+#d 'e deter inate 'eca+se if (eneric 61460, 2nd para(raph7 then there is nothin( to 'e ta2en cared of. )t wi## 'eco e deter inate on#$ +pon de#i&er$. 4Ace&tions: 0here are sa#es transactions wherein the &endor wo+#d not ha&e this o'#i(ation! a. -onstr+cti&e de#i&er$ ? 're&i an+ , 0here wo+#d 'e no o'#i(ation on the part of the se##er to ta2e care of the thin( fro the ti e of perfection 'eca+se at the ti e of perfection, the '+$er was a#read$ in possession of the thin(. 9a$'e he 'orrowed the thin(. Example: he 'orrowed the car and he decided to '+$ it , the thin( was a#read$ in his possession. '. BKa#iwaanC an( 'entahan 3 +pon perfection a$ de#i&er$ na then there is nothin( to 'e ta2en cared of. O(L2;A02ON 0O %AB 4D%4NS4S / 0AD4S 0hese o'#i(ations a$ 'e the s+'/ect of stip+#ation. 5$ a(ree ent, it wo+#d 'e the '+$er who wi## pa$ xxx "or a##$, dito hindi nat+t+#o$ an( sa#e dahi# hindi a(2as+ndo 2+n( sino a('a'a$ad n( tax.
8a(e 9
O(L2;A02ON 0O 0RANS94R O5N4RS:2% B!: <ay a person sell something which does not belong to him? ould the sale be valid? ould the buyer acEuire ownership over the thing sold, if seller does not own the thing? *A! Hes. .wnership o&er the thin( so#d is not an essentia# re1+isite for the sa#e to 'e &a#id. 5+t if the se##er does not own the thin(, he a$ ha&e a pro'#e on his o'#i(ation to transfer ownership. 0he pro'#e wo+#d 'e whether or not the '+$er wo+#d ac1+ire ownership o&er the thin( so#d if the person who so#d the thin( is not the owner. Q: ho can transfer ownership by way of sales? A! .n#$ those who ha&e the ri(ht to se##. Q: ho would have the right to sell and therefore they can transfer ownership by way of sale? A! ;irst, is the owner. %&en if he is not the owner, he a$ ha&e the ri(ht to se## 'eca+se! 617 Ae was (i&en the a+thorit$ '$ the owner. Example: A(ent 627 Ae a$ 'e the owner '+t he a$ ha&e the a+thorit$ of the #aw to se##, 2nown as B*tat+tor$ 8ower to *e##C 6Artic#e 15057. Examples: "otar$ p+'#ic in p#ed(e, #i1+idators, (+ardians and recei&ers. 637 0hose who ha&e the a+thorit$ of the co+rt. Example: *heriff. Note: it is as if the$ ha&e the a+thorit$ of #aw 'eca+se not e&en the /+d(e can &a#id#$ se## so ethin( if it is not consistent with the #aw. Q: <ay a buyer acEuire ownership over the thing sold if the seller has no right to sell? A! 0he answer '$ wa$ of exception is $es. 5+t the 7eneral r le here is +nder 1505 , the '+$er ac1+ires no 'etter tit#e than what the se##er had. )f the se##er is neither the owner nor does he ha&e the a+thorit$ to se##, the '+$er ac1+ires no 'etter tit#e than what the se##er had. )f his ri(ht is on#$ as a #essee that is the ost that can 'e transferred to the '+$er. )f he has no tit#e then no tit#e can 'e transferred to the '+$er. 4Ace&tions: 6<hen the '+$er can ac1+ire a 'etter tit#e than what the se##er had. %&en if the se##er does not ha&e the ri(ht to se##, the '+$er a$ ac1+ire ownership o&er the thin( so#d 'eca+se the #aw so pro&ides and not 'eca+se the se##er was a'#e to transfer ownership to the '+$er.7 1. 5$ %stoppe# 2. %stoppe# '$ 4eed 3. %stoppe# '$ Record 4. *a#e '$ an Apparent .wner 5. "e(otia'#e 4oc+ ent of 0it#e 6. 8+rchases fro a 9erchantDs *tore xxx 1. (1 4sto&&el , '$ the princip#e of estoppe#, a person is prec#+ded fro den$in( that another person has a+thorit$ to se## 'eca+se of his acts. A#so 2nown as B%stoppe# in 8aisC which is a 2ind of
e1+ita'#e estoppe# 'eca+se of the acts @ representation of the owner, he a$ not #ater on den$ the a+thorit$ of the 3rd person. $. 4sto&&el b1 .ee/ B!: A and B co@owners of land sold 5sale is verbal6 to B their land. B subseEuently sold the land to D. ould D be considered to have acEuired ownership over the land? *A! :nder 1434 which is considered as B%stoppe# '$ 4eedC 6technica# estoppe#7 , when the se##er who was not the ownerat the ti e of the sa#e, ac1+ires ownership, a+to atica##$, ownership passes to the '+$er '$ operation of #aw. Aowe&er, Artic#e 1434 re1+ires de#i&er$ to the '+$er. And +nder the facts, 1434 wo+#d not app#$ 'eca+se! a7 0here was no showin( there was pa$ ent '7 "o showin( that there was de#i&er$ of the #and to L. )t cannot 'e said that '$ operation of #aw, H #i2ewise ac1+ired ownership '$ wa$ of estoppe# '$ deed. '. 4sto&&el b1 Recor/ Furisprudence: *a#e '$ nephew of the owner of the #and. *ince the nephew co+#d not de#i&er the #and, the '+$er s+ed the nephew for estafa. ;or the acc+sed to 'e ac1+itted, he as2ed his +nc#e to testif$ that he act+a##$ had the a+thorit$ to se##. <hen the +nc#e testified in co+rt, the nephew is ac1+itted. After ac1+itta#, the '+$er de anded fro the +nc#e the de#i&er$ of the #and. 0he +nc#e ref+sed, c#ai in( that Bsa totoo #and, ) did not a+thori=ed $ nephewC. Q: -ase was filed against the uncle, would that action prosper? A! *- said $es 'eca+se he cannot 'e a##owed now to c#ai that his nephew was not a+thori=e to se## after he testified in co+rt that he (a&e s+ch a+thorit$. 0his is estoppe# '$ record which is considered a technica# estoppe#. !. Sale b1 an A&&arent Owner A. ;actorDs Act 5. Recordin( Laws -. An$ other pro&ision of #aw ena'#in( the apparent owner of the (oods to dispose of the as if he was rea##$ the owner. A. ;actorDs Act ;actor is an o#d na e for a(ent. %&en if a(ent has no ri(ht to se##, a third person a$ ac1+ire ownership 'eca+se he a$ re#$ on the power of attorne$ as written. Example! *pecia# 8ower of Attorne$ 6*8A7 , a(ent was a+thori=ed to se## a car. Aowe&er, in a &er'a# instr+ction when the *8A was de#i&ered, the principa# a+thori=ed the a(ent to se## that car to 1 of the e 'ers of a certain or(ani=ation '+t the a(ent did not se## that car to one of the e 'ers of a certain or(ani=ation. Q: ould the buyer acEuire ownership?
8a(e 10
A! Hes. Artic#e 1900 pro&ides that so far as 3 rd persons are concerned, the$ on#$ ha&e to re#$ on the *8A as written, e&en if a(ent has no a+thorit$ or ri(ht to se##. 5. Recordin( Laws M ost co on 1+estion in the 'ar exa <apalo vs. <apalo ;acts! 0he e#der 'rother, 9i(+e# 9apa#o, donated ha#f of his #and to his $o+n(er 'rother, 9axi o 9apa#o, 'eca+se the #atter wi## (et arried. 5+t instead of the $o+n(er 'rother as2in( his e#der 'rother to si(n a deed of donation o&er that #and, he as2ed his e#der 'rother and the #atterDs spo+se to si(n a 4eed of *a#e o&er the entire parce# of #and. Ae was a'#e to ha&e the entire propert$ re(istered in his na e. ;ew $ears after, he so#d the #and to the "arcisos. .'&io+s#$, he does not ha&e the ri(ht to se## the other ha#f. 0he "arcisos c#ai ed that the$ are '+$ers in (ood faith fro an apparent owner 'eca+se the entire propert$ was in the na e of 9axi o. Q: &id the Garcisos acEuire ownership? A! *- *aid 3 no, 'eca+se the #aw re1+ires that the sa#e +st not on#$ 'e a sa#e '$ an apparent owner '+t the '+$er +st 'e a '+$er in (ood faith. 0he '+$ers here were in 'ad faith 'eca+se 'efore the$ 'o+(ht the #and, the$ went to the ho+se of 9i(+e# and as2ed hi whether he wo+#d a##ow 9axi o to se## the entire #and. *- said the$ are in 'ad faith. B!: #he owner of a parcel of land covered by an :-# mortgaged the land to a creditor. #he owner delivered the :-# to the creditor. #he mortgagee forged the signature of the owner in a deed of sale. 9e was able to register the property in his name. 9e sold the land to a third person who had no 0nowledge of the transaction. &id the mortgagee acEuire ownership? *A! "o. A for(ed deed is a &oid instr+ ent and cannot con&e$ a &a#id tit#e to the '+$er '+t +nder the #aw the for(ed deed a$ act+a##$ 'e the root of a &a#id tit#e +nder the B9irror 8rincip#eC , when the '+$er 'o+(ht it fro the ort(a(ee in whose na e the propert$ was re(istered and re#ied on the 0-0, then if he 'o+(ht the propert$ in (ood faith, he wi## 'e considered the owner +nder Artic#e 1505 in re#ation to 8.4. 529. Ae 'o+(ht the #and re#$in( on the 0-0 and 'o+(ht the #and in (ood faith then he wo+#d ha&e a 'etter ri(ht than the rea# owner. Q: hen a buyer may be considered a buyer in good faith? A! 5$ the ere fact that he had no 2now#ed(e at the ti e of the exec+tion of the deed does not necessari#$ ean that he is in (ood faith. 0he #aw f+rther re1+ires that he +st ha&e f+##$ paid witho+t 2now#ed(e of the defect in the tit#e of the se##er. *o if after exec+tion he is in (ood faith '+t 'efore pa$ ent he is in 'ad faith then he is in 'ad faith.
B!: A, the owner of a parcel of land entrusted to his cler0 the #-# of the land for safe0eeping. #his cler0 instead forged the signature in the &:. with him as the buyer. #hereafter, he was able to have the property registered in his name. #hen he sold the land to a third person. &id the cler0 acEuire title over the land? -an the owner of the land have the property registered in his name? *A! 0he 3rd person 'ein( in (ood faith, he is considered to ha&e ac1+ired ownership o&er the thin( so#d e&en if the se##er had no ri(ht to se##. 5$ wa$ of exception 'eca+se the '+$er 'o+(ht it fro an apparent owner. An apparent owner who disposed the thin( as if it was owned '$ hi . #. Ne7otiable .oc ment of 0itle )f (oods are co&ered '$ a ne(otia'#e doc+ ent of tit#e and it was thereafter ne(otiated. )f the '+$er 'o+(ht it in (ood faith and for &a#+e, he wi## 'e protected +nder the #aw. Ae wi## ac1+ire ownership e&en if the se##er did not ha&e the ri(ht to se##. Example: 0he se##er a$ ha&e ac1+ired tit#e '$ &io#ence. 5in+('o( n$a $+n( owner n( (oods. 8ero 2+n( ne(otia'#e doc+ ent of tit#e $an and proper#$ ne(otiated, #a#o na 2+n( 'earer doc+ ent of tit#e, then the '+$er a$ ac1+ire ownership e&en if the se##er has no ri(ht to se##. ,. % rchases from a Merchant>s Store / Mar6ets / 9airs .un Brothers vs. Helasco ;acts! *+n 5rothers was the owner of a refri(erator. *+n 5rothers was en(a(ed in the '+siness of se##in( refri(erator. *+n 5rothers so#d a ref to Lope= on insta## ent 'asis. As stip+#ated, *+n 5rothers reser&ed ownership +nti# f+## pa$ ent. Lope= on#$ paid 8300 o+t of 81,500. 0he 'a#ance to 'e paid on insta## ent. Lope= then so#d the ref to Ee#asco. Q: ould Helasco acEuire ownership? A! "o 'eca+se Artic#e 1505 pro&ides that the '+$er ac1+ired no 'etter tit#e than what the se##er had. Aowe&er, Ee#asco was the owner of a store. .n the next da$, Ee#asco so#d the ref to Ko Kan( -h+ who paid in f+##. <hen *+n 5rothers #earned this transaction, it fi#ed an action to reco&er the ref fro Ko Kan( -h+. Q: -an .un Brothers recover the ref from Io Iang -hu by reimbursing the price? A! *- *aid no. Artic#e 1505 pro&ides that the ownership of the '+$er who 'o+(ht the thin( fro a erchantDs store and he 'o+(ht it in (ood faith is a'so#+te in character. Artic#e 559 does not app#$ 'eca+se *+n 5rothers was not +n#awf+##$ depri&ed of the ref and the ref was neither #ost. 559 wi## app#$ if the owner was +n#awf+##$ depri&ed 6Example: the thin( was #ost or sto#en7. :nder 559 he can reco&er '$ rei '+rsin( the '+$er who 'o+(ht the thin( in (ood faith. Ae has to rei '+rse.
8a(e 11
B!: #he painting owned by J was stolen from her and later she noticed the painting in the room of B. hen as0ed how he acEuired the painting, B said he bought it from a gallery auction. -an the owner J recover the painting from B? *A! 0he first consideration here is the nat+re of the (a##er$ a+ction. )s it a p+'#ic sa#e or notG *o e s+((ested answers of the :8 Law -enter wo+#d c#ai that a (a##er$ a+ction is not a p+'#ic sa#e. Att1. =ribe: ) can a(ree that so e (a##er$ a+ctions are pri&ate , B'$ in&itationC. 0h+s, in that a+ction ) wo+#d definite#$ a(ree, hindi $an p+'#ic sa#e. )f it is not a p+'#ic sa#e then the owner who was +n#awf+##$ depri&ed can reco&er that propert$ e&en witho+t rei '+rse ent. )f the a+ction sa#e is considered a p+'#ic sa#e, he can reco&er as #on( as he is wi##in( to rei '+rse the '+$er of the price paid in that sa#e. Artic#e 559 is app#ica'#e 'eca+se the owner was +n#awf+##$ depri&ed. B!: J lost her diamond ring in a hold@up. =ater on, this ring was an obKect of a public sale of one pawnshop. -an J recover the ring from the buyer in that public sale? *A! Hes, Artic#e 559 pro&ides that e&en if the '+$er is in (ood faith so #on( as the owner is wi##in( to rei '+rse the '+$er of the price paid in that sa#e. Note: A(ain in 1505, there is no ri(ht to reco&er as #on( as the '+$er 'o+(ht it in (ood faith fro a erchantDs store, there can 'e no reco&er$ as a atter of ri(ht. Q: 9ow transfer of ownership is effected? A! :nder the #aw, as far as thin(s are concerned, it is effected '$ de#i&er$! 6a7 Act+a# 6'7 -onstr+cti&e 0here can 'e no transfer of ownership witho+t de#i&er$. Q: Is it correct to say that every time there is delivery, the buyer acEuires ownership upon delivery? A! "ot necessari#$. 0his is not an a'so#+te r+#e. 0here are 2inds of sa#e where despite de#i&er$ the '+$er does not ac1+ire ownership +pon de#i&er$! 617 -onditiona# *a#e , ownership is reser&ed '$ the se##er s+ch that despite de#i&er$, ownership does not pass. Q: .o when would the buyer acEuire ownership in conditional sale? A! "ot +pon de#i&er$ '+t +pon the happenin( of the condition which is nor a##$ the f+## pa$ ent of the price. 627 *+n 5rothers -ase 637 *a#e on 0ria# @ *a#e on *atisfaction @ *a#e on Appro&a# , +pon de#i&er$, e&en if there is act+a# de#i&er$ there is no transfer of ownership at the ti e of de#i&er$.
Q: hen would the buyer acEuire ownership? A! ;ro the o ent he si(nifies his acceptance or appro&a# of the thin(. Q: hat if he did not signify his acceptance or approval? <ay he be considered to have accepted and therefore ownership may be considered to have passed to him? A! Hes. 2 *cenarios! 6a7 0here a$ 'e a period a(reed +pon '$ the parties within which the '+$er wo+#d ha&e to decide. %&en if he fai#ed to si(nif$ his acceptance '$ the ere #apse of the period, he is dee ed to ha&e accepted 6i p#ied#$ accepted7 hence, ownership passes to hi . 6'7 %&en 'efore the #apse of the period, he a$ 'e considered to ha&e accepted if he did an act wherein he wo+#d 'e considered to ha&e adopted the transaction then ownership passed to hi . Example: %&en if he has 10 da$s within which to decide '+t on the 2 nd da$, he so#d the car to another. .'&io+s#$, he is dee ed to ha&e accepted the thin( 'eca+se he did an act which is inconsistent with the ownership of the se##er #i2e he donated or destro$ed the thin(. 6c7 )f there is no period a(reed +pon, the #aw sa$s if he did not si(nif$ his acceptance he wi## 'e considered to ha&e accepted after the #apse of a reasona'#e ti e. Reasona'#e ti e wi## depend on the circ+ stances of the sa#e, p+rpose of the sa#e, nat+re of the thin( so#d. Example: 8erisha'#e (oods. Sale or Ret rn Q: :wnership passes upon delivery? A! Hes. Aowe&er, the '+$er is (i&en the ri(ht to re&est the tit#e 'ac2 to the se##er nor a##$ within a certain period. Example: -#a+ses in s+'scription a(a=ine which sa$s that $o+ can ret+rn within 30 da$s witho+t pa$ ent. B!: A car was sold for (1*+,+++. ()*,+++ paid upon the e'ecution of &:.. #he balance payable on a monthly basis. ()*,+++ was paid. #he car was delivered to the buyer. 9owever, before he could pay the balance, the car was destroyed due to a fortuitous event or was burned ''' -an he still be compelled to pay the balance? *A! Hes. :pon the de#i&er$ of the car to the '+$er, there 'ein( no retention of ownership '$ the se##er. 6Note: <a#a sa facts na na?retain n( se##er and ownership7. 0herefore, ownership passed to the '+$er. :nder the princip#e of res perit do ino , Artic#e 1504 , the owner 'ears the #oss and hence it can 'e co pe##ed to pa$ the price. ;.R.: Res perit do ino , 1504. Note! 4eter ination of when ownership passed is i portant 'eca+se if at the ti e of the #oss, the
8a(e 12
'+$er is not $et the owner, as a r+#e, the '+$er wi## not 'ear the #oss #i2e in sa#e on appro&a# and he has 10 da$s within which to decide and the thin( was #ost thro+(h a fort+ito+s e&ent within the 10? da$ period witho+t fa+#t on his part, the se##er wi## 'ear the #oss. 4Ace&tions: 1. =awyers$ -ooperative vs. #abora ;acts! 0his pertains to a sa#e of A erican >+rispr+dence to Att$. 0a'ora. )t was a sa#e on insta## ent 'asis. :pon de#i&er$ or on the da$ the 'oo2s were de#i&ered to the office of Att$. 0a'ora, the entire '#oc2 where Att$. 0a'oraDs office was #ocated 6in "a(a -it$7 was '+rned. 0he office inc#+din( the 'oo2s was '+rned. Att$. 0a'ora ref+sed to pa$ the 'a#ance. Law$ersD -ooperati&e fi#ed a case. 0wo defenses were raised '$ Att$. 0a'ora! 617 Res perit do ino , there was a stip+#ation in the contract that Law$ersD -ooperati&e wi## retain ownership o&er the 'oo2s +nti# f+## pa$ ent. <hen the 'oo2s were #ost, no f+## pa$ ent so Att$. 0a'ora was not $et the owner. Aence, Law$ersD -ooperati&e sho+#d 'ear the #oss. Q: Is this argument correct? A! *- *aid no. A#tho+(h there was a stip+#ation that Law$ersD -ooperati&e retains ownership o&er the 'oo2s +nti# f+## pa$ ent, there was another stip+#ation in the contract which states that the ris2 of #oss sha## pertain to the '+$er fro the ti e the 'oo2s are de#i&ered whate&er a$ 'e the ca+se of the #oss. *o with that stip+#ation, that is one of the exceptions. $. 0itle was reser+e/ b1 the seller onl1 to sec re the &a1ment of the &rice b1 the b 1er Q: But even assuming that there was such no stipulation under the contract, would Atty. #abora have to bear the loss? A! Hes 'eca+se it wo+#d fa## into the other exceptions +nder 1504 that when the tit#e was reser&ed '$ the se##er on#$ to sec+re the pa$ ent of the price '$ the '+$er, then '$ #aw, ris2 of #oss wi## a#read$ 'e with the '+$er. 0his tit#e of the se##er is 2nown as B*ec+rit$ 0it#eC and therefore '$ #aw xxx the '+$er wi## 'ear the #oss. '. .ela1 in the .eli+er1 <hen there is de#a$ in the de#i&er$ d+e to the fa+#t of one of the parties, whoe&er was at fa+#t wi## 'ear the #oss. "ote that either '+$er or se##er a$ 'e at fa+#t. Example 1: 0he '+$er and the se##er a$ ha&e a(reed that the (oods are to 'e o'tained '$ the '+$er at the wareho+se of the se##er on a specific date. .n the date a(reed +pon, the se##er de anded the '+$er to (et the (oods. 4espite s+ch, the '+$er fai#ed to (et the (oods. .n the next da$, the wareho+se was destro$ed d+e to fort+ito+s e&ent. Q: ho is the owner at that time?
A! 0he se##er '+t there was de#a$ on the part of the '+$er hence +nder 1504 it is the '+$er who wi## 'ear the #oss. Example 2: 0he se##er hi se#f a$'e the one at fa+#t. 0h+s, he is in de#a$ in de#i&erin( the (oods to the '+$er. Q: hy would this be an e'ception to the res perit domino rule? A! An( pre ise dito, the ownership has a#read$ passed to the '+$er '+t the (oods are sti## with the se##er. -an this happen? Hes, 'eca+se of constr+cti&e de#i&er$. )f there was constr+cti&e de#i&er$, ownership passes to the '+$er '+t ph$sica# possession is sti## with the se##er. 0he$ a$ ha&e a(reed this ti e that the se##er wi## 'e the one to de#i&er the (oods to the '+$er at a certain date. <hen the date arri&ed, despite de and fro the '+$er, there was no de#i&er$ on the part of the se##er. %&en if the (oods are destro$ed the next da$ d+e to fort+ito+s e&ent, ta2e note an( owner a$ an( '+$er na '+t who will bear the loss? 0he se##er 'eca+se he was in de#a$ in de#i&erin( the (oods. .O=(L4 SAL4 (AR02CL4 1#!!) B!: J sold a registered parcel of land to " who did not register the sale. #hereafter, J sold the very same parcel of land to - who registered and obtained a new #-# in his name. ho would have a better right? *A! Att1. =ribe: ) f+##$ a(ree with the :8 Law -enterDs answer. )t depends on whether or not re(istered the sa#e in (ood faith. Re(istration is on#$ one of the re1+ire ents (ood faith is e1+a##$ an i portant re1+ire ent. Note: )n 1544 6do+'#e sa#e7, as to which r+#e app#ies wi## depend on the thin( so#d if o&a'#e or i o&a'#e. Q: If the thing is sold twice, who would have the better right? A! )f o&a'#e, the '+$er who first too2 possession in (ood faith wi## ha&e the 'etter ri(ht. )f i o&a'#e, the '+$er, who first re(istered in (ood faith, wi## ha&e the 'etter ri(ht. )f there was no re(istration, it wi## 'e the first who too2 possession in (ood faith. )f no possession in (ood faith, the '+$er who has the o#dest tit#e in (ood faith. %&en the 1st '+$er is re1+ired to 'e in (ood faith. .'&io+s#$, the first '+$er wo+#d ha&e the o#dest tit#e. H+n( (ood faith ditto o'&io+s#$ wo+#d not pertain to a'sence of 2now#ed(e of the 2 nd sa#e 2asi s$e pre 1st '+$er s$a. Ae is nonethe#ess re1+ired to ha&e 'o+(ht the thin( in (ood faith. Nood faith eans that he had no 2now#ed(e of the defect of the tit#e of the se##er. 5arnin7: Please be careful when you recite register the sale not the land! you
B!: If a thing is sold to 4 or more persons, what would be the effect of: 5a6 #he first buyer who registered the sale with 0nowledge of the 4nd sale. 5b6 #he second buyer who first registered the sale with 0nowledge of the prior sale. ho would have a better right? *A! 6a7 )n the first scenario , the first '+$er who re(istered the sa#e with 2now#ed(e of the second sa#e would that ma0e him a registrant in bad faith? "o. H+n( 2now#ed(e wo+#d pertain to the 2now#ed(e of the prior sa#e in order for hi to 'e a 'ad faith re(istrant. %h +na na an s$an( '+$er eh so e&en if he re(istered, it wo+#d not a2e hi a 'ad faith re(istrant. 6'7 )n the second scenario , the '+$er there is in 'ad faith. Ae has 2now#ed(e of the prior sa#e. Aence, he has no ri(ht. Q: If a person bought a thing without 0nowledge of the prior sale, does that mean he is a registrant in good faith? A! "ot necessari#$ 'eca+se fro the sa#e he a$ ha&e ac1+ired 2now#ed(e prior to the re(istration. <hat is re1+ired '$ #aw is not 'ein( a '+$er in (ood faith '+t a re(istrant in (ood faith. 8weden( at the ti e of the sa#e xxx the '+$er had no 2now#ed(e na na(2a'entahan na pa#a n+n( +na '+t after 2 onths n+n( a(papare(ister na, the '+$er had the 2now#ed(e of the prior sa#e and therefore he wi## 'e a re(istrant in 'ad faith. Bautista vs. .ioson ;acts! 0he owner A so#d a re(istered #and to 5 who did not re(ister and neither did 5 ta2e ph$sica# possession 'eca+se after the sa#e the$ exec+ted a #ease a(ree ent in which 5 was now the #essor. A contin+ed to 'e in possession of the #and. After the sa#e and the contract of #ease, A so#d the #and to -, this ti e - too2 ph$sica# possession. -an he do that? Hes. Kasi #essee s$a eh, hence, he can transfer possession to the 2nd '+$er. ho between B and - would have a better right? 5- did not also register the sale6 *- *aid that 5 wo+#d ha&e a 'etter ri(ht 'eca+se when he exec+ted a #ease a(ree ent with A, he is in conte p#ation of #aw in possession which is #e(a# possession o&er the thin( and th+s a2in( hi a possessor in (ood faith. Ka$ -, ph$sica# possession n(a pero pan(a#awan( possession #an(. H+n( #e(a# possession was with 5. Note: 0his decision was critici=ed 'eca+se so e a+thors said that it sho+#d 'e act+a# possession '+t the *- said that #e(a# possession wo+#d s+ffice. -arumba vs. -A ;acts! *a#e of #and to 5 who too2 ph$sica# possession '+t did not re(ister. Ae is the first '+$er. Aowe&er, the se##er 6A7 is a /+d( ent de'tor in one case to a certain creditor na ed -. 0he #and 'eca e the s+'/ect of an exec+tion sa#e. 0he '+$er 'eca e - who re(istered the sa#e.
8a(e 13
Q: ho would have a better right between and B 5- had no 0nowledge of the sale6? A! *- *aid 3 5 'eca+se this #and was not re(istered +nder the 0orrens *$ste . 1544 wo+#d not app#$ to +nre(istered #ands. Q: 9ow would you 0now that the land is registered under the #orrens .ystem? A! 8a( a$ .-0 or 0-0 na. 8ero 2+n( i'an( doc+ ents #an( #i2e tax dec#aration, it is not considered re(istered. Q: But - registered the sale, does it mean that it is registered under the #orrens .ystem? A! "o 'eca+se there are a#so s$ste s of re(istration of sa#e of #and in which the #ands are sti## considered as +nre(istered #ands. *a i'an( #i'ro. Aindi #i'ro +nder the 0orrens *$ste . Q: If 1*22 will not apply, who has the better right? A! 5 'eca+se there was de#i&er$ to hi which was act+a# de#i&er$ and hence +nder the (enera# r+#es on de#i&er$, ownership passes to the '+$er and when ownership ha&e passed to the '+$er, when the propert$ was so#d in an exec+tion sa#e, ano ma0u0uha ng buyer sa e'ecution sale? <a#a. Ae ere#$ steps into the shoes of the /+d( ent de'tor at the ti e of the sa#e then he did not ac1+ire ownership '$ &irt+e of that sa#e. O(L2;A02ON 0O .4L2C4R 0:4 O(@4C0 O9 0:4 SAL4 4eter ine the s+'/ect atter if it is a thin( or a ri(ht 'eca+se there are different odes of de#i&er$ as to thin( and as to ri(ht. 0hin7s <in/s of /eli+er1 of thin7s as a conse3 ence of sale 6nown as Etra/itionF G n/er the law: 1. Act+a# 4e#i&er$ @ 9ateria# 4e#i&er$ @ 8h$sica# 4e#i&er$ @ Rea# 4e#i&er$ , the thin( is in the possession and contro# of the &endee. 0a2e note Bcontro#C. 0a2e note Bto the &endeeC. Q: hat if the thing was delivered to a 7 rd person? A! >+rispr+dence , *- said 3 $es, there a$'e act+a# de#i&er$ if the third person has a+thorit$ to recei&e fro the &endee. 0h+s, a2in( hi an a(ent of the &endee and that wo+#d sti## 'e act+a# de#i&er$. Note: 8hi#ippine #aw does not on#$ re1+ire act+a# de#i&er$ , constr+cti&e de#i&er$ a$ res+#t in transfer of ownership. 2. -onstr+cti&e , '$ the exec+tion of a p+'#ic instr+ ent if the contrar$ intention does not appear on the doc+ ent. 5$ the ere exec+tion of the p+'#ic instr+ ent that is e1+i&a#ent to de#i&er$. Aence, ownership passes to the '+$er. IuenCle L .treiff vs. <ac0e L -handler
8a(e 14
;acts! 0he ori(ina# owner here *tan#e$ and Nriffindor 6paran( Aarr$ 8otter 7 and the propert$ in&o#&ed here are fixt+res of a sa#oon. 9ac2e and -hand#er are /+d( ent creditor of *tan#e$ and Nriffindor. 5eca+se of a /+d( ent in fa&or of 9ac2e and -hand#er, the sheriff #e&ied +pon these properties which was sti## in the possession of *tan#e$ and Nriffindor. 0he properties +nder exec+tion were 1+estioned '$ K+en=#e and *treiff. K+en=#e and *treiff c#ai ed that these thin(s were so#d to the prior to the #e&$. )f the$ c#ai ed that the properties were so#d to the , the properties sho+#d 'e in their possession. 0a2e note that *tan#e$ and Nriffindor were sti## in possession of the (oods ph$sica##$. Aence, there was no act+a# de#i&er$. Ae#d! )n order that ownership wo+#d pass, it has to 'e in a p+'#ic instr+ ent if that wo+#d 'e '$ constr+cti&e de#i&er$. Note: 0he exec+tion of a p+'#ic instr+ ent a$ 'e e1+i&a#ent to act+a# de#i&er$ if the contrar$ intention does not appear on the 4.*. Kasi pweden( notari=ed '+t it is c#ear in the contract that ownership wi## not pass +nti# f+## pa$ ent of the price then that is not e1+i&a#ent to de#i&er$. 0he intention is c#ear. <in/s of Constr cti+e .eli+er1 1. 4e#i&er$ of the Ke$s , of the p#ace where the (oods are #ocated #i2e a wareho+se. 8rof. 4e Leon! this a#so ca##ed as s$ 'o#ic de#i&er$. 2. 5$ 9ere -onsent or A(ree ent of the 8arties , if at the ti e of the sa#e, possession to the (oods cannot 'e transferred to the '+$er. 0here +st 'e a reason wh$ it cannot 'e transferred at the ti e of the sa#e. 0his is a#so 2nown as tradition #on(a an+. Example 1: 0he thin( was the s+'/ect atter of a #ease with a 3rd person +nti# the expiration of the #ease, the thin( cannot 'e de#i&ered. Example 2: 0he thin( was the s+'/ect co odat+ . As a r+#e, period of co has to 'e respected. atter of odat+
3. 5re&i 9an+ , this is a 2ind of constr+cti&e de#i&er$ 'eca+se the '+$er was a#read$ in possession of the thin( so#d at the ti e of the perfection of the sa#e so he wi## contin+e to 'e in possession after the sa#e, no #on(er as a #essee '+t this ti e as the owner. *o dati #essee #an( s$a that is wh$ he was in possession or a$'e depositar$ #an( s$a or a$'e he was the a(ent at the ti e prior to the sa#e. 4. -onstit+t+ 8ossessori+ , the se##er wi## contin+e to 'e in the possession of the thin( after the sa#e '+t no #on(er as an owner '+t in another capacit$ #i2e #essee. Bautista vs. .ioson
5eca+se a #ease a(ree ent was entered into '$ the '+$er and se##er after the sa#e then the '+$er 'eca e the #essor and the se##er 'eca e #essee. 0herefore, the #essee wo+#d contin+e with the possession no #on(er as an owner. Q: hat if pursuant to their agreement the seller delivered the goods to a common carrier. Upon delivery of the goods to a common carrier, would that result in transfer of ownership immediately? 5#his is important because in case the goods were destroyed even due to a fortuitous event while in transit, who will bear the loss?6 A! )f de#i&er$ to a co on carrier is de#i&er$ to the '+$er, then ownership passes to the '+$er +pon de#i&er$ to the co on carrier. 0hat is the (enera# r+#e. 4Ace&tions! 617 )f stip+#ated in the 4.* that despite de#i&er$ to co on carrier ownership wi## not pass to the '+$er 'eca+se ownership wi## pass +pon f+## pa$ ent. 627 %&en if 4.* does not pro&ide for s+ch stip+#ation, the se##er a$ ha&e o'tained a 'i## of #adin( which pro&ides that the (oods are de#i&era'#e to the se##er hi se#f or the a(ent of the se##er. Ri7hts <in/s of .eli+er1 of 2ncor&oreal %ro&ert1 / 8 asi G 0ra/ition: 1. %xec+tion of 8+'#ic )nstr+ ent 2. 8#acin( the 0it#e of .wnership in the 8ossession of Eendee , a ri(ht wo+#d nor a##$ 'e co&ered '$ a certificate. Example: de#i&er$ of the certificate of shares of stoc2s. 3. :se '$ the Eendee of Ais Ri(hts with the EendorDs -onsent Example: *a#e of shares of stoc2s 3 the &endee a$ not a#wa$s ha&e the ri(ht to exercise his ri(hts +nder the shares of stoc2s. -oncrete#$, if there is a stoc2ho#dersD eetin(, the 'oo2s of the corporation wi## 'e c#osed for 30 da$s 'efore the eetin(. 0h+s, if the sa#e occ+rred when the 'oo2s are a#read$ c#osed, no one wi## 'e reco(ni=ed except those re(istered owners. *o if $o+ are the '+$er of those stoc2s, $o+ can on#$ +se $o+r ri(ht with the consent of the &endor. R=L4S ON SAL4 AS 0O 8=AN020B / 8=AL20B O9 0:4 0:2N; SOL. Q: In a sale involving 1,+++ pairs of shoes with a specific design as agreed upon. #he seller delivered 1,4++ pairs of shoes instead of only 1,+++. -an the buyer reKect everything? A! "o. Ae has the ri(ht to re/ect on#$ the excess. Re/ect the 200 '+t he can 'e co pe##ed to accept the 1,000.
Q: hat if instead of 1,+++, ?++ was only delivered? A! 0he '+$er cannot 'e co pe##ed to recei&e 800 'eca+se partia# perfor ance is non?perfor ance. Ho+ cannot co pe# the creditor to accept partia# f+#fi## ent as a r+#e 'eca+se 617 it can 'e a s+'/ect of a stip+#ation that there can 'e partia# de#i&er$. Other 4Ace&tions: 627 <hen o'#i(ation pertains to o'#i(ation which is part#$ #i1+idated and part#$ +n#i1+idated. 0he de'tor can co pe# the creditor to accept the portion which was a#read$ #i1+idated. 637 <hen the o'#i(ation is s+'/ect to different ter s and conditions. Q: #he shoes per pair is (1,+++. #he seller only delivered ?++ pairs out of 1,+++ pairs. #he buyer accepted. It turned out that the seller can no longer deliver the balance 54++ pairs6. 9ow much can the buyer be compelled to pay? ?++ ' (1,+++? A! "ot necessari#$. Ho+ ha&e to a2e a distinction as to whether the '+$er was aware that the se##er co+#d no #on(er de#i&er the 'a#ance or when he accepted, he was not aware. )f he was aware that the se##er co+#d no #on(er de#i&er the 'a#ance then he can 'e co pe##ed to pa$ at the contract rate so 800 x 81,000 O 8800,000. )f he had no 2now#ed(e, he can 'e co pe##ed to pa$ on#$ the fair &a#+e. ;air &a#+e si(+ro non 8700 each instead of 81,000. Q: #he obligation to deliver 1,+++ cavans of <ilagrosa rice. Instead of delivering 1,+++ cavans of <ilagrosa, the seller delivered 1,1++ cavans of both <ilagrosa and Burmese rice. <ay the buyer reKect everything? A! Hes, if the (oods are indi&isi'#e. 9eanin( each sac2 of rice, 9i#a(rosa and 5+r ese rice were ixed. Aowe&er, if it is c#ear that per sac2 it is 9i#a(rosa rice and the 100 sac2s, it is c#ear that those are 5+r ese rice that wo+#d not 'e considered as indi&isi'#e. Ae can 'e co pe##ed to accept 1,000 sac2s 9i#a(rosa and he has the ri(ht to re/ect 100 sac2s 5+r ese rice. SAL4 O9 R4AL0B Q: .ale of a parcel of land. (rice agreed upon is (1<. <ore or less 1++ sEm. #he actual area delivered by the seller was only ;* sEm. hat are the remedies of the buyer? A! 617 *pecific perfor ance , wo+#d 'e a re ed$ if the se##er is sti## in the position to de#i&er the 'a#ance. *i(+ro $+n( 2ata'in( #+pa sa se##er din, hence, he can afford to (i&e additiona# 5 s1 . 627 Q: If specific performance is not possible, is proportional reduction a remedy? A! )t depends on whether the sa#e is considered as a sa#e with a state ent of an area of a rate of a certain eas+re or if it is a #+ p s+ sa#e. 6a7 )f #+ p s+ , e&en if the area de#i&ered is #ess than the area stated in the 4.*, there is no ri(ht to de and for the proportiona# red+ction of the price. Q: (ero pag sumobra A 14+ sEm na deliver, can the
8a(e 15
seller demand for the increase of the price? A! )f #+ p s+ sa#e, no. 6'7 )f the sa#e was 'ased at a rate of a certain price per +nit of eas+re #i2e it was so c#ear in the contract that the #and is 'ein( so#d at 810,000 per s1 so 810,000 per s1 x 100 O 819, the re ed$ of proportiona# red+ction of the price or accion 1+anti inoris is app#ica'#e. 637 Q: Under the facts, ;* sEm was delivered, would rescission be a remedy? A! As a r+#e no 'eca+se rescission wo+#d on#$ 'e a re ed$ if the area #ac2in( is ore than 10I of that area a(reed +pon. *o 2+n( 100 s1 , dapat 11 s1 or 15 s1 an( 2+#an(, so o+t of 100 2+n( 85 #an( an( na?de#i&er, then rescission is a atter of ri(ht. Q: But 0ung ;* lang ang na@deliver meaning the area lac0ing is less than 1+8, may rescission be a remedy? A! Hes, '$ wa$ of exception 6a7 )f the '+$er can pro&e that he wo+#d not ha&e 'o+(ht the thin( or #and hand he 2nown that is #ess than 100 s1 . )t is a atter of proof. 0his is consistent with a characteristic of rescission +nder 1191, that in order for rescission to prosper , the 'reach +st 'e a f+nda enta# 'reach. K+n( 2+#an( #an( n( 5s1 @ 10 s1 at a#a2i $+n( area, there can 'e no rescission as a atter of ri(ht. 6'7 0he other one is e&en if the entire area was de#i&ered as stated, proportiona# red+ction @ rescission a$ 'e a re ed$ if a part of the #and de#i&ered is of inferior 1+a#it$ than that stip+#ated '$ the parties. Example: *a#e of rice fie#d, it t+rned o+t a'o+t 20I of the #and is swa p, so hindi pwede tani an. Aence, proportiona# red+ction is possi'#e if he sti## wo+#d want the #and or rescission wo+#d 'e a re ed$ 'eca+se the area of inferior 1+a#it$ is ore than 10I of the tota# #and area +n#ess he can pro&e that he wo+#d not ha&e 'o+(ht the #and had he 2nown a portion of the #and is of inferior 1+a#it$. %LAC4 O9 .4L2C4RB Read 1524, 1525 and 1198 0he se##er de#i&ered the (oods to the p#ace of '+siness of the '+$er. )f the '+$er ref+ses to recei&e the (oods, the '+$er wi## 'e considered in de#a$ and therefore wi## 'e #ia'#e to the se##er 'eca+se of +n/+st ref+sa#. Q: <ay the buyer be considered in delay for his refusal to accept if there is no place stipulated in the contract? A! )t depends on the 2ind of thin(. 4eter ine if it is deter inate or (eneric. )f the thin( is deter inate, the #aw pro&ides that it wi## 'e the p#ace where the thin( is #ocated at the ti e of the perfection of the contract.
8a(e 16
Q: hat if the obKect of the sale is a generic thing? A! *e##erDs p#ace of '+siness or residence. Note: )f there is no stip+#ation when to 'e de#i&ered, the se##er cannot 'e co pe##ed to de#i&er. Q: hat if at the time of the perfection of sale, though the thing is determinate, it was on board a ship while in transit. here will be the place of delivery? A! 4ependin( on the shippin( arran(e ent a(reed +pon '$ the parties. 9.O.(. , ;ree on 5oard C.2.9. , -ost, )ns+rance, ;rei(ht ;...5. and -.).; are r+#es of pres+ ption which wo+#d ha&e to (i&e wa$ to the rea# intention of the parties. *o after a##, the ;...5. or -.).;. arran(e ents do not rea##$ deter ine the p#ace of de#i&er$, the$ on#$ a2e r+#es of pres+ ption. *o in a -.).;. arran(e ent, it is on#$ pres+ ed that the p#ace of de#i&er$ is the port of ori(in. )n a ;...5. destination, it is on#$ pres+ ed that the point of destination is the p#ace of de#i&er$. Q: hat really determines the place of delivery? A! .- said this indication as to the intention of the parties as to the p#ace of de#i&er$ is the anner and p#ace of pa$ ent. )f there is an a(ree ent as to where and how the price is to 'e paid that wo+#d 'e the p#ace considered for p+rposes of de#i&er$ and therefore for transfer of ownership. -oncrete#$, in one case which was -.).;. arran(e ent , it was stip+#ated that the se##er can de and the pa$ ent of the price +pon the arri&a# of the (oods at the port of destination. 6*+pposed#$, in -.).;. arran(e ent, the p#ace of de#i&er$ is the port of ori(in7. .- said the p#ace of de#i&er$ 'eca+se of the stip+#ation is the port of destination. )t is where the pa$ ent is to 'e ade. Q: hat was the purpose of fi'ing the delivery arrangement as a -.I.J. but the place of delivery is the port of destination? A! .- said the -.).;. arran(e ent a$ ha&e 'een a(reed +pon on#$ to fix the price. Example: 0he$ fixed the price for 829 that wo+#d inc#+de the frei(ht, ins+rance or cost '+t sti## the p#ace of de#i&er$ is the port of destination. )n another case, ;...5. destination so 'ased on the pres+ ption the p#ace of de#i&er$ wi## 'e the port of destination xxx the se##er wo+#d ha&e to 'ear a## the expenses for the de#i&er$ of the (oods +p to the port of destination. Aowe&er, it was stip+#ated in the contract that the se##er a$
de and for the pa$ ent of the price '$ presentation of the 'i## of #adin( 65.L7.
ere
there can 'e no #ia'i#it$ for 'reach of an express warrant$. B!: %A, sold a land to B for (1< in Antipolo. As agreed upon (1++,+++ will be paid upon the signing of the &:.. #he balance will be paid within 7+ days from the time the occupants 5sEuatters6 of the land are evicted. It was so stipulated that if within 3 months, the sEuatters have not yet been evicted, the seller should return the (1++,+++. Another stipulation states A within the 3@month period, the value of the land doubled. &espite the filing of an eviction suit by the seller and the lapse of the 3@month period, the sEuatters were still occupying the land. #he seller offers to return the (1++,+++ to the buyer. #he buyer refused to accept the (1++,+++ and told the seller %never mind even if the sEuatters are still there. I will still buy the land,. .o the buyer offered to pay the balance (;++,+++ and demanded that a &:. be e'ecuted by the seller. #he seller refused to accept the (;++,+++. hat he did is to file an action to rescind the contract. ould the action prosper? *A! 2 answers! 617 )f the answer is 'ased on rescission, the action wi## not prosper 'eca+se rescission a$ on#$ 'e in&o2ed '$ the a((rie&ed part$. 0he se##er is not an a((rie&ed part$. 627 Aowe&er, +nder 1645 if the o'#i(ation is s+'/ect to the happenin( of a certain condition, Att1. =ribe! Act+a##$, here the perfor ance of the o'#i(ation is s+'/ect to the happenin( of the condition. )f the condition did not happen, the '+$er wo+#d ha&e 3 options! 6a7 "ot to proceed with the contract, which is rescission. 6'7 Ae a$ wai&e the condition 6e&iction of the s1+atters7 and proceed with the sa#e 3 this was the re ed$ chosen '$ the '+$er in this case. 6c7 Ae can treat the non?happenin( of the condition as a 'reach of warrant$ and c#ai da a(es. .'&io+s#$, the '+$er chose option 6'7 and therefore the se##er cannot rescind the contract. $. 2m&lie/ , %rof. .e Leon: 'eca+se of this i p#ied warrant$, it cannot 'e said that 8hi#ippine #aw does not adopt ca&eat e ptor B'+$er 'ewareC. 6;a$eDs -a&eat ! 8#ease chec2 the 'oo2 of 8rof. 4e Leon re(ardin( this state ent. 0han2s 7 %&en if there is no stip+#ation as to these warranties, the #aw itse#f wo+#d pro&ide for these warranties and hence if there are hidden defects he wo+#d ha&e re edies +nder the #aw or e&en if he was depri&ed of the thin( he 'o+(ht he wo+#d ha&e a re ed$ a(ainst the se##er. Aence, it is not correct to sa$ that 8hi#ippine #aw has adopted ca&eat e ptor. 5+t there are certain instances when there wo+#d 'e no s+ch i p#ied warrant$
Q: here do you get the B:=? A! At the port of ori(in. Aence, e&en in the port of ori(in he can a#read$ present the 5.L to the '+$er and hence co pe# the '+$er to pa$ the (oods. A(ain .- ruled in that stip+#ation, the p#ace of de#i&er$ is the port of ori(in. And the p+rpose of the ;...5. arran(e ent, it was on#$ a(reed +pon in order to fix the price eanin( that the se##er wi## sti## ha&e to 'ear the expenses for the transportation of the (oods +p to the destination a#tho+(h the '+$er can a#read$ 'e co pe##ed to pa$ the price e&en at the port of ori(in. *o consider a#wa$s the anner and p#ace of pa$ ent which is deter inati&e as to the p#ace of de#i&er$. Read 1582 Obli7ations which cannot be 5ai+e/: 1. .'#i(ation to transfer 2. .'#i(ation to de#i&er Obli7ation which can be 5ai+e/: 1. .'#i(ation to warrant the thin( <in/s of 5arranties n/er the Law: 1. %xpress 2. ) p#ied 1. 4A&ress , an$ affir ation of fact or an$ pro ise '$ the se##er re#atin( to the thin(, the nat+ra# tendenc$ is to ind+ce to p+rchase the thin(. Re3 isites: 6a7 0here is an affir ation of fact 6'7 0he fact +st pertain to the thin( either to the 1+a#it$, character or tit#e of the thin( An$ other atter express warrant$. a$ not 'e considered as an
0he +se of the words @ ter ino#o(ies is not conc#+si&e as to whether or not there is an express warrant$. Example: B) (+arant$ @ warrant$ $o+ that $o+ wi## 'e happ$ if $o+ '+$ this car at 8100,000C3 this does not res+#t in an express warrant$ A(ain, if the affir ation of fact pertains to the 1+a#it$ of the thin(, it is an express warrant$. Example: 0hese 10 sac2s of ferti#i=er wo+#d res+#t in 200 ca&ans of rice. 0he state ent of the se##erDs opinion is not as a r+#e considered an express warrant$. Example: B0his is the 'est piPa c#othC 3 it a$ t+rn o+t that there are 'etter piPa c#oth. As #on( as the se##er is not an expert on that fie#d, that wo+#d 'e treated ere#$ as an opinion and
8a(e 17
a(ainst hidden defects. 0here a$ 'e warrant$ as to tit#e or a(ainst e&iction '+t there is no warrant$ a(ainst hidden defects +nder certain circ+ stances. 5arrant1 A7ainst 4+iction / 0itle Q: If the seller was able to transfer ownership to the buyer may the seller nonetheless be held liable for breach of warranty against eviction? A! Hes. 0hese are 2 different o'#i(ations! the o'#i(ation to transfer ownership and the o'#i(ation to warrant the thin(. Example: 0his warrant$ a(ainst e&iction wo+#d inc#+de the warrant$ that the '+$er fro the o ent of the sa#e ha&e and en/o$ the #e(a# and peacef+# possession o&er the thin( so#d. Ae a$ 'e depri&ed of the thin( '$ a 3 rd person e&en if he wo+#d not #ose ownership. Q: hen would this happen? A! 9a$'e the 3rd person has a 'etter ri(ht to the possession of the thin(. 9a$'e there was a #ease a(ree ent entered into which has to 'e respected '$ the '+$er. Note: A contract of #ease a$ #ast for 99 $ears. Q: If there is a claim or a 7 rd person claims a right over the thing bought, does it mean that the seller will already be liable for breach of warranty against eviction? A! "o 'eca+se there are re1+isites which +st 'e co p#ied with. Re3 isites: 1. 0here has to 'e fina# /+d( ent depri&in( hi of s+ch thin( either who##$ or partia##$. )n other words, a case was fi#ed '$ a 3 rd person a(ainst the '+$er which res+#ted in a fa&ora'#e decision as to the p#aintiff res+#tin( in the depri&ation of the propert$ '$ the '+$er. Note: ;or the se##er to 'e #ia'#e, he +st ha&e 'een notified of this case a(ainst the '+$er. )n fact, he sho+#d 'e i p#eaded as a co?defendant in the action 'eca+se! 6a7 0he se##er sho+#d ha&e an opport+nit$ to defend his tit#e. 6'7 0he se##er wo+#d nor a##$ ha&e the 2now#ed(e of the defenses as to the propert$ which is so#d. )f there is one person who can ediate the c#ai of the p#aintiff 'etween the se##er and the '+$er nor a##$ it wo+#d 'e the se##er. Q: If there is a decision in favor of the plaintiff 57rd person6 against the buyer in the trial court, is it reEuired that the buyer should appeal in order for him to be able to hold the seller liable? A! "o 'eca+se the part$ who sho+#d appea# if he is interested sho+#d 'e the se##er. )f he does not want to 'e he#d #ia'#e, he sho+#d appea# the case +p to
8a(e 18
the *-. )f the decision 'eco es fina#, he he#d #ia'#e for 'reach of warrant$.
a$ 'e
2. 4epri&ation +st 'e either! 62.17 5ased on a 3rd personDs prior ri(ht o&er the thin( prior to the sa#e or 62.27 5ased on an act after the sa#e '+t i p+ta'#e to the &endor. -oncrete#$, the reason for the depri&ation a$'e 'eca+se of non , pa$ ent of rea# propert$ taxes '$ the se##er and not the '+$er. Example: )f #and was so#d in an exec+tion sa#e 'eca+se of the fai#+re of the se##er to pa$ rea# propert$ taxes 3 this can 'e the 'asis of #ia'i#it$ for 'reach of warrant$. (ase/ on an Act after the Sale b t 2m& table to the Cen/or Example: 0here was a first sa#e to A and then a 2 nd sa#e to 5. :nder the #aw on do+'#e sa#e, 5 ha&e a 'etter ri(ht if this is a sa#e in&o#&in( i o&a'#e, if he was the first one who re(istered the sa#e in (ood faith. 0he first '+$er e&en if he was in possession a$'e e&icted fro s+ch propert$ '$ the 2nd '+$er 'eca+se the 2nd '+$er wo+#d ha&e a 'etter ri(ht. 0his is 'ased on an act of the &endor after the sa#e or after the 1st sa#e hence, there can 'e a #ia'i#it$ for 'reach of warrant$ a(ainst e&iction. Q: If during the sale a 7rd person was already occupying the land by way of adverse possession so in an open, continuous ''' for ) years under the color of title. But after the sale, the buyer did nothing. And hence, the occupants claiming a right or ownership was able to complete the prescriptive period of a minimum of 1+ years. #hus, if a 7 rd person would be able to deprive this buyer of ownership over the thing because of acEuisitive prescription, can the buyer hold the vendor liable for breach of warranty? A! "o 'eca+se it was his fa+#t that the 3 rd person was a'#e to co p#ete the period for ac1+isiti&e prescription. Aad he done so ethin( to interr+pt the r+nnin( of the prescripti&e period then he wo+#d not ha&e 'een depri&ed of the ownership of the thin(. 3. 0here sho+#d 'e no &a#id wai&er 4. 0he action to ho#d the &endor #ia'#e sho+#d 'e fi#ed within the period prescri'ed '$ #aw. Q: If indeed the seller can be held liable for breach of warranty against eviction, what will be the e'tent of liability of the vendor? A! 0he &endor can 'e he#d #ia'#e for the &a#+e of the thin( at the ti e of the e&iction, inco e or fr+its, cost of s+it, expenses of the contract and da a(es and interest.
4a a(es a$ on#$ 'e c#ai ed if the se##er is a se##er in 'ad faith. As #on( as he so#d the thin( in (ood faith, he cannot 'e he#d #ia'#e for da a(es re(ard#ess of whether there was a wai&er or not. )n fact, if there is a wai&er '+t the &endor is in 'ad faith, the wai&er is &oid and hence he can 'e he#d #ia'#e for e&er$thin( +nder the #aw. )f there was no wai&er and the &endor is in 'ad faith, a(ain he wi## not on#$ 'e #ia'#e for expenses xxx '+t a#so for da a(es, cost of s+it xxx e&er$thin(Q Q: If the seller was aware of the defect of his title at the time of the sale, hence, he is a seller in bad faith? A! "ot necessari#$. Ae a$ 'e aware '+t he infor ed the '+$er of s+ch defect in the tit#e and hence he cannot 'e considered 'ad faith &endor. %&en if he did not infor the '+$er '+t if the '+$er was a#read$ aware of the defect. Q: hy would a buyer buy a thing if the title of the seller has defect? A! 9a$'e 'eca+se the '+$er needs the thin( for his '+siness. )f ) a the &endor and ) 2now there is a defect in $ tit#e, ) wi## as2 the &endee to exec+te a wai&er. Q: #hus, if there is such a waiver and assuming the vendor acted in good faith, can the vendor be held liable for breach of warranty? A! )t depends on the 2ind of wai&er. 6a7 )f wai&er consiente , the '+$er exec+ted a wai&er witho+t 2now#ed(e of the defect in the tit#e of the se##er. A#so, the &endor does not 2now of the defect. 0he on#$ #ia'i#it$ of the &endor for 'reach of warrant$ a(ainst e&iction is the &a#+e of the thin( at the ti e of e&iction. 6'7 )f the wai&er is intentionada , when the &endee exec+ted the wai&er with 2now#ed(e in the defect of the tit#e of the se##er, hence, he 2new of the possi'i#it$ of 'ein( e&icted and nonethe#ess 'o+(ht the thin( the &endee cannot ho#d the &endor #ia'#e. 5ARRAN0B A;A2NS0 :2..4N .494C0S Re3 isites: 1. 0he defect +st exist at the ti e of the sa#e. )f the defect started after the sa#e there can 'e no s+ch #ia'i#it$. 2. 0he defect +st 'e hidden. )f the defect is patent and the '+$er nonethe#ess 'o+(ht the thin( then he can no #on(er ho#d the se##er #ia'#e. )f the se##er is not aware of the hidden defects, he can 'e he#d #ia'#e. )f he was aware, his #ia'i#it$ wi## 'e (reater 'eca+se that a2es hi a 'ad faith se##er. Q: !ven if there is such a hidden defect, is it possible that the vendee cannot hold the vendor liable despite the fact that there was hidden defect even if he was not informed because maybe the seller was not aware?
8a(e 19
A! Hes, he a$ not 'e a'#e to ho#d the se##er #ia'#e if he is an expert on the thin(. Ae is expected to 2now the defect. 3. 0he defect +st res+#t in the thin( 'ein( +nfit for the p+rpose of the '+$er or at #east it di inish the fitness of the thin( s+ch that the '+$er wo+#d not ha&e 'o+(ht it at the price had he 2nown of s+ch defect. Q: If the thing which has a hidden defect was lost or destroyed, can the vendee hold the vendor liable for this breach of warranty? &oes it matter if the loss was due to a fortuitous event or maybe the loss was due to the fault of the buyer himself, nonetheless, can he hold the vendor liable? A! Hes. 0he &endee can ho#d the &endor #ia'#e for 'reach of warrant$ a(ainst hidden defects e&en if the thin( was #ost d+e to fort+ito+s e&ent or d+e to the fa+#t of the &endee hi se#f 'eca+se of the hidden defects. 5+t of co+rse, if the ca+se of the #oss was the defect itse#f, the #ia'i#it$ is (reater than if the ca+se of the #oss was a fort+ito+s e&ent or fa+#t of the '+$er. )f there wo+#d 'e a pro'#e here as to the extent of the #ia'i#it$ of the &endor, he sho+#d first consider the ca+se of the #oss, a$'e it was #ost d+e to the defect itse#f or #ost thro+(h fort+ito+s e&ent or #ost thro+(h the fa+#t of the &endee. After that, he sho+#d deter ine whether the &endor was aware of the defects or he was not aware. A(ain, if he was aware, da a(es a$ 'e reco&ered. )f he was not aware, he a$ not 'e he#d #ia'#e for da a(es +n#ess he can on#$ 'e he#d #ia'#e for interest. )f the defect was the ca+se of the #oss, the &endor wo+#d 'e #ia'#e for the ret+rn of the price, not on#$ the price #ess &a#+e '+t a#so to ref+nd the expenses and da a(es 'eca+se the &endor was aware of the defects. )f the &endor was not aware of the defects, he cannot 'e he#d #ia'#e for da a(es '+t he wo+#d on#$ 'e he#d #ia'#e for the price. Q: #he price may be higher or lower than the value of the thing? A! Hes. )t does not atter. )t a$ 'e hi(her or #ower. 0he thin( a$ depreciate or appreciate or a$'e the thin( was so#d at a price #ess than the &a#+e and therefore at the ti e of the #oss, the &a#+e is sti## (reater than the price '+t he is on#$ o'#i(ed to ret+rn the price. )f the ca+se of the #oss of the thin( was a fort+ito+s e&ent, he can on#$ 'e he#d #ia'#e for the price #ess &a#+e. Example: )f price is 8100,000 and the &a#+e at the ti e of the #oss is 880,000. Ae can 'e he#d #ia'#e for 820,000 68100,000 ? 80,000 O 820,0007
Q: 9ow would defect be proven if the thing was lost or destroyed due to fortuitous event? A! )t is a atter of proof. 0he proof a$ ha&e 'een o'tained a#read$ prior to #oss. 8weden( pina , exa ine na n$a sa expert so eron na s$an( e&idence of the defects prior to the #oss. If the cause of the loss was fortuitous event or fault of the vendee and the buyer was not aware of the defects, is it possible that the vendor may not be liable even for a single centavo? A! Hes, in this scenario 'eca+se he on#$ had the o'#i(ation to ret+rn the price #ess &a#+e at the ti e of the #oss. )f it happens that the &a#+e is (reater than the price, the &endor has no #ia'i#it$ e&en there is hidden defect. ANB C:AR;4 OR NON G A%%AR4N0 4NC=M(RANC4 NO0 .4CLAR4. OR <NO5N 0O 0:4 (=B4R Q: ould there be an encumbrance over an immovable which is a form of easement or servitude? A! An exa p#e of this is a road ri(ht of wa$. Q: If the buyer bought the land which turned out to have a road right of way in favor of a 7 rd person, can he claim breach of warranty against any charge or non A apparent encumbrance? A! .f co+rse there are re1+isites! 617 0he enc+ 'rance or ease ent or '+rden or the road ri(ht of wa$ has to 'e non , apparent. Q: <ay a road be non@apparent? A! Hes, #i2e in r+ra# areas. )n r+ra# areas, $+n( road ri(ht of wa$ (a p+ti2 #an( $an and nor a##$ the road wi## on#$ 'e +sed '$ the person ha&in( this ri(ht d+rin( har&est period. Aar&est period is once e&er$ 6 or 3 onths. )n the eanti e, d+rin( the 3 or 6 , onth period, p+ro co(on $an and hence the road a$'e non , apparent. )f it is apparent, no #ia'i#it$. Q: If the encumbrance is non A apparent does that necessarily mean that the vendor can be held liable? A! "o 'eca+se the enc+ 'rance a$ 'e 2nown to the '+$er. 0his #ia'i#it$ wo+#d arise on#$ if the enc+ 'rance is not 2nown to the '+$er. Q: If he was not aware of this encumbrance and the encumbrance is non A apparent, vendor will now be liable? A! "ot $et 'eca+se the enc+ 'rance a$ 'e re(istered or annotated at the 'ac2 of the tit#e , ne(#i(ence of the &endee so he cannot ho#d the &endor #ia'#e. Q: If there is an encumbrance, what are the remedies of the buyer?
8a(e 20
A! 6a7 Ae can see2 for the red+ction of the price. Q: -an he rescind the contract? A! 6'7 Hes '+t the #aw re1+ires that the action for rescission +st 'e fi#ed within 1 $ear fro the date of the contract. )f after 1 $ear, no ore rescission. 6c7 )f he 'eca e aware ore than a $ear, he a$ fi#e an action for da a(es, 5+t the #aw re1+ires that the action for da a(es has to 'e fi#ed within 1 $ear a#so '+t fro the ti e of the disco&er$ of enc+ 'rance. )f he fi#ed it for exa p#e, after 2 $ears fro disco&er$ , no reco&er$ of da a(es. 5ARRAN0B O9 8=AL20B %rof. .eleonH %rof. Cit 7H %rof. (a+iera: there is another warrant$ which is 5ARRAN0B O9 8=AL20B which inc#+des! 617 <arrant$ of ;itness 627 <arrant$ of 9erchanta'i#it$ 0o so e a+thors the warrant$ of 1+a#it$ is considered +nder the warrant$ of hidden defects. Att1. =ribe: ) cannot a(ree that the warrant$ of 1+a#it$ is in the warrant$ of hidden defects. ) a(ree with 8rof. 4e Leon, 8rof. Eit+( and 8rof, 5a&iera that there is a warrant$ of 1+a#it$. 5ARRAN0B O9 920N4SS 9OR A %AR02C=LAR %=R%OS4 0he thin( 'o+(ht a$ not act+a##$ ha&e an$ defect and for 1 i##ion '+$ers it wo+#d 'e fit for their p+rpose. Aowe&er, it a$ not 'e fit for the p+rpose of 1 '+$er and if a## the re1+isites for this warrant$ are present, then he a$ ho#d the se##er #ia'#e for 'reach of warrant$ of fitness for a partic+#ar p+rpose a#tho+(h there is no hidden defect '+t it is not fit for the p+rpose of the '+$er. )n order for the se##er a$ 'e he#d #ia'#e! 1. 0he '+$er has to infor the se##er of the partic+#ar p+rpose for which the thin( is to 'e +se and 2. 0he se##er anifested that the thin( wo+#d 'e fit for the p+rpose and the '+$er re#ied on s+ch representation of the se##er. Note: )f the thin( is so#d +nder the trade na e there can 'e no warrant$ of fitness for a partic+#ar p+rpose. 5ARRAN0B O9 M4RC:AN0A(2L20B )t pertains to the fact that it is fit for the (enera# p+rpose. )f the thin( was so#d '$ description or '$ sa p#e, it is considered that there is s+ch a thin( as warrant$ of erchanta'i#it$. SAL4 O9 AN2MALS 520: .494C0S G R=L4S: 1. 0he defect is a redhi'itor$ defect , it is s+ch 2ind of defect that e&en '$ exa ination of expert it cannot 'e disco&ered.
Q: If one of the animals has redhibitory defect, can the buyer rescind the entire contract pertaining to all the animals? A! ;.R.! "o. Ae can on#$ rescind the contract pertainin( to the ani a# with redhi'itor$ defect. Ae cannot rescind the entire contract pertainin( to a## ani a#s. 4Ace&tion: )f he can pro&e that he wo+#d not ha&e 'o+(ht the others had he 2nown the defect of one then he can rescind the entire contract. Q: ho has the burden of proof that he would not have bought the others had he 0nown of the defect of one? A! "or a##$, it wo+#d 'e the '+$er. 5+t the #aw +nder certain circ+ stances wo+#d pro&ide for this pres+ ption that it is pres+ ed that he wo+#d ha&e 'o+(ht the others had he 2nown of the defect of one. Examples! Ae 'o+(ht the ani a#s in tea s or in pairs then the pres+ ption arises. ? Lo&e 'irds 6An( (a #o&e 'irds, 2apa( na ata$ $+n( isa #ater on a ata$ din $+n( isa. 9insan n(a (s+icide pa s$a pa( a( isa na #an( s$a. )++nto( n$a +#o n$a sa ca(e n$a. 7 ? *#ed(e do(s 6*a (a co+ntries na a$ n$e'e BsnowC a$ (a s#ed(e do(s. Kai#an(an pa( 'ini#i an( (a do(s, tea si#a. 9a$ #eader pa n(a si#a eh at s+ +s+nod si#a sa #eader ni#a 7 Q: If the animal which was bought, died of a disease within 1+ days, the disease e'isting at the time of the sale, may he still have a remedy under the law? A! Hes, if the disease t+rned o+t to 'e a conta(io+s disease. )n fact, +nder the #aw, the sa#e is &oid. )f he has a#read$ paid, he can reco&er what he paid 'eca+se the sa#e is &oid. )f the disease +s not conta(io+s, +nder the #aw he wo+#d on#$ ha&e a re ed$ if the ani a# died within 3 da$s. 2nstances whether there wo l/ be no warrant1 a7ainst hi//en /efects an/ therefore ca+eat em&tor ma1 be in+o6e/: 1. *a#e which is an Bas is where isC sa#e which eans as it is fo+nd, where it is fo+nd xxx 'aha#a 2a sa '+ha$ o if $o+ want to '+$ the thin( and $o+ cannot #ater on c#ai that there were hidden defects. 6;a$e! p#s. research the co p#ete eanin( of Bas is where isC sa#e. Att$. :ri'e wi## as2 the eanin(. 7 Q: -an there be a claim of breach of warranty against eviction? A! Hes 'eca+se the se##er wo+#d ha&e or wo+#d sti## warrant the tit#e o&er the (oods. 2. *a#e of 2nd hand ite s 3. *a#e of ani a#s in fairs 4. *a#e in p+'#ic a+ction
8a(e 21
Note! 0here wo+#d sti## 'e warrant$ a(ainst e&iction. Note: R+#es on warrant$ a#so app#$ to /+dicia# sa#e. Q: In sale by authority of law or in e'ecution sale, can there be breach of warranty against eviction? A! Hes. 0he /+d( ent de'tor and not the sheriff sha## 'e #ia'#e. 0he #aw wo+#d specifica##$ exe pt certain persons fro #ia'i#it$ for 'reach of warrant$ #i2e sheriff, a+ctioneer, ort(a(ee, p#ed(e and other persons who se## '$ &irt+es of an a+thorit$ of #aw #i2e notar$ p+'#ic 'eca+se the$ are not rea##$ se##in( for the se#&es, the$ are se##in( on 'eha#f of another person. R2;:0S AN. O(L2;A02ONS O9 0:4 C4N.44 1. .'#i(ation to accept the thin( de#i&ered. 2. .'#i(ation to pa$ the price 6if warranted, with interest7 1. Obli7ation to acce&t the thin7 /eli+ere/ Q: If the buyer received the goods delivered, does it mean that he already accepted? A! "o 'eca+se recei&in( is pre#i inar$ to acceptin(. )n fact, this is consistent to the ri(ht pro&ided '$ #aw to the '+$er which is the ri(ht of inspection or the ri(ht of exa ination. 0hereafter, he a$ re/ect the (oods if defecti&e. Q: hen will he be considered to have accepted? A! 617 <hen he inti ated his acceptance to the se##er. 627 %&en if he did not inti ate his acceptance or re/ection, he wi## 'e dee ed to ha&e accepted if he did an act which is inconsistent with the ownership of the se##er. A(ain, if he p#ed(ed the thin( to another that is an act of ownership or if he so#d or donated the thin(. 637 )f he did not do an$thin( '$ ere #apse of a reasona'#e ti e, he wi## 'e dee ed to ha&e accepted the thin(. <hat is reasona'#e ti e wo+#d depend on the circ+ stances s+rro+ndin( the sa#e. Q: hat if after an e'amination or before the e'amination, the buyer refused to accept and informed the seller but the goods are already in his place? hat if the goods were lost or destroyed in the possession of the buyer even due to fortuitous event, who will bear the loss? A! )t wi## depend on the reason of the re/ection. )f there is a /+st ca+se for the re/ection, then the se##er wi## ha&e to 'ear the #oss 'eca+se there wi## 'e no transfer of ownership and he cannot 'e co pe##ed to pa$ the price. Aowe&er, if the reason for the re/ection is +n/+stified, ownership passes to the '+$er '$ operation of #aw then he wi## ha&e to 'ear the #oss +nder the res perit do ino r+#e.
$. Obli7ation to &a1 the &rice Q: hen? A! 617 As stip+#ated 627 )f there is no stip+#ation, it wo+#d 'e at the ti e and p#ace of de#i&er$. Q: If the delivery was made a year ago but the payment of the price was made today, would the buyer be liable for the interest from the time of delivery up to the time of payment? A! ;.R. "o. 4Ace&tions: 617 *tip+#ation , the &endor a$ on#$ a(ree for the pa$ ent of the price for a certain ti e on#$ 'eca+se there wi## 'e interest. 627 %&en if there is no stip+#ation , if the thin( de#i&ered prod+ces fr+its or inco e. Example 1: 0he o'/ect of sa#e is a rice #and. )san( taon na sa '+$er $+n( rice #and i'i( sa'ihin he har&ested twice a#read$. 0he '+$er sho+#d 'e #ia'#e to pa$ interest. Example 2: Apart ent +nit. K+ ita na $+n( '+$er sa renta#s. 637 %&en if no fr+its, he a$ 'e #ia'#e for interest if he is in de#a$. 0his de#a$ wo+#d start fro the ti e there is /+dicia# or extra/+dicia# de and. A -.* is a 'i#atera# contract res+#tin( in reciproca# o'#i(ations +nder 1169 fro the o ent one of the parties in reciproca# o'#i(ation perfor ed his o'#i(ation and the other part$ has not e&en witho+t de and, the other part$ wo+#d 'e in de#a$ and therefore #ia'#e for interest and da a(es. 5+t in this pro&ision, in order for the '+$er to 'e considered in de#a$ there +st 'e /+dicia# or extra/+dicia# de and. 0his artic#e sho+#d 'e constr+ed to ean that there was a period fixed for the pa$ ent of the price. "a2a#a(a$ sa a(ree ent Btoda$ an( sa#e, after 1 $ear pa$ entC. :pon the expiration of the 1 $ear period, there has to 'e /+dicia# or extra/+dicia# de and which is different fro 1169 when the *- interpreted to ean that the o'#i(ation is a#read$ d+e and de anda'#e at the ti e of the perfection of the contract. Aence, no need for de and an$ ore. Ri7ht to 2ns&ect or 4Aamine 0his ri(ht a$ not 'e present in a## -.* 'eca+se $o+ can wai&e the ri(ht of inspection. :pon de#i&er$ and recei&in( the (oods, if $o+ a(ree that $o+ are dee ed to ha&e accepted , no ore ri(ht to inspect. )n -...4. arran(e ent, the de#i&er$ wi## not 'e ade +nti# pa$ ent has a#read$ 'een ade '$ the '+$er so in that scenario, he has to pa$ first e&en 'efore de#i&er$. 0his is a sa#e transaction where the '+$er wo+#d ha&e no ri(ht of exa ination prior to acceptance. Example
8a(e 22
0he arran(e ent 'etween a inin( co pan$ and "A8.-.R in the sa#e of coa#. "A8.-.R wi## ha&e no ri(ht to inspect pre#i inar$ to acceptance, the$ wi## a#wa$s accept. 5+t after acceptance, that there wo+#d 'e exa ination of the 1+a#it$ of the coa# not for the p+rpose of re/ectin( '+t for the p+rpose of fixin( the price. *o this is not a ri(ht of exa ination prior to acceptance. 0his is on#$ an exa ination for fixin( the price. MAC4.A LA5 B!: hat is the <aceda =aw? >ive its essential features. A! R.A. 6552 BRea#t$ )nsta## ent 5+$er 8rotection ActC. Rea#t$ , o'/ect of the sa#e is rea#t$ 6not rea# estate7. *pecifica##$, residentia# +nit and not co ercia# or ind+stria#. Q: 9ow about a condominium unit? A! )t is co&ered '$ the 9aceda Law as #on( as it is residentia# in character. Q: .ale on credit, does it mean that the sale will be covered by the <aceda =aw? A! "o. 0here is s+ch a sa#e on credit which is on a strai(ht ter 'asis. Example 1 19 , down pa$ ent of 500,000 toda$ and the 'a#ance to 'e paid at the end of the $ear 3 not co&ered '$ 9aceda Law Example 2 300,000 toda$, the 'a#ance of 700,000 to 'e paid on 10 e1+a# onth#$ insta## ents 3 co&ered '$ the 9aceda Law A## the pro&isions +nder the 9aceda Law are for the 'enefit of the '+$er. Q: Is it correct to say that in this law, the buyer cannot invo0e this law if he has not yet paid for at least 4 years? A! "o. %&en if he has on#$ paid for a onth, there wi## 'e ri(hts a#read$ of s+ch '+$er +nder the 9aceda Law. )f he has paid at #east 2 $ears, he wo+#d ha&e 'etter ri(hts. Q: If he has paid less than 4 years of installment, what are his rights? A! 617 0he (race period , he has a ini + of 60 da$s (race period 6the se##er can (i&e hi ore7. 4+rin( the 60?da$ (race period, he can se## his ri(hts +nder the contract, he can assi(n his ri(hts, he can +pdate his acco+nt, he can pa$ the 'a#ance. 627 0he ri(ht to reco&er a portion of what he has paid , cash s+rrender &a#+e 6-*E7. 0his -*E is a ini + of 50I of what he has tota##$ paid. 0his inc#+des insta## ent pa$ ents, deposit, downpa$ ent , e&er$ a o+nt paid , 50I of that.
)t can 'e hi(her dependin( on the n+ 'er of $ears that he has a#read$ paid. Aence, if he has paid on#$ twice, he a$ 'e entit#ed to -*E if the pa$ ent is on ann+a# pa$ ents not onth#$. Q: #he minimum of *+8 @ when higher? A! 2 $ears , 50I 8 $ears , 60I 7 $ears ? 55I 9 $ears , 65I 10 $ears , 70I %&er$ $ear thereafter, additiona# 5I. Q: hat if it is 4+ years A 1++8? A! "o. :pto 90I on#$. *o if 15 $ears or 16 $ears, sti## it is 90I. Q: ould the amount recoverable be bigger? A! Hes. 90I depends on the tota# a o+nt paid. 90I pa din pero a#a2i an( 'ase. B!: Ayce bought a condo unit for 1+<. 7< downpayment. #he balance of )< payable in 3+ eEual monthly payments. Ayce religiously paid until the 23th installment. :n the 2;th installment, she offered to update her account. #he seller >erard said %I have already cancelled the sale,. Is this cancellation valid? A! "o. :nder the 9aceda Law, if $o+ ha&e paid a ini + of 2 $ears, $o+ are entit#ed to 30 da$s for e&er$ $ear of pa$ ent. :nder the facts, she has paid 3 $ears. Aence, she is entit#ed to 90 da$s (race period. "+n( na( defa+#t s$a n+n( 47 th, a(start pa #an( $+n( (race period. .n the 48 th insta## ent , she was on#$ 30 da$s in defa+#t. 49 th insta## ent , 60 da$s in defa+#t. *he was &er$ +ch within the 90?da$ (race period when she decided to +pdate her acco+nt. Q: hat if the installment period is for 1* years. #he buyer defaulted on the 7 rd year. Under the law, she is entitled to a minimum grace period of 3+ days. #hereafter, she was able to update. But on the * th year, she defaulted again. 9ow many days is her grace period? A! "one. 0he defa+#t +st 'e once for e&er$ 5? $ear #ifeti e of the contract. Q: If there is a stipulation for the forfeiture of the payment made A %the buyer will lose the house and lot and he will not recover anything because all his payments will be treated as rentals, A is this a valid clause? A! "o, the pre ise of co+rse if he has a#read$ paid for 2 $ears 'eca+se '$ #aw he is entit#ed to 50I -*E. Q: %Upon failure to pay 1 or more installments without need of notice, the seller would have the right to cancel the sale, A is this automatic cancellation clause valid? A! Eoid. 0here has to 'e notice to the '+$er '+t ore than that if the '+$er is a#read$ entit#ed to the
8a(e 23
-*E, the cance##ation wi## ta2e effect on#$ +pon f+## pa$ ent of the -*E. Q: Are the remedies under the <aceda =aw alternative? -an the buyer be able to e'ercise 4 or more remedies all at the same time? A! Hes, re edies +nder the 9aceda Law are c+ +#ati&e. R4M4.24S 9OR (R4AC: O9 CON0RAC0 R4M4.24S O9 AN =N%A2. S4LL4R (AR02CL4 1#$,) 1. Ri(ht to retain the thin( in his possession 6possessor$ #ien @ withho#d de#i&er$7 2. Ri(ht of stoppa(e in transit+ @ ri(ht to res+ e possession of the (oods 3. Ri(ht of Resa#e 4. Ri(ht to Rescind Q: Are there other remedies aside from Article 1*43? A! Hes, the se##er a$ opt to fi#e an action for specific perfor ance or action for da a(es. Q: Under 1*43, who may be considered an unpaid seller? If the buyer has already paid ;+8 of the price, may the seller invo0e these remedies? A! Hes, 'eca+se an +npaid se##er is one who has not 'een f+##$ paid of the price. Q: <ay a person who was not a party to the sale be able to claim any of these remedies? A! Hes, 'eca+se a se##er need not on#$ pertain to a part$ to the contract. A person who is in the position of the se##er is act+a##$ a se##er +nder the #aw. Q: ho would be in the position of the seller? A! 0he assi(nee or heirs of the se##er or the a(ent to who the 'i## of #adin( was indorsed '$ the se##er. Q: In unpaid seller, are his remedies alternative? A! "ot necessari#$, 'eca+se in fact '$ express pro&ision of the #aw, the ri(ht of resa#e and the ri(ht to rescind a$ on#$ 'e exercised if the se##er has possessor$ #ien. 8a( wa#a na s$an( #ien, he can no #on(er exercise the ri(ht of resa#e or ri(ht to rescind so c+ +#ati&e to that extent. 5+t if there are 2 re edies that a#ternati&e and cannot exist at the sa e ti e, these are the ri(ht of stoppa(e in transit+ and possessor$ #ien 'eca+se a re1+isite in order for the se##er to ha&e a ri(ht of stoppa(e in transit+ is that the se##er +st ha&e a#read$ parted possession o&er the (oods. S&ecific Reme/ies 1. Ri7ht to retain the thin7 in his &ossession (&ossessor1 lien / withhol/ /eli+er1) Q: hy is it called possessory lien? A! 5eca+se there is another #ien in the #aw. 0his is the #ien +nder the r+#es on conc+rrence and
preference of credit. 0his is the #ien of the se##er for the price of the thin( so#d if the thin( has a#read$ 'een de#i&ered to the '+$er and the '+$er 'eca e inso#&ent. <hi#e the thin( is in the possession of the '+$er there is s+ch a #ien '+t that is not the #ien +nder 1526. 1526 a(ain is the ri(ht to retain the (oods in his possession , the possessor$ #ien. Q: hen would the seller have this possessory lien? Is it reEuired that the buyer should be insolvent? A! )t is not re1+ired that the '+$er sho+#d 'e inso#&ent '+t this is one of the instances when the #ien a$ 'e in&o2ed when the '+$er is inso#&ent. Other 2nstances 5here Seller Ma1 2n+o6e %ossessor1 Lien 1. <hen there is no stip+#ation as to the credit 2. .r there a$ 'e a stip+#ation as to the period of credit '+t the period has a#read$ expired. 5hen wo l/ the Seller be Consi/ere/ to ha+e Lost his Lien 1. )f he wai&es his ri(ht 2. )f the '+$er #awf+##$ o'tained possession o&er the (oods 3. <hen the thin( is de#i&ered to a co on carrier and the se##er did not prefer his ownership and possession o&er the (oods. )f $o+ re e 'er the disc+ssion on de#i&er$ , the r+#e here is de#i&er$ to the co on carrier is de#i&er$ to the '+$er and therefore when the se##er de#i&ered the (oods to a co on carrier as a r+#e he #oses his #ien o&er the (oods. 0he pre ise of that is that he did not preser&e his possession o&er the (oods. Att1. =ribe>s Comment: <ith d+e respect to this artic#e, the artic#e sa$s Bif he did not reser&e his ownership or possession o&er the (oodsC. ) donDt thin2 that phrase ownership is acc+rate 'eca+se it does not atter +nder the #aw re(ard#ess of whether ownership has passed to the '+$er, the se##er wo+#d ha&e the ri(ht to exercise an$ of these 4 re edies, notwithstandin( ownership has passed pwede pa s$an( a(2aron n( possessor$ #ien. )n fact, '$ express pro&ision of #aw e&en if he is on#$ ho#din( the thin( as a 'ai#ee, he wi## sti## ha&e possessor$ #ien, hence, ownership is irre#e&ant e&en if the se##er did not reser&e ownership, with or witho+t reser&ation he a$ or he a$ not 'e dee ed to ha&e #ost his #ien. 8ero 2+n( na reser&e n$a an( 2an$an( possession, definite#$, he wi## not 'e considered to ha&e #ost his #ien 2asi if +nder the 'i## of #adin( de#i&era'#e to the se##er then he wi## not 'e considered to ha&e #ost his #ien th+s there is no need for hi to exercise the ri(ht of stoppa(e in transit+.
Q: If the seller opted to file an action to compel the buyer to pay the price and the court decided in favor of the seller. #he court ordered the buyer to pay the price. -an the buyer tell the seller to deliver the goods so that he will pay the price? -an the seller now be compelled to deliver because there was a final Kudgment in his favor? A! "o, the &er$ specific pro&ision of the #aw , /+st 'eca+se there is a fina# /+d( ent in fa&or of the p#aintiff, that wo+#d not ean he wi## #ose his #ien o&er the (oods. Att1. =ribe>s Comment: 0his is a &er$ reasona'#e r+#e 'eca+se is there an ass+rance that the '+$er wi## pa$ e&en with co+rt orderG $. Ri7ht of sto&&a7e in transit res me &ossession of the 7oo/s / ri7ht to
Re3 isites: 1. )nso#&enc$ of the '+$er is an essentia# re1+isite 2. 0he se##er +st ha&e parted possession o&er the (oods 3. 0he (oods +st 'e in transit Q: .hould the debtor be insolvent already at the time of the perfection of the sale? A! "o, as #on( as at the ti e the ri(ht is in&o2ed, he is inso#&ent. 0he inso#&enc$ a$ happen a da$ 'efore or 2 da$s 'efore 'asta at the ti e the ri(ht is in&o2ed, the '+$er is inso#&ent. Q: 9ow is the right e'ercised? A! 617 5$ o'tainin( act+a# possession of the (oods 627 5$ ere notice to the co on carrier. Q: If such notice was sent to the common carrier but the common carrier refused to deliver the goods bac0 to the seller, is the common carrier liable? A! "ot necessari#$, if the (oods are co&ered '$ a ne(otia'#e doc+ ent of tit#e, the co on carrier can 'e co pe##ed to de#i&er the (oods p+rs+ant to the exercise of the ri(ht of stoppa(e in transit+ 'ac2 to the se##er on#$ if after the ne(otia'#e doc+ ent of tit#e is s+rrendered to the co on carrier. )t sho+#d 'e a ne(otia'#e doc+ ent of tit#e. 0his is a protection to the co on carrier. Kasi if not ne(otia'#e, pwede $+n i?ne(otiate sa 3 rd person who a$ p+rchase the (oods in (ood faith and for &a#+e. 0hat 3rd person wo+#d ha&e a 'etter ri(ht 2a$sa sa owner or se##er. Q: If the seller validly e'ercised the right of stoppage in transitu, what is the effect? A! Ae wi## 'e considered to ha&e re(ained his possessor$ #ien. Q: In a scenario where the seller still has possessory lien, he may have invo0ed the right of stoppage in transitu so he regained possessory lien, in the meantime, the buyer
8a(e 24
sold the same goods to another person, so tatlo na A the seller, the buyer and the 7rd person. -an this 4nd buyer compel the seller to deliver the goods to him as the 4nd buyer? A! As a r+#e no 'eca+se the se##erDs #ien o&er the (oods wi## not 'e affected '$ the disposition ade '$ the '+$er of the (oods to a 3 rd person. Ae wi## retain his possessor$ #ien. 2 exceptions! 1. )f the se##er assented to the disposition 2. %&en if he did not (i&e his consent to the sa#e, he wi## #ose his possor$ #ien if! a. the (oods are co&ered '$ a ne(otia'#e doc+ ent of tit#e '. the ne(otia'#e doc+ ent of tit#e was propert$ ne(otiated to a 3 rd person in (ood faith and for &a#+e. "ot ne(otiation to a donee. '. Ri7ht of Resale Q: hen would the seller have this right? A! 617 )f the (oods are perisha'#e 627 0he ri(ht is express#$ reser&ed in the contract 637 0he '+$er has 'een in defa+#t for an +nreasona'#e ti e Note: )n order to exercise this ri(ht, he at the sa e ti e possessor$ #ien. +st ha&e
0a2e note +nder the #aw, the resa#e a$ 'e a pri&ate sa#e. 0he on#$ #i itation here is that the se##er cannot '+$ direct#$ or indirect#$. Q: hat if there was an e'cess? !'ample A out of the 1++0 price the buyer paid 4+0. balance ?+0. hat if in the e'ercise of the right of resale, the seller was able to sell it at 17+0? <ay the buyer be able to recover at least the amount that he paid? A! "o, 'eca+se +nder the #aw, the se##er wi## not 'e responsi'#e for an$ profit that wi## deri&e fro the resa#e. 6*ee Artic#e 15337 Q: ould there be unKust enrichment? A! "one, 'eca+se it was precise#$ the fa+#t of the '+$er ? his fai#+re to pa$ that the se##er exercised the ri(ht of resa#e. !. Ri7ht to Rescin/ <o+#d on#$ 'e a&ai#a'#e +nder 2 instances na 2apareho n( resa#e. 4i 'a resa#e 3 instances? an( di #an( present sa rescission $+n( perisha'#e (oods. So the 7ro n/s in rescission are: a. 0he ri(ht is express#$ reser&ed '. 0he '+$er has 'een in defa+#t for an +nreasona'#e ti e Note: )n resa#e, *- said ? if the ownership of the thin( has a#read$ 'een transferred to the '+$er, in order for the se##er to exercise the ri(ht of resa#e. .hould he first rescind the contract? A! "o, he can i ediate#$ se## the (oods 'eca+se the effect of the resa#e is to ter inate the ownership of the 1st '+$er and that ownership wo+#d 'e &ested +pon the 2nd '+$er '$ operation of #aw, hindi na 2ai#an(an a(?rescind. )n rescission, this cannot 'e exercised for cas+a# 'reach. 8aran( 1191. .ong Jo vs 9awaiian ;acts! 0he '+$er fai#ed to pa$ aro+nd 20 da$s fro the ti e the o'#i(ation to pa$ 'eco e d+e. Ae#d! 0he *- said, that it not a serio+s 'reach of his o'#i(ation to pa$ which wo+#d entit#e the se##er the ri(ht to rescind the contract. 0he n+ 'er of da$s wo+#d depend on the circ+ stances s+rro+ndin( the sa#e. )n *on( ;o, the sa#e pertains to o#asses@ s+(ar. R4C0O LA5 ? pro +#(ated to protect the '+$er ? pertains to the ri(ht of the '+$er ? if $o+ ana#$=e the #aw, it on#$ pro&ided 3 re edies ? pertains to o&a'#e on insta## ents Q: Assuming this is a sale of diamond ring fro 1< payable in 1+ eEual annual. 1++0 each year payable Fan 1 each year. #he buyer was able to pay 1st and 4nd installment. 9e failed to pay the
Q: If necessary for the validity of resale that the seller should send a notice of the intention to resell to the buyer which means that if there is no notice of the intention to resell and then the resale will be void. Is that correct? Is it correct to say that for the resale to be valid, there should be notice to the buyer of the date, time and place of resale? A! 0he answers to 'oth 1+estions 3 "o. 0he$ are not necessar$ for the &a#idit$ of the resa#e. Q: .o what is the relevance of these notices? A! ;irst, the notice of the intention to rese## wi## on#$ 'e re#e&ant if the (ro+nd re#ied +pon '$ the se##er is that the '+$er has 'een in defa+#t for an +nreasona'#e ti e. Kasi fro the notice a2i2ita how #on( the '+$er has 'een in defa+#t. *econd, as to the notice of the date, ti e and p#ace of resa#e, this is not necessar$ for the &a#idit$ of resa#e '+t a$ 'e re#e&ant in deter inin( whether the sa#e was a (ood faith sa#e. 0his is re#e&ant as a conse1+ence of resa#e, if there is sti## a 'a#ance. ;or exa p#e, the tota# contract price is 8100,000. 0he '+$er did not pa$ a sin(#e centa&o. .+t of the resa#e, an( proceeds #an( 860,000. .o may balance pang (2+,+++, can the buyer be compelled to pay the deficiency? Hes, '+t if the sa#e is not a (ood faith sa#e, he a$ not 'e re1+ired to pa$ the 'a#ance. hy? hat has the letter got to do with good faith? 5eca+se if a #etter was sent, then the '+$er co+#d ha&e 'een present and co+#d ha&e deter ined for hi se#f whether in fact an act+a# sa#e cond+cted and there were act+a# 'idders in that sa#e. Kasi pweden( (awa (awa #an( n( se##er na 2+nwari a$ '+ i#i.
8a(e 25
7rd installment. &espite demand, the buyer failed to pay. -an the seller cancel the sale? A! "o, +nder the Recto Law, cance##ation of the sa#e and the forec#os+re of ort(a(e a$ on#$ 'e in&o2ed if the '+$er has fai#ed to pa$ 2 or ore insta## ents. )f the '+$er fai#ed to pa$ on#$ 1 insta## ent the on#$ re ed$ a&ai#a'#e to the se##er is exact f+#fi## ent eanin( specific perfor ance. Q: If after 4 months 5despite demand the buyer failed to pay6 the seller filed an action to recover a sum of money how much shall be recovered by the seller? 0a2e note +nder the facts he on#$ paid 2 insta## ents and hence the 'a#ance 8002. -an the seller recover the ?++0? A! As a r+#e none 'eca+se in a sa#e in insta## ents, this is act+a##$ an o'#i(ation to pa$ with a period. %&er$ ti e the period wo+#d arri&e on#$ then the o'#i(ation wi## 'eco e d+e and de anda'#e. An( na(i(in( d+e and de anda'#e #an( $+n( 3rd insta## ent. 0he 4th insta## ent wi## 'e d+e on#$ another $ear and so on. <hat he can reco&er is on#$ 1002 which 'eca e d+e on the third insta## ent. 0hat is the (enera# r+#e. 5$ wa$ of exception he a$ 'e a'#e to reco&er 8002 or e&er$thin( if there is a c#a+se 2nown as acce#eration c#a+se. K+n( sa 9aceda Law &oid an( acce#eration c#a+se, sa Recto Law &a#id. 5eca+se nor a##$ sa Recto Law, a#iit #an( 'ine'enta so there can 'e an acce#eration c#a+se wherein that wo+#d a2e the entire 'a#ance d+e and de anda'#e and therefore he can 'e co pe##ed to pa$ the entire 8002. Q: #his time 7rd installment default sya. After few months he was able to pay the 7 rd installment. Ga0abayad sya ng 2th, 3th. :n the )th he defaulted again. ould cancellation now be a remedy? 5Ga0a@dalawang default na sya eh6 A! "o, +nder the Recto Law he sho+#d ha&e fai#ed to pa$ 2 or ore insta## ents eanin( 2 consec+ti&e insta## ents. Aindi sina'i n( 'atas ? Cfai#ed to pa$ twiceC. Q: If he failed to pay the 7 rd and 2th then cancellation would now be a remedy. .o what if the seller opted to cancel the sale 5this is rescission di ba?6 and the effect of cancellation di ba mutual restitution and hence the buyer should return the thing delivered to him and the seller should return the amount he received as payment. ould the seller really be obliged to return the entire 4++0 51 st and 4nd installment6? A! "o, +nder the #aw, he is a##owed to retain a reasona'#e s+ which a$ 'e considered as a for of renta#. %xa p#e 2+n( $+n( car an( 'ini#i, 2 $ears na n$an( (ina(a it, hence #aspa( na $+n. Q: &espite the cancellation of sale which normally result in mutual restitution, may the seller this time be able to retain everything which he received?
8a(e 26
A! Hes, if there is a forfeit+re c#a+se except if retainin( e&er$thin( wo+#d 'e +nconsciona'#e. <hat is +nconsciona'#e wo+#d depend a(ain on the circ+ stances s+rro+ndin( the sa#e. %xa p#e 2002 is not +nconsciona'#e for 4andin( -o/+anco. 5+t if the sa#e is a sa#e of achiner$ where the '+$er is a poor far er? 2002 is +nconsciona'#e. ;ina##$ instead of cance##ation another re ed$ is forec#os+re of ort(a(e. Q: Buyer bought a car and to secure the payment of the price, he mortgaged his diamond ring. #he buyer failed to pay 4 or more installments 57rd and 2th installments6. If the seller foreclosed the mortgage and it turned out there was still a deficiency, if payable amount is *++0 and in the foreclosure sale the proceeds was only 7++0. <ay an action for the recovery of balance prosper? A! Hes, 'eca+se +nder the facts what was 'o+(ht was not the one ort(a(ed. ;or 1484 6Recto Law7 to app#$, where there can 'e no reco&er$ of the deficienc$ of the forec#os+re, the thin( 'o+(ht +st 'e the sa e thin( ort(a(ed. B!: Buyer bought a car to secure the fulfillment of the obligation he mortgaged the car but the buyer gave another security. 9e as0ed his brother to mortgage his brother$s house and lot. #he seller agreed. #he buyer failed to pay 4 or more installments. #he seller foreclosed the mortgage but there is a deficiency. .o the seller filed an action for the Kudicial foreclosure of the "!<. <ay that action prosper? A! "o, the forec#os+re of the 2 nd ort(a(e is in fact a deficienc$ /+d( ent. 0he on#$ p+rpose of the forec#os+re is to reco&er the deficienc$ and that is prohi'ited +nder the Recto Law. 4D02N;=2S:M4N0 O9 SAL4 )nc#+des the ordinar$ ca+ses of extin(+ish ent of o'#i(ation! 1. 8a$ ent 2. "o&ation 3. Loss of the thin(, etcR =n/er the law on sales 1. 0he exercise of the ri(ht of resa#e wi## res+#t in the extin(+ish ent of the 1 st sa#e. 0he ownership of the 1st '+$er wi## 'e ter inated and s+ch ownership wi## 'e &ested to the 2nd '+$er. 2. Rescission or cance##ation wi## extin(+ish -.* 3. Rede ption either con&entiona# or #e(a# <in/s: A. -on&entiona# ? it is 'eca+se the ri(ht to rep+rchase is express#$ reser&ed in the contract and th+s this ri(ht a$ on#$ arise in 1 2ind of contract. 0his is a sa#e with a ri(ht to rep+rchase or a pacto de retro sa#e.
5. Le(a#? a$ 'e exercised '$ co?owners or '$ owners of ad/acent #ot A. Con+entional )f there was no stip+#ation as to the ri(ht of rede ption then no ri(ht of rede ption Q: In the e'ercise of this right, how much would have to be offered by the seller in order to redeem the property? ould the price paid by the buyer be sufficient in order to repurchase the same? A! "ot necessari#$, +nder the #aw, the a o+nt which has to 'e offered '$ the se##er a retro in the exercise of the ri(ht of rede ption are! 617 price paidS 627 the expenses inc+rred '$ the &endee for the exec+tion of the contractS 637 necessar$ and +sef+# expenses inc+rred '$ the '+$er. Example )n the sa#e of #and, in order to preser&e the #and which is #ocated 'eside the ri&er, the '+$er a$ ha&e p+t +p a wa## in order that it a$ not erode. 0he expenses inc+rred '$ the '+$er wi## 'e considered as necessar$ expenses for the preser&ation of the thin( so#d and s+ch expenses ha&e to 'e rei '+rsed '$ the se##er, in the ri(ht of the se##er to rep+rchase the thin( so#d. ;rowin7 fr its Example Q: In a mango plantation, there may be fruits at the time of redemption. #he value of the fruits is 1++0. -an the seller be compelled to pay for the value of the fruits? A! 0he answer wi## depend on whether there are fr+its at the ti e of the sa#e. )f there were fr+its at the ti e of the sa#e, the se##er wi## on#$ 'e o'#i(ed to pa$ for the fr+its at the ti e of rede ption if at the ti e of the sa#e, the '+$er paid for the price of the &a#+e of the fr+its. *o a(ain, there were fr+its at the ti e of rede ption, whether or not the se##er wo+#d ha&e to pa$ for the fr+its at the ti e of rede ption wo+#d depend on whether or not there were fr+its at the ti e of the sa#e. 0a2e note that the sa#e a$ ha&e 'een 2 $ears 'efore that or 3 $ears 'efore that '+t if at the ti e of the sa#e there were fr+its and the '+$er paid for the &a#+e of these fr+its, it is reasona'#e that the se##er wo+#d a#so ha&e to pa$ for the &a#+e of the fr+its at the ti e of rep+rchase. 5+t if at the ti e of the sa#e, there were fr+its '+t the '+$er did not pa$ for the &a#+e of the fr+its then the se##er sho+#d not #i2ewise 'e co pe##ed to pa$ for the &a#+e of the fr+its at the ti e of rede ption. 0here were no fr+its at the ti e of the sa#e '+t there were fr+its at the ti e of rede ption. Q: If a -:. was entered into in 4++1 and there were no fruits at the time of the sale. 9owever,
8a(e 27
at the time of redemption April 1, 4++* there were fruits. #he value of which is 1++0. 9ow much can the seller be compelled to pay for these fruits? A! :nder the #aw, the se##er can 'e co pe##ed to pa$ for the &a#+e of the fr+its in proportion to the period in which the '+$er was in co+nted fro the anni&ersar$ date of this contract. H+n( anni&ersar$ date a$ e&er$ >an 1. H+n( anni&ersar$ date this $ear >an 1, 2005, fro >an 1, 2005 +p to Apri# 1, 2005 ? the '+$er wo+#d 'e in possession for 3 onths o+t of 12 onths is J of the entire $ear. #herefore, how much can the seller be compelled to pay? 25,000 , J of the &a#+e. 0he #on(er the '+$er is in possession of the (oods, the 'i((er the a o+nt which has to 'e paid '$ the se##er. Att1. =ribe>s Comment: )t is reasona'#e. )f the '+$er has 'een in possession for a #on(er period of ti e then he wo+#d ha&e tend ore for the preser&ation of the thin( or fr+its. )n fact, if the date of rede ption period is >+#$ 1 and the se##er wo+#d ha&e to pa$ 50I in proportion to the period when the '+$er was in possession co+nted fro the anni&ersar$ date. %erio/ in con+entional re/em&tion B!: Ariel sold a land to Fessica for 1+0 with a right to repurchase e'pressly agreed upon between the parties. Because they were friends, they did not provide for a period within which the seller may e'ercise the right to repurchase. But again, there was a reservation of the right to repurchase only that the parties failed to fi' the period. a. hen should the seller a retro e'ercise the right to repurchase? b. If the seller failed to repurchase within the period agreed upon or the period prescribed by law, what will be your advice to the buyer in order to protect the buyer more? A! 6a7 0he period is 4 $ears. :nder the #aw, if there is a ri(ht of rede ption '+t the parties fai#ed to pro&ide for s+ch a period, the #aw itse#f sa$s that ri(ht a$ 'e exercised on#$ within 4 $ears. Aowe&er, if the parties stip+#ated as to the period within which the ri(ht a$ 'e exercised #i2e 20 $ears, the #aw pro&ides, it cannot exceed 10 $ears and hence the 20?$ear period wi## 'e red+ced. Aindi na an &oid $+n( 20 $ears tota##$, it wi## /+st 'e red+ced to 10 $ears 'eca+se the #aw pro&ides that it sho+#d not exceed 10 $ears. 6'7 0o fi#e an action for the conso#idation of the tit#e. Q: In a sale with a right to repurchase, ownership passes when? Upon the e'piration of the period to repurchase?
A! "o, it fo##ows the (enera# r+#e in sa#e that ownership passes to the '+$er +pon the de#i&er$ as a r+#e. Q: .o what will be the effect of the e'piration of the period for repurchase without the seller e'ercising such a right? :r even if he did e'ercise it was not valid e'ercise of a right, li0e for e'ample: a total amount which should have offered *++0. 9e only offered to pay 7++0. 9ence, the buyer can refuse and therefore the right to repurchase was not validly e'ercised. #hus, assuming there was no e'ercise of the right to repurchase what is the effect on the ownership of the buyer? A! 5+$ers ri(ht or ownership o&er the thin( 'eco es a'so#+te. 4+rin( the period he has ownership '+t his ownership is s+'/ect to a reso#+tor$ condition which is the &a#id exercise of the ri(ht to rep+rchase. )f the ri(ht to rep+rchase, his ownership wi## 'e ter inated. Q: ould this be correct @ that upon the lapse of the period without the seller having e'ercised the right to repurchase the ownership of the buyer becomes absolute? Is this true also in sale of immovable? :r true only in sale of movable? A! )t does not atter, it is tr+e in e&er$ -.* with a ri(ht to rep+rchase. ;ro the o ent '$ the fact that the se##er was not a'#e to exercise the ri(ht to rep+rchase within the period pro&ided '$ #aw, the ownership of the '+$er 'eco es a'so#+te. Q: #he law reEuires for an action for consolidation of title, is this necessary in order the buyer to acEuire ownership or at least to acEuire absolute ownership? A! "o, this action is on#$ necessar$ if he wo+#d want the propert$ to 'e re(istered in his na e. )n a sa#e of i o&a'#e with a ri(ht to rep+rchase and the period for rep+rchase has a#read$ expired witho+t the se##er exercisin( s+ch ri(ht, the '+$er can on#$ ha&e the propert$ re(istered in his na e '$ fi#in( s+ch an action with the co+rt. 0h+s, in order to protect hi f+rther a(anda $+n( action for conso#idation of tit#e 2a$sa na an the thin( wi## 'e so#d '$ the se##er to another person. Q: Assuming you are a lawyer, a client as0ed you to e'amine a document which is denominated as a &:. with a right to repurchase and that client was the seller was the seller a retro 5he would have the right to repurchase6. 9owever, upon e'amination of the terms and conditions of the contract, it appears that the right has long e'pired. #hus, the client as0ed, may I still be able to recover this parcel of land which is the subKect matter of this contract? A! -onsider the possi'i#it$ that the c#ient a$ reco&er. As2 the c#ient of the circ+ stances s+rro+ndin( the exec+tion of that doc+ ent. As2 hi B<h$ did $o+ exec+te this 4.*GC )f the answer
8a(e 28
is B2asi po att$. na(2a +tan( a2o sa 2an$a 1502 tapos sa'i n$a instead of exec+tin( a ort(a(e a(ree ent, 4.* with a ri(ht to rep+rchaseC. An$wa$, fro the 4.* with a ri(ht to rep+rchase, he a$ appear to 'e protected. Kasi if he owes that person 19 and if he is (i&en in the de't a period of 1 $ear within which to pa$ in the 4.* with a ri(ht to rep+rchase, he wo+#d a#so ha&e 1 $ear within which to rep+rchase. 4i'a paran( pareho #an(G 5+t instead of ort(a(e he was as2ed to si(n a 4.*. )f that is the case, c#ear#$ $o+ can conc#+de that this is not an honest to (oodness sa#e with a ri(ht to rep+rchase. Ho+ can treat this transaction ere#$ as an e1+ita'#e ort(a(e. Aence, he a$ sti## 'e a'#e to reco&er what was the s+'/ect atter of that transaction. Q: hy would the creditor as0 his debtor to sign a &:. with a right to repurchase instead of a mortgage to secure the fulfillment of his obligation? A! 0o ens+re that the propert$ wi## 'e owned '$ hi a+to atica##$ +pon the expiration of the period within which to rep+rchase and the se##er a retro fai#ed to exercise the ri(ht to rep+rchase which wi## not happen in a ort(a(e. 0here is a princip#e in ort(a(e 2nown as pact+ co issori+ . :pon the defa+#t of the de'tor the ort(a(ee, cannot &a#id#$ appropriate the thin( for hi se#f. .wnership wi## not a+to atica##$ pass '$ ere defa+#t of the principa# de'tor 'eca+se pact+ co issori+ is &oid 'eca+se the re ed$ of the creditor is to ha&e the propert$ so#d in a forec#os+re sa#e not to appropriate the thin(. *o to a&oid those re1+ire ents sa ort(a(e, an( (a(awin n( se##er@ creditor is to ha&e the de'tor si(n a 4.* with a ri(ht to rep+rchase 'eca+se the o ent the de'tor fai#ed to rep+rchase within the period, a'so#+te ownership (oes to the creditor who is in that sa#e the '+$er 6creditor7 a retro. <a#a na s$an( 2ai#an(an (awin. )f the instr+ ent is a 4.* with a ri(ht to rep+rchase it a$ act+a##$ 'e considered as an e1+ita'#e ort(a(e '$ /+st exa inin( the ter s and conditions of that contract. 0here are certain instances when the #aw itse#f pro&ides for a pres+ ption that this is an e1+ita'#e ort(a(e +nder 1602. B!: 1. hat are those instances? 0he price is (ross#$ inade1+ate. Example: )f the &a#+e of #and is 19, the price stated in the 4.* is 1002 which is (ross#$ inade1+ate. Ka$a 1002 $+n 2asi an( +tan( n$a ta#a(a 1002.
Q: But is this presumption conclusive? A! "o, this is ere#$ a disp+ta'#e pres+ ption. )n fact, the *- wo+#d s+stain the &a#idit$ of a sa#e with a ri(ht to rep+rchase despite the (ross inade1+ac$ of price 'eca+se so ehow it wo+#d 'e ad&anta(eo+s to the se##er a retro. )n the exercise of the ri(ht to rep+rchase, it is ore ad&anta(eo+s
if the price is s a## 'eca+se he can easi#$ co e +p with that a o+nt and rep+rchase the thin(. 2. )f the &endor a retro wo+#d contin+e to 'e in the possession of the thin( after the sa#e, which is +n+s+a# 'eca+se if indeed this is a sa#e then the &endee sho+#d 'e in possession after the sa#e.
Q: A, B, -, & co@owners of land. & donated his interest in the land to B. would A, B, -, have the right to redeem? A! "o, in #e(a# rede ption, the a#ienation '$ a co? owner +st 'e '$ onero+s tit#e 6sa#e, dacion en pa(o, 'arter7. 0his act 6donation7 is (rat+ito+s act. Aence, no ri(ht of rede ption. Q: hat if B sold his interest in the land to &. would A and - have the right to redeem? A! "o, 'eca+se for A and - to ha&e the ri(ht to redde , the a#ienation sho+#d 'e in fa&or of a 3 rd person. Q: hat if B sold his interest in the land to B. A, &, -, wanted to redeem. <ay they be able to e'ercise the right of redemption? All of them? A! Hes. A## of the . Q: Is this the same rule in adKacent lots? A! "o, in ad/acent #ots, there can 'e so an$ owners dependin( on how it is 'i(. 0he owner with the s a##est #and area wo+#d ha&e the ri(ht to redee . Q: hat if the owners of adKacent lots would have eEual area? A! 0he first one who anifested his desire to redee . As to Co I owners B!: =and owned by spouses was sold by the spouses to their three sons in 7 different deeds of sale. In each &:. the specific area was already described. After the e'ecution of the &:., these children would actually harvest only their respective area. #hey wanted to have their respective share registered in their own name. #hey filed a petition for the cancellation of the title of their parents for that property to be divided, they submitted their individual &:.. But the petition was denied by the register of &eeds because they failed to submit a subdivision plan. #he "& cancelled the #-# in the name of the parents issued another #-# in the name of the 7 children in one #-#. :ne of the children sold the land to a 7rd person. -an the 4 other brothers redeem as co@ owners? A! "o, 'eca+se +nder the facts, the$ are no #on(er co?owners. A 0-0 is not conc#+si&e as to the ri(hts of the parties to a certain propert$. 8weden( apparent#$ co ? owners si#a '+t in rea#it$ there has a#read$ 'een a participation of the propert$, $+n #an( hindi pa na2a?ref#ect sa 0-0. )n fact, a propert$ a$ 'e re(istered in a person who is not the owner 2asi na ? for(e #an( $+n( si(nat+re n( rea# owner. 0h+s, the re1+ire ent of the #aw that the co?owner wo+#d ha&e the ri(ht to redee is not present therefore, there wo+#d 'e no ri(ht of rede ption. Q: A, B, - co@owners. A$s share M. B$s share M. -$s share N. B sold his interest in the land to B.
Note: 0his is on#$ a disp+ta'#e pres+ ption. Q: hat if there was a stipulation in the -:. that the seller will shoulder the capital gains ta'? ould the presumption that this is an eEuitable mortgage will arise? A! "o, the pres+ ption wi## on#$ arise if the se##er 'o+nd hi se#f to pa$ the tax on the thin( not the capita# (ains tax. 0hat wo+#d 'e the rea# propert$ tax. Att1. =ribe>s Stor1: Aindi a2o a(a#in( sa tax. *a'i ni >+stice Eit+(, he was o+r re&iewer, 2+n( s$a raw an( exa iner, he wo+#d on#$ as2 1+estions on (enera# princip#es on taxation wa#a +n( re edies or proced+re. "aniniwa#a a2o 2a$ >+stice Eit+(, it t+rned o+t $+n( (a 1+estions ta#a(an( (enera# princip#es 2a$a na2a?t$a 'a a2o. Ae Ae Ae Ae An$wa$, +nder the #aw on taxation it is the se##er who has the o'#i(ation to pa$ the capita# (ains tax +n#ess otherwise a(reed +pon with the '+$er wo+#d ha&e to pa$ the tax. 0he pres+ ption that this is an e1+ita'#e ort(a(e wi## on#$ arise if the se##er 'o+nd hi se#f to pa$ on the tax of the thin( e&en after the sa#e. Kasi hindi s$a owner, wh$ sho+#d he pa$ for the tax on the thin(G Note: 8res+ ptions +nder 1602 wo+#d arise re(ard#ess of whether the sa#e is deno inated as a sa#e with a ri(ht to rep+rchase or a 4.*. )t doesnDt atter. %&en if it is a 4.* if there is do+'t as to whether or not it is an e1+ita'#e ort(a(e. )t has to 'e reso#&ed as an e1+ita'#e ort(a(e. Q: "emedy of seller a retro? A! Refor ation 'eca+se the contract as written did not ref#ect the rea# intention of the parties. 0he rea# intention is to sec+re the f+#fi## ent of the o'#i(ation of the &endor a retro 6de'tor7. (. Le7al Re/em&tion Q: ho have the right to redeem? A! 2 (ro+ps 1. -o?owners 2. .wners of ad/acent #ots 6o'/ect is #ot7 ? consider if r+ra# or +r'an #and CoIowners Q: -o@owners of what thing, movable or immovable? A! )t does not atter.
8a(e 29
9owever, A and - both wanted to redeem. 5As co@owners they may have the right to redeem6. If they cannot agree on the portion of the share of B which will be redeemed by both of them @ what would be the final sharing? A! - wi## ha&e 2@3, A wi## ha&e 1@3 'eca+se the$ wi## ha&e the ri(ht to redee in proportion to their share in that propert$. "ote! the$ a$ stip+#ate as to the sharin(. Q: hat if in the &:. e'ecuted between B and B, the price stated in &:. was 7<. 9ence, A and - can be compelled to redeem by paying 7<? A! "ot necessari#$, +nder the #aw, if the price stated in this sa#e is +nconsciona'#e, the rede ptioners can on#$ 'e co pe##ed to pa$ the reasona'#e &a#+e. An( posi'#en( &a#+e co+#d on#$ 'e 19 pero an( na2a#a(a$ sa 4.* 39. Is it possible that B did not pay 7<? Hes. hy would they do that? 0he reason for that is to pre? e pt A and - fro exercisin( the ri(ht of rede ption. 0o disco+ra(e the fro redee in( the propert$ 2asi 2+n( +ra $an the$ can easi#$ exercise the ri(ht of rede ption. 0he #aw protects the rede ptioners ? if the price is +nconsciona'#e ? the$ a$ pa$ reasona'#e &a#+e. Q: hat if the value is 7< but &:. stated 1< but B actually paid 7< 51< was stated to reduce ta' liability6. 9ow much A and - can be compelled to pay? A! &oromal vs -A Ae#d! 0he co?owners can on#$ 'e co pe##ed to pa$ the price stated in the deed of sa#e. 0he tria# co+rt s+stained the c#ai of the '+$er that the$ 'e rei '+rsed the act+a# a o+nt paid 'eca+se accordin( to the tria# co+rt that wo+#d 'e i ora# to pa$ on#$ the a o+nt stated in the contract. *- said it was ore i ora# $+n( (ina(awa n( parties to pa$ on#$ a s a## a o+nt where in fact the rea# a o+nt paid is a +ch hi(her a o+nt. 5eca+se the on#$ p+rpose of this is to defra+d the (o&ern ent. Owners of A/-acent Lots 9a2e a distinction 'etween a sa#e of an +r'an #and and sa#e of r+ra# #and. Sale of =rban lan/ Re3 isites: 1. 0he #and is so s a## and p+rchased on#$ for spec+#ation )f that is the case, then the ad/acent #ot owners wo+#d ha&e the ri(ht not on#$ ri(ht of rede ption '+t a#so of ri(ht of pre?e ption. 6Artic#e 16227 4ito sa r+ra# wa#a ri(ht of pre?e ption eanin( e&en 'efore the perfection of the sa#e, the ad/acent #ot owners wo+#d a#read$ ha&e the ri(ht to redee '$ wa$ of pre?e ption. 30 da$s a#so 30 da$s fro notice of s+ch intention to se##.
8a(e 30
5+t in r+ra# #ands and a#ienation is '$ onero+s tit#e. Another re1+isite! the #and which was the o'/ect the sa#e +st not 'e (reater than 1 hectare. A#so, for the owners to ha&e the ri(ht of rede ption, the '+$er fro who the propert$ wi## 'e redee ed +st ha&e another r+ra# #and. Another re1+isite ? the #and so#d and the #and of rede ptioner +st not 'e separated '$ 'roo2s, ri&ers in order that these #ot owners wo+#d ha&e the ri(ht to redee . B!: .isters A and B co@owners of land. B sold her interest in the land to B a 7 rd person. B sent a notice to the sister of the seller, the other co@ owner informing her of such sale and giving her copy of the &:.. &espite notice, A did nothing. After that, B reEuested for the annotation of the sale in the title of that property in the "&. "& sent another notice to A. A did not do anything. After so many months, B wanted the property to be partitioned. A then give notice to B that she is e'ercising the right to redeem. &oes A have the right to redeem? "ight of redemption must be e'ercise within 7+ days from what? A! 0he co?owner sti## has the ri(ht to redee . :nder 1623, the 30?da$ period wo+#d start to r+n on#$ fro the ti e the co?owner recei&ed fro the &endor. .ino nagbigay ng notice from the facts? :na, $+n( &endee pan(a#awa $+n( R4. so hindi $+n( &endor a d na('i(a$. *o 30?da$ period has not started to r+n. Aence, he sti## has the ri(ht to redee . Att1. =ribe: :nder the facts, she recei&ed 2 notices, not on#$ written notices '+t a#so copies of the 4.*. :nder the princip#e of estoppe#, she cannot c#ai that she sti## has 30 da$s. )n fact, in a decision of *- in&o#&in( a sa#e of a co?owner share which sa#e was faci#itated '$ the other co?owner. 5+t the #atter c#ai ed he can sti## redee 'eca+se he did not recei&e notice. *- said s$a an( na(? faci#itate n( sa#e so wh$ he co+#d not 'e (i&en notice, hence he had 2now#ed(e of the sa#e. 0his is sti## consistent in the case of 4oro a#. )f $o+ consider the pro&ision #itera##$ it sa$s B30 da$s fro the ti e of notice in writin( is (i&en '$ the &endor to the co?ownerC. An( na2a#a(a$ sa 'atas, notice in writin(. 9ence, apparently even a letter written by the vendor would suffice and hence the 7+ day period would start to run? *- said! "o, the co?owner sho+#d 'e (i&en a cop$ of the 4.* and it is on#$ fro that o ent that the 30? da$ period wi## start to r+n. 0his is a (ood r+#in( ? not an$ ordinar$ notice '+t a cop$ of the 4.* 'eca+se in rede ption, the rede ptioner is s+pposed to 'e s+'ro(ated +nder the sa e ter s and conditions as the '+$er. Aow wo+#d he 2now the ter s and conditions of the sa#e if he is not (i&en a cop$ of the 4.*. *o he +st ha&e a cop$.
LEASE
Notes: Read the 4efinition of Lease +nder Artic#es 1643, 1644, 1713. -onsider a#so on ;or a#ities! Artic#es 1647, 1724 in re#ation to 1403 on *tat+te of ;ra+ds and 1403, 1878 on A(enc$ to Lease. Assi(n ent and *+'#ease! Artic#es 1649, 1650 ) p#ied new #ease or tacita rec+nd+cion! Artic#e 1670 "important# Ri(hts and .'#i(ation of the Lessor and Lessee! Artic#es 1673, 1678, 1680, 1723 "ta$e note se%eral &uestions in the bar ha%e appeared under these pro%isions# 8eriod of the Lease if the parties fai#ed to ;ixed the 8eriod! Artic#es 1682, 1687
contract of a(enc$, th+s +nder 1644, in order for the contract to 'e considered as #ease of ser&ice, there +st 'e no re#ation of principa# and a(ent existin( 'etween the parties. .istin7 ish a Contract for %iece of 5or6 from Contract of A7enc1 Jrensel vs. <ariano :chaco ;acts! 9ariano as2ed 9erit to constr+ct an edifice for hi and a(reed that 9erit was to s+pp#$ not on#$ La'or '+t a#so 9ateria#s. 9erit 'o+(ht the ateria#s fro ;rense#, howe&er the price of the ateria#s re ain +npaid so ;rense# de anded pa$ ent fro 9ariano, the (ro+nd re#ied +pon '$ ;rense# is that 9erit was an a(ent of 9ariano therefore, for fai#+re to pa$ the price, ;rense# c#ai that 9ariano can 'e he#d #ia'#e for the price of ateria#. Ae#d! )t is not a contract of a(enc$, since fro the ter s and condition of the contract it appears that the contro# of 9ariano o&er 9erit does not (o into the anner and ethod of perfor ance of the o'#i(ation '+t on#$ (oes into the res+#t of the prod+ct and therefore it cannot 'e considered an A(enc$ -ontract. Note: )n A(enc$, the contro# of the principa# o&er the a(ent is so per&asi&e that the principa# can contro# not on#$ the res+#t '+t a#so the anner and ethod of the perfor ance of the o'#i(ation which is not present in this case and therefore 9erit was not considered an a(ent of 9ariano. Q: As to the relationship of the ta'i driver with his operator, is this a contract of lease? A! *- r+#ed that this is in fact a #ease '+t not a #ease of thin(, '+t #ease of ser&ice specifica##$ an e p#o$ ent contract, this is 'eca+se of the contro# of the operator o&er the taxi dri&er, as to when, what ti e the dri&e operates the &ehic#e. Q: As to safety deposit bo'es does this involve lease of things? A! "o, in the #atest decision of the *-, it considered the contract as specia# 2ind of deposit. 0his cannot 'e considered a #ease of thin(s 'eca+se the #essee has no contro# o&er the safet$ deposit 'ox. )n fact he cannot e&en enter the 'an2 where the safet$ deposit 'oxes are #ocated if it not a 'an2in( ho+r, #i2e when the 'an2 is c#ose so he cannot enter therein. Note: A(ain, to distin(+ish #ease contract fro other #e(a# re#ationship $o+ ha&e to consider the characteristic of the contract. 0he 'est wa$ to re e 'er the 2inds of contract is to 2now '$ heart what are the rea# contract 6 +t++ , co odat+ , deposit, p#ed(e7 and for a# contract 6antichresis, donation7. Aside fro that it a$ 'e safe to consider as a r+#e a## the other contract as consens+a# contract, where no partic+#ar for is
Ri(hts of 0hird 8erson! Artic#e 1729 "ex: rights of owner of materials against the owner of the building# Note: 0he first thin( to consider in #ease is to consider the 2ind of #ease. <in/s of Lease: 1. Lease of 0hin(s 2. Lease of <or2 or *er&ice 3. Lease of Ri(ht Note: :nder the #aw, +nder 1642 on#$ #ease of thin(s and wor2 or ser&ice are entioned. Note: )n #ease of *er&ice, there are fo+r 647 of the '+t three 637 wi## not 'e co&ered '$ -i&i# Law, which are Ao+seho#d *er&ice and -ontract of La'or 6co&ered '$ La'or Law7, and -ontract of -arria(e 6co&ered '$ -o ercia# Law7. 0he on#$ 2ind of Lease of *er&ice that wi## 'e disc+ss +nder the -i&i# Law is the -ontract for a 8iece of <or2. .efinition: Q: If a party, binds himself to give another the enKoyment or use of thing, does that ma0e the contract one of lease of things? A! "o, the ost i portant distinction here with that of co odat+ is that in #ease, it +st 'e for a price certain, otherwise if there is no &a#+a'#e consideration for the +se or en/o$ ent of the thin( it wi## 'e co odat+ . Q: If in the agreement one of the parties binds himself to render service, for price certain would that be a lease of service? A! "ot necessari#$, 'eca+se it a$ a#so 'e a contract of a(enc$, where a person 'inds hi se#f to render ser&ice for another person it a$ 'e a
8a(e 31
re1+ired except in exceptiona# case! e.(. sa#e of #ar(e catt#e. As a r+#e #ease, therefore is a consens+a# contract '$ ere eetin( of the ind as to the o'/ect and to the consideration the contract is perfected. A contract of #ease of thin(s is essentia##$ onero+s. )n fact in one case decided '$ the *-, in&o#&in( an a(ree ent 'etween the 5+rea+ of Ani a# )nd+str$ and 9r. 5a(tas, where 3 '+##s were de#i&ered '$ the 5+rea+ to 5a(tas for 'reedin( p+rpose. 0here was a period a(reed +pon for one 617 $ear, after the #apse, despite de and for the ret+rn of the '+## 5a(tas fai#ed to do so, thereafter he died and so his estate was re1+ired to de#i&er to de#i&er the 3 '+## '+t on#$ the 2 were ret+rned and the third '+## co+#d not 'e ret+rned a##e(ed#$ on the (ro+nd that the said '+## died in a crossfire 'etween the A+2'a#ahap and the A;8, so the c#ai was fort+ito+s e&ent. -#ai in( that the a(ree ent was co odat+ it was ar(+ed that since there was no transfer of ownership in co odat+ , then the ris2 of #oss wo+#d sti## pertain to the 5+rea+. *r+#ed that this cannot 'e co odat+ , 'eca+se there was stip+#ation for the pa$ ent of 'reedin( fee that has to 'e paid '$ 5a(tas, it cannot 'e co odat+ '+t a #ease of thin(, 'eca+se there was a co pensation to 'e paid for the +se of the '+##. A(ain a contract of #ease of thin(s is essentia# onero+s. Note: Lease of thin(s is not essentia##$ persona#. 9eirs of Jausto &imaculangan vs. IAAe#d! :pon the death of parties #i2e death of #essee, the contract is not there'$ ter inated. 0he heirs of the #essee a$ contin+e to occ+p$ the pre ises '$ &irt+e of the #ease 'eca+se it is not extin(+ish +pon death of #essee. Characteristic of Lease of thin7s 1. -onsens+a# -ontract 2. .nero+s 6essentia##$ onero+s7 3. 5i#atera# 4. "o inate 5. 8rincipa#. 4ssential Re3 isites of Contract of Lease 1. Consent Note: As a contract a(ain, $o+ ha&e to (o into the essentia# re1+isite of contract in (enera# which wo+#d 'e app#ica'#e a#so to #ease. 5+t specifica##$ as to consent in sa#e, there are peop#e who are prohi'ited fro enterin( in specific 2ind of #ease, those entioned in 1490, 1491. <hen spo+ses are prohi'ited fro se##in( to each other si i#ar#$ the$ are a#so prohi'ited fro enterin( in contract of #ease as spo+ses.
8a(e 32
As 1491 is a#so app#ica'#e to #ease, hence the (+ardian cannot #ease propert$ of the ward as +ch as the a(ent cannot #ease the propert$ of the principa# which he is s+ppose to ad inister. $. Ob-ect Q: In lease of things, may a consumable thing be the subKect matter of lease? A! "or a##$ when a cons+ a'#e thin( is +se in accordance with its nat+re it is cons+ ed, as a r+#e therefore cons+ a'#e thin(s cannot 'e the s+'/ect atter of #ease of thin(s. 0he exception is, when the +se of the thin(s is on#$ for exhi'ition, or when the$ are accessor$ to an ind+stria# esta'#ish ent then it a$ 'e a s+'/ect of #ease. '. Ca se Lease of thin( , the consideration for the #essor is the pa$ ent of renta# Lease of wor2 or ser&ice ? it is the co pensation to 'e paid '$ the other part$ Lease of ri(ht , it is the pa$ ent of ro$a#ties which is the ca+se and consideration of the one #easin( the ri(ht to another 9ORMAL2024S Lease of *er&ice , there is no partic+#ar for re1+ired '$ #aw for the &a#idit$ of the #ease not e&en for the enforcea'i#it$ as a r+#e. &onald &y vs. -A ;acts! 0he 'rother of 4$ had a pro'#e in one of the casino in Las Ee(as, so he as2 Att$. 9+t+c to he#p which when reso#&e Att$. 9+t+c now de anded for his Att$. ;ees. .ne of the defenses raised '$ 4$ was that there was no written contract 'etween the parties and therefore he is not entit#ed to Att$. ;ees. Ae#d! 4oc+ entar$ for a#is is not an essentia# e#e ent in the contract. )n fact the contract a$ 'e express or i p#ied. 0h+s, the a'sence of a written contract wi## not prec#+de a findin( that there was a professiona# re#ationship which erit attorne$Ds fees for professiona# ser&ice rendered. Lease of 0hin(s , certain pro&ision of the #aw which re1+ires certain for s to 'e enforcea'#e. :nder 1403, *tat+te of ;ra+d, when there is a contract of #ease o&er an i o&a'#e and it is for ore than a $ear, the contract of #ease +st 'e in writin( in order for it to 'e an enforcea'#e contract. )n 1878, if a person is a+thori=ed to #ease an i o&a'#e propert$ of another for ore than 1 $ear, that person or a(ent sho+#d ha&e specia# power of attorne$.
Note: the pro'#e in #ease wo+#d nor a##$ 'e a co 'ination of an a(enc$ and #ease. B!: here a principal appointed an agent granting him unlimited and general management over his properties withholding no power from him and authoriCing the agent to act as may deemed appropriate. ith this >(A the agent entered in a contract of sale and two 546 contracts of lease. #he first lease pertains to a parcel of land in Ialoo0an for 2 years and rental to be paid annually for 3+0 a year. 9e also lease a certain land in Q- but they did not fi'ed the period of lease but they agreed on payment of rentals on monthly basis rate of 70 per month. #hese contracts were entered into while the principal was in the hospital. "ule on the validity and binding effects of the contracts upon the principal. A! 0he pro'#e pertains to 'oth #ease and a(enc$. Aowe&er in the pro'#e itse#f there was no state ent if the #ease a(ree ent itse#f was in writin(. As s+((ested answer, in the first #ease, since it was for 4 $ears and in&o#&e as #ease o&er an i o&a'#e and pertains to an act +nder 1878, then the a(ent sho+#d ha&e a specia# power of attorne$ and +nder the facts he was on#$ (i&en a (enera# power of attorne$, hence since ar ed on#$ '$ N8A, the contract is +nenforcea'#e as a(ainst the principa#. )n the second #ease, the a(ent represented the principa# did not fix the period of the #ease '+t on#$ fixed the onth#$ renta# of 32, therefore +nder 1687, this wi## 'e constr+ed as a onth to onth #ease. *ince on#$ onth to onth, in&o#&e ere#$ acts of ad inistration therefore not re1+ire *8A therefore the second #ease wi## 'e &a#id and 'indin( +pon the principa#. B!: Agreement for the repair of a private plane and for a certain sum of money, however additional wor0 was reEuested by a person who has the authority of a duly recogniCe representative of the owner of the plane and the reEuest was merely verbal, when the additional wor0 was completed, the one who rendered the wor0 demanded additional payment, the defense raise was under 1)42 in order that a claim for additional payment for the additional wor0, the agreement for the additional wor0 must be in writing and the changes should be authoriCed in writing. A! 0he s+((ested answer of :8 wi## s+stain the defense 'eca+se of 1724S s+ch chan(e not 'ein( a+thori=ed in writin(, the re1+est was ere#$ &er'a# then the c#ai a$ not prosper. Att$. :ri'e a(rees ore in the a#ternati&e answer where in pro&ides that, the person who re1+ested tho+(h &er'a# was the a+thori=ed representati&e of the owner, and this is (i&en
8a(e 33
a#read$ as a fact. )f the defense wo+#d 'e s+stain +nder 1724 then there wi## 'e +n/+st enrich ent on the part of the p#ane owner. 1724 wo+#d (i&e the proprietor the ri(ht to raise the defense that testi on$ a$ not 'e ad itted pertainin( to a chan(e in the p#ans 'eca+se it was on#$ &er'a# chan(e, '+t the o ent the fact is esta'#ished a#read$, $o+ can no #on(er in&o2e 1724 '+t $o+ can raise it as a defense if there is a witness that is 'ein( presented in the effect that there was re1+est or additiona# chan(e '$ in&o2in( 1724, the additiona# chan(e not 'ein( in writin( then no person a$ testif$ as to s+ch fact. 5+t in the pro'#e (i&en it was entioned as a fact, that the &er'a# re1+est was ade '$ a person a+thori=ed '$ the p#ane owner. A(ain the 'etter answer is the a#ternati&e answer, that, for the owner to 'e a'#e to raise the defense +nder 1724, wo+#d constit+te +n/+st enrich ent after he act+a##$ re1+ested for s+ch chan(e thr+ an a(ent. R2;:0S AN. O(L2;A02ONS O9 0:4 L4SSOR As to necessar$ repairs of the thin( #ease, this is an o'#i(ation of the #essor, +nder the #aw the #essor is o'#i(e to a2e the necessar$ repairs. >onCales vs. <ateo 0his in&o#&ed a contract of #ease o&er a coc2pit. )t was stip+#ated in the contract that Ban( #ahat n( 2ai#an(an( (a(awin sa 'aha$ sa'+n(an a$ ipa(a(awan( #ahat ni Ninoon( Non=a#es 6#essee7 sa 2an$an( sari#in( +2o#, na an( sa ahan a$ wa#an( sinasa(otC. )n other words the #essee, 'o+nd to do the necessar$ repairs, so when the coc2pit co##apsed the #essee was he#d #ia'#e, e&en if the #essor +nder the #aw has the o'#i(ation to a2e the necessar$ repairs it is sti## s+'/ect to stip+#ation of the parties. B!: A lease contract was entered into between A and B over a parcel of land for a period of 1* years wherein the lessee conducted his business where he constructed a 7 storey bldg for 7++, +++. Upon the lapse of the 1* year period the parties not having been able to agree on the e'tension of the lease, the lessor demanded the lessee to vacate the premises. =essee refuse to vacate until he is reimburse the 7++, +++ and arguing that since he is a builder in good faith he therefore has the right to retain the thing until he is reimbursed. hat are the rights and obligation of the lessor and lessee? -an the lessee be considered a builder in good faith in the first place? A! "o, he cannot 'e considered a '+i#der in (ood faith as he was ere#$ a #essee and he is not c#ai in( ownership o&er the parce# of #and when he constr+cted the '+i#din( therefore he has no ri(ht of retention. )n fact +nder the #aw the #essor has the option of appropriatin( the i pro&e ent or re1+irin( the #essee to &acate the pre ises and
re o&e the i pro&e ent. 5+t if he decides to appropriate the i pro&e ent for hi se#f he has to pa$ 50I of the expense inc+rred '$ the #essee 'eca+se it is a +sef+# i pro&e ent. )f the #essor decides not to appropriate, the #essee a$ re o&e the i pro&e ent e&en if that wo+#d ca+se da a(e to the #and as #on( as there is no +nnecessar$ da a(e ca+se to the #and. B!: Instead of building it was a chapel that is constructed by the lessee, will the same rule apply? A! -onsider a#so as +sef+# i pro&e ent '$ the :8 Law -enter. Note: )f the i pro&e ent howe&er is an orna enta# i pro&e ent and the #essor wants to appropriate the sa e, he has to pa$ for the &a#+e of the i pro&e ent not ere#$ 50I '+t the &a#+e of the i pro&e ent itse#f. B!: (ertain to construction of a building, where an architect was authoriCed aside from designing of the building also to supervise the wor0 of the contractor. hen completed it was delivered to the owner however within 1* years, it collapse because of the earthEua0e due to faulty construction, and it was the only building that collapse no other building. hat are the rights of the owner against the architect and contractor? -an the owner demand the reconstruction of the building considering that the cost of the construction of the building has tripled from the time of construction up to the time of collapse? A! :nder 1723, the owner can ho#d the architect and contractor so#idari#$ #ia'#e. 5eca+se the architect not ere#$ desi(ned the '+i#din( '+t a#so s+per&ise the constr+ction hence +nder 1723, the$ are so#idari#$ #ia'#e. :nder 1167, in o'#i(ation to do, if what has 'een poor#$ done a$ 'e +ndone at the expense of the de'tor, in fact he can ha&e another person to do the wor2 at the expense of the de'tor. "otwithstandin( that the cost trip#ed he a$ &a#id#$ do so. :nder the present practices in the rea# estate '+siness this a$ no #on(er happen. 0he #ia'i#it$ of the architect and contractor nor a##$ a$ not happen 'eca+se the standard practice nowada$s the architect wo+#d 'e tota##$ separated fro the contractor. As of now there wo+#d 'e a pro/ect constr+ction ana(er that wo+#d represent the owner in s+per&isin( the wor2 of the contractor and no #on(er the architect. R2;:0S AN. O(L2;A02ONS O9 0:4 L4SS44 Note: 0wo 627 fa&orite artic#es are 1649 pertainin( to assi(n ent of #ease, and 1650 on s+'#ease.
8: 0he 3 estion in the (ar ma1 be as sim&le as ma1 a lessee s blease the &ro&ert1 witho t the consent of the lessor an/ what are the res&ecti+e liabilities of the lessee an/ s blesseeJ A! Artic#es 1649 and 1650 wo+#d te## +s that a #essee a$ not assi(n his ri(ht on the #ease witho+t the consent of the #essor howe&er he a$ s+'#ease the propert$ in who#e or in part e&en witho+t the 2now#ed(e of the #essor as #on( as he was not prohi'ited fro s+'#easin( the pre ises. B!: In the contract the lessee was prohibited from assigning the lease in one 516 floor of the building but what the lessee did is sublease the property, would that sublease bind the lessor? A! Hes. Ae was on#$ prohi'ited was assi(n the #ease '+t was not prohi'ited fro s+'#easin( the pre ises. )n fact the #essor need not prohi'it the #essee fro assi(nin( 'eca+se +nder the #aw he is prohi'ited fro assi(nin( his interest as a #essee witho+t the consent of the #essor. )f there is a stip+#ation which +st 'e state in the contract is the prohi'ition to s+'#ease the pre ises in order to 'ind the #essee. :#ti ate#$ therefore the pro'#e here is if there is a contract entered into '$ the #essee with a third person in&o#&in( his ri(hts as a #essee, wo+#d that contract in&o#&e assi(n ent of the #ease or ere#$ s+'#easeG <alacat vs. .alaCar ;acts! 0he #essor entered in a contract with the #essee for a period of 20 $ears fro 1947 to >+ne 1, 1967. howe&er d+rin( the #ease period, the #essee entered into a(ree ent with third person witho+t consent of the #essor, thereafter the #essor 1+estion the &a#idit$ of the contract on the (ro+nd that this was entered witho+t his consent and c#ai in( that this was an assi(n ent of #ease, &oid therefore he can reco&er the propert$ fro the s+'? #essee. 4oes the contract in&o#&e assi(n ent of #ease or ere#$ s+'#ease. Ae#d! <hether the contract is assi(n ent of #ease or s+'#ease, wo+#d depend on whether there was a'so#+te transfer of ri(hts fro the #essee to the third person, s+ch that he desist hi se#f fro the #ease contract and his persona#it$, res+#tin( now in two 627 persons the #essor and the assi(nee, and the #atter is now con&erted in to the new #essee. Aowe&er if the #essee retains interest no atter how s a## in the contract of #ease then it wi## 'e treated on#$ as s+'#ease. *o a(ain, in an assi(n ent of #ease there has to 'e an a'so#+te transfer of interest '$ the #essee of his ri(hts and he disassociated hi se#f fro the contract howe&er if there is re&ersionar$ interest retained '$ hi then it wi## considered ere#$ as s+'#ease.
8a(e 34
)n this contract, the *- ere#$ treated it as a s+'#ease and therefore &a#id e&en witho+t the consent of the #essor, 'eca+se, first the contract was with a period that wo+#d #ast on#$ +nti# 9a$ 31, 1967, +pon the ter ination of the contract, there wo+#d sti## 'e one 617 da$ in the #ease a(ree ent, therefore this #essee wi## 'e re&erted 'ac2 to his ri(hts, since he sti## has +nti# >+ne 1, so this ade it ere#$ as s+'#ease. 0here were other stip+#ations in the contract which ade the to conc#+de that this is ere#$ a s+'#ease. Li2e, in the contract, there was a prohi'ition '$ the #essee +pon L fro c+ttin( the trees on that #and wito+t the consent of the #essee, so wh$ wo+#d he prohi'it L fro c+ttin( the trees if he wo+#d consider hi se#f fro 'ein( disassociated fro the #ease contract. )n other words, he sti## inter&ened in the contract with respect to the s+'/ect #andC. 0here was stip+#ation a#so as to pa$ ent of taxes. )f the contract was rea##$ in&o#&e assi(n ent of the #ease, he sho+#d ha&e nothin( to do an$ ore with the propert$. Ae wo+#d ha&e disassociated hi se#f fro the ori(ina# contract of #ease s+ch that, the parties that wo+#d re ain 'o+nded '$ the contract was on#$ 'etween the #essor and the assi(nee. Jrensel vs. <ariano :chaco )n this case, the theor$ of ;rense# that 9erit was ere#$ an a(ent was not s+stained '$ the *-. *- s+stained that theor$ that the re#ationship of 9erit and 9ariano was that of a e p#o$er or a principa# an contractor in a contract of piece of wor2. #hus, can the supplier of the material, Jrensel, recover from the employer in a contract of piece of wor0? 0here appears to 'e no pri&it$ of contract. 0here wo+#d 'e pri&it$ of contract 'etween the owner of the edifice 9ariano and 9erit in their constr+ction a(ree ent. And it wo+#d 'e 9erit and ;rense# in the contract of sa#e. *o 9ariano has no pri&it$ with the se##er of the ateria# ;rense#. 0h+s as a r+#e, there wo+#d 'e no ca+se of action. )n fact *- dis iss the case fi#ed '$ ;rense#. A#tho+(h in fairness, the *r+#ed, in the a'sence of ateria# ens #ien the action a$ not prosper. #his case was decided in 1;3+, if the action was filed today, may the action of Jrensel prosper? Hes, +nder the theor$ of +n/+st enrich ent, incorporated +nder Artic#e 1729, that the s+pp#ier of ateria# a$ reco&er s+ch a o+nt owin( to hi '$ the contractor to the extent that the owner of the edifice is sti## inde'ted to the contractor. ;or exa p#e the owner of ateria# is c#ai in( 3 i##ion, '+t the owner of the edifice is sti## inde'ted to the contractor for 5 i##ion and the pro/ect has 'een co p#eted, the s+pp#ier a$ reco&er fro the owner of the edifice hi se#f instead of c#ai in( fro the contractor.
8a(e 35
A(ain, on the 'asis of +n/+st enrich ent princip#e, since the owner of the edifice rea##$ owes the contractor and this #ia'i#it$ of the contractor a$ not exc+se '$ the fact that he a#read$ paid the contractor, if the pa$ ent was ade in ad&ance. )f his o'#i(ation was not d+e and $et he paid the contractor the s+pp#ier of the ateria#, can sti## reco&er the price of the ateria# fro the owner of the edifice. 0he #ia'i#it$ of the owner a$ not a#so 'e exc+se '$ the fact that the contractor wai&ed his c#ai a(ainst the owner. :#ti ate#$ e&en if the owner has a#read$ f+##$ paid the contractor at the ti e it is a#read$ d+e and de anda'#e he a$ sti## 'e he#d #ia'#e to the s+pp#ier of the ateria# if he did not de and for the de#i&er$ of a constr+ction 'ond which wo+#d answer for the c#ai s of the #a'orer and s+pp#iers of ateria#s. B!: #his pertains to the lease of fishpond. #he agreement was for five 5*6 years however after one 516 year period of the lease, the lessee demanded from the lessor for 5a6 reduction of the price and 5b6 e'tension of the lease for another 1 year because he was only able to harvest half of what is normally being harvested in the fishpond due to unlawful elements from the area, e'torting money from those leasing the property in that area. A! )f we are to consider the re#e&ant pro&ision on this atter, the #aw pro&ides that red+ction of renta# a$ on#$ 'e de anded '$ the #essee if he har&ested #ess than ha#f of what nor a##$ wo+#d 'e har&ested in that propert$. "or a##$ it can a#read$ 'e said that he is no #on(er entit#ed to the red+ction 'eca+se +nder the facts, he was a'#e to reco&er one ha#f. At an$ rate e&en if he was on#$ a'#e to har&est #ess than one ha#f this wo+#d not entit#e hi to red+ction of renta#s, 'eca+se +nder the #aw, this a$ on#$ 'e c#ai ed if it was d+e to extra ordinar$ ;% e&ent as oppose to ere#$ an ordinar$ ;%. *tor is an ordinar$ ;%, what co+#d 'e considered as an extra ordinar$ ;% e&ent is pesti#ence, +n+s+a# f#ood. 0h+s, the presence ere#$ of +n#awf+# e#e ent a$ 'e considered as extra ordinar$ ;% +nder the #aw and a$ not 'e considered as a 'asis for the c#ai of red+ction of the renta#. As to c#ai of extension of the #ease, a(ain for the sa e reason, e&en if there is a ;% in contract of #ease of thin(, the happenin( of which wo+#d not (i&e the #essee the ri(ht to ha&e the contract extended that wo+#d on#$ res+#t to s+spension of the #ease d+rin( the happenin( of the ;%. Example, war as ;% wo+#d on#$ ha&e the #ease s+spended and the #essee a$ 'ot 'e co pe##ed to pa$ the renta#s d+rin( that period '+t
wo+#d not (i&e the #essee the ri(ht to extend the #ease contract. 04RM2NA02ON O9 0:4 L4AS4 B!: A building was constructed by A, for this B gave A * million pesos with the agreement that B will be the lessee of the entire building for a period of 1+ years for 1,+++ rentals a month. 9owever, on the *th of the agreement the entire building was burned due to J! without fault of anyone. A reconstructed the building, Kust before the building is completed, B notified A of his intent to continue the lease, as to complete the 1+ year period. A refuse, is A Kustified in refusing B$s offer to continue the lease? A! Hes. Ae was /+stified 'eca+se '$ the destr+ction of the #ease d+e to ;% the #ease contract was ter inated so it can no #on(er 'e contin+ed. B!: &iscuss the effect of death of lessee, lessor, agent and principal. A! )n a #ease of thin(, death of the #essee does not ter inate the contract. A contract of #ease is not essentia##$ a persona# contract therefore +pon the death of the #essee, it a$ 'e contin+ed +nti# the expiration of period of the #ease '$ the heirs. 6-ase! Aeirs of 4i ac+#an(an &s. )A-7 2M%L24. N45 L4AS4 Note: .ne of the ost fa&orite in the 'ar exa .
the contract in the ori(ina# #ease contin+e a#so. ;irst as to the ter , +nder the #aw, the ter of the renewed #ease wo+#d not 'e the ter a(reed +pon '+t on#$ 'e of a period dependin( on the anner the renta#s are paid. )f the pa$ ent is on ann+a# 'asis, the renewa# wo+#d on#$ 'e for a $ear and if onth#$ pa$ ent of renta# is ade, the i p#ied new #ease wo+#d on#$ #ast for 30 da$s. As to the option, it was renews, *- he#d, in an i p#ied new #ease, on#$ those ter s and conditions which are (er ane in a contract of #ease are dee ed renewed as to the rest #i2e option to '+$, wi## not 'e considered renewed. %&en in the facts of the case itse#f, it was stip+#ated that the option a$ 'e exercise within the period a(reed +pon 63 $ears7.
AGENC
4efinition 1868, 1874 and 1878 ? for a#ities 5eca+se a for is re1+ired for the &a#idit$ or for the enforcea'i#it$ of the contract entered '$ the a(ent?1878, 1874 1892 ? pertain to appoint ent of the s+'stit+te? effect? a$ the a(ent nonethe#ess 'e he#d #ia'#e for the #oss that inc+rred '$ the principa# as the res+#t of the appoint ent of the s+'stit+te. .ther pro&isions pertain to the ri(ht and o'#i(ations of co ission a(ent or ore i portant#$ the (+arant$ co ission a(ent , 1907 ? 1908 4ffect of /eath ?1919, 1930 and 1931 %ither of the a(ent or principa# Re&ocation ? 2ind of a(enc$ ? a(enc$ co+p#ed with interest ? 1927 B!: A as0ed her best friend to B buy for her certain items in a grocery store. Is there a nominate contract created between A and B? A! 5etter answer, if 5 a(reed to the re1+est of A, an a(enc$ re#ationship has 'een created, a no inate contract has 'een created. A#ternati&e Answer! ) can a(ree with the answer (i&en '$ the :8 Law -enter that a #ease of ser&ice a$ ha&e 'een created so #on( as there was no principa# a(enc$ created or existin( 'etween A and 5, a#tho+(h fro the facts hindi ito #ease of ser&ice, 'estfriend eh, (ood possi'i#it$, so thatDs wh$ ) can a(ree with the a#ternati&e answer of the :8 Law -enter the a'sence of principa# a(enc$ re#ationship a$ res+#t in a #ease of ser&ice. Q: I$m sure all of you or most of you must have been a pro'y in a baptismal or wedding ceremony, but also you may have as0 by a politician to represent in gathering because probably he may be in another gathering in
B!: #he Euestion in the bar could be as simple as under what circumstance would an implied new lease or tacita recunducion arise? A! :nder the #aw, the on#$ re1+ire ent is that 1. 0he #ease period has expired and 2. 0he #essee contin+es to 'e in possession of the #ease for at #east 15 da$s fro the ti e of the expiration of the #ease and 3. "o notice to the contrar$ fro the #essor and the #essee. (4: %ertain to contract of lease entere/ into for &erio/ of ' 1ears @an 1H )1 & to 1?)!. Rentals were &ai/ on monthl1 basis. 2t was sti& late/ that the lessee has the o&tion to b 1 &ro&ert1 at a certain &rice within a certain &erio/ (o&tion to b 1). .es&ite the la&se of the ' 1ear &erio/H the lessee /i/ not eAercise the o&tionH b t contin e/ to be in &ossession of the &ro&ert1 an/ &a1in7 the monthl1 rentals an/ the lessor acce&tin7 the same. 0his contin e/ ntil @ ne 1?)! when the lessee state/ that he wo l/ now b 1 the &ro&ert1 in accor/ance with the o&tion to b 1. 0he lessor ref seH calimin7 there was no more o&tion. 5as the lessor correctJ Hes. as it correct to say that there was e'tension of the lease under the facts? A! Hes, there was an extension 2nown was i p#ied new #ease. Aowe&er, with the i p#ied new #ease it does not ean that a## the ter s and condition of
8a(e 36
another place, so if you$ve been a pro'y in a wedding ceremony or baptismal ceremony, actually accepted the reEuest of the real ninong or ninang then it mean an agency relationship created between you and the actual ninong or ninang? :r if you have accepted the reEuest of the politician were for you to deliver the speech in a gathering would that result an agency relationship? A! )n 'oth instances, no. )t a$ appear +nder the definition of a(enc$ +nder 1868, that there is s+ch an a(enc$ re#ationship 'eca+se as defined, a contract of a(enc$ at first 'ind hi se#f to render so e ser&ice or to do so ethin( in representation or on 'eha#f another with the consent or a+thorit$ of the #atter. *o, 2+n( prox$ 2a that wo+#d fa## +nder 1868 di 'a '+t the definition has 'een critici=ed '$ so e a+thors, one of the is >+stice Re$es, that the definition of a contract of a(enc$ +nder 1868 does not conte p#ate socia# and po#itica# representation, hindi 2asa a an( socia# representation, po#itica# representation in order to ha&e a contract of a(enc$ +nder the "ew -i&i# -ode, the p+rpose of the a(enc$ +st 'e the exec+tion of the /+ridica# act, the a(ent +st as2 or 'ind hi se#f to exec+te a /+ridica# act, eanin( the act that wi## 'e exec+ted '$ the a(ent on 'eha#f of the principa# sho+#d either create, odif$ or extin(+ish a #e(a# re#ationship 'etween the principa# and a third person. -oncrete#$ if the a(ent was a+thori=ed to '+$, the act ? the contract entered into '$ the a(ent with the third person wo+#d create a #e(a# re#ationship 'etween the principa# and the third person, that wo+#d 'e a se##er?'+$er re#ationship, so it is a /+ridica# act. .n the other hand, if the a(ent is a+thori=ed to pa$ an inde'tedness of the principa# to a certain person or to a 'an2 and he in fact paid the said a o+nt, the res+#t of the act is the extin(+ish ent of the existin( #e(a# re#ationship, the #e(a# re#ationship wo+#d 'e the de'tor?creditor re#ationship 'etween the principa# and third person, which wo+#d 'e extin(+ished '$ the act of the a(ent 2nown as pa$ ent. A(ain therefore for a contract of a(enc$ to arise the s+'/ect atter or the o'/ect of the contract +st 'e the exec+tion of the /+ridica# act, ere socia# or po#itica# representati&e wo+#d not res+#t to a contract of a(enc$. Q: If a contract well first if the instrument is titled or denominated as with agency does it mean that there is an agency relationship between the parties entered into a contract? A! "ot necessari#$, a(ain the contract is not the what parties want to ca## it to 'e, '+t rather how the #aw wi## consider s+ch contract if it is the #aw deter ines the nat+re of the contact dependin( on the stip+#ation of the parties.
8a(e 37
Q: But what if the agency was used by the parties in the stipulation? &oes it mean that it is a contract of agency? A! "ot necessari#$, in Quiroga vs. (arsons the word a(enc$ appeared a'o+t 3 ti es in the contract '+t the word a(enc$ does not pertain to a contract of a(enc$ '+t it pertains to another concept of the word a(enc$. Ho+ can +se the word a(enc$ se&era# ti es in another concept #i2e it a$ 'e an instr+ enta#it$ #i2e a tra&e# a(enc$, sec+rit$ a(enc$, or e&en a (o&ern ent a(enc$, '+t their is no a(enc$ re#ationship or it a$ pertain to exc#+si&e ri(ht to se## in a partic+#ar territor$ di'a, so there is an exc#+si&e he is considered an exc#+si&e a(enct to se## a partic+#ar 'rand in the pro&ince of )#oi#o, there is act+a##$ no a(enc$ re#ationship created, it is done on#$ in an exc#+si&e ri(ht to se## a partic+#ar 'rand @ prod+ct in a territor$ . .istin7 ishin7 Contact of A7enc1 from other Contract an/ other Le7al Relationshi& -onsider the characteristics of a contract of a(enc$ as a contract and as a #e(a# re#ationship '+siness or(ani=ation. C:ARAC04R2S02CS O9 A CON0RAC0 O9 A;4NCB Q: "eal? Jormal? A! 4efinite#$ it is not a rea# contract and a#so not a for a# contract. 1. Consens al ? conc#+de that it is consens+a# contract. )t is perfected '$ ere eetin( of the inds as to the o'/ect and consideration of the contract. $. %rinci&al ? hy it is a preparatory contract? 0his is a distinct feat+re of a(enc$ si i#ar to partnership, the$ are 'oth preparator$ contracts, the$ can stand on their own donDt depend on an$ other contract for their &a#idit$, which eans that e&en if the a(ent did not enter into another contract, which eans he did not perfor their o'#i(ation it doesnDt ean that the contract of a(enc$ is &oid, he a$ 'e he#d #ia'#e to s+ch other contract for not perfor in( his o'#i(ations, this is an a(enc$ in pro'#e s pertainin( to a(enc$, $o+ sho+#d a#wa$s consider the facts that nor a##$, 2 contracts in&o#&ed, $o+ ha&e to dea# with the re1+isite of 'oth contracts, in order to ena'#e to reach the correct conc#+sion, this is the principa# ? a(ent with the contract of a(enc$ and second contract wi## 'e the contract entered into '$ the a(ent with the third person, this other contract a$ 'e a #ease, sa#e, or an$ other contract an act ade '$ the a(ent. As of 8rincipa# contract, it can stand on its own e&en if the a(ent did not enter into another contract Q: Gow, is this contract similar to sale as to cause, in that it is also essentially an onerous contract?
A! "o, '+t it is pres+ ed to 'e for co pensation, pres+ ed to 'e onero+s, howe&er it a$ 'e dee ed (rat+ito+s. Nrat+ito+s a#so different fro partnership, 'eca+se partnership is essentia##$ onero+s, a partner wi## a#wa$s ha&e to contri'+te so ethin(, now after this a no inate contract ? co +tati&e contract. As distin(+ished fro other #e(a# re#ation, $o+ ha&e to (o into the feat+re of a contract of a(enc$, how it is createdG 0hen $o+ wi## 2now, for exa p#e that is different fro other #e(a# re#ationships, which are created '$ operation of #aw #i2e, ne(otior+ (estio, a(enc$ and ne(otior+ (estio a$ 'e si i#ar in the sense that there is representation in its #e(a# re#ationship '+t the$ can 'e distin(+ished as to their anner of creation in that a(enc$ is created '$ ere a(ree ent of the parties, ne(otior+ (estio created '$ operation of #aw. A feat re of a7enc1 which is &ec liar is re&resentation. "o representati&e in a contract ? he cannot 'e considered as an a(ent. Gielson vs. =epanto <inning 5=<6 Ae#d! <hi#e there was a c#ai '$ L9 that there is an a(enc$, the *- r+#ed that not a contract of a(enc$. "ie#son has no power of representation to 'ind L9 with third person e&en it has power to '+$ certain ite s he sti## has to o'tain or see2 the opinion or appro&a# of the 5.4 of the L9 in order to '+$ certain ite s, which eans he is not rea##$ an a(ent as to their has no ri(ht of representation. ( t a feat re which wo l/ ma6e a7enc1 similar to &artnershi& )t is 'ased on tr+st and confidence that there are fid+ciar$ o'#i(ations of an a(ent as +ch as there are fid+ciar$ o'#i(ations of a partner +n#i2e in sa#es or other #e(a# re#ationships which are not 'ased on tr+st and confidence. Another +er1 im&ortant feat re of A7enc1 is the manner of termination. 0his is +n+s+a# for a contract that it can 'e ter inated at wi## '$ the principa# a(ent, as2i sino. )f the ter ination was ade '$ the principa#, it is ca##ed re&ocation. if ade '$ the a(ent it is ca##ed withdrawa#. <ariano -ase 0o extend the contract of one part$ o&er another ? in a(enc$ the principa# has a# ost f+## contro# of the a(ent, he can (i&e specific instr+ctions to the a(ent, on how the o'#i(ations are to 'e perfor ed, the anner of the o'#i(ations, the re edies perfor ed, with who , where it is to 'e perfor ed, #ahat, that wo+#d 'e the extent of the contro# of the principa# o&er the a(ent.
5+t as he#d in the case of contro# of one part$ o&er another which on#$ (oes into the res+#t, it cannot 'e considered as a contract of a(enc$ '+t it a$ 'e considered a contract for a piece of wor2. Another im&ortant feat re as to effect of /eli+er1 of the thin7 )f there is a transfer of ownership +pon de#i&er$ of one part$ to the other part$, that is not a contract of a(enc$. )n a contract of a(enc$, when the principa# de#i&ers the thin( to the a(ent, on#$ possession is transferred to the a(ent, ownership is retained '$ the principa# 6owner7 in fact in a(enc$ to se##, an a(ent who was not a'#e to se## he has the ri(ht to ret+rn the (oods to the se##er. <hether there was a stip+#ation as to there wo+#d 'e no transfer of ownership despite the de#i&er$ of the (oods fro one part$ to another, and ownership of the (oods, first part$ wi## on#$ 'e ter inated +pon the sa#e of the (oods to a third person, despite another stip+#ation statin( that there is no a(enc$ re#ationship created 'etween the parties. 0he *- r+#ed act+a##$ principa# a(ent an( re#ationship ni#a. $ conce&ts similar in a7enc1 an/ &artnershi& 5oth of the are '+siness or(ani=ations, 'oth are 'ased on tr+st and confidence, there wo+#d 'e nor a##$ a representation, howe&er the &er$ i portant distinction 'etween the two ? in partnership, there is a /+ridica# persona#it$ created separate and distinct fro that of the indi&id+a# partner. )n a(enc$, despite the perfection of a contract of a(enc$, wa#a si#a pa rin, the on#$ persona#ities wo+#d 'e that persona#it$ of the principa# and the persona#it$ of the a(ent. Some a thors wo l/ classif1 contract of a7enc1 into three: 1. Act+a# a(enc$ 2. Apparent @ .stensi'#e 3. %stoppe# 1. 4sto&&el Iang -ase ;acts! ;#ores appears to ha&e f+## contro# in a resta+rant 6<ashin(ton -afT7 owned '$ Kan( and in the ad inistration of the resta+rant he 'o+(ht certain ite s fro 9ac2 ? ite s needed for resta+rant. 5+t a portion @ price was not paid '$ ;#ores. *o 9ac2 6se##er7 went after the owner of the resta+rant. 0he on#$ defense raised '$ the owner was that ;#ores was not his a(ent. 0a6e note: )t is &er$ diffic+#t to pro&e act+a# a(enc$, 'eca+se an a(ree ent 'etween 2 persons, eh 2+n( &er'a# #an( an( a(ree ent d+n, how wo+#d $o+ 'e a'#e to pro&eG Ae#d! 0he owner of the resta+rant can 'e he#d #ia'#e '$ estoppe# 'eca+se he c#othed ;#ores with f+## power as if he had the a+thorit$ to '+$ those
8a(e 38
ite s necessar$ for the ad inistration of the resta+rant. Aside fro that, 9ac2 was a'#e to pro&e pieces of e&idence ? #i2e in the #ease a(ree ent o&er the '+i#din( where the resta+rant was #ocated and co es the owner of the resta+rant as #essee and ;#ores si(ned as an a(ent of the #essee with a## these the *- r+#ed that the owner of the resta+rant is #ia'#e +nder the 8rincip#e of %stoppe#. $. A&&arent / Ostensible "allos -ase ;acts! Letter was sent '$ 5 to L, infor in( L that A has the a+thorit$ to enter into a contract with L specifica##$ to o'tain (oods fro L, #i2e copra, a'aca which (oods wi## 'e so#d '$ A. After the sa#e a portion can 'e ded+cted as a co ission and the rest to 'e de#i&ered to L. After a certain period, the (oods o'tained '$ A fro L re ained +npaid. )n other words, A wi## (et the (oods fro L. A did not de#i&er the proceeds of the sa#e. L de anded pa$ ent fro 5. 0he defense of 5 was as of that o ent fro that certain period he has a#read$ re&o2ed the a+thorit$ of the a(ent and therefore 'e 'o+nd '$ an$ contract entered into '$ A in representation of 5 with 3rd person. Is the claim of B tenable? "o, 1873 so far as 3rd person are concerned, this notice iton( #etter n$a 2a$ L re ain in f+## force and effect +nti# it is rescinded in the sa e anner it was (i&en. Q: hat if B was able to prove that he posted the notice in <anila Bulletin @ notice of fact of revocation of A. If there was such publication of notice, would the ruling of the .- be different? A! "o, sti## the sa e 6Artic#e 18737 6*ee phraseo#o($ of 18737 Q: hat if in this problem he had actual 0nowledge of the revocation even if he did not receive the letter eh under 1?)7 he should be sent a letter in order that the revocation of authority of A will be effective as to third person? A! )f the 3rd person has act+a# 2now#ed(e of the re&ocation, it is 'ad faith on his part to contin+e transactin( with the a(ent. 0he a(ent actin( on 'eha#f of the principa# and th+s he sho+#d not 'e a##owed to reco&er. 8wede na'asa $+n( p+'#ication, infor ed '$ phone, te#ephone con&ersation '+t it is &er$ hard to pro&e 'eca+se the word of the principa# is a(ainst the 3rd person. As far as 3rd person are concerned the$ wo+#d ha&e the ri(ht to 'e#ie&e that the a(enc$ has the a+thorit$ +nti# the$ ha&e recei&e a notice in the sa e anner that he recei&ed notice as to the a+thorit$ of the a(ent.
8a(e 39
Q: In agency by estoppel / apparent agency, is there really an actual agency e'isting? A! )t does not atter, the principa# can 'e he#d #ia'#e +nder the 8rincip#e of %stoppe# 'eca+se it is &er$ hard to pro&e the existence of the act+a# a(enc$. )t can on#$ 'e the principa# in estoppe# that can 'e he#d #ia'#e. >+st #i2e in apparent @ ostensi'#e a(enc$ sa totoo #n( it is possi'#e that he did not re&o2e the a+thorit$ pwede pa din di'a, pweden( 2+nwari nire&o2e na ni$a /+st to a&oid #ia'i#it$ to 3 rd person '+t that is a atter or a c#ai that he a#read$ re&o2ed. 8ati (a #etter, ha#i 'awa e&en ass+ in( the principa# he#d a #etter to the a(ent that #etter can 'e easi#$ denied 2+nwari, pinada#a n$a 3 onths a(o pero n(a+n #n( pinada#a ni#a(a$ n$a #n( +n( date n+n( +nan( panahon. 0h+s, it on#$ protects 3rd person. 0h+s, 1873 is inc#+ded in the #aw in a(enc$. '. Act al A7enc1 0he #aw itse#f c#assifies act+a# a(enc$ into , as to anner of creation, express or i p#ied. 0here is no pro'#e with express a(enc$. A. %xpress A(enc$ ? it is a 2ind of a(enc$ wherein the consent of 'oth parties is express#$ (i&en. 5. ) p#ied A(enc$ ? were the consent of one of the parties was on#$ i p#ied#$ (i&en on the part of principa#. &ela (ena vs. 9idalgo ;acts! 4e#a 8ena a+thori=ed Aida#(o to ad inister his properties in the 8hi#ippines, Ae has to #ea&e the co+ntr$. Aida#(o ana(ed the properties of 4e#a 8ena, after a whi#e he has to #ea&e the co+ntr$ a#so and (o to *pain for hea#th reasons. *o he appointed another person, another Aida#(o to ad inister said properties of 4e#a 8ena and wrote a #etter to 4e#a 8ena infor in( hi of the appoint ent of another person to rep#ace hi as the ad inistrator of his propert$. 4e#a 8ena recei&ed a #etter, he did not re/ect the appoint ent, he did not 1+estion the acts of the new ad inistrator. After a whi#e he died and his heirs 64e#a 8ena heirs7 fi#ed an action a(ainst Aida#(o 6the 1st a(ent7 for acco+ntin(, da a(es etcetera for the period after the appoint ent of the other a(ent. )ss+es! 617 <ho was then the a(ent d+rin( the periodGS 627 -an the 1st a(ent 'e he#d #ia'#e after the appoint ent of another ad inistratorG Ae#d! ;ro the si#ence of the principa#, d+e to his inaction, d+e to his fai#+re to rep+diate the acts of the s+'stit+te, he is there'$ dee ed i p#ied#$ consented to the appoint ent of another person as the new a(ent, therefore i p#ied a(enc$ was created. 0his (oes to i p#ied a(enc$ pertainin( to the principa# 'eca+se of the si#ence of the principa#, 'eca+se of #ac2 of action of principa#, 'eca+se of
fai#+re to rep+diate the acts of another principa#, na a#a n$an( was actin( on his 'eha#f. Q: 9owever, is this rule applicable also to the agents or to the other party? -oncretely, if a person was as0ed to administer the property of another or to sell the property, and he said nothing @ by his silence, by his inaction, may he be deemed to have accepted agency? A! "ot necessari#$, th+s +nder the #aw, $o+ ha&e to a2e distinction to deter ine the scenario +nder which the said appoint ent was ade, o2ieQ 0he #aw wo+#d sa$ when the 2 parties are a'sent, and when the 2 parties are present. <hen 2 parties are a'sent ? 1 is in 9ani#a and the other is in -e'+. <hen 2 parties are present ? present in the sa e roo (A) $ &ersons &resent I &resent in the same conference hall Q: hen both parties are within the same conference hall, A said to B that he would sell his 5B6 parcel of land in -agayan &e :ro -ity but that B did not react, he Kust stared at the spea0er, na0atingin lng sya, he said nothing, by his silence would have deemed the agency? A! "o. Q: But if B delivered a special power of attorney to A, sabi nya %9ere is the .(A, I am authoriCing you to sell my parcel of land in -agayan &e :ro -ity,. #he .(A was accepted by B but he said nothing, basta tinanggap na lng nya, deemed impliedly consented to that agency? A! Hes. (() 2f $ &ersons are in /ifferent &laceH one in Manila an/ the other one in Ceb Q: hat if A was in <anila B in -ebu. A as0ed B to be his agent to sell a parcel of land and B did not say anything, wala lng, is B considered to have impliedly consented as an agent? A! "o. Q: But this time again a .(A was sent by A 5<anila6 through &9= to B 5-ebu6 which was accepted / received by B, now he did nothing by his inaction, by silence he is deemed to have accepted the agency? A! "ot necessari#$, it wi## depend on the nat+re of the '+siness of 5, 2+n( an( ne(os$o, a(ain +nder the facts in the *pecia# 8ower of Attorne$ he was a+thori=ed to se## the parce#s of #and of A, if 5 was in the '+siness of pi((er$ @ po+#tr$ a$ wa#an( 2ina#a an $an sa se##in( of a parce# of #and. Ae wi## not 'e considered to ha&e i p#ied#$ accepted the a(enc$. Aowe&er, if 5 is a rea# estate 'ro2er, ta#a(an( (an+n $+n( ne(os$o n$a di 'a, '+$in(
8a(e 40
and se##in( parce#s of #and, then and on#$ then on his si#ence, he is dee ed to ha&e i p#ied#$ consented to the a(enc$. COM%4NSA02ON O9 0:4 A;4N0 Q: As to the compensation in a contract of agency consider again if agency is gratuitous or onerous? A! A(enc$ is pres+ ed to 'e for co pensation. )f that principa# is c#ai in( that the a(ent a(reed to render ser&ice witho+t co pensation the '+rden is on hi 6the principa#7 to pro&e that in fact it is (rat+ito+s 'eca+se the #aw pres+ es that it is for co pensation. 5+t there is one other re#e&ance in this distinction ? for exa p#e, d+e to the ne(#i(ence of the a(ent the principa# s+ffered da a(es in the a o+nt of 1002. )t was act+a##$ pro&en that the a(enc$ was (rat+ito+s. 0he a(enc$ in other words sa a'o(ado, pro 'ono or #i're an( ser'is$o nan( a(ent, may the agent be held liable? A! .f co+rse sa a'o(ado e&en if pro 'ono $an if he ca+sed da a(e to the principa# or c#ient d+e to his ne(#i(ent acts, he can 'e he#d #ia'#e. Aowe&er, +nder the #aw if the contract of a(enc$ is (rat+ito+s in character, the co+rt a$ iti(ate the #ia'i#it$ of the a(ent, dahi# (rat+ito+s. Att1. =ribe>s Comment: ) definite#$ a(ree with the pro&ision. As to this, the on#$ reco(nition of h+ an nat+re, pa( wa#an( swe#do ahirap (tra'aho, in fact, ahirap (+ isin( sa + a(a. 5+ti na #n( na+na an( swe#do sa2in ditto sa re&iew 2a$a (anado a2o a(sa#ita Article 1?*? ? 0he #ia'i#it$ of the a(ent for ca+sin( da a(e to the principa# d+e to his ne(#i(ence or e&en 'ad faith or fra+d co itted a(ainst the principa# a$ 'e iti(ated if the a(enc$ is (rat+ito+s in character. B!: hat is the scope of authority of the agent @ whether it only pertains to the acts of administration or acts of strict dominion? A! :nder Artic#e 1877, if the a(enc$ is in (enera# ter this on#$ co prises acts of ad inistration. %&en if the principa# 'eho#ds power to the a(ent or it is stated that the a(ent a$ exec+te an$ act as a$ 'e dee ed appropriate, that wi## sti## 'e an a(enc$ pertainin( to act of ad inistration. 9ORM O9 A CON0RAC0 O9 A;4NCB As to for , the #aw is c#ear that it a$ 'e ora# howe&er, the law may reEuire a particular form or specific form for what? for the validity of agency? Is there a law which reEuires a particular form for the validity of the agency? A! <a#a, there is no s+ch for . Q: Is there a particular form reEuired by law for the agency to be enforceable? A! At #east one, +nder the stat+tes of fra+ds , if in the ter s or a(ree ent if it is not to 'e perfor ed within 1 $ear, it sho+#d 'e in writin( otherwise, it is +nenforcea'#e. 0he effect of the a(enc$ if the
a+thorit$ of the a(ent it is not in writin( wo+#d (o into the contract entered into '$ the a(ent with the 3rd person. 1874 and 1878 ? for a#ities. R48=2S204S O9 A CON0RAC0 O9 A;4NCB %ssentia# re1+isites of a contract of a(enc$ are #i2e an$ other contract ? there are 3 essentia# e#e ents! 617 consent of the contractin( partiesS 627 as entioned a whi#e a(o, the o'/ect of a contact of a(enc$ is the exec+tion of the /+ridica# actS 637 as to ca+se, as far as the principa# is concerned it is the ser&ice to 'e rendered '$ the a(ent and as to the a(ent, it is the co pensation to 'e paid '$ the principa# or it a$ /+st 'e #i'era#it$ in (rat+ito+s contract. "allos -ase Ae#d! 0he *- en+ erated the essentia# e#e ents or the a##e(ed essentia#s e#e ents of a contract of a(enc$! 1. -onsent 2. %xec+tion of the /+ridica# act ? s+'/ect atter 3. Acts within the scope of a+thorit$ 4. 0he acts +st 'e in representation of the principa# Att1. =ribe>s Comment: 0hese are a##e(ed#$ the essentia# e#e ents. A(ain, so e a+thors wo+#d disc+ss in their 'oo2s that these are the essentia# e#e ents. <ith d+e respect to the ponente of this case, ed$o a#i a#i an( en+ eration, first there was nothin( entioned a'o+t the ca+se or consideration as a contract, a contract wi## ne&er &a#id#$ ha&e a ca+se or consideration. <e##, it a$ 'e #i'era#it$, pwede na an ca+se $an '+t there +st ha&e a ca+se. 0hat the a(ent act within the scope and that the a(ent +st act in representation are not essentia# e#e ents of a contract of a(enc$. 0he$ are act+a##$ o'#i(ations of the a(ent which eans the$ ha&e a#read$ perfected the contract of a(enc$. "o o'#i(ation wi## arise 2+n( &oid $+n( 2ontrata 2+n( wa#a pan( &a#id contract. *o the essentia# e#e ents are on#$ those e#e ents necessar$ for the &a#idit$ of the contract. .nce the contract is &a#id then the o'#i(ations wi## arise. Q: If the agent acted outside the scope of his authority, does it mean that the contract of agency is void? A! .f co+rse not. Ae can 'e he#d #ia'#e for actin( o+tside the scope of his a+thorit$ or if he acted not in representation of the principa#. Q: &oes it mean that there was no agency at all? A! .f co+rse not. 0here is a contract of a(enc$. :nder the r+#e, there are conse1+ences if the a(ent did not act in representation of the principa#. %AR024S 2N A CON0RAC0 O9 A;4NCB
Noin( to the consent of the parties, 1 a+thor a$ c#ai that there are 3 parties in a contract of a(enc$ that is tota##$ wron(Q 0here are on#$ 2 parties in a contract of a(enc$ the principa# and the a(ent. Aowe&er, in pro'#e s in&o#&in( a(enc$, nor a##$, there are three persons in&o#&ed. 0he third person with who the a(ent transacted is no #on(er part of the concept a(enc$. 0he contract entered into 'etween the principa# and the a(ent is the contract of a(enc$. 5+t when the a(ent entered into another contract, it a$ 'e a sa#e, #ease or other contract and the 3rd person is not a part$ to this contract. 0he 3rd person is a part$ to a 2nd contract. A(ain the parties are the principa# and the a(ent. 0he$ a$ 'e ca##ed in other na es the principa# a$ a#so 'e ca##ed the e p#o$er, constit+ent, chief. 0he a(ent a$ 'e ca##ed attorne$?in?fact, prox$, representati&e. 1. Consent of the Contractin7 %arties Q: hat if the principal authoriCed an agent who was then 13 years old to sell a house and lot, giving him a .pecial (ower of Attorney. (ursuant to his mandate, the agent 5minor6 sold the house and lot to B, a 7 rd person, thereafter B filed an action to annul the contract of sale on the ground that the agent is minor at the time of the sale, will the action prosper? A! )t wi## not prosper. .n 2 (ro+nds! 617 )n that contract of #ease entered into '$ the a(ent and the third person or the contract of sa#e 'etween the third person and the a(ent, whi#e A is considered as the se##er '+t on#$ actin( on 'eha#f of the principa# sti## the rea# part$ in the contract is the principa# and not the a(ent 627 0he other reason is +nder the r+#es in contracts , )n ann+# ent of contract, on#$ the incapacitated person has the ri(ht to ha&e the contract ann+##ed, the part$ in the contract who is not otherwise incapacitated has no ri(ht to instit+te an action for ann+# ent. %ither (ro+nd wo+#d 'e a &a#id (ro+nd to dis iss the case. $. Ob-ect of the Contract of A7enc1 As to the o'/ect of the contract of a(enc$ we ha&e entioned a#read$ that this is the exec+tion of /+ridica# act. Q: Is it correct to say that any act which a person can lawfully do, he can delegate to a 7 rd person or to an agent? A! "ot a##. 0here are acts which are considered p+re#$ persona# acts. 0his he a$ not de#e(ate to an a(ent , #i2e the exec+tion of an affida&it, $o+ cannot as2 so e'od$ to si(n on her 'eha#f in an affida&it or e&en in s+ccession $o+ cannot
8a(e 41
de#e(ate the exec+tion of a wi## to a 3 rd person, note that it is exec+tion not draftin( of the wi##. Ho+ can as2 so e'od$ to si(n for $o+, +nder certain circ+ stances, '+t the exec+tion per se cannot 'e #eft to a 3rd person, it is a p+re#$ persona# act. Q: #he right to vote may be delegated to another person? A! 0he answer is ? it depends. Eotin( in nationa# @ #oca# e#ection cannot at #east 'e &a#id#$ de#e(ated. <e## it a$ 'e de#e(ated, a$ ha&e 'een de#e(ated '$ other peop#e, pero pa( nah+#i 2a, pa( 'ad 2a, 2+#on( 2a sa'i ni >o2er 5+t in a corporation, as for corporation can there be a valid delegation of the right to vote? Hes. )n a stoc2ho#dersD eetin(, this cannot happen '+t in a 5.4Ds eetin(, in a 5.4 eetin( it is the persona# presence of the 4irector which wi## 'e co+nted for the p+rposes of 1+or+ '+t for p+rposes of &otin(, $o+ can as2 so e'od$ to o'ser&e d+n sa proceedin(s. 0he e 'ers of the 5oard wo+#d nor a##$ not exc#+de $o+ as an o'ser&er, as a representati&e of the other 5.4. 5+t o'&io+s#$ if the person hi se#f cannot #awf+##$ do, cannot de#e(ate an$one #i2e if the a(ent cannot '+$ a parce# of #and in the 8hi#ippines, he cannot a#so de#e(ate s+ch acts to another person that is &oid sa#e. 9ORM O9 CON0RAC0 O9 A;4NCB As entioned ear#ier, a(enc$ a$ 'e ora#. )t doesnDt atter if the contract of a(enc$ wo+#d 'e &a#id '+t the parties e&en if it is '$ &er'a# a(ree ent, an$ effect in the &er'a# a+thori=ation, the a(ree ent 'etween the a(ent and the principa# if it was on#$ &er'a# wi## on#$ 'e in the contract entered into '$ the a(ent. -oncrete#$, +nder 1874, if the a(ent was a+thori=ed to se## a parce# of #and and his a+thorit$ is not in writin(, the sa#e itse#f is &oid +nder 1874, howe&er, if for exa p#e, the a(ent was a+thori=ed to se## a car and his a+thorit$ is not in writin(, what is the status of the sale? ould that be valid and enforceable against the principal? A! "o, it is +nenforcea'#e +nder 1878. .an yung car sa 1?)?? )t fa##s +nder the #ast para(raph of 1878 ? an$ other act of strict do inion wo+#d re1+ire specia# power of attorne$. *o 1878 wo+#d en+ erate cases, acts of contracts where the #aw re1+ires the a+thorit$ of the a(ent in writin(, it sho+#d ha&e a *pecia# 8ower of Attorne$, otherwise the contract entered into '$ the a(ent is +nenforcea'#e a(ainst the 8rincipa#. Q: -oncretely, the agent was authoriCed to administer a rice land. In the administration of the rice land, he had to buy fertiliCer, if he paid the sellers of fertiliCer without .pecial (ower of Attorney, would the payment be binding against the principal? A! Hes 'eca+se that pa$ ent is on#$ considered as an act of ad inistration.
8a(e 42
Q: 9owever, 0ung na@harvest na ung palay then he used the proceeds of the palay to pay the indebtedness of his principal with a certain ban0 5(GB6 without .(A, would that payment be valid and binding as against the principal? A! "o 'eca+se that wo+#d fa## +nder the first para(raph of 1878 , to a2e s+ch pa$ ent not in the atter of acts of ad inistration witho+t *8A. Other Acts / Contracts which Re3 ire a S%A 1. %nterin( into a co pro ise a(ree ent with *8A. Ae cannot s+' it the atter to the ar'itrator witho+t another *8A, those are 2 and separate distinct powers ? the power to s+' it atters in the ar'itrator and the power to co pro ise. B!: #he agent of the principal entered into a contract of lease 5without .(A6 with B and the period of lease is for 7 years. ould the contract of lease be valid and enforceable as against the principal? A! )t depends on the o'/ect of the #ease. )f this #ease in&o#&es i o&a'#e #i2e a parce# of #and, for a period of 3 $ears witho+t a *8A, would that be valid and Binding? :nahin natin +n( car, if it wo+#d 'e a car for 3 $ears witho+t *8A, e&en if it is for 3 $ears this wo+#d 'e a &a#id and 'indin( contract of #ease as a(ainst the principa#. Aowe&er, if this is an immovable li0e a parcel of land, would this be valid and binding against the principal? )t depends on whether in this contract of #ease if the principa# is the #essor or the #essee. :nder Artic#e 1878, this contract is +nenforcea'#e as a(ainst the principa# on#$ if! 617 in the contract of #ease the principa# is the #essorS 627 the o'/ect is i o&a'#e and 637 the period is ore than 1 $ear. 0a2e note of the 3 re1+ire ents. :nder 1878, it is to #ease the propert$ of the principa# to another. 0herefore, if the principa# is the #essee *8A is not re1+ired, 2asi an( '+rden wa#a na an sa principa#, d+n sa #essor, 2c propert$ n( #essor $an di 'aG 0h+s, the #aw on#$ re1+ired the *8A if the principa# is a #essor, and the #ease contract in&o#&es i o&a'#e propert$ and the period is ore than 3 $ears. Q: =ease contract was entered into by A in representation of B, with B as the lessor, the period of lease of a parcel of land is 7 years. A has a .(A. <ay this contract be unenforceable as against the principal? A! Hes, it is possi'#e if this #ease is not in writin(. 0his ti e +nder the *tat+te of ;ra+ds. Kanina an( disc+ssion natin a$ +nder 1878 '+t if $o+ re e 'er the *.;, a #ease o&er i o&a'#e propert$ for ore than 1 $ear +st 'e in writin( to 'e enforcea'#e 6Artic#e 14037. 0here is an a+thor a(ain who wo+#d c#ai that a 8ower of attorne$ a$ 'e ora#. Ae is rea##$ wron(. A power of Attorne$ '$ its nat+re is in
writin(, '$ definition it is a written a+thorit$. )t cannot 'e ca##ed a power of attorne$ if it is not in writin(, in fact, if $o+ consider the specific pro&ision in the a(enc$ a## this pro&isions pertain to a power of attorne$ in a written instr+ ent. ;or example' Artic#e 1871, pertains to the de#i&er$ of a power of attorne$S 1872 refers to trans itta# of a power of attorne$S 1900 ? power of attorne$ is writtenS 1902? presentation of a power of attorne$. .'&io+s#$ in a power of attorne$, $o+ cannot do that if it is ere#$ a &er'a# a+thori=ation. 9ow can a third person demand the presentation of a power of attorney if that alleged power of attorney is verbal? 5$ its nat+re, it is in writin(. Q: ould that power of attorney be valid and binding as against the principal if it is not in a public instrument? A! Hes, e&en if a power of attorne$ is on#$ in a pri&ate instr+ ent, the power of attorne$ is &a#id and 'indin( a(ainst the principa#. 0he #aw does not re1+ire that it +st 'e in a p+'#ic instr+ ent. FimeneC vs. "abot ;acts! >i ene= was the owner of certain parce#s of #and in 8an(asinan. Ae was then in the pro&ince of "orth L+=on when he sent a #etter to his sister as2in( his sister to se## one of his parce#s of #and. <ith that #etter, the sister indeed so#d one of his parce#s of #and to Ra'ot. Aowe&er, the sister did not re it the proceeds of the sa#e, 'in+#sa #n( n$a, so when >i ene= went 'ac2 to 8an(asinan, he de anded the propert$, $+n a$ na 2a$ Ra'ot na, so he fi#ed an action a(ainst Ra'ot, the defense raised '$ hi is that the #etter wo+#d not 'e s+fficient a power of attorne$ to 'ind hi as a principa# in the sa#e of the parce#s of #and. Ae#d! A #etter s+ffices as a power of attorne$. <hen $o+ sent a #etter to $o+r 'rothers or sisters $o+ do not notari=e s+ch #etter. O(L2;A02ONS O9 0:4 A;4N0 1. 0o carr$ o+t the a(enc$. 2. )n carr$in( o+t the a(enc$, there are 2 o'#i(ations of the a(ent! 6a7 0o act within the scope of a+thorit$ 6'7 0o act in 'eha#f of the principa# or in representation of the principa#. 3. 0o render an acco+nt of his transactions and to de#i&er to the principa# whate&er he a$ ha&e recei&e p+rs+ant to an a(enc$ e&en if it not owin( to the principa#. 1. %rimaril1H the obli7ation of the a7ent is to carr1 o t the a7enc1. 2f he faile/ to carr1 o tH he ma1 be hel/ liable. Q: .hould he carry out the agency after the death of the principal? A! As a r+#e no, 'eca+se there is no one to 'e represented. )n fact +nder 1919, the a(enc$ is extin(+ished '$ the death of the principa#.
8a(e 43
Aowe&er, the #aw pro&ides for an exception ? if de#a$ wo+#d i pair dan(er for an a#read$ 'e(an '+t then +nfinished contract, he sho+#d contin+e to carr$ o+t the a(enc$. A(ain, if it wo+#d ca+se dan(er. Q: But if he did not carry out agency, he may not be held liable? A! As a r+#e, he is #ia'#e for not carr$in( o+t the a(enc$. Q: .o what is the e'ception? A! 8rofessor de Leon (a&e an example of this, if the a(ent was a+thori=ed to '+$ a specific car fro a specific person. <hen the a(ent was a'o+t to '+$ the car, he was infor ed '$ the se##er that there is a defect in the 'ra2e s$ste of the car. "onethe#ess, witho+t infor in( the principa# he 'o+(ht the car. )f da a(e was ca+sed to the principa# 'eca+se of the defecti&e 'ra2e s$ste and a c#ai is fi#ed a(ainst the a(ent, can the agent invo0e that he merely carried out the agency? "o, here the #aw is &er$ c#ear that he sho+#d not carr$ o+t a(enc$ if it wo+#d res+#t in #oss @ da a(e in the principa#. Another Example An a(enc$ to '+$ a parce# of #and 'efore the 9t. 8inat+'o er+ption. 4+rin( that ti e, a(ents a## o&er L+=on, wi## '+$ a parce# of #and not on#$ in 9etro 9ani#a '+t a#so in 8a pan(a and *o+th -ALA5ARU." '+t if the a(ent was (i&en a+thorit$ and he 'o+(ht parce#s of #and i ediate#$ after the er+ption so ewhere in 8orac @ 5aco#or 8a pan(a, +2han( $o+ can 'e he#d #ia'#e for '+$in( those parce#s of #and. #hat it would be a valid sale? A! Hes, that wo+#d 'e a &a#id and 'indin( sa#e as far as the 3rd person is concerned. )f na2ita na an na p+ro #ahar, na2ita o pa 'ini#i o pa, the a(ent can 'e he#d #ia'#e 'eca+se the act definite#$ wo+#d res+#t in #oss or da a(e to the principa# at #east for a'o+t 15 $ears. $. 2n carr1in7 o t the a7enc1H there are $ obli7ations of the a7entH he sho l/ alwa1s remember: 6a7 0o act within the scope of a+thorit$ 6'7 0o act in 'eha#f of the principa# or in representation of the principa#. 6a7 0o act within the scope of a+thorit$ Q: 9ow would you 0now if the agent was acting within the scope of authority? A! Ho+ wi## 'e (+ided '$ the power of a+thorit$. )n fact, as a 3rd person, $o+ can de and the power of attorne$, so that $o+ wi## 2now whether in fact he had a+thorit$ to enter into a contract. 5+t sa totoo #n( there are so e *8As which wo+#d 'e s+'/ect of the case +p to the *- pertainin( to the scope of a+thorit$ of the a(ent. =inal vs. (uno
Q: as (uno authoriCed to sell the land or merely authoriCe to administer the land? A! 0here was a dissentin( opinion. Att1. =ribe: 9as a(a#in( an( dissentin( opinion. *a phraseo#o($ n( a+thorit$ ni 8+no he was on#$ to '+$, to se##, etcRin the ad inistration of #and, so the '+$in( and se##in( sho+#d not 'e constr+ed as a separate a+thorit$ fro the ad inistration and sho+#d 'e constr+ed as a '+$in( and se##in( in re#ation to the ad inistration. )f $o+ ha&e to ad inister a parce# of #and, $o+ ha&e to '+$ so an$ thin(s, #a#o na 2apa( a(ric+#t+ra# #and $an. Ho+ ha&e to '+$ too#s, ferti#i=ers, and therefore $o+ ha&e the a+thorit$ to '+$. &o you have to authority to sell? Hes, the prod+cts of that #and. Ho+ ha&e the a+thorit$ to se## pero +n( (inawa ni 8+no, 'inenta n$a is o $+n( #and. <hen the case reached the *-, the a/orit$ of the decision was , he has the a+thorit$ to se## +nder the power of a+thorit$. .ne of the 'ases of the *- in the conc#+sion that there was a power to se## a#so 'eca+se the fact that the a(ent acted in (ood faith, that is an incredi'#e ar(+ ent, '$ the mere allegation that the agent acted in good faith he already acted within the scope of the his authority? 8aran( a#a'o $+n( da#awan( $+n. %&en if ) wo+#d c#ai that ) tho+(ht ) a a+thori=ed, does it mean therefore that I was authoriCed? 0hose are 2 different thin(s ? 'e#ie&in( in (ood faith that $o+ ha&e the a+thorit$ is different fro in fact ha&in( the a+thorit$. "onethe#ess, a(ain, as a r+#e $o+ can 'e (+ided '$ the power of attorne$ '+t e&en if witho+t the power of attorne$ or despite the fact there was a specific andate of the power of attorne$, $o+ sho+#d 'e (+ided '$ specific pro&isions of #aw whether the act is within the scope of $o+r a+thorit$. ;or example: 1881 ? the a(ent a$ do s+ch acts as a$ 'e cond+ci&e for the acco p#ish ent of the p+rpose of a(enc$. 0his partic+#ar pro&ision has 'een cited '$ the *- in the case of <ac0 vs. Iang, if a person who is an a(ent has the a+thorit$ to ana(e the resta+rant, necessari#$, he +st ha&e the a+thorit$ to p+rchase ite s for the ana(e ent of the resta+rant ? the act of '+$in( these ite s, #i2e p#ates, these are reasona'#e and necessar$ for the acco p#ish ent of the a(enc$. Another Artic#e which wo+#d he#p $o+ in deter inin( if the act is within the scope of the a+thorit$ is Artic#e 1882. Example of this, the principa# a+thori=ed his a(ent to se## his car, a specific car for 3002. 0he a(ent so#d the car for 400K. )t is possi'#e for the principa# to sa$ that $o+ acted o+tside the scope of a+thorit$, (a#it pa c$a 3002 na 'ine'enta pero 4002 na'enta. 0echnica##$, $es, the a(ent indeed a$ 'e considered to ha&e or a$ 'e c#ai ed to ha&e acted o+tside or in excess of his a+thorit$ 'eca+se he to#d to se## the car for 3002.
8a(e 44
Q: hat is the reason that the principal would claim that the agent acted outside the scope of his authority? A! 9an$ reasons! for exa p#e he as2ed to '+$ so e'od$ to se## his car 'eca+se he expected s+ one$ to arri&e fro a'road to '+$ a 'rand new car '+t wa#a napornada, di 'ini(a$ n( 2apatid $+n( pera. 0herefore, if the car wi## 'e so#d wa#a na s$an( 2otse and it is an exc+se that the a(ent acted o+tside the scope of his a+thorit$ '+t the co on reason wo+#d 'e 'eca+se the principa# a#read$ ta#2ed to so e'od$ e#se which wi## rea##$ '+$ the car for 4002. <hen $o+ a$ choose this 1G 5eca+se d+n sa isa, wa#an( co ission di 'a sa 1 a$ co ission. Ae a$ not reco(ni=e this contract. Artic#e 1882 ? the #i its of the a(entDs a+thorit$ sha## not 'e considered exceeded sho+#d it ha&e 'een perfor ed in a anner ore ad&anta(eo+s to the principa# than that specified '$ hi . *o +nder the #aw, that the act is dee ed not in extent of his a+thorit$, e&en on its face paran( in excess, the #aw wi## consider it as not in excess ere#$ 'eca+se it is ad&anta(eo+s to the principa#. Ho+ distin(+ish these transactions fro an a(enc$ to se## 100 2i#os of an(oes and there is a specific instr+ction that the an(oes wi## 'e so#d 30 pesos per 2i#o. )f $o+ so#d the an(oes for 50 pesos, 30 #an( 'inenta 50 pesos per 2i#o an( nan($ari o+t of 100 2i#os sisenta #n( an( na'enta, 60 sisenta, 70 sitenta, so instead of 30 pesos per 2i#o he so#d 50 per 2i#o. Act+a##$, this is a &io#ation of the instr+ctions of the principa# 2a$a si(+ro di #ahat na'enta +n( (a an((a 'inenta n$a with a +ch hi(her price. Another Artic#e 1879 ? the #aw specifica##$ pro&ides that the specia# power to se## exc#+des the power to ort(a(e. %&en if the a(ent was a+thori=ed to se##, he cannot ort(a(e that witho+t another power of attorne$, as +ch as the power to ort(a(e does not inc#+de the power to se## as entioned a whi#e a(o the power to co pro ise does not a+thori=e for the s+' ission to ar'itration. Q: 9owever, if the principal authoriCed the agent to borrow money without the authority of the principal can the agent himself be the lender? A! 0he #aw pro&ides $es, as #on( as the interest rate wi## 'e the ar2et rate, so the a(ent a$ 'e the #ender. Q: #he agent was authoriCed to lend money of the principal, may the agent himself be the borrower of the money without the consent of the principal? A! 0his ti e hindi na pwede. Ae a$ 'e a (ood a(ent to #end the one$ to other person '+t he
a$ not 'e a (ood de'tor. 0h+s, the #aw wo+#d protect the principa# in that case. 5+t a#so, 'e (+ided '$ the decision of the *- as to the extent of the a+thorit$ of the a(ent. ;or exa p#e in the case of Insular &rug vs. (GB ;acts! 0he a(ent here was a+thori=ed to co##ect s+ s of one$ inc#+din( chec2s fro the c#ient of )ns+#ar. *o a$ a(ent an( )ns+#ar. Ae did co##ect the s+ s of one$ and the chec2s, and the chec2s were pa$a'#e to )ns+#ar '+t instead of de#i&erin( the chec2s in the )ns+#ar, he encashed the chec2 or deposited the chec2s in his acco+nt in 8"5. )ss+e! 4oes the a+thorit$ to co##ect the chec2s inc#+des the power to indorse the chec2s or e&en the power to encashed the chec2G Ae#d! "o, the power to co##ect does not inc#+de the power to indorse or the power to encash the chec2s. *o 2asa#anan n( 8"5 2+n( 'a2it ni#a tinan((ap +n( chec2 witho+t the proper indorse ent sa anta#an( an( pa$ee a$ )ns+#a. Aindi na an si a(ent. Att1. =ribe: )n fact, the one$ in&o#&ed here is 18,000 and ) wo+#d sti## re e 'er na 8hi#ippine Reports pa iton( case. 0he a(ent 69r. ;oster7 co itted s+icide when that fra+d was co itted. *a'i n+n( isan( na('asa for s+re ahead pa sa a2in, encirc#e n$a 18,000, (a(o na an ito 18,000 #n( a#iit #n( an( a o+ntR. 5+t there was another (+$, s+ +nod d+n sa isa, sina(ot n$a, as (a(o 2a 1932 pa eto ehR Q: #he obligation to act on behalf of the principal @ If the agent acted for himself and did not disclose his principal, would that 7 rd person has a cause of action against the principal? A! "o. Q: ould that principal have a cause of action against the 7rd person? A! <a#a din. 5+t there is an exception in this r+#e if the o'/ect in&o#&ed in the contract entered into '$ the a(ent and the 3rd person 'e#on(s to the principa# ? the #aw (rants @ (i&es a ca+se of action to the 3rd person a(ainst the principa# and &ice? &ersa. )t is 'eca+se of the possi'#e co##+sion 'etween the principa# and the a(ent di 'a, so that sasa'ihin n( principa# a#a 2o $an( 2otse na $an sira sira na a2ina 6 a$ 2ato27. 0h+s, in act+a# case the *- said, the &ehic#e has a B2noc2C , *decicion $anQ Aehehehehe Kasi a$ 2ato2 an( 2otse, the principa# wo+#d a(ree with the a(ent /+st to se## it '$ $o+rse#f in $o+r own na e so that if there wo+#d 'e a co p#aint the 3rd person has no ca+se of action a(ainst e and the principa#. 5+t to a&oid s+ch possi'i#it$ the #aw wo+#d (rant a ca+se of action to the 3rd person if the o'/ect of the contract 'e#on(s to the principa#.
B!: A authoriCed B to borrow sum of money from any ban0 and he also authoriCed B to mortgage a specific parcel of land to secure that loan. hat B did, he borrowed money for himself from a certain ban0 without disclosing his principal. =ater on, he defaulted. -an the ban0 go after the principal? A! .f co+rse no, the contract is 'etween the a(ent and the 'an2 on#$. 0he principa# has nothin( to do with the contract. :nder the facts, the a(ent 'orrowed for hi se#f. Aowe&er, if $o+ ha&e read the s+((ested answer, a$ 2nd para(raph ? to the effect that the 'an2 can at #east forec#ose the ort(a(e the$ can. )f $o+ re e 'er the 1+estion, di tinatanon( n( exa iner can the 'an2 (o after the principa# as far as the thin( is concerned. 0he on#$ 1+estion pertains to the pa$ ent of #oan. Another thin( in the s+((ested answer which is tota##$ wron( ? +nder the facts, the principa# a+thori=ed the a(ent to ort(a(e the propert$ for the #oan that wi## 'e o'tained '$ the a(ent in the na e of the principa#. )f indeed he ort(a(ed the #and for a #oan in his na e, would that mortgage be valid? A! 4efinite#$ not. )f he ort(a(ed it as a ort(a(or the ort(a(e is &oid. 0he #aw re1+ires that the ort(a(or +st 'e the a'so#+te owner of the thin( ort(a(ed. .n other hand, e&en if the a(ent ort(a(ed the thin( on 'eha#f of the principa#, the principa# is the ort(a(or. ould that be a valid and binding mortgage as against the principal? A! A#so not. Ais a+thorit$ to ha&e the propert$ ort(a(ed to sec+re a #oan, not to sec+re an$ other personDs #oan and that therefore it cannot 'e within the a+thorit$ of the a(ent and therefore an$ forec#os+re of s+ch ort(a(e wi## not prosper. Q: If the agent acted within the scope of his authority and in representation of the principal, who will be bound in such contract? A! Aside fro the 3rd person, it wi## 'e the principa# 'eca+se a(ain the a(ent is ere#$ representin( the principa#. Q: 9owever, is it possible for the agent himself to be bound in such contract or be held liable under such contract? A! Hes. )f he express#$ 'inds hi se#f to that contract, wh$ he wo+#d do thatG A(ent #an( na an s$a, when he wo+#d 'ind hi se#f persona##$ @ express#$G )n the &er$ nat+re of the a(enc$ the 3 rd person act+a##$ 2nows that it is the a(ent and not the principa#. An( na2i2ita #an( n( 3rd person sa pa#en(2e eh +n( na(titinda 'a2a +n( principa# nasa espana. 0herefore, the 3 rd person to who a thin( is offered for sa#e for exa p#e the a(enc$ to se##, the 3rd person wi## sa$ that B) wi## '+$ that if $o+ a#so 'ind $o+rse#f as one of the se##ersC 'eca+se ) donDt 2now the principa#. %h an( a(ent (+sto 2+ ita, si(e na din di 'a. Ae wi## 'ind hi se#f
8a(e 45
persona##$ in the contract as a se##er and not as an a(ent. 0he a(ent a$ 'e he#d #ia'#e in the contract e&en if he acted within the scope, acted in representation of the principa#, he acted ne(#i(ent#$ or in 'ad faith di 'a. Artic#e 1909 is consistent a#so on the #aw on o'#i(ations that e&er$ person who is (+i#t$ of fra+d, ne(#i(ence, etc.. wi## 'e he#d #ia'#e for da a(es. 5+t aside fro these 2 scenarios, of co+rse, the a(ent a$ 'e he#d #ia'#e if he acted 'e$ond the scope of a+thorit$. A#so, if he acted 'e$ond the scope of his a+thorit$, howe&er, he a$ not 'e he#d #ia'#e +nder s+ch contracts and +nder certain circ+ stances! 6a7 0he principa# ratified ? then the principa# wi## 'e he#d #ia'#e and 'e 'o+nd on s+ch contract. 6'7 %&en if the principa# did not ratif$, if the 3 rd person was notified of the fact that the a(ent was in excess of his a+thorit$ or e&en if he was not notified, he was aware of the fact that the a(ent was in excess of his a+thorit$, the a(ent wi## not 'e he#d #ia'#e 'eca+se +nder 1898 that contract is &oid. *o this contract 'ein( &oid, the third person cannot ho#d hi #ia'#e for actin( within the scope of a+thorit$. '. One im&ortant obli7ation of an a7ent is to ren/er an acco nt of his transactions an/ to /eli+er to the &rinci&al whate+er he ma1 ha+e recei+e & rs ant to an a7enc1 e+en if it not owin7 to the &rinci&al. )n fact, an$ stip+#ation exe ptin( hi fro this o'#i(ation to render an acco+ntin( is &oid. &omingo vs. &omingo ;acts! 0he re#ationship 'etween the principa# and the a(ent was not entioned in this case '+t the a(ent 4o in(o was a+thori=ed to se## a propert$ of the principa# 4o in(o '+t in p+rs+ant to this a+thorit$, he introd+ced a perspecti&e '+$er to the principa# .scar de Leon. .scar, /+st an$ other prospecti&e '+$er wanted the price to 'e #owered. *o he was as2in( that the price 'e #owered. 4+rin( the ne(otiation, this .scar de Leon 'id 1,000 to the a(ent, which a o+nt the a(ent did not disc#ose to the principa#. Aowe&er, a$ &io#ation na n( o'#i(ation an( a(ent. 0he principa# on the other hand, so ehow to on#$ acco odate the de and of the prospecti&e '+$er, na2aisip n( paraan, what he did, he had an a(ree ent with the prospecti&e '+$er that 2+nwari the sa#e wo+#d no #on(er p+sh thro+(h so the$ ha&e this dra a that the prospecti&e '+$er was expectin( one$ fro a'road and therefore the principa# wo+#d ha&e a reason to the a(ent na hindi na at+t+#o$ an( a(enc$ and therefore ) a re&o2in( $o+r a+thorit$ as an a(ent.
8a(e 46
0hereafter, the a(ent disco&ered that so ethin( is wron( with what happened. Ae went to the re(ister of deeds and he disco&ered that in fact a sa#e was exec+ted 'etween 4o in(o and .scar de Leon. 0he a(ent de anded for his co ission. 9a$ s+' a(ent pa s$a dahi# inintrod+ce c$a 2a$ .scar, did the action prosper? Ae#d! "o, the *- r+#ed that for the fai#+re of the o'#i(ation to de#i&er to the principa# for whate&er he a$ ha&e recei&ed p+rs+ant to the a(enc$, e&en if that is not on#$ to the principa#, that is a 'reach of fid+ciar$ re#ation which res+#ted in not (i&in( the a(ent his co ission. But is the 1,+++ important? .upposedly, parang 1+,+++ ang marereceive nya as commission? A! 0he answer wo+#d 'e $es 'eca+se wh$ wo+#d the prospecti&e '+$er (i&e 1,000 sa a(entG hindi dahi# aha# n$a an( a(entGQ 0hat wo+#d 'e 'eca+se he wanted the a(ent to contin+e with the principa# to #ower the price of the thin( which wo+#d 'e so#d, which is inconsistent with the interest of the principa#. As an a(ent of the principa#, he is s+pposed to protect the interest of the principa# not to #ower the price to 'e paid '$ the '+$er. )f on#$ for this the *- wi## not dis iss the case. )n fact, (inawa pa s$an( #ia'#e for the share of the s+'? a(ent. Obli7ation to /eli+er to the &rinci&al what he ma1 ha+e recei+e )n fact this o'#i(ation is so serio+s. )f the a(ent wo+#d fai# to perfor this o'#i(ation, he a$ 'e i prisoned. U. vs. "eyes ;acts! 0he a(ent was a+thori=ed to co##ect s+ s of one$ for con&enience of the principa#. 9ore or #ess 800 #an( $+n or 800V is the a o+nt to 'e co##ected. "ow he was a'#e to co##ect on#$ 500 instead of 800. Ae c#ai ed that he is entit#ed to 20I as a co ission 620I of 800 is 1607. *o hee on#$ re itted 340 to the principa#, 'eca+se of that the principa# de anded a (reater a o+nt than the 340. A cri ina# co p#aint was fi#ed 6for estafa7. Ae#d! Re(ard#ess of the co ission whether 10I or 20I, the a(ent was not entit#ed to retain 160 'eca+se e&en if 20I the 20I of the 500 and he is not entit#ed to the 20I of 800. 0he co ission sho+#d 'e 'ased on the act+a# a o+nt he co##ected not the tota# a o+nt which he is s+pposed to co##ect. And 'eca+se of his fai#+re to de#i&er 400 to the principa# he was con&icted. Obli7ation to ren/er an acco ntin7 Q: #he principal authoriCed the agent to sell a car for 7++0, the description of the car was mentioned in the .(A. 9owever, before the agent would sell the car, the principal called him by phone and instructed him to sell the car in Q- to a member of IB( chapter. Instead of selling the car in Q- to an IB( member, he sold
the car in <anila to a person not 0nown by the principal for 7++0. 516 -an the principal recover the car from the buyer if that car is already delivered to the buyer? 546 Any remedy provided by the law to the seller or to the principal? A! 617 )t depends, if that '+$er has no 2now#ed(e of that instr+ction of the principa# then he has a## the ri(ht to retain the car and that sa#e wi## 'e &a#id and 'indin( as a(ainst the principa#. As pro&ided +nder Art. 1900 so far as 3rd persons are concerned the$ on#$ re#$ on the *8A as written. 0he$ ha&e no o'#i(ation to in1+ire on the specia# instr+ctions ade '$ the principa# which are not entioned in the *8A, eh wa#a na an d+n sa *8A na it wi## 'e so#d to an )58 e 'er chapter in W-. 627 0o (o after the a(ent for da a(es, if there is an$ da a(e s+stained '$ hi for his fai#+re to fo##ow the instr+ctions of the principa#. Article 1)?) ? if the a(ent acted o+tside the scope of his a+thorit$ and this was 2nown to the 3 rd person the contract is &oid. 0a2e note '$ the specific pro&ision of the #aw this contract is &oid and s+'/ect to ratification. 0his is on#$ the &oid contract which can 'e ratified +nder Artic#e 1898. Q: Is it possible that the agent be held liable to the 7rd person even if the 7rd person was aware of the fact that the agent was in e'cess or outside his authority? A! Hes, if the a(ent pro ised to o'tain the ratification of the principa# and fai#ed to o'tain the ratification. "a(2wento s$a sa 3rd person C$o+ 2now ) was actin( in excess of $ a+thorit$, '+t donDt worr$ ) wi## (et the ratification of $ principa#C. )f he fai#ed to (et the ratification of the principa# he wi## 'e he#d #ia'#e not 'eca+se of the contract itse#f is &oid '+t 'eca+se of fai#+re to (et the ratification of the principa#. )f the principa# ratifies the contract, he cannot 'e he#d #ia'#e e&en if it is a &oid contract 'eca+se the principa# is 'o+nd to the contract. A%%O2N0M4N0 O9 S=(S020=04 Another possi'#e o'#i(ation of an a(ent fro an appoint ent of s+'stit+te a$ res+#t
which eans apparent#$ there is no distinction 'etween a s+'?a(ent and s+'stit+te. <ith d+e respect to the answer of the :8 Law -enter, 8rofessor de Leon is rea##$ (ood on this atter, a s+'?a(ent is &er$ +ch different fro a s+'stit+te. )f it is in rep#ace ent 62apa#it7 that is a s+'stit+te which eans that the a(ent wo+#d 'e disassociatin( hi se#f fro the a(enc$ 6Aa#is na s$a or #a#a'as na s$a n( 8i#ipinas etc.7 and so e'od$ e#se +st ta2e o&er his f+nctions. An a(ent who appoints a s+'?a(ent wi## contin+e to 'e an a(ent in that a(enc$ re#ationship. Ae does not disassociate hi se#f fro the re#ationship. Ae is sti## the a(ent and therefore a## the ri(hts and o'#i(ations wo+#d sti## 'e there e&en if he appointed a s+'?a(ent. 5+t if the a(ent appointed a s+'stit+te, the answer wi## depend on Art 1892. K+n( an( tanon( a$ s+'stit+te and d+rin( the ana(e ent of the '+siness '$ the s+'stit+te, #osses were inc+rred '$ the principa#, as2 isan( taon pa #n( an( s+'stit+te 29 was inc+rred '$ the principa#, may the principal hold the agent liable? Iba ung can the principal hold the substitute liable? A! 0he first thin( $o+ ha&e to consider is if he was prohi'ited in appointin( a s+'stit+te or not. )f he was prohi'ited he wi## 'e he#d #ia'#e 'eca+se he appointed 1 despite the prohi'ition. )n fact, +nder the #aw a## acts of the s+'stit+te appointed, if it is a(ainst the prohi'ition, s+ch acts are &oid. )f he was not prohi'ited +nder the #aw, he sha## 'e responsi'#e for the acts of the s+'stit+te +nder certain circ+ stances. 0a2e note that the operati&e word here is responsi'#e and not #ia'#e. Ho+ a$ 'e responsi'#e ? there are conse1+ences. )f he was not prohi'ited there are 2 scenarios! 617 "ot prohi'ited '+t he was neither (i&en the power to appoint or 627 Ae was not prohi'ited precise#$ 'eca+se he was (i&en the power to appoint. K+n( he was not prohi'ited he '+t he a#so #ac2s the power to appoint, an( scenario dito wa#a #n( na ention sa *8A so nothin( was entioned in the *8A re(ardin( the appoint ent of the s+'stit+te. An( i'i( sa'ihin n+n he was not prohi'ited and he was neither (i&en the power to appoint. If that is the case will he be liable necessarily because of losses which were incurred by the principal? A! Aindi na an. )f the s+'stit+te acted within the scope of a+thorit$ in representation of the principa# and the s+'stit+te acted in (ood faith with the di#i(ence of a (ood father of the fa i#$, nonethe#ess #osses were inc+rred '$ the principa# ? (wede bang mangyari un? Hes, an( ne(os$o a$ ne(os$o 2ahit na napa2a(a#in( o pan( ne(os$ante 2+n( pa#+(i na ta#a(a ne(os$o, there are forces 'e$ond the contro# of e&er$ person. 0o
B!: B appoints D as his agent to sell his 5B6 products in -ebu -ity. -an D appoint sub@ agent? And if he does what are the effects of this appointment? A! Hes, the a(ent a$ appoint a s+'stit+te or s+'? a(ent, if the principa# does not prohi'it hi in doin( so. 5+t he sha## 'e responsi'#e for the acts of the s+'stit+te 6'eca+se he was not (i&en a+thorit$ '$ the principa#7 especia##$ if one appointed t+rns to 'e inco petent or inso#&ent. Att1. =ribe: )s this correctG 9+2han( a#i. 9+2han( conf+sed an( sa(ot. An( tanon( s+'?a(entG -an H appoint s+'?a(entG Hes, the a(ent a$ appoint s+'stit+te or s+'?a(ent
8a(e 47
'e fact+a# a'o+t this 2apa( n(coconstr+ct n( LR0 ha#i 'awa sa A+rora 'o+#e&ard, d+rin( the constr+ction sta(e i#an( taon $an 2 or 3 $ears, sa tingin nyo 0ung may restaurant pa dyan buhay pa ba? <a#a na 2a2ain d$an p+ro a#i2a'o2 na. As #on( as he acted within the scope of his a+thorit$, in representation of the principa# and he acted with (ood faith, the a(ent cannot 'e he#d #ia'#e. Ae is responsi'#e for the acts of the s+'stit+te and if the s+'stit+te acted within the scope of a+thorit$ di 'a. 0his is consistent to the princip#e of a(enc$ ? that the a(ent is not the ins+rer of the s+ccess of the '+siness of the principa#. .therwise, wa#a na a(?a?a(ent dahi# 2apa( na#+(i #ia'#e s$a. Aowe&er, if in the ana(e ent of the '+siness of the principa# #osses were inc+rred 'eca+se the s+'stit+te isappropriated the inco e of the '+siness or acted with (ross ne(#i(ence, (a once a wee2 #n( n$a dinada#aw an( '+siness, if that is the case, the a(ent wi## 'e responsi'#e for the acts of the s+'stit+te and he a$ 'e he#d #ia'#e for the #osses inc+rred '$ the principa# 'eca+se the s+'stit+te acted ne(#i(ent#$, o+tside the scope of the a+thorit$ and in 'ad faith. Aowe&er, if the a(ent was (i&en the power to appoint, there a$ 'e 2 scenarios! 617 0he person to 'e appointed as the s+'stit+te a$ ha&e 'een desi(nated or 627 the person to 'e appointed was not desi(nated. *a'i n( principa# , Bo2 $o+ can appoint a s+'stit+te '+t if $o+ wi## appoint a s+'stit+te, appoint 8edroC. If the agent appointed (edro, would he be held liable for the losses incurred by the principal coC of the acts of (edro? A! Aindi na an. 0he s+'stit+te was desi(nated 'eca+se the principa# said that he sho+#d appoint 8edro 2a$a inaapoint n$a si 8edro '+t this sho+#d 'e s+'/ected to the pro&ision of a(enc$ that he sho+#d not carr$ o+t the a(enc$ if s+ch wo+#d anifest #oss or da a(e to the principa#. Example At the ti e of the appoint ent, the a(ent was at that ti e f+##$ aware that the person was notorio+s#$ inco petent. Ae sho+#d ha&e at #east infor ed the principa# that the s+'stit+te is notorio+s#$ inco petent. )f he fai#ed to do so ha&in( the opport+nit$ to in1+ire, then he can 'e he#d #ia'#e. )f the person to 'e appointed was not desi(nated, he wi## on#$ 'e #ia'#e if the s+'stit+te t+rns o+t to 'e notorio+s#$ inco petent or inso#&ent. 6Artic#e 18927. L2A(2L2024S O9 $ OR MOR4 A;4N0S Q: If the principal appointed 4 or more agents for a certain transaction, what would be the
8a(e 48
nature of their liability? -an they be held liable Kointly or solidarily? A! A(ents can on#$ 'e he#d /oint#$ #ia'#e +n#ess the$ express#$ 'o+nd the se#&es so#idari#$. 5+t in fact, e&en if the$ 'o+nd the se#&es so#idari#$ and da a(e was inc+rred '$ the principa# d+e to the act of one of the a(ents, it is sti## possi'#e that the$ a$ not 'e he#d so#idari#$ #ia'#e despite that there is an express a(ree ent, if that a(ent who ca+sed da a(e to the principa# acted o+tside the scope of his a+thorit$. Commission A7ent A+thori=ed to se## and he wo+#d ha&e a co as to the price. ission
Q: If the agent sold a refrigerator on credit without the consent of the principal A pag on credit, he can still sell it at a higher price. Iung normally 1+0 ang sabi ng principal, he may be able to sell it at 1*0 pero 2 gives. If payable every other month, the ne't day after the sale, the principal having been informed of the sale, he demanded for the proceeds of the sale. -an the agent be compelled to pay or deliver the proceeds of the sale 0ahit hindi pa nya na@ collect? A! Hes, he can 'e co pe##ed to de#i&er the proceeds as if it was so#d on a cash 'asis 'eca+se he so#d it on credit witho+t the consent of the principa#. Q: 9ow much would the commission agent deliver if he was able to sell it at 1*0, payable in 2 months but under the agreement of the principal and the commission agent, it should be sold only at 1+0? 5Assuming that the agent$s commission is 1+86 A! Ae sho+#d de#i&er 9,000 to the principa# 610,000 x 10I O 1,000 co ission... 10,000 , 1,000 O 9,0007 Q: hat if 2 months after, he have already collected 1*0, can the principal claim %di ba you only gave me ;0 which is based on the 1+0 price but you were able to sell it at 1*0, so I should get ;+8 of the 1*0,. Is that a valid claim? A! "o, +nder the #aw, if the co ission a(ent so#d the thin( on credit witho+t the consent of the principa#, he is entit#ed to an$ profit which he wo+#d deri&e fro s+ch o'#i(ation. Q: If he was obliged to collect or sell 1+ refrigerators but he was able to sell only 1 refrigerator, can he be held liable for not selling the remaining refrigerator? A! "or a##$, he wo+#d 'e 'eca+se that is fai#+re to co p#$ with his o'#i(ations as an a(ent. 5+t he has a defense , exercise of the di#i(ence re1+ired. )f there was no #aw or stip+#ation, it wi## 'e di#i(ence of a (ood father of a fa i#$. 0he fact that he was a'#e to pro&e that he exercised the di#i(ence of a
(ood father of a fa i#$ xxx nonethe#ess, he was not a'#e to se##, he can no #on(er 'e he#d #ia'#e. A(ain, he is not the ins+rer of the s+ccess of the principa#. B!: #he agent was authoriCed to sell 4+ units of refrigerator. 9e received in addition to his commission, a guaranty commission. 9e was able to sell the refrigerators and received his guaranty. 9owever, the buyer failed to pay the price of these refrigerators. #he principal demanded from the agent the money which he could have delivered to the principal as a guaranty commission agent. #he defense raised by the agent is that he has no obligation to collect the price. #he agent said that his only obligation is to sell the refrigerator. Is that correct? A! "o, as he recei&ed a (+arant$ co ission, he is 2nown as a (+arant$ co ission a(ent. Ae is a#so 2nown as Bde# credere a(entC and as s+ch, he 'ears the ris2 of co##ection. O(L2;A02ONS O9 0:4 %R2NC2%AL 617 0o co p#$ with the o'#i(ations which the a(ent a$ ha&e contracted within the scope of his a+thorit$ and in representation of the principa#. 627 .'#i(ation to ad&ance the one$ necessar$ for the acco p#ish ent of the p+rpose of the a(enc$. 637 .'#i(ation to Rei '+rse (1) 0o com&l1 with the obli7ations which the a7ent ma1 ha+e contracte/ within the sco&e of his a thorit1 an/ in re&resentation of the &rinci&al. 0his is the ain o'#i(ation of the principa#. )f the a(ent acted o+tside the scope of his a+thorit$, the principa# a$ not 'e 'o+nd to s+ch contract. 5+t e&en if the a(ent acted 'e$ond or o+tside the scope of his a+thorit$, the principa# a$ 'e 'o+nd if! 1. Ae ratified 2. Ae contri'+ted to decei&e the 3 rd person into 'e#ie&in( that the a(ent acted o+tside the scope of his a+thorit$ 6estoppe#7. 0he principa# and the a(ent wi## 'e so#idari#$ #ia'#e. 3. <hen the 3rd person co+#d not ha&e 2nown of the #i itations on the power of the a(ent 6Example! Eer'a# #i itation7 Article 1?** , the third person wi## on#$ ha&e to re#$ on the power of attorne$ as written. ($) Obli7ation to a/+ance the mone1 necessar1 for the accom&lishment of the & r&ose of the a7enc1. 0he principa#, +n#ess otherwise stip+#ated or +n#ess the he is a#read$ inso#&ent, +st ad&ance the one$. %&en if the a(ent 'o+nd hi se#f to ad&ance, if the principa# is a#read$ inso#&ent, he need not ad&ance the s+ of one$ 2asi wa#a n( a(?re?rei '+rse sa 2an$a.
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(') Obli7ation to Reimb rse N.R.! 0he principa# %xc! 1918 a. )f the a(ent is actin( in contra&ention of the instr+ctions of the principa#. Example! Ae so#d ite s in -e'+ instead in -a(a$an. Aowe&er, if the principa# wants to a&ai# of the 'enefits deri&ed '$ the a(ent, the principa# wi## 'e o'#i(ed to rei '+rse. '. A(ent was at fa+#t 05O OR MOR4 %R2NC2%ALS A%%O2N04. AN A;4N0 Q: An agent was appointed to a single and common transaction and damage was incurred by the agent. hat is the nature of the liability of the principals? A! *o#idar$. Q: Ayce was authoriCed to lease a specific property 5warehouse6. .he entered into a lease contract with &ian. 9owever, the principal 5-hato6 also entered into a contract of lease over the same property with another person named >erard. hich contract will be recogniCed? A! 5ased on priorit$ in ti e, priorit$ in ri(ht. 0he prior date sho+#d pre&ai#. 0a2e note that this is a #ease of propert$. )n sa#e, priorit$ in ti e is not app#ica'#e. *ee Artic#e 1544 6do+'#e sa#e7. Q: hat if the person filed an action for damages against both principal and agent, who will be liable? A! N.R.! 0he principa# %L-.! )f a(ent acted in 'ad faith 6inco pati'#e contracts7 MO.4S O9 4D02N;=2S:2N; A;4NCB % , xpiration of the period 4 , eath, ci&i# interdiction, insanit$ < , ithdrawa# A , cco p#ish ent of p+rpose R , e&ocation 4 , isso#+tion of the entit$ Q: Is this enumeration e'clusive? A! "o, the other odes of extin(+ishin( o'#i(ations are e1+a##$ app#ica'#e to a(enc$. Example! +t+a# dissent, #oss of the thin( d+e to fort+ito+s e&ent. B!: Ariel authoriCed Fessica to sell a pendant with a diamond valued at *0. hile Fessica was on her way home, 4 persons snatched the bag containing the pendant. #hus, Fessica was not able to sell the pendant. Ariel sued Fessica. Fessica raised the defense that robbery is a fortuitous event and therefore he cannot be held liable for the loss of the pendant. Ariel claimed that before Fessica could invo0e
fortuitous event, there has to be conviction of the perpetrators of the crime and even though this is a fortuitous event, there was negligence on the part of Fessica in wal0ing alone with that pendant. &ecide. A! 0he case is identica# to Austria vs. -A. As to the contention of Arie#, con&iction is not re1+ired. 8reponderance of e&idence is s+fficient. >essica cannot 'e he#d #ia'#e 'eca+se wa#2in( a#one is not a ne(#i(ent act. Att1. =ribe>s Comment: 0he answer is erroneo+s. )n the case of A+stria which was decided on >+ne 10, 1971, the incident happened in the 60Ds. 0he *- said, we cannot consider the a(ent ne(#i(ent in (oin( ho e a#one. *- said that if the incident happened toda$ 6referrin( to $ear 19717, the a(ent can 'e he#d #ia'#e for conc+rrin( ne(#i(ence, considerin( the cri e rate. %roblem Areas in 4Atin7 ishment B!: hat is the effect of the death of the agent? A! N.R.! 0he a(enc$ is extin(+ished 6Artic#e 19197. %L-.! Artic#e 1930 , if the a(enc$ was constit+ted for the 'enefit of 'oth parties or for the 'enefit of a third person who accepted the 'enefit, then that a(enc$ sha## contin+e e&en after the death of the a(ent. B!: ( authoriCed A to sell a land 512 hectares6. In 1;*+, before A could sell, ( died. After ( died, in 1;*2, the heirs sold the land to B. In 1;*3, A sold it to D. ho has a better right? A! )f A has no *8A, this sa#e is &oid +nder Artic#e 1874. L wo+#d ha&e a 'etter ri(ht. )f there was a *8A, it depends if A has 2now#ed(e of the death of 8 or if he was in (ood faith. )f A has 2now#ed(e of the death, L has a 'etter ri(ht. )f H is in 'ad faith 6he 2nows of the death of 87, L has a 'etter ri(ht. :nder Artic#e 1931, the act of an a(ent after the death of the principa# wi## 'e &a#id if he had no 2now#ed(e of the death of the principa# and the third person is in (ood faith. Q: hat if A has no 0nowledge and D is in good faith? A! 0his wi## 'e inco pati'#e contracts. App#$ Artic#e 1544. "allos vs. Jeli' ;acts! 0he a(ent was a 'rother of his two sisters. Ae was a+thori=ed to se## the #and. 0he 'rother so#d the #and on#$ after the death of one of the sisters. Ae so#d it to ;e#ix. 0he ad inistrator of his sister fi#ed an action to reco&er the propert$. )ss+e! <hat is the effect of the death of one of the principa#sG Ae#d! As to the s+r&i&in( sisterDs portion, it is &a#id and 'indin(. 5+t as to the deceased sister 6Artic#e 19197, the a+thorit$ of a(ent was ter inated after
8a(e 50
the death. 5+t if a(ent has no 2now#ed(e of the death , it is &a#id. 5+t o'&io+s#$, the 'rother had 2now#ed(e of the death of her sister. Note: -i&i# interdiction , accessor$ pena#t$ 6 ore than 12 $ears pena#t$7 Re+ocation )t is an act of the principa#. 0he principa# can re&o2e the a+thorit$ of the a(ent at wi## at an$ ti e. Q: ould this be correct if the parties agreed for the period of agency? -an the agent hold the principal liable for breach of contract? A! Baretto vs. .ta. <aria , the principa# can re&o2e an$ti e e&en when there is a period a(reed +pon 'eca+se a(enc$ is 'ased on tr+st and confidence. Q: If he has the power to revo0e, may the principal be held liable? A! Hes 'eca+se e&en in the exercise of a ri(ht, it +st 'e exercised in (ood faith. )f there is a'+se of ri(ht, the #ia'i#it$ wo+#d 'e +nder the pro&isions on h+ an re#ations. &omingo vs. &omingo 0he reason of the principa# is that in order for hi to a&oid pa$ ent of co ission, that re&ocation is a 'ad faith re&ocation. Aowe&er, in this case, the a(ent is a#so in 'ad faith. B!: A sold a land to B at 1++<. #hey agreed that it will be paid in 1+ years. #he seller reserved title over the land. In order for B to pay the price, A constituted B as his agent for the development of the land A subdividing the land, constructing houses and selling the house and lot. (roceeds to be delivered to the seller who is also the principal as payment of the price in the sale of land. 9owever, in the * th year, the principal revo0ed the authority of the agent. as the revocation valid? A! "ot &a#id, 'eca+se this is an a(enc$ which is co+p#ed with interest. Aere, 617 a 'i#atera# contract depends +pon the a(enc$ and 627 the a(enc$ is the eans of f+#fi##in( an o'#i(ation which has a#read$ 'een contracted. Att1. =ribe: X2 is correct '+t X1 is not app#ica'#e to the pro'#e . An( as app#ica'#e is the case of -ollongco vs. -laparol. ;acts! -#aparo# was the owner of a nai# factor$ and he needed additiona# capita#. -o##on(co offered to ad&ance the one$ needed '$ -#aparo# on#$ on the condition that he wi## 'e constit+ted as a(ent for so e aspects of the '+siness 6exa p#e! a(ent for ad&ertise ent7. Ae#d! ;ro that arran(e ent, it is c#ear that a 'i#atera# contract depends +pon the a(enc$. 5i#atera# contract which is the contract of #oan. Ae wo+#d not ha&e ad&anced that one$, had he not 'een constit+ted as an a(ent '$ -#aparo#. 0hese contracts are considered a(enc$ co+p#ed with interest.
Note: 0he *- said that for an a(ent to c#ai that the a(enc$ is co+p#ed with interest and hence cannot 'e re&o2ed '$ the principa#, the interest +st not 'e the +s+a# co pensation of the a(ent which is co ission and +st 'e stated in the *8A. Q: If agency coupled with interest A possible that it could be revo0ed? A! *- said in -o##on(co , Hes, if the re&ocation was with a /+st ca+se. )n the case of -o##on(co, there was a /+st ca+se 'eca+se the a(ent co itted acts contrar$ to the interest of the principa#. -o##on(co atte pted to as2 the s+perintendent of the factor$ to destro$ the achiner$ '$ po+rin( acid. A(ent a#so sent dero(ator$ #etters to 'an2s where -#aparo# app#ied for a #oan. 0he a(entDs oti&e is 'eca+se he had an a(ree ent with another person 69r. *o7 that the$ wanted to ta2e o&er the '+siness of -#aparo#.
necessari#$ res+#t in a partnership contract. 0h+s, it can 'e said that rea##$ ;a$e was not a partner '+t is act+a##$ a creditor of -hato. .492N202ON O9 %AR0N4RS:2% Q: hat if two or more persons agreed to put up a partnership but they never intended to divide the profits among themselves, would that still be considered a valid partnership contract? A! Hes, +nder the second para(raph of the artic#e, two or ore persons can for a partnership for the exercise of a profession. %artnershi& +s. CoIownershi& -onsider the essentia# feat+res! Creation: 8artnership is o'&io+s#$ created '$ a(ree ent. -o? ownership a$ 'e created '$ a(ree ent, '+t it a$ a#so 'e created '$ operation of #aw. )n fact, '$ express pro&ision of the #aw, the fact that there is co?ownership does not necessari#$ ean that there is a partnership existin( 'etween two persons. Example! 0wo persons a$ inherit a propert$ fro their father or other, and +nder the #aw, the$ a$ 'e considered as co?owners of the sa e propert$. % r&ose: 8artnership! either to di&ide profits or exercise a profession. -o?ownership! -o on en/o$ ent of the thin( or ri(ht owned in co onS ere#$ to en/o$ the propert$, th+s the$ a$ ha&e different p+rposes. A &er$ i portant feat+re of partnership in re#ation to co?ownership! it has a /+ridica# persona#it$, separate and distinct fro the indi&id+a# partner which is o'&io+s#$ not present in co?ownership. )n co?ownership, the$ ha&e their respecti&e persona#ities and no new persona#it$ wi## 'e created. %owers of the Members: 8artnership! :n#ess otherwise a(reed +pon, each partner is an a(ent of the other partners and of the partnership. -o?ownership! As a r+#e, a co?owner cannot act as an a(ent of the other co?owners +n#ess otherwise a(reed +pon 'etween the co?owners. 8R.;)0*! -o?owner! 9as a#a2i an( profits, as a#a2i an( interest. 5+t not necessari#$ in partnership, 'eca+se the sharin( in the profits a$ 'e stip+#ated +pon '$ the parties. 8ero 2+n( wa#an( stip+#ation, it a$ 'e 'ased on the capita# contri'+tion. Q: ill death e'tinguish co@ownership? A! "o, Kapa( na ata$ an( isan( co?owner, his heirs wi## 'e the co?owners of the s+r&i&in( co? owners at pweden( t+#o+?t+#o$ #an( $an. Aowe&er in partnership, if it is a (enera# partnership, if one of the partners dies, the partnership is disso#&ed.
Partnership
B!: -hato, using all his savings in the total amount of 4,+++, decided to establish a restaurant. Jaye, however, gave 2,+++ as %financial assistance, with the agreement that Jaye will have 448 share of the profits of the business. After 44 years, Jaye filed an action to compel -hato to deliver to her the share in the profits claiming that she was a partner. -hato denied that Jaye was her partner. Is Jaye a partner of -hato? A! Hes, ;a$e was a partner in the '+siness 'eca+se there was a contri'+tion of one$ to a co on f+nd and there was an a(ree ent to di&ide the profit a on( the se#&es. Att1. =ribe>s Comment: ) do not a(ree with the answer. )Dd rather a(ree with the a#ternati&e answer. <AHG )n the a#ternati&e answer as can 'e seen fro the facts, ;a$e (a&e 4,000 on#$ as a financia# assistance. )t was not a contri'+tion to a co on f+nd. As s+ch, she act+a##$ 'eca e a creditor of -hato. 0herefore, she did not contri'+te to a co on f+nd. Q: hat about the stipulation that Jaye will have 448 share of the profits? A! 0he #aw on partnership is &er$ c#ear that a sharin( in the profits does not necessari#$ res+#t in a partnership contract 'eca+se the sharin( of the profits a$ on#$ 'e a wa$ of co pensatin( the other person, in fact that can 'e a ode of pa$ ent of the #oan. Kasi $+n( #oan, s+pposed#$ pwede pa$a'#e e&er$ onth with a fixed a o+nt. 5+t as a(anda an( a(ree ent na ito, 22I of the profits, so that if wa#an( profit sa isan( taon, wa#a +nan( 'a$ad. Y4i 'a thatDs reasona'#e a(ree ent. .n#$ 2+n( a$ profit, sa2a #an( 'a'a$aran. K+ 'a(a, friend#$ #oan ito. 0he sharin( in the profits as express#$ pro&ided '$ #aw does not
8a(e 51
4SS4N02AL 4L4M4N0S O9 %AR0N4RS:2% Li2e an$ other contract, it sho+#d ha&e the three essentia# re1+isites! 1.7 -onsent 2.7 .'/ect! to en(a(e to a #awf+# acti&it$, whether a '+siness or profession. 3.7 -a+se or consideration! the pro ise of each partner to contri'+te one$, propert$ or ind+str$ Note! ;ro the definition a#one, it can 'e 2nown that a contract of partnership is essentia##$ onero+s?each partner has to contri'+te either propert$, one$ or ind+str$. <a#an( free rider sa partnership. 1. Consent of the contractin7 &arties: 0he r+#es in contract wo+#d 'e e1+a##$ app#ica'#e '+t, /+st #i2e in sa#es and #ease, there are persons who are prohi'ited fro enterin( into a contract of partnership! 1.7 *po+ses! B!: <ay the spouses enter into a limited partnership to engage in a realty business, with the wife as a limited partner? A! Hes, 'eca+se spo+ses are on#$ prohi'ited, +nder the "ew -i&i# -ode, to enter into a +ni&ersa# partnership. 0herefore, if the$ for a #i ited partnership, the$ can constit+te on#$ 8hp100,000 each, and that wi## not 'e a +ni&ersa# partnership 'eca+se that wo+#d 'e a partic+#ar partnership. 2.7 -orporations! B!: -an a corporation enter into a contract of partnership with an individual? -an a corporation enter into a contract of partnership with another corporation? A! 0o these two 1+estions, the answer is no. R+#ed '$ the *+pre e -o+rt in the -ase of #uaCon, whi#e a corporation a$ enter into a /oint &ent+re, it cannot &a#id#$ enter into a contract of partnership. :nder the -orporation -ode, the '+siness of the corporation is s+pposed to 'e (o&erned '$ the 'oard of directors, and if s+ch a corporation wi## enter into a contract of partnership, the other partners a$ 'ind the corporation in certain acti&ities witho+t the consent of the 'oard of directors. Another reason is that the properties r in&est ents of the stoc2ho#ders a$ 'e exposed to a ris2 not conte p#ated '$ the stoc2ho#ders. 3.7 0hose persons who are prohi'ited fro (i&in( each other an$ donation or ad&anta(e cannot enter into a :")E%R*AL partnership! a.7 those (+i#t$ of ad+#ter$ or conc+'ina(e at the ti e of the exec+tion of the contract 'eca+se it wo+#d 'e eas$ to circ+ &ent the pro&ision on donation if the$ wo+#d enter into a +ni&ersa# partnership, 2asi pwedeDn( $+n( para o+r an( na? contri'+te #an( 8hp10.00, whi#e $+n( isa an( na? contri'+te 8hp10 9i##ion, howe&er, pa(datin( n( sharin(, 2a'a#i(taran. H+n( para o+r, 90I, whi#e
8a(e 52
$+n( na(?contri'+te n( 8hp10 9i##ion, 10I #an( n( profit. )n fact, sa disso#+tion, pweden( (an+n din an( a(ree ent. 0hat wo+#d 'e a circ+ &ention of the pro&ision on donation. .ther persons prohi'ited are those entioned in Art. 1739, those persons entioned in the #aw on donation. $. Ob-ect of %artnershi&: 0o en(a(e in a #awf+# acti&it$. Q: If the obKect is to engage in a lawful activity, necessarily the partnership is valid? A! "o. 0here are specific '+siness acti&ities wherein the #aw wo+#d re1+ire partic+#ar '+siness or(ani=ation which a$ en(a(e in s+ch '+siness acti&it$, specifica##$ the -orporation -ode which pro&ides that on#$ corporation a$ en(a(e in ins+rance and 'an2in( '+siness, therefore there can 'e no partnership en(a(in( in s+ch '+siness! 'an2in( and ins+rance. '. Ca se of %artnershi& 0he pro ise of each partner to contri'+te either one$, propert$ or ind+str$. Q: hat would be the effect if either the cause or the obKect of the partnership is illegal or if the partnership has an unlawful cause or obKect? A! 0he contract of partnership is &oid and +nder the #aw, when the contract is &oid, it prod+ces no #e(a# effects whatsoe&er, therefore, action to co pe# a part$ to the contract to distri'+te the profits wi## ne&er prosper. )n fact, +nder the #aw on partnership, the *tate wi## confiscate the profits of s+ch i##e(a# partnership. Q: ill an action to compel a partner to render an accounting prosper? A! "o. An$ action to enforce a &oid contract wi## ne&er prosper. Q: <ay a party to such void contract at least be able to recover what he contributed or delivered pursuant to that void contract? A! As a r+#e, no, 'eca+se of the in pari de#icto r+#e +nder Artic#e 1411. %L-%80)."*! Artic#e 1411, 1412, 1414,1415 and 1416. :nder these circ+ stances, a part$ to a &oid contract a$ 'e a'#e to reco&er what he contri'+ted. Att1. =ribe! ) wo+#d a#wa$s consider one of these pro&isions as a &er$ practica# one! )n a contract that is &oid, it is so pro&ided that a part$ to s+ch contract a$ reco&er what contri'+ted if he rep+diated the contract 'efore the cons+ ation of the contract and 'efore da a(e is inc+rred '$ a third person.
9ORMAL2024S:
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? ill there be a Kuridical personality created? A! As a r+#e, $es. %&en if +nder Art. 1772, the #aw pro&ides that e&er$ contract of partnership, ha&in( a capita# of ore than 8hp3,000 or ore, sha## 'e in a p+'#ic instr+ ent and +st 'e re(istered with the *%-. 0he 2nd para(raph of Art. 1772 pro&ides that despite fai#+re to co p#$ with the re1+ire ents in the precedin( para(raph, this is witho+t pre/+dice to the #ia'i#it$ of the partnership and the indi&id+a# partners to third persons. ;ro that artic#e a#one, it is c#ear that despite non?co p#iance with the re1+ire ents of the #aw as to for , there is a partnership created, 'eca+se this is witho+t pre/+dice to the #ia'i#it$ of the partnership 62+n( a$ partnership7. 5+t ore direct#$, Art. 1768, the #aw pro&ides, the partnership has a /+ridica# persona#it$ separate and distinct fro that of each if the partners, e&en in case of fai#+re to co p#$ with the re1+ire ents of Art. 1772, par.1. After a##, a &er'a# partnership contract is &a#id and 'indin( 'etween the parties. Q: Is there a partnership agreement which would reEuire a particular form for the validity of the partnership agreement? A! Hes. 0here is on#$ one scenario here! if one of the contractin( parties pro ised to contri'+te an i o&a'#e, there has to 'e an in&entor$ of s+ch i o&a'#e and si(ned '$ the contractin( parties. )f there is no in&entor$, the #aw is &er$ c#ear, the partnership is &oid. Q: hat 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? Att$. :ri'e! ) a(ree with the position of 8rofessors A('a$ani and 5a+tista that, despite Art. 1771, as #on( as there is an in&entor$ of s+ch i o&a'#e, the partnership a(ree ent is &a#id and 'indin( and the /+ridica# persona#it$ wi## 'e created. hy?! As r+#ed '$ the *- consistent#$, #i2e in the case of &auden@9ernaeC vs. delos Angeles , for a contract to 'e &oid for non?co p#iance with the re1+ire ents of the #aw as to for , the #aw itse#f +st pro&ide for the n+##it$ of the contract. )f the #aw on#$ re1+ired a for , '+t the #aw itse#f did not pro&ide for the n+##it$ of the contract, if the parties fai#ed to co p#$ with that for , then that for is not necessar$ for the &a#idit$. )t a$ 'e necessar$ for the enforcea'i#it$ of the contract or (reater efficac$ of that contract. 0h+s, in partnership, it is said that this re1+ire ent as to for wi## on#$ 'e necessar$ for the (reater efficac$, 2asi 2ai#an(an na2a? re(ister sa *%-. 0hat is apparent#$ the on#$ reason wh$ the #aw wo+#d re1+ire a partic+#ar for in
8a(e 53
partnership where there is an i o&a'#e contri'+ted '$ one of the contractin( parties. Att1. =ribe: 0he position of 8rof. A('a$ani is we##? s+pported '$ the *-. A partnership has a /+ridica# persona#it$ which is separate and distinct. 0his is consistent with the B#e(a# person theor$,C as opposed to the partnership in the :nited *tates which adheres to the Ba((re(ate theor$C which states that their partnership has n /+ridica# persona#it$ separate and distinct fro the contractin( parties. Conse3 ences: se&arate an/ /istinct &ersonalit1 1.7 )t can own its propertiesS 2.7 )t can s+e and 'e s+edS 3.7 )t a$ 'e fo+nd (+i#t$ of an act of inso#&enc$S 4.7 )t a$ 'e disso#&ed for co ittin( an act of inso#&enc$. -oncrete#$, in the case of -ampos@"ueda vs. (acific -ommercial ;acts! 0he partnership here fi#ed a petition for the disso#+tion of the partnership, '+t one of the creditors opposed the petition for disso#+tion on the (ro+nd that there was no showin( that the indi&id+a# partners are a#read$ inso#&ent. Ae#d! 0he so#&enc$ or inso#&enc$ of the indi&id+a# partners is irre#e&ant as to the petition of the disso#+tion of the partnership. 0he partnership itse#f, ha&in( a separate and distinct persona#it$ a$ 'e disso#&ed or a$ co it acts of inso#&enc$ re(ard#ess of the so#&enc$ or inso#&enc$ of the partners. Act+a##$, if one of the partners in a (enera# partnership is inso#&ent, there is a#read$ disso#+tion of the partnership '$ operation of #aw, if the sa e 'e pro&en. CLASS292CA02ON O9 %AR0N4RS:2%: As to the o'/ect of the partnership is on#$ to deter ine whether a person a$ enter s+ch partnership, there is a need to distin(+ish whether a partnership is a :")E%R*AL or 8AR0)-:LAR partnership. $ <in/s of =ni+ersal %artnershi&: 1.7 :ni&ersa# 8artnership of 8ropert$ 2.7 :ni&ersa# 8artnership of 8rofit :nder the #aw, if the partners a(reed to for a +ni&ersa# partnership, howe&er, the$ fai#ed to state what 2ind of +ni&ersa# partnership, it sha## 'e treated ere#$ as a +ni&ersa# partnership of profit, eanin(, it sha## co prise on#$ the res+#t of their wor2 and ind+str$. )n +ni&ersa# partnership of propert$, the partners are dee ed to ha&e contri'+ted a## their propert$, not #itera##$ a##, for there so e properties which are exe pt fro exec+tion and +nder the #aw a$ not 'e
considered as ha&in( 'een contri'+ted '$ the partners. 04RM O9 %AR0N4RS:2% Q: If the partners failed to fi' a period, does it mean that the partners agreed a partnership at will and may be dissolved at any time without any liability so long as they acted in good faith? A! "o, 'eca+se a partnership a$ 'e a partnership for a partic+#ar +nderta2in( e&en if no period was fixed '$ the parties. )n one case, a partner, disso#&ed a partnership, c#ai in( it to 'e a partnership at wi##, the partnership 'ein( in&o#&ed in a 'ow#in( '+siness. 0he *- r+#ed that e&en if the partners fai#ed to fix a period, the partnership cannot 'e considered as a partnership at wi## 'eca+se there was a stip+#ation in the partnership a(ree ent that the de't of the partnership sha## paid o+t of the profits that wi## 'e o'tained '$ the 'ow#in( '+siness. 0h+s, after a##, it cannot 'e disso#&ed at wi##, for the de'ts wi## ha&e to 'e paid. 0herefore, the *- r+#ed that the said partnership is a partnership for a partic+#ar +nderta2in(. CLASS292CA02ON O9 %AR0N4RS: Accordin( to the #ia'i#it$ of the partners! 1.7 Nenera# 2.7 Li ited 0his c#assification is re#e&ant on#$ in #i ited partnership. )n (enera# partnership, partners are (enera# partners and the$ are #ia'#e for partnership o'#i(ations +p to their persona# propert$. %ach one of the has the ri(ht to participate in the ana(e ent of the partnership +n#ess otherwise a(reed +pon '$ the partners. )n #i ited partnership, whi#e a #i ited partner cannot 'e he#d #ia'#e +p to his persona# propert$, the #ia'i#it$ of a #i ited partner wi## on#$ 'e +p to his capita# contri'+tion. Ae a#so wo+#d not ha&e the ri(ht to participate in the ana(e ent of the '+siness of the partnership. ;.R.! A #i ited partner cannot 'e he#d persona##$ #ia'#e for partnership o'#i(ations. 4DC: )nstances when a #i ited partner a$ 'e he#d #ia'#e +p to his persona# propert$! 1.7 )f he participates in the ana(e ent of the '+siness of the partnership. 2.7 )f his s+rna e appears in the fir na e. %xcept! a.7 e&en if a #i ited partnerDs na e appears in the fir na e, if the s+rna e of a (enera# partner is the sa e as that of the #i ited partner. '.7 s+ch s+rna e was a#read$ in the fir na e prior to his entr$ in the partnership.
8a(e 54
3.7 <hen he is a (enera# partner and a #i ited partner in the sa e partnership at the sa e ti e. ho? A person who is 'oth a (enera# and #i ited partner at the sa e ti e and in the sa e partnership wo+#d ha&e a## the ri(hts and o'#i(ations of a (enera# partner, howe&er, he wo+#d ha&e a ri(ht as to his contri'+tion as a(ainst the other partners, which he wo+#d not ha&e, had he not 'een a #i ited partner. <hen it co es to di&ision of assets +pon disso#+tion he has the priorit$ as a #i ited partner. 0hat is the on#$ ed(e, otherwise, he has a## the ri(hts and o'#i(ations of the (enera# partner. 4.7 <hen there is fai#+re to co p#$ s+'stantia##$ as to the for a#ities prescri'ed '$ #aw in the for ation of a #i ited partnership. :nder the #aw, if there is a fai#+re to co p#$ s+'stantia##$ with the for a#ities for the creation of a #i ited partnership, that a(ree ent wi## 'e &a#id a on( the partners, howe&er, a## of the can 'e treated as (enera# partners '$ third persons. 0herefore, a third person, in this scenario, can ho#d a #i ited partner #ia'#e +p to his persona# properties. 0he #i ited partnerDs re ed$ is to see2 rei '+rse ent fro his other partners. As to the contrib tion: 1.7 -apita#ist 2.7 )nd+stria# Q: An industrial partner, may be a general partner? A! Hes. A capita#ist partner a$ either 'e an ind+stria# or (enera# partner. Q: <ay an industrial partner be a limited partner? A! "o. A #i ited partner can on#$ contri'+te one$ or propert$. Ae cannot contri'+te ser&ice. Q: But can a partner be both capitalist and industrial? A! Hes, he can contri'+te 'oth one$ and ind+str$. Ae can 'e 'oth capita#ist and ind+stria# and there wi## 'e conse1+ences to that. B!: A and B formed a partnership to operate a car repair shop. A contributed money, B contributed industry. hile the car repair shop was already in operation, A operated a coffee shop beside the car repair shop. B also operated a car accessories store on the other side of the shop. <ay these partners engage in those business activities? A! As far as A is concerned, he can &a#id#$ en(a(e in s+ch '+siness 'eca+se the #aw wo+#d on#$ prohi'it hi fro en(a(in( in a si i#ar acti&it$. As
far as 5, an ind+stria# partner, is concerned, he cannot en(a(e in an$ '+siness acti&it$ witho+t an$ express a+thorit$ or (rant '$ the partnership for hi to en(a(e in s+ch '+siness. 0h+s, if A did not (i&e his consent, 5 cannot &a#id#$ en(a(e in A"H '+siness, not on#$ si i#ar '+siness, for 5, as ind+stria# partner, is s+pposed to (i&e his ti e in the said partnership '+siness. 2ncomin7 %artner: Q: AB- (artnership is composed of A, B and -. #hereafter, & became a member of the partnership. .i' months after &$s entry as a member, a certain obligation, 7 <illion became due and demandable. Jor this partnership obligation, can & be held liable? A! As was pro&ided in the facts, the 3 9i##ion 'eca e d+e and de anda'#e. 0h+s, this o'#i(ation a$ ha&e 'een inc+rred after 4Ds entr$ or 'efore his entr$, a#tho+(h it 'eca e d+e after his entr$ or ad ission to the partnership. )f the o'#i(ation is inc+rred after his entr$, there is no 1+estion that, if he is a (enera# partner, he can 'e he#d #ia'#e +p to his persona# properties. Q: If this obligation is incurred prior to his entry as a partner, can he be held liable? A! Hes. As a r+#e, he a$ 'e he#d #ia'#e, '+t on#$ to the extent of partnership propert$ which wo+#d inc#+de his capita# contri'+tion, +n#ess there is a stip+#ation to the contrar$. %&en if the o'#i(ation was inc+rred prior to his entr$, howe&er, if in the partnership a(ree ent, he a(reed to 'e 'o+nd '$ those o'#i(ations, then he can 'e he#d #ia'#e e&en to the extent of his persona# propert$, tho+(h he is a new partner. Q: B is indebted to AB- (artnership which may be limited. #he same debtor of the partnership is also a debtor of one of the partners. #he debt to the partnership is 1++,+++, while the debt to the partner is *+,+++. B delivered 7+,+++ to A. .hould this 7+,+++ be distributed in proportion to the debts to the partnership and to A, meaning, 4+,+++ will go to the partnership and 1+,+++ will go to A. A! )f A is a #i ited partner, there sha## 'e no distri'+tion in proportion to the credit of these two creditors. 0he #aw which re1+ires that pa$ ent 'e distri'+ted in proportion to the two credits wi## on#$ app#$ if the partner to who the a o+nt is de#i&ered is a ana(in( partner. )f he is a #i ited partner, nor a##$, he wo+#d not ha&e an$ participation in the ana(e ent of the partnership '+siness. 0h+s, if he is a #i ited partner, then he can ha&e the ri(ht t recei&e e&er$thin( he recei&ed. Q: Assuming that A is in fact a managing partner and he received the 7+,+++ from B, is it possible still for A to retain everything which he received? A.! Hes, if this de't is a#read$ d+e and de anda'#e. )n this scenario, the de't is not $et
8a(e 55
d+e and de anda'#e. *+ch de't 9:*0 'e d+e and de anda'#e in order for the #aw on the proportiona# distri'+tion to app#$ to 'oth de'ts. Q: A is a managing partner and both debts are due and demandable. 7+,+++ was delivered to A. Is it possible for the partnership to have the right to the entire 7+,+++? A! )f A receipted the a o+nt in the na e of the partnership. 5$ specific pro&ision of the #aw, if the ana(in( partner who recei&ed s+ch a o+nt, receipted the sa e in the na e of the partnership, the partnership wi## 'e entit#ed to the entire a o+nt. Q: If A, as managing partner, and both debts being due and demandable, he received the amount of (hp7+,+++ and receipted the same in his own name, may he be entitled to retain everything? A! Hes, if LDs de't to A is ore onero+s and L chose to ha&e this a o+nt paid to this de't. :nder the #aw, the de'tor has the ri(ht to choose to pa$ the de't which is ore onero+s. A(ain, the pre ise is the de't to A is ore onero+s than the de't to the partnership. )f A, as ana(in( partner, recei&ed the sa e a o+nt, receipted in the na e of the partnership, 'oth de'ts are d+e and de anda'#e and are of the sa e '+rden, there wi## 'e a proportiona# distri'+tion of the a o+nt, 20,000 wi## (o to the partnership, and 10,000 wi## (o to A, the de't to the partnership 'ein( 100,000 and the de't to A 'ein( 50,000. %RO%4R0B R2;:0S ' Ma-or &ro&ert1 ri7hts of a &artner: 1.7 Ri(ht in specific partnership propert$S 2.7 )nterest in the partnershipS and 3.7 0he ri(ht of the partner to participate in the ana(e ent of the '+siness of the partnership. %ro&ert1 ri7hts consi/ere/ as minor: 1.7 Ri(ht to ha&e access to the 'oo2s of the partnershipS 2.7 R(ht to de and for a for a# acco+ntin(. Q: -an a partner demand for a formal accounting at any time? A! "o. 0he #aw wi## on#$ (i&e a ri(ht to a for a# acco+ntin( +nder &er$ specific circ+ stances. hy? 5eca+se a partner a#read$ has access to the 'oo2s, th+s, it a$ 'e +nnecessar$ to de and for a for a# acco+ntin( at an$ ti e. Ri7ht in s&ecific &artnershi& &ro&ert1: :nder the #aw, a partner is a co?owner with the other partners as to specific partnership propert$. A(ain, he is a co?owner with his partners and ".0 with the partnership o&er specific partnership properties. Q: 9ow could a person be a co@owner of a property owned by another if he is not a co@
owner of that other person? #he owner is the partnership. 9ow can a partner be a co@owner of that property if he is not a co@owner with the partnership? A! .ther a+thors wo+#d sa$ that the pro'#e with this pro&ision is that it was copied fro the :nifor 8artnership Act of the :nited *tates, where a partnership has no separate and distinct persona#it$, th+s a2in( the ere#$ co?owners. 5+t, in fairness with the -ode co ission, the 2nd sentence wo+#d te## $o+ that this co? ownership has its own incidence. )n other words, this is no ordinar$ co?ownership +nder the propert$ #aw. 0hatDs wh$ so e a+thors wo+#d ca## it co? ownership s+i (eneris. Q: -oncretely, in property law, if two persons are co@owners of a parcel of land, can a co@ owner sell his interest over the parcel of land without the consent or even 0nowledge of the other co@owner? ould that be a valid assignment of interest? A! Hes. Aowe&er, in specific partnership propert$, there can 'e no &a#id assi(n ent of interest '$ one partner. 0he assi(n ent of interest of a specific partnership propert$ wo+#d on#$ 'e &a#id if a## the partners wo+#d #i2ewise assi(n their interests. Q: <ay a creditor of a co@owner of a parcel of land levy upon such portion of the land interest over that land owned by the debtor / co@owner? A! Hes, there can 'e s+ch &a#id #e&$. Q: In partnership, can a creditor of a partner levy upon the rights of the partner over a specific partnership property? A! 0hat is not possi'#e. .n#$ partnership creditors can #e&$ +pon partnership assets or partnership propert$. 0his is different in the partnerDs interest in the partnership for this interest in the partnership can 'e &a#id#$ assi(ned '$ one of the partners e&en witho+t the consent or 2now#ed(e of the other partners. 2nterest in the %artnershi& *i p#$ p+t, this is a partnerDs share in the profit and s+rp#+s. <hate&er is his share in the profit or s+rp#+s is his interest in the partnership. Q: hat would be the share of a partner in a partnership? 1.7 *tip+#ation. ;or instance, in a partnership of 3 persons, the$ can a(ree that one a$ ha&e 95I of the profits, whi#e the 2 other partners a$ ha&e 5I of the sa e respecti&e#$. Q: hat if, in such agreement, one of the partners was e'cluded in sharing in the profits? A! *+ch stip+#ation is &oid. 0a2e note that on#$ s+ch stip+#ation is &oid and not the who#e partnership a(ree ent.
8a(e 56
Q: #hus, if the stipulation as to the sharing of the profits is void, or that there is no stipulation with this regard, what would be the sharing in the profits of the partners? A! )t wi## depend on their capita# contri'+tion. Q: hat if one of the partners is an industrial partner? A! 5$ express pro&ision of the #aw, he sha## 'e (i&en his share '$ deter inin( the &a#+e of the ser&ice rendered. 0h+s, deter ine first the &a#+e of the ser&ice rendered, (i&e the sa e to the ind+stria# partners, then the 'a#ance wi## 'e distri'+ted to the capita#ist partners in accordance to their capita# contri'+tion. B!: A, B and - are partners. In their partnership agreement, they agreed in the eEual sharing of the profits. #hereafter, assigned his whole interest in the partnership to B. B now demanded that he be allowed to participate in the management of the business of the partnership and also his share in the profits in the business of the partnership. Are the claims f B valid? A! As to LDs c#ai t participate in the ana(e ent of the '+siness, he has no s+ch ri(ht as an assi(nee. 5$ express pro&ision of the #aw, an assi(nee has no ri(ht to participate in the ana(e ent of the '+siness of the partnership, +n#ess otherwise a(reed +pon. Ae wi## not e&en ha&e the access to the 'oo2s of the partnership. Ais on#$ ri(ht wo+#d 'e to recei&e whate&er the assi(nin( partner a$ recei&e as share in the profits and in the s+rp#+s. Q: If profits were declared, for instance, in the amount of 73+,+++, would the assignee have the right to share in the profits? A! Hes. L is entit#ed to share of 8hp120,000, since the a(ree ent is e1+a# sharin( of profits. Ri7ht to &artici&ate in the mana7ement of the b siness of the &artnershi& B!: , B, D and O formed a partnership. and B contributed industryP D contributed *+,+++P O contributed 4+,+++. In a meeting, the partners unanimously agreed to designate and B as managing partners, such appointment having no stipulation as to their respective duties nor was there any statement that neither can act without the consent of the other. #hereafter, 4 persons applied for two positions: 1.6 as secretaryP and 4.6 as an accountant. As far as the secretary is concerned, it was and B who appointed the secretary, opposed by and O. #he accountant was appointed by concurred by O, which was opposed by B and D. hose appointment would bind the partnership? A! 0his ana(e ent arran(e ent is 2nown as /oint ana(e ent. An$ ana(in( partner a$ exec+te acts which are ere#$ acts of
ad inistration e&en if opposed '$ a## the other partners, 2+n( a(?isa #an( s$a. 5+t, if there are two or ore ana(in( partners, the$ ha&e to decide '$ a a/orit$ &ote. Q: Is the appointment of the secretary an act of administration? A! Hes. Q: ould it bind the partnership? A! Hes, e&en if opposed '$ the other partners, the capita#ist partners, the #atter wo+#d not ha&e an$ ri(ht for this is ere#$ an act of ad inistration we##? within the powers of a ana(in( partner. Q: ith regard to the accountant, ta0e note that the appointment by was opposed by another managing partner. 9ow will this tie be resolved? A! :nder the #aw, this wi## 'e reso#&ed '$ a## the partners with the contro##in( interest. 0he partners with contro##in( interest wi## pre&ai#. Q: In this case, who has the controlling interest? A! H. 0he deter ination as to who has contro##in( interest depends on the capita# contri'+tion. 0h+s, an ind+stria# partner is exc#+ded in s+ch cases. )n this case, it is o'&io+s that 50,000 is ore than the capita# contri'+tion, and 'eca+se H opposed to the appoint ent, s+ch appoint ent wi## not 'ind the partnership. .ther ana(e ent arran(e ents are pro&ided in Artic#es 1800, 1801, 1802, 1803. 0B%4S O9 MANA;4M4N0: 1.7 *o#idar$ 9ana(e ent! ?witho+t specification as to each otherDs d+ties or witho+t stip+#ation that one of the sha## act witho+t the consent of a##. 2.7 >oint 9ana(e ent! ?two or ore ana(in( partners with the stip+#ation that none of the sha## act witho+t the consent of a## others. 0he incapacit$ of one of the partners, or his a'sence wi## not 'e a &a#id (ro+nd not to o'tain his consent to a contract. )t has to 'e '$ +nani o+s consent, +n#ess, in o'tainin( his consent 6he is a'sent or incapacitated7 it wo+#d res+#t in irrepara'#e da a(e to the partnership, then the consent of the a'sent or incapacitated ana(in( partner a$ 'e dispensed with. 0his is a#so 2nown as ana(e ent '$ consens+s. 3.7 )f there was ana(e ent arran(e ent a(reed +pon 'etween the partners, each partner is considered as an a(ent of the partnership. )nto these arran(e ents, if on#$ one partner is appointed as a ana(er, he can exec+te an$ acts of ad inistration e&en if opposed '$ a## the other partners.
8a(e 57
Q: In a partnership of which the business is into buying and selling cars, the managing partner decided to buy a vintage <ercedes BenC, to the opposition of the other partners for they consider it bad investment, will the decision or the act of the managing partner in buying the said car bind the partnership? A! Hes, 'eca+se s+ch act is ere#$ an act of ad inistration. 0he pro'#e is, if the ana(in( partner contin+es to not consider the senti ents of the other partners, he a$ 'e re o&ed as a ana(in( partner. Q: #he Euestion now is, can he be easily be removed? A! "o. 0he re1+ire ents for the re o&a# of a ana(in( partner wo+#d depend on whether he was constit+ted as s+ch in the artic#es of partnership or he was ere#$ appointed as ana(in( partners after the constit+tion of the partnership. )f he was constit+ted as a ana(in( partner in the artic#es f partnership, he can on#$ 'e &a#id#$ re o&ed +nder two conditions! 1.7 0here has to 'e /+st ca+seS and 2.7 '$ those partners ha&in( contro##in( interests. A'sent one of these conditions, he cannot 'e &a#id#$ re o&ed. )n fact, e&en if there is /+st ca+se, if the ana(in( partner contro#s 51I of the partnership, he can ne&er 'e re o&ed. Aowe&er, if he was appointed as a ana(in( partner on#$ after the constit+tion of the partnership, he can 'e &a#id#$ re o&ed e&en witho+t /+st ca+se, so #on( as it was done '$ those partners ha&in( contro##in( interests. O(L2;A02ONS O9 0:4 %AR0N4RS AMON; 0:4MS4LC4S AN. AS 0O 0:4 %AR0N4RS:2% AN. 2N CAS4 O9 NONI%4R9ORMANC4 O9 0:4 O(L2;A02ON ' Obli7ations of the &artners: 1.7 0o a2e (ood his pro ised contri'+tionS 2.7 ;id+ciar$ d+tiesS and 3.7 0o participate in the #osses inc+rred '$ the partnership '+siness. 1. 0o ma6e 7oo/ his &romise/ contrib tion: A. Mone1: )n order to 2now the re edies that a$ 'e a&ai#ed of '$ the non?defa+#tin( partners and the partnership, it +st 'e 2nown first what was pro ised '$ the partner, whether he pro ised to contri'+te one$, propert$ or ind+str$. )f the partner pro ised to contri'+te one$, for instance, the partners a(reed to contri'+te 1 9i##ion with 4 partners, witho+t an a(ree ent as to respecti&e a o+nt to 'e contri'+ted, the #aw pro&ides that the$ wi## ha&e to
share e1+a##$. 0h+s, in this exa p#e, 1 9i##ion wi## ha&e to 'e di&ided into 4 or the respecti&e contri'+tion wi## 'e 250,000. )f one partner fai#ed to a2e (ood his pro ised contri'+tion which is a s+ of one$, he can 'e he#d #ia'#e '$ the non? defa+#tin( partners +p to the a o+nt pro ised p#+s interest. )f no rate was stip+#ated '$ the parties, it wi## 'e the #e(a# rate of 12I, 'eca+se this is for'earance in one$. Aside fro pa$in( the interest, which is +n+s+a#, not on#$ wi## that defa+#tin( part$ 'e he#d #ia'#e to pa$ interest, he wi## a#so 'e #ia'#e to pa$ da a(es. "or a##$, in o'#i(ations in&o#&in( one$, in case of da a(e inc+rred '$ another part$, the #ia'i#it$ wi## on#$ 'e pa$ ent of interest. )n partnership, not on#$ wi## he 'e #ia'#e to pa$ interest, '+t a#so of da a(es. Reme/ies that ma1 be in+o6e/ b1 the nonI /efa ltin7 &artners: 1.7 *pecific perfor ance ? the other partners can co pe# hi to a2e (ood his pro ised contri'+tion. 2.7 4isso#+tion ? a$ 'e an option '$ the non?defa+#tin( partners, if that is the on#$ a o+nt that the$ are expectin( for the partnership. Q: -an a non@defaulting partner rescind the partnership agreement? A! )n a *- decision, it he#d that rescission is not a re ed$ of the non?defa+#tin( partners. :nder the #aw, the defa+#tin( partners are treated as a de'tor of the partnership '$ specific pro&ision of the #aw. 0herefore, the *- he#d that pro&ision pre&ai#s o&er the (enera# r+#e in o'#i(ations and contracts +nder Art. 1191, wherein rescission a$ 'e a re ed$ in case of serio+s 'reach. (. %ro&ert1: )f a partner pro ised to contri'+te propert$, it +st 'e deter ined as to what was rea##$ contri'+ted! was it the propert$ itse#f or the +se of the propert$. )f it was the ownership of the propert$ that was contri'+ted then he wo+#d ha&e the o'#i(ation to de#i&er and transfer ownership, aside fro that, +nder the #aw, he wo+#d ha&e the o'#i(ation to warrant the thin(. Before the delivery of the thing to the partnership, who will bear the loss? 0he partner wi## 'ear the #oss. 0he partnership wi## 'ear the #oss when the thin( is a#read$ in its possession )f what was contri'+ted was ere#$ the +se of the propert$, the ris2 of #oss wi## 'e with the contri'+tin( partner for there was no transfer of ownership in this case. :nder the res perit do ino r+#e, e&en if possession of the thin( is with the partnership, so #on( as there is no fa+#t on the part
8a(e 58
of the partnership, then the contri'+tin( partner? owner wi## 'ear the #oss. %L-%80)."*! 1.7 <hen the thin( contri'+ted is f+n(i'#eS 2.7 or it cannot 'e 2ept witho+t deterioratin(S 3.7 )f contri'+ted '$ the partner to 'e so#dS and 4.7 <hen it has an appraised &a#+e of s+ch propert$. )n a## these circ+ stances, it is the partnership which wi## 'ear the #oss if the thin( was #ost or destro$ed whi#e in the possession of the partnership. A(ain, if the contri'+tin( partners fai#s to a2e (ood his pro ise to contri'+te propert$, he wi## 'e treated as a de'tor of the partnership, th+s specific perfor ance wi## #i2ewise 'e a re ed$. C. 2n/ str1 )f a partner fai#s to render ser&ice as pro ised, wi## specific perfor ance 'e a re ed$G Ans.! 4efinite#$ not. )t wo+#d 'e a &io#ation of his ri(hts a(ainst in&o#+ntar$ ser&it+de. 0he re ed$ wo+#d 'e to de and for the &a#+e of the ser&ice p#+s da a(es. )t can 'e easi#$ done 'eca+se there is an ind+str$ rate. $. 9i/ ciar1 . ties: 0he d+t$ to o'ser&e +t ost (ood faith, honest$, fairness, inte(rit$ in 'ein( with each other. 0his d+t$ co ences e&en d+rin( the ne(otiation sta(e. 0est to /etermine whether there was a +iolation of this / t1: <hether the partner has an ad&anta(e hi se#f at the expense of the partnership. )f he has s+ch ad&anta(e at the expense of the partnership, then there is a 'reach of the fid+ciar$ d+t$. 0here need not 'e a proof of e&i# oti&e so #on( as he has this ad&anta(e at the expense of the partnership. 0his d+t$ #asts, nor a##$, ter ination of the partnership. +nti# the
Q: <ay a partner may be held liable for breach of fiduciary duty even after the termination of the partnership? A! Hes. 0he *- he#d that e&en if the act of a partner was ade after the ter ination of the partnership, if the fo+ndation of that act was ade d+rin( the existence of the partnership that can sti## 'e considered as a 'reach of fid+ciar$ d+t$. )n other words, pina(handaan na n$a $+n act d+rin( the existence of the partnership, howe&er, it was exec+ted on#$ after the ter ination of the partnership. '. %artici&ate in the Losses: Q: hat will be the share of the partner in the losses incurred in the partnership?
A! -onsider first whether there was a stip+#ation as to #osses or there was no stip+#ation. )f there was a stip+#ation as to #osses, the first scenario wo+#d pertain to, for instance, A, 5 and - a(reed to share 50I, 30I and 20I of the #osses. 0his wi## 'e a &a#id and 'indin( stip+#ation a on( the partners. Q: ould this still be a valid stipulation if one of them is an industrial partner? Att1. =ribe: Hes, this wo+#d sti## 'e a &a#id stip+#ation. )f the ind+stria# partner a(reed to share in the #osses, then who are we to den$ hi thatG Q: hat if in the stipulation regarding losses, one or more of the partners is e'cluded in sharing with the same, what will be the status of the stipulation? A! )t depends on who was exc#+ded. )f the exc#+ded partner is a capita#ist partner, that stip+#ation is definite#$ &oid, 100I. )f the partner exc#+ded is an ind+stria# partner, it depends. As a on( the partners, this stip+#ation is &a#id, howe&er, this is &oid a on( third persons. )n other words, despite the stip+#ation a on( partners, in exc#+din( the ind+stria# partner in sharin( in the #osses, the creditors of the partnership can sti## ho#d s+ch ind+stria# partner #ia'#e for his contract+a# o'#i(ations. 0he re ed$ of the ind+stria# partner, if he#d #ia'#e, is to (o after his partners, for the a(ree ent is &a#id a on( the se#&es. Q: hat if there is no stipulation as to the sharing of the losses, or that the stipulation in void? 0he first scenario is, there is an a(ree ent as to profits. )f there is an a(ree ent as to profits, then the sharin( in the profits wi## 'e the sa e 'asis in the sharin( of the #osses which is a &er$ reasona'#e r+#e. 0h+s, for instance, if A, in the a(ree ent, is entit#ed to 90I, 5?I and -?5I, then it wo+#d a#so 'e reasona'#e that A share 90I of the #oss, 5F- 5I of the #oss respecti&e#$. 0he #ast scenario, there is no stip+#ation as to #osses and there is a#so no stip+#ation as to profits. )n this case, it wo+#d depend on their capita# contri'+tion. 0heir share in the #osses wo+#d depend on their capita# contri'+tion. #hus, in this scenario, would the industrial partner share in the losses? A! <a#a, 2asi wa#a s$an( capita# contri'+tion. Note: :nder Art. 1816, e&en if he is exc#+ded '$ the partners@partnership in sharin( in the #osses, that is a &oid stip+#ation as to third persons and can sti## ho#d the ind+stria# partner #ia'#e as to the contract+a# o'#i(ation of the partnership.
Q: If indeed a partner, assuming that the assets of the partnership are not sufficient to cover the obligations of the partnership, what would be the nature of the obligation of the partner? ould the partners be held solidarily liable? :r would they only be held Kointly liable? A! )t wo+#d depend on the nat+re of the #ia'i#it$. ;or contract+a# o'#i(ations, as a r+#e, the partners wo+#d on#$ 'e /oint#$ #ia'#e, +n#ess the$ 'o+nd the se#&es so#idari#$, for contract+a# o'#i(ations. Aowe&er, +nder Art. 1824, if the o'#i(ation arose fro a tort+o+s act or a wron(f+# act +nder Arts. 1822 and 1823, for exa p#e, whi#e in the perfor ance of his o'#i(ation, a partner recei&ed a s+ of one$ fro one of its c#ients which s+ of one$ was isappropriated that partner, s+ch partner wi## 'e he#d so#idari#$ #ia'#e with his partners and with the partnership. A#so, if a s+ of one$ was de#i&ered, e&en if it was de#i&ered to the partnership, howe&er, one of the partners isappropriated the sa e, a## the partners wi## 'e considered so#idari#$ #ia'#e a on( the se#&es and with the partnership. )n the United (ioneers >eneral -onstruction -ase, the creditor fi#ed a co##ection s+it i p#eadin( the 5 (enera# partners. 4+rin( the pendenc$ of the case, the creditor as2ed for the dis issa# of the action as a(ainst one of the partners. :#ti ate#$, the co+rt decided in fa&or of the p#aintiff. Ass+ in( the a o+nt which was fo+nd to 'e the #ia'i#it$ of the partnership was 8hp100,000, the co+rt r+#ed that the partnership wi## ha&e to pa$ the said a o+nt and in case that the assets of the partnership wi## not 'e s+fficient to co&er this inde'tedness, the partners wi## 'e #ia'#e to pa$ e1+a##$. *o, na(in( iss+e $+n( Be1+a##$,C eanin( si#an( apat na #an(G for the case as a(ainst one of the partners was dis issed. )f the a o+nt of the o'#i(ation is 100,000, sho+#d the$ 'e #ia'#e 25,000 each or 20,000 each inc#+din( the 5 th partnerG 0he *- +#ti ate#$ he#d, in this case, that the #ia'i#it$ of the partners is on#$ /oint, therefore, the condonation of the #ia'i#it$ of one partner wi## not increase the #ia'i#it$ of the other partners. %&en if the partnership has no assets re ainin(, each partner sha## on#$ 'e he#d #ia'#e +p to his share in the partnership inde'tedness. 0h+s, if the de't is 100,000 and there is no a(ree ent as the share in the #osses, the$ ha&e to share in the #osses, e1+a##$ into 20,000, $+n( apat na #an( na defendants, 2asi $+n( isa, condoned na $+n( o'#i(ation. O(L2;A02ONS O9 %AR0N4R R4: 'R. %4RSONS Q: hen would a contract entered into by a partner bind the partnership? !'.: If a partner went to a furniture shop to buy furniture the of which is (hp1++,+++, and such amount remained unpaid, can the seller demand payment from the partnership?
8a(e 59
A! )t depends as to whether the contract was entered into in the na e of the partnership, for the acco+nt of the partnership, +nder its si(nat+re, '$ a partner who is a+thori=ed to enter into that contract to 'ind the partnership. 0h+s, in this exa p#e, if in the a(ree ent the '+$er was the partner hi se#f and not the partnership, that partner sho+#d 'e he#d #ia'#e, for the f+rnit+re was not 'o+(ht in the na e of the partnership. 0he pro'#e , if the contract wo+#d 'e 'indin( in the partnership, then wo+#d 'e, whether the partner who represented the partnership had the a+thorit$ to 'ind the partnership. "or a##$, if a partner wo+#d enter into a contract, a partnership reso#+tion is not necessar$. <hether or not a contract wo+#d 'ind the partnership wo+#d depend on the nat+re of the act of s+ch partner and the nat+re of the '+siness of the partnership. Q: -oncretely, if a partner bought a complete set of .-"A in the name of the partnership and signed by that partner, would that contract bind the partnership for the set was bought in the name of the partnership? A! )t wo+#d depend on the nat+re of the act and the nat+re of the '+siness of the partnership. )n this exa p#e, the partner 'o+(ht the set of *-RA, pero na an, and '+siness n( partnership a$ resta+rant, hindi na an ata na i?'ind n$a an( partnership to s+ch contract, an( ne(os$o ni#a resta+rant. Q: But the seller would raise the defense, %hindi 0o naman alam na restaurant yung business, e ang nagrepresent ng partnership si Atty. AB-, so a0ala law firm., Is that a valid defense? A! "o. 0he *- wo+#d te## that the third part$ contractin( with the partnership has the o'#i(ation to 2now at #east the nat+re of the '+siness of the partnership. )n fact, he can de and for the presentation of the artic#es of partnership in order for the third part$ to 2now the nat+re of the '+siness of the partnership. ;or, if this ti e, the partnership is a #aw office, and the partner 'o+(ht a set of *-RA, that act of '+$in( a set of *-RA wi## 'e considered apparent#$ for carr$in( the '+siness of the partnership the +s+a# wa$. 0herefore, that contract wi## 'ind the partnership. Q: !ven if he had no authority from the partners? A! Hes. Q: !ven if there was a resolution among partners that he should not be the one who will enter into the contract? Jor instance, A,B,-,&, and ! did decide to buy the set, but designated A to buy the same and not !, but the ! bought the .-"A, would that contract bind the partnership?
8a(e 60
A! Hes, as #on( as the third person was not aware of that a(ree ent of the partnership 'eca+se s+ch act is an act apparent#$ for carr$in( on the '+siness of the partnership the +s+a# wa$. *o, if the partnership is a #aw office, '+t the partner 'o+(ht certain thin(s for a resta+rant, then s+ch act is not apparent#$ for carr$in( on the '+siness the +s+a# wa$, th+s s+ch act wo+#d re1+ire the consent of the partners in order to 'ind the partners. :nder Artic#e 1818, there are certain acts which #aw re1+ires the +nani o+s consent of the partners for s+ch a contract or act to 'ind the partnership, #i2e, disposin( the (oodwi## of the partnership or to contest a /+d( ent a(ainst the partnership or reno+nce a c#ai of the partnership. .2SSOL=02ONH 52N.2N; =% AN. 04RM2NA02ON 0hese are three different concepts. :pon disso#+tion of the partnership, it is ".0 4%%9%4 disso#&ed. )t wi## sti## ha&e to (o thro+(h the process of windin( +p of the affairs of the '+siness of the partnership 'efore the partnership itse#f wi## 'e ter inated. Q: hen would there be a dissolution of a partnership? A! :nder the #aw, there wi## 'e a disso#+tion if there is a chan(e in the re#ation of the partners ca+sed '$ an$ of the partners ceasin( to 'e associated in the carr$in( on of the '+siness of the partnership. 0hat wi## res+#t in the disso#+tion of the partnership. A(ain, if one of the partners ceased to 'e associated in the carr$in( on of the '+siness of the partnership, that wi## res+#t in the disso#+tion of the partnership. Q: <ay there be a dissolution even if none of the partners ceased to be associated with the carrying on of the business of the partnership despite the definition of dissolution under Art. 1?4?? A! Hes. .ne scenario is the ad ission of a new partner. <ith the ad ission of a new partner, +nder Art. 1840, the partnership is disso#&ed. Q: hat is the effect of the dissolution? A! A(ain, it wi## not res+#t in the ter ination, it wi## on#$ start the windin( +p process, effecti&e#$, this wi## ter inate the a+thorit$ of a## partners to 'ind the partnership, %L-%80, if that act is necessar$ for the windin( +p of the partnership or necessar$ to co p#ete a '+siness which was then 'e(an '+t was not $et finished at the ti e of the disso#+tion of the partnership. CA=S4S O9 0:4 .2SSOL=02ON 1.7 %xtra/+dicia#S 2.7 >+dicia#. 4Atra- /icial ca ses: 1.7 Eo#+ntar$S
2.7 )n&o#+ntar$. >+dicia# ca+ses are necessari#$ &o#+ntar$ 'eca+se it is '$ app#ication. :nder &o#+ntar$ ca+ses wo+#d fa##, the ca+se of the disso#+tion a$ res+#t on the &io#ation of the a(ree ent or it a$ 'e witho+t &io#ation of the partnership a(ree ent. -oncrete#$, the expiration of the period wo+#d 'e &o#+ntar$, extra/+dicia# '+t witho+t &io#ation of the a(ree ent. 0he fixin( of the ter is an a(ree ent of the parties therefore, it is &o#+ntar$. 0er ination of a definite ter or a partic+#ar +nderta2in(! &o#+ntar$ '+t witho+t &io#ation. 5$ the wi## of one of the partners! the partnership a$ 'e disso#&ed witho+t #ia'i#it$ on the part of the partner, if the partnership is a partnership at wi## and he disso#&ed the partnership in (ood faith. 0hose are the two re1+ire ents, in order for a partner to 'e a'#e to disso#&e the partnership witho+t #ia'i#it$ on his part. A(ain, in an express wi## of an$ partner who acted in (ood faith, when no definite ter or partic+#ar +nderta2in( is specified, which eans, a(ain that a partnership is a partnership at wi##. B!: A, B and - agreed to form a partnership for a period of five years. After 4 years of business, - assigned his whole interests to (hilip. #he two other partners, realiCing that they would not be able to deal with (hilip, decided to dissolve the partnership. (hilip, not 0nowing of the dissolution done by the 4 partners, filed a petition for the dissolution of the partnership with the court. as the partnership dissolved by the act of the two partners? <ay the action filed by (hilip to dissolve the partnership prosper? A! As a#read$ entioned, '$ the express wi## of a## the partners who ha&e not assi(ned their interest is a ca+se for the disso#+tion of the partnership. 0herefore, the 2 partners &a#id#$ disso#&ed the partnership '$ ere wi## of the partners. Q: As far as (hilip was concerned, will his petition prosper, even assuming that no dissolution was made by the 4 partners? A! "o. <ith the assi(n ent of the interest of a partner to another person that does a2e the assi(nee a partner of the partnership witho+t the consent of the other partners, therefore, he has no persona#it$ to fi#e a petition for the disso#+tion of the partnership. %xp+#sion of an$ partner in (ood faith, it a$'e 'eca+se the (ro+nds for exp+#sion was a(reed +pon '$ the partners and one of the partners &io#ated s+ch a(ree ent, th+s he a$ 'e expe##ed in (ood faith, therefore it a$ 'e &o#+ntar$ and witho+t &io#ation.
8a(e 61
)n contra&ention, 'eca+se one of the partners a$ disso#&e a partnership, e&en if the partnership has a fixed period or it is a partnership for a partic+#ar +nderta2in( and that partic+#ar +nderta2in( has not $et 'een co p#eted, that wo+#d 'e in contra&ention of the a(ree ent of the partners. 2NCOL=N0ARB CA=S4S: Q: If one of the partners in a partnership was elected a .enator, would this dissolve the partnership by operation of law? A! "o. Q: !ven if it is a partnership of lawyers or a law office? A! "o. :nder the -onstit+tion, these e#ected officia#s are prohi'ited on#$ fro appearin( 'efore tri'+na#s and not fro pri&ate pratice. Q: If a lawyer was appointed in the cabinet, for instance as (residential =egal -ounsel, would that result in the dissolution of the partnership by operation of law? A! Hes. :nder the -onstit+tion, -a'inet *ecretaries are prohi'ited fro pri&ate practice of their profession. -#assic ex.! 0he ;ir 6-arpio Ei##ara=a -r+= Law7 0his a#so inc#+des appoint ent in the /+diciar$. Q: hat if the law partner was elected as governor of his province will it result in the dissolution of the partnership? A! Hes. :nder the Loca# No&ern ent -ode, chief exec+ti&es are a#so prohi'ited fro the pri&ate practice of their profession. Q: hat if the partner who died is a partner in a limited partnership? ould that dissolve automatically the partnership? A! )t depends as to who is the partner. )f he is a (enera# partner, as a r+#e, it disso#&es the partnership, +n#ess there was an a(ree ent in the artic#es of partnership that the$ wo+#d contin+e with '+siness of the partnership e&en after the death of the partner. .r e&en witho+t s+ch a(ree ent in the artic#es of partnership, if the s+r&i&in( partners decide to contin+e with the '+siness of the partnership, then the partnership is not dee ed disso#&ed e&en if the partner who died is a (enera# partner. )f the partner who died is a #i ited partner, that does not res+#t in the disso#+tion of the partnership. )n fact, the exec+tor or ad inistrator of the estate of the deceased #i ited partner wi## the ri(ht to choose or to appoint a s+'stit+te #i ited partner in the said partnership.
)nso#&enc$ or ci&i# interdiction of an$ partner wi## res+#t in the disso#+tion of the partnership. @ /icial Ca ses: ;ro n/s: 1.7 )nsanit$ or incapacit$! ?0he co+rts re1+ire that it sho+#d 'e per anent in characterS and ?s+ch incapacit$ or insanit$ +st affect the perfor ance of s+ch partner of his o'#i(ations with respect to the partnership '+siness. )n other words, 2+n( wa#a s$an( pa2ia#a sa ana(e ent n( '+siness n( partnership, insanit$ or incapacit$ is not a &a#id (ro+nd. 2.7 Nross iscond+ct! a.7 wron(f+# exp+#sionS '.7 if one partner wo+#d ref+se to a##ow another partner in the ana(e ent of the partnership '+siness, if he has s+ch ri(ht to participate in the ana(e ent S c.7 if the ana(in( partner wo+#d ref+se to distri'+te the profits of the partnership when there is s+ch o'#i(ation to distri'+te the profitsS d.7 isappropriation of the inco e of the partnership '+siness. Note! )f a #i ited partner 'eco es a #i ited partner in another partnership, that is not a &a#id (ro+nd to fi#e a petition for the disso#+tion of the partnership. Li ited partners has nothin( to do with the ana(e ent of the partnership '+siness, th+s, there is no conf#ict of interest. Note: 0he fact that the partnership inc+rred #osses for the past three $ears is not necessari#$ a (ro+nd for disso#+tion. Aowe&er, e&en if the partnership inc+rred #osses once and it can 'e shown '$ the partners that there is no prospect for reco&er$, it can 'e a &a#id (ro+nd for the fi#in( of the petition for the disso#+tion of the partnership. Q: Quarrels among partners, valid ground? A! "or a##$, no. Aowe&er, if s+ch 1+arre#s (i&e rise to dissension a on( the partners, affectin( the cond+ct of the '+siness of the partnership, this can a#so 'e a &a#id (ro+nd, fa##in( +nder Bother circ+ stancesC which wo+#d render the disso#+tion e1+ita'#e. Q: Upon the dissolution of the partnership, and there were assets left, how will these be distributed? #o whom these assets be given? A! As far as partnership assets are concerned! 1.7 8artnership creditors who are not partners. 2.7 8artnership creditors 3.7 )f there are re ainin( assets, to the capita#ist partnersS 4.7 %xcess ? profits 'ased on their a(ree ent as to profits.
Q: hat if, in their agreement, (artner A contributed 1++,+++P (artner B, *+,+++P (artner -, industrial partner. #he total assets of the partnership is 1 <illion at the time of dissolution, however, there were partnership creditors obligation of which amounted to ;++,+++. ould the industrial partner have a share in that 1 <illion asset? A.! "o. *ince the a o+nt of the o'#i(ation is 8hp900,000, the re ainin( 8hp100,000 sho+#d 'e (i&en 'ac2 to the capita#ist partners for their capita# contri'+tion. Q: Assuming that there was no agreement as their share in the losses, also there was no agreement as to their share in the profits, what if one of the partners became insolvent, will the other partner$s liability be increased? A! "o, 'eca+se their #ia'i#it$ is >.)"0. Q: Jor instance A, a partner is insolvent, his assets being 1++,+++. A is indebted B and D. #he partnership also has its creditors. #o whom shall this 1++,+++ be given? A.! )t sho+#d 'e (i&en to the separate creditors of the indi&id+a# partner. ;or a #i ited partnership to 'e for ed, there has to 'e at #east one #i ited partner and one (enera# partner. ;or the esta'#ish ent of a #i ited partnership, the #aw re1+ires certain for a#ities. -oncrete#$, +nder Art. 1844, there has to 'e a certificate si(ned and sworn to '$ the contractin( parties which has to 'e fi#ed with the *%-. *o #on( as there was s+'stantia# co p#iance with the for a#ities re1+ired '$ #aw, a #i ited partnership wi## 'e &a#id and 'indin(. Q: hat if there was no substantial compliance as to these formalities? A! %&en if there was no s+'stantia# co p#iance, the a(ree ent wi## 'e &a#id and 'indin( a on( the se#&es. As to third persons, a## of the a$ 'e he#d #ia'#e as (enera# partners, as if a## of the are (enera# partners. 0h+s, e&en a #i ited partner a$ 'e he#d #ia'#e e&en +p to his persona# properties.
TR!ST
$ <2N.S: 1.7 %xpressS 2.7 ) p#ied. 2m&lie/ 0r st: $ <in/s: 1.7 Res+#tin( tr+stS 2.7 -onstr+cti&e tr+st 0he c#assification of tr+st into two 2inds 6express and i p#ied7 and i p#ied tr+st into two 2inds 6res+#tin( and constr+cti&e7 wo+#d 'e re#e&ant in two concepts!
8a(e 62
1.7 2.7
App#ica'i#it$ of the paro#e e&idence r+#eS and 8rescription, specifica##$, ac1+isiti&e prescription.
propert$ fro a se##er who has no ri(ht to se##, '+t he has apparent a+thorit$ to se##, who appears to 'e the owner and the '+$er 'o+(ht the propert$ in (ood faith, he wi## ac1+ire ownership o&er the thin( e&en if the se##er has no ri(ht to se##. 5Ds re ed$ wo+#d 'e to (o after her 'rother for 'reach of tr+st in se##in( the propert$ witho+t her consent. B!: A property was bought by a father and was registered in the name of his illegitimate daughter. #he illegitimate daughter occupied the said parcel of land and constructed a house where she and her husband and their children lived. .everal years thereafter, her father died. #he other heir of her father 5his legitimate children6 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! :nder the #aw, there is no pres+ ption as to tr+st re#ationship +nder 1448, 'eca+se the donee in this sit+ation is a chi#d, e&en if i##e(iti ate, of the father. 0herefore, it a$ 'e a donation as pro&ided +nder Art. 1448. Q: -an the other heirs recover that property? A! )t depends, considerin( that it is a donation, if the donation is inofficio+s. )f the sa e 'e inofficio+s, the other heirs a$ de and for the ret+rn of the propert$ or at #east the &a#+e of the propert$. Res+#tin( tr+st inc#+des Artic#es 1448, 1451, 1449, 1450,1452,1453,1454. Constr cti+e 0r st: B!: A applied for the registration of a parcel of land in his name. 9owever, he was called in Gew Dor0 to be a chef in a hotel. .o, he as0ed his cousin to follow up his application for registration of land while he was in Gew Dor0. Instead of ensuring the registration of the property in the name of A, he had the property registered in his 5cousin6 name. After which, he sold the property to a thi2rd person who bought the land relying on the #-#. hen A returned to the (hils., he learned of what his cousin had done. <ay A recover the parcel of land from the 7rd person who bought the property in good faith and for value? A! "o. Q: =et$s assume that the remedy here is conveyance, the cousin has not yet been able to sell the property to the 7 rd person, however the same in registered in the name of the cousin. If the cousin would raise the defense that the action was filed more than one year from the time of registration of the property in his name, is that claim tenable?
Note: An express tr+st o&er an i o&a'#e a$ not 'e pro&en '$ paro#e e&idence. 0his eans that i p#ied tr+st o&er an i o&a'#e a$ 'e pro&en '$ paro#e e&idence or express tr+st o&er a o&a'#e, a$ 'e pro&ed '$ paro#e e&idence. 4D%R4SS 0R=S0 Q: <ay an e'press trust over an immovable be proven by mere testimony of the witness? ASHes, if the #aw$er of the other part$ did not o'/ect to the presentation of the witness. B!: 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 A$s son upon the graduation of the said son 5A$s son6. #his agreement was entered into in 1;?+. #he property was in fact registered in the name of B the following yea, 1;?1. In 1;?4, A died. In 1;?7, A$s son graduated. &espite that fact, B did not reconvey the property. 9e had no 0nowledge of this agreement until 1;;7, when accidentally, the son of A discovered such instrument pertaining to the agreement of A and B. #hus, he demanded that the land be conveyed to him. B refused raising the defense of prescription. Is this claim tenable? A! 4efinite#$ not. 0his pertains to an express tr+st. )n an express tr+st, tr+stee wi## 'e ho#din( the propert$ on#$ in the na e of the 'eneficiar$ or the cest+i 1+e tr+st, therefore, he cannot ac1+ire the said propert$ '$ ac1+isiti&e prescription +n#ess there wo+#d 'e ad&erse possession o&er the propert$. Q: hen would there be adverse possession? A! )t a$ on#$ start with rep+diation. <itho+t rep+diation, the period for ac1+isiti&e prescription wi## not start to r+n. *+ch act of rep+diation sho+#d 'e ade 2nown to the 'eneficiar$. 2M%L24. 0R=S0 Res ltin7 0r st: B!: A and B, brother and sister respectively, inherited two identical parcels of land. Jor purposes of convenience, B, sister of A, agreed to have the land registered in the name of A. 9owever, when the parcels of land were registered in the name of A, A sold one of the parcels of land to a buyer in good faith and for value. -an B recover the land from the buyer? hat would be the remedy of B? A! 0his 1+estion c#ear#$ pertains to a res+#tin( tr+st. 0his is specifica##$, Art. 1451 of the "--. 5 cannot reco&er the #and fro the '+$er. As disc+ssed in *a#es, a '+$er who had 'o+(ht the
8a(e 63
A! :ntena'#e. 0he one $ear period pro&ided '$ #aw is re#e&ant on#$ if the action fi#ed is for the re? openin( of the re(istration case 'eca+se of fra+d. 0h+s, if the action is for recon&e$ance, it does not atter of the one $ear period has a#read$ #apsed. ".5.! Art. 1456, 1455. Q: In constructive trust, may the trustee acEuire the property by prescription by mere lapse of time, without repudiation? A! Hes, 'eca+se fro the &er$ start, he was a#read$ c#ai in( ownership o&er the thin(. )'a don sa res+#tin( tr+st or express tr+st. <hen this tr+st was constit+ted, the tr+stee was ho#din( the propert$ in the na e of another person. 8ero sa constr+cti&e tr+st, iton( pinsan at $+n( a'o(ado in one case, wo+#d 'e c#ai in( ownership o&er the propert$, ri(ht fro the &er$ start and therefore witho+t need of rep+diation, $+n( prescripti&e period wi## start to r+n in a constr+cti&e tr+st.
)ndi&isi'i#t$ 8rincip#e Ri(ht to reco&er the deficienc$ @ excess , 2115 M t m +s. Commo/at m 1. - , a thin( is de#i&ered to the 'ai#ee for the +se of the propert$ and therefore ownership is not transferred. 9 , a cons+ a'#e thin( is de#i&ered and therefore ownership thereof is transferred to the 'ai#ee or 'orrower. 2. 9 , on#$ cons+ a'#es are the o'/ect - , a$ 'e i o&a'#es 6ho+se, rice fie#d7 =s fr ct +s. Commo/at m 1. : , is a ri(ht to en/o$ the propert$ which eans that the +s+fr+ct+ar$ wi## not on#$ ha&e the ri(ht to possess '+t he wo+#d ha&e the ri(ht to the fr+its of the thin(. - , no ri(ht to the fr+its '+t on#$ ri(ht to +se the thin( '+t it a$ 'e express#$ stip+#ated that he can a#so +se the fr+its. Consens al +s. Real Contracts 1. - , are perfected '$ ere consent th+s +pon eetin( of the inds as to the o'/ect and the ca+se there is a#read$ a perfected contract R- , are perfected +pon de#i&er$ of the thin( which is the o'/ect of the contract. 4Aam&les of Real Contracts 1316 , -o odat+ , deposit and p#ed(e 9+t++ 6 e ori=e these 4 exa p#es7 Note: 8erfection is s+'/ect to the for a#ities of the #aw. %&en if the contract has a#read$ 'een perfected, the contract a$ 'e +nenforcea'#e 'eca+se it is not in the for prescri'ed '$ #aw for the enforcea'i#it$ of the contract. %xa p#e , contract of sa#e 6s+'/ect to the pro&isions of the stat+te of fra+ds7 Note: 0here are different r+#es in +t++ and co odat+ . 0here are a#so different r+#es in /+dicia# and extra/+dicia# deposit. 5+t a## these are principa# contracts. A## the other credit transactions are accessor$ contracts , (+arant$, s+ret$ship, p#ed(e, -9, R%9, antichresis , the$ depend on other contracts for their existence or their &a#idit$. 6 e ori=e7 Note! An accepted pro ise to #oan is consens+a#. Sa ra +s. .(% , when the #oan app#ication of *a+ra was accepted or appro&ed '$ the 'an2, there was a#read$ a perfected contract '+t it is not +t++ . *- said, it is perfected consens+a# contract of #oan 'eca+se the #oan itse#f wi## on#$ 'e perfected +pon the de#i&er$ of the a o+nt to the 'orrower. :nti# the a o+nt is de#i&ered, there is no perfected +t++ rather there was on#$ a perfected consens+a# contract of #oan. 0h+s, with that perfected contract, the 'orrower can a#read$ de and for the de#i&er$ of one$. 0hat is his ri(ht '+t +nti# then the +t++ itse#f wi## not $et 'e
Credit transactions
Q: hy credit transactions? A! 5eca+se these transactions a## in&o#&ed credit eanin( there is a 'e#ief in the capacit$ of one of the parties to perfor his o'#i(ation in the f+t+re. Note: -redit transactions an( tawa( '+t the$ are not a## contracts. 0here can 'e #e(a# re#ationship e&en witho+t an a(ree ent , exa p#es , #e(a# p#ed(e, /+dicia# deposit. 5+t the others are contracts , there are contract+a# deposit and p#ed(e '$ a(ree ent. 0ransactions: A. Kinds of Loans 1. 9+t++ 2. -o adat+ 5. Kind of 4eposits 1. >+dicia# 2. %xtra/+dicia# -. N+arant$ 4. *+ret$ship %. Rea# N+arant$ , fa&orite in the 'ar exa s 1. 8#ed(e 2. -hatte# 9ort(a(e 6-97 3. Rea# %state 9ort(a(e 6R%97 4. Antichresis 9oc s on the followin7 &ro+isions: 1933, 1962, 2047, 2132, 2140 .'#i(ations of the 'ai#ee , 1942 .'#i(ations of depositar$ ? 1979 Ri(ht to de and for interest , 1956 Re1+isites of p#ed(e and ort(a(e ? 2085 8act+ -o issori+ , 2088
8a(e 64
perfected. Nan+n din sa co sa deposit.
odat+ , (an+n din B!: " upon reEuest loaned his passenger Keepney to J to enable to bring his wife from #arlac to (>9 for treatment. :n the way bac0 to #arlac after leaving his wife in (>9, people stopped the passenger Keepney and " allowed them to ride accepting payments from them Kust as in the case of ordinary passenger Keepney. As he was crossing Bamban, #arlac, there was an on rush of lahar from <t. (inatubo. #he Keep was wrec0ed. hat do you call the contract that was entered into by " and J? Is J obliged to pay " for the use? Is J liable to " for the loss of the Keep? *A! 0his is co adat+ . )n co adat+ , it is essentia##$ (rat+ito+s 6no pa$ ent7. 0a2e note the /eep was #ost d+e to a fort+ito+s e&ent. )f $o+ fo##ow the (enera# r+#e +nder 1174, he sho+#d not 'e he#d #ia'#e. 5+t '$ express pro&ision of the #aw in co odat+ , the 'orrower is #ia'#e. :nder 1942, when the 'orrower de&otes the thin( to other p+rpose not a(reed +pon 6the p+rpose is to 'rin( the wife to the hospita#7, the 'orrower is #ia'#e e&en if the #oss is d+e to fort+ito+s e&ent. Note: 5ai#or need not 'e the owner hi se#f 'eca+se there is no o'#i(ation to transfer ownership. B!: < borrowed B$s truc0. &uring a fire that bro0e out in <$s garage, < had time to save only 1 vehicle and < saved his car instead of B$s truc0. Is he liable for the loss of B$s struc0? *A! Hes. 0his is an exception to the res perit do ino r+#e. )t wo+#d a#so fa## +nder 1942 that he chose to sa&e his thin( when he had the opport+nit$ to sa&e one of two thin(s, the other 'ein( a 'orrowed ite . H+n( i'a , if $o+ 2ept it #on(er, it is consistent with de#a$ +nder 1165 ? in an o'#i(ation to de#i&er a deter inate thin( and the thin( was #ost d+e to a fort+ito+s e&ent, that de'tor wi## sti## 'e #ia'#e for the #oss if he was in de#a$. Re& blic +s. (a7tas Ae#d! %&en if this is co adat+ +nder Artic#e 1942, it wi## 'e the 'ai#ee or the 'orrower who wi## 'ear the #oss. .e&osit 0he sa e r+#e in deposit , in deposit, ownership does not pass to the depositar$. 0h+s, +nder the res perit do ino r+#e, it wi## 'e the depositor who wi## 'ear the #oss if the thin( was #ost d+e to a fort+ito+s e&ent. )n ro''er$, the depositor wi## 'ear the #oss +n#ess there is ne(#i(ence on the part of the depositar$ or if it is stip+#ated that the depositar$ wi## 'e #ia'#e. 6)f $o+ are the depositar$, de and for a hi(her renta# so $o+ ha&e one$ to pa$ for ins+rance7 )f he +ses it witho+t co pensation, he wi## 'e #ia'#e 'eca+se in deposit the p+rpose of the de#i&er$ is
Commo/at m )t is essentia##$ (rat+ito+s contract. )f there is co pensation, it is not co odat+ . )n the case of Re& blic +s. (a7tas, *- said it is #ease not co odat+ 'eca+se there was an o'#i(ation to pa$ 'reedin( fee. Loan Loan is nor a##$ (rat+ito+s 6+tan( o sa friend o7 +n#ess there is an express stip+#ation in writin(. 0a2e note +nder Artic#e 1956, a creditor in a contract of +t++ cannot de and for interest +n#ess it was express#$ stip+#ated in writin(. 0a2e note that we are ta#2in( here a 2ind of interest 2nown as co pensator$ interest for the +se of the one$. *o if $o+ 'orrowed one$ in >an+ar$ pa$a'#e at the end of the $ear, d+rin( that period, the creditor a$ 'e entit#ed to an interest 2nown as co pensator$ interest '+t after the o'#i(ation 'eca e d+e and there was de and for the pa$ ent nonethe#ess the 'orrower fai#ed to pa$, this ti e there wi## 'e a #ia'i#it$ to pa$ interest '$ wa$ of da a(es not co pensator$ interest. And this 2ind of interest 6da a(es7 need not 'e in writin(. 0his interest '$ wa$ of da a(es is the effect of de#a$ 'eca+se of the fai#+re to pa$ despite de and when the o'#i(ation was a#read$ d+e, he wi## 'e #ia'#e for da a(es. )n onetar$ o'#i(ations, the #ia'i#it$ for da a(es is in the for of interest. )n onetar$ o'#i(ations, if there was a stip+#ation that there is #ia'i#it$ to pa$ interest '+t the interest rate was not fixed, it wi## 'e the #e(a# rate that can 'e in&o2ed 612I7 , #oan or for'earance of one$. )f there is a stip+#ation #i2e 6I per onth or 72I per ann+ , the *- r+#ed in Solamon +s. CAH that a#tho+(h the +s+r$ #aw has a#read$ 'een s+spended and therefore apparent#$ the parties can stip+#ate an$ interest rate is not tr+e. 0he interest rate a(reed +pon a$ 'e +nconsciona'#e and therefore the *- wi## stri2e down the stip+#ation and the interest wi## 'e the #e(a# rate. 0he *- had str+c2 down interest a'o&e 60I per ann+ . 5e#ow 50I per ann+ , the *- a##owed this interest. 0here is sti## no decision if what is the stat+s if the interest is 'etween 50I to 60I per ann+ Commo/at m )n co odat+ , the o'/ect is o&a'#e or i o&a'#e. :s+a##$, it is non?cons+ a'#e 'eca+se the &er$ thin( 'orrowed sho+#d a#so 'e the &er$ thin( that sho+#d 'e ret+rned. )f it is cons+ a'#e it wi## 'e cons+ ed in accordance with its nat+re. 5+t the #aw pro&ides for exception, if the p+rpose of the co odat+ is not for cons+ ption , exa p#es , for disp#a$ or exhi'it , then there can 'e a &a#id co odat+ o&er a cons+ a'#e ite . 5+t it is non , f+n(i'#e 'eca+se it cannot 'e rep#aced with a si i#ar 2ind. 0he &er$ thin( 'orrowed sho+#d 'e the sa e thin( that sho+#d 'e ret+rned.
8a(e 65
for safe2eepin(, the depositar$ is not s+pposed to +se the thin(. *o if he +ses the thin(, he wi## 'e #ia'#e for the #oss of the thin(. Loan 0here is a specia# 2ind of co odat+ 2nown as precari+ . %recari m , in this 2ind of co odat+ the 'ai#or has the ri(ht to de and for the ret+rn of the thin( at wi## at an$ ti e. Q: hen would there be a precarium? A! 0here wo+#d 'e a precari+ if there was no stip+#ation as to d+ration nor the +se of the thin( +n#ess there is a c+sto . *o no a(ree ent as to period or no a(ree ent as to partic+#ar +se then the 'ai#or wo+#d ha&e the ri(ht to de and the thin( at an$ ti e or the +se of the thin( is ere#$ to#erated. ;ro this r+#e, $o+ sho+#d 'e a'#e to conc#+de that e&en if co adat+ is essentia##$ (rat+ito+s, if there was a period a(reed +pon as a r+#e the 'ai#or sho+#d respect the period. Ae cannot de and for the ret+rn of the thin( /+st 'eca+se there is no pa$ ent. 5+t there are exceptions! 1. %&en if there was a period, he can de and for the ret+rn if there is an +r(ent need on the part of the 'ai#or. 5+t in that scenario, the co adat+ is not extin(+ished, it is on#$ s+spended. After the 'ai#or ha&e +sed the thin(, he sho+#d ret+rn the thin( to the 'ai#ee so the #atter co+#d finish the period. 2. <hen the 'ai#ee co itted an act of in(ratit+de. 0he (ro+nds wi## 'e si i#ar to donation.
safe2eepin(. 5+t if he has the ri(ht to +se, that deposit a$ 'e ca##ed an irre(+#ar deposit, the #i itation of the #aw is that the +se +st not 'e the principa# p+rpose 6the principa# p+rpose sho+#d 'e the safe2eepin(7. Examples! -ar was de#i&ered to $o+ as depositar$. K+n( pwede o (a itin araw araw sa pa(hatid s+ndo sa (a ana2 o, hindi ito deposit, +2han( co odat+ ito 2+n( wa#an( 'a$ad for the +se. 5+t if the de#i&er$ is for safe2eepin( '+t the depositor a##owed $o+ to +se the car for an occasion , that is an irre(+#ar deposit 'eca+se the depositar$ has the ri(ht to +se the thin( with the per ission of the depositor. Another scenario where the depositar$ wo+#d ha&e the ri(ht to +se and therefore the deposit is an irre(+#ar deposit ? when the preser&ation of the thin( deposited de#i&ered to depositar$ re1+ires the +se of the thin( #i2e +sin( the car to preser&e it. B!: #he parties in a contract of loan of money agreed that the yearly interest rate is 148 and it can be increased if there is a law that would authoriCe the increase of interest rates. .uppose the lender would increase the rate by *8 to be paid by the borrower without a law authoriCing such increase. ould the lender$s action be Kust and valid? hat is the remedy of the borrower? *A! "ot &a#id 'eca+se '$ the a(ree ent of the parties, the increase in the rate wi## on#$ 'e ade if there is a #aw that wo+#d a+thori=e the increase. .- -ase: 0here can 'e no &a#id increase witho+t a #aw a+thori=in( it '+t in this case the 5an(2o *entra# iss+ed a reso#+tion increasin( the axi + rate. 0he *- said the 'an2s cannot increase the interest rates 'eca+se a 9onetar$ 5oard Reso#+tion is not the sa e as a #aw. )t a$ ha&e the effect of a #aw '+t that is not a #aw and therefore that co+#d not 'e a 'asis.
.e&osit Q: Are chec0ing accounts, savings account, dollar accounts irregular deposits? A! "o. 0he$ are not deposits +nder the #aw 'eca+se the$ are (o&erned '$ the r+#es on +t++ 6#oan7. 0he 'an2 is the de'tor. *- ca##ed these deposits Bin the nat+re of irre(+#ar depositsC '+t not irre(+#ar deposits 'eca+se the 'an2s +se the one$ that is wh$ it is in the nat+re of irre(+#ar deposits. 2rre7 lar .e&osits , these are deposits where the depositar$ has the ri(ht to +se the thin( 'eca+se nor a##$ in an ordinar$ deposit, the depositar$ has no ri(ht to +se 'eca+se the p+rpose is
-redit 0ransaction notes is inco p#ete. Refer to $o+r coda#.
CR4.20 0RANSAC02ONS 8 iz 1. 4eposit is a rea# contract , 0R:% 2. A contract of deposit is not co&ered '$ the stat+te of fra+ds , ;AL*% 3. )f deposit has 'een ade '$ capacitated person, if perfected with another who is not a depositor sha## on#$ ha&e an action to reco&er the thin( deposited whi#e it is sti## in the possession of the depositar$ ? ;AL*% 4. 4epositar$ is o'#i(ed to 2eep the thin( safe#$ and to ret+rn it to the depositor , ;AL*%
8a(e 66 ;a$e 9arie -. 9artine= , -hato -a'i(as , >essica A. Lope= , 4ian Rosapapan "o&e 'er 2008
5. )f deposit with a third person is a##owed, the depositar$ sha## not 'e #ia'#e for the #oss , ;AL*% 6. 0he depositar$ cannot a2e +se of the thin( deposited witho+t the express per ission of the depositor , ;AL*% 7. <hen depositar$ has per ission to +se the thin( deposited the contract #oses the concept of deposit and 'eco es a #oan ? ;AL*% 8. 4epositar$ cannot de and that the depositor pro&e his ownership of the thin( deposited , 0R:% 9. 0he thin( deposited +st 'e ret+rned to the depositor e&en tho+(h there is a specified period or ti e for s+ch , ;AL*% 10. 0he deposit of effects ade '$ tra&e#ers of inns is a necessar$ deposit , 0R:% 11. -ontracts of #oan and deposit are essentia##$ (rat+ito+s , ;AL*% 12. 0he 'ai#or in co odat+ ac1+ires the +se of the thin( #oaned witho+t co pensation '+t not the fr+its, if there is a stip+#ation to the contrar$, the contract ceases to 'e co odat+ 13. 5ai#ee sha## not 'e #ia'#e for #oss of thin( if it sho+#d 'e thro+(h fort+ito+s e&ent. ,;AL*% 14. A contract of deposit is a consens+a# contract, th+s xxx to de#i&er arise. , ;AL*% 15. An esca#ation c#a+se is &oid if there is no de?esca#ation c#a+se , ;AL*% 6tr+e on#$ if #oans in 'an2s7 16. <hi#e a s+ret$ +nderta2es to pa$ if the principa# does not pa$, the (+arantor on#$ 'inds hi se#f to pa$ if the principa# cannot pa$. 0he one is the ins+rer of the de't, the other is the ins+rer of the so#&enc$ of the de'tor. , 0R:% 17. N+arant$ is essentia##$ (rat+ito+s. , ;AL*% 18. A (+arant$ a$ 'e constit+ted to (+arant$ the perfor ance of a &oida'#e contract. ? 0R:% 19. A (+arant$ a$ a#so 'e (i&en as sec+rit$ for f+t+re de'ts, the a o+nt of which is not $et 2nown. , 0R:% 20. 0he (+arantor cannot 'e co pe##ed to pa$ the credit +n#ess the #atter has exha+sted a## the properties of the de'tor and has resorted to a## the #e(a# re edies a(ainst the de'tor. ? ;AL*%
8a(e 67

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Civ2 (Sale, Lease, Agency Notes)

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CIVIL LAW REVIEW II

a$ 'e a donation if there is no

pa$ ent wi## a#so 'e 'e +nenforcea'#e.

ade +pon de#i&er$, it wo+#d

perfected. Nan+n din sa co sa deposit.

-redit 0ransaction notes is inco p#ete. Refer to $o+r coda#.

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