OBLICON Lecture Notes Karichi E.

Santos | UP Law B2012

Page 1 of 52

Caveat Lector.
15 January 2009
It is well within the right of the seller not to deliver, both of them in compensation morae. When they agree to
consummate or extinguish fully execute the contract today. But since the buyer is not ready to pay the purchase price,
I cannot deliver the racehorse. Buyer only has half the amount, but I cannot give you half my horse!
If buyer not ready to pay the purchase price, seller not obligated to deliver the thing an age old saying or DEFENSE
exceptio non adempleti contractus, wherein one of the parties must perform his prestation to make the other one incur
in delay OR the other one is the seller can choose, whether resolve. For the seller, it is an actual breach. Grant the
buyer a period
However, there are still two choices. Not merely rescission but also specific performance. Unless he performs,
the other party does not incur in delay.

OBLIGATION WITH A PERIOD

PERIOD future event that will certainly happen. Though not exactly know when it will come
2 kinds of period
1. Definite or Indefinite
2. Suspensive (ex die from the day)
(already created but not yet due and demandable til the arrival of day certain, but normally, demand is
needed) **in reciprocal, all you have to do is to perform prestation** or
Resolutory (in diem - up to a day certain)
Already exists but will be extinguished upon the arrival of the day certain
**SO MANY DIES! SINE DIE last session day of the congress! They stop the clock by 11:59 PM, continue deliberating
until the budget is done. Then GMA can bypass operation. He should be a client of our student who is an organ
transplant surgeon (we have that). Why does he want to learn the law and suffer through? He is here. He has to pass
through a hour test with me first. Or in the words of Prof. Morales tete a tete. The only professor in this college who
can speak French. BTW, youre gonna meet another French term somewhere in the syllabus.
What? You didnt finish legislative branch in Consti1? The oldies teach you law although they come late hehe. Inertia is
involved. Especially if you are not ready, drink coffee first. Then the middle of the class, youll have to go out, right? I
havent done that yet. But maybe in the middle of the sem I will hehe.
**Dead Poet society movie Carpe Diem. Carpe is the hand. Use your carpal muscles. If you type all your notes in the
PC in an awkward posture, you get carpal tunnel syndrome.
3. Express and Implied period.
IMPLIED: mentioned in parties intended a period. Like the 3rd paragraph of 1197.
1, 2, 3 PAR: courts will set the period
If suspensive CONDITION: might make the obligation void (if suspense + dependent solely on the will of debtor
aka potestative)
If dependent on the creditor, PERIOD: payable when able whenever the debtor is able to pay, but then
supposing he never wills it, then the creditor can ask the court to fix the period (because its indefinite period)
All provisions Art 1197 refer to indefinite period
IXARA: what if the ability to pay is uncertain? LABITAG: foolish creditor, collect before action for specific
performance prescribes. Most likely the creditor has to make a judicial demand rather than extrajudicial demand.

PHIL SUGAR ESTATE: two stages in dealing with an indefinite period

1.

2.

Make the indefinite period definite e.g. ask for payment, extrajudicial demand
You say youll pay when you have money. Now I see your pockets are bulging and jean is falling because
of coins. You must have money. Please pay.
But these are only coins, these are not enough. These are not enough, Im just a courier
Judicial demand, ask the court to fix the period

No need to file two actions, 2 in 1 so no multiplicity of suits: Ask for two prayer: Docket fees is making the
courts rich, its taxation already but of course, you cannot question their procedures. File an action lets see if you can
win. What was the ruling in Endencia? No way Jose!
1. FIX PERIOD. Recite the obligation thats created, that its due and demandable. With an indefinite period
2. REQUIRE THE DEBTOR TO COMPLY ON FIXED PERIOD. When the day arrives, debtor has to pay, otherwise hell
be liable for damages. Ask for damages. The period has arrived although indefinite.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

SOURCES OF PERIOD
1.
2.

Page 2 of 52

What are the LEGAL periods? Spread in the CC are periods imposed by law like leases of urban land 1682 and
1687 (according to Rory).
JUDICIAL set by the court especially in judicial period.

Problem: if provided for the parties, for whose benefit is it? Presumption is both for the creditor and debtor unless
stipulated that it is given to one of them. Usually given to debtor.
E.g. Contract of loan: there is a period of payment, what benefit does the debtor has.
Benefits of CREDITOR: What about non-interest bearing loans? Safely invested in the hands of the debtor, as
good as the money of the banks as long as debtor is very, very solvent. (Ponce de Leon v Syjuco) If the money
is with him, hell feel so hot. His foot itches to go to the mall and shop. Or wife who has a penchant of
inspecting his wallet. Shopping needs vs shopping wants
The Americans are now learning how to economize. They will probably little less plump. No more supersize me
tendencies. Decline in purchases.
Benefits of DEBTOR: Ample time to raise enough money.
Extension of period to pay is not an implied novation. Because the two obligations are incompatible.
Then the period is both for the benefit of the parties unless expressly stipulated. Usually the period is given in favor of
the debtor if the debtor for example gives promissory note. If the debtor can pay ON or BEFORE the fixed date e.g.
December 31, 2009. He can pay now yes according to the terms of the contract. BUT LOOK. May lose the benefit of the
period and so the obligation becomes due and demandable.
5 circumstances here that the benefit loses the benefit of the period (Art 1198)
Remember Gaite v Fonacier where the collateral has expired and he didnt furnish a new and sufficient. Why should
the insolvent debtor lose the benefit of the period???
1.

Par 3 Art 1198: new security need not be a bond. But it doesnt mean he cant furnish a new one like mortgage,
pledge or debtors own property as long as the value is more than the debt AND acceptable to the creditor.

When the debtor becomes insolvent (liabilities > asset) not exactly totally without properties, only that not
enough to cover all his liabilities? Why should he lose the benefit of the period?
Supposing you have 5 creditors with pure obligation, only one with a period. Why do you have to bring them into equal
footing? All the four can file action for collection, join the queue for payment whereas the one due 2 years later (e.g.
the obligation not due until 2010) he cannot make a demand. If we wait for 2 more years, nothing left for him! Too bad.
Four others have been first in line. BUT best of all, if you are creditor, be sure that you have security for your credit.
Whatever happens to the debtor, you can rely on the security alone.
2.

Par 2 Art 1198: Creditor gave debtor suspensive period because he PROMISED to execute mortgage on his house
and lot. Third one, violates any undertaking, in consideration of which he has to appear. You are supposed to do
something. File a registration proceeding for titling of land which he promised to make as collateral, give him
enough period to deliver the absolute deed of sale given on consideration in the meantime, the seller is supposed
to file a registration case for the parcel of land, in the mean time hes given a period (like Romero v CA Paranaque
San Dionisio)

3.

Par 5 Art 1198: Debtor attempts to abscond? Tries to run away and changes residence so you dont know where
he is. He hides, no longer there but you granted him a period, why does he lose the benefit of period if he
attempts to abscond? Shows bad faith and because next time around he might succeed. An expression of the
Bulakenyos: maghanap ka sa tambol ngayon. He hides for more than 10 years from due date, the obligation is
extinguished. While he is still there, you can now make a demand on him. If in turn, you can prove that he is
insolvent.

One of the grounds for attachment or garnishment when the dependant debtor is insolvent then you can ask for
attachment. Do you know what GARNISHMENT is? Garnishings are for salad or viand. :P
Mistake of the payment: Debtor can recover it before the arrival of the period. But he has to go to court if the
creditor refuses. But by the time the judgment is given, the suspensive period has already arrived! Hahahahaha.
For period: Art 1195; Same is true for condition: Art 1188 Par 2
Oh its witching time again!!!

20 January 2009
For whose benefit is the period in an obligation?
INDEFINITE PERIOD usually for example if the stipulation is that the debtor will pay when able or little by little or
as soon as possible
1. Extrajudicial demand first

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

2.

Page 3 of 52

Then judicial demand go to court, file a complaint ask the court to set the period. Make indefinite period a
definite one. At the same complaint, ask in the second prayer (once fixed) pay from the fixed period, if didnt
pay, liable for damages. Because if you ask the creditor to file judicial demand, the prayer is the court should
make the indefinite period a definite one. Once the court sets it, there is no more extension. That is the case
of Phil Sugar Estate. It is instructive.

Claimant (squatters) possessor of the house in the middle of the proposed road. I saw that house when I was a law
student. Bounded by Quezon Ave and two more roads. Eastern part, a house in the middle of the road. About 50
meters from Quezon Ave. (as Quezon Blvd is in Quiapo)
What was the stipulation here, buyer will build the church/convent, seller will build the roads. It was a wooden house of
strong material. You cant just bulldoze that to clear the path, most likely, youll be charged with malicious mischief,
damage to property. It can actually be coercion (who cares?). But you should care because criminal law is one subject
where our graduates are perceived to be weak. UP is strong in political, constitutional and civil law. Not strong in
taxation and mercantile. In fact, the graduating class is worried about those subjects.
Its not a condition. Its a matter of when the squatters will be evicted from the property. Not IF but WHEN. But the
plaintiff here does not ask for specific performance, they claim that they are (Araneta) in default because the period
was an indefinite one. The value of this is that the creditor cannot ask for specific performance just yet in an obligation
subject to indefinite period. Its a TWO STAGE PROCESS:
1. Ask the court to fix a period (make indef a def)
2. Ask for specific performance or payment when it arrives
**Usually, they do this in one complaint, as a second prayer to avoid having to file another case.
PONCE DE LEON
- Case of the Japanese war note. One year from 1948. At the time the contract was entered into, there was already
radioactivity (clandestine radio) that McArthur is on his way to recover the Phil from the Japanese. Bash the Japanese
by showing the Pearl Harbor and WW2 footages. If they want coup, they show the movie Kudeta, harbingers of
multinational guys. They are not immune to being manipulated. The public can be manipulated by media. You should
know that you have been manipulated and indoctrinated in fact. Anyway, out of the money that was loaned by Ponce
de Leon, paid of the PNB for the purchase price of sugarcane land. It was in Negros Occidental. They never thought
there will be competition of sugar cane in honey sugar beets and sugar maple. Lo and behold, Americans find a way of
extracting sugar from corn. Right! From corn! There is sugar there! Of course now, there are the artificial sweeteners.
They can also extract sweetness from a plant. Do you know that vanilla comes from vanillin an orchid which is grown in
Indonesia. Its the vanilla orchid looks like the Sanggumay! Dianne, iniistalk ka talaga! LOLZZ. The original color of
waling waling is purple and a little bit of light purple with splotches. There is a white waling waling. What is the
cheapest candy now? Before it was one centavo in my youth of course. Hahahahaha! We have De Lemon. Manilenos
dont know that because Halls and Max killed them. Especially the branch manager of Max candies went to school
here. Youll never know where you come from. Only the college secretary will know. No more interview. Miriam keeps
on remembering her son every death anniversary and charge UP. Committed suicide after failing 2 subjects in ALS.
Doctrine of proximate cause and supervening event.
Who interviewed the son of Miriam? Oh well not me. I was out of the committee. There was Florin Hilbay, Barry,
Morales, Mam Chit, Mam Beth. If I were there, I will let him in because the parents will complain and they actually did.
How much is your annual gross family income? P300,000 kamooon! Sports promoter, cockfighting. Whats the next
logical question? Does he bet in the cockfighting he promotes? Yes Sir. How much? About 5,000. Last minute: Asked
about his reaction to what people are saying about his mother? How would you react thats the question that your
mother is Brenda?
What are your hobbies? Weightlifting. When the panel sees something unusual they will pounce on it. They ask him
how it is done, what are the tricks. Bench press, demonstrate. Bend and snap??? When he returned home, the mother
was a guidance counselor, the father was alumnus. Inane questions. If your hobby is singing you better be able to sing.
Will you give us a sample. One applicant graduated from National Arts Center, specialization was ballet and dance. Will
you do a pirouette? In other words, dont place anything there that is unusual, make it a humdrum. Interviewers have
very little patience or not listening for off tangent answers. But then what, never mind that. You re problem is how to
pass stage two of the sophie course without soft what?
(Going back now to Ponce) Ponce spouses tried to pay earlier but the creditor refused. Youre supposed to pay one
year after: suspensive period in favor of the creditor! Well, at least in his mind, he was thinking that by the time
Americans return, the govt will be reinstalled thats why he inserted that in the loan contract. Pay me the victory
peso /notes= Commonwealth peso. Reprint of Commonweath emblazed across in a diagonal of the reverse side of the
bill the word victory hence the name. thats the money that creditor was claiming. Anyway, its not unjust to Ponce
de Leon because he was able to pay PNB the loan using the money he loaned from Syjuco.
BUCE is off tangent. Where is the presumption there? If you are the counsel, make the period of the lease agreed upon
already. Why not 25 years na kasi kagad??

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 4 of 52

No indication how much the rental will be. No provision for the increase of the rental.
BP 26 House Rental Law. But during Martial Law, there was already a statute which prohibited the ejectment of lessees
on the ground mentioned in the law on lease. Lease rentals were not allowed to be increased. Supposedly stay put
until passage of this law which allowed an annual increase up to a certain percentage. 20% then 15% then 10%.
Subsequent house rental extension and extended so that was terminated last year, Im not sure if it is extension was
passed. Under this law, there were specific ground for ejectment of lessees Art. 1673 CC. If the lessor or any of the
children needs the residential lot or house, then they may evict. So anyway, if the stipulation is merely renewable for
another 10 years, but anyway, to be safe about it. You better indicate there whose option it is. Remember the principle
of mutuality of contracts which is always mentioned. Cannot be that only upon the will of the lessee that the lease
contract will be renewed. Already pre-agreed. There is a distinctin in the case between renewal of a lease and
extension of the lease. Two articles I pointed out to you about the implied renewal of the lease, not for the original
period but depending on the urban land/house dependent how the rental payment is made. Annual, semiannually,
monthly or daily.
TACITA RECONDUCCION once the lessor continues to accept the lease rental paid by the lessee, it will be deemed
exempted not for the original period but only monthly. Should at least have gone on for at least a year or more.
Then there can be a month-to-month lease. If he wants to terminate the lease, he can notify the lessee. Notice to
vacate that will allow the lessor to file action for ejectment or unlawful detainer. Thats the so called tacita
reconduccion. Now, its there in 1670. If its a rural land or urban land. Agricultural land, time to elapse from planting
to harvest because there are certain crops harvested earlier than 1 year. There are products whose gestation period is
more than a year like probably pineapple. Thats why Dole and Del Monte spray something to flower earlier. Import
from Brazil. Do you know that? Its not from Hawaii. Its just the variety was propagated by castle and crook
something. Its the cause of Hawaii being now in the hands of Whiteman rather than Polynesians. Of course.
Two stage process. This obligation with an indefinite period. Make the indefinite period indefinite. Terminated anytime.
Then give notice to vacate.

OKAY, LETS GO TO ALTERNATIVE OBLIGATIONS

ALTERNATIVE OBLIGATIONS
How many prestations are there? The debtor is obliged only.
Conjunctive = all the multiple prestations must be performed.
Alternative = not all but only one or some and usually the presumption is that debtor must perform only one or
some, then the presumption is that it is disjunctive, multiple obligation.
Facultative = only one thing is due, but debtor reserved the right to substitute it another
ABSENT INDICATION THAT it is facultative, the presumption is that it is alternative. Creditor was at a
disadvantage. The debtor will choose the one with lesser value. Most likely the relative value of this is equal if it is one
out of 5. Need not be for the sum of money. There must be alternative prestations might be pay a sum of money, 2)
prestation a specific thing like a specific horse, 3) for the delivery of three generic horses 4) do a service 5) not to do.
Relative values will all be the same otherwise. Never mind if they are different.
Whereas for facultative, what is the distinction: substitution.
ALTERNATIVE generally to the debtor, expressly to the creditor
FACULTATIVE choice is solely given to the debtor, cannot be given to the creditor. Whatever happens to the principal, if
the specific subject matter of the principal prestation (without fault, fortuitous event) = Extinguished, no need to
deliver the substitute.

21 January 2009
Review of alternative obligations.
Since the choices were narrowed by the debtor through his fault, creditor was not given the opportunity full panoply of
choice, it ought to be that debtor liable. Because of literal reading of Number 2.
Can the debtor make the choice prior to the due date?
Substituted performance when debtor doesnt want to make the choice, creditor can ask the court for a third
party e.g. clerk of court or the sheriff or any other knowledgeable third person to choose.
Chis question: The provisions talk about the act of choosing, but not the making of the options. How the mutuality
of contracts come into play in alternative obligations? By that I mean is the debtor given complete freedom to provide
the options or are the options subject to the approval of the creditor? Is it also possible to give an open ended
alternative which for example says any remedy which may be necessary? Is there such a thing as potestative
alternative obligations?
Hindi nasagot yung tanong ko. Ang layo ng sagot niya huhuhu.
Abutendi (sp?) the right to abnormal use, to consume the property

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 5 of 52

Some real right are less than this, right to use and enjoy and possess the property like the right of a lessee.
Personal rt depending on whether or not the lease contract recorded in the registry or at least in the eyes of some, a
quasi real right. Considered a real right although some says its not. When recorded, bounds the whole world. They will
have to recognize the right of the creditor, cannot dispossess of the lessee during the period of the lease, if lessor
forces lessee out, latter can file a forcible entry in the property or a replevin because he has a priority of right.
In any legal relation, there is right and obligation. You cannot have right without. Two of us will be younger and older.
Professor Sison looks young! There is yying. Yang ying the spelling is w young as in immature and ying about 20 yang
yangs yammie? Im the chi. 40 of you, the chi energy is young. Basta tinira niya si Tito Obet. Take up photograph! When
you graduate! (LOL) In December, the class of Prof. Santos, reunion in the house there in Fairview, one was so skinny.
Ar you really this??? Look at her now, she is aaah ahahaha.. she has already power. Shes the Secgen of HR. Look at
that. You dont she is. Secretary of the Senate (administrative power) You think Im illogical ha? Thats the reason why
when the silver jubilarian come home, last time, when we were around them, we look as old as they are especially prof
sison. He looks perfectly cherubic. From the neck up!!! =)))))))))) Down here, like a hippo. But remember, I only
do this to my bestfriends. At least your laughter will make you younger by one day. OBLICON and PROPERTY are
actually interrelated. Arising from the contract is a property right. It has value. The right of a mortgage creditor, loan +
mortgage. What happened in the US? Sold in a secondary market as a bunch of credits, mortgage rights of a bank,
sold to Funny May or Freddie Mack. Or in the case of Sen. Villar, when he develops subdivision, he started with the bird
cages, small lots what we call the bulldogs and pre-sold then sold the project/houses and lots then because of its
contract, it turns around and all conditional deeds of sale/absolute deed of sale with a mortgage, went to National
Home Mortgage. Secondary market for mortgages already. He got money already, if the homeowners do not religiously
pay, then its up to HMF to foreclose it, has nothing to do about it because he is already paid.
Turns around again and then high end market. Developments in Maharlika Road, majority of the lands there are owned
by family of Villar. Thats conjugal probably, inheritance of his wife. Wealthier is the wife, Aguilar isnt it. Contentious
intention. Somebody blew the whistle, now theres controversy, my point is this credit, belong to the creditor are all
property rights, worth money and can be traded in the same way that options to buy wherein the option can be sold
unless the obligation arising from the contract is by its terms/law/nature is unassignable. All credits are assignable as a
general proposition except when there is stipulation/law/nature of obligation. Certain personal obligations can be
assigned.
Has to be ascertainable as to what the object of the contract; need not be pinpointed; can be delimited generic things.
There should be no new agreement as to what the void or technically inexistent.

JOINT AND SOLIDARY OBLIGATION

The focus here is not the number of prestations but the number of multiple creditors/debtors (multiple parties).
If only one, it is individual.
Multiply parties, if there are multiple debtors and creditors, the joint & solidary nature, among the 2 or more what is
their relationship inter se especially in terms of liability, what kind of tie binds the multiple debtors. Of course, they are
all tied up to one another by virtue of that deficient cause.
Since there are 5 debtors and 3 creditors, how does each individual deal with each other? Whats the effect, thats the
idea/notion behind the rules on joint and solidary obligation. There cannot be joint obli when there is one to one
creditor and/or debtor.
Supposing there are 3 C and 5 D. Of course theres a link between the two!
C1
C2
C3

D1
D2
D3
D4
D5

to give, to o, to not to do.

Can he require the performance of the entire obligation. The tie that binds is either joint or solidary.
JOINT thin plastic rope/string
SOLIDARY solid steel cable
Now in the absence of any indication in the multiple parties, the tie is JOINT. (presumption)
Only SOLIDARY IF expressly stipulated, law and by nature (I dare you to find example for the last one, there is none!)
Does Tolentino give example? Joint tortfeasors are automatically solidary. Ultra bonus mores will be Art. 19! Moral
obligation is outside the ambit of civil law. Obligation is created by what? By law or quasi-delict. Tort is broader than
quasi-delict? Am I right? You dont know. Yes, I am right. Art 2176 acts and omissions done through negligence, there
are this so called intentional torts because tort is actually an English/common law concept. Ours is quasi-delict. But
look quasi-delict, as youve seen in Barredo case, it encompasses not only done through negligence but
broadened to include negligence even if there is a contract. Contract can also create quasi-delict obligation in
addition to the breach of contract. The presumption is unless the contract or obligation stipulates that multiple parties
bound solidarily, they are bound jointly. The problem is the law that requires solidarily are scattered. Theres no one

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 6 of 52

article that lists them in one article. So youll have to look for provisions which provide for solidarity. The most famous
of which is the joint tortfeasors Art 2194
OTHER SOLIDARITY OBLIGATIONS CREATED BY/PROVIDED FOR BY LAW
1. Joint officious management, two or more joint managers are liable solidarily. Art 2146
2. Joint payees in solutio indebiti, payment not due Art 2157
3. Two or more borrowers, commodatum Art 1945
2 ladies borrow a horse, have you ever heard that deity a lady who borrowed a horse?) it says here, the deity. I had a
pony. Its about the horse again huh! Whose name was Dapple Gray, I rent him to a lady to ride a mile away. She
whipped him, she lashed him, she rolled him through the mire. I would not lend my pony now for all the ladys ire. She
maltreated the animal! Pity my poor Dapple Grey! :D Prolly the pony was a Shetland pony. See when Im in the mood,
youll have a nice session. Shetland Islands in Northern British Isles, its windy there. The pony is sturdy and rugged.
The horse is less than 14 hands, then its a pony. The hand is an American hand, not your hand! 14 x 4 inches. 56! So
56 in is the ht of the horse. Below that, it is a pony. Higher than that, its a real horse! So our horses here are veritable
Shetland ponies. They are nice looking. Dapple grey, spots of black there. And its ridden rocky and barren land. Thats
the usual gift for little girls and boys. You want one? Theres one in Paradizoo. They also have llamas there! Yeah! The
cousin of the camel except that they are from the Andes, its the Peruvian llama. The beast of burden of the Andes,
alfaca. There are three of them, theres even the wool source for weaving to clothing. They are also wilder, the
guanaco. Of course, there is the pentunia (?) which hide is used for coats.
ANYWAY, back to this.
4. Two principals and an agent Art 1915
5. Another one in RPC civil liability, Art 110 civil liability (co-principals, co-accomplices, co-accessories after the
fact)
Most of the solidary obligations are provided for in the contracts
Usually what are the words used. Read Jaucian v Querol (1918) because there is a nice lecture there about distinction
between joint and solidary obligation written by an American.
Divided to as many cred/deb as there are. In other words, each portion debtor responsible only for his respective
share, the other creditors has their own proportionate share in the credit. What they own is divided into as many
debtors as there are. Responsible only for his share, not legally responsible for the share of the others.
EXCEPT for joint co-debtor may want to pay the proportionate share of another co-debtor, it is potestative/facultative
(means dependent on the will) on the part of the assumer. Legally speaking, cannot be required.
Supposing the obli is for the payment of P150B. The tongpats being asked as such. the contract is such, the tongpats
is sizeable THATS WHY THEY QUARREL. Most whistle blowers are the one charged. So dont whistle unless you want
to go to jail. Need not be equally proportional, the sharing can be in different proportion, subject to different terms and
conditions. One may be pure, the other one subject to a suspensive/resolutory period/condition (whatever
combination, depends on the agreement of the party)
IF C1 demands from D1, how much D1 can be required to pay? Silent so joint!
P30B or P10B
C1 can collect P50B, but cannot collect on only one debtor. He must get it from all the debtors. He can only claim for
his part and the corresponding portion of the debtors.

SHORTCUT: #debtors x #creditors = divisor total amount of obligation

as long as JOINTLY LIABLE on both sides.
Prolly your answer would be correct if solidary creditor and joint debtor (different combination). Normally, among joint
debtors, though they are bound together by thin piece of twine (not solid) each one owns a proportionate part of debt
or credit in equal portions if not indicated parts. The others are bound in different proportions. Depending on their
agreement subject to different terms and conditions. If the share of one solidary debtor not yet due and demandable,
you cannot collect it. Solidary is more complicated. The shortcut of considering the relationship inter se of solidary is
legal relationship existing among solidary codebtors (solidary both sides = mixed solidarity)
KINDS
1.
2.
3.

OF SOLIDARITY:
passive (debtors)
active (creditor)
mixed

Relationship among SOLIDARY CO-CREDITORS: mutual agency exercise acts for /on behalf of your principal
implication: can collect the entire credit. If collects credit, make accounting of the collection to give respective shares

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 7 of 52

Relationship among SOLIDARY CO-DEBTORS: no longer concerned with what c1 does with his payment. Obligation
is extinguished. Mutual guarantee not only bound to pay his share in 150B but also the portion of his other comakers.
Among themselves, the liability is normally if C1 makes a demand on D1 (solidary on both sides), he can get P150B in
one go! :D My Pacific Plans collapse so I have to sell it. Says who AY owners of pacific plans, now pronounced AWAY
I am very creative if in the mood.
Find something solidarity in nature and get extra credit.
C1 collects from D1, D1 paid only P30B, the debtors become in default. When C1 collects P120B + damages from D2,
obligation is extinguished. What is D1s basis for collecting from his co-debtors? Art 1217 Par 2 what is the source of
the obligation? Law! Because its in the CC! :P *Carcar and Chi

27 January 2009
Jaucian v Querol
Estate will now become a juridical person, entire corpus/all his properties taken together as one universal property
and it is the decedent will now be represented by.
Youll have to prove the conformity with all the formal requisites of the last will and testament although of course the
person can execute a holographic will (not a hologram) written in the handwriting of the decedent, writes his own last
will and testament, sign it and dates it can be probated, most likely only one copy unless he has carbon copy of his
own holographic will. No need for notarization, attestation witnesses.
Filed more than one year later, settlement of the estate of the decedent,
Sorrowful mystery cause you much sorrow, especially in grades.
So never mind or at least in so many cases you have to read. But mainly the former.
Whoever teaches it makes it a sorrowful mystery (emphasis on the mystery) sometimes glorious of course.
JOINT
Counterpart in Roman Law coreal obligation
Except that you must sue all of the joint debtors in common law, can be made to pay the whole obligation. All of them
must be sued, in one suit.
Joint co-creditors and joint co-debtors
No mutual agency or mutual guarantee in joint obligation of common law
SOLIDARY
No need to sue all the solidary debtors.
Art 1212 anyone can do what is beneficial but not prejudicial
Together alone, bound as joint debtors but alone as to liability
Whats the meaning of several?
Exact name of solidary obligation joint (common law meaning) and several (can be sued severally)
Often quoted for names given to joint and several names of civil law and solidary obligation.
RFC old case, 95 Phil 538
Read very carefully, the one Ill use for the defenses available is actually INCHAUSTI.
Jose Yulo, bat trappings and urine, batman minions. That white room, its now nice. They have renovated it. The one in
the third floor other end. When they renovated that room. The entire 3 rd floor used to be the law library. There used to
be just one bldg here until 1935. Its this ghost ridden bldg, try coming here at 12 midnight. There is one professor who
I think is a ghostbuster, because he is an atheist. Who else but the flowery one, Florin.
Labitag thinks the lawyers of Inchausti made a mistake. Did you see their mistake? Oh okay. Somebody should decide,
Ms. Alejandre.
Give me the facts,
Sugar is one of the tallest grass. The top part, in furrows, lying down. They burrowed during the lifetime. Iloilo and
Negros Occidental is merely a colony of Iloilo. Thats where the far flung areas are. One of the siblings is in Iloilo so he
wasnt able to sign the document. 6 signed. Aah yes, something wrong. All the bad genes of the father went to the
mentally incompetent Jr. He was Brenda, no, Brendo.
Inchausti can collect the obligation of Mariano? Yes he can, but what is the legal reason? Gregorio and the other
siblings, promised to get the signature of Mariano which they failed to do, what is the effect of that on the obligation? If
you get it, its a past lesson. If you get it, the siblings lose the benefit of the period because they did not comply with
the undertaking they promised to do. This Inchausti all of the cases here, is the best teaching tool for solidary
obligations and novation as well. And look at that, its an old case (1914) penned by CJ Arellano. See?! A CJ who was
trained by the Spaniards and he didnt not go to the UP. Most likely a product of the Dominican, prolly he was a
graduate of the Pontifical University. And then look at his English, trained in Spanish. So thats why youll see
ponencias in Spanish in the PhilRep. Very good clerk.

Page 8 of 52

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Anyway, that portion, lets go now to whether the entire 250,000 is the amount that Gregorio has solidary required to
pay or not. Of course the ruling here is that the defense upon whom a demand is made. How many defenses can a
solidary co-debtor interpose if demand is made on him to pay? Art 1222 gives 4 defenses.
Nuninuniuniununinuninuninuninuni
DEFENSES If all the solidary obligor each one has a legal effect in his capacity or their consent is voidable. The
solidary
1. Contract required by the statute of fraud, oral contract, Art 1492 CC, theres something wrong in the entire
contract. Obligation is either voidable, unenforceable or void.
2. His consent is defective e.g. when I signed this contact, I was still a minor, his consent was vitiated. Wait a
minute, I cant be made to pay this OR signed it during a lunatic spell. Can I be made to pay shares of others?
NO
3. 3rd and 4th are PARTIAL DEFENSES: Each solidary co-debtors may bind himself in different proportions subject
to certain terms and conditions, suspensive or resolutory. Especially the suspensive ones, therefore what? The
share of the particular co-debtor was subject to a suspensive period, supposed to pay Dec 9 2009, the others
debt was due now. Whose share is not yet due, can he be made to pay? YES, but minus his due. He can be
made to pay for the debt of the other two. Of course, because he guaranteed the share of two others which are
already due. That means the defense that the obligation is not yet due is available to the solidary co-debtor
upon whom the demand is made.
4. 4th is opposite of that. Share of the solidary co-debtor (D1) is already due, but the other two are not yet due.
Can he be made to pay the other two? NO, unless he wants to. Can only be made to pay for my share.
Interpose to the court that the share of the other two are not yet due. He can interpose this as a partial
defense.
C

D1
D2
D3

pure
suspensive period
suspensive condition

Can only be made to pay the share of D1. If the lawyer is not adroit or nimble mentally, thats what you should
cultivate, then what, he does not know these defenses, hell be required to pay all these things. Get that? The TOTAL
DEFENSES: look for:
1. Vices of consent
2. Causes of action has prescribed
3. Entire obligation is void
4. Voidable at the instance of all of them, if just one, you can use the defense
C

D1
D2
D3

no legal capacity (either minor or insane)

can say that at the time he signed the contract,

He was a minor hence cannot be made to pay his share, annul the contract relative to the share of D1.
If C made a demand on D1 who had no legal capacity, latter can ask for the annulment of the contract relative to his
share. Entire contract be annulled as to him. Cannot be made to pay anything at all. But if demand is made on D3, he
can interpose the defense.
There was a mistake made by the lawyers in the Gregorio could have been made to pay one half of 253000 the
amount of the obligation in the 1st promissory note. There were two PN signed by six siblings solidarily. Then 2 nd PN, as
to the three siblings (Carmen, Francisco and Manuel). In the eyes of the creditor, good looking, they were more benign
to them, liked them but not Gregorio. If they liked everyone, Inchausti prolly didnt like the eldest Gregorio. Thats why
the demand was made on him alone, he was the only one being sued instead of everyone.
Gregorio: You agreed to reduce it. The shares of Manuel, Carmen and Francisco, was not yet due when you made
judicial demand on me, I shouldnt be made to pay the share of those three.
Dgregorio

Inchausti

Dconcepcion
Dpedro
Dcarmen
Dfrancisco
Dmanuel

I cannot be made to pay P253000 because you

reduced it to P225000, 10% interest but 2nd PN and the
number of installments increased to 8, interest even
reduced to 6% - June 30, 1910
--l
--l
--l

2nd PN P225000
8 installments at 6%

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 9 of 52

Inchausti did not intend to benefit Gregorio and two others, but something went wrong because Gregorio was able to
use the benefits in the 2nd PN. Yes, creditor has the power to limit the liberality of his conditions. He can give benefits
to Carmen, Francisco and Manuel but not Gregorio.
Novation, remission is technically a gratuitous donation (until accepted in proper form)
Inchaustis lawyers made a mistake. Even Justice Arellano pointed it out. So the point here is, Gregorio made use of the
partial remission of the entire of obligation. of the amount is not yet due at the time of the judicial demand, the
other half though is already due. 2nd PN novated the first one? No. Because it didnt not expressly say there that they
actually novated. It was only implied, but there was also no implied novation either. Look at the reason, no
incompatibility between the first one and old one.
Gregorio should have paid the P253445, never mind the reimbursement later. Could not be made to pay yet.
The reimbursement should be there. These three, they wont share because their obligation is not yet due, they were
the only favored ones. Look at that statement of CJ Arellano as to the portion that says somewhere in the top of the
page lawyers of Inchausti admitted in their pleadings that
Contrary to intention of Inchausti, he didnt want Gregorio to benefit. He can favor one solidary debtor over one. Make
the demand on just one, zero in on him, reimbursement will come in later anyway, because he wants all of them to be
in default. Is there something wrong with that? No. In other words, a creditor knowing that D1 cannot pay, suffering
from financial distress (e.g. recently declared redundant dismissed from work, we might soon become redundant
too. The oldies, it takes them 5 years, to have a thorough knowledge of obligation or for that matter property. Enough
for us to stay on. The new faculties are here. Takes you 5 years to at least be very knowledgeable about the subject
you are teaching. 5 if you are fast, and then what, 1st day, the students will test your mental right away. UP Law being
UP Law students, test the waters right away) whereas before, were like cozy sheep even our shepherd do not know
where to guide us. They learn by themselves, times have change, roles are reversed. You can dictate on your faculty,
you will. Until you want to give your grades also. Or something like Prof Fernandez, you know law study is a power
situation. Its a power situation that youre studying about. All about this is economic power. The other is political
power. Especially corpo law, political law version of commercial law.
Had they not admitted in the pleadings, they alleged. The reason here is
1. No novation. 2nd PN does not novate. Both PN exists
2. Reduction only in favor of the three but Gregorio was able to use the one reserved for the 3. (inure to benefit of
the co-debtor, unless the creditor intended to limit the application)
Indian giver, technically the remission of donation is not perfected, suffer loss of face and sometimes if you dont have
epidermis of a pachyderms, you wont do it. Sometimes, thats all thats left, face. No money but you have face. The
ones wholl complain:
1. Creditors
2. Run after the solidary creditor who made the remission, because you can be liberal about your share but why
did you donate our share. Though legally speaking, it was valid, but relatively to our share, you have no right
to condone it. Therefore you pay us our share, but then thats no longer the same obligation.
3. So technically, the solidary creditor, will not complain on the debtor. The obligation has been condoned.
Therefore we didnt pay you anymore except for the portion there before 1219 before the remission is effected.
4. The others who will complain will be other creditors of the creditor who made the remission. If he becomes
insolvent. Meaning what? They can file accion pauliana write it down, because some of this are not ex
cathedra (infallibility of the Pope)
a. Very few of them will complain
b. The ones who will complain will be the heirs of the solidary creditor who made the total remission.
Meaning what? He (because remission is donation) donated much more than what he could lawfully
donate by law. You can be liberal about the free estate but not your legitime (of your heirs). They can
file accion pauliana, heirs as well as creditors of the estate of the decedent relative to their legitime.
Remember this because 2 years from now, youll be confronted with the mysteries of succession. In
other words, everything is interconnected. Only that you are being taught in modules (book 1, book 4)
What is the least partial remission? Partial remission instead of 15, you just reduce it to ten or next to that would
be remission of share of one of the solidary co-debtor (E.g. D5)
The trouble there is that there is a tie that binds them; remits partially.
If he eventually marries the daughter, shell be the sole heir, if D5 not legally savvy (if he is, hell insist on pre-nups
and legal separation of property). Hes banking on ACP or at least D5 will give heirloom, DPN worth 50 milliion to his
daughter. If only the share of D5 is remitted, supposing C2 demands on D4 who shall pay 12M.
If youre recipient of partial remission, make sure that the solidary tie is also broken. Unless that the remission includes
the solidary tie, the solidary debtor is still solidarily bound.
De minimis 00 ammunition of the shotgun, double x actually. Meaning there are 17 pellets caliber. 9 of them if all 9 will
scatter as you can see in cowboy movies. Double buckshot.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 10 of

52
De minimis is just this one: remit the solidary tie that binds D5 to the other solidary co-debtors. He is only liable for his
share, so jointly liable na lang, cannot be made liable to the share of the others.
(The absolute would be total remission of the entire obligation)
C1
C2
C3

D1
D2
D3
D4
D5 remitted 3M

Sequence of events:
1. C3 can remit the entire 15M, but why will he do this? Entire obligation will be extinguished.
2. C3 instead remitted 3M from D5.
3. When C2 makes demand on
4. Can heirs of C3 complain later? Yes! Because he had 5M share in the obligation (assuming its equally
proportional).
5. Inofficious donation next year you might not hear it from your professor anymore. Im already trying to fill
in and reinforce it if its taken up. But remember you heard it first on DZHP? Radio station before Martial Law
(Herald Philippines, one of the editors was Carlos P. Romulo)
6. More than one half of his estate
7. Creditors of C3 if he becomes insolvent. Donated in fraud of creditors, this can be rescinded through accion
pauliana assuming all the requisites are satisfied.
Only one is nodding because they are contemporaries. Jose Mari Velez. tinira na naman si Tito O hahahaha
Photocopy everything and file it OR sleep on it in the hope that osmosis will apply there. Judge prof in criminal law
and CivPro, you think Ms. Avena was a terror. Judge Artemio Solidum, he was solidly built, the joke then was , when he
called you, pppkt!!!! Boxer or bulldog. True enough, he was terrorizing Jose Mari Velez. 9:00 news primetime. Myrna,
Myrna whats my name? He was so terrorized he forgot his name. hahahahahahaha.
CJ Enrique Fernando: comes in late, and says You, why am I late. I dont know Sir. 5
The answer should be I was called by the President in Malacanang paimpress daw sabi ni Lolo
Why make your class difficult when you can be impossible. But everything changed after Martial Law. Do you know
that? Never even knew if theyll graduate. Until rules were issued.
Why am I telling you this, so youll know something about the way we were. but the standard is still there, we have
to pass that. Certainly higher than other law schools. Cramming and labor, and stress management. Malcolm Howl,
venting through shouting. Removed or open the safety valve or in other words dean abad Santos cracked a joke. Then
you have to laugh. Why didnt you laugh, whats wrong with you.
Red buses JD Lines (?)
Green Luico
White DM
You rely on secondary evidence, meaning, badly written digests. Back to this.
Credit is also property though intangible, youll have to collect it first before it becomes money.
Females are tigresses fiercer ones, males are lions
The little boy who gave ice cream to his future mother in law, because hes cottoning up to the mother-in-law. This too
is forward planning. Causa is liberality or generosity but can be rescinded if made in fraud of creditors or inofficious.
What should be the modus vivendi or Big Birds chorva, communication. Hey guys, SOS! I only have 3M come up with
your own 3M share too! Dont dillydally over your contribution, youll all be in default and liable for damages. Oh look,
were now in default.
Its not yet 4 no, 15 more minutes of fun time, except in the next class, I only run out of steam and patience. Only 2 or
3 read the cases. All of them appear hypnotized. Its good for a class also to react. Dohep is the shepherd who fetches
me. See, if Im in the mood, the similes are fast and furious. Thats why when I fly over there, you follow and ask where
I am.
Nessa: Yes, you can favor one but not the other. One can be joint and the other solidary. The whole includes the part.
Maybe Fregorio is guilty of a sin, which is Samurai warlord, the shogun, Rosemarie Clooney? Singer actress, big name
in the 50s? Hahahaha
JOINT INDIVISIBLE DEBTORS their tie is joint but the performance is indivisible
This kind of word is contribution, so that they together can deliver and perform the obligation. Usual example is to
assemble a jeepney among three different specialist. Mechanic, welder and upholsterer or car painter. UP to them to

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 11 of

52
divide this among themselves, what you dont realize is that the joint obligation here is joint indivisible obligation?
Ponder on that and see if its the gem (you dont understand me other) In between joint and solidary.

29 January 2009
Rescission must return to status quo, return whatever the creditor has advanced to the joint debtors. Sample is
mechanic, welder and upholsterer for the assembly of the jeep (Sarao type)
The one who is guilty will be made to pay the damages. But if its the obligation to deliver, painted and upholstered
the jeepney.

DIVISIBLE OBLIGATION
The same, cannot be performed in parts, never mind what kind of obligation it is (divisible or indivisible thing) usually
indivisible. Even if the completed jeepney with become an indivisible thing, the performance of the object is divided
into stages or parts. Usually the opposite, obligation to deliver indivisible thing (sacks of rice, corn, cereal) usually
presumed to be a divisible obligation because the thing can be delivered partially but parties can stipulate, indivisible
thing can be made indivisible obligation if they have many trucks and they can deliver everything in one day. UNLESS
the law or stipulation requires that it should be indivisible.
PRESUMPTION that if the obligation calls for the completion of certain days of work or the work can be done by
metrical units (obligation to do for example, paid by metrical units the most labor intensive and manual labor
digging of a canal, one meter wide and deep, the payment depends upon each cubic meter of canal that you dig then
youll be paid like P300).
The court will have to determine if the obligation is divisible or indivisible.
Kawati trees, have you seen that, with purplish flowers, they look like cherry blossoms from afar. But the cherry
blossoms are not in clusters really. But its nice no. have you seen Palawan cherry tree? Its called pink shower. Theres
a golden shower there in the infirmary, they cut it already. Bunches of yellow flowers in clusters. Nice looking also.
Have you noticed that tree shedding, talisay tree. You have a hillside of that. At about this time when its about to shed
its leaves and turn red, youre thinking youre in New England, its autumn. Or Ipil-ipil the one with.
In August, the tall talahib will flower, what the color of the flower? White!
Do sugarcane flower? Yes they do! Almost the same flower as talahib! Because they came from the same family! The
grass used for walis tabo, except that it has no juice.
Tanglad is the cousin of cogon. Theres also another grass there used for prevention of soil erosion, more bushy than
tanglad, vitever, very wide grass system. Its a monocot like a banana.
You see, theres still life after this, after the College of Law. If youre lonely you can look at the mountains and the
flowers of talahib and compose a poem or haiku. Lonely and loveless like Ruffa Mae. *She has a movie entitled Status:
Single
Debtor agrees to weave cloth in a handloom, weaving is backbreaking also especially if the fibers are very thin, like
pia which comes from pia of course. Haha. Can you call it nativized? Because its original land is Brazil, along with
Brazil nut and para (?) rubber. Banana is endemic in SE Asia, but they also say they have it in Africa. Like a tail of the
bird, red, yellow or pink. I think that comes from Papua New Guinea, part of the Heliconea family. The
cassava/kamoteng kahoy/manyok also comes from Brazil.
Anyway, this is part of exchange of lands, when Columbus landed in Americas (although he didnt see the Mainland) he
was only in the Caribbean, in St. Lucia, the effect was that the West Indies, actually later on the Indian tribes there
were decimated, killed by imported disease from the European which is small pox. But of course, that killed them all,
not the conquest. Mainly that, they have no immunity. The study was the New World exported another disease to the
west in return, might be that STD called syphilis. Because now, all of these viruses, we should be afraid of them if
there is no vaccine like that so called reston ebola, hasnt transferred to humans. Monkey myth, the reston ebola came
from/was discovered Reston is from that laboratory somewhere in the south, Reston Virginia, laboratory where it was
discovered from monkeys exported from the Philippines. Why were they exporting common Philippine monkeys? For
laboratory testing, rats first then higher mammals like monkeys then people. But then, they can also first get blood
samples from indigenous people who are immune from certain diseases. Natural immunity. Certain drug companies
getting blood samples from tribes in Cordillera, Japanese manufacturers, curing kidney disease, getting urine sample
of Filipino urines in movie houses, how, the urinal is portable, its a canister which is like a hole a tube sunk in the
ground actually is the half mouth of the oil container like helix cut it in half, inverted it place mouth in the tube. Thats
what they do. Filipino men are noted for when they pee, they first spit. You dont know that girls?
So theres a lot findings in the sample, they find out they have TB hahahaha. The medicine is called urinase. See, they
stopped it because its counterproductive.
Entire and severable contracts its just about valuable consideration, limited causa (because causa is broader)

Page 12 of

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

52
Three elements of contract: consent, causa, object
Means that the valuable consideration is treated as just one, if its entire, it means if consist of severable
things given by party, usually applied to subscription contracts, e.g. you subscribe to the Herald Tribune,
deliver to you daily, its the daily issue of the newspaper but you have to pay the subscription price e/I the
distributor is going to deliver you daily issues over a period of one year. The guard of the Law Center, one of
them is Herald Tribune. The consideration is subscription payment is entire (annual subscription rate) you have
to pay the entire amount on one go. Although the distributor will deliver to you daily.
It is severable if the consideration over the space of period. Its all about consideration.
Consideration whatever is returned or given by the other party. In civil law contracts, we are concerned with
causa NOT consideration. Consideration is used by common law contracts, specifically valuable
consideration
3 kinds of cause: Gratuitous, onerous, remuneratory (1 and 3 not recognized in common law)
Consideration legal detriment to the promisee other than a moral duty; can be money exchanged in hands
or changing of ones conduct; the other party chooses to forego a certain activity or certain act, in
consideration of the promise of the other. Instead of going left in the fork of the road, if you take the right
fork, Ill give you this property. So instead of the taking the left, he took the right fork because of the promise.
Hard to enter, hard to dismiss except for classes. In fact, easy to forego class recitation rather than attending a boring
six hour. You dont understand me. That convocation there last week. I came back again for the merienda, but we had
to wait until 6:30 PM. But I got one of the flower arrangement as souvenir. Its an advanced valentine offering. OMMG
Sir Labitag hahahahah!!

OBLIGATIONS WITH A PENAL CLAUSE

What is a penal clause? Miss Bonilla?
What is it exactly, a contract?
PURPOSES OF PENAL CLAUSE
1. Purpose
2. Pre-agreed/pre-stipulated measure of the damages: in case of breach, the following will be given. Thats why
sometimes, its in the form of interest. The case of Eastern Shipping Lines and Crismina Garments, the
interests there are damages in negligence in performing the obligation. There must be a principal obligation,
so in case the principal is invalid, the penalty is also invalid. If the penalty invalid, then there is no effect on the
principal.
DISTINGUISH FROM CONDITIONAL OBLIGATION
CONDITIONAL
PENALTY
No obligation before suspensive condition
There is existing obligation in the form of the
happens
principal obligation
Obligation is dependent on happening of the
Accessory obligation (penalty) dependent upon
uncertain event
non-performance of the principal obligation
The suspensive/resolutory condition is also a clause in the contract
ALTERNATIVE

PENALTY

FACULTATIVE

PENALTY

Facultative and penal clause is actually closer/nearer to each other: What is the connection between the two? E/I the
obligation has a penal clause, in one instance, this is the exact equivalent of the facultative obligation. Sometimes the
penal clause can contain another prestation, usually more valuable/higher than the principal one (bilang penalty nga
pala sha). If they are about the same, its like alternative and the debtor can choose which to perform.
When is the penal clause the exact equivalent of the facultative? Let that be a needle in the haystack at least
for the weekend. When you find it, youll know penal clause. If you find it, keep quiet so your classmates will study. Its
designed for cogitation, right?
GUARANTY

PENALTY

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 13 of

52
The guarantee is designed to secure the performance of the principal obligation because the debtor, if he does not
perform, he will lose both the subject matter of the prestation/the subject matter of the contract plus he will also lose
the property given as a guarantee OR he will be made to pay a sum of money in addition.
KINDS OF PENAL CLAUSES
1. Subsidiary
2. Complementary
Punitive Value of the penal clause is much more than the value of the principal obligation; to bludgeon the debtor
into performing the obligation, its a coercive measure. Hell lose more if he doesnt perform the principal obligation,
because the amount of damages will be very much more. The courts are authorized to reduce the damages
1. if they find that the breach was not one that is wanton (noodles)/callous disregard for the rights of the
creditor/done in bad faith, just ordinary breach. If excessive, exorbitant, shocking to the judge (usually the
reasonable judge or good father of a family principle, father of a Roman family which what? At the start of the
classical period of Roman law, they have the power of life and death over their children and those under them
including the daughter-in-law, they can be decapitated)
2. (If you reach Damages, these damages is important, exact equivalent is important or else it will be punitive)
Treble damages
Reparatory pre-agreed measure, prior to the breach
Liquidated damages (?)

03 February 2009
Resolutory period
Just like when Prof. Laureta comes in, end of class. He was my professor so I have to bow down to him.
Where else can he talk without contradiction??
Concentrate only on one philosopher, Hart! Welfare legislation. But he was teaching us hart.
He was my boss, he was the college secretary and student asst taking care of PLJ
Death of obligor in purely personal obligations
Compromise (new contract, new obligation created)
Court has to approve, so thats a judgment. If debtor fails to fulfill compromise agreement
Entitled to ask the court for a writ of execution already, no need for other trial, just the breach of compromise
agreement
Mutual dissent
What does your textbook say about mutual dissent
Mutual assent, the opposite is mutual dissent. Like MU. See you always bring out the best in me by being responsive
and feigning exuberance. Compilation of phrases that lawyers like to use. Everything I said is probably there also.
These 6 are the most important one, 4 + 4
Most natural is payment and performance. What is broader? What is the most natural way of doing it?
File and pay of tax obligations.
Well if youre a salaried employee, the government already collects money from you even before you have time to
spend it by way of withholding tax system. Government already collects tax from you next year, without paying
interest. Youre giving the government a loan without you knowing. But of course, can you require the government to
compute legal rate of interest? Of course, if you pass the law, before that, its interest fee. Why I have thought of this?
Because of Pacquiao. Like Richard Gomez and whos the girlfriend of Ryan? Judyann. I promise to appear on TV to extol
everyone to pay taxes even before its due and be patriotic.
Subliminal message. Dont issue a mission and minion, I cannot deduct my winnings and losses in sabong and billiards.
Payment or performance of most natural way of extinguishing obligation. In prestation not to do, there can
never be default because the debtor is always on his toes, he should not do any little bit any acts that will be part of
prestation not to do.
We have studied two
a. Payment of obligations earning interest
b. Payment of obligations on installment (the presumptions there)
We can analyze this title, put order on the rules of payment: THINK ABOUT THE QUESTIONS THAT A JOURNALIST ASKS?
A MassComm graduate asks,
Who are involved here? 2 bodies: payor (who should pay) and payee (receiver)
What should we pay? IDENTITY
Where should payment be made?

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 14 of

52
-

When should payment be made?

Why? no provision
How? INTEGRITY

Why pay? You can let it rest, and wait 10 years for it to become . Youll have worse fate than if you pay. The creditor
can sue him on a specific performance plus damages, then therell be money judgment, which will do what? You should
be afraid of the sheriff. Because he will levy upon all your properties that are not exempt from execution.
Consequences of not paying will be more severe and detrimental to his property.
No one can be imprisoned for non-payment of debt thats not true, if the case becomes estafa and contempt
charge Thats why DLAngeles had to appear, the municipal mayor of Sto. Domingo, Albay. Thats the new name,
name of patron saint. Used to be known as capital L-i-b-o-g. Are the people of this municipality ma-L? Part of that town
is washed away by explosion of Mount Mayon.
Not even your family home. Youll be the target of the assassin in San Pedro Laguna alludes to MMDA head of the
demolition team, the one demolishing illegal structures. Plenty of the defendants, just one sheriff, he cannot execute
so he had to ask help of police officers because hell be mauled by the people. They also have guns, so the sheriff does
the shooting. What one sheriff did many years ago, fired at the crowd.

Characteristics of a valid payment:

Side track: (two words which can this be remembered Queen Elizabeth eye-eye) millionaire because of cutting
down trees in Agusan (and other timberlands of RP, outside concession area, when we used to have that in our
Constitution) and ships it to Japan and South Korea. Became a congressman. I hereby crown you Queen Elizabeth II
the town is called PIlar. Very dear to my heart, because this is where my pillow is buried inunan, placenta. You
prostitute teachers, Ill make you firmament. Permanente colloquial word is permamente.
El dia day La noche night Buenos noches but never mind, well not finish Obligations and Contracts. Makes 3:00 a
little alive.
1.
2.

IDENTITY what is to be paid, payment should be very same obligation/prestation promised to be

performed/not performed. But of course, in certain cases, there would be substitution. If delivery of specific
thing, no other specific thing should be delivered except for this one.
INTEGRITY how should payment be made. The payment should have integrity in that it should be complete
payment. What should be delivered is not only specific but all of its accessions and accessories. But he
will be foolish if refuse the horse, without the saddle, because debtor can ride away with the horse and never
come back to pay. But then what, Creditor can say, look, you failed to include accession and accessories, if
you dont give me in 5 days, Ill ask for damage or specific performance. Adage: for want of a shoe, the horse
was lost.
Proximate cause saying: cause of the cause is the cause of the evil cause caused.

Want of shoe, the horse was lost. Want of horse, rider was lost. Want of rider, battle was lost. Want of battle, the
kingdom was lost. Rider is the king? Courier or generals. No radios, all are knights in shining armor, the courier is on a
horseback. Maybe the reserve cavalry was waiting for orders but the messenger died. More for Chinese or Asian
armies, they have pennants; look at this movie at Japanese/Chinese warfare. Forces are divided into four segments
representing the four elements, and the mountain does not move, the shogun. Thats why if you kill him, its the end.

Who should pay?

Can anybody pay? YES! (Like the play of words, you just remove the letter L).
1. As long as his payment has identity and integrity.
2. And the creditor accepts it as a valid tender of payment.
HOWEVER, Creditor is not bound to accept valid tender of payment from just any payer because CC classifies payor.
CC says payer, payor sounds more masculine rather than payers.

Who can pay?

1.
2.

3.

DEBTOR
Anyone ACTING ON HIS BEHALF
a. Agents/representatives
b. Heirs (that means debtor is dead, if alive, they would be 3 rd persons interested in the obligation)
c. Assignees (successor in interest of the debtor who tenders the payment)
All others, are THIRD PERSONS
a. Interested (all you need to know is this because all others are not interested), mainly in Art 1302.
i. When a creditor pays another creditor who is preferred, even without the debtors knowledge
ii. When a third person, not interested in the obligation, pays with the express or tacit approval of
the debtor
iii. When even / co-debtor pays the share of another joint codebtor.
Whats the status of joint co-debtor for share of other joint co-debtors?

Page 15 of

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

52
C1

----D1
----D2
----D3

5M
5M
5M

D2 in default because demand made on 3 simultaneously, he alone in default. 5 M plus damages. Either D1 or
D3 can pay for damages. Can the creditor refuse to accept? NO, they are 3rd person interested in the
obligation. The three for one, one for all. One debt, three persons. Trinity.
But where lies D1 and D3s interest as third persons? C cannot require me to pay, because I already paid my
part. Clue: birds of the same feather, flock together. CREDIT STANDING in the business community. Business of
goodwill. Malfagador, damay sha. He is still in that flock of birds and one has bird flu. Can borrow under
character loan, no need for credit investigation, just his face.
b.

Not-interested (usi and paki) Why are you paying for my debt, that would send people
impression that I am poor and insolvent, I am very capable for my obligation. I can file slander by
deed! I will also sue the creditor because he accepted it. CREDITOR: I dont care who pays for your obli
as long as its money. I dont care where it comes from.
i. Debtor from accion subrogatoria he is not interested in extinguishing his debtors debt.

Distinction between guarantor and surety: (both obligors to secure the obligation, they promise to pay in case principal
does not pay)
GUARANTOR
Has defenses available to him, aside from obli not
yet due. Right to defend self:
1. EXHAUSTION aka EXCUSSION: Principal
has not yet exhausted all his properties.
2. DIVISION: If you accept obli as guarantor,
he can plead to pay only half of the
obligation.
**youll come across this in guaranty and credit
transaction

SURETY
Guarantor who binds himself solidarily. Once
creditor demands on debtor, and he does not pay,
he can right away demand from the surety. If
surety pays, entire/full obligation, he can ask for
reimbursement of the full amount, not only the
share of the debtor. Because he wasnt a
principal, unlike a solidary co-debtor.

What is the distinction between interested and not interested

INTERESTED

NOT INTERESTED

Creditor has the right to refuse tender of payment from anybody else, but not a VALID TENDER OF PAYMENT made by
CREDITOR CANNOT REFUSE PAYMENT FROM THESE PEOPLE:
1. debtor or his assignees
2. representative/successor in interest/
3. heir (if dead)
4. 3rd person interest in the obligation.
Seal of good housekeeping in an insolvency case. He gives to the debtor discharge to the insolvency, honorable
discharge like a soldier. It means if the list of his obligation, his debts, like a jueteng collector, its 6 ft long thats why
the list of your assets is just 1 ft. Then the debtor is in state of insolvency. Hes slate will be wiped clean, he will have a
new start at 0 asset. Start working and scrimping, the faster way is waiting for his parents, married/childless auntie,
grandparents to die so he can inherit. Or stumble upon hidden treasure (he was going fishing and struck a casket full
of jewels and gold. But of course, thats another problem if he could get entire thing legally).
Take note of who are third persons in interest in the obligation. Art 1302. Read again provisions, plus Tolentino and
see. Because what Im giving you is the Winhold grain(?). No more chap. Farmer again.

04 February 2009
This is our sarswela. Lets have payment for our ACLE.
WHO MAY PAY

FIRST PERSONS

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 16 of

52
The usual one who pays is usually the debtor, those who are his heirs, successors, executors, assigned including
agents and representatives. Those are the first persons.

THIRD PERSONS
Interested
1. Guarantor
2. Surety
3. Mortgagor (who did not sign as co-debtor OR signed as co-debtor but did not bind himself solidarily)
Accomodation mortgagor. Your bestfriend is borrowing from a loan from creditor, but the creditor requires him to put
up security. He has no properties, only his face, but the character security is not enough. Give your car as a chattel
mortgage.
Mortgagor is not solidarily bound. The mortgage is accessory obligation. The pledge or the mortgage is an accessory
contract. The owner of the property signs the mortgage agreement, he will still be a third person interested in the
share of the principal debtor. So he is a third person interested in the obligation. Otherwise, he is interfering liable for
quasidelict.
Can exercise right of division and pays half. But then he will still lose the car, it will still be foreclosed. Thats why he
is interested in the extinguishment.
4. Junior creditor/encumbrancer
If you look at Art 2241 (specific movable property of the debtor) and 2242 (specific immovable property and real
rights of the debtor)
Later you will especially number 4 and 5, because number 1 usually will be taxes, the placement of pledges and
chattel mortgage, equivalent for real property will be real estate mortgage, ANTICHRESIS.
Real estate mortgage 2242
Look at the furnisher of materials, 3 and 4 for specific immovable property
But for repair, in the other one its number 5.
Youll come across property next year (Lopez v Orosa), priority of preference of the credit. About theater and real
estate mortgage. You negotiate with Sol if you want me for Property.
Not interested:
Make your own list, Chi. Sir Labs did not elucidate

Reimbursement:
1.

INTERESTED
Most people want that reimbursed to the full benefit
A few does not want donation, which must be accepted in the proper form otherwise it will not be
perfected unless there is formality even private writing. Although the donation has not yet been perfected, the
third person perfector as donor, will not file an action for reimbursement, otherwise, he will be labeled as an
Indian giver. Of course pachydermal or kapal muks.
The ones who will complain will be the heirs of donors or his creditors if he is reduced to insolvency.
Capacity to alienate and enter into contract.
Without prejudice to the effect of natural obligation, (which you will learn later) involves payment of the 3rd
person. MINOR candies is necessary for promotion of dental carries.

2.

NOT INTERESTED: Debtor can claim that he wasnt benefited by the payment. The burden of proving that
debtor derived benefit is on the 3rd person payor.

To whom must payment be made

Undue payment. Suffering under mistake of fact or mistake as to the person to whom you pay. If you pay to the
wrong party, leads to the extinguishment of obligation. If the creditor can be
1. Guilty of negligence in (debtor was led to believe that the 3 rd person has authority to collect/receive) -- > basis
here is ESTOPPEL BY MISREPRESENTATION. Basis of Art 1241 Par 3.
2. Court appointed receiver in insolvency
3. Successor in interest or assignee third person steps into the shoes of creditor and that assignee of the credit
(essential assignment of the credit is a sale of credit) which is an incorporeal movable or
personal/intangible property. You wont understand this until next sem.
4. Incapacitated creditor no further demand, but when went to St. Lukes Hospital up and about but in a
respirator and dextrose, sleeping soundly. Hes just comatose but they say youre hearing is the last one to go.
So you whisper to your creditor. Foolish debtor. Never pay to someone who is incapacitated. Im paid na ha,
put under your pillow or put in your hands.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 17 of

52

5.

Look for someone who represents him. If youre sure its part of the ACP, pay to the wife and let her
sign the receipt. But if not, the safest way is to go to the court and CONSIGNATION. Trouble with that is
youre enriching the SC. Used for bonuses of the judges. Any income by the SC can be spent and does
not go to the general funds. So just look for any receiver, representative or guardian. Expensive
because youll file action and pay the docket fees. Legal research fee.
Authorize opening a bank account or depositing it in the bank account of the creditor. Usually allowed
in payment of rentals. But you must get permission.
UNLESS (exception):
Kept the thing delivered
Benefitted him, e.g. used for payment of hospital bills and you can prove it.
3rd person
a. Legal heirs as a group if he has died.
b. Redounded to the benefit of the creditor

Can you pay to inday? Why inday? The maid who was more knowledgeable and literate than the boss/master. He was
on vacation. Can you pay inday or secretary even if you know the secretary is the mistress? If did not leave anyone
authorized, you make sure itll redound to the benefit of the creditor like Inday accepted P5k and then used for
allowance for marketing is milk gustling toddler without being lactose intolerant, except that sometimes he also
increases the methane emission, after that you can prove that, you can sue her for estafa by conversion or theft.
Part of it, I havent been paid for my salary for two months, the balance I got it for myself, I just told my master.
NEED NOT BE PROVED IN Art 1241
1. In effect became the creditor, because he became an assignee of the credit or inherited the credit
2. Ratifies understand you paid to my secretary even if she went to Rustans and shopped with it, just dont tell
my misis, the real one. Its alright, youre already paid. In fact you will not raise a howl.
3. Conduct based on estoppel, have the authority to receive the payment. No authorization to receiver but by
conduct of the creditor, he was led to believe that 3p had authority to receive the payment. Inday again, 3 rd
person.
Here is an old lady who was a renter of 10 apartments in a compound. Ten. Imagine that. Then all the rentals will be
due the first week of the end of the month, they will tae kwan. She does not hire collectors, already 75 years old and
still skimpy and every month skin peel and sometimes botox treatment. Everytime she goes around first week, and
then personally collects the rentals, she usually have her facial, the rays of the sun will be bad for the well-being of her
skin so she has inday carrying an umbrella and handbag with all the record book and all payments.
Dewlap here. I was a former college secretary, I know what should be known. Thats what prof Sison is doing. Vicky
belo. Isnt this better than ACLE?? She cannot face the public because her face is as red as a lobster. Inday goes
around collecting from the rents. She had your handbag and umbrella. You never told us not to pay from her. That
Inday, eloped with my driver!!! Inday wrote her a letter, Dear Mam, I collected rentals from all tenants for month of
November, because you never increased my salary of P2k, according to the Labor Code. You didnt not enroll me to
the SSS. Masada, terminal pay amount you pay for the month. PS Tikyo is with me. I have tickled him away.
Take Property under different professor, Ill repeat the same jokes. Hes holding my umbrella. Fernandos hideaway. The
original hideaway is Room 202, Prof. Sison and my room. You ask his former students. Class 50s down. His motto in
class, difficult and impossible.

What should be paid?

IDENTITY: cannot be a different one, including all accessions and accessories. Should not suffer any deterioration,
otherwise, the debtor will be in default. Negligent in performing his obligations. Take good father of a family.
If it is a prestation to give a generic thing. Art 1246
1. CREDITOR cannot demand superior of the genus
2. DEBTOR cannot deliver inferior of the genus
*the opposite is true, the debtor can deliver superior (thankful creditor for that Ill contract with you again) and creditor
can accept inferior (waived his rights to not receive it)
Prestation to do:
The act promised to be done. What was promised not to be done, should not be done. Not even a small portion of it.
Any act that will lead to the doing that was promised not to be done. Now comes the payment of some of money
Pay money is prestation to give generic thing:
Money is a generic thing, specific thing if numismatic collection
Artifacts of Afghanistan have been stolen, most of it
Silk and tea were the exports of the china to the west, especially to England which is the primary maritime
power. They didnt drink coffee. Only tea. Not te, teddy. Thats how they pronounce it. Te went to war forcing
china to sell opium. China doesnt like importing opium because too many Chinese are addicted. Give away

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 18 of

52
HK. To the Chinese, recovery of HK was a matter of national pride. To us losing our territory, its not national
pride, its matter of convenience. Even probably the Kalayaan Islands might be bartered away or something.
Inviting the Saudis, Libyan, Malaysians, to Mindanao, theyll all be quarelling over Mindanao. Good if we also
invite the Israelis, its the middle east all over again. The most fertile lands is in Mindanao, if you drain it.
Art 1250 take not at the time the obligation was established.
Value of peso the time obligation was established. But usually, the parity of the peso to the foreign currency is
determined at the time of the payment instead of time of establishing. RA 529 and RA 4100
Liberalized, agree to make a contract, loan payable in foreign currency, before it was always in the legal tender of the
Philippines. You look at the peso, this the legal tender for all debts and obligations in the Philippines.
Payment of interest for using somebody elses money. Charging of interest is in Art 1956 loan or forbearance,
money good or credit. There is no stipulated right of interest, there would be 12% as damages for default/delay. Unless
there is stipulation for both using the money and interest charged as penalty or for default.

DATION
Historical account of Ponce de Leon v Syjuco, there has been questions before. There were lots of cases in contracts
during Japanese war payable in Japanese war notes.
I told you my ACLE can be fun, but it will be on Tuesday.

11 February 2009
Kalalo v Luz is mentioned in Eastern Shipping Lines. Interest should be counted from the date of payment. Read
carefully Kalalo v Luz mentioned something about estoppel. Find out what kind of estoppel is that since there are
several types of estoppel.
Papa v AV Valencia thats the broker. The complications that the case can go through. Not only the seller and buyer
but also the. Up to you now as lawyer to unravel all of these. Paid handsomely if you get the right client, if not you get
brownie points in heaven if gratis in amore. Difficult for a lawyer to enter the pearly gate because they are all liars.
PAL v CA case lasted for more than 30 years. How much was involved? Not much, just damages for contract. Sheriff
absconded with the amount. Make arrangement with the bank so that the judgment creditor will be paid rather than
the sheriff. Strictly speaking, PAL should not be liable anymore, but well, it was unfair because up until 20 years later
the plaintiff still didnt get justice for her cause.
Read the historical account of Japanese warnotes, worth the paper was printed. Late 1945 was worth nothing anymore.
But thats according to a monetary expert hired by the government whose name was Ballantyne, whose day will come
on Saturday. Spelled differently.
In order that mortgage should be valid, the one who should constitute it should be the owner. If by other person than
the owner, the mortgage will be void. One of the articles in general rules relative to mortgage is Art 2085. Essential
requisite, the contract will be void.
Antichresis is about real property. But pledge and antichresis not the same. Chattel mortgage and real estate is almost
the same aside from the chattel mortgage has a registry. In order that CM be binding upon 3 rd persons, it has to be
recorded in the CM registry. The real estate of must be registered as an encumbrance in the registry of deeds where
the property is located. title property, it
Look at the complications in here, 4 parties involved already. One who intervene was the Chinese, Hao. He was the one
who bought it from the first purchaser then here comes this foreclosure sale. This case involves both obligations and
property.
Earnest money contract of sale is consensual, perfected by consent of the two parties as to agreement to sell and
consideration, but still executor. Like the 1191, none of them will pay damages, will pay in default, the buyer cannot be
in default unless the seller delivers to him the thing to be sold. Without one of them fulfilling their respective
prestation, none of them will incur delay. Later you will see the relationship of this with the nature of contract.
Both of them will only have demandable obligation.
In case the same seller sells the same property to a 2 nd buyer who was able to require the delivery of the thing, the 2nd
buyer becomes the owner of the thing sold. The first buyer has no right of action to recover the goods form the 2nd
buyer. All that is left to him is recover damages from the seller. No privity of contract between buyer 1 and buyer 2.
Once the specific thing sold is delivered to the 2nd buyer, then it is most likely that the 2nd buyer is the owner and
since the 1st buyer has personal right against the seller, his interest, he cannot sue for the recovery of the
generic/specific things delivered to the 2nd buyer. All he can ask is damages because the seller is already in default.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 19 of

52
Seller mora solvendi because he is the debtor in the thing to be sold. Thats the reason why a first buyer who only has
personal right cannot file an action to recover for replevin the movable property that was sold to 2 nd buyer. Nicer to
word the use vendee. If youre writing it, use vendee, if you say it, you might interchange it. Vendee and vendor is
better. Mortgage is merely an accessory contract. Depends upon the principal contract. A mortgage or a pledge or an
antichresis may also secure any other prestation, even the prestation to do or not to do (although not always
emphasized).
Going back. Earnestness in buying, to show that you are in good faith. But in contract of sale, it should be considered
as part of the purchase price. Later you will see, there is also earnest money, option money. Thats different. Not much
difference between DP and earnest money. But DP is normally for payable in installments. Can stipulate to forfeit the
earnest money. Also similar to good faith money.
Option period opportunity to keep in open. The option can be a valuable consideration for the option supposing you
pay
Value of peso relative to a foreign currency. Its using RA 529 which Sir said was old. Theres RA 4100 and RA 8183.
Kalalo v Luz involves RA 529. You need architect to know if the high-rise can support all the floors. It will support but
not resist fire. What am I adverting to? Mandarin Oriental hotel in Beijing.
http://edition.cnn.com/2009/WORLD/asiapcf/02/09/china.hotel.fire/index.html
In San Mateo, Timberland, leisure farm in one of the hills there. That place always burns in summer and usually its
caused by cigarette butts. In Australia, there are eucalyptus trees, koalas only eat two types of eucaplyptus. The koala
is finicky. Just like the panda, it eats how many types of bamboos. Bamboos only flowers once in its lifetime. They
flower and they die. Its the type of bamboo that the panda eats. The panda in the zoo can now eat carrots, convert it
into carrots. Thats the way of if you cannot adapt, you will die. I told you about the black woman who was on top of
her house during the Katrina flood, but he was fat! Filipinos are resilient. We will survive because we are used to crisis
like this. But except maybe Prof. Sison resist two viands at lunch he had four. Look, no rice. :P Hes still size 42.

SPECIAL FORMS OF PAYMENT

1.
2.
3.
4.

Application
Cession
Consignation
Dacion en pago or dation in payment

APPLICATION one debtor, one creditor, prestation of the same kind (usually loans)
Cannot apply to prestation to give specific thing
Can apply to prestation to give generic thing (same fungible thing those that can be counted, weighed and
measured)
E.g. delivery of muscovado sugar

Requisites for Application of Payment:

1. Various debts of the same kind
2. Same debtor
3. Same creditor
4. All debts must be due
5. Payment is not enough to extinguish all debts
Why does the debtor make an application of payment? If interest bearing(?) Debtor has the right to make
application of payment. Cannot apply to all if the creditor disagrees because he cannot be compelled to accept
impartial payments. Patay mali.
The court will determine which is most onerous because the two parties are already at odds. They cannot agree
as to the application of the payment. It would be foolhardy to do that unless you are both lawyers. Litigating for the
sake of enshrining your names in SCRA. Your daughter will make do with less allowance. You are your own client.
What is the most onerous debt? They come in different combination. In actual practice, the different burdens. The
most onerous is the one that bears interest.

Co debtor and debtor is a sole debtor: less onerous is co-debtor especially if solidary.

Same amount, the older and younger mas troubling sa mind. Carcar.

Secured and unsecured the younger

Bow like the genie. With matching actions. In other words, the adage is still. Do not mock the crocodile before you
have crossed the river. Thats the favorite adage of Prof. Balane. Hes telling that to the Ateneo Law Students.
Guardians to the mysteries of law on succession.
If suspensive period, it should be for the benefit of the debtor.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 20 of

52
PAYMENT BY CESSION state of insolvency, not enough money/assets to pay off all his creditors so what he
does is to put out the white flag together with it is the titles of his properties.
He tells his creditors that he is assigning to them all of his rights to these properties, authorizing them to sell
all of his properties.
YES he is still liable because what he should have done is to file an action for voluntary insolvency if he is
sure that he didnt commit any acts of insolvency that would disqualify him from being given a discharge in
insolvency (honorable discharge) after all his properties are given to the creditors, their proportionate share
which is called dividends in insolvency, then the court will give to the insolvent debtor. His record is wiped
clean. He is born again hehe of sorts, but not so, monetary wise. He can now incur in obligation IF some
creditor will deal with him.
But in case of payment by cession, and theres a balance of ten million, you wait until my favorite grandmother
dies and she gives me an inheritance from her last will and testament. Due to receive part of her free portion.
In short, liability is not totally extinguished.
Sale of properties to the creditor with the agreement to extinguish the obligation.

TENDER OF PAYMENTS FOR CONSIGNATION read the requisites.

17 February 2009
Tender of payments should comply with all the requisites
Otherwise the one making tender of payment is a 3rd person, refusal of the creditor is valid.
All the requisites must be strictly complied with.
Tender of payment
1st notice
Filing of the consignation/deposit of amount
2nd notice creditor + all interested in the obligation
Trial

So many opportunities for creditor to accept the payment.

Sotto v Mijares -> willing debtor but with condition
Pacific Timber v Ceneris (?)

LOSS (of the thing due) or IMPOSSIBILITY OF PERFORMANCE

How does loss occur? Art 1189 [2]
1. Perishes
2. Goes out of commerce
3. Disappears in such a way that whereabouts are known/even if known cannot be recovered (e.g. sinks in the
bottom of Marianas, blame Russians. Ours was the deeper until they measured the Marianas OR in the bottom
of Lake Baikal, deepest fresh water lake in the world, thats why they dump their decrepit pollutants there)
* 3 kind of loss but qualification wise, there are only two
1. Total
2. Partial as defined there about loss, how many kinds of losses are there. Two?
Physical perishes; specific things; if the one who perishes is the debtor, that is loss of the thing
due
Legal goes out of commerce
The genus never perishes not true, because it can be legally loss
If the loss happens through fortuitous events, the debtor not guilty of concurrent negligence: EXTINGUISHED
Have you seen a horse being saddled? You put a blanket first before you put the saddle. Around the abdomen of the
horse or the chest. Its not the abdomen. Or on the buttocks of the horse. Isnt it?
The parties are reverted to the status quo ante prior to the extinguishment of the obligation.
PARTIAL LOSS: the court will determine whether the partial loss is so important so as to extinguish the obligation. If
you are delivering a specific horse, a race horse, then a Doberman jumped on it and bit its ears, like Mike Tyson and
Evander Holyfield. Probably, this Mike Tyson loves to eat ear, he would be at home here at campus because there is
the bbq stand there called tenga. Its ears was just deformed, it can still run.
EXCEPTIONS: Notwithstanding the happening of the fortuitous event of the thing due, the debtor will still be liable.
1. Stipulation
2. Assumption of risk

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 21 of

52
3.
Others
4.
5.

Rendered it beyond his power to comply to obligation: sold to another third person or second person
are spread in the CC, e.g.:
Guilty of concurrent negligence
Debtor already in default Why do you make him liable for the fortuitous event? Rescission + damages?
Why? Had he delivered the thing before the happening of the fortuitous event, it would not have been
affected.
Super typhoons are only observed/reserved for Bicol Region. Had he not defaulted, even if it would have been loss
anyway, it would have been loss in the possession of the new owner? (same vicinity)
On Ixaras sneeze: its not so loud anymore. Im gonna wash that man right out of my hair.

PRESUMPTION: The loss of the specific thing is presumed to be loss through the fault of the debtor if it is in his
possession (prima facie). The burden of the proof on the part of the debtor that it was indeed lost through the fault of
the debtor. HOWEVER, the presumption is reversed if loss through natural calamity.
Otherwise, guilty of concurrent evidence e.g. volcanic eruption which means Act of God thing presumed to be
loss through fortuitous event (creditors burden of proof to prove that concurrent negligence or fault of the debtor)
Airplane crashed into your house: jet engine swallowed two ducks or Canadian geese (since they are bigger) of course
its a fortuitous event, act of man or God (Phoebe: act of the duck) the word to be used is synchronicity. Why should
those geese be in the flight path of the airplane? Had the plane be 20 meters above the flight plan of the geese, they
wouldnt have been sucked in by the airplane. Now there should be a warning for airplanes to take care of the spare
parts of the two satellites that collided in outer space then raining debris.
Natural calamity = fortuitous event
Not natural calamity = not fortuitous event, burden to prove casus fortuito would be on the part of the debtor
The Australian brushfire burns so well because most of them are eucalyptus trees. They have oil. When you have oil, it
burns. They are also planting eucalyptus in the Philippines. For purposes of electric posts because they are strong and
straight. Just like pine trees, they also have oil called turpentine. When your horses (the horse again) foot is swollen
you massage them with oil.
Why did you tie that cow in the river when there is a storm coming in. From the banks of the river where it might
drown. Most likely it will not be drowned but it will be in another place after the flood, youll have to look for it.
DISTINGUISH BETWEEN DIFFERENT PRESTATIONS
1. Prestation to do its not called lost that causes the extinguishment, but called the impossibility of
performance
2. Prestation not to do impossibility of non-performance (e.g. promised not to enlist as a soldier, but
required by military call-up, you are required under the pain of incarceration; superseded by the
impossibility of non-performance)
Look at Art 1267 (might be useful for you later)
Debtor will be the court, but you will have to ask the court to release you from the obligation because of the
difficulty of performing the obligation
At the time obligation created by contract was entered into, parties never contemplated such a circumstance
(e.g. change in technology) outside the ambit of their knowledge but of course here, these one runs counter to
the general principle in contract that the parties should perform whatever the stipulation they agreed to.
They agreed to the stipulations voluntarily so they should comply in good faith obligatory force of the
contract together with the freedom of the parties to stipulate
Art 1159
Took in blue pills in a motel. Rigors was too much, so he was rigor mortis.
The City of Manila lost the case but Sogo bid them all. Notice that Sogo they are so near certain business
establishments that you can make active left turn and then youre lost. Professor Disini was recounting about the girl
who cried in his class. 4th case of crying because he said he should be able to decide well because you must have
received a dozen roses last Saturday. She cried. Turns out that she just broke up with her boyfriend before Valentines.
His mentioning dozen roses was what she was missing. At least here, his student the children are busy in labor law.
The civil law version of that rule in international law in interpretation of treaties Art 1129 (pactu su servanta) treaty
stipulation. The opposite of that is clausa rebus stantlo (?) WTH!!!!
Almost the same with circumstances manifestly beyond the treaty. One good example of this is Paris used to be known
as the city of lights. Even before Thomas Alva Edison invented the incandescent lamp although another inventor
started it all Nikolav Tesla. Its just that TAE was able to commercialize all this, gathered capitals to mass produced. But
theyre both dead, now TAE is credited. What was his adage? 99% perspiration and 1% inspiration. (scuttlebutt with
Tesla) it was lighted with gas lamps, you have to light the gas lamps. There was a contract between the outfit and the

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 22 of

52
city of Paris where the outfit is supposed to hire people to see that gas lamps will be lighted at dusk. Usually the
contract is for certain number of years.

19 February 2009
1.
2.
3.

Ac Bd Dg
Ad Bc
Ad Bc
Cc

Just by mastering this, you can recoup your parents expenses. You do not realize that legal compensation has taken
place. One of the obligations has become natural obligation.
Once the five requisites of legal compensation concur, both obligation is extinguished. Ipso facto occurs.
There has been partial compensation five years ago, the defendants obligation is no longer the full amount + interest
+ penalty. Reduce the amounts from 5 years ago and then the amount thats due the defendant spends more and then
before that once you realize that legal compensation took place, if youre quick about it at the time you are retained,
what if I can reduce your obligation to 80% will you give me the 20%?
Go to the distributor of BMW and gift yourself with brand new BMW then youll have bragging rights when you ask your
classmates for an informal reunion wherein you are the host. Later on, those of you who are materialistic as most of
you are, in your reunion any get together of the class, youll be comparing notes, not about personal life but material
possession. See if you dont do it, I guarantee you. Even now those who have celebrated their silver jubilee, they come
home dont you think they brag about themselves, except they remember how they were 25 years ago. Insulted by
professor (Prof. Magallona) and didnt realize it until you sat down and think about it. Delayed reaction, I think I was
insulted. Watch out. You can earn your keep by mastering legal compensation.
Legal and facultative. Which is more difficult? More subtle?
Art 1279 provides cut and dry requirements
REQUIREMENTS OF LEGAL COMPENSATION
1. 2 debts
2. Sum of money or fungible thing
o Not applicable for specific/determinate things (though possible through facultative condition)
o FUNGIBLE: same kind, same quality; interchangeable by nature e.g. muscovado and cane (not possible
through legal compensation)
o Abaca plantations are gone, replaced by bananas and durian. In Davao. Part of campus of UP Mindanao
might have been an abaca plantation before the war. Abaca as a fiber was killed by nylon. Manila
hemp is used for cordage.
3. DUE: the obligation
DEMANDABLE: the contract has not yet been annulled, or rescinded. The cause of action is still available. The
obligation has not yet become a natural obligation.
LIQUIDATE: all the factors are known, not in controversy (even if the total is not yet known); i.e. determinable
and ascertainable
If one of the parties is claiming damages from the plaintiff. Asking the court in granting him damages, the factor or
elements he has suffered are yet to be proved through evidence.
Separate complaint? E.g. specific performance then counterclaim.
1.
2.
3.

Ac (10M)
Ad (7M)
Ad (2M)

Bc
Cc

Bd
Bc

Dg

Pag puno na ang salop, kinakalis even it out then less amount of grains there later on they changed it to kilos
during time of Diosdado where there is already a rice pila. Shortage of rice then and that was also the start of the
devaluation of the peso. From 2 to 1 to 4 to 1. Theres still the Besa, handmade shoes, you dont find them now
anymore. Cheapest pair of shoes then was less than 20 pesos. Daily wage was 4. You have to scrimp and save.
4.

No right of retention or both. That was communicated in due time by the third person. Both obligations do not
have controversy involving who is the payee or creditor.

Writ of garnishment (generic word is attachment of a property, corporeal or tangible property)

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 23 of

52
Once all of these five requisites are presents, extinguished up to concurrent amount. If no one ever claims,
ignorance is bliss. You dont know that you have paid so much. But if you did, you cannot claim it back when you
realize it. Now what is the prescriptive period for claiming the legal compensation? Obligation created by law?

24 February 2009
1.

Ac (5M)

Bd

2.

Ad (2M)
G

Cd joint obligation (Yes, he can claim compensation but only up to 2.5 M)

Bc (Yes, A claim the difference 3M from B), (B can ask reimbursement of 2.5 from C)
(Guarantor can also claim compensation from A, whoever the debtor)

FACULTATIVE COMPENSATION one of the parties can claim the right to compensation; ask for the blessing of the
court
1.
2.

Suspensive condition/period
Feb 20, 2009

Ac (5M)
Bd
Ad (obli to give specific/generic thing e.g. specific BMW)

Bc

* Cannot be compensated because not of the same kind. So how would make compensation possible? Usually
cannot be done because they are of different kinds
* By wrecking the BMW etc. through the insurance, breaching the obligation: best clue
* In default, now liable for the damages + whatever B paid for the BMW
* Convert delivery of BMW because you can ask for rescission plus damages
* WHO WILL CLAIM THE FACULTATIVE?? A or B?? Think it through now so youll have something to do
The one who could facultatively compensate here is Debtor B because its his obligation that is not yet due because
of the suspensive condition/period its absurd because hell pay 2M if he compensates! That would be foolish!
1. Suspensive condition/period
Ac (3M)
Bd
2. Feb 20, 2009
Ad (5M)
Bc
Period should be for the benefit of the debtor, he can always waive it
1. Suspensive condition/period
Ac (3M)
Bd
2. Feb 20, 2009
Ad (5M)
Bc
In your mind, always distinguish, qualify.
Whats the other name for JUDICIAL COMPENSATION? Counterclaim or set-off
Not yet liquidated, so the court will determine it during the trial.
Litany about the veterans. Read the case of PNB v Sapphire.
Stipulacion pour autri (stipulation for others) only Prof. Morales can pronounce it, you will have to curl your tongue.
Art 1794 Damages cause by a partner in a partnership
Reason: cant benefit from his own wrong
ASSIGNMENT OF CREDIT
Can the debtor claim compensation? It depends if he knows/consents to the assignment
1. If consented: he should reserve his rights
2. Did not consent (objected), but knew of assignment of rights: claim compensation previous to the
assignment (cut-off point is time of assignment)
3. If didnt know: can still claim compensation of his own credits in the contracting (prior) until he learns about
the assignment
Other name for LEGAL COMPENSATION: look for it. Its also known as what?

NOVATION
Not a complete extinguishment, just theoretical because you created another obligation.
Its not an absolute extinguishment, merely relative extinguishment.
GENERAL RULE: not presumed, needs to be proved.
ANIMUS NOVANDI intention to novate especially in the case of substitution of the debtor and implied objective
novation
3 KINDS OF NOVATION
1. Objective

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 24 of

52
a.

2.

Implied objective (the more difficult one, go back to the case one Ynchausti v Yulo) incompatibility
between old and new
b. Express objective
Subjective
a. Passive substitution of the debtor
i. Expromision
ii. Delegacion
b. Active subrogation of the creditor
i. Conventional
ii. Legal/voluntary

Separate bar review for UP Law to guarantee bar passing rate. Too many extra curriculars during the four years. UP
Law graduates are elitists. Very little in their bank accounts, stock knowledge which is what you will turn to in case
you dont know the exact number. You never realized the general principles of law.
Blahblahblahblah deroga. General principle does not derogate the special one.
Spaniards are haughty, but Madrileos are the haughtiest ones. Boondocks, contribution to the English language.
They pronounce Colorado as Colorao (Coloraw). They say Madrid as Madri, they cannot pronounce the letter D. King
Alfonso was born with a lisp, his tongue is short. So they legislated it to save him for embarrassment, or in other
words, sipsip. Dont outshine the King!
REQUISITES OF NOVATION
1. Valid old
2. Valid new
3. Extinguishment of the old
4. Agreement of the parties and ANIMUS NOVANDI
Advanced assignment: Read Tolentinos explanation of different requisites of a valid contract, especially offer and
acceptance. Well concentrate more on the Oh shocks I didnt get it.

25 February 2009
SUBJECTIVE NOVATION
1. Expromision promise of the third person
2. Delegacion
The problem: what if theres something wrong with the new debtor, e.g. he is a bad debtor (because creditor can just
file action for specific performance from the debtors properties) or insolvent? Can the creditor find recourse from
the old debtor? Normally, NO. Unless its a case of delegacion wherein the old debtor presents new debtor, knew to
be insolvent or pretend that he didnt know. Or pwede na rin na community knows he is insolvent at the time he is
insolvent.
In your sojourn here you will reservatoria/reserva troncal. Look this up now because youll be dealing with this on your
Credit Transactions.
Art 2241 Specific movable
Art 2242 Specific immovable
Art 2244 All other
Difference in hierarchy of credits: if you analyze these two, youll see that taxes will always be first. But look at
number 4 with respect to movables, credits guaranteed by a pledge/chattel mortgage (mortgage over movable
property).
Higher than the mortgage credit. Thats the case of Lopez v Orosa but that is for next semester.
The creditor has no right to reject the payment as long as it is complete and valid, identity and integrity
(tendered from a third person interested in the obligation which includes a junior creditor)
The less preferred creditor pays the more preferred creditor. Legally subrogated to number 4 creditor, steps
into the shoes of the number 4 creditor but he also owns the original credit, merges the rights of creditor number 4
and 5. Unless he pays off the 3 above him in the ranking. Pay all the others, you cannot go directly to Number 1.
Whats the other name which you go by? LEGAL SUBROGEE (sab-ro-gi or sab-ro-ji your hair smells terrific)
CONVENTIONAL SUBROGATION by agreement of the parties BUT I want you to look at Chapter 8 starting with Art
1624 (Assigning of credits of other incorporeal rights), its the chapter after the chapter on sales. Whats the

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 25 of

52
difference between assignment of credits and conventional subrogation, if any? If they are the same, they
are the same but would you be correct. Theres a difference, thats your assignment!
Last paragraph there. Who is preferred? The partial legal subrogee, the payor, the junior creditor or the third person
interested or not interested? If made a partial payment accepted by the creditor e.g. payment by installment. Partial
payment but there is balance, partially payment only. Will he be preferred over the old creditor, the old partial creditor
(partially paid) will still be preferred, maintains preference over the partial legal subrogee.
EFFECTS OF LEGAL SUBROGATION Art 1303
OBJECTIVE NOVATION more difficult because all the requisites should be present especially for implied objective
novation. Look at the case of Ynchausti v Yulo, the court has to determine whether there is incompatibility between the
old and the new obligation. Remember that novation is never presumed. So the presumption is already against the
existence of a novation.
You cannot revive a dead member (gold member). You dont understand me?
Look at Ynchausti, theres a reduction of the debt but only as to 6 solidary co-debtors. But liberal with respect to the
new one (second promissory note) but actually, there was no intention on part of Ynchausti to novate because he only
wanted to favor three of the debtors. Ynchausti probably does not like Gregorio thats why he zeroed in on him.
Liveraide legal aid? Huh? Sabaw.
1.
2.

Ac (P5M)

Ac (P5.5M)

Bd on Jan 1, 2009 Third person mortgagor L (should have signed as co-debtor)

G
Bd on or before June 30, 2009

What is he in relation to B 3rd person interested in the obligation which lies in his wanting his parcel of land to be
foreclosed.
Extension of time does not imply novation. Implied objective novation if they cannot stand together.
What is the reason behind the provision (Art 2079): Why are the guarantor of the surety released by the law in case
creditor grants debtor extension time to pay? Binds solidarily. If the guaranty or surety pays, the principal debtor
cannot just thank him for the payment, he must reimburse the guarantor.
Dianne says: assumption of risk as profligate as the pambansang kamao.
No indication that the old one is extinguished by the new one. But supposing the situation is reversed.
1.
2.

Ac (P5M)

Ac (P4.7M)

Bd on June 30, 2009

Bd on or before February 28, 2009

Is there a novation here? No payment due on June 30 anymore if he made the payment earlier. There is incompatibility.
Dacion en pago is an objective novation.
If the amount was increased and you can prove the intention to novate then it will be an implied novation, but usually
its not a novation if you change the amount.
But if you convert an obligation to some other obligation like an obligation for contract of deposit for one of loan,
or a contract of deposit to one of commodatum, then there will be an objective novation.
But it does not detract from the case where a debtor allows the creditor to exercise some other act not indicated the
contract like allowing the debtor to exercise some other right like if its a contract of lease of a house for example, and
a normally theres no indication as to whether or not the lessee can also gather the fruits produced by the land
surrounding the house leased. Normally, if its a lease of the house, the fruits of the land surrounding the house, the
yard is not included if you lease the house, you only have the right to use and enjoy the land itself but as to gathering
the fruits surrounding land is not included. If the lessor without the objection allowed the lessee to gather the fruits,
thats not of right, the lessor is just being generous. Hence, that is not a novation. But usually the conversion of some
contracts to another will be a novation, an objective novation which changes the nature of the contract. E.g. one of
lease of a thing to one of usufruct. Or from contract of loan to one of commodatum. Vice versa. Theres a change there
in the contract itself, there is a novation. So remember that novation is never presumed. You have to prove that there
is an intention to prove.

GENERAL PRINCIPLES OF CONTRACTS

Definition is not a perfect one. Its a meeting of a mind

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 26 of

52
Sir Labitag: a convention manifested in legal form (writing, oral or public document) whereby two parties agree to
some prestation (eg give specific/generic thing, do or not to do). Actually, offering and acceptance between two
contracting parties as to object of the contract and the causa/consideration. Its not two persons, but two parties.
Acting as an agent of both of them.
How many real contracts are there in civil law?
Have you met an article on this? What makes it real? Its not in the sense of real or simulated? Not the truth or
falsity.
What makes it a real contract, not only the 3 requisites of a valid contract (consent, object, causa/consideration
causa is broader).
Contract of purchase and sale, contract of agency, contract of partnership or acontract of mortgage, antichresis.
Theyre all consensual contracts except that there are certain contracts denominated a formal contract/solemn, then it
will be classified as a formal contract. You look at the general principles of contract, general provisions, there are 5 of
them, although your outline mentions only three
4. Consensuality of contract
5. Autonomy freedom to stipulate
Real contract: one more element: delivery
ADDITIONAL REQUIREMENTS FOR:
1. Formal contract: Execution of contract to writing or a public document or registration or transfer of the
certificate of registration
2. Solemn contracts; e.g. marriage usually not mentioned in law on contracts, they always forget about marriage
There is a discussion between marriage and contracts. After the consummation, inviolable social institution but wholly
avoidable. Look at Prof. Florin. What is created by marriage is status. After the consummation, it will be status that you
will not get.

26 February 2009
Sale of cattle is a special contract. If you dont follow that, youll be charged with cattle rustling.

GENERAL PRINCIPLES OF CONTRACT

1.
2.
3.
4.

5.

Art 1306 Freedom or autonomy of contracts contracting parties are free to stipulate the terms of the
contracts as long as
Art 1159 Stipulation of the parties shall be the law between them and this should be complied with in good
faith (also mentioned in Art 1315 second clause)
Art 1315 Consensuality of contract, perfected by mere consent UNLESS real or formal contracts
Art 1308 mutuality of contracts, both binds the contracting parties, not only one of the parties. Basis for the
rule that if the positive suspensive condition depends solely upon the will of the debtor then, the obligation is
void because it will lack mutuality. Mirage is oasis, water. Thats also the case where the basis for making for
the court declaring that the automatic acceleration of interest clauses which depends only on the part of the
creditor is declared to be void.
Relativity principle contract shall only bind the contracting parties and their relatives, those who are
related to the original contracting parties: heirs, administrators, executors and assignees. UNLESS, there is
stipulation for the involvement of a third person, or stipulacion pour autrui (stipulation for others)

EXCEPTION for autonomy:

1.
2.

Not contrary to law

Void for stipulation

Mandatory provision requiring a specific requirement like specific provision (like Art 5)
The entire contract will also be void, principle of statutory construction, separability. Separate the good apples
from the bad apples.

Especially notorious stipulation in the contract can be declared void by the civil code, the most infamous of
these is called pacta/pactum. Part of the contract or stipulation of the contract.

Creditor is allowed to automatically foreclose without need of going through with foreclosure proceedings
then that stipulation debtor fails to pay the loan on due date then the creditor shall become the owner of
the property given by way of pledge, mortgage or antichresis, no need to go through with the foreclosure
proceeding.
a.

Pactum commissorium - Art 2088 and 2037 stipulation that allows for automatic foreclosure for contract of
mortgage, pledge or antichresis (that is the law on property)

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 27 of

52
b.
c.

Pactum de non alienando - Art 2130 (not to alienate) when a mortgagor sells the property that he has
mortgaged, he has to sell it as mortgage, cannot say that it is free from liens and encumbrances (because a
mortgage is an encumbrance) --- its a crime, swindling, other forms of swindling (Art 317 or 319)
Pactum leonina - Art 1799 (Lionine partnership) the lion gets the meaty part, the other gets the bones or
nothing at all. E.g. Share only in the profits, thats why the conjugal partnership of gains is only for profit. The
profit of the marriage. If one partner agrees to share only in the losses but not in the profit, of course he is
insane or a philantrophist because that is not a partnership at all. That stipulation is void.

**These are not only the void contracts, any mandatory or prohibitory laws is void because its contrary to law.
3.

Moral, good customs, public order and public policy

Mans notion of right and wrong. Innate sense of what is right and what is wrong, although we have free
will. But do not stipulate that are contrary to morals or customs. More or less universal. Sense of right and
wrong of man.

Code commission included custom because there are certain precepts that cannot be universally
recognized as moral, sometimes they only apply to certain communities or localities. Even if not
recognized universally, they can still be good customs, as long as sanctioned by a community. As long as
acknowledged by a community that is a decent thing to do. The community cannot hold him bad. They
cannot have bad custom only some of the members.

Whats a good example. One case you should read. Something to do with cause. Its the Heges (?) v. CA. A
case of a DOM, figuratively a DOM, how old was he, I think its 65 man who entered into a contract with a
16 year old girl. Wherein he said that I will donate a parcel of land, as long as you come and live with me
and by my love (euphemistically speaking, because he was a married man, who wanted to become
Abraham. When Abraham was old, the tribe gave him a pretty warm thing to keep him warm. asus!) In
fact some of the patriarchs, his first wife cannot bear him any child, he was given the maid Hagar and gave
him Ishmael. Sara got him Isaac without in vitro fertilization. Isaac became ancestors, Jacob was the father
of all Jews. Father of 12 tribes. Lea, Rachel. Bore to 4 women. Thats why theyre all half brothers. He
outwitted his father in law. Anyway. If the basis for contract is carnal relation, then thats contrary to public
morals. Ixara goes huwaaash. Theres a case of Iranian who lived with a Filipina and married her so she can
be an unpaid domestic helper.

4.

Public order

The only one used in Spanish civil code. The French said that the ordre publique consideration of the
public good, will or weal (welfare), peace and safety of the public and health of the community. Anything
that is contrary to that, you have to convince the court.

Broader.

5.

Public policy
Ferrazzini vs Gsel l (p. 421 in Tolentino) stipulation not to engage in competitive enterprise after leaving the
employment. Those stipulation must be limited to time, place and extent so that otherwise, you will be. If ita
chef you hired, he can no longer exercise his skills as a chef, hell be a janitor.
Provision deemed contrary to public policy meaning what, the employee will bargain away his right to decent
living if he agrees not to enter into or any other business that is blah blah with his employer if for any reason,
he is terminated by his employer, he cannot enter into any enterprise without his permission. He is dismissed
from employment. You think he will be given. Of course not. But usually, the court has to determine
whether this stipulation is in effect bargaining away ones right to earn a decent livelihood. Usually
it has to be an anti competitive undertaking limited as to the time. Cannot be for a long period of time. It has
to be in the context, only for certain aspects. Usually there are reasons why he is engaging in the same
activity, prevent him from making use of the skill or state of the art while he is employed by the contracting
party. Usually this is true for certain high tech industries, there is a provision there for a limited as to time and
activity, cannot be encompassing so you can earn livelihood, limited to time place and world. The one who
designs these integrated circuit (IC) or software design. Depends on how fast the technology is. In five years
time what you learn is already obsolete. The technology changes every 6 months or at least every year. Look
at all the gadgets they are getting smaller and smaller.
The evidence of the mistake of doctors can no longer testify. However, the evidence of mistake of lawyers can
testify. Doctors sometimes do not tell the public what happened in the operation although they will in their
postmortem meeting about what went wrong here. Then they will blame two or three of them and then forget
about it.
You keep him warm not by uhhh. You keep him warm by putting on his coat.
-

Contrary to public, sound policy or good moral, undermine individual right whether personal policy (Ferrezine v
Gsell) most likely Justice Laurel copied this from somewhere else, just like the social justice. We were required
to memorize it before. Calalang v William. No footnote. It turns out that that definition was lifted from an

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 28 of

52
-

encyclopedia of social sciences so he is known for that but nobody told the public that it was lifted from an
encyclopedia of the social sciences. Thats plagiarism? But hes dead, do not malign his memory.
Contracts exempting person from own malice or gross negligence of his employees or servants.
A stipulation that contract of carriage that exempts common carrier from its negligence, that would be void.
Usually before buses had many notices and sayings like baggages carried at owners risk. Unless it is proved
that it is not the fault of the conductors fault. Ordinary diligence together with other churvaloo like reduction of
fare. Inviting to be valid, not that stipulation is actually a solemn contract. Part of the contract of carriage,
the dictation is formal (in writing and coupled with additional consideration) other than the service of carrying
the goods of the passenger. Or contracts that the delay of justice. Or stifles the prosecution of the crime. A
contract that says the stipulation of the crime, I will no longer prosecute you for violation of the bouncing
checks law. Or crimes that will be contrary to public policy. Or unduly restrains competition.

04 March 2009
Offer and acceptance looks like a pingpong match. Have you seen a face to face transaction in a fish market? How
much is a kilo of tilapia? 170? 150 na lang. Patuka ng tilapia is expensive. Rice bran. They dont go as big. Take you
probably one year for them to reach one half kilo. For the meantime, its both male and female, soon the female will
give birth to tilapia fry. But now they are all males. Because the male grows bigger. No more females so no more
distraction. You just eat and eat and grow it. Have ready spins. No tilapia now that is spotted in the sides.
Even horses, the one who looks nice is the stallions, the males that strut. The females are passive, well never mind. I
was thinking about catching and it. Foreplay is courting. Try? Hear domestic cats. Until one of the parties gets tired of
concocting counter-offers any variation, sometimes youll run out of things to say, you just buy. Thats it. You get the
seller, okay, fine. Once the counter-offeree accepts the final counter-offer, there is a contract.
Exactly when a contract is perfected: When THE counter-offeror learns about the acceptance. Especially if
face to face. But if it were by some other means of communication like PhilPost unless it gets waylaid.
1.
2.
3.
4.

MANIFESTATION counterofferee manifest/possess his acceptance, writes the letter or sends the message
EXPEDITION sending of the message, mailing it if by letter
RECEPTION receipt of the message
COGNITION what our CC follows, in between the sending and the knowledge, there is many a slip.

At anytime, he offers it. The offeror can withdraw the offer because the contract has not been perfected yet. But there
is also danger of payment of damages if there is abuse of right. If offeror or counterofferor. Spend for inspection and
examination of the title to the property or he knows that he is going to hire an appraiser, he will spend money without
any justifiable reason, out of caprice, withdraws to the damage of the offeree.
If offeror gave an option to the offeree, what is an option? An option is the actually an opportunity given to the
offeree to consider the offer, usually has a time frame (or option period span of time given to the offeree to consider
the offer) Offer must be complete, intentional and definite Read the case of Yacht Bronzewing. Two of the
requisites are already there. The object certain and the causa/consideration.
Intentional on the part of the offeror to enter into a contract. Not a mere sham, not a mere prank of the offeror. Once
the acceptance is qualified and absolute, he just says yes to all the terms in the offer. In between, there might be an
option granted to the offeree by the offeror. 30 days to consider my offer to sell to you this house and lot for 5 million.
During the thirty day period, he has to investigate how nice the house is. How good the selection of the lot. He may
hire and appraiser for all that. He just knows the value of house and lot, investigate the title WON the offeror is really
the owner of the property. He may have to spend for that. At anytime, the rule is that withdrawal of the offer, the
offeror can withdraw the offer as long as he does not know any acceptance of the offer UNLESS, there is
a consideration as something paid or promised. It can be money or something else lets say promise to do or to
give. Not essentially money, but normally money. If there is a valuable consideration for the option, then the law says
offeror cannot withdraw it until the lapse of the option period.
Supposing the offeror gave offeree to consider offer to sell a house for 5M, the offeree paid offeror a price of 5M, if you
can you can give 5 centavos, but as long as there is valuable consideration paid, the offeror is not supposed to
withdraw the offer, if he does, for which the offeree paid 1000 PHP. On the 15 th day, the offeror called up the offeree,
Im withdrawing the offer even if there is valuable consideration. Upon hearing this, no no no under the law you
cannot withdraw the offer because Im accepting it. QUESTION: Is there now a breach of contract, if he turns
around and brings to another buyer? NO. Whats the basis of damages? Breach of the option agreement. Its a
contract ALREADY because there is a valuable consideration for the option. That is what is breached but there is no
contract of sale. The damages offeree can ask the court to grant him, 1000 actual damages and the cost of finding out
the title. Lucrum cesants lucro cesante or unrealized profit. He too will earn profit because later on he will sell it for
5.5 M the profit is 500,000 that there is a firm contract to resell it. No buyer and no contract yet, the would-be buyer
will have to prove the unrealized profits because of the non-perfection of contract to sell because of withdrawal offer.
Accepted it when the offer was already withdrawn. Nothing to accept, but there was a breach of the option agreement.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 29 of

52
DISTINCTION BETWEEN CONDITIONAL SALE, OPTION TO BUY/SELL, PERFECTED CONTRACT OF SALE,
CONTRACT TO SELL (the same with option to buy and sell) this should make the distinction between these three
terms. Option to buy and to sell. Contract to sell, contract of sale. Look for it. In a complex offeror fix the time place
and manner of acceptance, should be by way of a letter, or in writing. Cannot be done orally, the acceptance should be
made in a certain place, a certain time. The time place and manner of acceptance can be indicated in the offer.
The offer will terminate when the offer is withdrawn before he learns about the acceptance. There are usually
cases between acceptance and withdrawal of the offer. Usually done by letters, withdrawal was communicated by way
of letters. By the offeree made by sent throught the mail. Withdrawal was also sent through the mail. They will cross
line somewhere. From whose point of view whether a contract has been perfected or withdrawn? The offeror or
counter-offeror because the original offeror might not be the offeror in the end in the pingpong match. If the offeror
already learns about the acceptance, here comes the reception because if for e.g. if the acceptance was already
receive and then he does not open it, he does not know about the acceptance, he didnt take cognizance, but the
letter accepting the offer was already sitting on his desk because he didnt want suspicious that its an acceptance. If
the letter was already registered with return card, thats why lawyers love this return card, its the date stamp by the
receiving post stamp but the signature of the receiver and the date there. Done by post smart. Sent the day before he
received the registered letter accepting it. Theres no contract because the letter accepting it was later than the letter
sent to withdraw the offer. But if he can prove and its down there, sitting on his table delivered by the mailman. e/I
theres no registered return card. Given to the mail man and executes an affidavit that I already deliver the paper. only
paper I delivered in his office. I can recognize the envelope that I delivered. He will have in his favor the mail mans
affidavit will have the presumption of regularity in performance of official functions. Unless you can prove that
he is a fit and liar mailman. Theres also the track record, maxim falsity in one is falsity in all. Falsus in unom, falsus
in omnibus.

EXTINGUISHMENT/ANNULMENT OF OFFER:
1.
2.
3.
4.
5.

Withdrawal by the offeror

Lapse of the time for option period
Legally incapacitated to act (insane flew over the cuckoos nest or imprisonment, with the subsidiary penalty
of civil interdiction)
Offeree makes a counter-offer
Contract becomes illegal

Just focus on the theory: the contract is perfected when the offeror or counter-offeror learns about the acceptance
of the counterofferor, before he learns he can withdraw the offer EXCEPT when there is a valuable consideration
for the offer. Then hes not supposed to withdraw the offer if you dont give the offeree complete offer period, leave
the option open for a period of 30 days. Make another offer for contracting party.
OFFER MADE BY THE AGENT, NOT THE PRINCIPAL assuming he is acting within the ambit of his agency, any
contract he entered into in violation of that is unenforceable as to his principal
ADVERTISEMENT channel that includes all these gadgetry (knives ergonomic this is, how you slice through me and
even the can) the value of all the knives something like 20 K, only introductory pays all now will even reduce it to 500
pesos more. Supposing you call the number, look at the offer, if you accept it, you are guaranteed to receive this as
long as you pay the price, the contract is guaranteed if you pay this number, its definite and complete an indication of
there is a contract of sale if you call it. Even if you know the price, no indication that a contract of sale is guaranteed,
once the offeree manifests his acceptance of the firm offer. The offeror learns of it, all advertisements are just
invitation to make an offer or to bid. Eligibility to bid, anyone who expresses in a clear interest is merely making an
offer. That means the one who advertise is merely the one who accept or reject by the bidder or prospective buyer.
Unless it is clear in the contract is a buyer will be guaranteed the perfection of contract to sale, just an invitation to
bid. You cant sue them for breach of contract if they sold the last piece 5 minutes ago. Be sure if the ad guarantees
the contract if they learn of it.

ANTOK NA KO NG
FATAAAAAAAAAAAAAAAAALE.
-_- -_- -_-

Moral damages not usually granted in a breach of contract . Only the actual and compensatory

damages. The damages will be proved. Okay, any other questions? You just read the long disquisition of Tolentino on
the offer and acceptance. But essentially, the PERFECTION OF THE CONTRACT is when there is an offer made by an
offeror and has essential requisites of valid contract except CONSENT.
Acceptance is also qualified, not ifs and buts, if there are provisos, that would be counter-offer which must be
accepted by the other party.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 30 of

52
LEGAL CAPACITY TO CONTRACT OR GIVE THEIR CONSENT
They must be of age and not suffering incapacity to act. Because if they are, one of the contracting parties, even if
freely given, one of the contracting parties has no. Consent given is vitiated by the one party has not could not legally
give consent. The effect is VOIDABLE
1. Has legal capacity but vitiated by one of the five vices of consent
Goes to the very freedom or freeness if the consent is vitiated by mistake, then the consent
that was given was suffering from mistake or error but must be mistake of fact, not law
2. One of the legal parties has no capacity
3. Victim of a fraud is also suffering in a mistake of fact, in error as to the truth because through the insidious
words and machinations of the other party, he gives consent. Had he known about the true fact hell be
suffering under the mistake of fact. But usually, one party can be mistaken without fraud perpertrated by him.
The opposite is not true. The victim of fraud, suffering from mistake, but a party may be mistaken without the
need of insidious word. In other words, theres not hospital for him, theres a hospital for the crazy not for the
tanga. :P You have to distinguish between mistake of fact and mistake of law.
Mistake of fact excuses. But mistake of law doesnt. Some people are expected to be knowledgeable of certain
facts because they should be wary of machinations like lawyers. Supposedly, lawyers do not just believe facts
given to them especially if in one case,
Three estates in French society then, aristocracy, the church and the military, the journalists are the fourth estates.
Revolution of the cake makers, let them eat cake. Mary Antoinette. Then she cannot dispute it because she lost her
head, history is written by the winners.
How many STAGES OF DRUNKENNESS are there? There are four stages of inebriation.
1. JOCOSE (?) after you imbibe one bottle or one glass of liquor, the drunk is just voluble and loquacious. And he
is very happy. Can he enter into a contract? He knows what hes doing. From being loquacious and happy,
sometimes he dances around and talks a lot
2. One more bottle. BELLIGERENT stage. Can he enter into a contract into that point. He will not agree to any
offer make outrageous counter-offer, no contract. Quarrel some how can you make him agree?
3. One of the 7 dwarfs. Weepy. LACHRYMAL. She will remember all the hurts. Can you make her enter contract.
Its very easy to make her sign. Thats true, but sign this contract. Easiest stage. Some sort of undu influence
there already.
4. COMATOSE, dead to the world. You can make her enter a contract unless you affix her thumbmark.
For or in the name of the owner without authority to do that or in excess of the authority. Powers of ownership, that
one is void and unenforceable against the owner. Distinguish from rescissible contracts in 1381 Par 1
where the ward suffers, entered into by the administrator, lesion of the economic income. Note that the guardian is
acting under the powers of his administration but there is prejudice. Required economic prejudice is 25 % of the value
of the property sold.
____________ Something to do with the voluntariness of the act giving the consent by the contracting parties.
Mistake and fraud must have something to do with the intelligence and spontaneous character of the consent that is
given
At the instance of the party whose consent is vitiated, the party who inflicted fraud or the violence is not why should
you be allowed to make the contract cannot benefit from his own wrong
File an action for annulment. Of course together with the force or intimidation or threat, - DURESS
Pure force, possibly, the contracting party will no longer have the capacity to affix his signature, beat him up until hes
unconscious, how can he sign. In other words, you inflict force first then threaten him with more force, though it can be
pure intimidation. Because theres still the one who gives consent can still do so, sign his name in the contract.
Definition of force, Art 1335. There is VIOLENCE where in order to rest consent, serious force is employed beat him up
until he says yes, if its oral. If its verbal. If hes supposed to affix signature. You better find out if left handed or right
handed, good if ambidextrous, find out which hand can sign, the other hand depending on the definition of
INTIMIDATION infliction of great evil upon his person/property, or descendants, spouse.
High threshold of pain. Or actually, his nerves are dead. Or the pain part of his brain is damaged already. He can just
beat him up and see contusions and fractures but then what, his face is impervious to pain, you can threaten not his
person but his property. You might threated Prof Esguerra, to smash the windshield of his brand new BMW, he might
give you a 1.0 through intimidation. I will kill your wife. Go ahead, I have a spare. Then I will regain my freedom.
Will it only include legitimate relationship? No it might include the illegitimate. 5 legitimate daughters and only one
illegitimate son.

05 March 2009

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 31 of

52

VICES OF CONSENT
Still on violence.
UNDUE INFLUENCE taking undue advantage of ones superiority or will, result of familial, confidential, spiritual, other
relations, applies to lawyer client relationship, priest-penitent relationship, father-son or grandfather-grandson,
The inferiority of will on the part of the undue, mental weakness, ignorance or financial distress or some other
unfavorable bartering position then the effect is constrained of force in a way to his consent because the alternative is
worse than the giving of the consent.
FRAUD vice of consent, dolo causante or causal fraud not merely dolo incidente, not the fraud in breach of an
obligation. If you make that mistake, Ill let you repeat obligation.
INCIDENTAL FRAUD are those slight fraud wherein the party who was defrauded would still have given consent
to the contract had he known the truth but would have bargained for some other concession. But still given
consent like that fellow industrialist Fortunato Halili.
CAUSAL FRAUD goes into the very heart of giving of the consent. Would not have given his consent had he
known the truth.
CONCEALMENT OF CERTAIN FACTS verily find out the truth, cannot help the unwitting. The street jargon, the law
cannot help the tanga. No hospital for it. Confidential relationship between the two party, has duty to reveal the true
facts. Under the obligation, confidential relationship between the agent and the principal. Lawyer and the client, how
about the doctor and the patient, I suppose so also. Even if the fact will make him depressed, still you shall tell the
patient whats wrong with him. If he doesnt ask, the doctor will not tell. Unless asked, the doctor does not volunteer
unless they want to operate on you, your condition is worse. You have this, one of your coronary arteries is blocked, Ill
schedule you for surgery. First, your problem is surviving the operation. Second, your problem will be surviving the
financial status. Will your wealth survive the operation?
SALES TALK OR DEALERS TALK. Exaggeration of the trade, salesmen will extol the virtues of the products theyre
selling. No salesman who will denigrate their product unless they intend to leave the company. Otherwise he wouldnt
reach his quota and out of the job next month. As long as he does not overstep the bounds of allowable sales talk and
deliberate fraud. The one who says untruth knows the fact, but can also be mistake of fact.
Causal fraud other fraud would not have given the fraud if he does know the true facts. The fraud if it does not
overstep the fact of fraud, might be cause of mistake or error on part of the person who is mistaken. Error of fact. Not
usually an error of law. Just one mention of error of law. Mistake as to the legal effect of the transaction. You do not
realize that actually, you use the words there, its tantamount to being a mortgage, started off as a mortgage of a
parcel of land. Mortgage of the improvements to a homestead. In that case of Casilan v Rodriguez, the one which
involves the formulation of the 3rd paragraph of Art 526 (definition of a good faith possessor) mistake as a doubtful or
difficult question of law, ruling in the case of Casilan v Rodriguez. Also involves statutory construction. The contract
was originally designed to get around a legal prohibition, which is found in the Homestead Law or Public Land Act.
There is a prohibition, the homestead there is prohibited from alienating or encumbering the homestead. But allowed
to encumber merely the improvements of the homestead, not the land itself. What is allowed is also the encumbrance
of this homestead in favor of GOCC financial institution. The absolute prohibition is for 5 years from the approval from
the homestead application or the grant of the homestead patent. If it is covered within, then it is void. Then there is
a redemption class to his heir to relieve the homestead. Whatthe contracting party here is an homestead patent (there
was a title already of Casilan) which is within the 5 year prohibited period. Improvements of the homestead.
Allowed to gather the fruits and repay the interest of the law out of the fruits. In effect, the real estate mortgage is the
creditor has possession of the real property. He just gets the public document/mortgage document which in effect
encumbers the property or land. But remember here, what was mortgage is merely the improvements in the
homestead. There was even a stipulation here that the homesteader is going to ask for the cancellation of the title or
homestead patent and then file a land registration case, he could no longer have grant from the state as to the
prohibition. The homesteader is telling the state or the court in the land registration case that the owner in feasible
title, private land actually, homestead/free patent, the applicant states or admits that the land is essentially public
land whereas in the land registration case he should not approve. Its private land. Theres a difference. If youre
publication for free patent or homestead is approved, the land will go back to the public domain whereas in the land
registration case, granted to the petitioner, reverts to the public land. Remains to be private, assumption is that it is
private. There are two kinds of land, public lands and private lands. Among public domains: alienable and inalienable
like forest and mineral lands. Cannot be alienated or given by way of homestead or free patent. Governed by the
forestry code. Mineral lands are covered by mineral covered or mining code. Essentially, under your constitution and
you reach that one,
Biggest marsh in the Philippines aside from Candava, the other one is Liguasan Marsh. Straddles Surigao and Agusan
POINT:
Mutual error is a vitiation in the consent. Legal effect of the agreement if they were mistaken.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 32 of

52
-

Mutual mistake of law, legal effect of the agreement. Opportunity to know the facts, to know if it is true or
not true. The claims of the other party may not that is not fraudulent.

How about expression of the opinion: Not fraudulent UNLESS done by an expert and was relied upon, there must be
reliance.
Blue diamond is the name of the Philippine air force. Crazy isnt it? But thats how my mind works, and thats for you
and me. The victim of a fraud is what? Suffering under a mistake. Especially in the mistake of fact if its not dolo
causante, its merely a dolo incidente, the mistake of the other party is this type of fraud, does not vitiate, but makes
the other party guilty of fraud liable for damages. What is allowed is the usual exaggeration of the other party and
no opportunity to investigate the facts. Must be relied upon as to the true facts. To say that he was suffering from the
estate. That is in effect a fraud. Especially if the gemologist is in cahoots with the other contracting party.
MISREPRESENTATION BY A THIRD PERSON (Art. 1342) not exactly fraud unless it is a substantial mistake, the one
usually guilty of fraud or causal fraud is usually the other contracting party or someone who is in conspiracy with one
of them. But remember, the one who is the victim of fraud, although he is suffering from mistake of fact, mistake alone
will be the result of a fraud. A party can be mistaken without any help from any other person or contracting. You can be
mistaken by your own lonesome self. Get it? There, if youre mistaken on your own, you alone has to bear it because it
is your fault that you did not investigate. It is presumed that all persons take good care of their own concerns,
dont expect the law to be always on the lookout for your mistakes. If you did this with eyes wide open, without the
opportunity to know the true facts, will not extricate you from bad bargains. Unless it created substantial mistake, it
has to be mutual, but if there is misrepresentation. Had he known about the true facts, thats the key to vitiation of
consent. The other party who doesnt know about the mistake, if you would have if there is still consent, then thats
not the mistake or even the fraud that will vitiate the consent, because usually, its part to freely find out the true state
of the facts. He has enough time then any consent that he gives, cannot blame anybody else. So this
misrepresentation will be considered as well but if it is supposing both parties perpetrate a fraud mutual both of them.
The seller says this is flawless 5 karats diamond, worth 500K but Im selling you for only 99K because if you say 100K,
its expensive, thats the way marketers entice people to buy. You have a bargain. They give you candy you will realize
that you will part with 200. What is the effect if there is fraud. The buyer pays in counterfeit money. Both of them are
mandurugas.
TWO KINDS OF MISREPRESENTATION: especially about the legal capacity especially age
1. ACTIVE
2. PASSIVE By the looks, a guy who will buy beer is a worrier not a warrior, look like 21 not 17 . He will have to
wait for his 18th bday and never tell the cashier his age. Just proffer the money.
Before we leave duress, Look at Art 1335, its the main article on violence and intimidation (duress) to determine the
degree of intimidation, the age, sex and condition should be borne in mind. But look at the 4 th par (lawful claim in a
competent authority does not vitiate the consent)
Reverential fear - afraid to displease someone in a higher position

10 March 2009
BADGES OF FRAUD (indication of fraud in the contract) or INDICIA OF FRAUD
Usually, you use these for accion pauliana and for purposes that there was a fraud in getting the consent of one of the
contracting parties.
- courts are usually on guard now if there are badges of fraud attending to a contract. There is a proof for this.
- Can also be used for indication of simulation.
- Oria v McMicking enumerates badges of fraud.
1. Proof of large indebtedness of one of the parties, more likely suffering from financial distress or insolvency, all
his debtors are cursing him
2. Sale property on credit by insolvent debtor (does not receive valuable with no consideration)
- either to defraud creditor or fictitious sale to hide properties available as badges of simulation
3. Transfer of property after suit is filed
4. Inadequate consideration (worth 10 M is sold for 100 K) when not supposed to be absolute sale. Inadequate
consideration.
5. Transfer of all or nearly all of debtors property. such that debtor becomes insolvent
6. Gross disparity between price and value property
7. Contract is between parent and child there can be an arms length transaction between parent and child. So
there should be another transaction that should go together with this badge of fraud like gross disparity or
previous collection suit by another party. By itself, its not badge of fraud, there must be another indicium.
8. Transferee of the property failed to take physical possession of the property sold
SIMULATED CONTRACTS
Two kinds of simulated or feigned contracts, no contract at all
a. ABSOLUTELY SIMULATED never intended to be bound, so essentially inexistent

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 33 of

52
b.

RELATIVELY SIMULATED usually depends on valid and void

In relatively simulated, there are two contracts,
1. Seen in the paper or above the ground VOID aka ostensible contract, out there in the open
2. Hidden were interested in. It depends. (Lawyerly answers, usually love to qualify) may be valid if:
o not prejudice third persons
o cause, object or purpose not contrary to LMGCPOPP

OBJECT OF CONTRACTS
-

Certain or ascertainable without need for a new agreement

Thing or service, just like a sale (creates prestation to do, give or not to do)

CHARACTERISTICS OF OBJECT:
1.

Determinate or at least determinable/certain or ascertainable need not be pinpointed as a specific thing,

can be delimited generic thing or truly generic thing. As long as you know what is the object of the contract

2.

Actual and existing or capable of existing like future things, as long as it will exist in the future. Otherwise, if
that object will never exist in the future, its not a fit object of the contracts. E.g. cannot have object of
contract, the delivery of the unicorn or the delivery of a pterodactyl except if you are going to deliver the
fossilized bones of the pterodactyl, but not the live dinosaur that flies. It must be possible of existing, have
actual existence

3.

Lawful and Licit object of contracts. This object is not contrary to LMGCPOPP

Between sobs, you can sell your inheritance already. Wait til he is embalmed. You thought he is dead but
he is merely comatose. Embalmers scream, its alive. The moment formaldehyde drips to your veins,
youre an object. Anyway he is being paid for his services. Do something about your skull if it becomes
deformed because of big bullet hole. Run over by a truck. They will give you your last haircut.

Become an heir, only when the moment the person from whom you are going to inherit dies. That exact
moment you become an heir. If there are 5 or ten of you, you all become co-heirs and co-owners. The
moral here is be obedient to your parents. Say amen always, do not commit gross disobedience
because grounds for disinheritance. But even if, they can sell all their properties and you cannot complain,
unless you can prove that they are spendthrift or crazy (prodigality). They can spend the money by going
around the world. You have no cause to complain unless you can prove it, in which case if you fail to prove
that they are, youll be disinherited. So the lesson, just be on the good side of the person youll inherit
from.

4.

Possible. Have no possibility of existing or services that are impossible e.g. guided tour of the core of the earth,
dont believe Jules Verne. If you want to see the earth from the outer space. You can book a seat in the Virgin
Explorer. Russian cosmonaut, you have to train otherwise you might not take the pressure. Spend 6 months in
antigravity train. And they probably you have to swim underneath a swimming pool. $20 Million

5.

Transmissible or something that can be transferred from one person to another. Certain services are non
transmissible by law, like fidelity and consortium (sirs favorite). Non-transmissible and non-assignable
because the subject matter of a penal provision.

Its determinable and the one who determines makes this object determinate is another person, can be 3 rd person or
one of the contracting parties. The contract is for the seller to sell to the certain buyer that the seller chooses to
deliver. The object is one of his horses, determinate generic thing or it could be selling one of his Boer (south African)
goats, the other is Namibian goats. Native of south Africa but they have been reared in some other arid lands like
Australian.
Try not to be the goat of the class, sometimes they become the most successful. They can become chief of staff of the
AFP and senator like Rodolfo Biazon who was the goat of his PMA class. He was a cool customer in combat.
If the object of the contract cannot be determined, it will be void or inexistent. There is no object. If one or two of
the essential requisites of the valid contract is absent, either actually absent or legally absent, the contract is void and
inexistent, actually, inexistent. So if there is no object, the contract is inexistent.
The thing is going to be sold is one of the cars in the sellers car collection which his wife chooses. It is determinable,
because the wife can determine to choose or dispose of. Or the thorough-bred horses in his ranch. Certain or at least
ascertainable, without need for new agreement, then the contract is void.

CAUSA OF CONTRACTS
THREE KINDS OF CAUSA

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 34 of

52
1.

2.
3.

ONEROUS usually the causa of contract, meaning there is exchange of values between the two contracting
parties. To them, its almost equivalent values. Can be a thing (usually money), sometimes the problem is with
regard purchase and sale. What is the causa of sale? There are two causa, causa as to the vendor
(purchase price that buyer will pay), causa as to the buyer (thing that is going to be delivered to him/sold)
What does Tolentino say? The starting point of the contract is the subject of the sale, the causa is the
value that he will give in exchange for the sale. (Ambrosio of Padis Point, that highest point in Antipolo,
nickname of Ambrosio Padilla who used to teach here before he ran for Senator)
REMUNERATORY Or it could also be that they will both do (Ill do that you may do) eg Ill teach your
preschooler how to read but you supervise the building of my house.
Usually the other one is thing the other one is money
GRATUITOUS one party will part property or render service then the other party will not do anything in
return. Giving out of liberality, fondness, generosity and the like. No exchange of values. One just wants to
give to the other. Give something out of liberality or fondness. But the fondness should be as pure as undriven
snow, unalloyed, no immoral motive. I wish you would read that case of Liguez. Then they used on part of the
in pari delicto rule. But the ones who tried to recover the property, the widow of the old man and his children
but they were charged of privies/successors in interest to the illegal contract. Generosity is also a causa but
remember in common law they only recognize valuable consideration.

Consideration is the causa of common law contracts. In our jurisdiction (civil law), there are three causa. GRO.
Consideration legal detriment to the promisee the one to whom the promise is made which is more than a moral
duty. Parts with money or something of value, the legal detriment that is quantifiable in loss of opportunity the simile
is the one part promise to whom promise is made is either going to take two courses of action he either goes to the left
or to the right of the forked road. Or two activities, he may choose one but because of the promise of the promissee,
you chose the other one. E.g. took up law instead of medicine for a Porsche car. Legal detriment to the promissor
because had you taken up med, youll be a successful doctor. Now that youre in law, youre miserable.
Bargain for exchanged values, which is the onerous one. You cannot reward a transferee for his past services not
amounting to a demandable debt. Like a remuneratory donation that Sharon gave to her faithful yaya. Included in
the commercial. Yaya of the parent and then now the yaya of the son of the original baby that she took care of. What
more loyal service do you need? Give your trustee yaya a donation, thats called a remuneratory donation, for the past
services although she has been paid for her services before. At the time she completed her services, she was paid for
her faithful service. The causa there is to reward for past services. Because if the services are still to be performed in
the future, that is onerous. Past services, that still amounts to demandable debts, paying an obligation, a demandable
debt. But if you paid her before and at the same time gave her donation.
Retirement benefit annuity. Out of your monthly salary, you are deducted to your contribution then remits it.
Counterpart contribution of the employer. Annuity contract capitalized then at the retirement, given in lump sum or
monthly pension. The fund that was accumulated through the years of service and contribution is the capital of the
fund. Each monthly payment is considered as the furits of that fund. It is called a civil fruit. Periodical income.
THREE
1.
2.
3.

KINDS OF FRUIT
Civil
Industrial
Natural

Liguez wherein he is a married old man who suffered. Statement of a false cause UNLESS there is another causa that
is true and lawful. Opposite of true causa. Two other characteristics: true and lawful and existing.
Inadequacy of cause can be a badge of mistake. Property valued at ten times more than the price indicated in
the contract. Can even include contracts that are subject of duress, the consideration is also inadequate if the one who
inflicted force or intimidation paid a little bit or most likely none at all. All the grounds of vitiating consent is a badge of
fraud.
Refer to Art 1409 Par 3-5
3. Cause or object did not exist at the time of transaction
4. Outside the commerce of man
Pars 1 and 7: truly void contracts.

FORM OF CONTRACTS
Art 1356 especially this is true for consensual contracts, in whatever form it may be e.g. oral sale is valid.
The EXCEPTION is

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 35 of

52
1.
2.
3.
4.

Law requires contract be in some form in order that it may be valid e.g. donation of real property, needed for
validity or donation of movable property must be in writing for validity o
In order that they may be enforceable e.g. covered by statute of frauds, there should be written memorandum
otherwise unenforceable in other parties or its privies
In certain way e.g. covered by statute of fraud or you prove that chattel mortgages you prove that in order to bind
third persons, it must be recorded in the chattel mortgage registry
Real contracts need delivery in addition to essential requirements, otherwise the real contract is not perfected like
mutuum, simple loan, commodatum, pledge andn the real contract of deposit or depositum. Contract not
perfected until delivered to the other party. Unless the pledge or pledgor is not delivered.

Look at 1357 and 1358 in these two contracts, the law require document or special form which is needed to public
document, its not for validity of the contract, its for the real right, may be transferred to other contracting party.
Look at number 1. Real rights of immovable property (Book 2 of CC) but it should be immovable property. E.g. the real
right of real estate mortgage its needed that there must be a public document OR the highest of all real rights is
ownership, you need public document to transmit it to the buyer, you need a public document. Without which, the
contract is void or is unenforceable as long as there is a in statute of frauds in 1402 number 2. Needed a
writing or written memorandum because the memory of man, lasts only one year.
Statute passed by English parliament to prevent frauds and perjuries. Because the premise is the memory of man does
not last a long time. So you must memorialize what they agreed to, the more forgetful of the two will forget what he
agreed to. Likelihood that the other party who claims to have an acute memory can perpetrate fraud upon the faulty
memory. (For your case, its only 6 months or one semester). Clipped tongue prone to prevarication, recite to him the
stipulation he allegedly have agreed to. In certain contracts, this must be memorialized in writing so that the parties
will not be the victim of a fraud. Thats the basis. But the statute for fraud only requires written memo so that the
parties can now have this written memorial what days to be later on. But that will no agreed to was the sale of a parcel
of land which is an immovable property. That written memorandum is not enough to transfer the title of ownership
over the land. Art 1358 is the public document. When one of the parties tries to enforce the obligation arising from
the sale of that parcel of land, he has to show the written memorandum and then ask the court to require the seller to
execute the proper public document or the real right of ownership can be transferred to the buyer otherwise it will not
be transferred yet. Especially so if that title to that parcel of land is evidenced by a Torrens title registered in the civil
registry.
The contracting parties may compel each other to observe the proper form once the contract has been executed.
There is now the action for specific performance. Not only to deliver specific parcel of land but also public ownership.
Art 1358 Number 1
Certain contracts need public document like transfer of real properties. E.g. right of usufruct, easement, real estate
mortgage rights over real property so that once there is a public document, and when it is registered, it will bind the
entire world. For this to be extinguished, transferred, modified or transmitted, not for validity but for the real right to
be created.
Tomorrow, reformation then interpretation and rescissible contracts.
DEFECTIVE CONTRACTS: think about the provision and commentary, what are the defective, nature of defects, is the
contract curable, who can and how, what is the period for curing. If you are going to attack the contract, how, will you
attack it frontally or on the sides (collaterally), who can attack it, what is the time frame for attacking. Curing and
attacking. Who, when and how. Thats the frame of reference.

15 January 2009

FORMAL CONTRACTS
Formal contracts
a. Donation
b. Sale of land
c. Sale of land through agent, must be in writing otherwise, the sale will be void (Art 1874)
d. Antichresis (Art 2134)
Statement of the amount sold and interest (must be in writing) in order that antichresis must be valid
so youll know the fruits of real property. Because the creditor is given authority with the property, but
he will apply the net fruits earned by the property towards the payment of interests and the principal.
Fruits will pay for the entire thing, subject matter is real property.
e. Interest for using someone elses money (Art 1956)
f. Chattel mortgage (writing in the deed of chattel mortgage, most likely the public document because recorded
in chattel mortgage registry in the register of deeds of city or municipality). In addition to the writing, the

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 36 of

52
g.
h.
i.

addition of chattel mortgage must have affidavit of good faith which means that the parties attest to the fact
that the chattel mortgage is consensual (?).
Can reduce diligence from extraordinary to ordinary, provided that the stipulation is in writing, signed by the
shipper and supported by other services of the carrier
Art 1744
Art 1773 Partnership, its an agreement also, can be made orally BUT where immovable properties or real
rights are contributed to the partnership, find out if its real rights over immovable property. Its a movable
property or interest in immovable property. there must be an inventory. The contract of partnership must be a
document it must be attached to the public document an inventory of said real property and in addition there
must be an appraisal of a value (how much the value of the property) instead of the money, there is real
property. inventory signed by the property. plus an statement of the value.

Art 1771 not credit because its personal right. Only real rights (those which are enforceable against the whole
world) e.g. right of pledge creditor over the movables *but the pledge is an accessory act. Cattle accessory act, in a
sale of large cattle, there must be transfer of certification which in the Philippines, there are only three: cows, carabaos
and horses. No elephants, in Thailand there is. How about giraffe in Calauit Islands. These are actually not objects of
trades, there is a convention for endangered species (CITES? convention on international trade of endangered
species). Theres a contraption inside the stockings wherein the parrots are kept in a cylindrical tube. Not only of
endangered birds but even amphibians (lizards) even snakes.
Contracts are valid whatever form they may be unless they are formal contracts which are required to
have in writing.
Real contracts which require the delivery of the contract as in delivery of money in datum, object of commodatum (but
find out what kind of property may be subject of commodatum, movable or immovable, actually the answer is both) .
you can also borrow real property. You can borrow a condom gratuitously.
Jack Lemon, grumpy old man. Shirley something.
Art 1358 Constructive delivery execution of public document because it will transfer the real right, but will it
bind third persons? NO unless that public document is recorded in the proper registry. It will only bind: the two
contracting parties and privies to the contract (heirs, executors and assigns). The estate is now the representative of
the deceased party. Public documents are necessary to bind third persons or the entire world. Without that, the public
document and registration. E.g. Torrens Title System, title to land, evidence of ownership. The owner may have
acquired parcel of land by way of grant from the state under the Public Land Act (homestead = title of ownership, free
patent, sales patent and lease four ways to apply public domain). Not the title of the land yet, he still has to go to
the registry of deeds and register of property, then the issue a certificate of title. It is called original certificate title (all
compiled according to serial number, the owner is merely given a duplicate certificate). Any other subsequent to that
is certificate transfer of title. Under the Constitution, the maximum area you can acquire in this provisions: homestead
before 24 ha, now all three have been limited to 12 ha, because were running out of public land. You know how big the
land property of Philippines?? 30 M ha only. Now I think it is 30, 200 000 M because of reclamation. The low tide is
what used to be the high tide before. What if certain islets sink? Land area will increase.
Once a certain contract exists from the grant of the patent, there is a prohibition from alienating or encumbering a
homestead except in the control of GOCC after 5 years he can sell it but the sale must be evidenced by a public
document. It means that there should be formal acknowledgement before the notary public recorded in the notarial
book. Signed by the parties and their witnesses. When the seller executes this public document and delivers it to the
buyer, then there has been a transfer of the ownership in the tradition or delivery by virtue of delivery of the public
document of sale is construed as constructive delivery of the land except that there is a claimant occupying ht eland,
therell be a problem there. Normally when there is no adverse claimant, the ownership is also transferred. But he
must surrender the TCT together with the absolute deed of sale in his favor tot the register of deeds so they will now
cancel the owners duplicate and cancel and issue a new one, for the transfer certificate of title. But its in the
recording and the one that controls it is the original certificate of title in the office of registrar. Anything not
annotated on the back is not binding upon third persons, they can register it as not encumber by any
liens. Its a two page paper that at the back is blank for the annotation of encumbrances. The mortgage creditor can
ask the register to annotate unless that is cancelled, its an encumbrance, the public document that evidences the real
estate mortgage. Then cancellation is also annotated there. So all you need to do is the title, the buyer can rely on the
record of the civil registry. You need this public document in order to transfer the real rights, of course. But the contract
of sale is already valid once there is consent (it is consensual remember).
Binds both contracting parties but since it creates the reciprocal obligation, they have reciprocal obligation, cannot
demand from the seller the execution of absolute deed of sale unless he pays the full purchase price, yet the seller can
tell him, Im not required to execute the public document because you havent paid in full. Execute the proper public
document. There is another problem, a sale of real property for an interest in real property is covered by statute of
fraud which may be inherited from the Englishmen. Laws passed by English parliament. During the time of the Tudors,
you need a written memorandum otherwise the contract will be unenforceable. Likelihood that there will be afraud
perpetrated by one on the other. Before a buyer can require the seller to execute the proper form, at the time of the
sale, they must now have written down their contract saying if the land is titled, there should be technical description
of the land. Land surveys, direction of the compass of each point in the boundary, perimeter. Its called survey,

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 37 of

52
direction and distances are measured against a big map wherein the municipality is fixed monument for the purposes
of surveys. The purpose of those big concrete cylindrical monument. The coordinates of that fixed monument known
relative to the surface of the earth.
If its a hilly land, youll get more surface area. Even if its hilly, they have that stick. The engineering students with a
stick. They tried to find the perfect level so if its inclined, they level it out. More surface but be careful because it
might slide together with your house. All of the contracts that are covered by statute of frauds required a written
memo. Valid between the parties, but subject to be challenge as unenforceable if lacking. Later on, Ill ask you the
minimum requirement for the compliance of statute of fraud. Minimum amount of data in the memorandum.
Art 1357 Covered by the statute of fraud if does not have written memorandum, word of honor, he will honor his word
even if unenforceable to the parties and the privies.

REFORMATION OF INSTRUMENTS
What cant be reformed?
Three contracts there in your outline, but is that all?
Simple donation inter vivos without condition imposed (absolute liberality)
Last will and testament (because the maker of the instrument is already dead) they have abolished the
limbo because they only do limbo rack there.
Void contracts - Nothing comes out of nothing.
Oral contract Not in writing. How can you reform that? Its not fixed! Reformation of instrument,
something must be written. The contract entered into by the parties is already valid but whats wrong with it?
Its the expression that Ive been telling you. Between the cup and the lift, there is many a slip. Applied
to this, you already agreed orally to the contract, but since the contract are to be reduced in writing, there was
a slip, the contract as written does not show or express the true intent of the party. Why?? Because something
went wrong, and what went wrong? In writing it down, something was missed. 100 m 2 but in the writing, 100
HA. Or there is an added 0 there, it became 1000 m2. But that wasnt the intention of the party.
What was the cause of the written contract not expressing true intention?
Fraud
Mistake
Accident
Inexcusable conduct (Art 1362-1365)
The contract is already valid, whats wrong with it, translation from oral to written is where the complaint is all
about. It does not express the true intentions of the party, the one is complaining asking the court allows the
reformation of the instrument to make it express the true intentions of the parties.

12 March 2009

RESCISSIBLE CONTRACTS

In between valid and void

Perfectly valid except that there is economic prejudice or pecuniary damage is visited upon a owner,
creditor or litigant or in one case

How many rescissible contracts are there? 5? There is a sixth one! Art 1382
Art 1381 is couched in general terms so you dont know which is expressly declared rescissible in law
Species of application of Art 1191 (implied resolutory condition attached to a reciprocal obligation) youll have to
distinguish these two. Those examples there, all other contracts especially declared, theyre actually resolution.
Essentially, theres just one example of number five, look at Art 1098. Am I correct?
These rescissible contracts are valid until rescinded by direct action in court. (direct attack) You cannot attack
rescissible contract. Light brigade, last cavalry charges of horse riding cavalry were the Polish officers/cavalrymen and
German skirmisher. After that no more horse riding cavalry men, only for ceremonial purposes to attract tourists. The
rest of the cavalry are riding inside tanks. They get blown anyway, especially when it hits a landmine. Anyway, never
mind, its just that Im amusing myself, otherwise, I will be depressed.
Attack directly in an action for rescission. Which means you cannot interpose the rescissible nature of a contract as
a counterclaim or in an answer. The contract that sought to be enforced through an action for a specific performance,
you will have to file a direct action for rescission. For VOIDABLE CONTRACTS, you can attack it directly or collaterally.
These are the contracts that are rescissible, properly so called. The rest, the cancellation of a reciprocal obligation, the
correct term should be resolution of the reciprocal obligation. The underpinning for rescissible contract is
economic prejudice or damage visited upon the plaintiff.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 38 of

52
1 and 2 all mention lesion which are economic prejudice. LESION essentially inadequacy of consideration for the
transfer of ownership of property.
Essentially a thin band of contracts all contract entered into guardian for ward wherein the valuable consideration
is 25% of the property. How do you prove it? In the eyes of the judge is disproportionate to the value. Produce the
testimony of experts that the value of property is about the same e.g. valued at 10K, the appraiser 9,900 or 10,100.
But if their opinions are varied, probably you have arranged it. Its in the eyes of the judge. Its more than 25%. In the
actual case, it should be something that the judge is something very much less. Economic prejudice. Thin band of
contracts. Not all contracts entered into by the guardian, will be rescissible limited and unexpandable. There must first
be an accrual, (sell property to ward) it is required that he ask permission/authority to sell from guardianship court (the
court which granted the guardianship).
Hardly no more lumber from trees except coco lumber because we have ran out of forest trees. So we are now cutting
coconut trunks which if you are not careful smoothen it by way of plane, be careful you might suffer from splinters
(saludsod). The part of coconut at the base, its the hardest part. The immature one at the top of the trunk. Whether
top or bottom, be careful. What do you care about coconuts.
Never mind how much the value/price it was sold for, the contract is valid. For another, the administrator if he sells the
property belonging to his ward without authorization from the court or without authorization from the owner especially
in the guardianship. Contracts covered by these, contracts entered into by guardian, by virtue of powers of
administration, not powers of ownership thats why its thin band of contracts. Applies to those contracts entered into
by the guardian by virtue of his powers of administration and he has no powers of ownership. So essentially, it will be
all about the sale of fruits of property belonging to the ward. If for example the property owned by the ward is a
coconut plantation. Every 60 days the matured coconut are gathered. Remove coconuts so that they can be used for
candies. What do you call those candies again?
Nata de coco is a bacteria, type of acillobacter that loves to eat the sugar inside the coconut water. they eat it and
form a film. The waste of the bacteria is nata de coco and cook it in syrup.
Whatever was given must be returned. In fact there was a statement by Jurado, CAN IT BE RATIFIED? It is
convalidated only by prescription of the action, not by ratification. I dont think that is exactly correct. Even for
voidable contracts, if the period for filling annulment lapses, its also convalidated. Then you lose the action to rescind
and annul. Because the contracts are valid until valid or annulled respectively. Supposing the ward realizing later after
the sale that the fruits of the properties were sold at the 25% of the value, anyway, used for my sustenance never
mind I suffered a lot. Guardian is forgiven. What is that, prolly its a waiver but if he says that he tells transferee, never
mind Ill no longer file an action. I recognize my guardian sold the fruits for you for less than 75% of the value. He is
confirming. If you dont file action for rescission and annulment, the period is four years after gaining capacity to act.
When te whereabouts are known four years start to run, the case of CONTRACTS IN FRAUD OF CREDITORS, 4 years
from the knowledge of fraudulent transaction. Litigation in number 4, four years for the knowledge of the same. Also
four years. Four years is the favorite number of the civil code. Four and ten but more on four.
Watch out for actions that are imprescriptible except for application of estoppels by laches. Im declaring you
in estoppel. Its unjust if you are allowed to prosecute this action. Its a courts in the Philippine are both courts of law
and equity. In England, theres distinction between court of chancery, court of queen and courts of (something else
Chi didnt catch).
Take not not only of period but also knowing when to start counting. Differentiates run of the mill and core of
(something). You ought to know the extinctive prescription of action plus the time you start counting the period.
An action for rescission proper in 1382 and 1381 are actually a remedial and subsidiary action. If theres any other
remedy like damages, thats the remedy that the plaintiff should file or choose.
If the transferee is in good faith and core value, onerous and in good faith, you CANNOT RESCIND THE
CONTRACT.
It can only be rescinded if GRATUITOUS e.g. in simple donations, never mind if transferee is in good faith, anyway he
didnt part with valuable consideration. But in ONEROUS contracts or causa, the purchase and sale agreement you
cannot rescind contract if the transferee if the transferee is in good faith and for a considerable value. He was able to
take possession of it, register the sale then theres no way you can rescind that anymore. Hes left with the creditor
having to run after whatever property the insolvent has left. Joins other creditor of the insolvent debtor. Wait for the
receiver to liquidate the insolvents estate and distribute the dividends.

Art 1401 Number 1: without authority from the court even if there is the required economic prejudice of more
than 25% of its value
There is another type of sale that a guardian may do: he sells property belonging to the ward without mentioning that
he is doing so as an administrator or the guardian. He pretends to be the owner. Thats the property of the ward, what

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 39 of

52
is the defectiveness of the contract. Certainly it is not rescissible. Its beyond his power. IS IT UNENFORCEABLE
THEN OR SOME OTHER DEFECTIVENESS? Get that? That is for a problem you have to ponder. Its bad to give you
the thin band, this one is another band.
Distinguishment between accion subrogatoria and accion pauliana in number 3 of 1381
Transfer of property subject of litigation without consent of: (1) court hearing the case OR (2) the other party litigant.
No lis pendens (annotation subject of litigation) who files action for rescission as a subsidiary action? Theres no other
way to ask for rescission, but there can be damages. Then action for rescission is directly filed for rescinded contracts.
Supposing the same property is involved in three cases, who can file, can anyone of the plaintiff file action for
rescission or only that one litigant who is actually involved in just one case. Im not inventing it. Read carefully, its
somewhere there.

Art 1401 Number 5. All other contracts specially declared by law subject to rescission.
Under 1098, extrajudicial partition. There is a commissioner who presents project of partition equal?
5th one got only 700K. He tried to sell it. He can go back until one of the partitioners, if you dont agree to each one of
you give me 75 K each, the four of you, that would be 300K or is it they will also get. It just evens out so each one will
receive. The value of net estate is 4.7M divide it by 5, thats what they will get = 900K each
SPECIES OF
1. 1539
2. 1556
3. 1560
4. 1567
5. 1542
6. 1534
7. 1526
8. 1659

GENERIC ARTICLE AND APPLICATION OF 1191

partial eviction
hidden encumbrances
hidden defects
sale of immovable for single price
Leases

Art 1386
Art 1387 presumptions
Donor is more charitable to strangers than his creditors!
ONEROUS: if there has been also made in fraud of creditor, already a writ of attachment or judgment against insolvent
debtor. Never mind who obtained that writ of attachment or judgment creditor. Thats why in one of the badges of
fraud, sale has been made after judgment has been promulgated or writ of attachment has been issued in favor of not
even the creditor himself or another 3rd person creditor
Law of evidence = essentially the other badges of fraud,
Art 1388
Damages can also be imposed upon transferee if he is in bad faith. Entered into a fraud of creditors is in collusion with
the insolvent debtor so you can ask for damages.
If there is other legal means to repair damages or other creditor has in favor pledge, antichresis, mortgage or other
forms of security.
Rescission will also FAIL if plaintiff cannot return what he must return or restore. Or if the object is in the hands of 3 rd
persons who acted in good faith. If he parted with valuable consideration.
Who can assail? Injured party e.g. ward, absentee, creditor of insolvent debtor, party litigant, co-partitioners
Until when? 4 years after gain or regain capacity to act or absentees domicile is known or his domicile is not in
Loyola because Master Rapper was buried there. Just being impish but really its a. How old? 44. Okay ang daming
sumagot. See 44. Four years to file action! Haha. When to start counting? Four years from partition.
Voidable contract need not be cured. I think you can cure rescissible by confirming after knowledge. Acknowledge
it, never mind guardian sold coconut fruits of plantation, anyway I ate half of it. Its his lookout now. I didnt suffer too
much because by the sale of that I became happy and contented. I didnt not have high blood pressure unlike my
guardian. Then if you are going to cure it, if you want to cure it since its valid anyway and the action for filing
rescission it remains valid.
Pero kapag kinondone na ba, hindi na pede icontest? Time cured it. Within the four year period, you cannot be knowing
he has an action to rescind. Its not everyday you can rescind. Get it?
WHATS THE NATURE

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 40 of

52
Effect of contract: valid or void or unenforcible
Can you assail it? First can you attack it,
How is attack made? Direct or collateral
Then who may attack it? Who cant?
Period for attacking?
Then curing (usually everything is cured by time, all of these defective contracts can be cured by time, even if its
void, if the parties delivered to each other, who will ever complain even if its void). The trouble is when the third
person wakes up and realizes. A third person affected by void contract can assail it. So you should be mindful of this
framework. Because its easiest to understand this through that. Attack cure. What cant be cured must be endured.

17 March 2009
Were through with RESCISSIBLE CONTRACTS, you cannot attack it collaterally. Do it by direct action

VOIDABLE CONTRACTS
VOIDABLE CONTRACTS is easy. There are just two voidable contracts.
GROUNDS: vitiation of consent
1. Incapacity to give consent
2. Consent of one parties is vitiated through mistake, violence, intimidation, undue influence and fraud.
EFFECT: valid until annulled.
ATTACK: collateral or direct. In an answer you can interpose the voidability as a defense.
WHO CAN ATTACK: party whose consent is vitiated, no capacity to give consent, not the other party who can give
consent. (case of active misrepresentation) fraud perpetrated upon the minor, in that case, there may be estoppel.
What kind of estoppel, youll have to tell me later. As to all kinds of estoppel, be very careful. You are estopped from
claiming you werent able to think about it hehe.
PERIOD: 4 years, but when do you start counting to attack the voidability. 4 years from discovery of the mistake or the
fraud, cessation of the F,I,UI, re/gaining capacity (if you become non-compost mentis, if you become incompetent from
stresses law school or love life. Its worse than reading cases. Unrequited love, you cant sleep thinking about it!
Whats worse than unrequited love, frustrated or attempted?)
The one who files action for annulment is the one whose consent is vitiated or no capacity. Just like in active
misrepresentation. Estoppel is always a defense, you cannot use estoppel just like the thrusting of Brad Pitt in
Troy. He was very agile except that he had a heel that is named after him, all because the mother did not dip including
her hands so that her hands will be invulnerable as well.
King Arthur: the bullet that will kill me has not yet been manufactured. Foolhardy, all war propaganda to proclaim that
he is invulnerable.
Can this be ratified or the generic name is ratification, but it is actually, something about the legal capacity. The party
suffering from legal incapacity after regaining, he confirms the contract. It is really CONFIRMATION.
Examples of acts that necessarily means IMPLIED RATIFICATION in Art 1393:
1. When the minor, after reaching the age of majority and he files an action for specific performance (enforce
obligation arising from the contract)
2. Art 1401 as long as the thing of the contract can be returned.
But what if it were loss through fortuitous event (can you still file an action for annulment?)
May a guarantor or surety file for action for annulment? YES. Because the CC says so, except that youll have to
know that he is principally bound.
Who may effect annulment? The guardian in behalf of the ward.
EFFECT OF ANNULMENT: Reverted to status quo before entering the contract. Return whatever they have received.
Including the fruits and price and interest of the price. Except in cases provided by law, revert to Art 1187 (for
reciprocal obligations).
How many course of action for the creditor:
1. specific performance
2. rescission
I want you to come to your oral exams chirpy and pushy instead of haggard, at the first question, your tired mind will
go blank. Theres a difference between a blank mind and clear mind. Youll know that you do not know.
Taking advantage of the benefits is merely estoppel

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 41 of

52
If two minors and the other one does not want to ratify: depends if joint or solidary.
If joint indivisible: hes not required to contribute to the other party. Cannot deliver the thing alone.

UNENFORCEABLE CONTRACTS
Nature: interposed as a defense, when the other guilty party demands performance
More difficult one: UNENFORCEABLE CONTRACTS
1 and 3 are easy
2 is the hardest
WHAT IF: one party is insane (incapacitated) and the other is minor (vitiated) the contract is unenforceable
1.

Usually one who has only powers of administrators exercise powers of ownership. Or oversteps the authorities
of special power of attorney. In excess of authorities granted to him by his principal.
Guardian sells it in his own name, not in the name of the ward (not defective, nor rescissible)
What is the defectiveness of the contract? Another cud for you to chew on. Regurgitate it and then
chew again.
One watch that you can hand over from generation to generation. Handed over to son inherited from
the father. Now the guardian sells it by saying that he is the owner. 70K worth 200K. Im just in need of
money, turns out that it is the inherited property of the ward. But he pretends to be the owner, what
defective is that? Rescissible or voidable But look at rescissible contract number 1. Last week I told you
that a guardian cannot sell property of the ward without authority from the court because that would
be an unenforceable contract (entered into in the name of the ward in excess of authority)
Rescissible contracts number 1 and 2 are relegated to those acts which guardian is allowed legally to
do under their acts of administration. Concerns the fruits of the property of the ward. Because if it is
the property of the ward itself, the law requires that the guardian get authority from the court, once
the guardianship court grants authority even if the purchase price is more than 50% is valid, because
the court has taken into consideration why the property has to be sold. Its a choice between ward
starving and the ward parting away with its property. You can live without property, but if you have it
and you dont eat, youll die. Your having property is useless.
Thats why its a thin band of contract. There are only a few allowable limits. Further than that, its
gonna be unenforceable.

STATUTE OF FRAUDS (which I have been adverting to since long time ago!)
Do you agree memory of man is just one year? In your case, its just one sem. According to Letter A and Letter E.
What is required by the statute of frauds? If you look at the history, it was passed by English parliament in the same
manner that you know about statute of limitation. This one is passed way back in the 1600s. imagine how old it is.
That means there are parties who are victimized and perpetrators of fraud. Many times in life you are the victim. If
there are no victims of fraud, theres no need for one half of the lawyers. Actually, if theres no property, there would
be less work for lawyers.
What does this statute of fraud require? Certain contracts have a written memorandum without which it will be
unenforceable at the instance of one of the parties. Because it pays to complies with the statute of frauds.
What does the written memorial contain? This time we lost the Jessup and we blame it to poor judging who does
not know international law itself. Thats the convenient excuse of the UP Law if they lose. Its the judges, not the
participants, not the coach. But most likely they are correct, if the judges are knowledgeable about international law
like officials of international agencies like the ADB, WB or the WHO. They cannot appreciate the nuances and the
niceties.
Depends on what kind of stroke you use. Sink or swim. You float, you survive but you dont reach the other bank.
Parties covered by the statute of fraud, memorialize otherwise, both or one of them are likely to forget what they
agreed upon after a year. And one of them who pretends to have an acute memory and is voluble and a born
prevaricator, he can perpetrate a fraud upon the other whose memory is faulty. Because the other party will rattle off
what they agreed to 1 2 3 4 5. Then the other party goes like did we really agree on that??? too bad for him. The one
who commits perjury, his recollection of the oral contract will be believed by the court. But the law comes in, more
likely, there have been a lot of frauds perpetrated in oral contracts. Good if its face to face and consummated then
and there. But if the contract calls for like number 1 there, calls for the performance obligation arising from the
contract after or more one year. If exactly, not necessary.
What kind of contracts? Essentially verbal or oral contracts cannot be reformed. You reform their crooked lips,
yes. Especially if they have a stroke.
Is the written memorandum a complete contract? Notarized? Formalized?
Whats the minimum for the compliance in the written memorandum? (look in Tolentino) --- essential
requisites

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 42 of

52
1.
2.
3.
4.

Name of parties (or merely signature as long as you know whose signature that is)
Signature how you manifest CONSENT in the agreement
OBJECT not necessary to describe boundaries, only address and location except if he has so many
parcels of land located in the same sitio, in which case you better describe it sufficiently so youll know
and ascertainable without need for a new agreement. Otherwise, dont quibble over it.
CAUSA price or consideration. It should be there. Unless the contract is a formal one, get it? Because if
yes, the donation of real property, youll need a public document not merely a written memorandum.

Save those contracts where the period commencing from the contract is indicated. Lets say, two parties enter into
contract now but the performance shall be consummated when it shall be done, one year or more later. The obligation
arising from the contract will be performed a year or more later. Since memory is fleeting, we are liable to forget what
we agreed upon. There should be a date or the reckoning point, especially in letter A and letter E. Because how
would you know what the period is a lease? Otherwise, there is no termination day, but if the contract were a formal
contract.
My memory is also very short, you realize it? I forget what I said five minutes ago. If somehow the train of thought is
cut, its very difficult to go back. You will be the loser because I will presume you have read all of these. If you want I
can just give you materials and then so be it.
If youre good I tend to give you hand outs. The promdis appreciate it. Those who review there, they get these
materials and appreciate it. By following the diagram I made. They can follow arrows. Get it?
What is required by the statute of fraud is a written memorandum because it requires definite formality for its validity.
You need public document for donation of movable property. If its merely simple donation, its out of pure generosity
or an alloy fondness. No strings attached.
What thing can be donated without strings attached? Ball of strings.
Krissy Conti has a counter-example. Bwahahahaha
There are 7 contracts mentioned here. Look at letter E. there are two different contracts there.
Case of NAPOCOR and the DAM wherein they leased a crane. Memorize it and understand.
EVIDENCE or last part of Par 2 of 1403: The parties at the time they entered into contract covered by statute of
fraud, memorialize in writing, what kind it doesnt say. Supposing the two of you are marooned like that fellow in
Castaway, Tom Hanks, use a piece of wood to hand it down. Secondary evidence, they can reduce it to writing but the
very writing itself is lost or cannot be found or wrote it in a bamboo leaf or the insides of the split bamboo. But what at
high tide, they left it in the beach and the bamboo float away, no more! But they can prove it was reduced in writing.
And then they can produce secondary evidence. E.g. Diary of Angara, recollection of the witness, another contract
mentioning this contract, or instead of being castaway are classmates here and classmates there in Classmates
(contracted through the flickering light of a candle like a table napkin. Yes as long as the inkblots is still visible, blow
runny nose or salivating by anyone on stage. Ball of pulp or mush. Present it to the judge, heres the written
memorandum Your Honor! Haha!
EXCEPTION: Letter D on contract of sale of good, chattels or things of action. In original version of things in action,
the word used by English parliament were choses in action find out what they are
1. Partial performance
2. Auction sale and entry into the sales book of the auctioneer (name of the principal for whom the agent is
acting)
Almost everything now will be covered by this?
MISCARRIAGE OF CONTRACT: akin to debt and default. Restrictive meaning? Yes, cannot be widened. Associated
words, noscitur noscii. Does not include a baby. Give me a concrete example of miscarriage of a contract. This means
that the promissory (who makes special promises) binds himself as a codebtor, surety or a guarantor.
PROMISE MADE IN CONSIDERATION OF MARRIAGE
Donations prompter nuptias (to prompt him to marry to ugly daughter) or goes both ways (a frog prince of a son) if
the son has a face that only a mother can love. The bride will agree unless you prompt him with a donation propter
nuptias. Agreement made in consideration of marriage. It can be the marriage settlement.
Mutual promise to marry is what kind of contract? Its always an oral contract, unless you do it long distance.
ACP Is that not a valuable consideration?
Why is it that there can be no damages for breach of promise to marry? Because the consideration of mutual promise
to marry, how is the proposal to marry? UNLESS you already spent for it. Go to the printer and make the advance
payment for the invitation plus the caterer and the hotel and reserve and pay the San Agustin one year in advance.
Tort or quasidelict is the basis of damage.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 43 of

52
RATIFICATION/ACKNOWLEDGEMENT/CONFIRMATION
How to assail unenforceable contract: by interposing the defense that it is unenforceable because it does not
comply with the statute of fraud therefore no oral evidence can be presented as to the contents of the oral contract
BUT the objection must be prompt or right away or as soon as it becomes apparent that the other party is trying to
prove the contract covered by statute of fraud. Objection that the contract is unenforceable and you cannot produce
oral evidence. But it should be made promptly as soon as it is apparent, otherwise its too late to prove. If any witness
succeeds to testify. It must be interposed as soon as it becomes apparent. It does not mean apparent, seasonably or
before the contents is proved by oral evidence.
Remember this because its useful for practice
Who can assail:
Number 1: Owner of the properties or his privies (heirs, assigns)
Number 2: Parties and privies in interest of the party
Number 3: Ratified by both
How can it be cured?
1. Acknowledgement
2. Acceptance of benefits (partially executed)
Who can cure?
1. Party who ?
Period for curing: Assignment (what is the period for curing unenforceable contract)
GENERAL RULE: As long as action is not imprescriptible, action can prescribed. Its not imprescriptible, there must be
a period. Its somewhere in the CC.

18 March 2009
Its ONLY the rescissible contract that can be challenged directly. Failure to do so, action for prescription lapses so
with voidable contract, failure for imposing
RESCISSIBLE and VOIDABLE: can be subject of novation.
UNENFORCEABLE: can it be subject of novation, the key there is to know if it is valid; wait until the other one tries to
enforce it and say that it is unenforceable. Especially so with respect to contracts covered by statutes of fraud and fail
to memorialize in writing. Usually in an unenforceable contract (sales of good, chattels) it says there how to get out of
it. If the obligation has been partially executed on either side OR fully executed in one side, but not fully
executed in both sides (why is the last statement true?) Why cannot the unenforceable contract once fully
executed, there can be no more, thats how to take it out of the statute of fraud? The one is other exception, OPTION
CONTRACT.
Sale of real right and real property, you need a public document also, but the public document is necessary for what,
not for the validity or enforceability if you have the required written memorandum, it need not be a very technical
document, a private writing is okay as long as you input the minimum requirements.
Youll have to rely on the 60 hours that SC recently mandated credited to your MCLE. How about regular members of
the law faculty. We are used to not charging anything especially when a former student comes to you. You are the
expert because you dont charge anything. He has already accepted the retainer. He just goes to your office and says
Sir I have a problem. You relate this Art which requires a public document and formal contract.
Ask the seller to execute the proper public document in addition to the action for specific performance.
Ask him already, okay deliver to me the partial of land I bought. Then execute the public document. But where is the
purchase price, you are asking me to execute the purchase price. No money, no honey. No price, no public document.
Is the seller correct, why? You should now be able to dovetail all the obligations part? Seller has the exceptio non rite
adimpleti contractus. Which is Latin. But is still not enough to transfer the immovables.
Later if you are given voluntary usufruct or easements, there must also be voluntary usufruct over immovable. There
must be a public document. Is that clear???
I told you yesterday to look for things inaction. If you dont act or it is inaction (one word) persons inaction one word.
EXCEPTION TO LETTER B: If auctioneer enters in salesbook the name of the buyer, price paid for it and the item that
was sold. Usually inaction, the item to be solved is there.
Term for the highest bid declared in. They call it paypay mayaman, just one and two. Thats a joke. The paypay pobre
is mabilis. Might be mistaken as a bid.
What is missing???

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 44 of

52
Among the requirements of a written memorandum in a memo, the auctioneer entry is made in his sales book, amount
and kind of property sold. Principal of the one making the bid. Whats missing, the signature of highest bidder, its not
usually there. Later when you reach Evidence, thats part of the exception to the hearsay rule: entry in a
commercial record. One of the exception you dont need to prove it, its presumed to be regular.
The one who makes representation does he become a party to the contract? NO. Check with Art 1403.
Bad debtors are public school teachers. Even before they have earned their monthly salary, they have already
borrowed the 10K on the third week so when their check comes it. All they do is indorse it. If they borrow from cashier
of the school or district. These teachers look for creditors, anyone whos willing to lend them money, theyll lend from
him. Then promise their salary.
If the representation is made in bad faith by that person who made the representation: Creditor cannot sue
him for specific performance because he does not bind himself as guarantor or surety, but only represent that the
fishball vendor is a good. Liability cannot be breach of contract or guarantor because he didnt really guarantee the
contract. Unlike letter B which makes him guarantor. Special promise to ?
Find out what is the legal basis for the liability of the representative in letter F?
If you memorize all the instances there, better for you and your health. But remember this is unenforceable contract
covered by statute of fraud. Once the party has been able to prove existence of the contract through oral evidence, its
mainly recollection.
Unless you can prove that what there has been a writing before, so this will only be secondary. It was copied in a diary.
Its not the actual contract signed but it was written in a diary wherein this is quoted. Dear diary, today I bought a
piece of land, paid for it. This lot can be converted into a memorial garden.
LETTER A AND LETTER E. Better if there is a date, but its NOT necessary. Because what is needed is proof that the
parties agreed to the contract for a valuable consideration. Then signatures which show consent. Formal contract the
written memo might not suffice. Especially if its a donation of real property, youll need a public document. Thats
simple or remuneratory donation. It will be enough if it is an onerous donation. WHY IS IT THERE A DISTINCTION
BETWEEN SIMPLE REMUNERATORY AND ONEROUS?
Art 749 requires form for validity immovable property
On the other hand, onerous, when it has consideration (refrain from doing something or comply with condition
attached by donor) e.g. finish law studies consideration of the donation. At least up to the extent of the value of the
property and the value of the condition or the act/future service that done is going to comply with, value of that,
deducted from the entire property, that value of the service is a onerous donation, the balance is a simple
remuneratory.
SIMPLE and REMUNERATORY donations are governed by the CC
ONEROUS DONATIONS are governed by law on obligations and contracts, then what, even if the donation is not
made in a public document, its valid if (oral covered by statute of fraud daw?) governed by letter A. Can be made
need not be in a public document all you need to do is prove it, especially so if the donor delivered the property
already. Even then, if the simple donation of a parcel of land not made in a public document, did not comply with
formal requirement, doesnt mean that if donor delivered that possession of parcel of land, no right has transferred.
What was transferred, its not recorded or registered property, it can be the basis for ownership. Creation of ownership
not through transfer of donation but by acquisity possession (longtime possession, all you need is merely good faith).
You need only 10 years, not so if it is registered and has a Torrens title.
But then, why am I doing this? I told you the reason, you might not win in the auction sale, what auction sale? In the
unblocking, you might be out of the block. Youre brighter than the other section, at least you understand my jokes.
PERIOD FOR CURING: Its ground wood.

VOID OR INEXISTENT CONTRACTS

DIFFERENCE BETWEEN VOID AND INEXISTENT: Relate Number 7 to Art 5 of the CC
RULE: When 1 or 2 of the essential requisites are absent or do not exist, or legally they do not exist, in the eyes of the
law they do not exist. They are inexistent EXCEPT number 1 and number 7. Thats why its inexistent because the
contract does not exist. (Actually or legally absent)
There are two kinds of impossibility right? Legal and Physical

Those that are outside the commerce of man, legally speaking, the law does not recognize them as fit subject
matter of contract.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 45 of

52

Those which do not exist at the time of the transaction which is btw difficult to conceive because the causa is
presumed to exist, at the very least there is gratuitous causa.

NUMBER 6: despite reformation, they can still make out the heads or tails of the object of contract. Talking in riddles
or talking a different language. Cannot be translated, new language, newer than Esperanto.
Several void or inexistent contracts. Essentially a void contract does not create right and imposes no obligation,
IN LAW. BUT the enforcement might be extralegal, but thats outside the ambit of oblicon, you are made an offer you
cannot refuse, most likely the performance of the obligation cannot be dodged because the enforcement is extralegal.
Victim of extraordinary rendition (kidnap), thats the term used by the Bush administration for kidnap. Thats current
events. Prisoners are taken to other countries where it is legal to torture them. Theres a word about meat. Rendered
meat Hilary shouting Help us close Guantanamo!
Pretended contract, how about simulated marriage except that there must be something wrong with essential
requisites, all the requisites are there except for the genuiness of the consent. Might have difficulty proving the
marriage. Usually they make the rounds of certain married couples, one of whom is a foreigner. Find out if they are still
living together as husbands and wife, never mind if it is a mnage a troi (Thats marriage of three in French. Why does
Chi know? Hahaha). If the cause of the object of the contract did not exist at the time of the transaction, the object for
example is a figment of the imagination, if I sell to you a unicorn or a pterodactyl or archaeopteryx. Unless I sell to you
its fossil which is outside the commerce of man.
1411 and 1412 rule on IN PARI DELICTO. Public spectacle of, sometimes they wash it down with rain. Guarantee of
the cause or the object of the contract, both of the contracting parties will be charged with a criminal offense that will.
The trouble is what if the one is less guilty than the other.
Innocent party may RECOVER but NOT:
1. If contract constitutes a crime, both are prosecuted and then the object of the crime will be dealt with as the
instrument of the crime. It will be disposed of the by the state.
2. If the contract or the act is clearly unlawful or has a forbidden cause and does not constitute a criminal
offense, its just usually unlawful or forbidden. It does not constitute a crime. No law penalizing it but its illegal
to do so. E.g. entering into contract wherein parties stipulate not to prosecute another for a crime. Unless its a
case of misprision (failure to report). But nowadays treason is committed not in a shooting war, but all over the
world, there is now economic war. But there is no law penalizing treason for that. Or else, we will lose most of
our top officials. Dont you realize it? Theres treason for economic war, most likely, well if you have a
Secretary of Justice who is really loyal to the republic, loyal to his oath of office. But seems that everyone loyal
to the appointing authority because they want to go higher or at the very least, remain as where they are until
they turn blue. Some may turn blue, how, they dont have their machine for renal failure, they turn blue or
green? They will have different pallor, isnt it? Im just enjoying myself.
Art 1412 forbidden or unlawful but does not constitute criminal offense, if both are equally guilty, since its void,
nothing comes out of it, no one of the parties may recover by virtue of the contract or demand the performance of
the contract if it is still executory, none of them can ask specific performance.
3. Only one of them is at fault. Guilty party cannot recover what is given and cannot demand performance,
its the innocent party who can ask for recovery and cannot be required to perform. Thats about it, distinguish
between contracts that constitute crim offense and one that doesnt. In both, the INNOCENT CAN RECOVER
ALSO IN THE CRIMINAL OFFENSE.
If its not clear, you just memorize it. Both are equally guilty. The one is guilty and the one is innocent. Thats all
there is to it. Starting from 1413 up to 1419, these are actually exceptions to the applicability of the in pari delicto
rule
GENERAL EXPRESSION is the general exception.
Art 1416 judgment call of the court/judge whether public policy will be enhanced, if not, no recovery.
Art 1413 might be a dead letter now. You must shock the conscience of the judge. If he is, then he will reduce the
interest rate saying it is iniquitous, unconscionable.
Art 1414 money is paid, one of the parties is allowed by the law to repudiate before legal purpose is accomplished
or damage has been done to third person. Before the full consummation of the legal contract for an illegal purpose,
one of the parties can change his mind and backtrack and trace back his footsteps before the 3P is prejudiced or
damaged.
In Crim law, there is a statement about the attempted stage. About the attempted, retrace his steps back into the
light. If you really want to know CrimLaw 1, replete with examples and quotations. Good to be taught by someone
whose book you are reading. Especially if his footnotes are also digest of cases. You read the case. Certain footnotes
are decisions also. Short digests. And he used to ask and hammer on us that maxim. Actus actus actus non facit reum.
Favorite latin maxim : quam veritas (?) read your Gramps book. That is long term memory, short term memory is
gone. So youll have to remind me. Also when one of the parties is not capable of giving consent. Suffering under legal
incapacity, the interest of justice will be subserve, the law may allow to empower it what was delivered.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 46 of

52
Art 1417-19 Specific exceptions from Art 1416
Art 1417 Price Control Law (no more. Is there? Even if there is a calamity, price control is just a warning, nobody has
been imprisoned by violating price control law. The ones who violate this actually pays, they are not prosecuted
because they compromise with the authorities.)
Art 1418 work 16 hours a day, sleep less than 4 hours.

19 March 2009

NATURAL OBLIGATIONS
Although debtor cannot be enforced, once he pays, he cannot recover anymore.
GROUND: solutio indebiti. The payment is not due. He cannot interpose the cause of action that the obligation was not
due if it was a natural obligation.
Art 1423
Examples of natural obligation, BUT that do not exhaust the entire field of natural obligation.
The most common natural obligation, the one described in Art 1423.
Last will and testament of a decedent if he gave a legacy or a bequest. Gave a piece of property.
When the will fails to probate, what ensues? None of the provisions of the testament will be enforced. Intestate
proceeding. What will the intestate heirs do? Honor the wishes of the decedent as testator. Gave the car to the
bestfriend. His estate will succeed him in the matter of estate.
Namely purely personal obligations will have to be extinguished like money debts owed to creditors. Those creditors
can still collect from the estate but they have to if they have settlement of the estate. They will need to file a claim
against the administrator or executor of the estate. But each heir, there is a partition already. There is one
creditor whose debts has not been paid. All heirs enter extrajudicial partition, divided the estate for themselves, left no
more and there was a debt pending, the debt is still existing, the creditor files a claim. Even if they have already
extrajudicially partitioned the estate, the estate is still liable. There is a period, I think 5 years for the debt of
the decedent that survived. Each particular share of each heir, will be liable for the proportionate payment of the debt
but only to the extent of the value of each of the heirs if each one of the heirs received only 1 million each, each of the
heirs will only be liable for one million which is their share. Especially so if the estate is only 4 million and the liability is
5 million. Only to the extent of what they received, thats the meaning of 1429. The GENERAL RULE the heir is only
liable for the value of the estate he inherited from the estate, no more legally. But what, the natural obligation is they
make good the balance, in other words, the total debt of the intestate is 10 million.
They do not want their father to be called malfagador even in his grave. They want to retain his reputation. When
someone visits his grave during All Saints Day, oh hes a bad debtor. The heirs want to clean up his act even in his
grave. No creditor now will say bad words about him especially so if its about money. The Filipinos anger is short
lived, the memory is also short lived. Unlike if it were what Thats why our national animal beast of burden, thats our
Filipino psyche, if our national animal is an elephant, any herd will be remembered until kingdom come. You speared
him where it hurts. We have a streak of 5 minutes of anger.
Carcar: elephants are chismosong sinungaling.
1426 and 1427: analogous to this, its no longer applicable. But shouldnt it be applicable to a minor under 18. Why
shouldnt it be applicable to minor under 18?
Dovetail this with Art 1214 (payment made by 3rd person not interested in the obligation) without the knowledge or
against the will of a debtor.
1424: Reason for enforcing legal civil obligation. The debtor had a change of heart cannot sleep soundly. He paid. If he
pays voluntarily, he cannot demand the return of what he paid. These are all examples. I have mentioned in passing
that could be a natural obligation, since I dont remember also. No harm done. Until I remember it. I think I mentioned
something consider this a natural obligation
This does not exhaust the field. You can use some cases analogous to it. The obligation cannot be enforced at law,
the court will not help you for some reason but out of conscience. Pangs of conscience. Debtor voluntarily pays or
performs.
Mistake can be a defense? Turn out to be a carcinogen later. I might not be able to discard the free radical. He might be
afraid of karma. If the original creditor cant make me pay, why can you? Suffer the consequences.
Examples supposedly found on the LAW OF SALES. The rescission because of implied warranties, hidden defects, error
in the area sold, they are all about rescission of contract of sale which creates reciprocal obligation. They are really not
rescission but are actually species of 1191. All the articles I mentioned.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 47 of

52
The more correct one is the one in 1098 which if you look at it, its the required lesion in partition. Is it clearer
now??
The rescissible contracts are actually VALID UNLESS INVALIDATED BY COURT ACTION. If prescription period lapse, its
VALID. Also based on economic prejudice that the plaintiff will suffer.
The last difficult one is ESTOPPEL but most of the time youll use it. If theres no more legal provision to anchor your
action, youll use estoppel. Estoppel cannot be a basis of cause of action, its used merely as a defense. Just like
the unenforceable nature of contract, its a defense. Estoppel is used as a defense by the defendant, the complainant
is trying to enforce the cause of action. Especially if you cannot, if the defendant cannot use the defense of extinctive
prescription, the action was file within the period allowed for that cause of action. The action can be filled within a
period of how many years? I told you that already.
At least the EXTINCTIVE PRESCRIPTION PART, you better memorize those periods:
Written contract 10 years from the accrual of the action (date the obligation was due and demandable)
Estoppel supposing as creditor can still file the action. He can invoke the equitable principle of estoppel,
Estoppel by deed
Estoppe by record
Estoppels by judgment res judicata is different from conclusiveness of judgment, this one is BROADER,
any issue that could have been raised in the same parties of the case can no longer interpose the other
issues. Whereas in res judicata, only the issues decided upon in the case. You will come across this again in
civil procedure. [Hopefully, not inder,]
DEFINITION OF ESTOPPEL: has something to do about admission or representation is rendered conclusive upon the
person making it and cannot be denied or disproved by him as against a person relying thereon. Effectively, in
estoppel, there should be a question of fact. There are very few cases which can be estoppel by law, because
everybody is presumed to be estopped by law, but as to questions of fact, what party can be stopped about would be
a question of fact, usually, very rare cases it will be question of law. Usually there is: (aka element of estoppel)
1. CONDUCT can be positive (doing) or negative (which is not doing, inaction, non-act) the party being stopped
by conduct holds out a certain set of facts as true, the other party who is now claiming estoppels perceives
this to be the truth and then promptly relies on the false facts as the true facts (RELIANCE) and then changes
his conduct to suit the conducts which he thought were true. To be attuned to what he thought were the true
facts, since the change is conduct, the other party is allowed to say actually the true fact is this the other
party may be estopped. Because the other party relying on the false facts as the true fact will be prejudiced.
2. Facts held out are not the true fact
3. Reliance on the false facts as the truth
4. Change in the conduct or the prejudice that the party claiming estoppel will suffer. If the party is allowed to
disavow that the party is held out to be the truth. If its a question of law, everybodys presumed to know the
law. Too bad you dont know the law. Dura lex, sed lex. Isnt it? There are two parties here, the party who is
estopped, and the party claiming estoppel who is just defending himself. Estoppel is a big Trojan shield, big
enough to cover the torso of the warrior who kneels down.
Estoppel can only be used as a shield, its just a defense mechanism. Not a sword or a spear. Whenever you
read estoppel, think of Trojan War. Who lost his shield? Hector lost his shield even if he thrust Achilles, Achilles has a
shield.
How many kinds of estoppel are there? According to CC, there are TWO: estoppel in pais and estoppel by deed.
Deed here is actually a document, not an act. Because if act, thats estoppel in pais (or by conduct).
Actually, the CC simplifies it, estoppel by deed should be broader because there are other kinds of estoppel like
estoppel by judgment and estoppel by record. You cannot falsify what is officially recorded in the register. All of them
are fake, the real one was either burned or hidden. Estoppel by deed will include estoppel by record and estoppel by
judgment. Theres something in record. Something written.
ESTOPPEL IN PAIS

By conduct, either positive or negative (action or non-action) usually the definition could mainly apply to both
admission or representation is rendered conclusive upon the person maintaining it, where the seller says that
he is what. He is uh uh lets say he does not say he is the full owner, either a usufructuary or a long term lease
in the contract. Later on he cannot disavow the statement that he is just the lessee. He is declared estopped
by stating that the document. Merely lessee of this parcel of land. Estopped the avowal that he is the owner of
the document. Cannot be made to deny it or disprove it because of estoppels.

In CC there are something like four but actually there are 5. Three of these are positive acts, two are
negative non-action.
POSITIVE ACTS
1. The estoppel by positive act would be the most important Art 1437 that is called estoppel by representation
or misrepresentation.
2. Estoppels by acceptance of benefits (Art 1438)

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 48 of

52
3.

Promissory estoppel, came from Anglo American Law principles of estoppel are hereby adopted insofar,
wholesale adaptation of principle of estoppels from Anglo American Law. Therefore, promissory estoppels can
be included. Can even include other types of estoppel e.g. estoppels by record and judgment.
NON-ACTS
1. Most important is laches (estoppels by laches) thats inaction
2. Estoppel by silence
PROMISSORY ESTOPPEL Making a promise to do or not to something in the future, not estoppel, UNLESS the promise is
relied upon would sanction fraud or injustice e.g. okay you sign this contract because anyway, later on, you first sign
this long term lease, because in the future, if I intend to sell this, you will have the right of first refusal.
In nearly all of these, there is always conduct on the part of the person who is estopped. Usually, he knows the true
facts and yet twist it around, hold the untrue facts as the truth hoping the other party will rely on it and the other party
claiming the estoppels relies on the truth of the false sets of facts and changes his conducts to suit what he thought
was the truth. Now if you allow the other party to express the truth, he will be prejudiced. The court can say, SHUT UP!
Do not tell me the truth because you are ESTOPPED.
The most important estoppel in pais which is action Art 1437 or estoppel by representation or misrepresentation,
here the one who is estopped should know the truth. If he doesnt they are both suffering under a mistake. The other
one is also most likely misled, but essentially, mutual mistake, whats the effect, the truly void contracts under 1
and 7. Simulated? No, you dont use it. They are not equally guilty you cannot use inexistent contracts. The law does
not usually reach that far.
ESTOPPEL BY LACHES
LACHES is delay in enforcing ones rights or the estoppels of staying demands. Stale which means panis, panis na
beer. Panis na demand. You waited too long in filing the action. First line of defense: statute of limitation, just in
case you think youre not sure when to start counting the period although you know where the period is, you dont
know when to start counting. The action has prescribed, the innermost defense is your shield now, the first was a
redound, or embankment from the arrows.
The conduct of the defendant, gives rise to the situation being complained of. That is a ground for filing the complaint.
The delay in asserting the complainants right. Its not as longer than the period for prescription because if it were
prescription, the court has nothing discretion whether to apply it or not. Its the sense of justice or inequity that will
come in so youll have to persuade the judge that it is unfair if you allow the plaintiff/complainant to pursue his
action/give remedy praying for. You declare him in estoppel, though he has no right to file action, it took him so long,
the defendant because he did not have. Ill just accumulate the filing fee and retainer fee of lawyer.

24 March 2009
ESTOPPEL BY LACHES is discretionary on the part of the court. Convince the judge that equity is on your side.
Law expects the lawyers to be skeptical if not cynical. Take things with a grain of salt, no, with a mouthful of salt.
Side stipulations that are not reduced into writing, promissory estoppel (the other name is DETRIMENTAL RELIANCE).
There was one case where this was explained. Promised to do or not to do then relied upon by the party.
Definition: whenever a party, by his non-declaration or commission, intentionally and deliberately.
Biggest of these estoppel by actions is representation or misrepresentation. Second is acceptance of benefits,
plus promissory estoppels.
The CC adopts the general principles of estoppels. Then NEGATIVE (or inaction) is
1. Laches
2. Silence -> there must be a duty to speak. Otherwise, you cannot be estopped. There must be a special
relationship between the two parties that she is expected to speak.
Theres another rule, you cannot estop the government. The mistake of the departments of the government will
not estop the state. Its a matter of law. Associated Insurance v. IAC classification of buildings, not superimposed in the
land as a chattel or movable, if it affects 3P who classify the building as real property will be preferred over earliest
chattel mortgage over the same house. They cannot say that the contract they entered into relative to the house
should be real property but classified this chattel. Force of estoppels. The trouble with that is the estoppel is one of
law. The estoppel there should be by deed, not by. But then that is what by their declaration is that it is movable, they
cannot go back on their word. One of the four cases that overturned that liplocking of SC that parties may consider a
house of strong materials as a movable. Result of an obiter dictum that became the rule until 20 years later the SC
came out with the decision that a house of strong material not merely superimposed on the ground is not movable by
nature. House itself is immovable. If you built a house on somebody elses land, its immovable. The improvements on
the parcel of land are considered as real properties subject to taxation separate from the land. PROBLEMS: What if
there is tax delinquency on house built on somebody else s land. You will see in one case, the case of Nuguid
v Pengson. Ramckeld for 20 years, by this time, that apartment must be dilapidated. Look at City of Caloocan,
declaring real properties as delinquent in non-payment of taxes, you look at the columns there because they declare

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 49 of

52
the house, not the land. If you want to buy the building but not the land, you have a problem because youre only
buying the building but not the land. If you buy a building, it is set for demolition or removals. You hire those outfits
that move the building to other sites without breaking the concrete house into two. You hire those megalifters in the
US. Last time it was a church. Then there was also a concrete court house pillars and all, transferred two blocks round
the corner.
ESTOPPEL IS A MATTER OF EQUITY. The court is acting as a court of equity. Thats why Im teling you. You can
defend yourself from the action that it has prescribed by extinctive prescription. Just in case you counted the period
wrongly OR you do not know the period, (it might be less than ten or five), with all the requisites for estoppels by
laches, you can have the second line of defense, the plaintiff is in estoppel by laches. That means: two-tierred
defense!
The other one is more positive: Abuse of right as long as you can prove all the requisites. The court has been using
estoppel indiscriminately. If its to your advantage, go ahead. Matter of fact vs. matter of law.
Use the logo of the DOJ. Theres no paper tray! No corpus delicti!

TRUSTS
Also transplanted to Philippine soil by virtue of 1442.
Look at 1432. Isnt it. Only ten articles from each other, same number.
1432 and 1442, numbers in the lotto. You might win there, but not in the deblocking except the freshmen who do not
know any better. No caput. But the sophomores will be deblocked except that. Do it by bidding. The professors will be
up for bid. Heaven forbid!
Classified as civil law country. Neither here nor there. Cannot classify us anymore. Also not sure, follow AmJur or
Corpus Juris. Based on Anglo-American Law. Different from ours.
TWO KINDS OF TRUSTS
1. Express
Created by virtue of contract and there is formality (most likely real property so you need a public
document, get it? :D)
The parties who used the property (called the trustor aka settlor in Anglo-American Law). The person
whom the trustee is reposed (called the trustee). The 3P cestui que trust beneficiary.
Can the trustor be trustor and trustee? NO
Can the trustee and beneficiary? NO. Trustee might be transferee of legal title, but he is not supposed
to benefit from the property. He is only entitled to a fee, costs of admin, plus a little something else as
salary or compensation but not as the beneficiary. Even if the legal title is entrusted to him, the fruits will
still go to the beneficiary
Can the trustor be the beneficiary? YES because he is afraid he wont be able to take care of himself
10 years later. He will be the beneficiary in his, dotage, nonage. When he forgets everything, when he
Alzheimers is in proceeding near the finish line. When he eats his own poo just like when he is a baby.
2. Implied
The one that implies it is usually the law, because the property owner will be prejudice if no property
relationship
How many kinds of implied trust are there in the CC?

CONSTRUCTIVE on the part of the trustee, he never intended to be one. Maybe he intended to be
an owner. The law imposed on him obligation of the trustee because the owner will be prejudiced (or
will suffer irreparable damage) if no implied trust is implied or created by law.

RESULTING effect of failure to create an express trust, did not comply with the proper formality
You just analyze. The implied trusts here are mere examples. And they do not exhaust the field like the
natural obligation. Take note of the limitations on Art 1442, the transplantation of trust in the Philippine
jurisdiction.
1448: every intention to create a trust relationship. Thats why its a resulting trust.
2. Somebody else is true beneficiary, e.g. infant son. That is also a resulting trust. There is an intention to
create a trust relationship.
1450: Resulting, except that the trust is in favor of to whom the money is loaned. The borrower is the
beneficiary of the trust. The lender merely holds the legal title to the property so that he will be paid with
the loan. Deed of sale is made to the lender, but will be transferred to the real or true buyer. Instead of
deed of mortgage.
1451: Problematical. Although the son is the legal title now, he is not the beneficial owner, but the father.
Resulting trust at least from the point of view, who causes the title to be placed in the name of another
person. The trust is in his favor.
1452: several of friends contribute money to be put in piece of property. Name in just one of them.
Resulting trust.
1453: Transmit another to the grantor. Contemplated. Resulting trust because there is an intention to
create an express trust.
1454: only to secure the obligation.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 50 of

52
Cumbersome to have the names of all the 50 cousins in the Torrens title. Failure to create an express trust, therefore,
its a resulting trust.
Mortgage can secure any other prestation like not to do and to do. There are two kinds of bay:
1. PROPERTY BAY secures the person who furnishes the pay, a parcel of land. I will put up a property bay for the
release of this accused. The accused was detained. Im putting up this property. To person furnish the bay.
They promise that its a prestation to do that they guarantee. Appearance of accused in court (e.g. the one
who furnishes the bay are actually considered as the jailers of the accused. Each time theres a hearing. The
two bondsmen have to literally take the accused to the court and present him there. If he is absent
unexplained, the properties will be forfeited because of failure to appear in court prestation to do) its not
only a loan that a mortgage will secure it can be any other prestation. Prestation to give to do or not only
payment of sum of money. Delivery of specific thing. Prestation to do and not to do. Secure it with any of these
accessory contracts. In mortgages, the two types: property and chattel mortgage. Transferred to mortgagee
creditor. Deed of real estate mortgage with the ability or right to foreclose mortgage in case there is ability to
perform. The ability to perform thing antichresis will be delivered to the movable. All accessory contracts
dependent upon the principal contract.
2.

SURETY BOND
1455: the one who owns the fund is the trustor. Constructive trust in favor of the owner.
1456: legal basis for action for reconveyance for a parcel of land: survey from outer space, aerial survey,
remote sensing. In the protractor its one half minute, any square on the surface of the earth, 64 or 84
square meter. Wall of the mountains in Sierra Madre, but first youll have to be declared alienable. You
succeed in having title in your name. But youre not the actual cultivator. Prior possession and cultivation
for Public Land Act. Planting trees and food crops and then here you come, you have a title, and you drive
them away. Of course, they can be bamboozled, but since theyre poor, you can buy them off or bulldoze
them unless they are organized and youll have a problem.
There is a provision in the Land Registration Decree which says that once the Torrens title has been
granted, that Torrens title will become indivisible one year after it has been recorded. You can no longer
question the title. You are given within one year to question it. After that, its indivisible. Courts cannot
cancel it EXCEPT State acting through the SolGen, if you happen to succeed in titling inalienable lands in
public domain. By the action for reversion. revert back to the inalienable land of the public domain,
succeed by a bogus relocation of the boundaries. Its outside of the forest land but its proved that there
was something wrong because you bribed officials in the Bureau of Lands.
Change to constitution to enable aliens own property together with proclamations of taking out of
inalienable land all those forest lands. They will all become alienable lands. Or everyone, of course only
individuals with. Nowadays, its only individual citizens. Corporations cannot hold lands of the public
domain except by way of lease, they cannot buy lands of public domains. Supposing your neighbor
succeeds in titling land youve been cultivating all these years. The titled owner (neighbor) is actually
considered by law as trustee of constructive trust in your favor as position as owner cultivator. You cannot
ask his Torrens title be cancelled because more than 1 year has lapsed but declare him to be a trustee.
Therefore, you are going to enforce constructive trust. The action you should file is action for
reconveyance on the basis of constructive trust without cancelling the title directly. What the defendant
registered will be ordered by the court the plaintiff is enforcing the trustee. Commanding execute a deed of
reconveyance. There is no payment of valuable consideration. For the purpose of reconveying property
held in constructive trust. The trouble there, according to SC the action has to be filed within 10 years
counted from date of registration of the title. The inscription there is constructive notice to the whole
world even if there is no actual notice given. No newspaper account of what titles has been given.
Everyone is constructively notified even if they are not.

DOUBLE PRESUMPTION: the trust is already a constructive trust and then the period is 10 years because from the
date of registration, the entire world is also presumed to be notified although they werent really on the basis of fraud
or mistake. When do you reckon it? From the actual date you found out, its constructive. It needs probably a
dissertation from one group. Get it? In a proper case, youll have to deal with trust, and then puncture the constructive
notice to the whole world. Its a mistake and fraud. The period starts being counted from day of mistake of law. Its
already registered.
CASE OF FRAUD: 4 or 10 years? Obligations created by law prescribe in 10 years. Trouble is when you start counting.
SC says from the date of registration. The records are dusty and I have allergy. But with 1K I can buy Claritine before I
dive in the records. Allergic not to dust but to work.
Although the period of trust in basis of mistake or fraud? With respect to the registered lands in the name of the
neighbor rather than actual cultivator? Although the period is 10 years from the period of registration: qualification if
the true owner instead of filing action for reconveyance on the basis of constructive class, action to quiet title.
Advanced knowledge. Theres a principle here, in action to quiet title if the plaintiff is in possession of land, that action
is imprescriptible. Only if he is still in possession. It will describe in 10 years. The usual prescriptive period.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 51 of

52
TRUSTEE HAS POWERS OF ADMINISTRATION: no matter how long he possesses property held in trust, he will
never be come owner as long as he recognize the trust. Because he can repudiate the trust by executing acts of
renunciation amounting to the ouster of the trust. Trustee oust beneficiary: from now on, this is mine now then he
shoves him out of the house. Thus begins the adverse position. Booted out. And then this fact about knowledge about
part of beneficiary must be proved by clear and convincing evidence. He must possess it for a period of more than 30
years. It should be extraordinary acquisitive for the real property unless it has a title. In which case, there can be no
registered possession. You just take it down because its for next year in case you lose in the bidding. Get it???

SIR LABITAG SUMMING UP OBLICON!

WERE THROUGH WITH OBLIGATIONS AND CONTRACTS! NOW THE HARD PART ON YOUR PART BEGINS.

OBLICON
Remember that you just have to remember it will create a personal right, not a real right, UNLESS the thing is
delivered and especially so if its a real property if you need a public document. A creditor can enforce right against
all of the properties of debtor not exempt from execution. But the law on property is all about the real rights in Civil
Law, including the mortgages, pledges which are accessory obligations. But the main ones that youll study next sem
ownership, real right of possession, usufruct or coradial possession. There are in special contracts in mortgages. And
the other one in real contracts are there too. So. You do the three prestations. Obligations are created by one of
the five sources of obligation and then the law comes in and provides for the rights and obligation of the
parties, the one is the obliging creditor and he has many options. Specific performance OR rescission plus
damages because of default but can be one of the four other sources of breach which includes (1) total failure, (2)
default, (3) negligence and (4) fraud and also (5) contravention of the tenor of the obligation except that for total
failure, fault and then contravention of the tenor, the DEFENSE by the debtor can be FORTUITOUS EVENT.
Negligence, you cannot apply it right. How about fraud, worse, you cannot. But certainly in contravention, if nearer to
fault or failure, probably you can use it. But nearer fraud and negligence you cannot especially that typewriter case,
fortuitous event is that the typewriter fell. Acts of god and acts of man.
Nature of all this nature and effect of obligation, how breach, how specific performance, what can be asked by the
creditor which may include specific things not only of the same specific things but all of the accession and
accessory. But also the fruits, in the end, the debtor pays it. The key here is the NATURE AND EFFECTS OF
OBLIGATION. How to get out of it? What the debtor will be liable for?
Depending upon CLASSIFICATION OF OBLIGATION (joint or solidary/alternative/ facultative/mixed, is there a
penal clause, divisible or indivisible or joint indivisible (joint obligation is actual joint indivisible). Depending upon the
classification of obligation, there is a permutation of rights and obligations. Then there is EXTINGUISHMENT.
Basically (1) payment or performance. You already know how to divide or prove the rules on payment. Who to pay,
whom, what should be paid, when, where, how and then why. An obligation is created, it has a life according to
classification of obligation. It creates right and then after that it is extinguished. Other ways to extinguish through the
special forms of payment: (2) merger or confusion, (3)compensation (legal and voluntary), (4) condonation or
remission of debt, (5) novation: Express [a) objective OR b) subjective (passive OR active there are specific names for
this: substitution of debtors and subrogation and expromision, legal and voluntary)] Implied: compatibility of
obligations.

CONTRACTS
Three essential REQUISITES: (1) consent, (2) object, (3) causa
Additional requisites for real, formal and solemn contracts.

CONSENT: look at the commentary, most of the time there is congruence between offer and acceptance as to
object which should be certain or ascertainable, and cause or considerable (presumed to have this that is valid)
absent any causa, it is presumed to have valid gratuitious causa.

5 ways of vitiating consent:

The easier one is legal capacity of both contracting parties: UNENFORCEABLE against each one of
them, ratification by both to be fully valid

One consent taken through duress, undue I, fraud or mistake: VOIDABLE at his instance

RESCISSIBLE contracts: defective is all about economic prejudice, either the acquired lesion, fraud of
creditors number 3 and 1382 and then fraud of litigants. E.g. required lesion in extrajudicial partition.

UNENFORCEABLE contracts:
o 1 = entered into in the name or for the name of another without or in excess of authority.

OBLICON Lecture Notes Karichi E. Santos | UP Law B2012

Page 52 of

52
2 = Statue of Fraud: requires written memorandum absent which unenforceable at the instance of
one of his parties or his privies.
o 4 = sale of goods, partially executed you take it out of the statute of fraud, but most of the grounds
there partially accepted, there is no more need for written memorandum because in fact the one who
performed will be the one who will be prejudiced if the contract is not enforced. The reason why
written memo is theres likelihood of fraud by one parties upon the other whose memory is defective.
The VOID AND INEXISTENT in contracts, there are 7 of them,
o In pari delicto rule is applied to number 1 and 7.
o Theres already a rule does not apply to absolutely simulated contracts but without any
explanation as required. Ex cathedra. Either they dont know or just like ours, our limitation is
defective, we study on our own.
o

NATURAL OBLIGATION debtor voluntary performs prescribed debt cannot recover

Estoppel in pais or conduct
Estoppel by deed, by record, technical by judgment broader than res judicata. Any issue that could have been litigated
upon in that previous case can no longer be litigated upon anymore. Broader than res judicata because its same issue
only.
FINAL WORDS: I promised you that I will give you one set but this is not complete. This my version. You look for, if
you want you can correct it. Dont take it as gospel truth because thats not. I still find mistakes there every now and
then on a good day I find something wrong after all these years. Hopefully therell be a published one. Prolly I want to
earn something also, so thats just to whet your appetite for the rest of the diagram. 30h open bar review in Davao.
Late the next day, so the oral exams start 13 and 14th of April. Youll have exam on the multiple choice on the cases. I
told you that is subject to potestative condition. Youd like that. You better pray hard.